Phibro Animal Health Q3 2025 Earnings Report

Phibro Animal Health EPS Results

• Actual EPS: $0.63
• Consensus EPS: $0.52
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

Phibro Animal Health Revenue Results

• Actual Revenue: $347.80 million
• Expected Revenue: $352.41 million
• Beat/Miss: Missed by -$4.61 million
• YoY Revenue Growth: N/A

Phibro Animal Health Announcement Details

• Quarter: Q3 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 9:00AM ET

Phibro Animal Health (NASDAQ:PAHC) operates as an animal health and mineral nutrition company in the United States, Israel, Brazil, Ireland, and internationally. It operates through three segments: Animal Health, Mineral Nutrition, and Performance Products. The company develops, manufactures, and markets various products for food and companion animals including poultry, swine, beef and dairy cattle, aquaculture, and dogs. It also offers animal health products, such as antibacterials, anticoccidials, nutritional specialty, and vaccines and vaccine adjuvants for animal's health and performance, food safety, and animal welfare; and engages in development, manufacturing, and marketing of microbial and bioproducts for various applications serving animal health and nutrition, environmental, industrial, and agricultural customers. In addition, the company develops, manufactures, and markets conventionally licensed and autogenous vaccine products, as well as adjuvants for animal vaccine manufacturers. Further, it provides formulations and concentrations of trace minerals, such as zinc, manganese, copper, iron, and other compounds to fortify the daily feed requirements of their livestock's diets and maintain optimal balance of trace elements in animals. Additionally, the company offers specialty ingredients for personal care, industrial chemical, and chemical catalyst industries. It sells its animal health and mineral nutrition products through local sales offices to integrated poultry, swine, and cattle producers, as well as through commercial animal feed manufacturers, wholesalers, and distributors. The company was formerly known as Philipp Brothers Chemicals, Inc. and changed its name to Phibro Animal Health Corporation in July 2003. Phibro Animal Health Corporation was founded in 1946 and is headquartered in Teaneck, New Jersey.

Phibro Animal Health Q3 2025 Earnings Call Transcript

Presentation

[Operator]

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fibro Animal Health Corporation Third Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the conference over to Glenn David, Chief Financial Officer. Please go ahead.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Thank you, Regina. Good day, and welcome to the Fibro Animal Health Corporation earnings call for our third quarter ended 03/31/2025. My name is Glenn David, and I'm the Chief Financial Officer of Fibro Animal Health Corporation. I'm joined on today's call by Jack Bantine, Fibro's Chairman, President and Chief Executive Officer Donnie Bantine, Director and Executive Vice President of Corporate Strategy and Larry Miller, our Chief Operating Officer. Today, we will cover our financial performance for our third quarter and provide updated financial guidance for our fiscal year ending 06/30/2025.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

At the conclusion of our remarks, we will open the lines for your questions. I would like to remind you that we are providing a simultaneous webcast of this call on our website, pahc.com. Also on the Investors section of our website, you will find copies of the earnings press release and quarterly Form 10 Q as well as the transcript and slides discussed and presented on this call. Our remarks today will include forward looking statements, and actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward looking statements section in our earnings press release.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Our remarks include references to certain financial measures, which were not prepared in accordance with Generally Accepted Accounting Principles or U. S. GAAP. I refer you to the non GAAP financial information section in our earnings press release for a discussion of these measures. Reconciliation of these non GAAP financial measures to the most directly comparable U.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

S. GAAP measures are included in the financial tables that accompany the earnings press release. We present our results on a GAAP basis and on an adjusted basis. Our adjusted results exclude acquisition related items, unusual nonoperational or nonrecurring items, including stock based compensation, other income expense as separately reported in the consolidated statements of operations, including foreign currency losses gains net and income taxes related to pretax income adjustments and unusual or nonrecurring income tax items. Now let me introduce our Chairman, President and Chief Executive Officer, Jack Bantine, to share his opening remarks.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Jack?

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

Thanks, Glenn. Good morning, everyone. I'm pleased

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

to report another solid quarter for Fiber Animal Health Corporation. Our performance this quarter reflects continued strength across the business, supported by the integration of the Zoetis MFA portfolio and steady execution across our teams. Total sales increased 32 year over year, while adjusted EBITDA rose 85% and adjusted diluted EPS more than doubled. These results reflect both top line growth and improved operating leverage. By segment, Animal Health led the way with 42% revenue growth.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

Within that, the sales of our newly integrated MSA and other products increased 68%. Our legacy MSA and other sales had a slight decline and vaccines grew 1% largely due to the timing of customer orders. Overall, the segment continues to perform well. The Nutritional Specialties maintained its positive momentum with 8% revenue growth, while minimum efficient and performance products posted strong gains of 428%, respectively, highlighting the strength of our diversified portfolio. Across all segments, this quarter's results demonstrate how our focus execution and operational excellence, central themes of our Fiber Forward strategy is helping drive meaningful progress.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

While Fiber Forward is a long term initiative, its emphasis on disciplined operations and continuous improvement is already contributing to our performance. The same focus is helping us navigate external challenges like the evolving tariff environment. While the situation remains fluid, we do not expect any material impact on our financial results for the remainder of fiscal twenty twenty five. Through fiber forward, we've made targeted investments in procurement and supply chain resilience that are already helping us manage potential disruptions. Looking ahead to fiscal twenty twenty six, based on currently announced tariffs, we anticipate some pressure on certain inputs and markets in the range of 5,000,000 to $10,000,000 but we believe we're well positioned to manage these impacts effectively and still deliver growth.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

Now turning to guidance. Based on our strong third quarter results and improved visibility into the remainder of the year, we are narrowing our full year guidance ranges and in most case, raising the midpoint. We now expect net sales between $1,260,000,000 and $1,290,000,000 adjusted EBITDA of $177,000,000 to $183,000,000 and adjusted EPS of $1.96 to $2.09 GAAP EPS is projected to be in the range of $0.98 to $1.11 This updated guidance reflects solid execution across our businesses and continued momentum as we close out the fiscal year. I'll now turn it back to Glenn for additional color on the quarter's performance. I look forward to your questions at the end.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

Glenn?

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Thanks, Jack. And starting with our Q3 performance on Slide four. Consolidated net sales for the quarter ended 03/31/2025 were $347,800,000 reflecting an increase of $84,600,000 or a 32% increase over the same quarter one year ago. The Animal Health segment grew 42%, while Mineral Nutrition grew at 4%, and the Performance Products segment grew by 28%. GAAP net income and diluted EPS increased significantly, driven by the integration of the new MFA business, increases in demand, improved gross margin due to favorable mix and lower input costs, offset by increased SG and A due to higher employee related costs.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

After making our standard adjustments to GAAP results, including acquisition related items, foreign currency losses and certain one off items, the third quarter adjusted EBITDA increased $25,200,000 or 85% versus prior year. Adjusted net income and adjusted diluted EPS both significantly increased as well. Increased gross profit, driven by sales growth, was partially offset by higher adjusted SG and A and higher adjusted interest expense. Moving to segment level financial performance. The Animal Health segment posted $258,400,000 of net sales for the quarter, an increase of $77,100,000 or 42% versus the same quarter prior year.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Within the Animal Health segment, we reported legacy MFA and other net sales decline of $3,500,000 or negative 3% due to the timing of specific customer orders and strong performance in Q3 last year. The new MFA business contributed a full quarter of sales of $77,000,000 in the quarter, driving the total MFA and other growth to 68%. Nutritional specialty specialty products net sales increased $3,200,000 or 8%, mostly due to higher sales of microbial and companion animal products. Vaccine net sales growth of $05,000,000 or 1% was driven by vaccines in Latin America plus an increase in domestic demand, offset by timing of specific international market registration renewals, which was expected and resolved with limited sales for the quarter. Animal Health adjusted EBITDA was $63,100,000 a 73% increase driven by the new MFA business, higher gross profit from improved mix in the legacy business, partially offset by higher SG and A.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

For comparison purposes only, we are providing a rough estimate of Zoetis EBITDA contribution. Please note that many expenses are not easily attributed to the new business. Our estimated EBITDA of $23,400,000 includes only those expenses that can be directly attributed to the new MFA business. Moving on to the third quarter financial performance of our other business segments on Slide six. Starting with Mineral Nutrition.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Net sales for the quarter was $66,800,000 an increase of $2,500,000 or 4% due to increased sales volume and price. Mineral Nutrition adjusted EBITDA was $5,800,000 reflecting the year on year increase of $1,100,000 driven by higher gross profit and improved cost positions. Looking at our Performance Products segment. Net sales of $22,700,000 reflects an increase of $5,000,000 or 28% as a result of higher demand for the ingredients used in personal care products. Adjusted EBITDA was $3,300,000 and grew $1,000,000 versus the same quarter prior year.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Corporate expenses increased $3,400,000 driven by increased employee related costs. Turning to key capitalization related metrics on slide seven. We generated $49,000,000 of positive free cash flow for the twelve months ended 03/31/2025. We generated $87,000,000 of operating cash flow and invested $38,000,000 in capital expenditures. Cash and cash equivalents were $70,000,000 at the end of the quarter.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Our gross leverage ratio was 3.0x at the end of the third quarter based on $734,000,000 of total debt and $245,000,000 of trailing twelve month adjusted EBITDA. Please note that the trailing twelve months of adjusted EBITDA includes twelve months from the Zoetis Medicaid feed additive portfolio, seven months of Zoetis history and five months from FIBRO ownership. Our net leverage ratio was 2.7x at the end of the third quarter based on six sixty four million dollars of net debt and $245,000,000 of trailing twelve month adjusted EBITDA. As a reminder, dollars 300,000,000 of our debt is at a fixed rate of 0.51% plus the applicable margin through June 2025. In September of twenty twenty four, we entered into a new swap arrangement $150,000,000 at a fixed rate of 3.18% plus the applicable margin that runs through September 2029.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

In March of twenty twenty five, we entered into a new swap arrangement for $275,000,000 at a fixed rate of 3.64% plus the applicable margin that runs through February 2030. In March 2025, we also entered into a forward starting interest rate collar starting in July 2025 for $250,000,000 with an interest rate cap and floor of 4.751.99% respectively through June 2026. Turning to dividends. Consistent with our history, we paid a quarterly dividend of $0.12 per share or 4,900,000 in aggregate. Let's turn to Slide eight, which lays out our guidance for fiscal year twenty twenty five.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Please note that our guidance includes the acquisition of the Zoetis Medicaid feed additive portfolio. Included in this guidance for fiscal year twenty twenty five are early benefits related to our fiber forward income growth initiative that will help drive additional EBITDA and margin growth. One time costs related to this initiative are also included in our GAAP guidance and primarily consist of one time consulting fees. The initiative is focused on unlocking additional areas of revenue growth and cost savings, areas such as potential price increases, expanded product offerings, procurement initiatives and other cost savings initiatives. Our revised guidance for fiscal year twenty twenty five is as follows: total net sales of $1,260,000,000 dollars to $1,290,000,000 dollars This represents a total growth range 24% to 27% and a midpoint of approximately 25%.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Total adjusted EBITDA of 177,000,000 to $183,000,000 This represents a growth range of 59% to 66% and a midpoint of approximately 62%. Total adjusted net income of $80,000,000 to $85,000,000 This represents growth of 65% to 76% with a midpoint of approximately 70%. The estimates for the Zoetis MFA contribution to fiscal year twenty twenty five include some of the unusual impacts you would expect during the integration such as destocking of inventory, the impact of blackout periods and incremental costs related to transition service and distribution service agreements. GAAP net income and EPS assumes constant currency and no further gains or losses from FX movements. Also included in our GAAP net income and EPS are onetime costs related to our Fibro Forward income growth initiative and acquisition related costs from the new MFA products.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

We are confident in our ability to deliver total adjusted diluted EPS between $1.96 and $2.09 for the fiscal year of twenty twenty five, which represents a growth of 65% to 76% with a midpoint of approximately 70%. Regarding tariffs, as Jack mentioned and based on what we know today, we expect very limited income from tariffs to our fiscal year twenty twenty five results and expect the impacts of fiscal year twenty twenty six to be manageable and remain confident in our ability to drive strong income growth next year. This growth will come from continued strong performance in our legacy business, driving revenue growth at or above the livestock market rate accelerated EBITDA growth from our five Go Forward income growth initiatives and a full year of revenue and adjusted net income contribution from the Zoetis MFA portfolio versus eight months in fiscal year twenty twenty five. With that, Regina, could you please open the line for questions?

[Operator]

We will now begin the question and answer session. Our first question will come from the line of Ekaterina Kieshkova with JPMorgan. Please go ahead.

[Ekaterina Knyazkova, Equity Research Associate at JP Morgan]

Hi, thank you so much. So first, just on tariffs, you've touched upon this, but maybe you can elaborate and give a little bit more color as to how you're thinking about exposure for the company. I think specifically around the upcoming pharma tariffs, how much of The U. S. Animal health business do you think could be potentially exposed from a manufacturing standpoint?

[Ekaterina Knyazkova, Equity Research Associate at JP Morgan]

And just can you potentially mitigate some of the headwinds via price? And then second question is just around the Medicaid fee added business. Just kind of adjusting for the Zoetis acquisition, I think the core business performed a little bit worse than recent trends. Just elaborate a bit on what drove that and maybe how to think about performance for that segment going forward. Thank you.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Sure. So I'll start with the tariffs and the growth in MFAs and others. We'll certainly add on. From tariffs, like to be catarrina, one of the things when you look at our manufacturing, the majority of our manufacturing is done in The U. S.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

As well as with manufacturing in Brazil and Israel. We do have manufacturing sites in Italy and China as well. But the majority of our manufacturing is done locally and provided for local markets. There are certain inputs, as we called out in our prepared remarks, that we do get from other markets, and those tariffs are reflected in our guidance and our estimates. But we believe there are ways to mitigate impacts of tariffs there, we've taken many of those actions.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

So some of the ways that we do that are we have built inventory on certain of those inputs. We've also switched suppliers to other markets where we could. We've also renegotiated with a number of suppliers to absorb the tariff impact. And as you mentioned, we do have the ability to take price increases, and we have announced price increases on products that have been particularly impacted by the tariffs. So there are a number of mitigation items that in areas that we've been able to implement already.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Regarding the slower MFA growth of negative 3% in this quarter, that was driven by factors. The main one just being the timing of orders to some of our larger customers, which negatively impacted growth for the quarter. But overall, our MFA and other segment, from a year to date perspective, has grown 7%. The other thing to think about in the quarter is we had particularly strong growth in Q3 of last year. So in Q3 of last year, our MFA and Other segment grew over 16%.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

So it was a very difficult comparative quarter for this year. But overall, we remain confident in the performance of that segment and the underlying demand with our customers.

[Ekaterina Knyazkova, Equity Research Associate at JP Morgan]

Thank you.

[Operator]

Our next question will come from the line of Michael Ryskin at Bank of America. Please go ahead.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Great. Thanks for taking the question. Congrats on the quarter guys. Want to talk about the guide update. You're keeping revenues more or less unchanged through the midpoints the same, but you took up your EBITDA and EPS guide pretty meaningfully for where we are in the year.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Could just talk about what's driving that? Is it mix? Is it the Fibro Forward initiative? Just sort of unpack that a little bit, just given how late we are in the year, is a pretty impressive bump. And I've

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

got a follow-up.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Mike. So thanks for the question. I think there are a number of factors that are driving the increase in the guide. To your point, a bit of it is mix and continued strong performance that we expect for the year in our vaccine portfolio.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

It is the five point forward income growth initiative continuing to drive incremental growth for the year, but also equal or not the greatest contributor would be the Zoetis MFA portfolio and the improved margins that we continue to see. I think we've been able to leverage our global infrastructure even to a greater extent than we initially anticipated, and we're seeing very positive margin contribution from that. Again, we'll caution that the numbers that we share our estimates, they don't fully reflect costs that aren't 100% dedicated to the Zoetis portfolio. But overall, we're seeing greater profitability come from the inclusion of that portfolio into our business.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Okay. And that's helpful. And a follow-up on tariffs. I know this was just previously asked, but could you give us a little more color on you mentioned the geos, but is there any particular product or product category where the tariff is coming from? Is it more from sort of the API and the raw underlying chemicals or subcomponents?

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Is it specific to China? Just trying to think of not only what's been seen now, but potential future tariffs, whether it's pharma tariffs or regional tariffs, just so we can continue to model this as the situation evolves. Thanks.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

I'll take it, Mike. It's Jack. Thank you. And it's a great question. I think the impact we're seeing are not necessarily from China.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

I think as Glenn had said, we produce most of our active ingredients in The US, in Brazil and in Israel, and we get very, very little of the active ingredients in China. It's more the inputs that come from the overall sort of 10% tariffs across the board that we're seeing from inputs from all over the world. So there, it's a combination of looking how we use those products, can we use a few of those products. It's going back to suppliers and asking them to absorb the cost and maybe changing some more materials. So it's not a huge amount of money, but it's we're reflecting it in the sort of de minimis discussion of how we have to handle it, but we're working on it.

[Michael Ryskin, Managing Director at Bank of America Merrill Lynch]

Okay. Thanks. I'll leave it there.

[Operator]

Our next question comes from the line of Nevan Tighe with BNP Paribas. Please go ahead.

[Navann Ty Dietschi, Lead Analyst at BNP Paribas]

Hi, good morning. Just a follow-up on tariffs. If you do expect or are you lobbying for an exception for animal health from potential pharma tariffs? We know that the bigger players are discussing that. And second, if you can discuss the FX impact on the quarter and the rest of the year.

[Navann Ty Dietschi, Lead Analyst at BNP Paribas]

Thank you.

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

So to the first question, we're involved with all of the animal health companies in lobbying in the various markets for exceptions for the animal health. And as you're well aware, the end result of these products are in the price of food, at least for our sector of the business. And to that extent, no one is really eager to increase the inputs. So I think we are lobbying. And as of right now, the initial reactions we're seeing

[Jack Bendheim, Chairman, President & CEO at Phibro Animal Health]

are positive, but we'll know in the next couple of weeks where this thing ends.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

And regarding FX for the quarter, we saw limited impact in the quarter. One of the things we've talked about and discussed in the past is in many of the international markets, particularly at the revenue line, we try to act and transact in U. S. Dollars and match our pricing to U.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

S. Dollars so that we see limited impact from FX. On a year over year basis, there is some favorability within our costs related to FX, but overall limited impact for the quarter and the year.

[Navann Ty Dietschi, Lead Analyst at BNP Paribas]

Thank you very much.

[Operator]

And we have no further questions at this time. I will hand the call back over to Glenn David for any closing comments.

[Glenn David, Chief Financial Officer at Phibro Animal Health]

Thank you, Regina, and thank you, everyone, for listening in on today's call. We really appreciate your time, attention and interest and support of Fiber Animal Health. Have a great day.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Glenn David, Chief Financial Officer
• Jack Bendheim, Chairman, President & CEO

Analysts

• Ekaterina Knyazkova, Equity Research Associate at JP Morgan
• Michael Ryskin, Managing Director at Bank of America Merrill Lynch
• Navann Ty Dietschi, Lead Analyst at BNP Paribas