Full Press Release Details
Phibro Animal Health Corporation Reports
TEANECK, N.J., November 6, 2017 (GLOBE
NEWSWIRE) - Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its first quarter
ended September 30, 2017.
Highlights for the September 2017 quarter
(compared to the September 2016 quarter)
"I am very pleased with our performance
in the September quarter, as our Animal Health business saw accelerating growth in our Nutritional Specialties and Vaccines product
categories," said Jack Bendheim, Phibro's Chairman, President and Chief Executive Officer. "The 20% combined
growth in these categories more than outpaced the sales decline in our MFAs and other product category. Overall, our results were
consistent with our expectations. United States sales of medically important antimicrobials, although stable at a new lower level,
continued to be a negative comparison to last year. We expect one more quarter of negative overlap for U.S. sales of medically
important antimicrobials. We are encouraged by the improved economic conditions we are seeing in Brazil - one of our largest
markets. On the other hand, we continue to see weakness in the worldwide dairy market, as producers' profitability is challenged."
of the quarter was our September acquisition of Biotay Argentina. We are happy to welcome the entire Biotay team as colleagues
into Phibro. Biotay greatly expands our reach into the Argentine cattle market. We continue to see cattle as a species where
we can grow all of our Animal Health product categories."
active on the business development front. At the same time, we are strengthening our internal product development and organizational
capabilities as we seek to fully capitalize on our existing portfolio and pipeline, as well as begin to address adjacent opportunities."
million for the three months ended September 30, 2017, increased $5.4 million, or 3%, as compared to the three months ended September
30, 2016. Animal Health, Performance Products and Mineral Nutrition grew $4.3 million, $0.6 million and $0.5 million respectively.
million for the three months ended September 30, 2017, grew $4.3 million, or 3%. The growth was primarily due to volume increases
in the nutritional specialty and vaccine product groups within the segment. Nutritional specialty products grew $4.5 million, or
17%, primarily due to volume growth of our products for the U.S. poultry and dairy industries. Vaccines grew $3.7 million, or 25%,
primarily due to volume growth of our products for the poultry and swine industries. MFAs and other declined $3.8 million, or 5%,
primarily due to volume declines. Domestic net sales of MFAs and other declined $10.5 million due to $4.2 million lower sales of
medically important antimicrobials and due to unfavorable timing of certain customer orders. International net sales increased
$6.7 million due to growth across most regions, including the benefit of improved economic conditions in Brazil.
million increased $0.5 million, or 1%, for the three months ended September 30, 2017. The increased revenue was primarily due to
higher average selling prices resulting from underlying raw material commodity price increases. The increase in average selling
prices was partially offset by lower volumes of trace mineral products due to customer demand.
Performance Products
million increased $0.6 million, or 5%, for the three months ended September 30, 2017, due to higher average selling prices and
higher volumes of copper-based products.
of $63.4 million for the three month ended September 30, 2017, increased $2.4 million, or 4%, as compared to the three months
ended September 30, 2016. Gross profit increased to 32.8% of net sales for the three months ended September 30, 2017, as compared
to 32.4% for the three months ended September 30, 2016. The three months ended September 30, 2017, included $0.2 million of acquisition-related
cost of goods sold. Depreciation expense included in cost of goods sold increased $0.5 million due to recent capital expenditures.
Excluding the effects of the acquisition-related cost of goods sold and increased depreciation, Animal Health gross profit increased
$3.7 million due to volume growth in nutritional specialty and vaccine products, as well as lower unit costs from improved operating
efficiencies, partially offset by volume declines in MFAs and other products. Mineral Nutrition gross profit decreased $0.2 million
due to higher raw material costs, partially offset by higher average selling prices. Performance Products gross profit decreased
$0.4 million due to higher product costs for copper-based products, partially offset by higher average
selling prices of copper-based products.
Selling, general and administrative expenses
million for the three months ended September 30, 2017, increased $1.8 million, or 5%, as compared to the three months ended September
30, 2016. SG&A for the three months ended September 30, 2017 and 2016, included $0.4 million and $1.3 million, in acquisition-related
transaction costs, respectively. Excluding these costs, SG&A increased $2.7 million, or 7%, for the year.
increased $2.5 million, driven by sales force expansion and product development costs. Mineral Nutrition and Performance increased
$0.1 million and $0.2 million, respectively. Excluding the acquisition-related transaction costs, Corporate decreased less than
$0.1 million, as reduced pension costs offset increases in other expenses.
Interest expense, net
Interest expense, net of $3.1
million for the three months ended September 30, 2017, decreased $0.8 million, or 20%, as compared to the three months ended September
30, 2016. Interest expense decreased $1.2 million compared to the prior year, primarily due to lower interest rates in the new
Credit Facilities completed in June 2017. Interest income decreased $0.4 million due to less interest on deposits in foreign jurisdictions.
Foreign currency (gains) losses, net
Foreign currency (gains)
losses, net for the three months ended September 30, 2017, amounted to net losses of $0.3 million, as compared to $0.3 million
in net losses for the three months ended September 30, 2016. Foreign currency losses in the three months ended September 30, 2017,
were primarily due to the movement of the South African and Mexican currencies relative to the U.S. dollar. Foreign currency gains
and losses primarily arise from intercompany balances.
Provision (benefit) for income taxes
The provision for income
taxes was $3.1 million and $5.4 million for the three months ended September 30, 2017 and 2016, respectively. The effective
income tax rates for these periods were 16.1% and 30.7%, respectively. The provisions for income taxes for the three months ended
September 30, 2017 included a benefit of $2.7 million from the exercise of employee stock options. Without the benefit,
the effective income tax rates for the three months ended September 30, 2017 would have been 30.6%.
million for the three months ended September 30, 2017, increased $3.7 million, as compared to net income of $12.2 million
for the three months ended September 30, 2016. The increase was a result of the factors described above, including a $2.3 million
reduction in income tax expense and a $0.8 million reduction in interest expense, net.
Diluted EPS was $0.39 for
the three months ended September 30, 2017, an increase of $0.08, compared to $0.31 for the three months ended September 30, 2016,
as a result of the increase in net income.
Adjusted EBITDA of $30.1
million for the three months ended September 30, 2017, increased $0.3 million, or 1%, as compared to the three months ended September
30, 2016. Animal Health Adjusted EBITDA increased $1.1 million, or 3%, due to sales growth and increased gross profit, partially
offset by increased SG&A. Mineral Nutrition Adjusted EBITDA decreased $0.3 million, or 7%, due to higher raw material costs,
partially offset by higher average selling prices. Performance Products Adjusted EBITDA decreased $0.5 million, due to higher product
costs, partially offset by higher average selling prices. Corporate expenses increased $0.1 million due to increased compensation
and benefit costs, partially offset by lower pension costs.
Adjusted diluted EPS
Adjusted diluted EPS was
$0.38 for the quarter, an increase of $0.02 compared to $0.36 last year. A higher gross profit ratio, lower interest expense, net,
and a lower effective income tax rate, were the primary contributors to the improvement.
Pension Plan and Retirement Savings Plan
In July 2016, we amended
our domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective
as of September 30, 2016. The amendment resulted in a curtailment of the pension plan. During the three months ended September 30,
2016, we recorded a pension curtailment gain of $6.8 million in other comprehensive income and an offsetting reduction in
the liability for pension benefits included in other liabilities. We also modified the 401(k) retirement savings plan effective
October 1, 2016, to include, for all domestic employees, a non-elective Company contribution of 3% of compensation and an
additional discretionary contribution of up to 4% of compensation, depending on the employee's age and years of service.
BALANCE SHEET AND CASH FLOWS
We have reaffirmed our
financial guidance for the fiscal year 2018 as initially presented in our August 30, 2017 press release. The guidance is shown
in detail on the schedule included with this press release.
WEBCAST & CONFERENCE CALL DETAILS
Phibro Animal Health
Corporation will host a webcast and conference call during which the company will review its financial results and respond to questions.