# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NASDAQ_BCPC_2020/NASDAQ_BCPC_2020.mmd` · pages 2-8_

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Dear Fellow Shareholders:

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As I reflect on 2020, Balchem truly had a remarkable year in what was an unprecedented and extraordinary time. Maneuvering our way through the challenges and uncertainties of the COVID-19 pandemic was our primary focus throughout the year. One of our five core values is "Playing to Win," and we certainly played to win in 2020! The Balchem team stepped up to face these challenges head-on with creativity, determination, and resilience. I could not be more pleased with our response to the pandemic, and ultimately our ability to deliver record financial results, significantly improved year over year safety performance, solid progress on our key strategic growth platforms, and meaningful improvements with our Environmental, Social, and

Governance (ESG) initiatives. None of these accomplishments would have been possible without the incredible team of employees we have at Balchem. I would like to thank each and every one of our employees for all of their contributions in 2020, as well as our board of directors who could not have been more helpful and assuring throughout this unusual year, and our customers, suppliers, partners and shareholders, for their continued commitment and support. Thank you all very much!

We delivered record financial results in 2020. We achieved record sales of \(703.6 million, up 9.3% over the prior year, with record sales in all three of our business segments; Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. We also delivered record Adjusted Net Earnings of \)107.8 million compared to \(103.7 million for the prior year, an increase of \)4.1 million or 4.0 percent, resulting in Adjusted Earnings Per Share of \(3.32. Adjusted EBITDA of \)174.2 million, an increase of \(14.2 million or 8.9 percent from the prior year, was also a record. In addition, we generated strong record Free Cash Flow of \)117.7 million in 2020 which also reflects investing \(32.8 million in capital projects to support our continued growth. We are particularly proud of the fact that 2020 was our 10th consecutive year of sales and Adjusted EPS growth!

In 2020, we significantly improved our safety performance. Despite the distractions associated with the pandemic, Balchem achieved a new safety milestone with a full year Total Recordable Injury Rate of 1.04, a 21% improvement over the prior year. We have embraced a Zero Incident Culture and will not be satisfied until we become injury free, but we are very pleased with our continued progress toward that ultimate goal. Over the course of 2020, we increased participation and engagement in our behavior-based safety program; Stop Taking Avoidable Risks (STAR), while accelerating our investments in automation and reducing our dependency on manual tasks. We also continued to shift our focus to injury prevention by increasingly looking proactively at near misses, while emphasizing leadership and management accountability for employee safety.

In 2020, we also continued to make solid progress on our key strategic growth initiatives. Within our Human Nutrition and Health business segment, we continued to advance the science around the nutritional and health benefits of our existing and future products. A number of outside academic research projects initiated and supported by Balchem were completed in 2020 and were in various stages of data analysis, manuscript preparation or submission for publication. This research explores the benefits of prenatal choline in neurological development and cognition, the positive relationship between choline and DHA, and the possibilities of establishing a biomarker for choline in the National Institutes of Health (NIH) funded study, all in support of our VitaCholine \( ^{\circledR} \)  brand. In 2020, we also completed GRAS, or generally recognized as safe, self-affirmations for chelated Magnesium, Zinc and Calcium sold under the Albion \( ^{\circledR} \)  brand, further advancing our leading position in this area and opening new applications for our products. We also strengthened our marketing capabilities to accelerate awareness around existing science and to better showcase to our customers how they can incorporate and benefit from our products.

Within our Animal Nutrition and Health business segment, our scientists have continued to pursue the expanded application of our innovative products, across both the ruminant and monogastric sectors, in areas such as mature cow and calf immunity, neonatal in-utero programming through choline supplementation, and greatly improved formulations for swine and poultry diets with better analysis and formulation for natural levels of choline within common feedstuffs. We successfully continued to drive penetration of ReaShure \( ^{®} \) , our market leading microencapsulated rumen protected

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Choline, and in 2020 our efforts once again drove double digit growth for this product, helping to push our North American market penetration higher by several hundred basis points. We also had great success with Aminoshure \( ^{®} \)  XM, our micro-encapsulated rumen protected Methionine, that continues to capture market share by offering a superior value proposition to our customers. Within our companion animal portfolio of products and solutions, we captured significant growth for our PetShure \( ^{®} \)  line of products, leveraging our microencapsulation and inclusion technologies, and enabling our customers to further innovate in the pet food space. We also strengthened our marketing capabilities within the Animal Nutrition and Health segment, launching enhanced e-learning podcasts and webinars focused on important animal nutrition topics. Our educational and science-based webinars were hugely successful, attracting high attendance and enabling us to effectively reach and interact with an expanded target audience despite the pandemic.

Within our Specialty Products business segment, our plant nutrition business returned to healthy growth levels, benefiting from a good growing season in North America, but also new crop applications, geographic expansion, and very significant growth achieved from our organic line of products that we had recently bolstered by the addition of a new organic potassium sold under the Metalosate \( ^{®} \)  brand.

Within the year, we also completed the integration of our two 2019 acquisitions, Chemogas and Zumbro River Brand, which are now fully integrated both from a business and functional perspective. We have delivered the targeted synergies that we were hoping to achieve, and we are very pleased having them be part of the Balchem family. In 2020, we also made a small investment in the emerging area of precision nutrition with an investment in a leading start-up gene guided nutrition company, called SNP Therapeutics. Balchem is a strategic investor with SNP and we have secured a commercial agreement for our minerals and nutrients portfolio for when the company ultimately commercializes its personalized solutions.

Over the course of the last year or so, we significantly progressed our Environmental, Social, and Governance (ESG) initiatives as well. We have remained true to our higher purpose of; making the world a healthier place while maintaining focus on our two primary objectives; providing innovative solutions for the health and nutritional needs of the world and operating with excellence as strong stewards of our stakeholders. To that end, we implemented actions to advance our Sustainability efforts while improving transparency through continuous development of our Sustainability reporting, including the announcement of our 2030 goals for both energy and water usage reduction. We also Committed to the United Nations Global Compact and signed the CEO Action for Diversity & Inclusion \( ^{™} \)  pledge. We invested in the education of Balchem's leadership team and Board of Directors through eCornell's Diversity and Inclusion Training Certificate Program, which enhanced our organization's ability to further develop a culture that values diversity and embraces inclusion by increasing our awareness of behaviors that encourage engagement with those across a variety of backgrounds and perspectives. Additionally, we launched Balchem Helping Hands, a new initiative that consists of philanthropic partnerships, a matching donation program, and employee volunteer efforts. Additionally, we updated our various public disclosures to increase transparency, particularly with regard to human capital and diversity metrics.

As you can see, 2020 was indeed a truly remarkable year for Balchem! Thank you again to all of our employees for your incredible contributions over the last year and to all of our stakeholders for your continued support of Balchem. I wish everyone good health in the year ahead.

Sincerely,

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Theodore (Ted) L. Harris

Chairman and Chief Executive Officer