Phibro Animal Health Corporation Reports First Quarter Results
Phibro Animal Health Corporation (Nasdaq: PAHC) reported its Q1 financial results for the period ending September 30, 2021. Net sales increased by 10% to $215 million, while net income dropped 47% to $7 million. Diluted EPS fell by 47% to $0.16. The company raised its fiscal year net sales guidance to $860-$890 million, citing strong product demand, especially in nutritional specialties and vaccines, despite challenges from increased costs. Gross profit margins decreased to 30.1%. The outlook includes further price adjustments to offset rising freight costs.
- Net sales increased by 10% to $215 million.
- Revised net sales guidance raised to $860-$890 million for FY 2022.
- Increased demand for nutritional specialties and vaccines.
- Net income decreased by 47% to $7 million.
- Diluted EPS fell by 47% to $0.16.
- Gross margin declined to 30.1% from 32.8%.
-
Highlights for the three months ended
September 30, 2021 (compared to the three months endedSeptember 30, 2020 )-
Net sales of
$215 million $20 million 10% -
Net income of
$7 million $6 million 47% -
Diluted EPS of
$0.16 $0.14 47% -
Adjusted EBITDA of
$22 million $2 million 8% -
Adjusted net income of
$10 million $1 million 6% -
Adjusted diluted EPS of
$0.25 $0.02 7%
-
Net sales of
-
The Company revised financial guidance for the fiscal year ending
June 30, 2022 , raising net sales projections by$20 million $840 $870 million $860 $890 million $110 $114 million
COMMENTARY
“I was most encouraged by first quarter sales performance as it reflects continued growth in the demand for our products, particularly nutritional specialties and vaccines. Overall, our financial performance was in line with internal expectations,” said
Jack continued, “While we raised the prices of select products, the increases did not fully compensate for the higher cost of freight, labor, and the unfavorable currency movements that are putting pressure on margins. Subject to normal competitive conditions, we plan to adjust prices further and pass-through incremental freight costs in the form of a surcharge, the benefit of which should be realized in the second half of our fiscal year. Consequently, we are raising full year net sales guidance to
QUARTERLY RESULTS
Net sales
Net sales of
Net sales of
Mineral Nutrition
Net sales of
Performance Products
Net sales of
Gross profit
Gross profit of
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) of
Animal Health SG&A increased
Interest expense, net
Interest expense, net of
Foreign currency (gains) losses, net
Foreign currency (gains) losses, net for the three months ended
Provision for income taxes
The provision for income taxes was
Net income
Net income of
Adjusted EBITDA
Adjusted EBITDA of
Adjusted provision for income taxes
The adjusted effective income tax rates for the three months ended
Adjusted net income
Adjusted net income of
Adjusted diluted EPS
Adjusted diluted EPS was
BALANCE SHEET AND CASH FLOWS
-
Free cash flow of
$21 million September 30, 2021 -
3.8x gross leverage ratio as of
September 30, 2021 -
$406 million -
$106 million September 30, 2021
-
-
$97 million $137 million September 30, 2021
REVISED FINANCIAL GUIDANCE
Our revised projections of financial performance for the year ending
-
Net sales of approximately
$860.0 $890.0 million -
Adjusted EBITDA of approximately
$110.0 $114.0 million -
Adjusted net income of approximately
$50.7 $53.3 million -
Adjusted diluted EPS of approximately
$1.25 $1.32 -
Adjusted effective tax rate of approximately
29% –31%
This revised financial guidance includes but is not limited to sales growth across all three business segments, further price adjustments and the pass through of incremental freight costs in the form of a surcharge, where applicable and competitive conditions allow.
We are not providing revised forward-looking guidance for certain GAAP financial measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items, including but not limited to the impact of foreign currency exchange gains or losses.
The COVID-19 global pandemic continues to present challenges to the animal health industry, including but not limited to increased material and shipping costs and labor cost increases and shortages.
We will continue to monitor the impact the pandemic is having on our business and adjust our financial guidance, if necessary.
WEBCAST & CONFERENCE CALL DETAILS
Date: |
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Time: |
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Location: |
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+1 (888) 330-2022 |
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International Toll: |
+1 (365) 977-0051 |
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Conference ID: |
3927884 |
NOTE: To join this conference call, all participants will be required to provide the Conference ID number.
A replay of the webcast will be archived and made available on Phibro’s website.
DISCLOSURE NOTICES
Forward-Looking Statements: This communication contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this communication are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. These statements are not guarantees of future performance or actions. If one or more of these risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Phibro expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K, including in the sections thereof captioned “Forward-Looking Statements” and “Risk Factors.” These filings and subsequent filings are available online at www.sec.gov, www.pahc.com, or on request from Phibro.
Non-GAAP Financial Information: We use non-GAAP financial measures, such as adjusted EBITDA and adjusted net income, to assess and analyze our operational results and trends and to make financial and operational decisions. Management uses adjusted EBITDA as its primary operating measure. We report adjusted net income to portray the results of our operations prior to considering certain income statement elements. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this communication should not be considered alternatives to measurements required by GAAP, such as net income, operating income and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this communication and/or our Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
Internet Posting of Information: We routinely post information that may be important to investors in the “Investors” section of our website at www.pahc.com. We encourage investors and potential investors to consult our website regularly for important information about us.
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||||||||||||||
Consolidated Results of Operations |
||||||||||||||
Three Months |
||||||||||||||
| For the Periods Ended |
|
2021 |
|
|
2020 |
|
Change |
|||||||
(in millions, except per share amounts and percentages) |
||||||||||||||
| Net sales | $ |
214.7 |
|
$ |
195.2 |
|
$ |
19.5 |
|
10 |
% |
|||
| Cost of goods sold |
|
150.0 |
|
|
131.1 |
|
|
18.9 |
|
14 |
% |
|||
| Gross profit |
|
64.7 |
|
|
64.1 |
|
|
0.6 |
|
1 |
% |
|||
| Selling, general and administrative |
|
50.1 |
|
|
48.4 |
|
|
1.6 |
|
3 |
% |
|||
| Operating income |
|
14.6 |
|
|
15.7 |
|
|
(1.1 |
) |
(7 |
)% |
|||
| Interest expense, net |
|
2.9 |
|
|
2.8 |
|
|
0.1 |
|
3 |
% |
|||
| Foreign currency (gains) losses, net |
|
2.1 |
|
|
(3.6 |
) |
|
5.8 |
|
* | ||||
| Income before income taxes |
|
9.6 |
|
|
16.5 |
|
|
(6.9 |
) |
(42 |
)% |
|||
| Provision for income taxes |
|
3.1 |
|
|
4.2 |
|
|
(1.1 |
) |
(27 |
)% |
|||
| Net income | $ |
6.5 |
|
$ |
12.3 |
|
$ |
(5.8 |
) |
(47 |
)% |
|||
| Net income per share | ||||||||||||||
| basic | $ |
0.16 |
|
$ |
0.30 |
|
$ |
(0.14 |
) |
(47 |
)% |
|||
| diluted | $ |
0.16 |
|
$ |
0.30 |
|
$ |
(0.14 |
) |
(47 |
)% |
|||
| Weighted average common shares outstanding | ||||||||||||||
| basic |
|
40.5 |
|
|
40.5 |
|
||||||||
| diluted |
|
40.5 |
|
|
40.5 |
|
||||||||
| Gross profit |
|
30.1 |
% |
|
32.8 |
% |
||||||||
| Selling, general and administrative |
|
23.3 |
% |
|
24.8 |
% |
||||||||
| Operating income |
|
6.8 |
% |
|
8.0 |
% |
||||||||
| Income before income taxes |
|
4.5 |
% |
|
8.5 |
% |
||||||||
| Net income |
|
3.0 |
% |
|
6.3 |
% |
||||||||
| Effective tax rate |
|
31.9 |
% |
|
25.5 |
% |
||||||||
Amounts and percentages may reflect rounding adjustments |
||||||||||||||
* Calculation not meaningful |
||||||||||||||
|
||||||||||||||
Segment |
||||||||||||||
Three Months |
||||||||||||||
| For the Periods Ended |
|
2021 |
|
|
2020 |
|
Change |
|||||||
(in millions, except percentages) |
||||||||||||||
| MFAs and other | $ |
83.8 |
|
$ |
78.7 |
|
$ |
5.1 |
|
6 |
% |
|||
| Nutritional specialties |
|
36.0 |
|
|
32.6 |
|
|
3.4 |
|
10 |
% |
|||
| Vaccines |
|
21.2 |
|
|
17.1 |
|
|
4.2 |
|
25 |
% |
|||
|
141.0 |
|
|
128.4 |
|
|
12.6 |
|
10 |
% |
||||
| Mineral Nutrition |
|
54.4 |
|
|
51.4 |
|
|
3.0 |
|
6 |
% |
|||
| Performance Products |
|
19.2 |
|
|
15.4 |
|
|
3.8 |
|
25 |
% |
|||
| Total | $ |
214.7 |
|
$ |
195.2 |
|
$ |
19.5 |
|
10 |
% |
|||
| Adjusted EBITDA | ||||||||||||||
$ |
27.6 |
|
$ |
30.1 |
|
$ |
(2.5 |
) |
(8 |
)% |
||||
| Mineral Nutrition |
|
4.5 |
|
|
3.0 |
|
|
1.5 |
|
49 |
% |
|||
| Performance Products |
|
2.1 |
|
|
2.0 |
|
|
0.2 |
|
8 |
% |
|||
| Corporate |
|
(11.8 |
) |
|
(10.8 |
) |
|
(1.0 |
) |
(9 |
)% |
|||
| Total | $ |
22.5 |
|
$ |
24.3 |
|
$ |
(1.8 |
) |
(8 |
)% |
|||
|
19.6 |
% |
|
23.4 |
% |
|||||||||
| Mineral Nutrition |
|
8.3 |
% |
|
5.9 |
% |
||||||||
| Performance Products |
|
11.1 |
% |
|
12.8 |
% |
||||||||
| Corporate (1) |
|
(5.5 |
)% |
|
(5.5 |
)% |
||||||||
| Total (1) |
|
10.5 |
% |
|
12.4 |
% |
||||||||
| (1)reflects ratio to total net sales | ||||||||||||||
| Reconciliation of GAAP Net Income to Adjusted EBITDA | ||||||||||||||
| Net income | $ |
6.5 |
|
$ |
12.3 |
|
$ |
(5.8 |
) |
(47 |
)% |
|||
| Interest expense, net |
|
2.9 |
|
|
2.8 |
|
|
0.1 |
|
3 |
% |
|||
| Provision for income taxes |
|
3.1 |
|
|
4.2 |
|
|
(1.1 |
) |
(27 |
)% |
|||
| Depreciation and amortization |
|
7.9 |
|
|
8.0 |
|
|
(0.2 |
) |
(2 |
)% |
|||
| EBITDA |
|
20.3 |
|
|
27.4 |
|
|
(7.0 |
) |
(26 |
)% |
|||
| Stock-based compensation |
|
- |
|
|
0.6 |
|
|
(0.6 |
) |
* | ||||
| Foreign currency (gains) losses, net |
|
2.1 |
|
|
(3.6 |
) |
|
5.8 |
|
* | ||||
| Adjusted EBITDA | $ |
22.5 |
|
$ |
24.3 |
|
$ |
(1.8 |
) |
(8 |
)% |
|||
| Amounts and percentages may reflect rounding adjustments | ||||||||||||||
| * Calculation not meaningful | ||||||||||||||
|
||||||||||||||
Adjusted Net Income |
||||||||||||||
Three Months |
||||||||||||||
| For the Periods Ended |
|
2021 |
|
|
2020 |
|
Change |
|||||||
(in millions, except per share amounts and percentages) |
||||||||||||||
| Adjusted cost of goods sold | $ |
148.5 |
|
$ |
129.5 |
|
$ |
19.0 |
|
15 |
% |
|||
| Adjusted gross profit |
|
66.2 |
|
|
65.7 |
|
|
0.5 |
|
1 |
% |
|||
| Adjusted selling, general and administrative |
|
49.4 |
|
|
47.2 |
|
|
2.2 |
|
5 |
% |
|||
| Adjusted interest expense, net |
|
2.9 |
|
|
2.8 |
|
|
0.1 |
|
3 |
% |
|||
| Adjusted income before income taxes |
|
13.9 |
|
|
15.6 |
|
|
(1.8 |
) |
(11 |
)% |
|||
| Adjusted provision for income taxes |
|
3.7 |
|
|
4.8 |
|
|
(1.2 |
) |
(24 |
)% |
|||
| Adjusted net income | $ |
10.2 |
|
$ |
10.8 |
|
$ |
(0.6 |
) |
(6 |
)% |
|||
| Adjusted net income per share | ||||||||||||||
| diluted |
|
|
|
|
( |
) |
(7 |
)% |
||||||
| Weighted average common shares outstanding | ||||||||||||||
| diluted |
|
40.5 |
|
|
40.5 |
|
||||||||
| Adjusted gross profit |
|
30.8 |
% |
|
33.6 |
% |
||||||||
| Adjusted selling, general and administrative |
|
23.0 |
% |
|
24.2 |
% |
||||||||
| Adjusted income before income taxes |
|
6.5 |
% |
|
8.0 |
% |
||||||||
| Adjusted net income |
|
4.8 |
% |
|
5.5 |
% |
||||||||
| Adjusted effective tax rate |
|
26.4 |
% |
|
31.0 |
% |
||||||||
| Reconciliation of GAAP Net Income to Adjusted Net Income | ||||||||||||||
| Net income | $ |
6.5 |
|
$ |
12.3 |
|
$ |
(5.8 |
) |
(47 |
)% |
|||
| Acquisition-related intangible amortization(1) |
|
1.5 |
|
|
1.5 |
|
|
(0.1 |
) |
(3 |
)% |
|||
| Acquisition-related intangible amortization(2) |
|
0.7 |
|
|
0.7 |
|
|
(0.0 |
) |
(3 |
)% |
|||
| Stock-based compensation (2) |
|
- |
|
|
0.6 |
|
|
(0.6 |
) |
* | ||||
| Foreign currency (gains) losses, net(3) |
|
2.1 |
|
|
(3.6 |
) |
|
5.8 |
|
* | ||||
| Adjustments to income taxes(4) |
|
(0.6 |
) |
|
(0.6 |
) |
|
0.0 |
|
* | ||||
| Adjusted net income | $ |
10.2 |
|
$ |
10.8 |
|
$ |
(0.6 |
) |
(6 |
)% |
|||
| Amounts and percentages may reflect rounding adjustments | ||||||||||||||
| * Calculation not meaningful | ||||||||||||||
| (1)Included in cost of goods sold | ||||||||||||||
| (2)Included in selling, general and administrative | ||||||||||||||
| (3)Primarily related to intercompany balances | ||||||||||||||
| (4)Related to the income tax effect of pre-tax income adjustments and the exclusion of certain income tax items | ||||||||||||||
|
||||||||||||
Operating and Investing Cash Flows |
||||||||||||
Three Months |
||||||||||||
| For the Periods Ended |
|
2021 |
|
|
2020 |
|
Change |
|||||
(in millions) |
||||||||||||
| EBITDA | $ |
20.3 |
|
$ |
27.4 |
|
$ |
(7.0 |
) |
|||
| Adjustments | ||||||||||||
| Stock-based compensation |
|
- |
|
|
0.6 |
|
|
(0.6 |
) |
|||
| Foreign currency (gains) losses, net |
|
2.1 |
|
|
(3.6 |
) |
|
5.8 |
|
|||
| Interest paid, net |
|
(2.7 |
) |
|
(2.5 |
) |
|
(0.2 |
) |
|||
| Income taxes paid |
|
(3.0 |
) |
|
(5.0 |
) |
|
2.0 |
|
|||
| Changes in operating assets and liabilities and other items |
|
(13.0 |
) |
|
(15.1 |
) |
|
2.1 |
|
|||
| Net cash provided (used) by operating activities | $ |
3.8 |
|
$ |
1.7 |
|
$ |
2.1 |
|
|||
| Short-term investments, net | $ |
(13.0 |
) |
$ |
(6.0 |
) |
$ |
(7.0 |
) |
|||
| Capital expenditures |
|
(7.4 |
) |
|
(7.4 |
) |
|
(0.0 |
) |
|||
| Other investing, net |
|
(0.2 |
) |
|
(0.2 |
) |
|
(0.0 |
) |
|||
| Net cash provided (used) by investing activities | $ |
(20.7 |
) |
$ |
(13.6 |
) |
$ |
(7.0 |
) |
|||
| Net cash flow before financing activities | $ |
(16.8 |
) |
$ |
(11.9 |
) |
$ |
(4.9 |
) |
|||
| Amounts and percentages may reflect rounding adjustments | ||||||||||||
About
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Source:
FAQ
What were the Q1 net sales for Phibro Animal Health Corporation (PAHC) for the period ending September 30, 2021?
How did Phibro Animal Health's net income change in Q1 2021 compared to Q1 2020?
What is the adjusted diluted EPS for Phibro Animal Health for the first quarter ended September 30, 2021?
What challenges did Phibro Animal Health face in Q1 2021 that affected its margins?
What is the new financial guidance for Phibro Animal Health for the fiscal year ending June 30, 2022?
