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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended June 30, 2022
    OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from ____ to ____
Commission file number: 1-13648
_______________________________________________________________________________________________________________
Balchem Corporation
(Exact name of Registrant as specified in its charter)
Maryland 13-2578432
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

52 Sunrise Park Road, New Hampton, NY 10958
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (845) 326-5600

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $.06-2/3 per shareBCPCNasdaq Global Market
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
(Check one):Large accelerated filerAccelerated filer 
 Non-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of July 21, 2022, the registrant had 32,120,593 shares of its Common Stock, $.06 2/3 par value, outstanding.


BALCHEM CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page No.



Part I.    Financial Information

Item 1.    Financial Statements
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
AssetsJune 30, 2022 (unaudited)December 31, 2021
Current assets:  
Cash and cash equivalents$76,183 $103,239 
Accounts receivable, net of allowance for doubtful accounts of $1,203 and $928 at June 30, 2022 and December 31, 2021 respectively
138,579 117,408 
Inventories140,840 91,058 
Prepaid expenses8,467 6,116 
Derivative assets7,276  
Other current assets5,796 4,411 
Total current assets377,141 322,232 
Property, plant and equipment, net252,145 237,517 
Goodwill731,772 523,949 
Intangible assets with finite lives, net218,802 94,665 
Right of use assets - operating leases10,718 6,929 
Right of use assets - finance lease2,255 2,359 
Other assets13,841 11,674 
Total assets$1,606,674 $1,199,325 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable$66,363 $56,243 
Accrued expenses58,649 43,411 
Accrued compensation and other benefits14,973 19,567 
Dividends payable127 20,886 
Income taxes payable863 1,334 
Operating lease liabilities - current2,997 2,194 
Finance lease liabilities - current171 167 
Total current liabilities144,143 143,802 
Revolving loan433,569 108,569 
Deferred income taxes77,574 46,455 
Operating lease liabilities - non-current7,725 4,811 
Finance lease liabilities - non-current2,216 2,303 
Derivative liabilities 2,658 
Contingent consideration liability24,793  
Other long-term obligations15,284 13,712 
Total liabilities705,304 322,310 
Commitments and contingencies (Note 16)
Stockholders' equity:
Preferred stock, $25 par value. Authorized 2,000,000 shares; none issued and outstanding
  
Common stock, $0.0667 par value. Authorized 120,000,000 shares; 32,120,593 and 32,287,150 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
2,143 2,154 
Additional paid-in capital120,811 147,716 
Retained earnings790,840 732,138 
Accumulated other comprehensive income(12,424)(4,993)
Total stockholders' equity901,370 877,015 
Total liabilities and stockholders' equity$1,606,674 $1,199,325 
See accompanying notes to condensed consolidated financial statements.
3

BALCHEM CORPORATION
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except per share data)
(unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net sales$236,693 $202,365 $465,560 $388,021 
Cost of sales164,817 142,918 322,178 269,847 
Gross margin71,876 59,447 143,382 118,174 
Operating expenses:
Selling expenses15,991 14,846 32,976 29,770 
Research and development expenses2,922 2,899 6,153 5,648 
General and administrative expenses13,043 11,109 25,997 21,588 
 31,956 28,854 65,126 57,006 
Earnings from operations39,920 30,593 78,256 61,168 
Other expenses, net:
Interest expense, net960 608 1,505 1,333 
Other (income) expense, net(298)(34)(137)(167)
662 574 1,368 1,166 
Earnings before income tax expense39,258 30,019 76,888 60,002 
Income tax expense9,476 7,288 18,176 13,860 
Net earnings$29,782 $22,731 $58,712 $46,142 
Net earnings per common share - basic$0.93 $0.71 $1.83 $1.43 
Net earnings per common share - diluted$0.92 $0.70 $1.81 $1.41 
See accompanying notes to condensed consolidated financial statements.

4

BALCHEM CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Dollars in thousands)
(unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net earnings$29,782 $22,731 $58,712 $46,142 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(6,951)1,524 (9,793)(4,619)
Unrealized gain on cash flow hedge850 351 2,423 863 
Change in postretirement benefit plans(34)8 (61)15 
Other comprehensive income (loss)(6,135)1,883 (7,431)(3,741)
Comprehensive income$23,647 $24,614 $51,281 $42,401 
See accompanying notes to condensed consolidated financial statements.

5

BALCHEM CORPORATION
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the three and six months ended June 30, 2022 and 2021
(Dollars in thousands, except share and per share data)
Total
Stockholders'
Equity
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Common StockAdditional
Paid-in
Capital
SharesAmount
Balance - December 31, 2021$877,015 $732,138 $(4,993)32,287,150 $2,154 $147,716 
Net earnings28,930 28,930 — — — — 
Other comprehensive (loss)(1,296)— (1,296)— — — 
Repurchases of common stock(34,599)— — (245,685)(16)(34,583)
Dividends(10)(10)— — — — 
Shares and options issued under stock plans3,642 — — 74,604 4 3,638 
Balance - March 31, 2022873,682 761,058 (6,289)32,116,069 2,142 116,771 
Net earnings29,782 29,782 — — — — 
Other comprehensive (loss)(6,135)— (6,135)— — — 
Repurchases of common stock(600)— — (4,976)— (600)
Shares and options issued under stock plans4,641 — — 9,500 1 4,640 
Balance - June 30, 2022$901,370 $790,840 $(12,424)32,120,593 $2,143 $120,811 
Balance - December 31, 2020$828,233 $656,740 $4,173 32,372,621 $2,160 $165,160 
Net earnings23,411 23,411 — — — — 
Other comprehensive (loss)(5,624)— (5,624)— — — 
Repurchases of common stock(1,596)— — (13,475)(1)(1,595)
Shares and options issued under stock plans5,068 — — 92,784 6 5,062 
Balance - March 31, 2021849,492 680,151 (1,451)32,451,930 2,165 168,627 
Net earnings22,731 22,731 — — — — 
Other comprehensive income1,883 — 1,883 — — — 
Repurchases of common stock(9,240)— — (72,649)(5)(9,235)
Shares and options issued under stock plans4,776 — — 25,493 2 4,774 
Balance - June 30, 2021$869,642 $702,882 $432 32,404,774 $2,162 $164,166 
See accompanying notes to condensed consolidated financial statements.

6

BALCHEM CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
 Six Months Ended
June 30,
 20222021
Cash flows from operating activities:  
Net earnings$58,712 $46,142 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization23,861 24,463 
Stock compensation expense6,889 5,914 
Deferred income taxes1,778 54 
Provision for doubtful accounts380 (25)
Unrealized loss/(gain) on foreign currency transaction and deferred compensation188 (401)
Asset impairment charge23  
Loss/(gain) on disposal of assets203 (19)
Changes in assets and liabilities
Accounts receivable(15,506)(16,361)
Inventories(33,141)(7,949)
Prepaid expenses and other current assets(1,733)(2,859)
Accounts payable and accrued expenses15,075 25,873 
Income taxes(779)898 
Other(689)659 
Net cash provided by operating activities55,261 76,389 
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired(295,660) 
Capital expenditures and intangible assets acquired(20,799)(13,760)
Proceeds from sale of assets197 240 
Investment in affiliates(150) 
Net cash used in investing activities(316,412)(13,520)
Cash flows from financing activities:
Proceeds from revolving loan365,000 5,000 
Principal payments on revolving loan(40,000)(45,000)
Principal payments on acquired debt(30,648) 
Principal payments on finance lease(83)(78)
Proceeds from stock options exercised1,328 3,886 
Dividends paid(20,704)(18,700)
Purchase of common stock(35,199)(10,835)
Net cash provided by (used in) financing activities239,694 (65,727)
Effect of exchange rate changes on cash(5,599)(1,811)
Decrease in cash and cash equivalents(27,056)(4,669)
Cash and cash equivalents beginning of period103,239 84,571 
Cash and cash equivalents end of period$76,183 $79,902 
See accompanying notes to condensed consolidated financial statements.
7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All dollar amounts in thousands, except share and per share data)

NOTE 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements presented herein have been prepared in accordance with the accounting policies described in the December 31, 2021 consolidated financial statements, and should be read in conjunction with the consolidated financial statements and notes, which appear in the Annual Report on Form 10-K for the year ended December 31, 2021. The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company"). All intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, the unaudited condensed consolidated financial statements furnished in this Form 10-Q include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal, recurring nature. The condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”) governing interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934 (the "Exchange Act") and therefore do not include some information and notes necessary to conform to annual reporting requirements. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results expected for the full year or any interim period.
Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, this Standard Update is in effect from March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. The Company adopted the Standard Update in 2021. The adoption of the Standard update did not have a significant impact on the Company's consolidated financial statements and disclosures.
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 became effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted ASU 2019-12 on January 1, 2021. The adoption of ASU 2019-12 did not have a significant impact on the Company's consolidated financial statements and disclosures.

8

NOTE 2 – SIGNIFICANT ACQUISITIONS
On June 21, 2022, Balchem and its wholly-owned subsidiary, Balchem B.V., completed the acquisition of Kechu BidCo AS and its subsidiary companies, including Kappa Bioscience AS, a leading science-based manufacturer of specialty vitamin K2 for the human nutrition industry, headquartered in Oslo, Norway (all acquired companies being hereinafter collectively referred to as “Kappa”). The Company made payments of approximately kr3,301,341 ("kr" indicates the Norwegian krone) on the acquisition date, amounting to approximately kr2,997,669 to the former shareholder and approximately kr303,672 to Kappa's lenders to pay off all Kappa bank debt. Net of cash acquired of kr63,064, total payments on the acquisition date were kr3,238,277. Considering net cash acquired of $6,365, these payments translated to approximately $326,820 paid on the acquisition date, amounting to $302,537 paid to the former shareholder and approximately $30,648 to Kappa's lenders. The acquisition was primarily financed through the 2018 Credit Agreement (see Note 8, "Revolving Loan"). In connection with this transaction, the seller has an opportunity to receive an additional payment in 2024 if certain financial performance targets and other metrics are met, and therefore we recorded contingent consideration of kr245,000 (translated to $24,793) as of June 30, 2022. Kappa manufactures specialty vitamin K2, a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic performance. Primarily, vitamin K2 supports the transport and distribution of calcium in the body. Vitamin K2 is important at all life stages, from pregnancy and early life to healthy aging. Kappa's K2VITAL® branded vitamin K2 is the leading synthetic vitamin K2 and is backed by strong intellectual property and a deep clinical research portfolio. The acquisition strengthens the Company's scientific and technical expertise, geographic reach, and marketplace leadership, which should ultimately lead to accelerated growth for the Company's portfolios within the Human Nutrition & Health segment.
The goodwill of $212,591 that arose on the acquisition date consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce. The goodwill is assigned to the Human Nutrition & Health business segment and is not deductible for income tax purposes.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed:
Cash and cash equivalents$6,365 
Accounts receivable8,036 
Inventories17,701 
Property, plant and equipment9,854 
Right of use assets3,349 
Customer relationships113,545 
Developed technology18,166 
Trademarks6,055 
Other assets2,399 
Accounts payable(3,301)
Bank debt(30,648)
Lease liabilities(3,349)
Other liabilities(4,373)
Deferred income taxes, net(29,127)
Goodwill212,591 
Total consideration on acquisition date327,263 
Contingent consideration liability(24,726)
Net gains on foreign currency exchange forward contracts(512)
Amount paid to shareholders302,025 
Kappa bank debt paid on purchase date30,648 
Total amount paid on acquisition date$332,673 
The estimated fair value of tangible and intangible assets acquired and liabilities assumed is based on management’s estimates and assumptions, which are subject to change. In preparing our preliminary fair value estimates of the intangible assets and certain tangible assets acquired, management, among other things, consulted an independent advisor. Valuation methods utilized include net realizable value for inventory, multi-period excess earnings method for customer relationships, the relief from royalty method for other intangible assets, and a scenario-based approach for the contingent consideration. The purchase price and related allocation of assets acquired and liabilities assumed is preliminary pending management's final review of fair value calculations and deferred tax liabilities related to certain non-deductible assets.
9

Customer relationships are amortized over a 15-year period utilizing a percentage of excess earnings over economic life method. The corporate trademark and product trademarks are amortized over 2 years and 10 years, respectively, and developed technology is amortized over 12 years, utilizing the straight-line method as the consumption pattern of the related economic benefits cannot be reliably determined.
Transaction and integration costs related to the Kappa acquisition are included in selling, general, and administrative expenses and were $451 for both the three and six months ended June 30, 2022. There were no such amounts related to this acquisition for the three and six months ended June 30, 2021.
The following preliminary unaudited pro forma information has been prepared as if the acquisition had occurred on January 1, 2021.
 Three Months Ended
June 30,
Six Months Ended
June 30,
 
Net SalesNet EarningsNet SalesNet Earnings
Kappa actual results included in the Company's consolidated income statement from June 21, 2022 through June 30, 2022$ $ $ $ 
2022 Supplemental pro forma combined financial information$247,430 $30,172 $489,170 $58,648 
2021 Supplemental pro forma combined financial information$213,032 $26,344 $410,649 $50,379 
Kappa's net sales and net earnings from June 21, 2022 through June 30, 2022 were not material. As such, they were not included in the Company's condensed consolidated statements of earnings for the three and six months ended June 30, 2022. 2022 supplemental pro forma net earnings for the three and six months ended June 30, 2022, excluded $643 and $722, respectively, of acquisition-related costs incurred. The pro forma information presented does not purport to be indicative of the results that actually would have been attained if the Kappa acquisition had occurred at the beginning of the periods presented, and is not intended to be a projection of future results.

NOTE 3 – STOCKHOLDERS’ EQUITY
STOCK-BASED COMPENSATION
The Company’s results for the three and six months ended June 30, 2022 and 2021 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:
Increase/(Decrease) for theIncrease/(Decrease) for the
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cost of sales$277 $444 $676 $744 
Operating expenses3,535 2,849 6,213 5,170 
Net earnings(2,933)(2,547)(5,312)(4,569)
As allowed by ASC 718, the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest.
The Company’s stock incentive plans allow for the granting of stock awards and options to purchase common stock. Both incentive stock options and nonqualified stock options can be awarded under the plans. No option will be exercisable for longer than ten years after the date of grant. The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises. As of June 30, 2022, the plans had 534,120 shares available for future awards. Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee
10

performance share awards, and three years for non-employee director restricted stock awards. Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events.
Option activity for the six months ended June 30, 2022 and 2021 is summarized below:
For the six months ended June 30, 2022Shares (000s)Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2021867 $88.19 $69,711 
Granted109 138.07 
Exercised(18)72.74 
Forfeited(6)120.36 
Canceled  
Outstanding as of June 30, 2022952 $93.99 $34,907 6.4
Exercisable as of June 30, 2022666 $81.11 $32,409 5.4
For the six months ended June 30, 2021 Shares (000s)Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2020858 $80.58 $29,735 
Granted129 119.12 
Exercised(58)65.95 
Forfeited(2)101.38 
Canceled(1)74.57 
Outstanding as of June 30, 2021926 $86.85 $41,107 6.8
Exercisable as of June 30, 2021580 $73.72 $33,398 5.6
ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yields of 0.5% and 0.5%; expected volatilities of 31% and 33%; risk-free interest rates of 2.0% and 0.5%; and expected lives of 4.9 years and 4.9 years, in each case for the six months ended June 30, 2022 and 2021, respectively.
The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior. Expected volatility is based on the Company’s historical volatility levels. Dividend yields are based on the Company’s historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury Zero coupon issues with a remaining term equal to the expected life.
11

Other information pertaining to option activity during the three and six months ended June 30, 2022 and 2021 is as follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Weighted-average fair value of options granted$ $34.42 $40.26 $33.11 
Total intrinsic value of stock options exercised ($000s)$495 $1,814 $1,149 $3,731 
Non-vested restricted stock activity for the six months ended June 30, 2022 and 2021 is summarized below:
Six Months Ended June 30,
20222021
Shares (000s)Weighted
Average Grant
Date Fair
Value
Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 31166 $99.70 159 $90.71 
Granted34 137.74 37 119.30 
Vested(77)80.84 (13)87.33 
Forfeited(3)116.73 (2)85.60 
Non-vested balance as of June 30120 $122.03 181 $96.89 

Non-vested performance share activity for the six months ended June 30, 2022 and 2021 is summarized below:
Six Months Ended June 30,
20222021
Shares (000s)Weighted
Average Grant
Date Fair
Value
Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 3169 $110.72 71$91.99 
Granted39 114.22 36108.74
Vested(35)53.17 (24)70.64
Forfeited(3)84.09 (11)74.57
Non-vested balance as of June 3070 $127.69 72$110.22 

The performance share (“PS”) awards provide the recipients the right to receive a certain number of shares of the Company’s common stock in the future, subject to an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and relative total shareholder return (TSR) where vesting is dependent upon the Company’s TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents. Expense is measured based on the fair value at the date of grant utilizing a Black-Scholes methodology to produce a Monte-Carlo simulation model which allows for the incorporation of the performance hurdles that must be met before the PS vests. The assumptions used in the fair value determination were risk free interest rates of 1.8% and 0.2%; dividend yields of 0.5% and 0.6%; volatilities of 32% and 33%; and initial TSR’s of -15.7% and 11.7%, in each case for the six months ended June 30, 2022 and 2021, respectively. Expense is estimated based on the number of shares expected to vest, assuming the requisite service period is rendered and the probable outcome of the performance condition is achieved.  The estimate is revised if subsequent information indicates that the actual number of shares likely to vest differs from previous estimates. Expense is ultimately adjusted based on the actual achievement of service and performance targets. The PS will cliff vest 100% at the end of the third year following the grant in accordance with the performance metrics set forth.
As of June 30, 2022 and 2021, there were $19,988 and $19,796, respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans. As of June 30, 2022, the unrecognized
12

compensation cost is expected to be recognized over a weighted-average period of approximately 1.7 years. The Company estimates that share-based compensation expense for the year ended December 31, 2022 will be approximately $13,000.
REPURCHASE OF COMMON STOCK
The Company's Board of Directors has approved a stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 3,068,905 shares have been purchased. The Company’s prior presentation of reflecting treasury stock separately within stockholders’ equity has been adjusted to conform to the presentation prescribed by the State of Maryland, where the Company is incorporated. In connection therewith, adjustments to balances previously reflected as treasury stock of $8,472, $2,210, and $7,873 as of June 30, 2021, March 31, 2021, and December 31, 2020, respectively, were made to the condensed consolidated statements of changes in stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly. There was no impact to total stockholders’ equity in any of the years presented as a result of these updates. The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors. The Company also repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans. During the six months ended June 30, 2022 and 2021, the Company purchased 250,661 and 86,124 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes. These shares were purchased at an average cost of $140.42 and $125.81, respectively.

NOTE 4 – INVENTORIES
Inventories at June 30, 2022 and December 31, 2021 consisted of the following:
June 30, 2022December 31, 2021
Raw materials$43,342 $28,639 
Work in progress20,249 10,563 
Finished goods77,249 51,856 
Total inventories$140,840 $91,058 

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30, 2022 and December 31, 2021 are summarized as follows:
 June 30, 2022December 31, 2021
Land$11,273 $11,692 
Building91,140 89,602 
Equipment263,929 253,995 
Construction in progress65,906 52,930 
 432,248 408,219 
Less: accumulated depreciation180,103 170,702 
Property, plant and equipment, net$252,145 $237,517 

NOTE 6 – INTANGIBLE ASSETS
The Company had goodwill in the amount of $731,772 and $523,949 as of June 30, 2022 and December 31, 2021, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is the result of the acquisition of Kappa, partially offset by the change due to foreign exchange translation adjustments. Refer to Note 2, "Significant Acquisitions", for more information.
13

Identifiable intangible assets with finite lives at June 30, 2022 and December 31, 2021 are summarized as follows:
 Amortization
Period
(in years)
Gross Carrying Amount at
6/30/2022
Accumulated Amortization at 6/30/2022Gross Carrying Amount at 12/31/2021Accumulated Amortization at 12/31/2021
Customer relationships & lists
10-20
$350,523 $180,638 $240,059 $173,489 
Trademarks & trade names
2-17
48,724 30,968 43,116 28,985 
Developed technology
5-12
38,252 14,993 20,234 14,607 
Other
2-18
24,687 16,785 23,921 15,584 
 $462,186 $243,384 $327,330 $232,665 
Amortization of identifiable intangible assets was approximately $5,850 and $11,761 for the three and six months ended June 30, 2022, respectively, and $6,229 and $12,713 for the three and six months ended June 30, 2021, respectively. Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $14,485 for the remainder of 2022, $27,923 for 2023, $19,659 for 2024, $16,117 for 2025, $15,710 for 2026 and $14,949 for 2027. At June 30, 2022 and December 31, 2021, there were no identifiable intangible assets with indefinite useful lives as defined by ASC 350. Identifiable intangible assets are reflected in “Intangible assets with finite lives, net” in the Company’s condensed consolidated balance sheets. There were no changes to the useful lives of intangible assets subject to amortization during the six months ended June 30, 2022 and 2021.

NOTE 7 – EQUITY-METHOD INVESTMENT
In 2013, the Company and Eastman Chemical Company (formerly Taminco Corporation) formed a joint venture (66.66% / 33.34% ownership), St. Gabriel CC Company, LLC, to design, develop, and construct an expansion of the Company’s St. Gabriel aqueous choline chloride plant. The Company contributed the St. Gabriel plant, at cost, and all continued expansion and improvements are funded by the owners. The joint venture became operational as of July 1, 2016. St. Gabriel CC Company, LLC is a Variable Interest Entity (VIE) because the total equity at risk is not sufficient to permit the joint venture to finance its own activities without additional subordinated financial support. Additionally, voting rights (2 votes each) are not proportionate to the owners’ obligation to absorb expected losses or receive the expected residual returns of the joint venture. The Company receives up to 2/3 of the production offtake capacity and absorbs operating expenses approximately proportional to the actual percentage of offtake. The joint venture is accounted for under the equity method of accounting since the Company is not the primary beneficiary as the Company does not have the power to direct the activities of the joint venture that most significantly impact its economic performance.  The Company recognized a loss of $140 and $280 for the three and six months ended June 30, 2022, respectively, and $130 and $274 for the three and six months ended June 30, 2021, respectively, relating to its portion of the joint venture's expenses in other expense. The Company made capital contributions to the investment totaling $75 and $133 for the three and six months ended June 30, 2022, respectively, and received a net return of capital totaling $28 and $15 for the three and six months ended June 30, 2021, respectively. The carrying value of the joint venture at June 30, 2022 and December 31, 2021 was $4,352 and $4,499, respectively, and is recorded in "Other assets."

NOTE 8 – REVOLVING LOAN
On June 27, 2018, the Company and a bank syndicate entered into a credit agreement (the "2018 Credit Agreement"), which replaced the existing credit facility that had provided for a senior secured term loan of $350,000 and a revolving loan of $100,000.  The 2018 Credit Agreement, which expires on June 27, 2023, provides for revolving loans up to $500,000 (collectively referred to as the “loans”).  The loans may be used for working capital, letters of credit, and other corporate purposes and may be drawn upon at the Company’s discretion.  The initial proceeds from the 2018 Credit Agreement were used to repay the outstanding balance of $210,750 on its senior secured term loan, which was due May 2019. During the second quarter of 2022, the Company borrowed an additional $345,000 to fund the Kappa acquisition (see Note 2, "Significant Acquisitions"). As of June 30, 2022 and December 31, 2021, the total balance outstanding on the 2018 Credit Agreement amounted to $433,569 and $108,569, respectively. There are no installment payments required on the revolving loans; they may be voluntarily prepaid in whole or in part without premium or penalty, and all outstanding amounts are due on the maturity date. On July 27, 2022, the Company entered into an Amended and Restated Credit Agreement with lenders in the form of a senior secured revolving credit facility, due July 27, 2027. The Amended and Restated Credit Agreement allows for up to $550,000 of borrowing. The Company used initial proceeds from the Amended and Restated Credit Agreement to repay the outstanding balance of $433,569 on the previous revolving credit facility, due June 2023. In connection with the entering into the Amended and Restated Credit Agreement, the Company also modified its existing interest rate swap under the relief provided for in ASC 848, "Reference Rate Reform" (see Note 20 "Derivative Instruments and Hedging Activities").
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Amounts outstanding under the 2018 Credit Agreement are subject to an interest rate equal to a fluctuating rate as defined by the 2018 Credit Agreement plus an applicable rate.  The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the 2018 Credit Agreement, and the interest rate was 2.538% at June 30, 2022. The Company is also required to pay a commitment fee on the unused portion of the revolving loan, which is based on the Company’s consolidated net leverage ratio as defined in the 2018 Credit Agreement and ranges from 0.15% to 0.275% (0.15% at June 30, 2022).  The unused portion of the revolving loan amounted to $66,431 at June 30, 2022.  The Company is also required to pay, as applicable, letter of credit fees, administrative agent fees, and other fees to the arrangers and lenders.
Costs associated with the issuance of the revolving loans are capitalized and amortized on a straight-line basis over the term of the 2018 Credit Agreement, which is not materially different than the effective interest method.  Costs associated with the issuance of the extinguished debt instrument were capitalized and amortized over the term of the respective financing arrangement using the effective interest method. Capitalized costs net of accumulated amortization totaled $280 and $421 at June 30, 2022 and December 31, 2021, respectively, and are included in other assets on the condensed consolidated balance sheets. Amortization expense pertaining to these costs totaled $70 and $141 for the three and six months ended June 30, 2022 and 2021, respectively, and are included in "Interest expense" in the accompanying condensed consolidated statements of earnings.
The 2018 Credit Agreement contains quarterly covenants requiring the consolidated leverage ratio to be less than a certain maximum ratio and the consolidated interest coverage ratio to exceed a certain minimum ratio.  At June 30, 2022, the Company was in compliance with these covenants.  Indebtedness under the Company’s loan agreements is secured by assets of the Company.

NOTE 9– NET EARNINGS PER SHARE
The following presents a reconciliation of the net earnings and shares used in calculating basic and diluted net earnings per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net Earnings - Basic and Diluted$29,782 $22,731 $58,712 $46,142 
Shares (000s)
Weighted Average Common Shares - Basic31,999 32,232 32,020 32,243 
Effect of Dilutive Securities – Stock Options, Restricted Stock, and Performance Shares315 419 375 410 
Weighted Average Common Shares - Diluted32,314 32,651