Phibro Animal Health Corporation Reports First Quarter Results, Updates Financial Guidance TEANECK, N.J.

Phibro Animal Health Corporation Reports

First Quarter Results, Updates Financial Guidance

TEANECK, N.J., November 6, 2018 (GLOBE

NEWSWIRE) - Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its first quarter

ended September 30, 2018, and presented updated financial guidance for the fiscal year.

Highlights for the September 2018 quarter

(compared to the September 2017 quarter)

Phibro will increase its quarterly dividend

by 20%, to $0.12 per share, effective with the December 2018 dividend payment.

"Our Animal Health business reported

another positive quarter, despite turbulence in currencies, economic conditions in certain countries and continued weakness in

dairy industry fundamentals," said Jack Bendheim, Phibro's Chairman, President and Chief Executive Officer. "Animal

Health adjusted EBITDA increased 6%, as we leveraged 2% sales growth with improved gross profit and good expense control. International

volume growth of MFAs and other, notably in the cattle sector in various countries, was the primary driver of Animal Health's

sales growth. The Mineral Nutrition business faced some short-term challenges as profit declined due to unfavorable product mix

and pricing pressures. We expect the minerals business to recover later this fiscal year."

"We are investing P&L

expense dollars to develop future growth opportunities. The spending is focused on expanding our portfolio of nutritional

specialty and vaccine products and developing an entry into the companion animal segment. We also acquired additional vaccine

technology during the quarter, including in aquaculture," Mr. Bendheim said.

Net sales of $200.2 million for

the three months ended September 30, 2018, increased $6.7 million, or 3%, as compared to the three months ended

September 30, 2017. Animal Health, Mineral Nutrition and Performance Products grew $2.3 million, $2.8 million and $1.6 million,

Net sales of $131.2 million for

the three months ended September 30, 2018, grew $2.3 million, or 2%. Net sales of MFAs and other increased $7.4

million, or 9%, driven by continued international volume growth, particularly in the cattle sector. Reduced selling prices in certain

countries due to unfavorable exchange rate movements partially offset the international volume growth. Net sales of domestic MFAs

and other also contributed to the growth. Net sales of nutritional specialty products declined by $3.8 million, or 12%, primarily

due to volume declines from the continued negative dairy industry conditions, while sales to the poultry sector were approximately

even with the prior year. Net sales of vaccines declined $1.2 million, or 7%, due to turbulent economic conditions in certain international

countries and the timing of certain distributor orders in the prior year.

Net sales of $54.8 million increased

$2.8 million, or 5%, for the three months ended September 30, 2018. Higher average selling prices related to increased

commodity prices were the primary driver of the increased revenue. Our selling prices of mineral nutrition products generally move

in direct correlation with the underlying commodity costs. Net sales also declined in part due to reduced volumes due to the competitive

nature of the business.

Performance Products

Net sales of $14.1 million increased

$1.6 million, or 13%, for the three months ended September 30, 2018, due to higher unit volumes of copper-based

products coupled with higher average selling prices of certain industrial chemical products.

Gross profit of $65.8 million for the

three months ended September 30, 2018, increased $2.4 million, or 4%, as compared to the three months ended September 30,

2017. Gross profit increased to 32.9% of net sales for the three months ended September 30, 2018, as compared to 32.8%

for the three months ended September 30, 2017. Animal Health gross profit increased $3.0 million due to volume growth and favorable

unit costs and product mix in MFAs and other, partially offset by volume declines of nutritional specialty products. Mineral Nutrition

gross profit decreased $1.2 million, primarily due to unfavorable product mix and constrained pricing in a competitive environment.

Performance Products gross profit increased $0.4 million, primarily due to increased volumes and favorable manufacturing costs.

Gross profit increased $0.2 million due to acquisition-related cost of goods sold included in the three months ended September 30,

Selling, general and administrative expenses

Selling general and administrative expenses

("SG&A") of $43.0 million for the three months ended September 30, 2018, increased $2.0 million,

or 5%, as compared to the three months ended September 30, 2017. SG&A for the three months ended September 30, 2018,

included $0.6 million of stock-based compensation. SG&A for the three months ended September 30, 2017, included $0.4 million

in acquisition-related transaction costs and $0.4 million in acquisition-related compensation costs. Excluding the effects of these

costs, SG&A increased $2.3 million, or 6%.

Animal Health SG&A increased $1.1 million,

driven by sales force expansion and increased investments in marketing, registrations and product development. Mineral Nutrition

and Performance Products SG&A costs were even with the prior year. Corporate costs increased $1.2 million due to increased

business development expenses and higher professional fees. The stock-based compensation, acquisition-related transaction costs

and acquisition-related compensation costs resulted in a $0.3 million net decrease in SG&A compared to the prior year.

Interest expense, net

Interest expense, net of $2.8 million

for the three months ended September 30, 2018, decreased $0.3 million, or 11%, as compared to the three months

ended September 30, 2017. Interest expense decreased $0.2 million compared to the prior year, primarily due to the extinguishment

of acquisition-related obligations. Interest income increased $0.1 million due to earnings on short-term investments.

Foreign currency (gains) losses, net

Foreign currency (gains) losses, net for

the three months ended September 30, 2018, amounted to net gains of $2.6 million, as compared to $0.3 million

in net losses for the three months ended September 30, 2017. Foreign currency net gains in the three months ended

September 30, 2018, were primarily due to the movement of the Turkish, Mexican and Brazilian currencies relative to the U.S.

dollar. Foreign currency gains and losses primarily arose from cash and intercompany balances.

Provision for income taxes

The provision for income taxes was $6.4 million

and $3.1 million for the three months ended September 30, 2018 and 2017, respectively. The effective income tax rate was 28.1%

and 16.1% for the three months ended September 30, 2018 and 2017, respectively. The provision for income taxes included a benefit

from the exercise of employee stock options of $0.2 million and $2.7 million for the three months ended September 30, 2018 and

2017, respectively. The effective income tax rate, without the benefit of the employee stock option exercises, would have been

28.8% and 30.6% for the three months ended September 30, 2018 and 2017, respectively. The provision for income taxes included a

U.S. federal statutory tax rate of 21% and 35% for the three months ended September 30, 2018 and 2017, respectively. The provision

for income taxes for the three months ended September 30, 2018, also included a $0.3 million provision for the U.S. federal Global

Intangible Low-taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation.

Net income of $16.3 million for

the three months ended September 30, 2018, increased $0.4 million, as compared to net income of $15.9 million

for the three months ended September 30, 2017. Increased operating income of $0.5 million, lower interest expense of

$0.3 million and increased foreign exchange gains of $3.0 million resulted in a $3.8 million increase in income before income taxes.

The provision for income taxes increased by $3.3 million, primarily due to a reduced benefit from the exercise of employee

stock options of $2.5 million and increased taxes related to the higher pre-tax income; the reduced U.S. federal statutory tax

rate in the current year partially offset the increases.

Adjusted EBITDA of $30.1 million for

the three months ended September 30, 2018, was even with the three months ended September 30, 2017. Animal

Health Adjusted EBITDA increased $2.0 million, or 6%, due to sales growth and increased gross profit, partially offset by

increased SG&A for investments in organization and business development. Mineral Nutrition Adjusted EBITDA decreased $1.2 million,

or 31%, due to the effect of unfavorable product mix and pricing pressures on gross profit. Performance Products Adjusted EBITDA

increased $0.5 million, due to increased gross profit. Corporate expenses increased $1.2 million due to increased business

development expenses and higher professional fees.

Adjusted provision for income taxes

The adjusted effective income tax rate for

the three months ended September 30, 2018, was 28.0%, compared to 30.6% for the three months ended September 30, 2017.

The current period rate included the benefit of a reduced statutory federal income tax rate from the change in federal legislation

enacted in December 2017.