Phibro Animal Health Corporation Reports First Quarter Results, Updates Financial Guidance
- Core Animal Health business demonstrated continued growth, with a 4% increase in net sales and a 6% increase in adjusted EBITDA.
- Strong customer acceptance of poultry vaccines in Latin America resulted in double-digit sales growth of vaccines product group.
- Challenging dairy fundamentals reduced overall growth in nutritional specialty products for poultry.
- Reduced sales in Mineral Nutrition and Performance Products businesses are expected to rebound later in the fiscal year.
- Expect medium-term opportunities for commercial products in the companion animal pipeline.
- The company continues to operate and supply customers despite the effects of the conflict in Israel.
- Adjusted effective income tax rates improved due to a favorable mix of international earnings and the benefit of recently implemented tax savings strategies.
- Net sales decreased by 1% and net loss amounted to $8.0 million.
- Adjusted EBITDA decreased by 16% to $18.7 million.
- Reduced expectations for fiscal year 2024 guidance due to difficult fundamentals in certain parts of the business, including international beef feedlots, the U.S. and China dairy sectors, and the pace of recovery in the Mineral Nutrition and Performance Products segments.
Highlights for the three months ended September 30, 2023 (compared to the three months ended September 30, 2022)
-
Net sales of
$231.3 million $1.2 million 1% -
Net loss of
$8.0 million $11.9 million -
Diluted loss per share of
$0.20 $0.30 -
Adjusted EBITDA of
$18.7 million $3.5 million 16% -
Adjusted net income of
$5.5 million $2.8 million 33% -
Adjusted diluted EPS of
$0.14 $0.07 33%
We have updated our fiscal year 2024 guidance, which includes:
-
Net sales of
$980 million $1.02 billion -
Adjusted EBITDA of
$106 million $112 million
COMMENTARY
“Our core Animal Health business demonstrated continued growth, with a
Jack continued, “Our Mineral Nutrition and Performance Products businesses saw reduced sales in the quarter, in part because customers rationalized their inventory levels and in part due to timing. We expect these businesses to rebound later in the fiscal year. We continue to invest in our companion animal pipeline and see medium-term opportunities for commercial products. We are navigating the effects of the conflict in
QUARTERLY RESULTS
Net sales
Net sales of
Animal Health
Net sales of
Mineral Nutrition
Net sales of
Performance Products
Net sales of
Gross profit
Gross profit of
Animal Health gross profit increased
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 losses, net
Foreign currency losses, net for the three months ended September 30, 2023, were
(Benefit) provision for income taxes
The benefit for income taxes was
Net (loss) income
Net loss of
Adjusted EBITDA
Adjusted EBITDA of
Adjusted provision for income taxes
The adjusted effective income tax rates for the three months ended September 30, 2023, and 2022, were
Adjusted net income
Adjusted net income of
Adjusted diluted earnings per share
Adjusted diluted earnings per share was
BALANCE SHEET AND CASH FLOWS
-
Free cash flow was
$4.1 million -
4.4x gross leverage ratio as of September 30, 2023
-
$484 million -
$109 million
-
FISCAL YEAR 2024 FINANCIAL GUIDANCE
Our updated fiscal year 2024 financial guidance is as shown in the table below. Year-over-year percentages are calculated using the midpoint of the guidance ranges.
-
Net sales of
$980 million $1.02 billion 2% -
Net income of
$23 million $28 million 22% -
Diluted EPS of
$0.57 $0.69 22% -
Adjusted EBITDA of
$106 million $112 million 3% -
Adjusted net income of
$42 million $47 million 9% -
Adjusted diluted EPS of
$1.04 $1.16 9% -
Adjusted effective tax rate of
31% to33%
The updated guidance reflects reduced expectations for the fiscal year, compared with our previous guidance, reflecting difficult fundamentals in certain parts of our business, including international beef feedlots, the
WEBCAST & CONFERENCE CALL DETAILS
Phibro Animal Health Corporation will host a webcast and conference call during which the Company will review its financial results and respond to questions.
Date: |
Thursday, November 9, 2023 |
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Time: |
9:00 AM Eastern |
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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 report 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, adjusted net income, adjusted diluted EPS and free cash flow 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.
We are not providing a reconciliation of forward-looking guidance of non-GAAP financial measures to the most directly comparable GAAP financial measures because of the uncertainty regarding, and the potential variability of, certain of the items required for a reconciliation; accordingly, a reconciliation of the non-GAAP financial measure to the corresponding GAAP financial measure is not available without unreasonable effort.
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.
Phibro Animal Health Corporation |
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Consolidated Results of Operations |
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Three Months |
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For the Periods Ended September 30 |
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2023 |
2022 |
Change |
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(in millions, except per share amounts and percentages) |
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Net sales |
|
$ |
231.3 |
|
$ |
232.5 |
|
$ |
(1.2 |
) |
|
(1 |
)% |
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Cost of goods sold |
|
|
163.6 |
|
|
163.9 |
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(0.3 |
) |
|
(0 |
)% |
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Gross profit |
|
|
67.7 |
|
|
68.6 |
|
|
(0.9 |
) |
|
(1 |
)% |
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Selling, general and administrative |
|
|
68.5 |
|
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55.0 |
|
|
13.5 |
|
|
25 |
% |
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Operating (loss) income |
|
|
(0.7 |
) |
|
13.7 |
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(14.4 |
) |
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* |
|||
Interest expense, net |
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4.6 |
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3.1 |
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|
1.5 |
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|
49 |
% |
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Foreign currency losses, net |
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|
6.7 |
|
|
5.2 |
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|
1.5 |
|
|
* |
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(Loss) income before income taxes |
|
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(12.0 |
) |
|
5.4 |
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(17.4 |
) |
|
* |
|||
(Benefit) provision for income taxes |
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|
(4.0 |
) |
|
1.6 |
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(5.5 |
) |
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* |
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Net (loss) income |
|
$ |
(8.0 |
) |
$ |
3.9 |
|
$ |
(11.9 |
) |
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* |
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Net (loss) income per share |
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basic |
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$ |
(0.20 |
) |
$ |
0.10 |
|
$ |
(0.30 |
) |
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* |
|||
diluted |
|
$ |
(0.20 |
) |
$ |
0.10 |
|
$ |
(0.30 |
) |
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* |
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Weighted average common shares outstanding |
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|||||
basic |
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40.5 |
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40.5 |
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diluted |
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40.5 |
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40.5 |
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Ratio to net sales |
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Gross profit |
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29.3 |
% |
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29.5 |
% |
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Selling, general and administrative |
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|
29.6 |
% |
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23.6 |
% |
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||||
Operating (loss) income |
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|
(0.3 |
)% |
|
5.9 |
% |
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(Loss) income before income taxes |
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|
(5.2 |
)% |
|
2.3 |
% |
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Net (loss) income |
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|
(3.5 |
)% |
|
1.7 |
% |
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|
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Effective tax rate |
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|
33.1 |
% |
|
28.8 |
% |
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||||
| Amounts and percentages may reflect rounding adjustments. | ||
* |
Calculation not meaningful |
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Phibro Animal Health Corporation |
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Segment Net Sales and Adjusted EBITDA |
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Three Months |
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For the Periods Ended September 30 |
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2023 |
2022 |
Change |
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(in millions, except percentages) |
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Net Sales |
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MFAs and other |
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$ |
94.1 |
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$ |
92.8 |
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$ |
1.3 |
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|
1 |
% |
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Nutritional specialties |
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|
40.2 |
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39.1 |
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1.2 |
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3 |
% |
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Vaccines |
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26.2 |
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|
23.0 |
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3.2 |
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14 |
% |
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Animal Health |
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160.5 |
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|
154.9 |
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5.7 |
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4 |
% |
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Mineral Nutrition |
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|
56.0 |
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|
59.6 |
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(3.6 |
) |
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(6 |
)% |
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Performance Products |
|
|
14.8 |
|
|
18.0 |
|
|
(3.2 |
) |
|
(18 |
)% |
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Total |
|
$ |
231.3 |
|
$ |
232.5 |
|
$ |
(1.2 |
) |
|
(1 |
)% |
||
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Adjusted EBITDA |
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|
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Animal Health |
|
$ |
28.5 |
|
$ |
27.0 |
|
$ |
1.5 |
|
|
6 |
% |
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Mineral Nutrition |
|
|
2.9 |
|
|
5.3 |
|
|
(2.4 |
) |
|
(46 |
)% |
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Performance Products |
|
|
1.4 |
|
|
2.4 |
|
|
(1.0 |
) |
|
(40 |
)% |
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Corporate |
|
|
(14.1 |
) |
|
(12.5 |
) |
|
(1.6 |
) |
|
13 |
% |
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Total |
|
$ |
18.7 |
|
$ |
22.1 |
|
$ |
(3.5 |
) |
|
(16 |
)% |
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Ratio to segment net sales |
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|
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Animal Health |
|
|
17.7 |
% |
|
17.4 |
% |
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|
||||
Mineral Nutrition |
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|
5.1 |
% |
|
8.9 |
% |
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|
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Performance Products |
|
|
9.5 |
% |
|
13.1 |
% |
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Corporate (1) |
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|
(6.1 |
)% |
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(5.4 |
)% |
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Total (1) |
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|
8.1 |
% |
|
9.5 |
% |
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Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA |
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|
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Net (loss) income |
|
$ |
(8.0 |
) |
$ |
3.9 |
|
$ |
(11.9 |
) |
|
* |
|||
Interest expense, net |
|
|
4.6 |
|
|
3.1 |
|
|
1.5 |
|
|
49 |
% |
||
(Benefit) provision for income taxes |
|
|
(4.0 |
) |
|
1.6 |
|
|
(5.5 |
) |
|
* |
|||
Depreciation and amortization |
|
|
8.9 |
|
|
8.5 |
|
|
0.4 |
|
|
5 |
% |
||
EBITDA |
|
|
1.5 |
|
|
16.9 |
|
|
(15.5 |
) |
|
(91 |
)% |
||
Pension settlement cost |
|
|
10.4 |
|
|
— |
|
|
10.4 |
|
|
* |
|||
Stock-based compensation |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
|
* |
|||
Foreign currency losses, net |
|
|
6.7 |
|
|
5.2 |
|
|
1.5 |
|
|
* |
|||
Adjusted EBITDA |
|
$ |
18.7 |
|
$ |
22.1 |
|
$ |
(3.5 |
) |
|
(16 |
)% |
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| Amounts and percentages may reflect rounding adjustments. | ||
* |
Calculation not meaningful |
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| (1) | Reflects ratio to total net sales |
|
Phibro Animal Health Corporation |
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Adjusted Net Income |
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Three Months |
|||||||||||||
For the Periods Ended September 30 |
|
2023 |
2022 |
Change |
|||||||||||
|
|
(in millions, except per share amounts and percentages) |
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Reconciliation of GAAP Net (Loss) Income to Adjusted Net Income |
|
|
|
|
|
|
|
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|
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Net (loss) income |
|
$ |
(8.0 |
) |
$ |
3.9 |
|
$ |
(11.9 |
) |
|
* |
|||
Acquisition-related intangible amortization (1) |
|
|
1.7 |
|
|
1.7 |
|
|
0.0 |
|
|
1 |
% |
||
Acquisition-related intangible amortization (2) |
|
|
0.8 |
|
|
0.7 |
|
|
0.0 |
|
|
4 |
% |
||
Pension settlement cost (2) |
|
|
10.4 |
|
|
— |
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|
10.4 |
|
|
* |
|||
Stock-based compensation (2) |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
|
* |
|||
Foreign currency losses, net (3) |
|
|
6.7 |
|
|
5.2 |
|
|
1.5 |
|
|
* |
|||
Adjustments to income taxes (4) |
|
|
(6.1 |
) |
|
(3.1 |
) |
|
(3.0 |
) |
|
* |
|||
Adjusted net income |
|
$ |
5.5 |
|
$ |
8.3 |
|
$ |
(2.8 |
) |
|
(33 |
)% |
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|
|
|
|
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|
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|
||||||
Statement of Operations Line Items - adjusted |
|
|
|
|
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|
|
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|
||||||
Adjusted cost of goods sold (1) |
|
$ |
162.0 |
|
$ |
162.2 |
|
$ |
(0.3 |
) |
|
(0 |
)% |
||
Adjusted gross profit |
|
|
69.4 |
|
|
70.3 |
|
|
(0.9 |
) |
|
(1 |
)% |
||
Adjusted selling, general and administrative (2) |
|
|
57.2 |
|
|
54.2 |
|
|
3.0 |
|
|
5 |
% |
||
Adjusted interest expense, net |
|
|
4.6 |
|
|
3.1 |
|
|
1.5 |
|
|
49 |
% |
||
Adjusted income before income taxes |
|
|
7.7 |
|
|
13.0 |
|
|
(5.4 |
) |
|
(41 |
)% |
||
Adjusted provision for income taxes (4) |
|
|
2.1 |
|
|
4.7 |
|
|
(2.6 |
) |
|
(55 |
)% |
||
Adjusted net income |
|
$ |
5.5 |
|
$ |
8.3 |
|
$ |
(2.8 |
) |
|
(33 |
)% |
||
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income per share diluted |
|
$ |
0.14 |
|
$ |
0.21 |
|
$ |
(0.07 |
) |
|
(33 |
)% |
||
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding diluted |
|
|
40.5 |
|
|
40.5 |
|
|
|
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|
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|
|
|
|
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Ratio to net sales |
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|
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|
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Adjusted gross profit |
|
|
30.0 |
% |
|
30.2 |
% |
|
|
|
|
||||
Adjusted selling, general and administrative |
|
|
24.7 |
% |
|
23.3 |
% |
|
|
|
|
||||
Adjusted income before income taxes |
|
|
3.3 |
% |
|
5.6 |
% |
|
|
|
|
||||
Adjusted net income |
|
|
2.4 |
% |
|
3.6 |
% |
|
|
|
|
||||
Adjusted effective tax rate |
|
|
27.6 |
% |
|
36.0 |
% |
|
|
|
|
||||
| Amounts and percentages may reflect rounding adjustments. | ||
* |
Calculation not meaningful |
|
(1) |
Adjusted cost of goods sold excludes acquisition-related intangible amortization |
|
(2) |
Adjusted selling, general and administrative excludes acquisition-related intangible amortization, pension settlement cost and stock-based compensation |
|
(3) |
Foreign currency losses, net, are excluded from adjusted net income |
|
(4) |
Adjusted provision for income taxes excludes the income tax effect of pre-tax (loss) income adjustments and certain income tax items |
|
Phibro Animal Health Corporation |
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Operating, Investing and Free Cash Flows |
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Three Months |
||||||||||
For the Periods Ended September 30 |
|
2023 |
|
2022 |
|
Change |
||||||
|
|
(in millions) |
||||||||||
EBITDA |
|
$ |
1.5 |
|
|
$ |
16.9 |
|
|
$ |
(15.5 |
) |
Adjustments |
|
|
|
|
|
|
|
|
|
|||
Pension settlement cost |
|
|
10.4 |
|
|
|
— |
|
|
|
10.4 |
|
Stock-based compensation |
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
Foreign currency losses, net |
|
|
6.7 |
|
|
|
5.2 |
|
|
|
1.5 |
|
Interest paid, net |
|
|
(4.3 |
) |
|
|
(2.9 |
) |
|
|
(1.4 |
) |
Income taxes paid |
|
|
(4.7 |
) |
|
|
(3.8 |
) |
|
|
(0.9 |
) |
Changes in operating assets and liabilities and other items |
|
|
6.5 |
|
|
|
(26.1 |
) |
|
|
32.6 |
|
Net cash provided (used) by operating activities |
|
$ |
16.2 |
|
|
$ |
(10.7 |
) |
|
$ |
26.9 |
|
|
|
|
|
|
|
|
|
|
|
|||
Short-term investments, net |
|
$ |
(8.0 |
) |
|
$ |
7.0 |
|
|
$ |
(15.0 |
) |
Capital expenditures |
|
|
(7.5 |
) |
|
|
(23.2 |
) |
|
|
15.7 |
|
Other investing, net |
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.1 |
|
Net cash used by investing activities |
|
$ |
(15.4 |
) |
|
$ |
(16.1 |
) |
|
$ |
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|||
Free cash flow: |
|
|
|
|
|
|
|
|
|
|||
Net cash provided (used) by operating activities |
|
$ |
16.2 |
|
|
$ |
(10.7 |
) |
|
$ |
26.9 |
|
Capital expenditures |
|
|
(7.5 |
) |
|
|
(23.2 |
) |
|
|
15.7 |
|
Building purchase (1) |
|
|
— |
|
|
|
15.0 |
|
|
|
(15.0 |
) |
Free cash flow (adjusted) |
|
$ |
8.7 |
|
|
$ |
(18.9 |
) |
|
$ |
27.6 |
|
| Amounts and percentages may reflect rounding adjustments. | ||
| (1) |
Adjusted free cash flow for the three months ended September 30, 2022, excludes a |
|
About Phibro Animal Health Corporation
Phibro Animal Health Corporation is a leading global diversified animal health and mineral nutrition company. We strive to be a trusted partner with livestock producers, farmers, veterinarians, and consumers who raise or care for farm and companion animals by providing solutions to help them maintain and enhance the health of their animals. For further information, please visit www.pahc.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231108414957/en/
Phibro Animal Health Corporation
Richard G. Johnson
Chief Financial Officer
+1-201-329-7300
Or
investor.relations@pahc.com
Source: Phibro Animal Health Corporation
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