PHIBRO ANIMAL HEALTH CORP

Previous wording

We have three manufacturing sites in Israel. A manufacturing plant in Neot Hovav that produces active pharmaceutical ingredients for certain of our anticoccidial and antimicrobial products, a facility in Beit Shemesh that produces vaccines and a plant in Petah Tikvah that manufactures premix products and nutritional products. In addition, we have an office location near Tel Aviv in Airport City. As of December 31, 2023, we had approximately 500 employees located in Israel. While we initially had some disruption to our operations at the onset of the conflict, at the current time, we have confidence in our ability to meet our supply commitment to customers and maintain sufficient inventory to continue regional support. While the situation surrounding the ongoing conflict remains fluid, our operations in Israel have navigated numerous challenging situations over the years.

Current wording

We have three manufacturing sites in Israel. A manufacturing plant in Neot Hovav that produces active pharmaceutical ingredients for certain of our anticoccidial and antimicrobial products, a facility in Beit Shemesh that produces vaccines and a plant in Petah Tikvah that manufactures premix products and nutritional products. In addition, we have an office location near Tel Aviv in Airport City. As of March 31, 2024, we had approximately 500 employees located in Israel. While we initially had some disruption to our operations at the onset of the Israel-Hamas conflict, at the current time, we have confidence in our ability to meet our supply commitment to customers and maintain sufficient inventory to continue regional support. A significant escalation of the tensions in Israel occurred on April 13, 2024, when Iran launched more than 300 drones and missiles against Israel, but we had no material disruption to our business. While the situation surrounding the ongoing conflict remains fluid, our operations in Israel have navigated numerous challenging situations over the years.

Previous wording

The prolonged continuation or escalation of this conflict may trigger bans, economic and other sanctions, as well as broader military conflict, which could include neighboring nations. The potential impact of the current conflict, or escalation thereof, on our business is unclear but may include, without limitation, the possible disruption of our operations, particularly at our facilities in Israel, supply chain and logistics disruptions, personnel and raw material shortages, and other consequences, including as a result of the actions of, or disruption of the operations of, certain regulatory and governmental authorities and of certain of our suppliers, collaborative partners, licensees, manufacturing sites, distributors and customers. Our Israeli manufacturing facilities and local operations account for 27% of our consolidated assets as of December 31, 2023, and 19% of our consolidated net sales, for the six months ended December 31, 2023.

Current wording

The prolonged continuation or escalation of this conflict may trigger bans, economic and other sanctions, as well as broader military conflict, which could include neighboring nations. The potential impact of the current conflict, or escalation thereof, on our business is unclear but may include, without limitation, the possible disruption of our operations, particularly at our facilities in Israel, supply chain and logistics disruptions, personnel and raw material shortages, and other consequences, including as a result of the actions of, or disruption of the operations of, certain regulatory and governmental authorities and of certain of our suppliers, collaborative partners, licensees, manufacturing sites, distributors and customers. Our Israeli manufacturing facilities and local operations account for 28% of our consolidated assets as of March 31, 2024, and 21% of our consolidated net sales for the nine months ended March 31, 2024.

Previous wording

Since the conflict began, the United States and other North Atlantic Treaty Organization (“NATO”) member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises. The continuation or escalation of the conflict may trigger additional economic and other sanctions, as well as broader military conflict. The potential impacts of any resulting bans, sanctions, boycotts or broader military conflicts on our business are uncertain. The potential impacts could include supply chain and logistics disruptions, macroeconomic impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy as well as heightened cybersecurity threats. Our sales to Russia and Ukraine for the twelve months ended December 31, 2023, represented approximately 1% of consolidated net sales.

Current wording

Since the conflict began, the United States and other North Atlantic Treaty Organization (“NATO”) member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises. The continuation or escalation of the conflict may trigger additional economic and other sanctions, as well as broader military conflict. The potential impacts of any resulting bans, sanctions, boycotts or broader military conflicts on our business are uncertain. The potential impacts could include supply chain and logistics disruptions, macroeconomic impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy as well as heightened cybersecurity threats. Our sales to Russia and Ukraine for the 12 months ended March 31, 2024, represented approximately 1% of consolidated net sales.

Previous wording

In March 2022, the FDA held a Part 15 virtual public hearing seeking data and information related to the safety of carbadox in which Phibro participated and again detailed the extensive research and data that confirm the safety of carbadox. In November 2023, the FDA issued a final order to revoke the approved method for detecting residues of carbadox. The FDA also provided notice in the Federal Register proposing to withdraw approval of all new animal drug applications (NADAs) providing for use of carbadox in medicated swine feed and announcing an opportunity for Phibro to request a hearing on this proposal. This second action is based on CVM’s determination that there is no approved regulatory method to detect carbadox residues in the edible tissues of the treated swine. Phibro is taking the next steps to continue to defend swine producers’ ability to use Mecadox. We have formally requested a full evidentiary hearing on the merits before an administrative law judge. In January 2024, Phibro filed a lawsuit in the D.C. Federal District Court asking the court to invalidate the order which revoked the regulatory method for carbadox. Should we be unable to successfully defend the safety of the product, the loss of carbadox sales will have an adverse effect on our financial condition and results of operations. Sales of Mecadox (carbadox) for the twelve months ended December 31,2023 were approximately $18 million. As of the date of the filing of this Quarterly Report on Form 10-Q, Mecadox continues to be available for use by swine producers. For additional information, see also “Business — Compliance with Government Regulation — United States — Carbadox”; and “Business — Compliance with Government Regulation — Global Policy and Guidance” in Item 1 of our Annual Report.

Current wording

In March 2022, the FDA held a Part 15 virtual public hearing seeking data and information related to the safety of carbadox in which Phibro participated and again detailed the extensive research and data that confirm the safety of carbadox. In November 2023, the FDA issued a final order to revoke the approved method for detecting residues of carbadox. The FDA also provided notice in the Federal Register proposing to withdraw approval of all new animal drug applications (NADAs) providing for use of carbadox in medicated swine feed and announcing an opportunity for Phibro to request a hearing on this proposal. This second action is based on CVM’s determination that there is no approved regulatory method to detect carbadox residues in the edible tissues of the treated swine. Phibro is taking the next steps to continue to defend swine producers’ ability to use Mecadox. We have formally requested a full evidentiary hearing on the merits before an administrative law judge. In January 2024, Phibro filed a lawsuit in the D.C. Federal District Court asking the court to invalidate the order which revoked the regulatory method for carbadox. Should we be unable to successfully defend the safety of the product, the loss of carbadox sales will have an adverse effect on our financial condition and results of operations. Sales of Mecadox (carbadox) for the 12 months ended March 31,2024 were approximately $20.0 million. As of the date of the filing of this Quarterly Report on Form 10-Q, Mecadox continues to be available for use by swine producers. For additional information, see also “Business — Compliance with Government Regulation — United States — Carbadox”; and “Business — Compliance with Government Regulation — Global Policy and Guidance” in Item 1 of our Annual Report.

Previous wording

Net sales, Adjusted EBITDA and reconciliation of GAAP net income (loss) to Adjusted EBITDA

Current wording

Net sales, Adjusted EBITDA and reconciliation of GAAP net income to Adjusted EBITDA

Previous wording

The table below sets forth a reconciliation of net income (loss), as reported under GAAP, to Adjusted EBITDA:

Current wording

The table below sets forth a reconciliation of net income, as reported under GAAP, to Adjusted EBITDA:

Previous wording

We report adjusted net income to portray the results of our operations prior to considering certain income statement elements. See “—General description of non-GAAP financial measures.” The table below sets forth a reconciliation of net income (loss), as reported under GAAP, to adjusted net income:

Current wording

We report adjusted net income to portray the results of our operations prior to considering certain income statement elements. See “—General description of non-GAAP financial measures.” The table below sets forth a reconciliation of net income, as reported under GAAP, to adjusted net income:

Previous wording

(2)Adjusted selling, general and administrative excludes acquisition-related intangible amortization, pension settlement cost, Brazil employment taxes, stock-based compensation and environmental remediation costs

Current wording

(2)Adjusted selling, general and administrative excludes acquisition-related intangible amortization, pension settlement cost, Brazil employment taxes, acquisition-related other, insurance proceeds, stock-based compensation and environmental remediation costs

Previous wording

Net sales of $173.1 million for the three months ended December 31, 2023, increased $9.3 million, or 6%. Net sales of MFAs and other increased $4.8 million, or 5%, due to increased demand for our MFAs in international regions and for our processing aids used in the ethanol fermentation industry. Net sales of nutritional specialty products decreased $2.4 million, or 6%, mostly due to lower domestic dairy demand. Net sales of vaccines increased $7.0 million, or 31%, primarily due to poultry product introductions in Latin America, plus an increase in domestic demand.

Current wording

Net sales of $181.3 million for the three months ended March 31, 2024, increased $16.9 million, or 10%. Net sales of MFAs and other increased $15.0 million, or 16%, due to increased demand for our MFAs in both domestic and international regions. Net sales of nutritional specialty products decreased $4.8 million, or 11%, mostly due to lower demand for microbial and dairy products. Net sales of vaccines increased $6.7 million, or 26%, primarily due to poultry product introductions in Latin America, plus an increase in both domestic and international demand.

Previous wording

Net sales of $30.3 million for the six months ended December 31, 2023, decreased $6.9 million, or 19%, driven by decreased demand for personal care product ingredients and industrial chemicals.

Current wording

Net sales of $17.7 million for the three months ended March 31, 2024, decreased $0.7 million, or 4%, due to a decrease in demand for personal care product ingredients and industrial chemicals.

Previous wording

Gross profit of $78.6 million for the three months ended December 31, 2023, increased $1.2 million, or 2%, as compared to the three months ended December 31, 2022. Gross margin decreased 10 basis points to 31.5% of net sales for the three months ended December 31, 2023, as compared to 31.6% for the three months ended December 31, 2022, due to decreased sales and unfavorable product mix in Mineral Nutrition and Performance Products.

Current wording

Gross profit of $79.6 million for the three months ended March 31, 2024, increased $4.1 million, or 5%, as compared to the three months ended March 31, 2023. Gross margin decreased 50 basis points to 30.2% of net sales for the three months ended March 31, 2024, as compared to 30.7% for the three months ended March 31, 2023, due to unfavorable product mix.

Previous wording

Animal Health gross profit increased $4.1 million, primarily driven by higher sales volume and favorable product mix. Mineral Nutrition gross profit decreased $1.0 million, driven by lower sales volume and an increase in raw material costs. Performance Products gross profit decreased $1.6 million as a result of lower product demand and an increase in raw material costs. Acquisition-related cost of goods sold reduced gross profit by $0.3 million.

Current wording

Animal Health gross profit increased $3.5 million, primarily driven by higher sales volume, partially offset by unfavorable product mix. Mineral Nutrition gross profit increased $0.9 million, driven by increased sales volumes. Performance Products gross profit was comparable to the prior year’s quarter. Acquisition-related cost of goods sold reduced gross profit by $0.2 million.

Previous wording

Selling, general and administrative expenses (“SG&A”) of $62.9 million for the three months ended December 31, 2023, increased $1.4 million, or 2%, as compared to the three months ended December 31, 2022. SG&A for the three months ended December 31, 2023, included a $4.2 million cost for an unfavorable litigation result related to Brazil employment taxes paid from January 2013 through December 2015, an additional $0.3 million true-up to the pension settlement cost and $0.1 million for stock-based compensation. SG&A for the three months ended December 31, 2022, included $6.6 million of environmental remediation costs. Excluding these items, SG&A increased $3.4 million, or 6%.

Current wording

Selling, general and administrative expenses (“SG&A”) of $59.7 million for the three months ended March 31, 2024, increased $2.7 million, or 5%, as compared to the three months ended March 31, 2023. SG&A for the three months ended March 31, 2024, included $0.5 million in acquisition-related costs and $0.1 million of stock-based compensation, partially offset by a gain from insurance proceeds of $0.3 million. SG&A for the three months ended March 31, 2023, included $0.3 million of environmental remediation costs. Excluding these items, SG&A increased $2.6 million, or 5%.

Previous wording

Animal Health SG&A increased $2.3 million, primarily due to an increase in employee-related costs to support increased demand in Latin America and Asia Pacific. Mineral Nutrition and Performance Products SG&A was comparable to the prior year. Corporate costs increased by $1.4 million, driven by the planned increase in strategic investments.

Current wording

Animal Health SG&A increased $2.0 million, primarily due to an increase in employee-related costs to support increased demand and new product launches in Latin America. Mineral Nutrition and Performance Products SG&A was comparable to the prior year. Corporate costs increased by $0.7 million, due to an increase in employee-related costs.

Previous wording

Interest expense, net of $4.7 million for the three months ended December 31, 2023, increased by $0.8 million, as compared to the three months ended December 31, 2022, as a result of higher variable interest rates and slightly increased debt levels.

Current wording

Interest expense, net of $4.6 million for the three months ended March 31, 2024, increased by $0.7 million, as compared to the three months ended March 31, 2023, as a result of higher variable interest rates and increased debt levels.

Previous wording

Foreign currency losses, net for the three months ended December 31, 2023, were $7.5 million, as compared to $(0.1) million of net gains for the three months ended December 31, 2022. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar, including a major devaluation in Argentina.

Current wording

Foreign currency losses, net for the three months ended March 31, 2024, were $2.4 million, as compared to $0.4 million of net gains for the three months ended March 31, 2023. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar.

Previous wording

The provision for income taxes was $2.3 million and $4.9 million for the three months ended December 31, 2023 and 2022, respectively. The effective income tax rates were 64.3% and 40.5% for the three months ended December 31, 2023 and 2022, respectively. The effective income tax rate for the three months ended December 31, 2023, increased due to an unfavorable mix of pre-tax income and related tax provisions in the various jurisdictions where we have operations and the relatively greater effect of certain items such as Global Intangible Low-Taxed Income (“GILTI”) on reduced pre-tax income.

Current wording

The provision for income taxes was $4.5 million and $5.1 million for the three months ended March 31, 2024 and 2023, respectively. The effective income tax rates were 35.0% and 33.5% for the three months ended March 31, 2024 and 2023, respectively. The effective income tax rate for the three months ended March 31, 2024, increased due to the relatively greater effect of certain items such as Global Intangible Low-Taxed Income (“GILTI”) on reduced pre-tax income.

Previous wording

Net income of $1.3 million for the three months ended December 31, 2023, decreased $5.9 million, as compared to net income of $7.2 million for the three months ended December 31, 2022. Operating income decreased $0.1 million, driven by higher SG&A, offset by favorable gross profit. Gross profit increased as a result of higher product demand in the Animal Health segment. SG&A included a $4.2 million cost for an unfavorable litigation result related to Brazil employment taxes paid from January 2013 through December 2015. Interest expense, net increased $0.8 million and foreign currency exchange resulted in increased losses of $7.6 million. Income tax expense increased by $2.6 million.

Current wording

Net income of $8.4 million for the three months ended March 31, 2024, decreased $1.6 million, as compared to net income of $10.0 million for the three months ended March 31, 2023. Operating income increased $1.4 million, driven by favorable gross profit, partially offset by higher SG&A. Gross profit increased primarily as a result of higher product demand in the Animal Health segment. SG&A increased due to higher employee-related costs. Interest expense, net increased $0.7 million and foreign currency exchange resulted in increased losses of $2.8 million. This was partially offset by a $0.5 million decrease in income tax expense.

Previous wording

Adjusted EBITDA of $29.5 million for the three months ended December 31, 2023, decreased $1.5 million, or 5%, as compared to the three months ended December 31, 2022. Animal Health Adjusted EBITDA increased $2.2 million due to gross profit from increased sales, partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA decreased $0.9 million, driven by lower gross profit. Performance Products Adjusted EBITDA decreased $1.5 million due to lower product demand and unfavorable product mix. Corporate expenses increased $1.3 million, driven by increased strategic investments.

Current wording

Adjusted EBITDA of $29.7 million for the three months ended March 31, 2024, increased $2.3 million, or 9%, as compared to the three months ended March 31, 2023. Animal Health Adjusted EBITDA increased $2.3 million due to gross profit from increased sales, partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA increased $0.8 million, driven by higher gross profit. Performance Products Adjusted EBITDA remained relatively the same. Corporate expenses increased $0.7 million, driven by increased employee-related costs.

Previous wording

The adjusted provision for income taxes was $4.9 million and $7.2 million for the three months ended December 31, 2023 and 2022, respectively. The adjusted effective income tax rates were 26.7% and 34.3% for the three months ended December 31, 2023 and 2022, respectively. The improvement in our adjusted effective income tax rate for the three months ended December 31, 2023, was driven by a favorable mix of pre-tax income and the benefit of recently implemented global tax structuring.

Current wording

The adjusted provision for income taxes was $5.7 million and $5.8 million for the three months ended March 31, 2024 and 2023, respectively. The adjusted effective income tax rates were 30.8% and 33.2% for the three months ended March 31, 2024 and 2023, respectively. The improvement in our adjusted effective income tax rate for the three months ended March 31, 2024 was driven by a favorable mix of pre-tax income.

Previous wording

Adjusted net income of $13.5 million for the three months ended December 31, 2023, decreased $0.3 million, or 2%, as compared to the prior year. Increased adjusted gross profit, driven by sales growth, was offset by higher adjusted SG&A and higher adjusted interest expense, net, with a partial benefit from a reduced adjusted provision for income taxes. Adjusted SG&A increased due to strategic investments and increased employee-related costs and adjusted interest expense, net, increased due to higher variable interest rates.

Current wording

Adjusted net income of $12.7 million for the three months ended March 31, 2024, increased $1.1 million, or 9%, as compared to the prior year. Increased adjusted gross profit, driven by sales growth, was partially offset by higher adjusted SG&A and higher adjusted interest expense, net, with a partial benefit from a reduced adjusted provision for income taxes. Adjusted SG&A increased due to increased employee-related costs and adjusted interest expense, net, increased due to higher variable interest rates.

Previous wording

Adjusted diluted earnings per share was $0.33 for the quarter, a decrease of $0.01, or 2% as compared to the adjusted diluted earnings per share of $0.34 in the prior year.

Current wording

Adjusted diluted earnings per share was $0.31 for the quarter, an increase of $0.02, or 9% as compared to the adjusted diluted earnings per share of $0.29 in the prior year.

Previous wording

Net sales of $481.3 million for the six months ended December 31, 2023, increased $4.1 million, or 1%, as compared to the six months ended December 31, 2022. Animal Health sales increased $15.0 million. Mineral Nutrition and Performance Products sales decreased $3.9 million and $6.9 million, respectively.

Current wording

Net sales of $744.5 million for the nine months ended March 31, 2024, increased $21.7 million, or 3%, as compared to the nine months ended March 31, 2023. Animal Health sales increased $31.9 million. Mineral Nutrition and Performance Products sales decreased $2.6 million and $7.6 million, respectively.

Previous wording

Net sales of $333.6 million for the six months ended December 31, 2023, increased $15.0 million, or 5%. Net sales of MFAs and other increased $6.1 million, or 3%, due to higher demand for processing aids used in the ethanol fermentation industry and for our MFAs in Latin America. Net sales of nutritional specialty products decreased $1.3 million, or 2%, driven by lower domestic dairy demand, partially offset by international poultry demand. Net sales of vaccines increased $10.2 million, or 22%, due primarily to poultry product introductions in Latin America, plus an increase in domestic demand.

Current wording

Net sales of $515.0 million for the nine months ended March 31, 2024, increased $31.9 million, or 7%. Net sales of MFAs and other increased $21.1 million, or 7%, due to increased volumes in all regions and higher demand for processing aids used in the ethanol fermentation industry. Net sales of nutritional specialty products decreased $6.1 million, or 5%, driven by decreased demand for domestic dairy and microbial products. Net sales of vaccines increased $16.9 million, or 23%, due primarily to poultry product introductions in Latin America, plus an increase in domestic demand.

Previous wording

Net sales of $117.4 million for the six months ended December 31, 2023, decreased $3.9 million, or 3%, driven by lower average selling prices and a reduction in sales volume.

Current wording

Net sales of $181.6 million for the nine months ended March 31, 2024, decreased $2.6 million, or 1%, driven by lower average selling prices, partially offset by an increase in sales volume.

Previous wording

Net sales of $15.5 million for the three months ended December 31, 2023, decreased $3.7 million, or 19%, driven by decreased demand for personal care product ingredients and industrial chemicals.

Current wording

Net sales of $47.9 million for the nine months ended March 31, 2024, decreased $7.6 million, or 14%, driven by decreased demand for personal care product ingredients and industrial chemicals.

Previous wording

Gross profit of $146.3 million for the six months ended December 31, 2023, increased $0.3 million, as compared to the six months ended December 31, 2022. Gross margin decreased 20 basis points to 30.4% of net sales for the six months ended December 31, 2023, as compared to 30.6% for the six months ended December 31, 2022 due to decreased sales and unfavorable product mix in Mineral Nutrition and Performance Products.

Current wording

Gross profit of $225.9 million for the nine months ended March 31, 2024, increased $4.4 million, as compared to the nine months ended March 31, 2023. Gross margin decreased 40 basis points to 30.3% of net sales for the nine months ended March 31, 2024, as compared to 30.7% for the nine months ended March 31, 2023 due to unfavorable product mix.

Previous wording

Animal Health gross profit increased $6.6 million as a result of higher product demand. Mineral Nutrition gross profit decreased $3.3 million, driven by lower sales volume and an increase in raw material costs. Performance Products gross profit decreased $2.7 million due to lower demand and unfavorable product mix. Acquisition-related cost of goods sold reduced gross profit by $0.3 million.

Current wording

Animal Health gross profit increased $10.0 million as a result of higher product demand. Mineral Nutrition gross profit decreased $2.4 million, driven by lower sales volume and an increase in raw material costs. Performance Products gross profit decreased $2.7 million due to lower demand and unfavorable product mix. Acquisition-related cost of goods sold reduced gross profit by $0.5 million.

Previous wording

SG&A of $131.4 million for the six months ended December 31, 2023, increased $14.9 million, or 13%, as compared to the six months ended December 31, 2022. SG&A for the six months ended December 31, 2023, included $10.7 million pension settlement costs, a $4.2 million cost for an unfavorable litigation result related to Brazil employment taxes paid from January 2013 through December 2015, and $0.2 million of stock-based compensation. SG&A for the six months ended December 31, 2022, included $6.6 million of environmental remediation costs. Excluding these items, SG&A increased $6.4 million, or 6%.

Current wording

SG&A of $191.0 million for the nine months ended March 31, 2024, increased $17.6 million, or 10%, as compared to the nine months ended March 31, 2023. SG&A for the nine months ended March 31, 2024, included $10.7 million pension settlement costs, a $4.2 million cost for an unfavorable litigation result related to Brazil employment taxes paid from January 2013 through December 2015, acquisition-related costs of $0.5 million and $0.3 million of stock-based compensation, slightly offset by a gain from insurance proceeds of $0.3 million. SG&A for the nine months ended March 31, 2023, included $6.9 million of environmental remediation costs. Excluding these items, SG&A increased $9.0 million, or 5%.

Previous wording

Animal Health SG&A increased $3.7 million primarily due to an increase in employee-related costs and overall inflation. Mineral Nutrition SG&A remained relatively flat. Performance Products SG&A decreased $0.3 million, with a reduction in spending. Corporate expenses increased $3.0 million due to an increase in employee-related costs and strategic investments.

Current wording

Animal Health SG&A increased $5.6 million primarily due to an increase in employee-related costs and new product launches in Brazil. Mineral Nutrition SG&A remained relatively flat. Performance Products SG&A decreased $0.3 million, with a

Previous wording

Interest expense, net of $9.2 million for the six months ended December 31, 2023, increased $2.3 million, or 33%, as compared to the six months ended December 31, 2022, as a result of higher variable interest rates and increased debt levels.

Current wording

Interest expense, net of $13.8 million for the nine months ended March 31, 2024, increased $3.0 million, or 27%, as compared to the nine months ended March 31, 2023, as a result of higher variable interest rates and increased debt levels, partially offset by higher returns on short-term investments.

Previous wording

Foreign currency losses, net for the six months ended December 31, 2023, were $14.2 million, as compared to net losses of $5.1 million for the six months ended December 31, 2022. Current period losses were driven by fluctuations in certain currencies relative to the U.S. dollar, primarily related to a major devaluation in Argentina.

Current wording

Foreign currency losses, net for the nine months ended March 31, 2024, were $16.6 million, as compared to net losses of $4.6 million for the nine months ended March 31, 2023. Current period losses were driven by fluctuations in certain currencies relative to the U.S. dollar, primarily related to a major devaluation in Argentina.

Previous wording

The benefit for income taxes was $1.7 million for the six months ended December 31, 2023, and the provision for income taxes was $6.5 million for the six months ended December 31, 2022. The effective income tax rates were 19.9% and 36.9% for the six months ended December 31, 2023 and 2022, respectively. The effective income tax rate for the six months ended December 31, 2023, was unfavorably affected by the mix of pre-tax income and related tax provisions in the various jurisdictions where we have operations and the relatively greater effect of certain items such as GILTI on reduced pre-tax income. The provision for income taxes for the six months ended December 31, 2023, included (i) a $1.2 million benefit related to the determination of whether a foreign tax is eligible for a U.S. foreign tax credit related to our fiscal year 2023, based on Internal Revenue Service (“IRS”) guidance provided subsequent to our fiscal year-end, (ii) a $0.4 million benefit related to the release of certain valuation allowances on non-U.S. companies and (iii) a $0.3 million expense from changes in uncertain tax positions related to prior years. The effective income tax rate, without these discrete items, would have been 4.3% for the six months ended December 31, 2023. The provision for income taxes for the six months ended December 31, 2022, included a $0.9 million benefit related to exchange rate differences on intercompany dividends and a $0.2 million expense from changes in uncertain tax positions related to prior years. The effective income tax rate, without these items, would have been 41.0% for the six months ended December 31, 2022.

Current wording

The provision for income taxes was $2.8 million and $11.5 million for the nine months ended March 31, 2024 and 2023, respectively. The effective income tax rates were 63.1% and 35.3% for the nine months ended March 31, 2024 and 2023, respectively. The effective income tax rate for the nine months ended March 31, 2024, was unfavorably affected by the relatively greater effect of certain items such as GILTI on reduced pre-tax income. The provision for income taxes for the nine months ended March 31, 2024, included (i) a $1.2 million benefit related to the determination of whether a foreign tax is eligible for a U.S. foreign tax credit related to our fiscal year 2023, based on Internal Revenue Service (“IRS”) guidance provided subsequent to our fiscal year-end, (ii) a $0.5 million benefit related to the release of certain valuation allowances on non-U.S. companies and (iii) a $1.1 million expense from changes in uncertain tax positions related to prior years. The effective income tax rate, without these items, would have been 78.5% for the nine months ended March 31, 2024. The provision for income taxes for the nine months ended March 31, 2023, included a $0.9 million benefit related to exchange rate differences on intercompany dividends and a $0.2 million expense from changes in uncertain tax positions related to prior years. The effective income tax rate, without these items, would have been 37.5% for the nine months ended March 31, 2023.

Previous wording

Net loss of $6.7 million for the six months ended December 31, 2023, decreased $17.8 million, as compared to net income of $11.1 million for the six months ended December 31, 2022. Operating income decreased $14.6 million driven by higher SG&A, slightly offset by higher gross profit. SG&A increased by $14.9 million due to pension settlement costs of $10.7 million and Brazil employment taxes of $4.2 million. Changes in interest expense, net and foreign currency losses resulted in a $2.3 million and $9.1 million reduction in income before income taxes, respectively. Income tax expense decreased $8.1 million.

Current wording

Net income of $1.7 million for the nine months ended March 31, 2024, decreased $19.4 million, as compared to net income of $21.1 million for the nine months ended March 31, 2023. Operating income decreased $13.2 million driven by higher SG&A, slightly offset by higher gross profit. SG&A increased by $17.6 million, which included pension settlement costs of $10.7 million, Brazil employment taxes of $4.2 million, acquisition-related costs of $0.5 million and stock-based compensation of $0.3 million, slightly offset by a gain from insurance proceeds of $0.3 million. Changes in interest expense, net and foreign currency losses resulted in a $3.0 million and $12.0 million reduction in income before income taxes, respectively. This was partially offset by a $8.7 million decrease in income tax expense.

Previous wording

Adjusted EBITDA of $48.1 million for the six months ended December 31, 2023, decreased $4.9 million, or 9%, as compared to the six months ended December 31, 2022. Animal Health Adjusted EBITDA increased $3.8 million, resulting from higher sales and increased gross profit, partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA decreased $3.3 million, due to decreased sales and gross profit. Performance Products Adjusted EBITDA decreased $2.4 million, driven by decreased sales and gross profit. Corporate expenses increased $3.0 million due to increased employee-related costs and strategic investments.

Current wording

Adjusted EBITDA of $77.8 million for the nine months ended March 31, 2024, decreased $2.6 million, or 3%, as compared to the nine months ended March 31, 2023. Animal Health Adjusted EBITDA increased $6.1 million, resulting from higher sales and increased gross profit, partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA decreased $2.5 million, due to decreased sales and gross profit. Performance Products Adjusted EBITDA decreased $2.5 million, driven by decreased sales and gross profit. Corporate expenses increased $3.7 million due to increased strategic investment and employee-related costs.

Previous wording

The adjusted provision for income taxes was $7.0 million and $11.9 million for the six months ended December 31, 2023 and 2022, respectively. The adjusted effective income tax rates for the six months ended December 31, 2023 and 2022, were 27.0% and 34.9%, respectively. The improvement in our adjusted effective income tax rate during the six months ended December 31, 2023, was driven by a favorable mix of pre-tax income and the benefit of recently implemented global tax structuring.

Current wording

The adjusted provision for income taxes was $12.7 million and $17.7 million for the nine months ended March 31, 2024 and 2023, respectively. The adjusted effective income tax rates for the nine months ended March 31, 2024 and 2023, were 28.6% and 34.3%, respectively. The improvement in our adjusted effective income tax rate during the nine months ended March 31, 2024 was primarily driven by a favorable mix of pre-tax income.

Previous wording

Adjusted net income of $19.0 million for the six months ended December 31, 2023, decreased $3.1 million, or 14.1%, as compared to the prior year. The decrease was driven by higher adjusted SG&A and higher adjusted interest expense, net, partially offset by slightly improved adjusted gross profit and a partial benefit from a reduced adjusted provision for income taxes. Adjusted SG&A increased due to strategic investments and increased employee-related costs and adjusted interest expense, net, increased due to higher variable interest rates.

Current wording

Adjusted net income of $31.7 million for the nine months ended March 31, 2024, decreased $2.1 million, or 6%, as compared to the prior year. The decrease was driven by higher adjusted SG&A and higher adjusted interest expense, partially offset by higher gross profit and a partial benefit from a reduced adjusted provision for income taxes. Adjusted SG&A increased due to increased strategic investments and employee-related costs and adjusted interest expense, net, increased due to higher variable interest rates.

Previous wording

Adjusted diluted earnings per share was $0.47 for the six months ended December 31, 2023, a decrease of $0.08, or 14%, as compared to the adjusted diluted earnings per share of $0.55 in the prior year.

Current wording

Adjusted diluted earnings per share was $0.78 for the nine months ended March 31, 2024, a decrease of $0.05, or 6%, as compared to the adjusted diluted earnings per share of $0.83 in the prior year.

Previous wording

Net decrease in cash and cash equivalents was:

Current wording

Net increase (decrease) in cash and cash equivalents was:

Previous wording

liabilities and other items was $17.5 million. Accounts receivable provided $14.3 million of cash due to timing of sales and an improvement in days sales outstanding. Inventories used $7.5 million of cash due to increased raw material and production costs, and increased quantities on hand due to forecasted future demand and internal production schedules. Accounts payable provided $11.5 million of cash due to timing of purchases and payments. Accrued expenses and other liabilities provided cash of $2.4 million, primarily due to timing of incurrence and payments for professional fees.

Current wording

Operating activities provided $59.2 million of net cash for the nine months ended March 31, 2024. Cash provided by net income, adjusted for the non-cash items, including depreciation and amortization, was $46.9 million. We paid $13.0 million of net interest expense and $11.6 million in income taxes, net. Cash provided in the ordinary course of business from changes in operating assets and liabilities and other items was $5.9 million. Accounts receivable provided $3.0 million of cash due to timing of sales and an improvement in days sales outstanding. Inventories used $5.9 million of cash due to increased raw material and production costs, and increased quantities on hand due to forecasted future demand and internal production schedules. Accounts payable provided $8.1 million of cash due to timing of purchases and payments. Accrued expenses and other liabilities provided cash of $2.9 million, primarily due to timing of incurrence and payments for professional fees.