What Phibro Animal Health (PAHC) Said on Its Q1 Earnings Call

Key Points

• Fiscal Q1 sales rose 6% to $386.8 million, while net income increased 11% to $29.5 million and adjusted EBITDA grew 4% to $64.3 million.
• Growth in Mineral Nutrition (+17%) and Performance Products (+16%) helped offset poultry-related weakness in Animal Health, where lower demand weighed on nutritional specialties and vaccines.
• Phibro maintained its fiscal 2027 outlook, including adjusted EBITDA guidance of $258 million to $268 million. The forecast assumes no further Brazilian virginiamycin sales, though regulatory approval could provide upside.

Phibro Animal Health NASDAQ: PAHC reported a 6% increase in fiscal first-quarter sales, helped by growth in its Mineral Nutrition and Performance Products businesses, and maintained its full-year outlook despite pressure on poultry producers.

For the quarter ended September 30, 2026, net sales rose to $386.8 million from $363.9 million a year earlier. Net income increased 11% to $29.5 million, while adjusted EBITDA rose 4% to $64.3 million.

President and CEO Dani Bendheim said the company’s two non-animal health segments “did a lot of the heavy lifting” during the quarter. Animal Health sales grew 3%, in line with the company’s plan, he said.

Animal Health Growth Offset by Poultry Weakness

Animal Health sales rose $9.6 million to $293 million. Within the segment, medicated feed additives, or MFAs, and other sales increased 6%, driven by demand for certain products in North America and Asia and higher sales of ethanol processing aids.

Those gains were partly offset by a $5.2 million decline in sales of virginiamycin in Brazil, which CFO Glenn David attributed to regulatory developments. David said products from the Zoetis portfolio were a major contributor to MFA growth, while the legacy portfolio was relatively flat as growth in ethanol products offset the Brazilian decline.

Nutritional specialty sales fell 2%, reflecting lower poultry demand in North America and aquaculture demand in South America. Vaccine sales also declined 2%, as lower poultry demand in Brazil and sales timing in Asia outweighed gains elsewhere.

Bendheim said poultry producers have faced softer margins and that some customers have trimmed spending and inventories. He described the pullback as temporary and said the company expects both nutritional specialties and vaccines to grow in the mid- to high-single digits for the fiscal year.

Animal Health adjusted EBITDA fell $1 million as higher selling, general and administrative expenses offset increased gross profit. Bendheim said the segment’s result was better than planned, partly because some costs shifted into the second quarter.

Other Segments Drive Sales Gains

Mineral Nutrition sales increased 17% to $73.6 million, reflecting higher demand and average selling prices for zinc oxide, copper and trace minerals. Its adjusted EBITDA rose $1.6 million.

Bendheim said commodity prices contributed to the quarter’s growth, while the company has also been moving the business toward higher-margin markets, including plant nutrition, dairy and pet food.

Performance Products sales rose 16% to $20.2 million on increased demand for copper-based and fluoride products. Adjusted EBITDA for the segment increased $1.2 million.

Companywide operating income fell $1.6 million because higher SG&A expenses more than offset improved gross profit. Lower net interest expense, favorable foreign currency movements and lower income tax expense helped lift net income, David said.

Outlook and Brazilian Regulatory Update

Phibro maintained its fiscal 2027 guidance. David outlined the following ranges:

• Net sales of $1.55 billion to $1.6 billion, representing growth of 2% to 5%.
• Adjusted EBITDA of $258 million to $268 million, representing growth of 1% to 5%.
• Adjusted net income of $140 million to $147 million, representing growth of 6% to 11%.
• Adjusted diluted earnings per share of $3.41 to $3.59.

David said the company held its adjusted EBITDA outlook because it was only one quarter into the year, some expenses had shifted to later quarters and its forecast remained within the guidance range.

Bendheim said the transition period for virginiamycin in Brazil ended in October and discussions with regulators about therapeutic claims were ongoing. He said Phibro had not had renewed contact with regulators following the Brazilian election and had included no further Brazilian virginiamycin sales in its fiscal-year forecast. An approval would provide upside to that outlook, he said.

David also cautioned that second-quarter sales growth will benefit from an easier comparison. The prior-year quarter included approximately $13 million in product returns related to the transition of certain markets from Zoetis back to Phibro. Those returns reduced sales but had no effect on gross profit because the products were originally transferred at cost. Along with the shifted expenses, that comparison is expected to make second-quarter revenue growth higher than EBITDA growth.

Cash and Operations

Phibro generated $22 million in free cash flow over the 12 months ended September 30, consisting of $86 million in operating cash flow and $64 million in capital expenditures. It ended the quarter with $83 million in cash, cash equivalents and short-term investments, and $740 million in total debt.

Bendheim said reducing inventory is a priority. He also said the planned closure of the Chicago Heights plant remains on schedule, with production expected to wind down in summer and early fall 2027. Products will move to other Phibro plants and contract manufacturers.

About Phibro Animal Health (NASDAQ:PAHC)

Phibro Animal Health Corporation develops, manufactures and sells products designed to support the health, nutrition and productivity of food-producing animals. Its offerings include animal health products, vaccines, medicated feed additives, nutritional specialties and performance products used in livestock, poultry and aquaculture.

The company's products are intended to help prevent and manage disease, improve animal well-being and support efficient food production. Phibro serves producers, veterinarians, feed manufacturers and distributors through a portfolio that includes pharmaceuticals, vaccines, mineral and nutritional supplements, and other feed and water solutions.

Phibro Animal Health markets its products internationally across a broad range of geographic regions, including North America, Latin America, Europe, Asia-Pacific and other global markets.

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