Full Press Release Details
Phibro Animal Health Corporation Reports
Fourth Quarter and Fiscal Year
TEANECK, N.J., August 30, 2017 (GLOBE NEWSWIRE)
- Phibro Animal Health Corporation (NASDAQ:PAHC) today announced its financial results for its fourth quarter and fiscal
year ended June 30, 2017.
Highlights for the June 2017 quarter (compared
to the June 2016 quarter)
Highlights for the June 2017 year (compared to
Guidance for the June 2018 year, compared to the
"Our June quarter was a solid finish to
our fiscal year," said Jack Bendheim, Phibro's Chairman, President and Chief Executive Officer. "Continued strength
in nutritional specialties and vaccines resulted in Animal Health sales growth, despite reduced U.S. demand for medically important
antimicrobials and a challenging economic environment in Brazil. We continued to invest in Animal Health product development and
organization capabilities, which again tempered the profitability of the segment. Our Mineral Nutrition business completed the
year with another solid quarter of income growth."
"We are optimistic about our business
and the broader animal health industry as we enter our new fiscal year. We expect continued double-digit growth in nutritional
specialties and vaccines will offset the remaining reductions in U.S. demand for medically important antimicrobials. We expect
sales growth will drive improved profitability, while we will continue to invest in Animal Health product development and organization
million for the three months ended June 30, 2017, increased $5.7 million, or 3%, as compared to the three months ended June 30,
2016. Animal Health, Mineral Nutrition and Performance Products grew $2.4 million, $2.5 million and $0.7 million, respectively.
sales of $128.6 million for the three months ended June 30, 2017, grew $2.4 million, or 2%. The growth was primarily due
to volume increases in the nutritional specialty and vaccine product groups within the segment. Nutritional specialty products
grew $3.4 million, or 14%, primarily due to volume growth of our products for the U.S. poultry and dairy industries. Vaccines grew
$1.2 million, or 8%, primarily due to volume growth of our products for the poultry and swine industries. Medicated feed additives
("MFAs") and other declined $2.2 million, or 3%, primarily due to volume declines. Domestic net sales of MFAs and other
declined $7.4 million primarily due to reduced volumes of medically important
antimicrobials, due to regulatory changes and consumer preferences. International net sales increased $5.2 million, primarily due
to growth in our Asia Pacific region, partially offset by declines in Brazil due to economic conditions.
Net sales of $52.8 million
increased $2.5 million, or 5%, for the three months ended June 30, 2017. The increased revenue was due to increased volumes and
higher average selling prices resulting from underlying raw material commodity price increases.
Performance Products
million increased $0.7 million, or 6%, for the three months ended June 30, 2017, due to higher volumes of copper-based products
and personal care ingredients and higher average selling prices of copper-based products. Lower average selling prices of personal
care ingredients partially offset the increases.
Gross profit of $63.1
million for the three months ended June 30, 2017, increased $3.6 million, or 6%, as compared to the three months ended June 30,
2016. Gross profit increased to 32.4% of net sales for the three months ended June 30, 2017, as compared to 31.5% for the three
months ended June 30, 2016. For the three months ended June 30, 2016, $1.0 million of acquisition-related cost of goods sold reduced
gross profit. Excluding the effect of the 2016 acquisition-related cost of goods sold, Animal Health gross profit increased $2.1
million due to volume growth in nutritional specialty and vaccine products, as well as lower unit costs from improved operating
efficiencies. Mineral Nutrition gross profit increased $0.9 million due to higher average selling prices and volume growth, partially
offset by higher raw material costs. Performance Products gross profit decreased $0.4 million due to lower average selling prices
of personal care ingredients and higher product costs of copper-based products, partially offset by higher average selling prices
of copper-based products.
Selling, general and administrative expenses
general and administrative expenses ("SG&A") of $39.6 million for the three months ended June 30, 2017,
increased $0.1 million, or less than 1%, as compared to the three months ended June 30, 2016. SG&A for the three months ended
June 30, 2017, included a $1.0 million gain from the net effect of acquisition-related adjustments to contingent consideration
and impairments of intangible assets. Without the gain on the acquisition-related
adjustments, SG&A increased $1.1 million, or 3%. Animal Health SG&A increased $2.1 million, driven by timing of spending.
Performance Products decreased $0.6 million primarily due to lower environmental costs. Corporate decreased $0.5 million primarily
due to lower benefit plan costs.
Interest expense, net
Interest expense, net, of $3.2
million for the three months ended June 30, 2017, decreased $1.3 million, or 30%, as compared to the three months ended June 30,
2016. Interest income increased $0.4 million from interest on deposits in foreign jurisdictions. Interest expense decreased $0.4
million, as compared to the three months ended June 30, 2016, due to decreased borrowings under our Revolver. Acquisition-related
accrued interest decreased $0.3 million due to an adjustment to contingent consideration.
Foreign currency (gains) losses, net
Foreign currency (gains) losses,
net for the three months ended June 30, 2017, amounted to net losses of $0.5 million, as compared to $2.5 million in net
gains for the three months ended June 30, 2016. Foreign currency losses in the three months ended June 30, 2017, were primarily
due to the movement of the Turkish and Argentinian currencies relative to the U.S. dollar. Foreign currency gains and losses primarily
arise from intercompany balances.
Loss on extinguishment of debt
Our consolidated statements
of operations for the three months ended June 30, 2017, included a $2.6 million loss on extinguishment of debt for unamortized
debt issuance costs and debt discount related to retired debt.
Provision (benefit) for income taxes
The provision for income taxes
was $1.8 million for the three months ended June 30, 2017, as compared to $2.8 million for the three months ended June 30, 2016.
The effective income tax rates for these periods were 10.7% and 15.6%, respectively. The decrease in the effective income tax rate
during the three months ended June 30, 2017 was primarily the result of the mix in geographic earnings. The provisions for income
taxes for the three months ended June 30, 2017 and 2016, included a benefit (expense) of $0.3 million and $(1.7) million, respectively,
from the release and adjustment of valuation allowances for certain foreign and domestic deferred income taxes, benefits of $1.7
million and $3.5 million, respectively, from the exercise of employee stock options and benefits of $0.5 million and $1.1 million,
respectively, from the recognition of previously unrecognized tax benefits. Without these benefits, the effective income tax rates
for the three months ended June 30, 2017 and 2016, would have been 25.1% and 31.8%, respectively.
Our future effective income
tax rate may fluctuate due to various factors, including the relative amounts of income earned in different taxing jurisdictions,
changes in statutory tax rates, potential strategies to reduce our overall income tax expense, discrete items, the benefit of employee
stock option exercises and certain non-deductible items.
million for the three months ended June 30, 2017, increased $0.2 million, as compared to net income of $15.2 million for
the three months ended June 30, 2016. The increase was a result of the factors described above, including the $1.0 gain on acquisition-related
adjustments, a $3.0 million unfavorable change in foreign currency (gains) losses, net, and the $2.6 million loss on extinguishment
$0.38 for the three months ended June 30, 2017, which was equal to the three months ended June 30, 2016, as a reduced provision
for income taxes offset lower income before income taxes. Income before income taxes was lower due to the unfavorable change in
foreign currency (gains) losses, net and the loss on extinguishment of debt, which offset improved operating income and lower interest
Adjusted EBITDA of $29.4
million for the three months ended June 30, 2017, increased $1.1 million, or 4%, as compared to the three months ended June 30,
2016. Animal Health Adjusted EBITDA decreased $0.2 million, or 1%, due to increased SG&A, partially offset by sales growth
and increased gross profit. Mineral Nutrition increased $0.7 million, or 21%, due to improved operating margins from volume growth
and from higher average selling prices, partially offset by higher raw material costs. Performance Products increased $0.2 million,
or 51%, as higher volumes and lower SG&A were partially offset by higher product costs. Corporate expenses decreased $0.4 million
due to lower benefit plan costs.
Adjusted diluted EPS
EPS was $0.39 for the quarter, an increase of $0.07 compared to $0.32 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.