Phibro Animal Health Corporation

Phibro Animal Health Corporation

Reports Third Quarter

TEANECK, N.J., May 9, 2016 (GLOBE NEWSWIRE)

- Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its third quarter ended March

"Our third quarter was a continuation

of many of the trends we have seen recently, with our core Animal Health segment recording low single-digit revenue growth leading

to robust double-digit Adjusted EBITDA growth," said Jack Bendheim, Phibro's Chairman, President and Chief Executive

Officer. "Some of our U.S. customers are reducing usage of antibacterials that are classified as medically important by the

Food and Drug Administration, in anticipation of upcoming regulatory changes and in response to consumer preferences for the reduction

or elimination of antibacterials in protein production. While U.S. MFAs and other declined in the quarter, our international volumes

grew, even though revenues were tempered by pricing pressures from the strong U.S. dollar. We believe international volume increases

will continue to be a substantial offset to potential U.S. declines. Nutritional specialties and vaccines reported good growth

as producers look for alternatives to maintain the health of their animals."

The FDA recently took initial steps to withdraw

approval of our swine drug Mecadox (carbadox). In accordance with the FDA process, Phibro has requested a hearing

with the FDA to address its concerns. Phibro intends to continue to collaborate fully with the FDA to provide and evaluate

scientific data which we expect will address the FDA's concerns. We will submit our data and analyses to the FDA not

later than the July 11, 2016 deadline. After that submission, the timeline is undefined and we are unable to estimate when or

if additional steps will be taken. Safety is Phibro's highest priority and we continue to have complete confidence in the

safety of Mecadox. We expect the data we present to the FDA will support the continued safe use of the product. This initial action

by the FDA does not prohibit the sale or use of Mecadox and Mecadox continues to be marketed to swine producers, as it has been

For the twelve months ended March 31, 2016,

MFAs and other include approximately $40 million of U.S. net sales of medically important antibacterials for use in animal health.

Effective January 1, 2017, producers will continue to be allowed to use medically important antibacterials for therapeutic uses.

Some portion of these sales could be at risk of decline due to regulatory and consumer preference changes, balanced by the ongoing

need for therapeutic treatment of diseases, that is necessary for animal welfare, food safety and affordable food. Phibro products

in this category include virginiamycin, tetracyclines and neomycin.

For the twelve months ended March 31, 2016,

MFAs and other also include approximately $15 million of U.S net sales of Mecadox.

Comparison of three months ended March 31, 2016 and

Our results for the three months ended March 31,

2015 included $2.0 million of revenue and income from milestone payments for licensing of vaccine delivery technology. For a better

understanding of underlying trends, we also present comparisons with 2015 that exclude the prior year milestone payments.

Net sales of $183.5 million for the three

months ended March 31, 2016 decreased $2.0 million, or 1%, as compared to the three months ended March 31, 2015, excluding the

prior year $2.0 million of vaccine licensing milestone revenue. Animal Health grew $3.0 million, offset by declines in Mineral

Nutrition and Performance Products of $4.3 million and $0.7 million, respectively.

Including the prior year $2.0 million in vaccine

licensing milestone revenue, net sales decreased $4.0 million, or 2%.

Net sales of $118.3 million for the three

months ended March 31, 2016 grew $3.0 million, or 3%, excluding the prior year $2.0 million of vaccine licensing milestone revenue.

The growth was primarily due to volume increases in the nutritional specialty and vaccine product groups. Nutritional specialty

products grew $3.0 million, or 15%, primarily due to U.S. volume growth of our products for the dairy and poultry industries. Vaccines

grew $0.9 million, or 8%, principally from volume growth, including approximately two months results from the MVP Laboratories,

Inc. ("MVP") acquisition, partially offset by a reduction in international volumes. Certain vaccine sales were reduced

due to production interruptions necessary to implement Good Manufacturing Practices capital improvements, which have now been completed.

MFAs and other decreased $0.9 million, or 1%, primarily due to volume declines in the U.S., as well as unfavorable currency movements

in certain international markets.

Including the prior year $2.0 million of vaccine

licensing milestone revenue, net sales grew $1.0 million, or 1%.

Net sales of $53.0 million decreased $4.3

million, or 7%, for the three months ended March 31, 2016. The decrease is due to lower average selling prices due to underlying

raw material commodity price declines. Partially offsetting the lower average selling prices were increased volumes from improved

demand for trace mineral products.

Performance Products

Net sales of $12.1 million decreased $0.7

million, or 6%, for the three months ended March 31, 2016 due to lower volumes of copper-based and chemical catalyst products,

as well as lower average selling prices of personal care ingredients. These declines were partially offset by higher volumes of

personal care ingredients.

Gross profit of $61.6 million for the three months

ended March 31, 2016 increased $4.4 million, or 8%, as compared to the three months ended March 31, 2015, excluding the prior year

$2.0 million of vaccine licensing milestone revenue and excluding $1.6 million of current year acquisition-related cost of goods

sold from the inventory step-up related to the MVP acquisition. Gross profit increased to 33.6% of net sales for the three months

ended March 31, 2016 as compared to 30.8% for the three months ended March 31, 2015. Animal Health gross profit increased $5.2

million due to volume growth and favorable currency movements. Mineral Nutrition gross profit was level with last year, as lower

average selling prices were offset by lower product costs. Performance

Products gross profit decreased $0.5 million due to higher product

costs of copper-based products and lower average selling prices of personal care ingredients, partially offset by higher volumes

of personal care ingredients.

Including the prior year $2.0 million of vaccine

licensing milestone revenue and including $1.6 million of acquisition-related cost of goods sold, gross profit increased $0.8 million,

Selling, general and administrative expenses

Selling, general and administrative ("SG&A")

expenses of $36.3 million for the three months ended March 31, 2016 increased $0.5 million, or 2%, as compared to the three

months ended March 31, 2015, excluding acquisition-related transaction costs of $0.6 million for the three months ended March 31,

2016; acquisition-related intangible amortization of $1.5 million and $1.2 million; and acquisition-related accrued compensation

of $0.4 million and $0.3 million for the three months ended March 31, 2016 and 2015, respectively. Animal Health accounted for

$0.6 million of the increase, driven by increased sales force and product development costs. Corporate expenses accounted for $0.1

million of the increase due to increased compensation and office-related costs.

Including acquisition-related transaction costs,

intangible amortization and accrued compensation, SG&A increased $1.5 million, or 4%.

Adjusted EBITDA of $29.7 million for the

three months ended March 31, 2016 increased $4.2 million, or 16%, as compared to the three months ended March 31, 2015, excluding

the prior year $2.0 million in vaccine licensing milestone revenue. Animal Health adjusted EBITDA increased $4.5 million, or 16%,

due to sales growth and increased gross profit, partially offset by increased SG&A expenses. Mineral Nutrition increased $0.3

million, or 7%, due to lower SG&A expenses as lower average selling prices were offset by lower product costs. Performance

Products decreased $0.5 million due to lower volumes. Corporate expenses increased $0.1 million due to increased compensation and

office-related costs.

Including the prior year $2.0 million of vaccine

licensing milestone revenue, adjusted EBITDA increased $2.2 million, or 8%.

Interest expense, net

Interest expense, net of $3.9 million

increased $0.5 million primarily due to interest on increased borrowings under our revolving credit facility (the "Revolver"),

excluding acquisition-related accrued interest of $0.4 million and $0.3 million for the three months ended March 31, 2016 and 2015,

Including acquisition-related accrued interest,

interest expense, net increased $0.7 million, or 18%.

Foreign currency (gains) losses, net

Foreign currency (gains) losses, net for the

three months ended March 31, 2016 amounted to net gains of $2.2 million, as compared to $4.6 million in net gains for the

three months ended March 31, 2015. Foreign currency gains in the three months ended March 31, 2016 were primarily due to the movement