Full Press Release Details
Phibro Animal Health Corporation Reports
Fourth Quarter and Fiscal Year
TEANECK, N.J., August 29, 2016 (GLOBE NEWSWIRE)
- Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its fourth quarter and fiscal
year ended June 30, 2016. It also provided guidance for its fiscal year ending June 30, 2017.
Health segment reported 7% revenue growth for the fourth quarter. Adjusted EBITDA growth of 4% was below recent trends due to product
mix and manufacturing costs related to production interruptions," commented Jack Bendheim, Phibro's Chairman, President
and Chief Executive Officer. "Some of our U.S. customers continue to reduce 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. 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."
Net sales of $189.2 million
for the three months ended June 30, 2016 increased $4.2 million, or 2%, as compared to the three months ended June 30, 2015. Animal
Health and Performance Products grew $8.7 million and $0.8 million, respectively, offset by declines in Mineral Nutrition of $5.3
Net sales of $126.2 million
for the three months ended June 30, 2016 grew $8.7 million, or 7%. The growth was primarily due to volume increases across all
product groups. Vaccines grew $3.4 million, or 29%, including the January 2016 acquisition of MVP Laboratories, Inc. ("MVP").
Certain vaccine sales were reduced by the continuing effects of production interruptions earlier in the year to implement Good
Manufacturing Practices capital improvements. Nutritional specialty products grew $3.1 million, or 14%, primarily due to U.S. volume
growth of our products for the dairy and poultry industries. MFAs and other increased $2.2 million, or 3%, primarily due to volume
increases in Brazil and other international markets, partially offset by declines in U.S. sales of certain MFAs.
Net sales of $50.3 million
for the three months ended June 30, 2016 decreased $5.3 million, or 9%. Sales declined primarily due to lower average selling prices
driven by underlying raw material costs, as well as slightly reduced volumes on seasonal variations in demand for trace mineral
Performance Products
Net sales of $12.7 million
for the three months ended June 30, 2016 increased $0.8 million, or 6%. Sales increased due to higher volumes of copper-based and
industrial chemical products, partially offset by lower average selling prices of copper-based products.
Gross profit of $59.6
million for the three months ended June 30, 2016 decreased $0.4 million, or 1%. Gross profit decreased to 31.5% of net sales for
the three months ended June 30, 2016, as compared to 32.4% for the three months ended June 30, 2015. Animal Health gross profit
decreased $1.1 million due to: (i) unfavorable product mix of MFA and other sales; (ii) unfavorable vaccine manufacturing
costs related to production interruptions; (iii) $1.0 million of acquisition-related cost of goods sold from the inventory
step-up related to the MVP acquisition; and, (iv) increased depreciation expense of $1.0 million due to recent capital expenditures.
Volume growth and favorable production costs of nutritional specialties products partially offset the negative factors. Mineral
Nutrition gross profit was even with last year, as lower average selling prices were offset by lower material costs. Performance
Products gross profit increased $0.6 million due to higher volumes of industrial chemical products and lower material costs of
copper-based products, partially offset by lower average selling prices of copper-based products.
Excluding the $1.0 million
of acquisition-related cost of goods sold and acquisition-related amortization for each period, gross profit increased $1.0 million,
Selling, general and administrative expenses
Selling, general and administrative
("SG&A") expenses of $39.5 million for the three months ended June 30, 2016 increased $0.5 million, or 1%, as compared
to the three months ended June 30, 2015. Performance Products accounted for $0.8 million of the increase due to increased accruals
for environmental remediation costs. Corporate expenses accounted for $0.3 million of the increase, due to increased compensation
and office-related costs. Lower costs for Mineral Nutrition due to one-time expenses in the prior year partially offset the increases.
Excluding acquisition-related
intangible amortization and accrued compensation for both years, SG&A increased $0.1 million.
Interest expense, net
Interest expense, net of
$4.5 million for the three months ended June 30, 2016 increased $0.8 million, primarily due to interest on increased borrowings
under our revolving credit facility.
Foreign currency (gains) losses, net
Foreign currency (gains)
losses, net for the three months ended June 30, 2016 amounted to net gains of $2.5 million, as compared to $1.5 million in net
losses for the three months ended June 30, 2015. Foreign currency gains in the three months ended June 30, 2016 were primarily
due to the movement of Brazil and Belgium 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 for the three months ended June 30, 2016 was $2.8 million, an effective tax rate of 15.6%. The provision included $2.6 million
for benefits related to the exercise of employee stock options and certain other discrete items. Excluding the benefits, the provision
for income taxes was an effective tax rate of 30.0%. The provision for income taxes for the quarter ended June 30, 2015 was $5.4
million, an effective tax rate of 34.2%.
Net income of $15.2 million for the three
months ended June 30, 2016 increased $4.8 million, compared to net income of $10.4 million for the three months ended June 30,
2015, as a result of the factors described above.
Diluted EPS was $0.38 for
the three months ended June 30, 2016, an increase of $0.12, compared to $0.26 for the three months ended June 30, 2015, as a result
of the increase in net income.
Adjusted EBITDA of $28.3
million for the three months ended June 30, 2016 increased $1.2 million, or 4%, as compared to the three months ended June 30,
2015. Animal Health adjusted EBITDA increased $1.6 million, or 5%, due to sales growth, partially offset by increased SG&A
expenses. Mineral Nutrition increased $0.2 million, or 5%, due to lower SG&A expenses as lower average selling prices were
offset by lower product costs. Performance Products decreased $0.1 million due to higher SG&A expenses. Corporate expenses
increased $0.5 million due to increased compensation and office-related costs.
Adjusted diluted EPS
EPS was $0.40 for the quarter, a decline of $0.04 compared to $0.44 last year. Increased depreciation expense, interest expense
and income taxes accounted for approximately $0.07 of the decline. Adjusted EBITDA contributed approximately $0.03 of growth, partially
offsetting the other factors.
Our results for the fiscal year ended June 30,
2015 included $8.0 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 $751.5 million
for the year ended June 30, 2016 increased $2.9 million, or less than 1%, as compared to the year ended June 30, 2015. Animal Health
grew $15.3 million, while Mineral Nutrition and Performance Products declined $10.4 million and $2.0 million, respectively.
Excluding the prior year
$8.0 million of vaccine licensing milestone revenue, net sales increased $10.9 million, or 1%.
Net sales of $486.1 million
for the year ended June 30, 2016 grew $15.3 million, or 3%. The growth was primarily due to volume increases across all product
groups within the segment. Nutritional specialty products grew $12.4 million, or 15%, primarily due to U.S. and E.U. volume growth
of our products for the dairy and poultry industries. MFAs and other grew $4.2 million, or 1%, primarily due to volume growth in
international markets, which offset declines in domestic volumes. Vaccines declined $1.2 million, or 2%, due to the $8.0 million
in vaccine licensing milestone revenue recorded in the prior year. Excluding the prior year $8.0 million in vaccine licensing milestone
revenue, vaccines grew $6.8 million, or 15%, principally from volume growth, including sales of MVP products.
Excluding the prior year
$8.0 million of vaccine licensing milestone revenue, Animal Health net sales grew $23.3 million, or 5%.
Net sales of $216.7 million