Full Press Release Details
Animal Health Corporation Reports Third Quarter Results
TEANECK, N.J., May 13, 2014 (GLOBE
NEWSWIRE) - (Nasdaq: PAHC) - Phibro Animal Health Corporation today reported its financial results for its March
2014 fiscal third quarter and provided guidance for its June 2014 fiscal fourth quarter and fiscal year. The Company
completed an initial public offering of its common stock and a refinancing of substantially all of its outstanding
indebtedness in April 2014.
investing community to our first earnings release as a public company. For the March 2014 quarter, our Animal Health-focused growth
initiatives continued to deliver strong sales and profit growth," said Jack Bendheim, Chairman, President and Chief Executive
Officer. "We see good operating momentum going into the final quarter of our fiscal year and we continue to look for tuck-in
million increased $10.6 million, or 7%, for the three months ended March 31, 2014 as compared to the three months ended March 31,
2013, primarily from $13.9 million of growth in Animal Health, partially offset by declines in Mineral Nutrition and Performance
million grew $13.9 million, or 15%, due to volume growth of MFAs and other, nutritional specialty products and vaccines. MFAs and
other grew $8.7 million, or 12%, with growth in the Asia Pacific and Latin America regions. Nutritional specialty products grew
$2.0 million, or 14%, primarily due to price and volume growth of our products for the dairy industry. Vaccines grew $3.2 million,
or 46%, principally from the introduction of new products in several markets, as well as increased volumes in most markets.
million decreased $1.9 million, or 4%. Our earlier decision to deemphasize low margin, volatile lysine sales accounted for $0.7
million of the reduction. The remainder of the sales decline was principally due to reduced average selling prices due to lower
underlying raw material commodity prices, partially offset by higher volumes.
Performance Products
million decreased $1.5 million, or 9%, due to reduced volumes of a low margin industrial chemical and reduced average selling prices
due to lower underlying raw material commodity prices and pricing pressure at certain customers.
Gross profit of $52.8
million increased $7.1 million, or 15%, to 30.5% of net sales, with all of the improvement coming from Animal Health. Animal Health
gross profit increased $8.2 million, with approximately $5.4 million due to volume growth and $2.7 million from higher average
selling prices and other items. MFAs and other contributed $3.6 million of the increase on higher volumes and higher average selling
prices. Nutritional specialty products contributed $1.7 million of the increase on volume growth and higher average selling prices.
Vaccines gross profit increased $2.9 million due to volume growth. Mineral Nutrition gross profit decreased $0.3 million due to
reduced margins from competitive conditions and product mix. Performance Products gross profit decreased $0.7 million due to reduced
volumes and lower average selling prices.
Selling, general and administrative
Selling, general and
administrative ("SG&A") expenses of $35.5 million increased $4.2 million, or 14%. Animal Health accounted for $3.0
million of the increase, driven by sales, marketing and development spending. Selling headcount and related marketing support increased
in Latin America and Asia Pacific to support MFA and vaccine initiatives and in the United States and Europe to support the expansion
of our nutritional specialty products to the dairy industry. Development spending focused on product lifecycle extensions. Corporate
expenses increased $0.9 million due to increases in salary and wage-related costs and increases in professional fees relating to
becoming a public company.
$22.4 million increased $3.0 million, or 16%, with Animal Health's $5.2 million increase accounting for all the improvement,
due to sales growth and increased gross profit, partially offset by increased SG&A expenses.
Pro forma adjusted diluted EPS
Pro forma adjusted diluted
EPS was $0.36 for the third quarter, a 28% increase from last year. The pro forma adjustments reflect the effects of our recent
initial public offering and refinancing. The pro forma adjustments assume the refinancing occurred at the beginning of the periods
presented, resulting in a reduction in annual interest expense of over $21 million compared with historical levels. The pro forma
adjustments also assume the additional common shares were outstanding for the entire period.
For the quarter ending
June 30, 2014, the Company estimates net sales will be approximately $174 to $177 million, a 6% to 8% increase compared to the
prior year, adjusted EBITDA will be approximately $23 to $24 million, a 15% to 20% increase and pro forma adjusted diluted EPS
will be approximately $0.19 to $0.21. Approximately $6 million of non-recurring income tax items will reduce pro forma adjusted
EPS by approximately $0.15. The items include withholding taxes on repatriated cash and a tax audit settlement.
The June 2014 quarter
will also include approximately a $23.7 million loss on extinguishment of debt. This loss is excluded from adjusted EBITDA and
from pro forma adjusted diluted EPS for the June 2014 quarter and fiscal year.
For the fiscal year, the
Company estimates net sales will be approximately $682 to $685 million, adjusted EBITDA will be approximately $89 to $90 million
and pro forma adjusted diluted EPS will be approximately $1.19 to $1.22.
The company also affirmed
its plan to pay a quarterly dividend of $0.10 per share, with the first payment beginning in September 2014. This represents an
annual rate of approximately $15.5 million.
WEBCAST & CONFERENCE CALL DETAILS
Phibro Animal Health
Corporation will host a webcast and conference call at 10:00 AM (EDT) on Wednesday, May 14, 2014 during which the company will
review third quarter 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
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. 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 by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Phibro expressly disclaims any obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and
other matters can be found in our Registration Statement on Form S-1, as amended, that was declared effective on April 10, 2014,
including in the sections thereof captioned "Forward-Looking Statements" and "Risk Factors." These filings and
subsequent filings are available online at www.sec.gov, www.pahc.com, or on request from Phibro.
Financial Information: We use non-GAAP financial measures, such as adjusted EBITDA, adjusted net income and pro forma adjusted
diluted earnings per share, to assess and analyze our operational results and trends and to make financial and operational decisions.
We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our
operating performance. The non-GAAP financial measures included in this communication should not be considered alternatives to
measurements required by GAAP, such as net income, operating income, and earnings per share, and should not be considered measures
of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies.
Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this communication
and/or our Quarterly Reports on Form 10-Q.
Posting of Information: We routinely post information that may be important to investors in the "Investors" section
of our website at www.pahc.com. We encourage investors and potential investors to consult our website regularly for important
information about us.
| For the Periods Ended March 31 | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Income | Three Months | Nine Months | ||||||||||||||||||||||
| (in millions, except per share amounts) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||||||||
| Net sales | $ | 173.3 | $ | 162.7 | 7 | % | $ | 508.2 | $ | 489.0 | 4 | % | ||||||||||||
| Cost of goods sold | 120.4 | 116.9 | 3 | % | 354.7 | 358.1 | (1 | )% | ||||||||||||||||
| Gross profit | $ | 52.8 | $ | 45.8 | 15 | % | $ | 153.5 | $ | 130.8 | 17 | % | ||||||||||||
| Selling, general and administrative expenses | 35.5 | 31.3 | 14 | % | 102.8 | 89.0 | 15 | % | ||||||||||||||||
| Operating income (loss) | $ | 17.3 | $ | 14.5 | 20 | % | $ | 50.7 | $ | 41.8 | 21 | % | ||||||||||||
| Interest expense, net | 8.7 | 8.9 | (1 | )% | 26.2 | 26.7 | (2 | )% | ||||||||||||||||
| Foreign currency (gains) losses, net | 0.3 | 0.8 | (67 | )% | 2.1 | 1.1 | 84 | % | ||||||||||||||||
| Other (income) expense, net | - | 0.5 | * | - | 0.5 | * | ||||||||||||||||||
| Income (loss) before provision (benefit) for income taxes | $ | 8.3 | $ | 4.3 | 95 | % | $ | 22.5 | $ | 13.5 | 66 | % | ||||||||||||
| Provision (benefit) for income taxes | 1.9 | 0.1 | * | 7.9 | (5.4 | ) | * | |||||||||||||||||
| Net income | $ | 6.4 | $ | 4.2 | 52 | % | $ | 14.5 | $ | 18.9 | (23 | )% | ||||||||||||
| Net income per share: | ||||||||||||||||||||||||
| basic | $ | 0.21 | $ | 0.14 | $ | 0.48 | $ | 0.62 | ||||||||||||||||
| diluted | $ | 0.21 | $ | 0.14 | $ | 0.48 | $ | 0.62 | ||||||||||||||||
| Weighted average number of shares: | ||||||||||||||||||||||||
| basic | 30.5 | 30.5 | 30.5 | 30.5 | ||||||||||||||||||||
| diluted | 30.7 | 30.5 | 30.5 | 30.5 |
Amounts and percentages may reflect rounding adjustments
* Calculation not meaningful
| Pro forma Adjusted Net Income | Three months ended March 31, | Nine months ended March 31, | Three months ended June 30, - Guidance | Fiscal Year ended June 30, - Guidance | ||||||||||||||||||||||||||||
| (in millions) | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
| Adjusted income before provision for income taxes | $ | 9.8 | $ | 6.8 | $ | 28.3 | $ | 18.3 | $ | 12.5 | $ | 7.2 | $ | 40.9 | $ | 25.4 | ||||||||||||||||
| Adjusted provision (benefit) for income taxes | 1.1 | 1.3 | 4.9 | 6.2 | 8.0 | 0.9 | 12.9 | 7.1 | ||||||||||||||||||||||||
| Adjusted net income | $ | 8.7 | $ | 5.5 | $ | 23.4 | $ | 12.1 | $ | 4.5 | $ | 6.3 | $ | 28.0 | $ | 18.4 | ||||||||||||||||
| Adjusted income before provision for income taxes | $ | 9.8 | $ | 6.8 | $ | 28.3 | $ | 18.3 | $ | 12.5 | $ | 7.2 | $ | 40.9 | $ | 25.4 | ||||||||||||||||
| Add: actual interest | 8.8 | 8.9 | 26.4 | 26.8 | 6.7 | 8.9 | 33.0 | 35.7 | ||||||||||||||||||||||||
| Less: pro forma interest | (3.4 | ) | (3.4 | ) | (10.1 | ) | (10.3 | ) | (3.4 | ) | (3.5 | ) | (13.5 | ) | (13.8 | ) | ||||||||||||||||
| Pro forma adjusted net income before provision for income taxes | 15.2 | 12.3 | 44.6 | 34.7 | 15.8 | 12.6 | 60.4 | 47.3 | ||||||||||||||||||||||||
| Adjusted provision (benefit) for income taxes | 1.1 | 1.3 | 4.9 | 6.2 | 8.0 | 0.9 | 12.9 | 7.1 | ||||||||||||||||||||||||
| Pro forma adjusted net income | $ | 14.1 | $ | 11.0 | $ | 39.7 | $ | 28.5 | $ | 7.8 | $ | 11.7 | $ | 47.5 | $ | 40.2 | ||||||||||||||||
| Pro forma adjusted diluted EPS | $ | 0.36 | $ | 0.28 | $ | 1.01 | $ | 0.72 | $ | 0.20 | $ | 0.30 | $ | 1.21 | $ | 1.02 | ||||||||||||||||
| Pro forma weighted average shares - diluted | 39.4 | 39.4 | 39.4 | 39.4 | 39.4 | 39.4 | 39.4 | 39.4 |
Table is based on mid-point of guidance
Pro forma weighted average diluted shares assume a $17.50
market price for all periods presented
About Phibro Animal Health Corporation
Phibro Animal Health
Corporation is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition
products for use in the production of poultry, swine, cattle, dairy and aquaculture. The company reported net sales of $653 million
for the fiscal year ended June 30, 2013. For further information, please visit www.pahc.com.
Animal Health Corporation