Phibro Animal Health Q4 Earnings Call Highlights

Key Points

• Record fiscal 2026 results: Phibro Animal Health reported sales of $1.518 billion, up 17%, while adjusted EBITDA rose 39% to $255 million. Growth was led by Animal Health and the integration of the acquired Zoetis medicated feed additive portfolio.
• Fiscal 2027 outlook includes Brazil uncertainty: The company expects sales of $1.55 billion to $1.60 billion and adjusted EBITDA of $258 million to $268 million, assuming minimal second-half Brazilian virginiamycin sales due to regulatory and political uncertainty.
• Efficiency and restructuring initiatives continue: Phibro completed its Phibro Forward program and plans to close its Chicago Heights facility, with expected annual adjusted EBITDA benefits of $15 million to $20 million beginning in fiscal 2028, partly offset by near-term closure costs and capital spending.

Phibro Animal Health NASDAQ: PAHC reported record fiscal 2026 sales and a sharp increase in adjusted EBITDA, supported by growth in its Animal Health and Mineral Nutrition businesses, the integration of its acquired Zoetis medicated feed additive portfolio, and operational initiatives under its Phibro Forward program.

For the fiscal year ended June 30, 2026, Phibro posted net sales of $1.518 billion, up $221.9 million, or 17%, from the prior year. Adjusted EBITDA rose $71.3 million, or 39%, to $255 million, according to Chief Financial Officer Glenn David. Chief Executive Officer Daniel Bendheim said the company’s results reflected improved execution, efficiency and positioning for long-term growth.

Fourth-quarter sales increased 5% to $396.7 million, while adjusted EBITDA grew 29% from the prior-year period. GAAP net income and diluted earnings per share increased 26% in the quarter, David said, citing integration of the acquired MFA business, stronger demand, favorable sales mix, lower input costs and tariff recoveries. Those factors were partly offset by higher employee-related selling, general and administrative expenses.

Animal Health Remains Main Growth Driver

The Animal Health segment generated $1.162 billion in fiscal-year sales, an increase of $199.4 million, or 21%. Segment adjusted EBITDA rose 37% to $303.6 million.

Within the segment, the acquired MFA portfolio contributed $354.3 million in annual revenue, up 70% from the prior year. In the fourth quarter, however, sales from the acquired portfolio declined 11% to $83.9 million, which management attributed to a difficult comparison with a strong fourth quarter in fiscal 2025 rather than a deterioration in underlying trends.

David said Phibro expects the acquired MFA portfolio to outpace companywide revenue growth in fiscal 2027, supported by continued momentum in North America, international growth opportunities and the absence of prior-year returns associated with certain market transitions.

Legacy Animal Health sales also advanced. For the full year, legacy MFA and other revenue increased 4%, Nutritional Specialties sales rose 9%, and vaccine revenue grew 14%. Vaccine growth was driven by poultry products in Latin America and demand in Israel and Southeast Asia, while Nutritional Specialties benefited from worldwide demand and higher companion-animal sales.

Chief Operating Officer Larry Miller said the company is using the acquired poultry MFA products alongside its legacy nutrition and vaccine offerings. In cattle, Phibro is positioning certain acquired products through its “Start Strong” package for feedlots, combining Bovatec, Deccox and Aureomycin offerings.

Brazil Regulatory Uncertainty Included in Outlook

Management said fiscal 2027 guidance assumes minimal sales of virginiamycin in Brazil because of uncertainty around therapeutic-use approvals. Phibro recorded approximately $27 million in Brazil sales of virginiamycin during fiscal 2026.

Miller said the company continues to work with Brazilian regulators and remains optimistic about obtaining therapeutic-use approvals. The company expects the 180-day transition period to end in late October, but Bendheim said the political environment surrounding upcoming elections could delay the process. As a result, Phibro did not include sales beyond the first quarter in its fiscal 2027 assumptions.

“A favorable outcome will represent upside to our expectations rather than something required to achieve our outlook,” Bendheim said during the call.

Mineral Nutrition Sales Rise as Costs Increase

Mineral Nutrition revenue increased 20% in the fourth quarter to $77 million and rose 11% for the year to $282.3 million. The growth reflected demand for premixes, copper, zinc and other trace minerals, as well as higher underlying commodity costs.

However, segment adjusted EBITDA rose only 1% in the fourth quarter and 4% for the full year, as elevated input costs limited profitability. Bendheim said the company expects Mineral Nutrition to produce stronger EBITDA growth in fiscal 2027 despite potentially slower revenue growth.

Performance Products revenue declined 8% for the full year to $73.5 million, primarily because of lower demand for ingredients used in personal care products. Full-year adjusted EBITDA in the segment fell $2.5 million to $8.1 million.

Phibro Forward Ends, Chicago Heights Closure Planned

Phibro formally concluded its three-year Phibro Forward transformation program in June. Bendheim said the operating discipline and accountability developed through the initiative will remain embedded in the organization. The company expects cumulative EBITDA contributions from the program to reach about $50 million in fiscal 2027 compared with its fiscal 2024 baseline.

The company also announced plans to close its Chicago Heights manufacturing facility following a review of the manufacturing network added through the MFA acquisition. David said the closure is expected to provide a small adjusted EBITDA benefit in fiscal 2027, with annual benefits of roughly $15 million to $20 million expected beginning in fiscal 2028.

Phibro expects about $10 million in one-time cash costs and approximately $10 million in capital expenditures related to the closure, though additional noncash costs remain undetermined.

Fiscal 2027 Guidance and Cash Flow

For fiscal 2027, Phibro guided for net sales of $1.55 billion to $1.60 billion, representing 2% to 5% growth. The company expects adjusted EBITDA of $258 million to $268 million, adjusted net income of $140 million to $147 million, and an adjusted effective tax rate of about 20%.

• Fiscal 2026 operating cash flow was $69 million.
• Capital expenditures totaled $59 million, producing $10 million of free cash flow.
• Inventory increased $86.3 million during the year, primarily related to the acquired MFA portfolio.
• Year-end cash, cash equivalents and short-term investments totaled $82 million.
• Gross leverage stood at 2.9 times, while net leverage was 2.6 times.

David said fiscal 2027 inventory growth should be substantially below fiscal 2026 levels, though the company expects a $25 million to $30 million inventory build associated with the Chicago Heights transition. Capital spending is expected to increase as Phibro expands vaccine capacity in Ireland and Israel and shifts production from the Illinois facility.

The company paid a quarterly dividend of $0.12 per share, or $4.9 million in aggregate.

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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