Phibro Animal Health Corporation Reports

Phibro Animal Health Corporation Reports

TEANECK, N.J., November 11, 2014 (GLOBE NEWSWIRE)

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

30, 2014. It also updated 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 businesses delivered another solid

quarter. Good volume growth across Animal Health and Mineral Nutrition was the key to the performance. We are also encouraged by

the accelerated receipt of licensing revenue from our vaccine delivery technology."

Net sales of $187.5 million increased $25.2

million, or 16%, for the three months ended September 30, 2014, as compared to the three months ended September 30, 2013,

due to growth in Animal Health and Mineral Nutrition of $16.1 million and $9.3 million, respectively.

The consolidated statement of operations

for the three months ended September 30, 2014 included $6.0 million of revenue and gross profit related to an existing license

agreement with a global animal health company to share in the use of our proprietary vaccine delivery technology. We recognized

the revenue and profit during the quarter because certain contractual and regulatory milestones were achieved by the licensee and

we had no performance obligations under the agreement. Excluding the $6.0 million in licensing revenue, net sales growth was $19.2

Net sales of $117.2 million grew $16.1

million, or 16%, primarily due to volume growth across all product groups. Excluding the $6.0 million in revenue from the licensing

agreement, net sales growth was $10.1 million, or 10%. Medicated Feed Additives ("MFAs") and other grew $2.8 million,

or 4%, primarily due to volume growth in the Latin America and Asia Pacific regions. Nutritional specialty products grew $5.4 million,

or 38%, primarily due to U.S. volume growth of our products for the dairy industry and their introduction in select European countries.

Excluding the effect of the $6.0 million in licensing revenue, vaccines grew $1.9 million, or 20%, principally from volume growth.

Net sales of $55.4 million increased $9.3

million, or 20%. Increased volumes accounted for 74% of the sales growth resulting from current market conditions and customer

demand for certain trace mineral products.

Performance Products

Net sales of $14.8 million decreased $0.1

million, or 1%, due to lower average selling prices and lower volumes in personal care ingredients, partially offset by higher

volumes of a low-margin industrial chemical. Lower average selling prices of copper-based products were offset by higher volumes.

Gross profit of $60.3 million increased $10.8

million, or 22%, to 32.2% of net sales, with a majority of the improvement coming from Animal Health. Gross profit growth was $4.8

million, or 10%, excluding the effect of the $6.0 million in licensing revenue. Animal Health gross profit increased $3.7 million,

excluding the effect of the licensing revenue, with approximately $4.2 million due to volume growth and favorable product mix and

$0.6 million due to higher average selling prices and other items, partially offset by $1.1 million of higher product costs. MFAs

and other contributed $0.2 million of the increase due to volume growth and average selling prices, partially offset by higher

unit costs. Nutritional specialty products contributed $2.9 million of the increase primarily due to volume growth, higher average

selling prices and lower unit costs. Excluding the current period gross profit from the licensing revenue for the vaccine delivery

technology, vaccines gross profit increased $0.5 million principally due to volume growth. Mineral Nutrition gross profit increased

$1.0 million due to higher average selling prices and higher volumes. Performance Products gross profit increased $0.1 million

due to lower product costs and higher volumes, partially offset by lower average selling prices.

Selling, general and administrative expenses

Selling, general and administrative ("SG&A")

expenses of $35.2 million increased $2.1 million, or 6%. Animal Health accounted for $1.5 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. Corporate expenses increased $0.5 million due to increases in salary

and wage related costs and professional fees, in part related to the costs of being a public company.

Adjusted EBITDA of $30.5 million increased

$8.9 million, or 41%. Adjusted EBITDA growth was $2.9 million, or 13%, excluding the $6.0 million in revenue from the licensing

agreement. Animal Health adjusted EBITDA increased $2.3 million, or 10%, excluding the effect of the licensing revenue, due to

sales growth and increased gross profit, partially offset by increased SG&A expenses. Mineral Nutrition increased $1.0 million,

or 41%, due to higher sales volumes and improved operating margins. Performance Products decreased $0.1 million, or 5%. Corporate

expense increased $0.4 million due to increases in salary and wage related costs and professional fees, in part related to the

costs of being a public company.

Interest expense, net

Interest expense, net of $3.5 million decreased

$5.2 million due to the net result of issuing the Term B Loan and Revolving Credit Facility in April 2014, retiring the Mayflower

Term Loan, the BFI Term Loan and the Domestic Senior Credit Facility in April 2014 and redeeming the 9.25% Senior Notes in

Foreign currency (gains) losses, net

Foreign currency (gains) losses, net for

the three months ended September 30, 2014, amounted to net gains of $1.2 million, as compared to $0.6 million in net losses for

the three months ended September 30, 2013. Foreign currency gains in the current period were primarily due to the movement of Brazil,

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

Provision for income taxes

Income taxes of $2.3 million were recorded

on consolidated pre-tax income of $22.8 million, a 10.2% effective tax rate. The tax provision is comprised primarily of income

taxes relating to profitable foreign jurisdictions, partially offset by a $1.2 million benefit from the recognition of certain

previously unrecognized tax benefits. The provision for income taxes on domestic pre-tax income was substantially offset by the

release of a valuation allowance previously recorded on accumulated domestic net operating losses.

Adjusted diluted EPS

Adjusted diluted EPS was $0.51 for the

quarter, compared with $0.30 last year on a pro forma adjusted basis. The pro forma adjustments to last year reflect the effects

of our initial public offering and refinancing. The pro forma adjustments assume the refinancing occurred at the beginning of the

period, 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.

BALANCE SHEET AND CASH FLOWS

We have increased our

FY2015 guidance for the benefit of an additional $4 million of licensing revenue and profit for vaccine delivery technology. The

revenue was recognized due to the accelerated achievement of a regulatory milestone under an existing license agreement that previously

had been expected to occur in our FY2016. The increase benefits sales and adjusted EBITDA in equal amounts. Our guidance continues

to contemplate an additional $2 million in licensing revenue and profit to be received later this fiscal year with the final milestone

payment to be made under the license agreement,

bringing the expected total licensing revenue and profit for the fiscal year to $8 million.

WEBCAST & CONFERENCE CALL DETAILS

Phibro Animal Health Corporation

will host a webcast and conference call at 9:00 AM (EDT) on Wednesday, November 12, 2014, during which the company will review

fourth quarter and fiscal year 2014 financial results and respond to questions. Investors and the public may access the live webcast

by visiting the Phibro website at http://investors.pahc.com. A replay of the webcast will be archived and made available on Phibro's

website until approximately February 15, 2015.

Statements: This communication contains forward-looking statements, which reflect Phibro's current views with

respect to business plans or prospects, future operating or financial performance, expectations regarding future use of cash and

dividend payments, and other future events. You can identify forward-looking statements by the fact that they do not relate strictly

to historical or current facts. These statements may include words such as "aim," "anticipate," "believe,"

"estimate," "expect," "forecast," "outlook," "potential," "project,"

"projection," "plan," "intend," "seek," "believe," "may,"

"could," "would," "will," "should," "can," "can have,"

"likely," the negatives thereof and other words and terms of similar meaning in connection with any discussion of the

timing or nature of future operating or financial performance or other events. These statements are not guarantees of future performance

or actions. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize,

or if management's underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated