Full Press Release Details
Phibro Animal Health Corporation Reports Third
Quarter and Year-to-Date Results
TEANECK, N.J., May 6, 2021 (Business
Wire) - Phibro Animal Health Corporation (NASDAQ: PAHC) today announced financial results for its third quarter and
year-to-date period ended March 31, 2021.
Highlights for the March 31, 2021 quarter (compared
to the quarter ended March 31, 2020)
Highlights for the nine months ended March 31, 2021
(compared to the nine months ended March 31, 2020)
"The third quarter was another quarter of
solid financial performance. Consolidated sales and adjusted diluted EPS were both ahead of guidance. Sales were comparable to the
same quarter last year, while profitability declined slightly due to unfavorable product mix and increases in certain expenses,
including incremental strategic investments in our future" said Jack Bendheim, Phibro's Chairman, President and Chief
Executive Officer. Jack continued, "I am pleased to report that we received EU GMP approval for our new vaccine facility in
Sligo, Ireland and we continue to build our companion animal pipeline, having recently finalized an agreement that adds two
early-stage oral care projects. We expect a strong fourth quarter to close out our fiscal year."
Net sales of $211.7 million for the three months
ended March 31, 2021, increased $1.0 million, or less than 1%, as compared to the three months ended March 31, 2020. Animal Health decreased
$4.6 million, while Mineral Nutrition and Performance Products increased $2.0 million and $3.6 million, respectively.
Net sales of $134.4 million for the three months
ended March 31, 2021, declined $4.6 million, or 3%. Net sales of MFAs and other decreased $4.1 million, or 5%, driven by lower international
demand, primarily poultry products in the Latin America region, as well as timing of certain domestic customer orders. Net sales of nutritional
specialty products increased $2.3 million, or 7%, principally due to international volume growth in dairy products. Net sales of vaccines
declined $2.8 million, or 13%, as challenging economic conditions in Eastern Europe, more than offset domestic volume growth and increased
demand in the Asia Pacific region.
Net sales of $58.2 million for the three
months ended March 31, 2021, increased $2.0 million, or 3%, driven by increased average selling prices. The increase in average selling
prices is correlated with the movement of the underlying raw material costs.
Performance Products
Net sales of $19.2 million for the three
months ended March 31, 2021, increased $3.6 million, or 23%. The increase was driven by strong demand for copper-based products coupled
with favorable product pricing correlated with underlying raw material costs.
Gross profit of $69.2 million for the three
months ended March 31, 2021, decreased $0.4 million, or 1%, as compared to the three months ended March 31, 2020. Gross margin decreased
30 basis points to 32.7% of net sales for the three months ended March 31, 2021, as compared to 33.0% for the three months ended March
Animal Health gross profit decreased $3.2 million
due to lower sales and unfavorable product mix. Mineral Nutrition gross profit increased $1.2 million, driven primarily by favorable product
mix. Performance Products gross profit increased $1.6 million driven by volumes and favorable product mix.
Selling, general and administrative expenses
Selling, general and administrative expenses ("SG&A")
of $49.0 million for the three months ended March 31, 2021, increased $0.8 million, or 2%, as compared to the three months ended March
31, 2020. SG&A for the three months ended March 31, 2020, included $0.6 million of stock-based compensation. Excluding these costs,
SG&A increased $1.4 million, or 3%.
Animal Health SG&A increased $0.3 million,
due to investments in market expansion initiatives in certain international regions, partially offset by decreased marketing and sales
team travel costs driven by COVID-19 limitations. Mineral Nutrition and Performance Products SG&A were comparable to the prior year.
Corporate SG&A increased $1.0 million due to investments in strategic initiatives and incremental performance-related compensation
costs, partially offset by a decline in travel costs driven by COVID-19 limitations.
Interest expense, net
Interest expense, net of $2.9 million for the
three months ended March 31, 2021, decreased $0.3 million, or 10%, as compared to the three months ended March 31, 2020. Interest expense,
net decreased primarily due to favorable variable borrowing rates, partially offset by reduced interest income from short-term investments.
Foreign currency gains, net
Foreign currency gains, net were $0.6 million
for the three months ended March 31, 2021 and 2020.
Provision for income taxes
The provision for income taxes was $5.6 million
and $5.2 million for the three months ended March 31, 2021 and 2020, respectively. The effective income tax rate was 31.6% and 27.7% for
the three months ended March 31, 2021 and 2020, respectively. The provision for income taxes during the three months ended March 31, 2021,
included a $0.6 million expense related to a detailed deferred tax analysis of property, plant, and equipment and intangible assets. The
effective income tax rate, without this expense, would have been 27.9% for the three months ended March 31, 2021.
Net income of $12.2 million for the three months
ended March 31, 2021, decreased $1.3 million, as compared to net income of $13.5 million for the three months ended March 31, 2020. Operating
income declined $1.2 million, driven by lower gross profit and increased SG&A expenses. The decrease in gross profit and the overall
gross margin was primarily driven by lower volume and unfavorable product mix in the Animal Health segment, partially offset by increased
gross profit in the Mineral Nutrition and Performance Products segments. SG&A expenses increased due to investments in strategic initiatives
and incremental performance-related compensation costs, partially offset by a decline in travel costs driven by COVID-19 limitations.
Interest expense was lower by $0.3 million, while income tax expense increased $0.5 million.
Adjusted EBITDA of $28.1 million for the three
months ended March 31, 2021, declined $2.1 million, or 7%, as compared to the three months ended March 31, 2020. Animal Health Adjusted
EBITDA decreased $3.7 million on lower sales and gross profit and increased SG&A costs. Mineral Nutrition Adjusted EBITDA increased
$1.2 million, driven by increased gross profit on favorable product mix. Performance Products Adjusted EBITDA increased $1.4 million driven
by increased gross profit. Corporate expenses increased $1.0 million, primarily due to investments in strategic initiatives and incremental
performance-related compensation costs, partially offset by a decline in travel costs driven by COVID-19 limitations.
Adjusted provision for income taxes
The adjusted effective income tax rates for the three
months ended March 31, 2021 and 2020 were 28.4% and 26.3%, respectively. The increase in our adjusted tax rate was driven by the geographical
mix of our operating earnings.
Adjusted net income of $13.9 million for
the three months ended March 31, 2021, decreased $1.6 million, or 11%, as compared to the prior year. The decline was driven by
lower gross profit coupled with increased SG&A expenses. The decrease in gross profit was driven by lower volume and unfavorable product
mix in the Animal Health segment, partially offset by increased gross profit in the Mineral Nutrition and Performance Products segments.
SG&A expenses increased due to investments in strategic initiatives and incremental performance-related compensation costs, partially
offset by a decline in travel costs driven by COVID-19 limitations.
Adjusted diluted EPS
Adjusted diluted EPS was $0.34
for the quarter, a decline of $0.04, as compared to $0.38 in the prior year.
YEAR-TO-DATE RESULTS
Net sales of $613.1 million for the nine months
ended March 31, 2021, decreased $1.4 million, or less than 1%, as compared to the nine months ended March 31, 2020. Animal Health and
Mineral Nutrition declined $5.5 million and $0.8 million, respectively. Performance Products increased $4.9 million.
Net sales of $399.0 million for the nine months
ended March 31, 2021, declined $5.5 million, or 1%. Net sales of MFAs and other declined $10.8 million, or 4%, due to reduced demand in
China following regulatory changes effective January 1, 2020, and lower volume in Latin America, partially offset by net sales growth
in other products and regions, including domestic swine. Net sales of nutritional specialty products grew $7.8 million, or 8%, due to
international and domestic volume growth in dairy products, partially offset by lower sales in domestic poultry. Net sales of vaccines
declined $2.5 million, or 4%, as challenging economic conditions in Eastern Europe, more than offset domestic volume growth and increased
demand in the Asia Pacific region.
Net sales of $163.8 million for the nine months
ended March 31, 2021, decreased $0.8 million, or less than 1%. Lower overall average selling prices were partially offset by increased