Phibro Animal Health Corporation Reports Fourth Quarter and Annual Results TEANECK, N.J.

Phibro Animal Health Corporation Reports

Fourth Quarter and Annual Results

TEANECK, N.J., September 16, 2014 (GLOBE NEWSWIRE)

- Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its fourth quarter and fiscal

year ended June 30, 2014. It also provided guidance for its fiscal year ending June 30, 2015.

Commenting on the quarter,

Jack Bendheim, Phibro's Chairman, President and Chief Executive Officer, said, "Our Animal Health-focused growth initiatives

continued to deliver strong sales and profit growth. We expect to see further organic sales growth and operating margin improvements

in our new fiscal year. We remain focused on providing our customers with value-based products and solutions to help them maintain

and enhance the health and productivity of their animals."

Net sales of $183.7 million increased $19.5

million, or 12%, for the quarter ended June 30, 2014 as compared to the quarter ended June 30, 2013, due to $13.4 million of growth

in Animal Health and $6.2 million of growth in Mineral Nutrition.

Net sales of $114.1 million grew $13.4 million,

or 13%, primarily due to volume growth across all product groups. MFAs and other grew $9.2 million, or 12%, primarily from growth

in Brazil, Latin America and the Asia Pacific regions. Nutritional specialty products grew $2.4 million, or 17%, primarily due

to U.S. volume growth of our products for the dairy industry and their introduction in select European countries. Vaccines grew

$1.8 million, or 21%, principally from the introduction of new products in several markets and volume growth in most markets.

Net sales of $54.9 million increased $6.2 million,

or 13%. Increased volumes of trace mineral products were partially offset by lower average selling prices due to lower commodity

Performance Products

Net sales of $14.7 million decreased $0.1 million,

or 1%, due to lower average selling prices partially offset by volume growth.

Gross profit of $54.3 million increased $6.1

million, or 13%, to 29.5% of net sales, with most of the improvement coming from Animal Health. Animal Health gross profit increased

$5.0 million, with approximately $3.9 million due to volume growth and favorable product mix, $2.5 million due to higher average

selling prices, partially offset by $1.4 million due to higher unit costs and other items. MFAs and other contributed $2.6 million

of the increase due to volume growth and higher average selling prices. Nutritional specialty products contributed $1.5 million

of the increase primarily due to volume growth and higher average selling prices. Vaccines gross profit increased $1.0 million

principally due to volume growth, partially offset by higher unit costs. Mineral Nutrition gross profit increased $0.8 million

primarily due to higher volumes and lower unit costs, partially offset by lower average selling prices and other items. Performance

Products gross profit increased $0.4 million due to lower product costs and higher volumes, partially offset by lower average selling

Selling, general and administrative expenses

SG&A expenses of $41.2 million increased

$8.0 million, or 24%. Included in the increase is a $5.4 million loss on an insurance claim as described in the next paragraph.

Excluding the loss attributable to the insurance claim, SG&A expenses increased $2.6 million, or 8%. Animal Health accounted

for $3.0 million of the increase, driven by sales and marketing and development spending. Selling headcount and related marketing

support increased in Brazil, Mexico and China to support MFA and vaccine initiatives and in the U.S. and Europe to support the

expansion of our products to the dairy industry. Development spending focused on product lifecycle extensions. Increased amortization

of intangible assets and other depreciation added $0.7 million. Performance Products expenses decreased $2.7 million primarily

due to lower environmental remediation costs. Corporate expenses, excluding the loss on the insurance claim, increased $2.4 million

due to increases in salary and wage-related costs, business development costs, consulting fees and professional fees, in part related

to the costs of being a public company.

During the quarter ended June 30, 2014, we

recognized in our consolidated statement of operations a $5.4 million loss on an insurance claim previously recorded as an asset.

In 2010, certain customers claimed damages to their poultry resulting from the use of one of our animal health products. We believed

we were entitled to coverage for the claimed damages under our insurance policies, above any applicable self-insured retention

or deductible. Our insurance carrier refused to cover the damages claimed and denied coverage. We instituted a legal action to

enforce our rights under the policies but in June 2014 the trial court ruled against us. We have appealed the trial court's

decision. In July 2014, we reached settlements with and made payments to our customers for their claims in amounts approximately

equal to the liability previously accrued.

Adjusted EBITDA of $24.2 million increased

$4.6 million, or 23%. Animal Health adjusted EBITDA increased $3.1 million, or 13%, due to sales growth and increased gross profit,

partially offset by increased SG&A expenses. Mineral Nutrition increased $0.7 million, or 26%, primarily due to higher volumes.

Performance Products increased $3.1 million primarily due to reduced environmental remediation costs. Corporate expense increased

$2.4 million due to increases in salary and wage-related costs, business development costs, consulting fees and professional fees,

in part related to the costs of being a public company. Adjusted EBITDA excludes the loss on the insurance claim.

Interest expense, net

Interest expense, net of $6.8 million decreased

$2.2 million due to the net result of issuing the Term B Loan and Revolving Credit Facility in April 2014, retiring the Mayflower

L.P. Term Loan, the BFI Co., LLC Term Loan and the Domestic Senior Credit Facility in April 2014 and redeeming the 9.25% Senior

Foreign currency (gains) losses, net

Foreign currency (gains) losses, net amounted

to net gain of $0.3 million for the three months ended June 30, 2014 compared to a net loss of $2.0 million for the three months

ended June 30, 2013. Foreign currency gains in the current period were primarily due to the movement of Brazil and Turkey currencies

relative to the U.S. dollar. Foreign currency gains and losses primarily arise from intercompany balances.

Loss on extinguishment of debt

Our consolidated statement of operations for

the three months ended June 30, 2014 included a $22.8 million loss on extinguishment of debt consisting of redemption premium

paid and the write-off of original issue discount and deferred financing costs related to retired debt. In April 2014, we retired

a $24.0 million term loan payable to Mayflower L.P., a $10.0 million term loan payable to BFI Co., LLC and outstanding borrowings

under our Domestic Senior Credit Facility. In May 2014, we retired $300.0 million of 9.25% senior notes due 2018.

Provision (benefit) for income taxes

We recorded a $1.5 million provision for income

taxes on a consolidated pre-tax loss of $16.1 million, representing a (9.3) % effective tax rate. The tax provision is comprised

primarily of income taxes relating to certain profitable foreign jurisdictions, partially offset by a benefit from the recognition

of certain previously unrecognized tax benefits. We generated a taxable loss from our domestic operations and established a valuation

allowance to offset the income tax benefit.

Pro forma adjusted diluted EPS

Pro forma adjusted diluted EPS was $0.22 for

the fourth quarter. The pro forma adjustments reflect the effects of our initial public offering and refinancing. The pro forma

adjustments assume the refinancing occurred at the beginning of the periods presented, resulting in a reduction in annual interest

expense of more than $19 million

compared with historical levels. The pro forma adjustments also

assume the additional common shares were outstanding for all periods presented.

Net sales of $691.9 million increased $38.8

million, or 6%, for the fiscal year ended June 30, 2014 as compared to the fiscal year ended June 30, 2013, due to $46.1 million

of growth in Animal Health, partially offset by declines in Mineral Nutrition and Performance Products.

Net sales of $431.1 million grew $46.1 million,

or 12%, primarily due to volume growth across all product groups. MFAs and other grew $22.8 million, or 8%, primarily due to volume

growth in the United States, Brazil, Latin America and Asia Pacific regions. Nutritional specialty products grew $10.7 million,

or 21%, primarily due to U.S. volume growth of our products for the dairy industry and their introduction in select European countries.

Vaccines grew $12.6 million, or 44%, principally from the introduction of new products in several markets and volume growth in

Net sales of $201.6 million decreased $1.6

million, or 1%. Our decision to deemphasize low-margin, volatile lysine sales accounted for $4.1 million of the reduction. Increased

volumes of trace mineral products partially offset the reduction.

Performance Products

Net sales of $59.3 million decreased $5.8 million,

or 9%, due to lower average selling prices for copper-based products for the catalyst industry and reduced volumes of a low-margin

industrial chemical. Volume growth in other industrial chemicals partially offset the decline.