Balchem Corporation (NASDAQ:BCPC) reported a strong performance in sales and earnings, driven by its minerals and nutrients business as well as the food and beverage markets. Despite facing challenges in the Animal Nutrition & Health segment in Europe and North America, the company expressed optimism about growth potential in the latter half of 2024. The Specialty Products segment saw improved margins and earnings growth in the fourth quarter. Balchem highlighted its progress in integrating acquisitions, enhancing marketing capabilities, and investing in infrastructure. The company also increased its annual dividend for the 15th consecutive year, reflecting its commitment to sustainability and stakeholder value.
Key Takeaways
- Balchem experienced growth in sales and earnings, notably in minerals and nutrients, and food and beverage markets.
- Challenges in the Animal Nutrition & Health segment persist, particularly in Europe and North America.
- The Specialty Products segment reported improved margins and earnings growth.
- The company is integrating acquisitions, enhancing marketing, and investing in plant and equipment.
- Balchem raised its annual dividend for the 15th consecutive year.
- A partnership with CureMark on an autism drug presents a significant future growth opportunity.
- Consumer awareness programs are planned for 2024 to boost performance.
- The ReaShure product line is growing due to its broader value proposition.
- No products currently available to boost the fat component in milk.
Company Outlook
- Balchem is optimistic about potential growth in the second half of 2024.
- The company is working on consumer awareness programs to improve its performance in 2024.
- A partnership with CureMark on an autism drug could significantly impact Balchem\'s bottom line in the future.
Bearish Highlights
- The Animal Nutrition & Health segment continues to face challenges in key markets such as Europe and North America.
Bullish Highlights
- Growth in the ReaShure product line is attributed to its benefits for cow health and milk production.
- Anticipated improvement in protein and milk prices is expected to drive sales of Balchem\'s products.
Misses
- Currently, there are no Balchem products that address the fat component in milk, which may represent a missed opportunity in the market.
Q&A Highlights
- Balchem is cautiously optimistic about the approval of the autism drug developed in partnership with CureMark.
- The company is looking forward to presenting Q1 2024 results in May and participating in a conference in March.
Balchem\'s recent earnings call has painted a picture of a company experiencing solid growth in several of its business segments, with strategic initiatives in place to address areas of challenge. The company\'s focus on innovation and market expansion, particularly in health and nutrition solutions, positions it well for future growth. While there are hurdles to overcome, particularly in the Animal Nutrition & Health segment, the company\'s overall outlook remains positive as it continues to navigate the dynamic global market.
Pro Insights
Balchem Corporation (BCPC) continues to show resilience and a commitment to shareholder returns, as evidenced by its impressive record of increasing its annual dividend for the 15th consecutive year. This streak underscores the company\'s financial stability and dedication to providing consistent shareholder value. For those looking to delve deeper into Balchem\'s financial health, an Pro Tip notes that the company has maintained dividend payments for an astonishing 38 consecutive years, demonstrating a robust track record in returning capital to shareholders.
Investors seeking to understand the company\'s valuation might be intrigued by Balchem\'s current P/E Ratio, which stands at 43.76. This is slightly above the adjusted P/E Ratio for the last twelve months as of Q4 2023, which is 44.09. Such a high earnings multiple could suggest that the market has optimistic expectations for the company\'s future growth. This is further supported by another Pro Tip indicating that analysts predict the company will be profitable this year. Additionally, the Price / Book ratio as of Q4 2023 is 4.56, which might interest investors as it could reflect the company\'s asset valuation and market perception.
Investors and potential shareholders can uncover more insights and tips, including those related to Balchem\'s debt levels and liquidity, by visiting https://www.investing.com/pro/BCPC. There are 13 additional Pro Tips available, which can provide a more comprehensive analysis of the company\'s financial health and stock performance. To gain access to these valuable tips, interested parties can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Balchem Corp (BCPC) Q4 2023:
Operator: Greetings, and welcome to the Balchem Corporation Fourth Quarter and Year End 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Martin Bengtsson, Chief Financial Officer of Balchem Corporation. Thank you, sir. You may begin.
Martin Bengtsson: Good morning everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending December 31st, 2023. My name is Martin Bengtsson, Chief Financial Officer and hosting this call with me is Ted Harris, our Chairman, President and CEO. Following the advice of our council, auditors and the SEC at this time, I would like to read our forward-looking statement. Statement made in today\'s call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem\'s most recent Form 10-K, 10-Q and 8-K reports. The company assumes no obligation to update these forward-looking statements. Today\'s call and commentary include non-GAAP financial measures. Please refer to the reconciliation in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President and CEO.
Ted Harris: Thanks Martin. Good morning and welcome to our conference call. We were pleased with the financial results for the fourth quarter of 2023, which capped off another solid year for Balchem. We delivered record fourth quarter adjusted EBITDA and record free cash flow on modestly lower sales in what continues to be a challenging demand environment. I am particularly pleased with our Human Nutrition & Health segment posting record fourth quarter sales and earnings. Before we get into more detail on the quarter, I would like to reflect for a few minutes on some of the significant accomplishments the Balchem team achieved over the past year. Overall, 2023 was another solid year for Balchem, while full year 2023 net sales were down 2.1%, we delivered record earnings from operations of $159.2 million, an increase of 9.6% and record adjusted EBITDA of $231 million, an increase of 7.1% from the prior year. And we have fully restored our margin profile to more normalized levels following the inflationary pressures we experienced over the last few years. And we also generated record free cash flow, allowing us to further pay down our debt and reduce our leverage ratio on a net debt basis to 1.1 times. We also made good progress on our strategic initiatives. In 2023, we fully integrated the Kappa Bioscience and Bergstrom Nutrition acquisitions, that we made in the second half of 2022. The addition of vitamin K2 and methylsulfonylmethane or MSM to our product portfolio is starting to play out as we expected, with our now broader portfolio indeed enhancing, our ability to provide a broader array of innovative solutions for the health and nutritional needs of our customers and the world at large. We have shared with you over the course of the year, a number of exciting new studies that support the supplementation of our portfolio of minerals, nutrients and vitamins for both human and animal nutrition. These studies augment existing science and bring new science to light and they ultimately will support and strengthen our efforts to drive increased awareness and market penetration. I am particularly pleased with the progress we made in 2023 to more effectively market, communicate and promote the positive results from these studies to both our customers as well as the end consumers. We have clearly enhanced our marketing capabilities to leverage the strong science behind our products, so that we can build awareness and ultimately drive penetration. While there is clearly more work to be done here, we are making good progress. Overall, we are very excited about the opportunities that exist with our portfolio of products and we believe that as the library of science keeps growing and our marketing capabilities continue to be enhanced, the market opportunity for our unique portfolio of products and technologies will grow as well. We are also encouraged by the recent progress by CureMark, the bio-pharmaceutical company that uses our microencapsulation technology as a delivery system for their unique treatment for autism, that is currently in development. In December, their long term clinical data demonstrating disease disorder modification in maladaptive behaviors in children, as young as three years of age with autism spectrum disorder was published. The paper entitled Pancreatic Replacement Therapy for maladaptive behaviors in preschool children with autism spectrum disorders was published in the Journal of the American Medical Association or JAMA. Despite the protracted timeline of this initiative, we are encouraged by the progress made over the past year toward reaching the important milestone of filing their biologics license application with FDA, which we believe now will happen in 2024 and we remain excited about the potential for this collaboration. Additionally, we made important investments in plant and equipment in 2023. Of particular note was the completion of our expanded manufacturing facility for VitaCholine, Balchem\'s market leading brand of human choline. The expansion and upgrade will increase output by 50%, and will allow the company to better meet the rising demand for this essential nutrient, well known in the supplement industry in relation to cognitive, liver and overall health. We also made significant progress in 2023 relating to the company\'s corporate social responsibilities. Balchem released its fifth sustainability report in 2023, in which we provided an update on our progress toward our 2030 goals to reduce both greenhouse gas emissions and water usage by 25%. We are extremely pleased to report that we are already tracking ahead of our 2030 goal on greenhouse gas emissions reductions. Balchem\'s approach remains unchanged as we continue to focus on our two main objectives, providing innovative solutions for the health and nutritional needs of the world and operating with excellence as strong stewards of our stakeholders. As a result of our efforts, Balchem was once again recently named one of America\'s most responsible companies by Newsweek magazine for the fourth consecutive year. And lastly, in December, we announced another increase to our annual dividend, taking the dividend from $0.71 to $0.79 share and a 11% increase year-over-year. This most recent increase marked the 15th consecutive year of double digit growth of our dividend, which once again reinforced our commitment to our long-standing dividend strategy. All-in-all, another solid year both financially and strategically for Balchem. Now, regarding the fourth quarter of 2023, while our revenue of $229 million was down 1.6%, we delivered strong profitability with growth in gross margin, earnings from operations and net income on expanded margin percentage rates in the quarter. We delivered earnings growth in two of our three reporting segments with the Human Nutrition & Health segment posting record fourth quarter sales and earnings. Our net income of $27 million, an increase of 24.5%, resulted in earnings per share of $0.82 on a GAAP basis, up $0.16 compared to the prior year. On an adjusted basis, our fourth quarter non-GAAP net earnings were $31 million, an increase of 1.8%, resulting in earnings per share of $0.95 on a non-GAAP basis. And we continued to deliver strong cash flows, which is a strong reflection of the quality of our earnings. Cash flows from operations were a record $67 million with record quarterly free cash flow of $56 million for the fourth quarter. I\'m now going to turn the call back over to Martin, to go through the fourth quarter consolidated financial results for the company and the results for each of our business segments.
Martin Bengtsson: Thank you Ted. As Ted mentioned, overall the fourth quarter was another solid quarter for Balchem with strong margin performance and cash flows. Our fourth quarter net sales of $229 million were 1.6% lower than the prior year. Our Human Nutrition & Health segment grew nicely in the quarter, but this was offset by continued softness in our Animal Nutrition & Health segment. Foreign currency exchange driven primarily by the stronger euro, had a favorable impact to our sales growth of 0.9%. Our fourth quarter gross margin dollars of $75 million were up 9.3% compared to the prior year. Our gross margin percent was 32.8% of sales in the quarter, up 327 basis points compared to the prior year. Primarily due to a favorable mix and lower manufacturing input costs. Consolidated operating expenses for the fourth quarter were $37 million, up 3.7% compared to the prior year. The increase was primarily due to outside services and higher compensation-related expenses, partially offset by a favorable adjustment to transaction costs. GAAP earnings from operations for the fourth quarter were $38 million, an increase of 15.1% compared to the prior year. On an adjusted basis as detailed in our earnings release this morning, non-GAAP earnings from operations of $45 million were up $2 million, or 3.7%. Adjusted EBITDA of $55 million was $3 million or 5.4% above the fourth quarter of 2022. Interest expense was $5 million and our net debt was $245 million, with an overall leverage ratio on a net debt basis of 1.1 times. The effective tax rates for the fourth quarters of 2023 and 2022 were 19.9% and 17%, respectively. The increase in the effective tax rate from the prior year was primarily due to an increase in certain state taxes and lower tax benefits from stock-based compensation. Consolidated net income closed the quarter at $27 million, an increase of 24.5% from the prior year. This quarterly net income translated into diluted net earnings per share of $0.82, an increase of $0.16 or 24.2% from last year\'s comparable quarter. On an adjusted basis, our fourth quarter adjusted net earnings were $31 million, translating to $0.95 per diluted share, an increase of 1.6%. Cash flows from operations for the quarter were $67 million and we closed out the quarter with $64 million of cash on the balance sheet. As we look at the fourth quarter from a segment perspective, our Human Nutrition & Health segment generated sales of $138 million, an increase of 5.8% from the prior year. This increase was driven by higher sales within both the minerals and nutrients business and food and beverage markets. Our Human Nutrition & Health segment delivered quarterly earnings from operations of $25 million, an increase of 43.8%, compared to prior year, primarily due to the aforementioned higher sales, favorable mix and lower manufacturing input costs, partially offset by higher operating expenses as we continue to invest in our selling and marketing capabilities. Fourth quarter adjusted earnings from operations for this segment were $30 million, an increase of 26.7%. We were very pleased with the overall performance of our Human Nutrition & Health segment, delivering record fourth quarter sales and earnings from operations. The overall demand picture appears to be improving in the food and beverage markets and on the minerals and nutrients side, we are seeing healthy demand growth. The acquisitions we made in 2022 are now fully integrated and growing year-over-year. While some volatility and uncertainty remain, we\'re encouraged by the year-over-year top and bottom line growth in our Human Nutrition & Health segment and feel they are well positioned heading into 2024. Our Animal Nutrition & Health segment generated quarterly sales of $58 million, a decrease of 10.2% compared to the prior year. The decrease in sales was driven by lower sales in both the ruminant and monogastric markets. Animal nutrition helped deliver earnings from operations of $5 million, a decrease of 41.3% from the prior year, primarily due to the aforementioned lower sales partially offset by lower manufacturing input costs. Fourth quarter adjusted earnings from operations for this segment were $6 million, a decrease of 44.5%. Similar to what we discussed in our Q3 earnings call, our Animal Nutrition & Health segment is experiencing challenging market conditions, particularly in Europe, but also in the North American dairy market. The market conditions appear to have stabilized but have yet to show real signs of improvement. The European animal feed market continues to show soft market demand and continued competition from low cost Chinese products. And the North American dairy market is still experiencing low U.S. milk and milk protein prices, impacting demand for our rumen-protected encapsulated nutrients in North America. We continue to believe the animal protein markets provide significant growth opportunity for Balchem over the longer term. With the European situation starting to stabilize, and U.S. milk futures suggesting improved dairy economics toward the later part of the first half of the year and certainly in the early part of the second half, we expect to be able to deliver year-over-year growth in this segment in the second half of 2024. We were encouraged to see the sequential improvement in our Animal Nutrition business in the fourth quarter compared to the third quarter, but having said all of that, the animal protein markets remain challenging at the moment. Our specialty product segment delivered quarterly sales of $31 million, a decrease of 2.6% compared to the prior year, due to lower sales in both the performance gases business and the plant nutrition business. Specialty products delivered earnings from operations of $9 million, an increase of 7.4% versus the prior year. The increase was primarily driven by lower manufacturing input costs. Fourth quarter adjusted earnings from operations for this segment were $10 million, an increase of 7.1%. We were pleased with the performance of specialty products in the fourth quarter, as improved margins delivered good earnings growth. We also continued to see further stabilization in volumes as the quarter progressed, and we believe specialty products is in a great position to continue to deliver year-over-year earnings growth again in 2024, while returning to top line growth. So overall, the fourth quarter was another solid quarter for Balchem with earnings growth in two out of our three reporting segments in what continues to be a challenging market environment. I\'m now going to turn the call back over to Ted for some closing remarks.
Ted Harris: Thanks Martin. We are pleased with Balchem\'s financial results reported earlier this morning for the fourth quarter of 2023, capping off another solid year for Balchem. Our full year 2023 results highlight the resilience of our business model in a challenging and volatile market environment. Our Human Nutrition & Health segment is performing well as evidenced by the mid-single digit organic growth we delivered in Q4 and the record fourth quarter earnings, and we expect this to continue in 2024. Specialty Products is also performing well. The strong margin fueling earnings growth in Q4. We expect this momentum to also continue in 2024, further supported by an expected return to revenue growth for Specialty Products. The area where we expect to see some continued challenges is in our Animal Nutrition & Health segment, where the competitive dynamics internationally combined with poor U.S. dairy economics will continue to challenge this segment in the near term. I am excited about 2024, and I believe the company is well positioned to deliver both top and bottom line growth on a full year basis, while further advancing our important growth initiatives. I will now hand the call back over to Martin, who will open up the call for questions.
Martin Bengtsson: Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.
Operator: [Operator Instructions] Thank you. Our first question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.
Bob Labick: Good morning. Congratulations on a strong quarter and year. Hi, can you hear me?
Martin Bengtsson: Thank you, Bob.
Ted Harris: Thanks, Bob.
Bob Labick: Oh, perfect. Yep. Great. Okay. So, yes, from an P&L perspective, you\'ve kind of operated in a tight band for the last five quarters, both on the top and bottom line, and you\'ve really been working hard getting through various headwinds that you\'ve outlined. I know there\'s obviously a lot going on under the surface, but maybe if you can help us think about as we go into 2024, what changes do you see to get that resumption to top line growth and maybe discuss new product pipeline and potential impacts for that in \'24 as well?
Martin Bengtsson: Yes, sure. I\'ll take that one, Bob, and thanks for joining the call. I think that as we look at 2024, as I said in the prepared statements, we are excited about the outlook for 2024. Our Human Nutrition & Health business really is performing well. The markets have recovered to some extent after the destocking period, and that\'s going to kind of return that portion of our growth to that business, i.e. current market growth, so that was lacking for a year or so, and so we really feel like that is back. We also feel like the acquisitions that we made in 2022 are really performing now at the levels that we expected them to perform and year-over-year, that\'s going to provide further growth for us. We also have some of the growth platforms that have been talking about for years in Human Nutrition & Health starting to contribute incremental additional sales, both from new products, new applications, as well as geographic expansion. So much of the momentum that we saw in Q4, we really feel good about that continuing in 2024. And I\'ll kind of jump to Specialty Products and then go back to Animal Nutrition Health, but Specialty Products really has been performing solidly for a while. But last year, the plant nutrition portion of that business had a very poor start to the year with all the rains in California and kind of the wet fields and so forth. So that business was materially impacted negatively in 2023. And we really don\'t see, based on what we see now, and we don\'t necessarily like to talk about weather too much as a reason for performance of that business. But last year, certainly the weather was a negative and this year we don\'t see that reoccurring based on what we see right now. So we really feel like plant nutrition will have a much stronger year in 2024 than they did in 2023. We\'ve also launched some new products in that business recently, that should start to pay off in 2024. So the return to top line growth is primarily driven by that in Specialty Products, but also elective surgeries are coming back to pre-pandemic levels, and that will also help volumes in the performance gases business. So that\'s a little bit about the Specialty Products business and why we\'re encouraged about Q4, but also the outlook for 2024. Obviously, as we talked about in the prepared statements, Animal Nutrition health is a bit more difficult. But even there, we feel as though the second half of 2024 will be improved and we will be able to deliver year-over-year growth, part of that is just simply, we\'re going to lap the difficult quarters that we\'ve been experiencing for a while. We\'re taking some solace in the fact that for the last few quarters we\'ve seen sequential improvement in that business, volumes were actually up nicely, sequentially in Q4 compared to Q3 in Animal Nutrition & Health. The situation in Europe really isn\'t getting any worse. And in fact, we see some signs with lower energy costs, lower kind of feedstock costs, that the market is becoming a little bit healthier. So we expect, as the year progresses some modest improvement there. And our ruminant business, which really is the more specialty business within Animal Nutrition & Health. When you really peel that onion back, there are many components of it that are performing extremely well. Our flagship product ReaShure, which is our encapsulated Choline product, grew significantly double digits in the U.S. in 2023, despite poor dairy economics and low prices, and we feel like that momentum will continue. We do believe that the dairy prices will start to pick back up in the U.S. and that will help some of our other products return to growth. And as I also mentioned in previous calls, we expect to launch a new product in 2024 within our Animal Nutrition & Health business that should provide some additional growth there. So when we wrap all of that together, that really does give us confidence that we can continue the positive momentum that we\'ve had for the last few years of earnings growth year-over-year, and that we will return to top line growth after the 2%-ish reduction in 2023.
Bob Labick: Got it. Great. That was super helpful. And then I\'ll just ask one more question and jump back in queue. You talked about investment in boosting your marketing a little bit. I was just wondering, how do you measure the awareness for Choline and K2 and other products that you\'re measuring and how do they compare to maybe some core vitamins out there like C & D and things like that? Can you get them close or how do you think about that?
Martin Bengtsson: Yes, it\'s difficult to measure, but one way we have tried to measure is we\'ve done our own surveys. And we\'ve surveyed consumers, we\'ve surveyed supplement users and, you know, again, unfortunately and fortunately depending on how you look at it, but unfortunately, I\'ll lead with that. The awareness is relatively low. So if you take a Vitamin C or D, the awareness would be as high as 80% or higher. Most people have certainly heard of those vitamins. We\'re down more in 20s and 30s, and so that\'s really our challenge. But looking at it positively, that\'s really our opportunity. And we do believe, we can make headway relative to the awareness. And that\'s largely why we\'ve been talking about not only the science that we\'re bringing to light, because that ultimately will help build awareness and drive penetration, but also just simply the marketing that we really haven\'t done historically, that we\'re starting to do now and we need to do even more of. And you\'ll see some things coming out from us in 2024, that we haven\'t done before, that are more consumer awareness programs and so forth. And so we can measure it going back to your fundamental question around by doing surveys such as those. And we\'ll continue to do that and do expect to see numbers improve over time based on what we\'re doing. But we also measure awareness based on new product launches, that include our ingredients. As we talk to our key customers and they start to launch products that include our nutrients, it\'s also partly because they\'re doing the analysis around consumer demand and what the consumers care about. And so we are seeing an increased number of launches that include our ingredients, many of which we\'re super excited about, kind of are co-branded with our Balchem brands and we see that as a way for us to kind of reach to the consumer a little bit. But the number of consumer launches with our ingredients, I think, is also an important measure, and we\'ll continue to look at that while we do our own surveys and try to get a feel for real consumer awareness. But we\'ve got a big opportunity, we\'re not where we want to be from this perspective. But that also is in part why we\'re so excited about the addressable market, the potential markets out there for us.
Bob Labick: Okay, great. Thanks so much.
Martin Bengtsson: Thanks, Bob.
Operator: Our next question comes from line of Kyle May with Sidoti. Please proceed with your question.
Kyle May: Hi. Good morning, everyone.
Martin Bengtsson: Hi, Kyle.
Kyle May: I wanted to start with the CureMark comments that you gave us an update on. I appreciate all the color there. But I was wondering if you could expand on the partnership with CureMark and the autism drug and how that could potentially impact the top and bottom line for you?
Ted Harris: So, again, this has been a long time coming and a project that\'s been in development for, dare I say, decades, or at least a decade and a half. But it does take a long time to introduce a new drug and get drug approval. And we tend not to talk about this that much, because not that much has materially changed. But behind the scenes, we\'ve been working hard on getting our manufacturing capabilities up, producing the batches that need to be produced for kind of setting quality standards, and ultimately getting approval. So a lot of work\'s been going on from our side, and CureMark\'s been doing a lot of work. We were excited to see that the data from their studies was published in JAMA in December, I think that was a really great step. And as we work with them, we know that they\'re working hard with their consultants to get their documents in order so that they can ultimately file for approval. This could be, if ultimately is approved, the first real drug treatment for autism, that\'s specifically designed for autism. And unfortunately, the number of children that suffer from autism continues to increase and continues to expand. And our perspective is that, again, if it ultimately is approved, the use of this drug treatment in combination with behavioral therapy and so forth, could really make a difference for parents and these children. And so when you start to put numbers down on paper, it could be a very successful, sizable drug treatment. It\'s very, very hard to estimate, this is not our product. This is CureMark\'s product, where we don\'t have access to their data around market expectations and pricing and so forth. So we make estimates, but it could be very significant, if successful and we ultimately get a royalty. And we\'ve talked about this in the past. There are some nuances in the early stages of launch, but ultimately we will get a 3% or so royalty on sales of the treatment. So it could again, if approved and if successful in the marketplace be a material impactor of our overall company. We manufacture the product in essence, we certainly aren\'t manufacturing the enzyme blend and so forth, but we take that raw enzyme and we encapsulate it with our unique encapsulation technology and then pass it on to the packager. And so we play a very critical role in this process, an important role and some of our patents are used in part of CureMark\'s patent portfolio. We\'re part of the drug master file and all of those things. So we feel good about our position in all of this and certainly are hopeful that ultimately this biologics license application is filed and approved by FDA, because there\'s significant opportunity for us.
Kyle May: Got it. Appreciate that color. And it sounds like it could be a very helpful drug. So we\'ll keep a close eye on that one. Maybe switching over to the Animal Nutrition & Health business. A couple of questions around this area. I know you gave some context of milk and protein prices potentially improving later this year. But I was wondering, if you could start by kind of giving us a sense of the latest percentage of business that\'s represented by the American dairy market. And then how you\'re seeing some of those different products, I guess the sales of those going forward, because it sounded like ReaShure is still growing and then some of the other [indiscernible] lagging, but maybe just any color on how you see that progressing this year?
Ted Harris: So I\'ll try to get into that, Kyle and Martin can kind of chime in a little bit as well. But if you think about our Animal Nutrition & Health business being about $240 million and $250 million, kind of the U.S. ruminant business is about $50 million of that, let\'s say. And so that\'s really what\'s tied to the dairy markets. And not to get into too much detail but these kinds of nutrients that ultimately address health needs for the cow, ultimately have different impacts. And ReaShure, for example, helps address fatty liver that cows often get in transition. And ultimately, if they have fatty liver, their metabolism goes down, they produce less milk. And if you prophylactically address this condition, the metabolism of the cow goes up and they eat more and they produce more milk. So ReaShure really helps improve the efficiency of the cow. And that\'s something that really is valued almost no matter where the milk prices are, even though it\'s a high cost ingredient. And I think that\'s partly why we continue to see nice growth in that product line. The other reason that we\'re seeing nice growth in that product line is some of these studies that we\'ve talked about, that we\'re incredibly excited about are showing that ReaShure not only helps address fatty liver, yes, it does that, but it also helps growth rates, it helps the overall health of the cow, ability to fight disease, colostrum increases in the mothers. And so there\'s much broader value proposition if you will for ReaShure than maybe we originally marketed it at. And for that reason, we\'re getting increased adoption and increased penetration. And ultimately, we have dreamt for years about having products that could be expanded into the beef industry. And we really feel like we now have some science there, and that\'s something for future discussion. But in any case, ReaShure helps create efficiency in the cow. Some of the other products, some of the encapsulated amino acids, impact the components within the milk. And so, for example, an encapsulated methionine helps boost the amount of protein that\'s in the milk, and protein prices today are particularly low. And that element of our product portfolio is the one that has really been impacted the most by the lower dairy prices. And as we said, we do expect the protein prices to start to pick up and milk prices overall to start to pick up. And I think that will allow those products that are very effective to return to growth. There are products in the marketplace that help boost the fat component in milk. We do not have any of those products. Milk, I mean, fat is priced quite high these days. That\'s of the kind of milk components that is probably the healthiest right now but none of our products specifically address that. But hopefully that gives you a little bit of a feel. It\'s a little bit complicated and it depends on the fat price component, the protein price component, overall milk prices. But we really feel good about our products. They\'re differentiated products. There\'s a lot of science behind them. And ultimately these, the U.S. dairy price and really global dairy prices will start to turn as animals are culled, supply comes down, prices will go up. And we\'ll be able to return to growth for this business, that we really feel as though we\'ve got a good position.
Kyle May: That\'s great, Ted. Appreciate all the additional color. I\'ll jump back in queue. Thanks.
Ted Harris: Okay. Thanks so much, Kyle.
Operator: Thank you. We have reached the end of the question and answer session. Mr. Harris, I would like to turn the floor back over to you for closing comments.
Ted Harris: Thanks, Christine. And once again, thank you all very much for joining our call today. We really appreciate your support throughout the year as well as your time today, and look forward to - it\'s hard to believe it\'s already February - but we look forward to reporting our Q1 2024 results in early May. In the meantime, we will be participating in the BNP Paribas (OTC:BNPQY) Exane 12th Consumer Ingredients Conference in London on March 14th, and we know we\'re going to see some of you there, and we hope to see others as well. So thanks again for joining the call today.
Operator: Ladies and gentlemen, this does conclude today\'s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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