Phibro Animal Health NASDAQ: PAHC reported fiscal third-quarter 2026 results that management characterized as a “strong third quarter,” with growth in sales and adjusted earnings and updated full-year guidance that raised the lower end of several key ranges.
Third-quarter results show higher sales and adjusted earnings
For the quarter ended March 31, 2026, consolidated net sales rose 10% year-over-year to $383.5 million, according to Chief Financial Officer Glenn David. Adjusted EBITDA increased 11% to $60 million, CEO Jack Bendheim said in prepared remarks.
David said GAAP net income and diluted EPS increased, driven by “favorable gross profit,” partially offset by higher SG&A due to increased employee-related costs. He added that net interest expense rose $1.1 million due to the expiration of an interest rate swap agreement.
Foreign exchange also weighed on results year-over-year. David said foreign currency losses were $1.9 million in the quarter, compared with gains of $5.5 million in the prior-year period. Income tax expense decreased by $0.5 million.
On an adjusted basis, David said adjusted net income and adjusted diluted EPS both increased 19% from the prior year, driven by higher gross profit from higher sales, partially offset by higher SG&A and higher interest expense.
Animal Health leads segment performance; Performance Products declines
Phibro’s Animal Health segment delivered $291.2 million of net sales in the quarter, up $32.8 million, or 13%, from the prior-year period. David said Animal Health adjusted EBITDA rose $8 million, or 13%, “due to higher sales and gross profit, partially offset by increased SG&A.”
Within Animal Health, David highlighted growth across several product categories:
- Legacy MFA net sales increased 5%, driven by demand in North America and certain antimicrobials sold through the company’s Ethanol Performance business.
- New MFA business contributed a full quarter of sales of $95.9 million, representing 25% growth versus last year.
- Nutritional specialties rose $3.5 million, or 8%, due to increased demand in North America and higher companion animal sales.
- Vaccines increased $5.2 million, or 16%, driven by higher demand in Israel and higher sales of autogenous vaccines.
Mineral Nutrition posted net sales of $73.4 million, up $6.6 million, or 10%, on increased demand for zinc and trace minerals, David said. However, Mineral Nutrition adjusted EBITDA decreased $0.6 million due to lower gross profit.
Performance Products net sales fell 17% to $18.9 million due to lower demand for ingredients used in personal care products, David said. Performance Products adjusted EBITDA declined $1.1 million as a result of lower sales.
Brazil antimicrobial regulatory change and other updates since quarter-end
Bendheim outlined three updates he said occurred after quarter-end, including a regulatory development in Brazil affecting certain antimicrobials.
Bendheim said Brazil implemented a new regulatory framework that removes growth promotion and performance indications for certain antimicrobials, including virginiamycin and bacitracin, with a 180-day transition period. He said the company is “working closely with regulators and industry to support an orderly transition and maintain continuity for customers.”
He also said Phibro has been engaged with MAPA, Brazil’s regulatory agency, on therapeutic re-registrations for virginiamycin in cattle and broilers, and that those are “in the final stages of review.” Bendheim framed the regulatory change as “a culmination of a process that’s been underway for years,” adding that the company views it as “the last major shoe to drop in this area, not the start of a new wave of changes.”
In guidance commentary, David provided additional context, stating that sales of virginiamycin in Brazil were $26 million in fiscal year 2025 and that its margin profile is “above our average for the company.” David said the company anticipates receiving approval for therapeutic claims during the six-month transition period and expects to better quantify the impact to fiscal 2027 once final approval is received. “While this will be a headwind for fiscal year 2027, we are confident that growth in our business in other areas will more than offset this impact,” David said.
Bendheim also highlighted the launch of a sustainable solutions platform and introduction of VERRATAIN, described as “verified sustainable solutions,” through a partnership with VAXA Technologies. He said customers are increasingly being asked to show progress on supply chain emissions and that feed is “often the biggest lever,” emphasizing the need for solutions that can scale and fit into existing systems.
Finally, Bendheim said the company strengthened liquidity by upsizing its revolving credit facility by $125 million through an “oversubscribed” process.
Cash flow, leverage, and dividend
David said the company generated $13 million of positive free cash flow for the 12 months ended March 31, 2026, with $66 million of operating cash flow and $53 million in capital expenditures. He noted cash generation was negatively impacted by a buildup of inventory “in advance of tariffs and to meet increasing customer demand,” adding the company expects inventory to stabilize in coming quarters.
At quarter-end, cash and cash equivalents and short-term investments were $77.5 million. Gross leverage was 3.1x based on $741 million of total debt and $241 million of trailing 12-month adjusted EBITDA, while net leverage was 2.8x based on $663 million of net debt and the same adjusted EBITDA figure, David said.
Phibro paid a quarterly dividend of $0.12 per share, or $4.9 million in aggregate, consistent with its history, David added.
Full-year fiscal 2026 guidance updated upward at the low end
Based on performance to date and “improved visibility into the remainder of the year,” David said the company increased the lower end of several guidance ranges for fiscal 2026 (ending June 30, 2026), lifting midpoints across key measures. Updated guidance includes:
- Net sales: $1.46 billion to $1.50 billion (previously $1.45 billion to $1.50 billion), representing growth of 13% to 16%.
- Total adjusted EBITDA: $247 million to $255 million (previously $245 million to $255 million), representing growth of 34% to 39%.
- Adjusted net income: $122 million to $127 million (previously $120 million to $127 million), representing growth of 44% to 49%.
David said GAAP net income and EPS guidance assumes constant currency and no additional gains or losses from FX movements, and also includes one-time costs related to the company’s Phibro Forward income growth initiative.
During the Q&A, Citi’s Luis Mario Higuera asked about the implied fourth-quarter cadence and whether there was any pull-forward in the third quarter. David said there was no pull-forward, and pointed to a tougher year-ago comparison between fiscal Q3 and Q4 of 2025. He also said the company took “a somewhat conservative approach” to its revenue guide due to uncertainties tied to the conflict in the Middle East, adding he would “anticipate to be towards the higher end.”
In response to JPMorgan’s Ekaterina Knyazkova on the Middle East, David said the company’s guidance includes any additional shipping or freight costs and “any potential downsides” in the region, where Phibro sells vaccines. He said the company had not yet seen much impact and viewed downside risk as “small.”
Phibro also discussed leadership transition plans on the call. Bendheim reiterated that Daniel Bendheim will assume the CEO role in July, with Jack Bendheim transitioning to executive chairman.
About Phibro Animal Health NASDAQ: PAHC
Phibro Animal Health Corporation NASDAQ: PAHC is a diversified global animal health and mineral nutrition company headquartered in Teaneck, New Jersey. The company develops, manufactures and markets a broad range of pharmaceutical, mineral nutrition and performance products designed to support the health and productivity of livestock, companion animals and aquaculture species. Phibro's portfolio includes vaccines, anti-infective therapies, coccidiostats, disinfectants, premix minerals and specialty feed additives aimed at enhancing growth, immunity and overall animal well-being.
The company operates through three principal business segments: Animal Health, Mineral Nutrition and Performance Products.
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