Phibro Animal Health Corporation Reports Second Quarter Results, Provides Revised Financial Guidance TEANECK, N.J.

Phibro Animal Health Corporation Reports Second

Quarter Results, Provides Revised Financial Guidance

TEANECK, N.J., February 9, 2022 (Business Wire)

- Phibro Animal Health Corporation (Nasdaq:PAHC) today announced financial results for its second quarter ended December 31, 2021.

"We had a strong second quarter. In fact, we

posted $233 million of net sales, the highest single quarter of sales in Company history," said Jack Bendheim, Phibro's

Chairman, President and Chief Executive Officer.

"Our financial performance this quarter was

driven by continued strong demand for our products globally and the recent actions we've taken and will continue to take to adjust

prices and pass through incremental freight costs, assuming competitive conditions allow. These actions had a marginally positive impact

on our bottom-line this quarter, and we anticipate a bigger benefit from them in the quarters to come." The Company also raised

projections for full-year financial performance. Jack remarked, "We are raising full year net sales guidance for a second time.

We are now projecting net sales for the year of $890 - $920 million. We are maintaining our adjusted EBITDA guidance of $110 - $114 million

and raising our guidance on adjusted Net Income and adjusted diluted EPS by about 5%, respectively, driven primarily by a favorable change to our adjusted

effective tax rate projection."

Net sales of $232.7 million for the three months

ended December 31, 2021, increased $26.6 million, or 13%, as compared to the three months ended December 31, 2020. Animal Health and Mineral

Nutrition increased $14.7 million and $12.5 million, respectively, while Performance Products decreased $0.6 million.

Net sales of $150.9 million for the three months

ended December 31, 2021, increased $14.7 million, or 11%. Net sales of MFAs and other increased $10.1 million, or 12%, driven by higher

demand in North America and South America, reflecting continued recovery from the effects of the pandemic. Our processing aids used by

producers of ethanol, distillers corn oil and distillers grain products contributed $3.5 million to the overall net increase in sales

in MFAs and other. Net sales of nutritional specialty products increased $0.9 million, or 3%, due to increased selling prices and volumes,

plus increased revenues from our companion animal product. Net sales of vaccines increased $3.6 million, or 20%, due to increased domestic

and international volumes.

Net sales of $66.7 million for the three

months ended December 31, 2021, increased $12.5 million, or 23%, primarily driven by higher average selling prices of trace minerals.

The increase in average selling prices is correlated with the movement of the underlying raw material costs.

Performance Products

Net sales of $15.1 million for the three

months ended December 31, 2021, decreased $0.6 million, or 4%, as a result of lower average selling prices and lower volumes in copper-based

products, partially offset by higher sales of personal care product ingredients.

Gross profit of $70.7 million for the three

months ended December 31, 2021, increased $2.4 million, or 4%, as compared to the three months ended December 31, 2020. Gross margin decreased

270 basis points to 30.4% of net sales for the three months ended December 31, 2021, as compared to 33.1% for the three months ended December

Animal Health gross profit increased $2.0 million,

or 3%, primarily driven by higher sales volume across all product lines, partially offset by increased raw material and logistics costs

and unfavorable product mix. Mineral Nutrition gross profit increased $1.4 million, driven primarily by higher average selling prices,

partially offset by an increase in raw material costs. Performance Products gross profit decreased $1.0 million, primarily driven by higher

raw material and production costs.

Selling, general and administrative expenses

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

of $48.4 million for the three months ended December 31, 2021, were comparable to the three months ended December 31, 2020. SG&A for

the three months ended December 31, 2021, included a $1.2 million gain on sale of investment. SG&A for the three months ended December

31, 2020, included $0.6 million of stock-based compensation. Excluding these items, SG&A increased $1.8 million, or 4%.

Animal Health SG&A increased $1.6 million,

primarily due to an increase in headcount and related employee costs. Mineral Nutrition and Performance Products SG&A were comparable

to the prior year. Excluding the gain on sale of investment and the stock-based compensation, Corporate expenses increased $0.2 million

due to strategic investments.

Interest expense, net

Interest expense, net of $3.0 million for the

three months ended December 31, 2021, decreased $0.3 million, or 8%, as compared to the three months ended December 31, 2020. Interest

expense decreased due to favorable borrowing rates, partially offset by higher debt levels.

Foreign currency (gains) losses, net

Foreign currency (gains) losses, net for the three

months ended December 31, 2021, amounted to net gains of $4.2 million, as compared to $0.6 million of net losses for the three months

ended December 31, 2020. Foreign currency (gains) losses, net primarily arose from intercompany balances. Current period gains were driven

by the weakening of the Turkish and Brazilian currencies relative to the U.S. dollar.

Provision for income taxes

The provision for income taxes was $6.1 million

and $3.3 million for the three months ended December 31, 2021 and 2020, respectively. The effective income tax rate was 25.8% and 20.3%

for the three months ended December 31, 2021 and 2020, respectively. The provision for income taxes during the three months ended December

31, 2021, included a $0.2 million benefit related to the finalized regulations for the Global Intangible Low-Taxed Income ("GILTI")

tax and a $0.1 million expense related to an uncertain tax position adjustment. The effective income tax rate, without these items, would have been 26.5% for the three months ended December 31, 2021.

Net income of $17.5 million for the three months

ended December 31, 2021, increased $4.7 million, as compared to net income of $12.8 million for the three months ended December 31, 2020.

Operating income increased $2.4 million, driven by favorable gross profit. The increase in gross profit in the Animal Health and Mineral

Nutrition segments was due to higher sales volume and higher average selling prices, partially offset by increases in raw material costs

and unfavorable product mix. Gross profit in the Performance Products segment decreased due to higher raw material and production costs.

Interest expense decreased by $0.3 million, while foreign currency (gains) losses, net increased $4.8 million. Income tax expense increased

Adjusted EBITDA of $29.1 million for the three

months ended December 31, 2021, increased by $0.6 million compared to the three months ended December 31, 2020. Animal Health Adjusted

EBITDA increased $0.3 million due to higher gross profit, partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA increased

$1.3 million, driven by increased gross profit. Performance Products Adjusted EBITDA decreased $0.9 million, primarily driven by higher

raw material costs and production costs. Corporate expenses increased $0.2 million, primarily due to strategic investments.

Adjusted provision for income taxes

The adjusted effective income tax rates for the three

months ended December 31, 2021 and 2020, were 25.5% and 28.5%, respectively. The decrease in our adjusted effective income tax rate was

driven primarily by a change in the jurisdictional mix of earnings.

Adjusted net income of $15.1 million for the three

months ended December 31, 2021, increased $1.2 million, or 9%, as compared to the prior year, driven by higher gross profit from an increase

in volumes and average selling prices, partially offset by increased SG&A due to strategic investments.

Adjusted diluted EPS

Adjusted diluted EPS was $0.37

for the quarter, an increase of $0.03, as compared to $0.34 in the prior year.

BALANCE SHEET AND CASH FLOWS

REVISED FINANCIAL GUIDANCE

Our revised projections of financial performance for the year ending

June 30, 2022, are as follows:

This financial guidance assumes certain planned price increases and

freight surcharges, where applicable and competitive conditions allow, have been and will continue to be applied.

The COVID-19 global pandemic continues to present challenges to the

animal health industry, including but not limited increased material and shipping costs and labor cost increases and shortages. Our revised

guidance assumes that supply chain and labor challenges will persist for the remainder of our fiscal year.

We will continue to monitor the impact the pandemic is having on our

business and adjust our financial guidance, if necessary.

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.