발켐(BCPC) 2026년 3분기 실적발표 콘퍼런스 콜: 사상 최대 매출 및 조정 EBITDA

핵심 요약

• 발켐(Balchem Corporation)은 2026년 3분기 매출이 전년 동기 대비 8.6% 증가한 2억 9,100만 달러를 기록하며 분기 기준 역대 최대 실적을 달성했으며, 3개 보고 부문 모두에서 성장을 기록했다고 발표했다.
• GAAP 기준 순이익은 16% 증가한 사상 최대치인 4,700만 달러를 기록했고, 희석 EPS는 17.7% 상승한 1.46달러를 기록했다.
• 조정 EBITDA는 12.4% 증가한 사상 최대치인 8,000만 달러를 기록했으며 마진율은 27.6%를 나타냈다. 이로써 발켐은 29분기 연속 전년 동기 대비 조정 EBITDA 성장을 달성했다.
• 휴먼 뉴트리션 & 헬스(Human Nutrition & Health) 부문이 1억 8,800만 달러의 사상 최대 매출을 올리며 가장 큰 매출 비중을 유지했고, 애니멀 뉴트리션 & 헬스(Animal Nutrition & Health) 부문은 11.7%의 가장 빠른 매출 성장률과 82.8%의 영업이익 증가율을 기록했다.
• 영업활동 현금흐름은 총 7,000만 달러, 잉여현금흐름은 5,800만 달러를 기록했다. 발켐은 약 2,800만 달러 상당의 자사주를 매입하고 순차입금을 2,800만 달러 상환하여, 분기 말 기준 순레버리지 비율 0.2배를 기록했다.
• 경영진은 계절적 요인으로 인해 4분기 실적이 3분기보다 낮아질 것으로 예상하지만, 전년 동기 대비로는 견조한 성장을 이룰 것으로 확신하고 있다.

핵심 재무 실적

사업 및 영업 성과

휴먼 뉴트리션 & 헬스

영양제 및 식품 원료·솔루션 부문의 동반 성장에 힘입어 매출은 8.1% 증가한 사상 최대치인 1억 8,800만 달러를 기록했다. 영업이익은 11.8% 증가한 4,600만 달러로 역대 최대를 기록했으며, 조정 영업이익은 10.9% 증가한 4,900만 달러를 나타냈다.

경영진은 수익성이 더 높은 영양제 사업이 식품 사업보다 빠르게 성장하면서 우호적인 제품 믹스 효과가 나타나고 있다고 밝혔다. 영양 보충제와 건강 지향적 식품 시스템에 대한 소비자의 관심이 지속되면서 수요를 뒷받침했다.

발켐은 비타콜린(VitaCholine)과 K2바이탈 델타(K2VITAL DELTA)를 뒷받침하는 새로운 연구 결과도 강조했다. MD 앤더슨이 주도한 파일럿 연구에서는 인지적으로 건강한 APOE4 유전자 보유자의 콜린 섭취 효과를 조사했고, DANCODE 임상시험에서는 비타민 K2가 관상동맥 석회화 및 심혈관 건강에 미치는 영향을 평가했다. 경영진은 두 연구를 바탕으로 고객과 소비자의 인지도를 높일 계획이다.

애니멀 뉴트리션 & 헬스

매출은 11.7% 증가한 6,300만 달러를 기록했다. 영업이익은 82.8% 증가한 680만 달러, 조정 영업이익은 73.6% 증가한 700만 달러를 기록했다.

성장은 반추동물 및 단위동물 시장에서의 매출 증가가 견인했다. 낙농 분야에서는 캡슐화된 반추위 보호 메티오닌, 리신, 콜린의 채택이 유럽, 중동, 아시아 등 해외 시장 전반으로 계속 확대되었다. 발켐은 3분기 종료 후인 10월 1일 차세대 캡슐화 메티오닌 제품을 출시했다.

유럽 단위동물 사업은 EU의 반덤핑 관세 조치, 판매량 회복, 가격 개선에 힘입어 이익을 얻었다. 미국에서는 가격 인상 조치를 통해 원가 상승분을 상쇄하는 데 도움을 받았다. 회사는 또한 미국에 반덤핑 소송을 제기했으며 2026년 말경 예비 판결이 나올 것으로 예상하고 있다.

스페셜티 제품

특수 가스(Performance Gases) 부문 주도로 매출은 4.5% 증가한 3,700만 달러를 기록했다. 영업이익은 6.6% 증가한 1,200만 달러, 조정 영업이익은 3% 증가한 1,300만 달러를 나타냈다. 경영진은 이 부문의 성과가 안정적이고 수익성이 높다고 평가했다.

경영진 가이던스

경영진은 과거 계절적 특성상 4분기 실적이 보통 3분기보다 직전 분기 대비 낮게 나타난다고 밝혔다. 그러나 회사는 4분기에도 전년 동기 대비 견조한 성장을 이룰 수 있을 것으로 자신하고 있다.

발켐은 연간 유효세율이 22.5%에서 23% 사이에서 마감될 것으로 예상하고 있다. 연초 대비 누적 유효세율은 22.7%였으며, 경영진은 해당 범위를 크게 벗어나게 할 구조적 변동은 없을 것으로 예상하고 있다.

리스크 및 주시 항목

• 2026년 내내 원자재 가격 상승세가 지속되었다. 연초 대비 금액 기준으로는 가격 인상을 통해 높아진 비용을 대략적으로 상쇄했으나, 단순 금액 전가는 마진율(%) 감소를 초래할 수 있다.
• 유가 상승은 운송비, 유틸리티 비용 및 석유화학 유래 원자재 비용을 증가시킬 수 있다. 경영진은 수압착굴착(프래킹) 관련 염화콜린 수요가 소폭 증가했음에도 불구하고 유가 상승을 순손실 요인으로 보고 있다.
• 인플레이션, 회사 성장, 지정학적 및 공급망 차질 리스크에 대비한 추가 안전재고 확보, 제품 출시 준비 등으로 인해 재고 자산은 1억 7,700만 달러에 달했다.
• 경영진은 EU의 반덤핑 조치 혜택에도 불구하고 유럽 단위동물 시장에서 우회 수출과 관세 흡수 문제가 여전히 과제로 남아있다고 언급했다.
• 알츠하이머 관련 콜린 연구는 비교적 작은 참가자 집단을 대상으로 진행된 파일럿 연구였다. 경영진은 향후 더 규모가 큰 후속 연구가 진행될 것으로 예상된다고 밝혔다.

애널리스트 Q&A 주요 내용

마진 지속가능성: 경영진은 마진 개선의 원인을 우호적인 포트폴리오 믹스 덕분으로 돌렸다. 휴먼 뉴트리션 & 헬스 부문 내에서는 영양제 사업이 식품보다 마진이 높고 더 빠르게 성장하고 있다. 애니멀 뉴트리션 & 헬스 부문 내에서는 마진이 더 높은 반추동물 사업이 단위동물 성장을 앞지르고 있다. 스페셜티 제품 부문 또한 연결 믹스에 우호적인 기여를 하고 있다.

동물 영양 부문 성장: 발켐은 사육 두수의 근본적인 증가가 없더라도 시장 침투율을 높일 수 있는 여지가 여전히 존재한다고 보고 있다. 새로운 반추위 보호 영양소 제품과 해외 채택 확대가 이러한 전략을 뒷받침할 것으로 예상된다.

재고 자산 증가: 경영진은 1억 7,700만 달러에 달하는 재고 잔액의 4가지 원인으로 원가 인플레이션, 매출 증가, 의도적인 안전재고 추가, 제품 출시에 앞선 재고 비축을 제시했다.

향후 임상 연구: 발켐은 근육 회복, 수면, 불안 감소, 이너뷰티 응용, 간 건강, 에너지 및 집중력 분야에 대한 연구를 지속할 계획이다. 경영진은 또한 뷰티 기업들과의 파트너십을 모색 중이라고 덧붙였다.

스포츠 마케팅: 뉴욕 제츠 및 바이에른 뮌헨 여성팀과의 파트너십에 이어, 경영진은 발켐이 더 국제적인 인지도를 가진 또 다른 스포츠 파트너십을 검토 중이며 다음 실적 발표 전화회의 이전에 발표될 수 있을 것으로 예상한다고 밝혔다.

프래킹 노출도: 프래킹 관련 염화콜린 매출은 전년도 약 500만 달러에서 현재 연율 기준 약 800만 달러 수준으로 증가했다. 경영진은 파쇄액 재조합, 재사용 및 저가 해외 경쟁으로 인해 이 사업이 과거 규모로 회복되지는 않을 것으로 예상하고 있다.

실적 발표 전화회의 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to the Balchem Third Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Martin Bengtsson, Balchem's Chief Financial Officer. Please go ahead.

Carl Bengtsson

Thank you. Good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending September 30, 2026. My name is Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our Chairman, President and CEO.

Following the advice of our counsel, auditors and the SEC, at this time, I would like to read our forward-looking statement. Statements made in today's call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct, and various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem's most recent Form 10-K, 10-Q and 8-K reports.

The company assumes no obligation to update these forward-looking statements. Today's call and commentary also include non-GAAP financial measures. Please refer to the reconciliations in our earnings release for further details.

I will now turn the call over to Ted Harris, our Chairman, President and CEO.

Theodore Harris

Thanks, Martin. Good morning, and welcome to our conference call. We were very pleased with our third quarter results reported earlier this morning, which were once again driven by healthy broad-based growth across all 3 of our reporting segments and continued solid execution on our strategic growth initiatives. Our healthy growth continues to be fueled by the ongoing market penetration of our unique portfolio of specialty nutrients and delivery systems and the favorable better-for-you trends within the food and nutrition markets that are well aligned with our product offerings and capabilities. As a result, we delivered record quarterly consolidated sales, net earnings and adjusted EBITDA as well as solid cash flows.

Before discussing our third quarter financial results in more detail, I would like to provide a few comments on the current market environment within which we are operating and also provide you with some updates regarding some new science that has been recently published supporting our branded ingredients, VitaCholine, K2VITAL and K2VITAL DELTA. We continue to see healthy demand trends across the majority of our businesses.

Within Human Nutrition & Health, we continue to see solid demand growth for our unique portfolio of ingredients and solutions. Consumer interest in supplementation and better-for-you food systems continue to support a healthy market environment for us. In Animal Nutrition & Health, momentum continues to build. Both ruminant and monogastric customers continue to adopt our nutrient technologies as they look for cost-effective ways to improve animal health and productivity.

And within Specialty Products, we continue to see healthy market demand for our specialized performance gases and services. Overall, we see a positive demand outlook for Balchem, and we remain confident in our ability to deliver healthy growth over the long term.

Turning to the growing body of science supporting our branded ingredients. I'd like to highlight 2 recently published studies that we believe are particularly noteworthy. The first is the MD Anderson-led pilot study that we have discussed in the past and that was recently published in Alzheimer's & Dementia: Translational Research & Clinical Interventions, a peer-reviewed journal of the Alzheimer's Association.

The study evaluated the potential benefits of choline supplementation in cognitively healthy APOE4 carriers, a population at significantly increased genetic risk for developing Alzheimer's disease. Researchers examined the impact of supplementation on biomarkers associated with neurodegeneration, brain metabolism and pathways implicated in Alzheimer's progression. The findings provide encouraging new evidence that may support the role of VitaCholine in lifelong brain health and further strengthen the scientific foundation of choline in healthy aging and cognition.

We believe this represents another important step in positioning VitaCholine not only as an essential nutrient, but also as a leading science-backed ingredient in adult cognitive health.

The second study I'd like to highlight is the DANCODE trial published in Circulation, a leading cardiovascular journal of the American Heart Association. The study examined the impact of vitamin K2 supplementation using Balchem's K2VITAL DELTA on coronary artery calcification and cardiovascular health. The findings add important clinical evidence supporting the role of vitamin K2 in cardiovascular health and healthy aging while further strengthening the scientific leadership and commercial differentiation of our K2VITAL platform.

Now let me turn to our consolidated results for the third quarter. This morning, we reported record consolidated revenue of $291 million, an increase of 8.6% versus the prior year. We delivered record quarterly GAAP earnings from operations of $62 million, an increase of 14.4%.

Consolidated net income closed the quarter at a record $47 million, an increase of 16%. This quarterly net income translated to diluted net earnings per share of $1.46 on a GAAP basis, up 17.7%.

On an adjusted basis, we delivered record quarterly adjusted EBITDA of $80 million, an increase of 12.4%. Our quarterly adjusted net earnings were a record $50 million, an increase of 14.5%, which translated to $1.57 per diluted share, up 16.3%.

Overall, it was an excellent quarter for Balchem, record results, healthy growth across all 3 segments and continued progress on our long-term strategic priorities. And with that, I'll turn the call back over to Martin to review our third quarter financial results and segment performance in more detail.

Carl Bengtsson

Thank you, Ted. As Ted mentioned, net sales grew 8.6% this quarter compared to the prior year, with each of our 3 segments contributing to that growth. Our gross margin was $106 million, up 10.7% and our gross margin as a percentage of net sales expanded 70 basis points to 36.4%. The improvement was driven primarily by higher sales, favorable product mix and manufacturing efficiencies, partially offset by certain higher manufacturing input costs.

Consolidated operating expenses for the third quarter were $43 million compared to $41 million in the prior year. The increase was primarily due to higher compensation-related costs, partially offset by the net favorable impact of certain discrete items in the quarter.

GAAP earnings from operations for the third quarter were a record $62 million, up 14.4%. On an adjusted basis, earnings from operations were $67 million, up 12.7%.

Adjusted EBITDA was a record $80 million, an increase of 12.4%, with an adjusted EBITDA margin rate of 27.6%.

Net interest expense for the third quarter was $2 million, down $1 million from the prior year, reflecting lower outstanding borrowings and lower interest rates. The effective tax rates for the third quarters of 2026 and 2025 were 22.2% and 22.6%, respectively. The decrease was primarily due to favorable adjustments related to filing our prior year federal tax return and a higher foreign-derived intangible income deduction benefit, partially offset by an increase in certain state taxes.

Consolidated net income closed the quarter at a record $47 million, up 16% and diluted net earnings per share were $1.46, up 17.7%. Adjusted net earnings were a record $50 million, up 14.5% and adjusted diluted earnings per share were $1.57, up 16.3%.

Cash flows from operations were $70 million for the quarter, and free cash flow was $58 million, and we ended the quarter with $66 million of cash on the balance sheet. We continue to generate healthy cash flows, which enables us to both invest in growth and return value to shareholders.

We repurchased approximately $28 million of Balchem common stock during the third quarter, and we also reduced net borrowings by $28 million in the quarter, resulting in a net leverage ratio of 0.2x. Together with the expanded $650 million credit facility we put in place in July, we're well positioned to fund innovation, capacity expansion and strategic acquisitions.

Turning now to our segment results. Human Nutrition & Health delivered record sales of $188 million, up 8.1%, driven by growth in both our nutrients business and our Food Ingredients and Solutions businesses. Earnings from operations rose 11.8% to a record $46 million, driven by higher sales and favorable mix, partially offset by higher operating expenses.

On an adjusted basis, earnings from operations for this segment were a record $49 million, up 10.9%. We remain very positive about the outlook for Human Nutrition & Health. Our differentiated ingredients, formulation expertise and branded portfolio position us well to support our customers and capture additional market opportunities, particularly as consumers prioritize health and better-for-you solutions.

Animal Nutrition & Health sales were $63 million, up 11.7% from the prior year, driven by higher sales in both the monogastric and ruminant markets. Earnings from operations were $6.8 million, up 82.8%, reflecting the higher sales and favorable mix, partially offset by certain higher manufacturing input costs.

On an adjusted basis, earnings from operations for this segment were $7 million, up 73.6%. Animal Nutrition & Health delivered another quarter of year-over-year improvement. Growth was supported by continued adoption of our encapsulated rumen-protected nutrient technologies in dairy, pricing actions in our U.S. monogastric business and gradual improvement in our European monogastric business following the implementation of EU antidumping duties. We remain optimistic about the direction of this business and confident in our ability to drive further penetration of our technologies to deliver long-term growth.

Specialty Products sales were $37 million, up 4.5%, driven by growth in our Performance Gases business. Earnings from operations were $12 million, up 6.6%, reflecting higher sales and favorable mix, partially offset by higher operating expenses. On an adjusted basis, earnings from operations for this segment were $13 million, up 3%.

Specialty Products continued to deliver steady profitable growth this quarter. With strong market positions and disciplined execution, we believe this segment remains well positioned to continue this steady growth over time.

In summary, it was another strong quarter with record results, healthy growth in each of our segments and solid cash generation. As we look ahead to the fourth quarter, we're optimistic about the outlook. The fourth quarter for us, as we have shown over the last number of years, is normally sequentially lower than the third quarter based on historic business seasonality, but remain confident in our ability to continue to deliver healthy year-over-year growth in the fourth quarter as we have done all year.

With that, I'll turn the call back over to Ted for some closing remarks.

Theodore Harris

Thanks, Martin. We are very pleased with the results we reported earlier today. Our teams executed extremely well during the quarter, delivering record financial performance while continuing to advance our strategic priorities. The third quarter marked our 29th consecutive quarter of year-over-year growth in adjusted EBITDA.

That level of consistency across a wide range of market conditions reflects the strength of our unique portfolio, the resilience of our business model and the dedication of our team. We are very proud of what we accomplished this past quarter and excited about the opportunities ahead for Balchem.

With that, I'll turn the call back over to Martin, who will open up the line for questions.

Carl Bengtsson

Thank you, Ted. This now concludes the formal portion of the conference. At this point, we will open up the conference call for questions.

Operator

[Operator Instructions] Your first question comes from the line of Bob Labick with CJS.

질의응답

Bob Labick

So in addition to the strong growth, you obviously had very nice margin performance and really kind of despite inflation in there and part of the discussion, you mentioned favorable mix, which helped on margins. Can you elaborate on the mix benefits you're getting by segment and talk about if they're sustainable and how we should think about that going forward?

Carl Bengtsson

Sure, Bob. Yes, I mean, we're obviously very pleased with the performance and the margins for those of you that have followed us over time, we've really improved on those margins here over the last couple of years. As we look at it now for the segments, there is some favorable tailwinds just from a portfolio perspective that if you look at HNH as our largest segment, the nutrition piece of that segment is higher margin relative to the food part and the nutrition part is growing faster than the food part. So you're getting a favorable mix within HNH over time due to that dynamic.

And you have a similar dynamic on the Animal Nutrition & Health side, right, where the ruminant business, the dairy business is higher margin than the monogastric and over time is growing faster. So there are tailwinds within both of those segments.

And obviously, with our Specialty Products segment having grown nicely being very high margin as well for us as a business, it just supports a nice tailwind for us. More specifically to your question around inflation and so on, I mean, we are in an inflationary period, as you called out. We have seen inflation in our raw materials all year. But we have been able to turn around and pass that through to our customers.

So net-net, if you look at it sort of year-to-date, we're pretty much breakeven. But there is a little bit of timing delay in some businesses and some were a little bit ahead and some were a little bit behind. But on a year-to-date basis, we're pretty much at breakeven from that perspective, which sort of -- if you take a step back, that is a little bit margin dilutive, right? If raw materials goes up, you pass that through dollar for dollar, that has a slight negative impact to your margin percentage, but we've been able to offset that to some extent with a beneficial portfolio mix.

Bob Labick

Okay. Great. That's wonderful. And then I guess for my follow-up, just switching gears a little bit. It sounded like some very exciting news on 2 trials that you just mentioned. So I was wondering if you could, I guess, elaborate on that and tell us the next steps for the -- for both, I guess, the Alzheimer's and cardiovascular trials that were just released?

Theodore Harris

Yes, you're right. We are very excited about these 2 new trials, but sort of just putting it into context, it really is simply kind of part of a broader portfolio of science that is so important to the vitamins, nutrients, minerals that we go to market with, and it's really the foundation of what we do, building this portfolio of science.

And the reason that I highlighted these 2, one is because, first of all, they're very new. But secondly, because they really stand out as being a bit different than the previous studies that we've done relative to these nutrients, really the previous many studies that have been done. And I'll start with the MD Anderson University of Texas and MIT study.

And that really is, as you know, Bob, choline has predominantly been recognized as an important nutrient for child nutrition, infant nutrition. It's commonly included in infant formula. It's known based on many studies to have a significant impact on infant cognition. And that's really what the history has been and a lot of the science has been for choline.

And this study is clearly focusing on adult cognition. And it's now one of several that I would say are really, really good studies that bring choline into the discussion relative to adult cognition, Alzheimer's dementia. And this was a pilot study, as we talked about. So it's a fairly small group of participants in it, but will lead to a much bigger study and one that really could very much change the game relative to showing the importance of choline relative to adult cognition.

And obviously, what are we going to do? What comes next is we're going to make sure that our customers are fully aware of this study and the favorable results and the fact that a pilot study is coming forward. And so now as we do typically in the process, we start with the science and then we need to create awareness around studies like this through our marketing efforts, and that's what we'll be doing next.

And I think that this will be viewed very positively by our customers and ultimately, consumers. And the second one was similar in that it was for vitamin K2. And I think you also are aware the vast majority of previous science and the deep library of studies on K2 are primarily around bone health and helping calcium find its way from soft tissues into the bones and strengthening bones. Well, what's different about this is this really is an important, much more significant study, 400 subjects in the study over a longer period of time that really showed cardiovascular benefit of K2. And so this is sort of not focused on bone strength, but on the cardiovascular benefit.

And it's very logical to kind of think that if K2 has a mode of action of helping calcium find its way from soft tissue into the bone that it could have a cardiovascular benefit. And this study went a long way to providing some evidence that may indicate that K2 does indeed do that.

So again, what we'll do with this is we'll now kind of add the marketing on top of this science and the library that we have behind it and create awareness around it. And as a company, lead with science, but we obviously need to create awareness through marketing as well. So I think they are 2 important studies. They aren't necessarily the end of the story, but help really add to the body of science supporting these branded ingredients. So we are excited about them.

Operator

Your next question comes from the line of Ram Selvaraju with H.C. Wainwright.

Theodore Harris

Hi Ram, Are you there? I think, Tracy, maybe we should go on to the next question and maybe we can come back to Ram because we can't hear him.

Operator

Absolutely. Your next question is coming now from Daniel Harriman with Sidoti & Company.

Daniel Harriman

Congratulations on yet another great quarter. Just a couple of quick questions from me today. Just focusing on ANH. Obviously, sales growing how they did and earnings from operations up significantly year-over-year. Martin, can you just provide a little bit more information about what's driving that and how sustainable you think it is over time? I know you did mention a few things in the prepared remarks.

And then the last question is just about inventory. It looks like it's crept up to about $177 million, which is up from where it was at the end of 2025. And I'm just curious if you could help us understand what's driving that, whether it's pricing, stocking ahead of cost or just inherent demand? Really appreciate you guys.

Carl Bengtsson

Yes. No, for sure. It sounded like 2 questions for me probably. So maybe we start with the ANH growth story. I mean, we're very happy with how ANH has performed over a number of quarters right now of gradually just improving. And a couple of drivers. One is obviously the ruminant side where we keep driving that penetration of our rumen-encapsulated nutrients there.

Market penetration is still one where even if the market weren't to grow, we can still drive growth through penetration and adoption of our technologies. And we're seeing that across our product portfolio, whether it be on our encapsulated methionine, our encapsulated lysine or encapsulated choline, et cetera. We're seeing growth across our product line. And that's further supported by -- we did launch a new encapsulated lysine last year that we spoke about that's really driven healthy growth in that product line.

We just rolled out the next-generation encapsulated methionine actually on October 1. So that's not in Q3, but it's sort of further just supporting the continued growth in that portfolio. And there's a nice sort of pipeline coming behind that of product launches that we're working on that we're looking forward to, to just continue to drive that penetration. And it's not just in the U.S. if we were historically very U.S. focused, we're also seeing an accelerated growth internationally. So we're seeing good ruminant growth in Europe, in the Middle East, in Asia, that's further supporting that ruminant penetration across the board as really the customers at the end of the day are looking to get healthier and more efficient cows. There are unlikely to be many more cows in the world. So to meet the demand for dairy-derived products, they really need their cows to become more efficient, and that's the business we're in there.

On the monogastric side, 2 things, right? We're -- in Europe, obviously, the antidumping that we've spoken about quite a bit over the last year is certainly helping. So we've regained volumes. Pricing has gradually improved with these changes. So we're seeing the benefits of that. At the same time, there's still a lot of work to do. We still see sort of circumvention happening and absorption where people are just dropping the price to import it and absorbing the duty.

So it will be an ongoing battle to push back around some of these things where they're sort of violating the trade practices, but it's certainly helping already at this point, and we're seeing that. And in the U.S., we've sort of seen higher input costs, and we've offset that through pricing to recover the costs, and that's driving some growth as well.

And we have filed for in the U.S. antidumping as well. So we will see here towards the end of the year what the preliminary ruling is in the U.S. to combat that same sort of dumping situation in the U.S. that we went after in Europe.

So then going to the other part of your question and around the inventory, which ended the quarter at $177 million, which is a high number from a historic perspective. I would say there's probably 4 reasons that I would point to why that is a higher number than what you're used to seeing. One part is obviously that there is an inflationary impact there as we're in an inflationary environment, a portion of this increase is just the fact that we're paying more for the inventory that we've purchased and hold.

But secondarily, growth is also driving a part of this increase. We've grown 9% as a company year-to-date. So obviously, that is requiring a bit more of inventory to support those sales.

And then third, I would say, we have, from a risk mitigation standpoint, chosen, deliberately chosen to hold more inventory in certain areas where we see higher risk of any sort of disruption or where it's really critical raw materials to serve our customers where we don't want to take any chances and as such, based on what's been going on in the Middle East and some other geopolitical situations, we've just made deliberate choices to hold a bit more safety stock essentially here throughout and build that up over the year.

And fourth, it's really that we've added a bit of inventory for coming product launches. So we have a few product launches that we're preparing for. And usually, that means that you have to get everything ready, you need to have the inventory on hand, et cetera, before you roll that out into the market, and that has further sort of increased a bit the inventory levels we're carrying at the moment.

So those 4 things have brought that balance up a bit. And I think as we go forward, we'll continue to monitor the situation and see what's sort of the right risk balance here of how much inventory we carry based on our growth and product launches and what's going on in the world, et cetera. So that would be sort of my summary of that.

Operator

Your next question comes from the line of Ram Selvaraju with H.C. Wainwright.

Raghuram Selvaraju

Can you hear me now?

Theodore Harris

Yes, we can, Ram.

Raghuram Selvaraju

Okay. Sorry about that. I don't know what the technical difficulty was. So just very quickly, I wanted to know if you could provide us with some additional sense of what other directions you might pursue with future clinical investigation of the applicability of certain elements of your product range. In particular, I was interested in your thoughts on exercise, physical recovery, athletic performance optimization and sleep?

Theodore Harris

Yes, Ram, thanks for the question. So I would say all of those that you mentioned are part of the benefits of some of our nutrients. So we already have certainly some studies around muscle recovery for sure, but kind of building off of that, I think, is important. So that's very relevant. Sleep is certainly for our magnesium product, the benefits of reduction in anxiety and ease of sleeping is an important part of the science behind those products, and we already have studies but would continue to be a focus.

I think other areas that you didn't mention that come to mind are kind of part of the sort of increasing trend around beauty from within and showing the benefits of some of our nutrients, for example, like OptiMSM on hair growth and hair strength and so forth as well as nail and skin benefits is something that we certainly have already invested in some science around, but we'll continue to invest in.

And I think the other one, we've talked about choline relative to infant cognition and now increasingly adult cognition, but there are certainly other benefits of choline around liver health and sort of energy and focus and so forth that I think are ripe for additional studies. And as we've said many times, I think the library of science behind these nutrients is absolutely critical and kind of foundational to what we do. So it's a -- it continues to receive a healthy amount of our focus, and we'll continue to invest there.

Raghuram Selvaraju

From a partnering perspective, do you think that Balchem might explore the possibility of any partnership or link up with companies in the aesthetic space, particularly given what you just said. Also, I wanted to ask if you anticipate any future high-profile marketing partnerships with professional sports teams and if so, you have some idea of the timing there?

And then just 2 very quick questions for Martin. Maybe you could comment on whether the elevated price of oil and potential increased fracking activity in the United States might have a salubrious impact on the company's other divisions outside of Animal Nutrition & Health and Human Nutrition & Health? And if so, what magnitude that might be? And then just very quickly, what your expectations are regarding effective tax rate, if you expect that to remain steady going forward?

Theodore Harris

Thanks, Ram. A bunch of questions in there. But partnerships are absolutely something that we're exploring and interested in. Obviously, we're not a cosmetics company. We're not a beauty company, but we have nutritional expertise and knowledge and certainly a nutrient portfolio that plays a role. And these are topics that the leading, I'll call them, beauty companies of the world are working on, talking about developing their own path forward. And I think partnerships in that area are a clear opportunity for us and something that we are exploring. So absolutely.

Relative to additional sports team partnerships, we've talked about the NFL, the New York Jets partnership that's now, I think, maybe in its fourth year as well as the Bayern Munich Women's team. We've been very pleased with both those investments. And we do think there is room for more. And we are contemplating another sports partnership that we should be able to announce. I would certainly think before our next earnings call that we think is something that really makes a lot of sense for us that has a bit more of an international global aspect to it that we're quite excited about and quite confident about given the results that we've seen from the first 2.

I don't think that this is a never-ending adding team upon team, but I think that building off of the 2 experiences we have makes sense with another partnership or maybe two and one of which we should be able to announce here in the next month or so, and we're excited about that. So I'll hand it over to Martin to answer the more technical questions.

Carl Bengtsson

All right. I'll start with the tax rate. That's pretty straightforward. We should be finishing the year in that range of 22.5% to 23%. I think we're at -- or I know we're at 22.7% year-to-date, and we're not seeing any larger structural change or anything that would significantly make us deviate from that rate. And from an oil price impact and so on, I mean, a couple of angles that this could be thought about. Obviously, we have a part of our business that's in our other segment, right? So it's not in our Human or Animal or our Specialty Products. Where we sell some choline chloride into the fracking industry, as you're well aware, which today, so last year was a $5 million business, so very small, but it was at one point, right, if you go back 12 years, $105 million business.

So once upon a time, that was very significant, but now it's not. And will we -- are we expecting that to come back in an environment like this where the oil prices are high and you're seeing some uptick in fracking, et cetera. And I think the short answer is not really. We would say not really. We are seeing a smaller uptick. So if we were a $5 million business last year, what's the current run rate, it's more like an $8 million type of run rate.

And some of the reasons for that is that they've sort of reformulated in how they -- what they put into the fracking fluids. They started to reuse fluids and so on, where there's just a lot less demand for that. And you also see some more, what I would call, international fluids coming in at low prices going down the hole, so to speak, which is also partially why we're filing for antidumping here in the U.S. But I don't think that will be a big driver of upside for us only on the margin.

So a higher oil price otherwise for us, obviously means more inflation, right, both from a transportation and logistics from a utilities perspective, but also from petrochemically derived raw materials that we purchase. So net-net, I would probably say that high oil prices is not necessarily a good thing for us. It would be a net negative for us. So I think we would actually be quite happy if those oil prices started easing off here in the not-too-distant future to just support the overall markets.

Operator

Your next question comes from the line of Artem Chubarov with Rothschild & Company.

Carl Bengtsson

Artem, are you there?

Theodore Harris

[Technical Difficulty] Maybe we're having the same technical difficulty with Artem. We certainly can't hear him.

Operator

As there are no further questions at this time, I will turn the call back over to Ted for some closing remarks.

Theodore Harris

Thank you, Tracy. Once again, thank you all very much for joining our call today. We really are very pleased with the third quarter results we reported earlier today and the outlook for our company. We certainly appreciate your support as well as your time today, and we look forward to reporting our Q4 and full year 2026 results in February of next year.

In the meantime, we will be participating in Baird's 54th Annual Global Industrial Conference on November 11 in Chicago and CJS Securities 27th Annual New Ideas for the New Year Conference on January 7, 2027, which is a virtual conference. So we hope to see some of you at one of those conferences, if not both. And thank you all for joining today.

Operator

This concludes today's call. Thank you for attending, and you may now disconnect.