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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 September 30, 2024
    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)

5 Paragon Drive, Montvale, NJ 07645
(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 shareBCPCThe Nasdaq Stock Market LLC
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 filer☑Accelerated filer☐ 
 Non-accelerated filer☐Smaller reporting company☐Emerging 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 October 17, 2024, the registrant had 32,507,716 shares of its Common Stock, $.06 2/3 par value, outstanding.

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


Table of Contents
Part I.    Financial Information

Item 1.    Financial Statements
BALCHEM CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share data)
AssetsSeptember 30, 2024December 31, 2023
Current assets:(unaudited) 
Cash and cash equivalents$73,694 $64,447 
Accounts receivable, net of allowances of $1,014 and $908 at September 30, 2024 and December 31, 2023 respectively
120,537 125,284 
Inventories, net118,510 109,521 
Prepaid expenses7,828 7,798 
Other current assets5,419 7,192 
Total current assets325,988 314,242 
Property, plant and equipment, net277,429 276,039 
Goodwill781,109 778,907 
Intangible assets with finite lives, net177,525 191,212 
Right of use assets - operating leases15,547 17,763 
Right of use assets - finance lease1,783 2,101 
Other non-current assets17,563 16,947 
Total assets$1,596,944 $1,597,211 
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable$46,461 $55,503 
Accrued expenses40,019 40,855 
Accrued compensation and other benefits17,551 17,228 
Dividends payable50 25,717 
Income taxes payable1,955 4,967 
Operating lease liabilities - current3,211 3,949 
Finance lease liabilities - current192 272 
Total current liabilities109,439 148,491 
Revolving loan227,000 309,569 
Deferred income taxes50,460 52,046 
Operating lease liabilities - non-current13,089 14,601 
Finance lease liabilities - non-current1,798 1,943 
Other long-term obligations17,932 16,577 
Total liabilities419,718 543,227 
Commitments and contingencies (Note 15)
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; 32,507,716 and 32,254,728 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
2,169 2,152 
Additional paid-in capital168,174 145,653 
Retained earnings992,380 897,488 
Accumulated other comprehensive income14,503 8,691 
Total stockholders' equity1,177,226 1,053,984 
Total liabilities and stockholders' equity$1,596,944 $1,597,211 

See accompanying notes to condensed consolidated financial statements.
3
Table of Contents
BALCHEM CORPORATION
Condensed Consolidated Statements of Earnings
(Dollars in thousands, except per share data)
(unaudited)

 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net sales$239,940 $229,948 $713,680 $693,740 
Cost of sales154,579 153,404 463,811 466,677 
Gross margin85,361 76,544 249,869 227,063 
Operating expenses:
Selling expenses15,557 18,258 51,798 55,125 
Research and development expenses4,329 3,868 12,283 11,113 
General and administrative expenses17,483 10,804 50,323 39,967 
 37,369 32,930 114,404 106,205 
Earnings from operations47,992 43,614 135,465 120,858 
Other expenses, net:
Interest expense, net4,071 6,594 13,709 17,322 
Other expense (income), net28 545 (213)(458)
4,099 7,139 13,496 16,864 
Earnings before income tax expense43,893 36,475 121,969 103,994 
Income tax expense10,056 7,400 27,077 22,099 
Net earnings$33,837 $29,075 $94,892 $81,895 
Net earnings per common share - basic$1.05 $0.91 $2.94 $2.55 
Net earnings per common share - diluted$1.03 $0.90 $2.90 $2.52 

See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Dollars in thousands)
(unaudited)

 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net earnings$33,837 $29,075 $94,892 $81,895 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment21,638 (14,425)5,661 (6,117)
Unrealized loss on cash flow hedge— — — (1,065)
Change in postretirement benefit plans(1)2 151 104 
Other comprehensive income (loss)21,637 (14,423)5,812 (7,078)
Comprehensive income$55,474 $14,652 $100,704 $74,817 


See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2024 and 2023
(Dollars in thousands, except share and per share data)

Total
Stockholders'
Equity		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common StockAdditional
Paid-in
Capital
SharesAmount
Balance - December 31, 2023$1,053,984 $897,488 $8,691 32,254,728$2,152 $145,653 
Net earnings28,986 28,986 — —— — 
Other comprehensive loss(12,563)— (12,563)—— — 
Repurchases of common stock, including
   excise tax 		(5,254)— — (36,122)(2)(5,252)
Shares and options issued under stock plans13,638 — — 204,79413 13,625 
Balance - March 31, 20241,078,791 926,474 (3,872)32,423,4002,163 154,026 
Net earnings32,069 32,069 — —— — 
Other comprehensive loss(3,262)— (3,262)—— — 
Repurchases of common stock, including
   excise tax 		(11)— — (72)— (11)
Shares and options issued under stock plans4,777 — — 11,5301 4,776 
Balance - June 30, 20241,112,364 958,543 (7,134)32,434,8582,164 158,791 
Net earnings33,837 33,837 — —— — 
Other comprehensive income21,637 — 21,637 —— — 
Repurchases of common stock, including
   excise tax		(165)— — (915)— (165)
Shares and options issued under stock plans9,553 — — 73,7735 9,548 
Balance - September 30, 2024$1,177,226 $992,380 $14,503 $32,507,716 $2,169 $168,174 

See accompanying notes to condensed consolidated financial statements.

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BALCHEM CORPORATION
Condensed Consolidated Statements of Changes in Stockholders’ Equity (continued)
For the Three and Nine Months Ended September 30, 2024 and 2023
(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, 2022$938,284 $814,487 $(7,154)32,152,787$2,145 $128,806 
Net earnings22,710 22,710 — —— — 
Other comprehensive income9,013 — 9,013 —— — 
Repurchases of common stock, including
   excise tax		(3,887)— — (28,109)(2)(3,885)
Shares and options issued under stock plans7,296 — — 100,9497 7,289 
Balance - March 31, 2023973,416 837,197 1,859 32,225,6272,150 132,210 
Net earnings30,110 30,110 — —— — 
Other comprehensive loss(1,668)— (1,668)—— — 
Repurchases of common stock, including
   excise tax		(76)— — (567)— (76)
Shares and options issued under stock plans5,121 — — 14,1421 5,120 
Balance - June 30, 20231,006,903 867,307 191 32,239,2022,151 137,254 
Net earnings29,075 29,075 — —— — 
Other comprehensive loss(14,423)— (14,423)—— — 
Repurchases of common stock, including
   excise tax		(102)— — (775)— (102)
Shares and options issued under stock plans3,814 — — 1,717— 3,814 
Balance - September 30, 2023$1,025,267 $896,382 $(14,232)32,240,144$2,151 $140,966 

See accompanying notes to condensed consolidated financial statements.
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BALCHEM CORPORATION
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
 Nine Months Ended
September 30,
 20242023
Cash flows from operating activities:  
Net earnings$94,892 $81,895 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization37,077 40,878 
Stock compensation expense12,787 12,267 
Deferred income taxes(1,918)(2,422)
Provision for doubtful accounts238 1 
Unrealized gain on foreign currency transactions and deferred compensation(730)(778)
Asset impairment and loss on disposal of assets1,479 6,858 
Change in fair value of contingent consideration liability(91)(9,900)
Changes in assets and liabilities
Accounts receivable5,220 2,606 
Inventories(8,738)2,545 
Prepaid expenses and other current assets1,199 (2,703)
Accounts payable and accrued expenses(9,734)(6,429)
Income taxes(3,110)(7,742)
Other1,111 (721)
Net cash provided by operating activities129,682 116,355 
Cash flows from investing activities:
Capital expenditures and intangible assets acquired(22,936)(26,177)
Cash paid for acquisitions, net of cash acquired— (1,252)
Proceeds from sale of assets 272 1,881 
Proceeds from settlement of net investment hedge— 2,740 
Investment in affiliates(113)(140)
Net cash used in investing activities(22,777)(22,948)
Cash flows from financing activities:
Proceeds from revolving loan26,000 18,000 
Principal payments on revolving loan(108,569)(78,000)
Principal payments on finance lease(169)(166)
Proceeds from stock options exercised15,084 3,888 
Dividends paid(25,572)(22,872)
Repurchases of common stock(5,376)(4,025)
Net cash used in financing activities(98,602)(83,175)
Effect of exchange rate changes on cash944 160 
Increase in cash and cash equivalents9,247 10,392 
Cash and cash equivalents beginning of period64,447 66,560 
Cash and cash equivalents end of period$73,694 $76,952 

See accompanying notes to condensed consolidated financial statements.
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BALCHEM CORPORATION
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, 2023 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, 2023. The condensed consolidated financial statements reflect the operations of Balchem Corporation and its subsidiaries (the "Company" or "Balchem"). 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 nine months ended September 30, 2024 are not necessarily indicative of the operating results expected for the full year or any interim period.

Recent Accounting Pronouncements

Recently Issued Accounting Standards
In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures." The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid. The amendment is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment in this update should be applied on a prospective basis, with retrospective application permitted. The Company is in the process of evaluating the impact that the adoption of ASU 2023-09 will have to the financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures." The ASU expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. The ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning December 15, 2024. Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented. The adoption of this guidance will not affect the Company's consolidated results of operations, financial position or cash flows. The Company is currently evaluating the effect the guidance will have on its disclosures.

Recently Adopted Accounting Standards
In August 2023, the FASB issued ASU 2023-05, "Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement." The new guidance applies to the formation of a joint venture and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to reduce diversity in practice and is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. While ASU 2023-05 is not currently applicable to Balchem, the Company will apply this guidance in future reporting periods after the guidance is effective to any future arrangements meeting the definition of a joint venture.


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NOTE 2 - STOCKHOLDERS' EQUITY
Stock-Based Compensation
The Company’s results for the three and nine months ended September 30, 2024 and 2023 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 September 30,Nine Months Ended September 30,
2024202320242023
Cost of sales$441 $477 $1,266 $1,436 
Operating expenses3,710 3,272 11,521 10,831 
Net earnings(3,188)(2,884)(9,815)(9,447)

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 omnibus incentive plan ("the Plan") allows 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 plan. 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 September 30, 2024, the Plan had 829,101 shares available for future awards, which included an additional 800,000 shares approved by the Company's shareholders during its annual meeting of shareholders held on June 22, 2023. Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three to five years for stock options, three years for employee restricted stock awards, three years for employee 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 nine months ended September 30, 2024 and 2023 is summarized below:
For the Nine Months Ended September 30, 2024Shares (000s)Weighted
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 20231,078 $104.38 $47,889 
Granted113 143.43 
Exercised(198)75.94 
Forfeited(2)137.06 
Canceled— — 
Outstanding as of September 30, 2024991 $114.49 $60,932 6.0
Exercisable as of September 30, 2024626 $99.39 $47,926 4.6
For the Nine Months Ended September 30, 2023Shares (000s)Weighted
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 20221,045 $99.82 $27,221 
Granted109 138.09 
Exercised(47)82.70 
Forfeited(11)131.79 
Canceled(1)138.07 
Outstanding as of September 30, 20231,095 $104.00 $26,825 5.9
Exercisable as of September 30, 2023728 $88.01 $26,512 4.6
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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 weighted average fair values of the stock options granted under the Plan were calculated using either the Black-Scholes model or the Binomial model, whichever was deemed to be most appropriate. The fair value of each option grant was estimated on the date of the grant using the following weighted average assumptions for the nine months ended September 30, 2024 and 2023, respectively: dividend yields of 0.6% and 0.5%; expected volatilities of 28% and 28%; risk-free interest rates of 4.1% and 3.9% and expected lives of 5.0 years and 4.8 years.
The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior. Expected volatilities are 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.

Other information pertaining to option activity during the three and nine months ended September 30, 2024 and 2023 is as follows:

 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Weighted-average fair value of options granted$— $— $44.52 $40.91 
Total intrinsic value of stock options exercised ($000s)$5,372 $100 $16,693 $2,280 
Non-vested restricted stock activity for the nine months ended September 30, 2024 and 2023 is summarized below:
Nine Months Ended September 30,
20242023
Shares (000s)Weighted
Average Grant
Date Fair
Value		Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 31116 $133.06 122 $124.42 
Granted50 147.49 39 137.48 
Vested(34)120.01 (34)111.48 
Forfeited(3)141.23 (4)128.06 
Non-vested balance as of September 30129 $141.94 123 $132.01 

Non-vested performance share activity for the nine months ended September 30, 2024 and 2023 is summarized below:

Nine Months Ended September 30,
20242023
Shares (000s)Weighted
Average Grant
Date Fair
Value		Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 3176 $135.25 70 $127.69 
Granted47 152.28 42 139.66
Vested(44)106.57 (36)98.84
Forfeited— — — —
Non-vested balance as of September 3079 $150.73 76 $135.25 

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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 of the grant at the date of grant. A Monte-Carlo simulation has been used to estimate the fair value. The assumptions used in the fair value determination were risk free interest rates of 4.2% and 4.2%; dividend yields of 0.0% and 0.5%; volatilities of 25% and 32%; and initial TSR’s of 10.3% and 4.2%, in each case for the nine months ended September 30, 2024 and 2023, 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. Grants may be subject to a mandatory holding period of one year from the vesting date. For PS grants made for the 2024-2026 performance period, grants are subject to such holding period.

As of September 30, 2024 and 2023, there were $24,300 and $22,470, respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans. As of September 30, 2024, the unrecognized 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, 2024 will be approximately $16,996.
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 3,140,215 shares have been repurchased. 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. Open market repurchases of common stock could be made pursuant to a trading plan established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. The Company also repurchases (withholds) shares from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan. Such repurchases of shares from employees are funded with existing cash on hand. During the nine months ended September 30, 2024 and 2023, the Company purchased 37,109 and 29,451 shares, respectively, from employees in connection with the tax settlement of vested shares and/or exercised stock options under the Company's omnibus incentive plan at an average cost of $144.89 and $136.69, respectively.


NOTE 3 – INVENTORIES
Inventories, net of reserves at September 30, 2024 and December 31, 2023 consisted of the following:

September 30, 2024December 31, 2023
Raw materials$43,109 $39,517 
Work in progress5,364 3,960 
Finished goods70,037 66,044 
Total inventories$118,510 $109,521 

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NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at September 30, 2024 and December 31, 2023 are summarized as follows:
 September 30, 2024December 31, 2023
Land$11,854 $11,787 
Building104,393 104,363 
Equipment312,143 312,704 
Construction in progress74,296 59,981 
 502,686 488,835 
Less: accumulated depreciation225,257 212,796 
Property, plant and equipment, net$277,429 $276,039 

In accordance with Topic 360, the Company reviews long-lived assets for impairment whenever events indicate that the carrying amount of the assets may not be fully recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset, which is generally based on discounted cash flows. Included in "General and administrative expenses" was $521 of restructuring-related impairment charges related to an asset that was held for sale for both the three and nine months ended September 30, 2024. Included in "General and administrative expenses" were $1,618 and $7,764 of restructuring-related impairment and asset disposal charges for the three and nine months ended September 30, 2023, respectively.


NOTE 5 - INTANGIBLE ASSETS
The Company had goodwill in the amount of $781,109 and $778,907 as of September 30, 2024 and December 31, 2023, respectively, subject to the provisions of ASC 350, “Intangibles-Goodwill and Other.” The increase in goodwill is due to changes in foreign currency translation.
Identifiable intangible assets with finite lives at September 30, 2024 and December 31, 2023 are summarized as follows:

 Amortization
Period
(in years)		Gross Carrying Amount at September 30, 2024Accumulated Amortization at September 30, 2024Gross Carrying Amount at December 31, 2023Accumulated Amortization at December 31, 2023
Customer relationships & lists
10-20
$363,563 $220,718 $362,032 $209,651 
Trademarks & trade names
2-17
50,353 40,225 50,286 37,773 
Developed technology
5-12
41,396 18,972 41,184 17,516 
Other
2-18
26,131 24,003 25,733 23,083 
 $481,443 $303,918 $479,235 $288,023 
Amortization of identifiable intangible assets was approximately $3,795 and $15,380 for the three and nine months ended September 30, 2024, respectively, and $6,947 and $21,132 for the three and nine months ended September 30, 2023, respectively. Assuming no change in the gross carrying value of identifiable intangible assets, estimated amortization expense is $3,747 for the remainder of 2024, $15,659 for 2025, $15,444 for 2026, $14,916 for 2027, $14,517 for 2028 and $14,091 for 2029. At September 30, 2024 and December 31, 2023, 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” on the Company’s condensed consolidated balance sheets. There were no changes to the useful lives of intangible assets subject to amortization during the nine months ended September 30, 2024 and 2023.

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NOTE 6 - EQUITY METHOD INVESTMENT
In 2013, the Company and Eastman Chemical Company 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 generally receives up to 2/3 of the production offtake capacity, which (percentage of offtake) may be adjusted from time to time to the extent the owners agree as such, 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 $124 and $367 for the three and nine months ended September 30, 2024, respectively, and $118 and $396 for the three and nine months ended September 30, 2023, respectively, relating to its portion of the joint venture's expenses in other expense. The Company made capital contributions to the investment totaling $33 and $113 for the three and nine months ended September 30, 2024, respectively, and $69 and $141 for the three and nine months ended September 30, 2023, respectively. The carrying value of the joint venture at September 30, 2024 and December 31, 2023 was $3,822 and $4,076, respectively, and is recorded in "Other non-current assets" on the condensed consolidated balance sheets.


NOTE 7 – REVOLVING LOAN
On July 27, 2022, the Company entered into an Amended and Restated Credit Agreement (the "2022 Credit Agreement") with certain lenders in the form of a senior secured revolving credit facility, due on July 27, 2027. The 2022 Credit Agreement allows for up to $550,000 of borrowing. 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. As of September 30, 2024 and December 31, 2023, the total balance outstanding on the 2022 Credit Agreement amounted to $227,000 and $309,569, 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.
Amounts outstanding under the 2022 Credit Agreement are subject to an interest rate equal to a fluctuating rate as defined by the 2022 Credit Agreement plus an applicable rate. The applicable rate is based upon the Company’s consolidated net leverage ratio, as defined in the 2022 Credit Agreement, and the interest rate was 6.070% at September 30, 2024. 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 2022 Credit Agreement and ranges from 0.150% to 0.225% (0.175% at September 30, 2024). The unused portion of the revolving loan amounted to $323,000 at September 30, 2024. 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 2022 Credit Agreement, which is not materially different than the effective interest method. Capitalized costs net of accumulated amortization were $814 and $1,030 at September 30, 2024 and December 31, 2023, respectively, and are included in "Other non-current assets" on the condensed consolidated balance sheets. Amortization expense pertaining to these costs totaled $72 and $216 for the three and nine months ended September 30, 2024, respectively, and $71 and $215 for the three and nine months ended September 30, 2023, respectively, and are included in "Interest expense, net" in the accompanying condensed consolidated statements of earnings.
The 2022 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 September 30, 2024, the Company was in compliance with these covenants. Indebtedness under the Company’s loan agreements is secured by assets of the Company.

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NOTE 8– 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
September 30,		Nine Months Ended
September 30,
2024202320242023
Net Earnings - Basic and Diluted$33,837 $29,075 $94,892 $81,895 
Shares (000s)
Weighted Average Common Shares - Basic32,373 32,116 32,311 32,102 
Effect of Dilutive Securities – Stock Options, Restricted Stock, and Performance Shares410 360 375 338 
Weighted Average Common Shares - Diluted32,783 32,476 32,686 32,440 
Net Earnings Per Share - Basic$1.05 $0.91 $2.94 $2.55 
Net Earnings Per Share - Diluted$1.03 $0.90 $2.90 $2.52 
The number of anti-dilutive shares were 189,830 and 326,020 for the three and nine months ended September 30, 2024, respectively, and 332,339 and 355,419 for the three and nine months ended September 30, 2023, respectively. Anti-dilutive shares could potentially dilute basic earnings per share in future periods and therefore, were not included in diluted earnings per share.


NOTE 9 – INCOME TAXES
The Company’s effective tax rate for the three months ended September 30, 2024 and 2023, was 22.9% and 20.3%, respectively, and 22.2% and 21.3% for the nine months ended September 30, 2024 and 2023, respectively. The higher effective tax rate for both the three and nine months ended September 30, 2024 was primarily due to lower tax benefits from stock-based compensation and certain higher state taxes.
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews its deferred tax assets for recoverability and would establish a valuation allowance if it believed that such assets may not be recovered, taking into consideration historical operating results, expectations of future earnings, changes in its operations and the expected timing of the reversals of existing temporary differences.
The Company accounts for uncertainty in income taxes utilizing ASC 740-10, "Income Taxes". ASC 740-10 clarifies whether or not to recognize assets or liabilities for tax positions taken that may be challenged by a tax authority. It prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken or expected to be taken. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosures. The application of ASC 740-10 requires judgment related to the uncertainty in income taxes and could impact our effective tax rate.
The Company files income tax returns in the U.S. and in various states and foreign countries. As of September 30, 2024, in the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2019. The Company had approximately $4,825 and $4,650 of unrecognized tax benefits, which are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets, as of September 30, 2024 and December 31, 2023, respectively. The Company includes interest expense or income as well as potential penalties on uncertain tax positions as a component of "Income tax expense" in the condensed consolidated statements of earnings. Total accrued interest and penalties related to uncertain tax positions at September 30, 2024 and December 31, 2023 were approximately $1,588 and $1,413, respectively, and are included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets.
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The European Union ("EU") member states formally adopted the EU's Pillar Two Directive on December 15, 2022, which was established by the Organization for Economic Co-operation and Development. Pillar Two generally provides for a 15 percent minimum effective tax rate for the jurisdictions where multinational enterprises operate. While the Company does not anticipate that this will have a material impact on its tax provision or effective tax rate, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.


NOTE 10 – SEGMENT INFORMATION
Balchem Corporation reports three reportable segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. Sales and production of products outside of our reportable segments and other minor business activities are included in "Other and Unallocated".
The segment information is summarized as follows:

Business Segment AssetsSeptember 30,
2024		December 31,
2023
Human Nutrition and Health$1,183,987 $1,180,527 
Animal Nutrition and Health154,905 166,994 
Specialty Products166,888 168,307 
Other and Unallocated (1)
91,164 81,383 
Total$1,596,944 $1,597,211 


Business Segment Net Sales		Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Human Nutrition and Health$152,283 $144,455 $452,955 $412,777 
Animal Nutrition and Health52,906 53,944 156,384 180,162 
Specialty Products33,191 30,004 99,898 94,961 
Other and Unallocated (2)
1,560 1,545 4,443 5,840 
Total$239,940 $229,948 $713,680 $693,740 


Business Segment Earnings Before Income Taxes		Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Human Nutrition and Health$35,578 $31,275 $102,202 $77,209 
Animal Nutrition and Health3,529 5,070 8,282 22,230 
Specialty Products10,516 8,740 29,943 25,984 
Other and Unallocated (2)
(1,631)(1,471)(4,962)(4,565)
Interest and other expenses(4,099)(7,139)(13,496)(16,864)
Total$43,893 $36,475 $121,969 $103,994 


Depreciation/Amortization		Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Human Nutrition and Health$6,803 $9,640 $24,729 $28,567 
Animal Nutrition and Health2,068 2,117 6,266 5,885 
Specialty Products1,770 1,831 5,314 5,440 
Other and Unallocated (2)
262 216 768 986 
Total$10,903 $13,804 $37,077 $40,878 
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Capital Expenditures		Nine Months Ended September 30,
 20242023
Human Nutrition and Health$11,850 $18,745 
Animal Nutrition and Health8,459 4,247 
Specialty Products1,948 2,663 
Other and Unallocated (2)
255 178 
Total$22,512 $25,833 
(1) Other and Unallocated assets consist of certain cash, capitalized loan issuance costs, other assets, investments, and income taxes, which the Company does not allocate to its individual business segments. It also includes assets associated with a few minor businesses which individually do not meet the quantitative thresholds for separate presentation.
(2) Other and Unallocated consists of a few minor businesses which individually do not meet the quantitative thresholds for separate presentation and corporate expenses that have not been allocated to a segment. Unallocated corporate expenses consist of: (i) Transaction and integration costs of $223 and $795 for the three and nine months ended September 30, 2024, respectively, and $384 and $1,600 for the three and nine months ended September 30, 2023, respectively, and (ii) Unallocated amortization expense of $0 and $0 for the three and nine months ended September 30, 2024, respectively, and $0 and $312 for the three and nine months ended September 30, 2023, respectively, related to an intangible asset in connection with a company-wide ERP system implementation.


NOTE 11 – REVENUE
Revenue Recognition
Revenues are recognized when control of the promised goods is transferred to customers, in an amount that reflects the consideration the Company expects to realize in exchange for those goods.
The following table presents revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues.

Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Product Sales Revenue$239,522 $229,274 $712,374 $691,507 
Royalty Revenue418 674 1,306 2,233 
Total Revenue$239,940 $229,948 $713,680 $693,740 

The following table presents revenues disaggregated by geography, based on the shipping addresses of customers:

Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
United States$181,990 $176,765 $541,768 $515,099 
Foreign Countries57,950 53,183 171,912 178,641 
Total Revenue$239,940 $229,948 $713,680 $693,740 


Product Sales Revenues
The Company’s primary operation is the manufacturing and sale of health and nutrition ingredient products, in which the Company receives an order from a customer and fulfills that order. The Company’s product sales are considered point-in-time revenue.

Royalty Revenues
Royalty revenue consists of agreements with customers to use the Company’s intellectual property in exchange for a sales-based royalty. Royalties are considered over time revenue and are recorded in the Human Nutrition and Health segment.
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Contract Liabilities
The Company records contract liabilities when cash payments are received or due in advance of performance, including amounts which are refundable.
The Company’s payment terms vary by the type and location of customers and the products offered. The term between invoicing and when payment is due is not significant. For certain products or services and customer types, the Company requires payment before the products are delivered to the customer.
Practical Expedients and Exemptions
The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling and marketing expenses.
The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for products shipped.


NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the nine months ended September 30, 2024 and 2023 for income taxes and interest is as follows:
Nine Months Ended September 30,
20242023
Income taxes$31,575 $30,899 
Interest$14,500 $20,085 


NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The changes in accumulated other comprehensive income (loss) were as follows:

 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net foreign currency translation adjustment$21,638 $(14,425)$5,661 $(6,117)
Net change of cash flow hedge (see Note 19 for further
   information)
Unrealized loss on cash flow hedge— — — (1,406)
Tax— — — 341 
Net of tax— — — (1,065)
Net change in postretirement benefit plan (see Note 14 for
   further information)
Amortization of (gain) loss(2)2 (7)6 
Prior service loss arising during the period— — 206 132 
Total before tax(2)2 199 138 
Tax1 — (48)(34)
Net of tax(1)2 151 104 
Total other comprehensive income (loss)$21,637 $(14,423)$5,812 $(7,078)
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Included in "Net foreign currency translation adjustment" were losses of $0 and $1,455 related to a net investment hedge, which were net of tax benefits of $0 and $1,114 for the three and nine months ended September 30, 2023, respectively. The Company settled its derivative instruments on their maturity date of June 27, 2023. See Note 19, Derivative Instruments and Hedging Activities.

Accumulated other comprehensive income (loss) at September 30, 2024 and December 31, 2023 consisted of the following:

 Foreign currency
translation
adjustment		Cash flow hedgePostretirement
benefit plan		Total
Balance December 31, 2023$8,408 $— $283 $8,691 
Other comprehensive income5,661 — 151 5,812 
Balance September 30, 2024$14,069 $— $434 $14,503 


NOTE 14 – EMPLOYEE BENEFIT PLANS
Defined Contribution Plans
The Company sponsors one 401(k) savings plan for eligible employees, which allows participants to make pretax or after tax contributions and the Company matches certain percentages of those contributions. The plan also has a discretionary profit sharing portion and matches 401(k) contributions with shares of the Company’s Common Stock. All amounts contributed to the plan are deposited into a trust fund administered by independent trustees.
Postretirement Medical Plans
The Company provides postretirement benefits in the form of two unfunded postretirement medical plans; one that is under a collective bargaining agreement and covers eligible retired employees of the Verona facility and one for officers of the Company pursuant to the Balchem Corporation Officer Retiree Program.
Net periodic benefit costs for such retirement medical plans were as follows:

 Nine Months Ended September 30,
 20242023
Service cost$84 $81 
Interest cost41 46 
Amortization of (gain) loss(7)6 
Net periodic benefit cost$118 $133 

The amounts recorded for these obligations on the Company’s condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 are $1,381 and $1,395, respectively, and are included in "Other long-term obligations" on the Company's condensed consolidated balance sheets. These plans are unfunded and approved claims are paid from Company funds. Historical cash payments made under such plans have typically been less than $200 per year.

Defined Benefit Pension Plans
On May 27, 2019, the Company acquired Chemogas Holding NV, a privately held specialty gases company headquartered in Grimbergen, Belgium ("Chemogas"), which has an unfunded defined benefit pension plan. The plan provides for the payment of a lump sum at retirement or payments in case of death of the covered employees. The amounts recorded for these obligations on the Company's condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 were $405 and $420, respectively, and were included in "Other long-term obligations" on the Company's condensed consolidated balance sheets.

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Net periodic benefit costs for such benefit pension plans were as follows:
Nine Months Ended September 30,
 20242023
Service cost with interest to end of year$58 $46 
Interest cost43 47 
Expected return on plan assets(32)(30)
Total net periodic benefit cost$69 $63 

Deferred Compensation Plan
The Company provides an unfunded, nonqualified deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees. Assets of the plan are held in a rabbi trust, and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company. The deferred compensation liability was $11,432 as of September 30, 2024, of which $11,411 was included in "Other long-term obligations" and $21 was included in "Accrued compensation and other benefits" on the Company's condensed consolidated balance sheets. The deferred compensation liability was $10,188 as of December 31, 2023 and was included in "Other long-term obligations" on the Company’s condensed consolidated balance sheets. The related assets of the irrevocable trust funds (also known as "rabbi trust funds") were $11,429 and $10,188 as of September 30, 2024 and December 31, 2023, respectively, and were included in "Other non-current assets" on the Company's condensed consolidated balance sheets.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

The Company is obligated to make rental payments under non-cancelable operating and finance leases. Aggregate future minimum rental payments required under these leases at September 30, 2024 are disclosed in Note 18, Leases.
The Company’s Verona, Missouri facility, while held by a prior owner, Syntex Agribusiness, Inc. (“Syntex”), was designated by the U.S. Environmental Protection Agency (the "EPA") as a Superfund site and placed on the National Priorities List in 1983 because of dioxin contamination on portions of the site. Remediation was conducted by Syntex under the oversight of the EPA and the Missouri Department of Natural Resources. The Company is indemnified by the sellers under its May 2001 asset purchase agreement covering its acquisition of the Verona, Missouri facility for potential liabilities associated with the Superfund site. One of the sellers, in turn, has the benefit of certain contractual indemnification by Syntex in relation to the implementation of the above-described Superfund remedy. In June 2023, in response to a Special Notice Letter received from the EPA in 2022, BCP Ingredients, Inc. ("BCP"), the Company's subsidiary that operates the site, Syntex, EPA, and the State of Missouri entered into an Administrative Settlement Agreement and Order on Consent (“ASAOC”) for a focused remedial investigation/feasibility study ("RI/FS") under which (a) BCP will conduct a source investigation of potential source(s) of releases of 1,4-dioxane and chlorobenzene at a portion of the site and (b) BCP and Syntex will complete a RI/FS to determine a potential remedy, if any is required. Activities under the ASAOC are underway and are expected to continue for some period of time.
Separately, in June 2022, the EPA conducted an inspection of BCP’s Verona, Missouri facility (“2022 EPA Inspection”) which was followed by BCP entering into an Administrative Order for Compliance on Consent (“AOC”) with the EPA in relation to its risk management program at the Verona facility. Further, in January 2023, BCP entered into an Amended AOC with the EPA whereby the parties agreed to the extension of certain timelines. BCP timely completed all requirements under the Amended AOC. In November 2023, BCP received a notice from the Environment and Natural Resources Division of the U.S Department of Justice (“DOJ”) primarily related to the 2022 EPA Inspection, which extended the opportunity to discuss alleged violations of Sections 112(r)(7) of the Clean Air Act and regulations in 40 C.F.R. Part 68, commonly known as the Risk Management Plan Rule (“RMP Rule”). BCP has engaged in, and intends to continue to participate in, such discussions in 2024. In connection with the 2022 EPA Inspection, the Company believes that a loss contingency in this matter is probable and reasonably estimable and has recorded a loss contingency in an amount that is not material to its financial performance or operations.
In addition to the above, from time to time, the Company is a party to various legal proceedings, litigation, claims and assessments. While it is not possible to predict the ultimate disposition of each of these matters, management believes that the ultimate outcome of such matters will not have a material effect on the Company's consolidated financial position, results of operations, liquidity or cash flows.

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NOTE 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held for trading purposes. The Company estimates that the fair value of all financial instruments at September 30, 2024 and December 31, 2023 does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed consolidated balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The carrying value of debt approximates fair value as the interest rate is based on market and the Company’s consolidated leverage ratio. The Company’s financial instruments also include cash equivalents, accounts receivable, accounts payable, and accrued liabilities, which are carried at cost and approximate fair value due to the short-term maturity of these instruments. Cash and cash equivalents at September 30, 2024 and December 31, 2023 includes $10,088 and $959 in money market funds and other interest-bearing deposit accounts, respectively.
Non-current assets at September 30, 2024 and December 31, 2023 included $11,429 and $10,188, respectively, of rabbi trust funds related to the Company's deferred compensation plan. The money market and rabbi trust funds are valued using level one inputs, as defined by ASC 820, “Fair Value Measurement.”


NOTE 17 – RELATED PARTY TRANSACTIONS
The Company provides services under a contractual agreement to St. Gabriel CC Company, LLC. These services include accounting, information technology, quality control, and purchasing services, as well as operation of the St. Gabriel CC Company, LLC plant. The Company also sells raw materials to St. Gabriel CC Company, LLC. These raw materials are used in the production of finished goods that are, in turn, sold by Saint Gabriel CC Company, LLC to the Company for resale to unrelated parties. As such, the sale of these raw materials to St. Gabriel CC Company, LLC in this scenario lacks economic substance and therefore the Company does not include them in net sales within the condensed consolidated statements of earnings.
Payments for the services the Company provided amounted to $1,109 and $3,321 for the three and nine months ended September 30, 2024, respectively, and $1,094 and $3,294 for the three and nine months ended September 30, 2023, respectively. The raw materials purchased and subsequently sold amounted to $7,616 and $21,249 for the three and nine months ended September 30, 2024, respectively, and $7,274 and $27,069 for the three and nine months ended September 30, 2023, respectively. These services and raw materials are primarily recorded in cost of goods sold, net of the finished goods received from St. Gabriel CC Company, LLC of $5,766 and $16,450 during the three and nine months ended September 30, 2024, respectively, and $5,903 and $22,198 for the three and nine months ended September 30, 2023, respectively. At September 30, 2024 and December 31, 2023, the Company had receivables of $2,446 and $8,314, respectively, recorded in accounts receivable from St. Gabriel CC Company, LLC for services rendered and raw materials sold. At September 30, 2024 and December 31, 2023, the Company had payables of $1,588 and $6,050, respectively, recorded in accounts payable for finished goods received from St. Gabriel CC Company, LLC. The Company had payables in the amount of $296 and $329, respectively, related to non-contractual monies owed to St. Gabriel CC Company, LLC, recorded in accounts payable as of September 30, 2024 and December 31, 2023.

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NOTE 18 – LEASES
The Company has both real estate leases and equipment leases. The main types of equipment leases include forklifts, trailers, printers and copiers, railcars, and trucks. Leases are categorized as both operating leases and finance leases. The Company elected the practical expedient to combine lease and non-lease components and recognizes the combined amount on the condensed consolidated balance sheet. Management determined that since the Company has a centralized treasury function, the parent company would either fund or guarantee a subsidiary's loan for borrowing over a similar term. As such, the Company's management determined it is appropriate to utilize a corporate based borrowing rate for all locations. The Company developed four tranches of leases based on lease terms and these tranches reflect the composition of the current lease portfolio. The Company's borrowing history shows that interest rates of a term loan or a line of credit depend on the duration of the loan rather than the nature of the assets purchased by those funds. Based on this understanding, the Company elected to use a portfolio approach to discount rates, applying corporate rates to the tranches of leases based on lease terms. Based on the Company's risk rating, the Company applied the following discount rates for new leases entered into during the third quarter of 2024: (1) 1-2 years, 6.75% (2) 3-4 years, 7.34% (3) 5-9 years, 7.68% and (4) 10+ years, 8.40%.
Right of use assets and lease liabilities at September 30, 2024 and December 31, 2023 are summarized as follows:

Right of use assetsSeptember 30, 2024December 31, 2023
Operating leases$15,547 $17,763 
Finance leases1,783 2,101 
Total$17,330 $19,864 

Lease liabilities - currentSeptember 30, 2024December 31, 2023
Operating leases$3,211 $3,949 
Finance leases192 272 
Total$3,403 $4,221 

Lease liabilities - non-currentSeptember 30, 2024December 31, 2023
Operating leases$13,089 $14,601 
Finance leases1,798 1,943 
Total$14,887 $16,544 


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For the three and nine months ended September 30, 2024 and 2023, the Company's total lease costs were as follows, which included amounts recognized in earnings, amounts capitalized on the balance sheets, and the cash flows arising from lease transactions:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Lease Cost
Operating lease cost$1,365 $1,326 $4,057 $3,972 
Finance lease cost
Amortization of ROU asset59 61 179 181 
Interest on lease liabilities25 29 79 87 
Total finance lease84 90 258 268 
Total lease cost$1,449 $1,416 $4,315 $4,240 
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$1,362 $1,232 $4,056 $3,441 
Operating cash flows from finance leases25 29 79 87 
Financing cash flows from finance leases58 56 169 166 
$1,445 $1,317 $4,304 $3,694 
Right-of-use assets obtained in exchange for new operating lease liabilities, net of right-of-use assets disposed$61 $1,110 $1,225 $3,715 
Weighted-average remaining lease term - operating leases9.18 years5.49 years9.18 years5.49 years
Weighted-average remaining lease term - finance leases8.62 years9.29 years8.62 years9.29 years
Weighted-average discount rate - operating leases7.6 %4.3 %7.6 %4.3 %
Weighted-average discount rate - finance leases5.1 %5.0 %5.1 %5.0 %
Rent expense charged to operations under operating lease agreements for the three and nine months ended September 30, 2024 aggregated to approximately $1,365 and $4,057, respectively, and $1,326 and $3,972 for the three and nine months ended September 30, 2023, respectively.
Aggregate future minimum rental payments required under all non-cancelable operating and finance leases at September 30, 2024 are as follows:

Year 
October 1, 2024 to December 31, 2024$1,418 
20254,717 
20264,112 
20272,947 
20282,293 
20291,841 
Thereafter5,828