Phibro Animal Health Corporation Reports Third Quarter Results, Updates Financial Guidance

TEANECK, N.J.--(BUSINESS WIRE)--May 07, 2025-- 

Phibro Animal Health Corporation (Nasdaq: PAHC) ("Phibro" or the "Company") today announced financial results for its third quarter ended March 31, 2025, and its updated financial guidance for the year ending June 30, 2025.

Highlights for the three months ended March 31, 2025 (compared to the three months ended March 31, 2024)

   -- Net sales of $347.8 million, an increase of $84.6 million, or 32% 
 
   -- Net income of $20.9 million, an increase of $12.5 million 
 
   -- Diluted earnings per share of $0.51, an increase of $0.30 
 
   -- Adjusted EBITDA of $54.9 million, an increase of $25.2 million, or 85% 
 
   -- Adjusted net income of $25.7 million, an increase of $13.0 million 
 
   -- Adjusted diluted EPS of $0.63, an increase of $0.32 

We have updated our fiscal year 2025 guidance, which includes:

   -- Net sales of $1.26 billion to $1.29 billion 
 
   -- Adjusted EBITDA of $177 million to $183 million 

COMMENTARY

"Our strong performance this past quarter underscores the successful integration of the Zoetis MFA business and the initial positive impact of our Phibro Forward initiatives, where we are beginning to see benefits from actions such as SKU rationalization, enhanced procurement capabilities, and manufacturing improvements," stated Jack Bendheim, President and Chief Executive Officer. "Despite temporary order timing that moderated growth in our legacy business, we achieved significant gains, with total sales increasing by 32%, and adjusted EBITDA and diluted EPS surging 85% and over 100%, respectively. Our overall Animal Health segment was a key driver, growing 42%, with MFA & Other product sales up 68% driven by the acquisition of the Zoetis MFA portfolio, while our legacy Animal Health business saw flat growth. Continued strong performance in our Nutritional specialty business was offset by the timing of orders in MFA and Other product sales, as well as Vaccines, which limited growth in the quarter. Mineral Nutrition and Performance Products delivered impressive year-over-year increases of 4% and 28%, respectively."

Regarding tariffs, Mr. Bendheim added, "While we are closely monitoring the situation, we do not foresee a material impact for the remainder of the fiscal year. We have identified potential effects on certain inputs and sales in the upcoming fiscal year based on current tariffs and have already begun implementing mitigation strategies. We believe the overall impact will be manageable and remain confident in our growth prospects for FY 2026, though we remain vigilant given the evolving global trade landscape."

QUARTERLY RESULTS

Net sales

Net sales of $347.8 million for the three months ended March 31, 2025 increased $84.6 million, or 32%, as compared to the three months ended March 31, 2024. Animal Health increased $77.0 million, while Mineral Nutrition and Performance Products increased $2.5 million and $5.0 million, respectively.

Animal Health

Net sales of $258.4 million for the three months ended March 31, 2025 increased $77.0 million, or 42%. Net sales of MFAs and other increased $73.4 million, or 68%, due to incremental revenues of $77.0 million from sales of products from the Zoetis MFA portfolio acquired on October 31, 2024, partially offset by lower poultry sales due in part to lower demand and the timing of sales.

Net sales of nutritional specialty products increased $3.2 million, or 8%, primarily due to increased poultry demand and higher sales of microbial and companion animal products.

Net sales of vaccines increased $0.5 million, or 1%, primarily due to continued growth of poultry products in Latin America, significantly offset by the timing of sales, impacted in part by import and other regulations in Asia.

Mineral Nutrition

Net sales of $66.8 million for the three months ended March 31, 2025 increased $2.5 million, or 4%, due to higher average selling prices for zinc and trace minerals.

Performance Products

Net sales of $22.7 million for the three months ended March 31, 2025 increased $5.0 million, or 28%, as a result of higher demand for the ingredients used in personal care products.

Gross profit

Gross profit of $104.6 million for the three months ended March 31, 2025 increased $25.0 million, or 31%, as compared to the three months ended March 31, 2024. Gross margin decreased 10 basis points to 30.1% of net sales for the three months ended March 31, 2025, as compared to 30.2% for the three months ended March 31, 2024. The comparison to the prior year includes $3.8 million of current period inventory write-offs attributable to the closure of an immaterial business and a net increase of $1.5 million for acquisition-related cost of goods sold related to purchase accounting adjustments for acquisitions. Excluding these items, gross profit increased $30.3 million, or 38%, and gross margin increased 140 basis points to 31.6% of net sales due to increased sales, an increase in average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs.

Animal Health gross profit increased $27.8 million, primarily driven by higher sales volume, higher average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs. Mineral Nutrition gross profit increased $1.2 million, driven by higher average selling prices. Performance Products gross profit increased by $1.2 million, driven by increased sales volumes.

Selling, general and administrative expenses

Selling, general and administrative expenses ("SG&A") of $71.1 million for the three months ended March 31, 2025 increased $11.4 million, or 19%, as compared to the three months ended March 31, 2024. SG&A for the three months ended March 31, 2025 included $4.0 million of costs associated with Phibro Forward income growth initiatives, $0.6 million for acquisition-related costs, and $0.2 million of stock-based compensation expense, partially offset by $1.5 million related to an insurance settlement gain. SG&A for the three months ended March 31, 2024 included $0.5 million of acquisition-related costs and $0.1 million of stock-based compensation expense, partially offset by $0.3 million related to an insurance settlement gain. Excluding these items, SG&A increased $8.5 million.

Animal Health SG&A increased $5.1 million, primarily due to an increase in employee-related costs due in part to the incremental headcount added as part of the acquisition of the Zoetis MFA portfolio (the "Acquisition"). Mineral Nutrition and Performance Products SG&A was comparable to the prior year. Corporate costs increased by $3.2 million due to an increase in employee-related costs and professional fees.

Interest expense, net

Interest expense, net of $9.4 million for the three months ended March 31, 2025 increased by $4.8 million, as compared to the three months ended March 31, 2024, due to the higher debt levels associated with the financing of the Acquisition.

Foreign currency (gains) losses, net

Foreign currency gains for the three months ended March 31, 2025 were $5.5 million, as compared to $2.4 million of net losses for the three months ended March 31, 2024. Current period gains were driven by fluctuations in certain currencies related to the U.S. dollar, most prominently, in the Brazil Real and in the Euro. Prior year period losses were driven in large part by fluctuations in the Brazil Real.

Provision for income taxes

The provision for income taxes was $8.8 million and $4.5 million for the three months ended March 31, 2025 and 2024, respectively. The effective income tax rates were 29.7% and 35.0% for the three months ended March 31, 2025 and 2024, respectively. The lower effective income tax rate for the three months ended March 31, 2025 is primarily due to higher pretax earnings and higher forecasted annual pretax earnings in the current period, which more significantly reduced the impact of certain items such as Global Intangible Low-Taxed Income ("GILTI") when compared to the prior year. In addition, the effective tax rate for the three months ended March 31, 2024 includes the impact of changes in valuation allowances and other reserves, which more significantly increased the effective tax rate in the prior year than in the current year.

The provision for income taxes for the three months ended March 31, 2025 was increased by various items, including (i) different tax rates on exchange rate gains, (ii) changes in uncertain tax positions related to prior years and (iii) certain non-deductible write-offs in connection with the closure of an immaterial business included as part of the Phibro Forward initiatives. The provision for income taxes for the three months ended March 31, 2024 was increased by various items, including (i) different tax rates on exchange rate losses and (ii) changes in uncertain tax positions related to prior years. Excluding the impact of these items, the effective income tax rates were 25.7% and 30.8% for the three months ended March 31, 2025 and 2024, respectively.

Net income

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