# LETTER TO SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NASDAQ_BCPC_2022/NASDAQ_BCPC_2022.mmd` · pages 2-8_

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LETTER TO SHAREHOLDERS

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## Dear Fellow Shareholders:

As I sit here in the early part of 2023, reflecting back on the Company's performance and progress in 2022, we have much to be proud of relative to Balchem's accomplishments. 2022 was another year of extraordinary challenges and volatility in the global business environment within which we operate. After three consecutive years of unprecedented market conditions, the "new normal" has shaped up to be an environment in which change should be expected and the best companies have business models that include a healthy ability to be nimble and flexible.

Balchem's ability to be nimble and flexible enabled us to maneuver our way through all of the headwinds we faced throughout the year to deliver yet another year of record top and bottom-line financial performance, while continuing to make good progress on our strategic growth initiatives.

In 2022, we delivered record Sales of \(942 million, an increase of 18 percent compared to prior year, with record sales achieved in all three segments: Human Nutrition & Health, Animal Nutrition & Health, and Specialty Products. We also delivered record Adjusted Net Earnings of \)131 million, an increase of $14 million or 12 percent from prior year, resulting in record Adjusted Earnings per share of \(4.03. Adjusted EBITDA of \)216 million, an increase of $26 million or 14 percent from the prior year, was also a record. In addition, we generated solid Free Cash Flow of \(138 million in 2022, while investing \)39 million in capital projects to support our continued growth. We are particularly proud of the fact that 2022 was our 13th consecutive year of Sales and Adjusted EPS growth!

While delivering record financial results, we continued to innovate and advance the science behind our key brands like VitaCholine \( ^{®} \) , Albion \( ^{®} \)  Minerals, K2Vital \( ^{®} \) , OptiMSM \( ^{®} \) , ReaShure \( ^{®} \) , AminoShure \( ^{®} \) , KeyShure \( ^{®} \) , PetShure \( ^{®} \) , and Metalosate \( ^{®} \) . Approximately 28% of our sales in 2022 came from products introduced to the market within the last five years, a healthy sign of the vitality of our product portfolio and the number of new solutions we have brought to our customers. Several important new studies supporting the science behind the supplementation of Choline, Minerals, and Vitamin K2 were published or completed in 2022 that augment existing science and bring new science to light that ultimately will support and strengthen our efforts to drive increased market penetration of these important nutrients.

We also acquired Kappa Bioscience AS, a leading science-based manufacturer of specialty vitamin K2 headquartered in Oslo Norway, and Bergstrom Nutrition, a leading science-based manufacturer of methylsulfonylmethane, or MSM, headquartered in Vancouver, Washington. With these acquisitions, Balchem continues to expand its science-based health and nutrition portfolio while providing a broader nutritional platform that will help our customers improve their nutritional and health solutions.

Additionally, we made important new investments in our manufacturing operations in 2022, resulting in additional capacity for our human nutrition, animal nutrition, and plant nutrition businesses. Of particular note was the expansion of our international

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manufacturing capabilities with the addition of human encapsulation and plant nutrition operations in Europe, which should enable accelerated growth in the region. All of these new investments will help support our continued organic growth as we further penetrate the markets with our product offerings.

Sustainability remained a key focus through the year as well, culminating in the recent publication of our 2022 Sustainability Report, which captures the Company's commitment to managing our Environmental, Social and Governance (ESG) performance. Balchem's sustainability initiatives are fully integrated into our business strategy and are critical to our vision of making the world a healthier place. We took meaningful steps toward advancing diversity, equity, inclusion, and belonging at Balchem, and remain committed to fostering a diverse and inclusive culture in which everyone feels welcomed, valued, and appreciated, while inspiring our external stakeholders to share our vision. Our Sustainability Report demonstrates the Company's continuing promise to provide our employees, customers, shareholders and the communities within which we operate with information on Balchem's sustainability initiatives and includes our progress on our 2030 goals and strategies for both emissions and water usage reduction. In 2022, we exceeded our 2030 greenhouse emissions reduction goal and achieved a combined scope 1 and scope 2 greenhouse gas reduction of 27%. This puts us in a position to execute on our strategic growth plans and achieve our 2030 25% absolute reduction target. Additionally, Balchem consumed slightly less than 4 million cubic meters of water in 2022, a level 1% below our 2020 baseline, and 5% below our 2021 results. As we work to implement intensive water reuse and recycling projects, we are also implementing other efficiency improvements. We are excited to see a trend of improvement in our absolute water usage result from these initiatives. The combination of these planned efficiencies and significant changes in our use of process water will ensure that we achieve our 2030 goal.

In 2022, Balchem was named one of America's Most Responsible Companies by Newsweek magazine for the third consecutive year. This list, compiled by Newsweek in partnership with Statista Inc., recognizes the most responsible companies in the U.S. across a variety of industries. We are proud of our efforts and continue to take many other important steps toward our continuous improvement journey relative to our corporate social responsibilities and pleased with this recognition by Newsweek.

As I look forward to 2023 and beyond, I believe we are well positioned to drive continued growth and progress on our strategic growth initiatives while nimbly and flexibly managing through the new challenges we will undoubtedly face within this dynamic global market environment. Thank you again to all of our stakeholders for your contributions and continued support.

Sincerely,

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Theodore L. "Ted" Harris
Chairman, President and Chief Executive Officer