PHIBRO ANIMAL HEALTH CORP
For the period ended Dec 31, 2024. Filed Feb 5, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 5, 2025
PAHC$32.96-6.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001558370-24-014644
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-05.
0001558370-25-000659
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 132 current paragraphs.
70 unchanged; 30 reworded; 29 added; 6 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 51 previous and 50 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
Macroeconomic developments, such as adverse economic conditions worldwide, international conflicts, or efforts of governments to stimulate or stabilize the economy or manage trade disputes, may adversely impact our business. For example, the Trump administration recently confirmed its intent to impose heavy tariffs on imports from several nations, including Mexico, Canada and China. These measures aim to address broader policy goals but could introduce supply chain inefficiencies, challenge current trade agreements with certain nations, and affect the cost and availability of materials critical to project execution. On February 3, 2025, President Trump announced a deal to delay the imposition of tariffs on Mexico imports by a month. However, any such tariffs, if and when enacted, and any further legislation or actions taken by the U.S. federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or retaliatory measures could adversely impact our ability to sell products and services in our markets. Countries may, in response to any U.S. actions, adopt retaliatory or other protectionist measures that could further limit our ability to offer our products and services. The ultimate impact of any tariffs will depend on various factors, including if any tariffs are ultimately implemented, the timing of implementation, and the amount, scope, and nature of the tariffs.
Current report
Net sales of $229.4 million for the three months ended December 31, 2024, increased $56.3 million, or 33%. Net sales of MFAs and other increased $48.4 million, or 47%, due to incremental revenues of $36.7 million from sales of products from the Zoetis MFA portfolio acquired on October 31, 2024 and increased demand for our MFA products in international regions and for our processing aids used in the ethanol fermentation industry.
Current report
Gross profit of $101.9 million for the three months ended December 31, 2024, increased $23.3 million, or 30%, as compared to the three months ended December 31, 2023. Gross margin increased 140 basis points to 32.9% of net sales for the three months ended December 31, 2024, as compared to 31.5% for the three months ended December 31, 2023. The comparison to the prior year includes a net increase of $1.3 million for acquisition-related cost of goods sold related to purchase accounting adjustments for acquisitions. Excluding this purchase accounting item, gross profit increased $24.6 million, or 31%, and increased 200 basis points to 33.5% of net sales due to increased sales, an increase in average selling prices, and the favorable impact of foreign currency exchange rates.
Current report
Animal Health gross profit increased $20.8 million, primarily driven by higher sales volume, higher average selling prices, and the favorable impact of foreign currency exchange rates. Mineral Nutrition gross profit increased $2.5 million, driven by higher average selling prices. Performance Products gross profit increased by $1.3 million, driven by increased sales volumes.
Current report
Interest expense, net of $9.0 million for the three months ended December 31, 2024, increased by $4.3 million, as compared to the three months ended December 31, 2023, due to the higher debt levels associated with the financing of the Acquisition.
Current report
Provision for income taxes
Current report
The provision for income taxes was $1.7 million and $2.3 million for the three months ended December 31, 2024 and 2023, respectively. The effective income tax rates were 34.2% and 64.3% for the three months ended December 31, 2024 and 2023, respectively. The effective income tax rate for the three months ended December 31, 2024 decreased primarily due to higher pretax earnings and higher forecasted annual pretax earnings than the three months ended December 31, 2023, which reduced the impact of certain items such as Global Intangible Low-Taxed Income. The provision for income taxes for the three months ended December 31, 2024, included (i) exchange rate losses, (ii) changes in uncertain tax positions related to prior years and (iii) acquisition-related costs. The provision for income taxes for the three months ended December 31, 2023, included various items including (i) exchange rate losses, (ii) the release of certain valuation allowances and (iii) changes in uncertain tax positions related to prior years. Excluding the impact of these items, the effective income tax rate was 26.4% and 26.7% for the three months ended December 31, 2024 and 2023, respectively.
Current report
Net income
Current report
Net income of $3.2 million for the three months ended December 31, 2024, increased $1.9 million, as compared to net income of $1.3 million for the three months ended December 31, 2023. Operating income increased $9.8 million, driven by favorable gross profit, partially offset by higher SG&A. Gross profit increased primarily as a result of higher sales in the Animal Health segment, driven in part by incremental revenues associated with sales from the Zoetis MFA portfolio acquired on October 31, 2024. SG&A increased by $13.4 million, which included $8.8 million for acquisition-related costs and $1.7 million of costs associated with Phibro Forward income growth initiatives. Interest expense, net increased $4.3 million due to higher debt levels, due in part to the financing of the Acquisition. Foreign currency losses, net increased by $4.2 million. Income tax expense decreased by $0.6 million.
Current report
Comparison of six months ended December 31, 2024 and 2023
Current report
Net sales
Current report
Net sales of $569.7 million for the six months ended December 31, 2024, increased $88.4 million, or 18%, as compared to the six months ended December 31, 2023. Animal Health sales increased $78.3 million. Mineral Nutrition and Performance Products sales increased $4.9 million and $5.2 million, respectively.
Current report
Animal Health
Current report
Net sales of vaccines increased $9.3 million, or 17%, due primarily to continued growth of poultry products in Latin America, plus an increase in domestic demand.
Current report
Mineral Nutrition
Current report
Net sales of $122.3 million for the six months ended December 31, 2024, increased $4.9 million, or 4%, due to an increase in demand for copper and trace minerals.
Current report
Performance Products
Current report
Gross profit
Current report
Gross profit of $185.4 million for the six months ended December 31, 2024, increased $39.0 million, or 27%, as compared to the six months ended December 31, 2023. Gross margin increased 210 basis points to 32.5% of net sales for the six months ended December 31, 2024, as compared to 30.4% for the six months ended December 31, 2023. The comparison to the prior year includes a net increase of $1.3 million for acquisition-related cost of goods sold related to purchase accounting adjustments for acquisitions. Excluding this purchase accounting item, gross margin increased $40.4 million, or 28%, and increased 240 basis points to 32.8% of net sales due to increased sales, an increase in average selling prices, and the favorable impact of foreign currency exchange rates.
Current report
Selling, general and administrative expenses
Current report
SG&A of $142.1 million for the six months ended December 31, 2024, increased $10.8 million, or 8%, as compared to the six months ended December 31, 2023. SG&A for the six months ended December 31, 2024, included $12.2 million for acquisition-related costs, $2.0 million of costs associated with Phibro Forward income growth initiatives, and $0.4 million of stock-based compensation expense, partially offset by $1.3 million related to an insurance settlement gain. SG&A for the six months ended December 31, 2023, included a $10.7 million pension settlement costs, $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 expense. Excluding these items, SG&A increased $12.4 million.
Current report
Interest expense, net
Current report
Foreign currency losses, net
Current report
Foreign currency losses, net for the six months ended December 31, 2024, were $12.1 million, as compared to net losses of $14.2 million for the six months ended December 31, 2023. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar, most prominently, in the Brazil Real. Prior year period losses were driven in large part by a major currency devaluation in Argentina.
Current report
Provision for income taxes
Current report
The provision for income taxes was $4.3 million, and the effective income tax rate was 29.7% for the six months ended December 31, 2024. The company incurred a pretax loss for the six months ended December 31, 2023 and had a benefit for income taxes of $1.7 million, and the effective tax benefit rate was 19.9%. The effective income tax rate for the six months ended December 31, 2024 was higher than the statutory rate as well as last year’s tax benefit rate, primarily due to an unfavorable mix of pre-tax income resulting in higher taxes related to foreign earnings as well as higher state and local taxes.
Current report
The provision for income taxes for the six months ended December 31, 2024, included (i) various exchange rate losses, (ii) changes in uncertain tax positions related to prior years and (iii) acquisition-related costs. The provision for income taxes for the six months ended December 31, 2023, included various items including (i) a benefit from a foreign tax credit related to the prior year, (ii) exchange rate losses, (iii) the release of certain valuation allowances and (iv) changes in uncertain tax positions related to prior years. Excluding the impact of these items, the effective income tax rate was 25.0% and 27.0% for the six months ended December 31, 2024 and 2024, respectively.
Current report
Net income
Current report
(1) See table titled “Items Excluded from Adjusted Net Income” below for further details.
Removed paragraphs (6)
Previous report
Gross profit of $83.5 million for the three months ended September 30, 2024, increased $15.8 million, or 23%, as compared to the three months ended September 30, 2023. Gross margin increased 280 basis points to 32.1% of net sales for the three months ended September 30, 2024, as compared to 29.3% for the three months ended September 30, 2023. The improvement in gross margin is primarily due to favorable product mix and lower input costs.
Previous report
Provision (benefit) for income taxes
Previous report
The provision for income taxes was $2.6 million for the three months ended September 30, 2024, on pre-tax income of $9.6 million, compared to a benefit for income taxes of $3.9 million on a pre-tax loss of $12.0 million for the three months ended September 30, 2023. The effective income tax rate was 27.5% and 33.1% for the three months ended September 30,2024 and 2023, respectively. The effective income tax rate in the current year included (i) a $0.3 million expense from changes in uncertain tax positions related to prior years and (ii) certain charges, including acquisition transaction costs, foreign currency losses, and stock-based compensation, which had lower tax benefit rates.
Previous report
The benefit for income taxes during the three months ended September 30, 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 IRS guidance provided subsequent to our fiscal year-end, (ii) a $0.2 million expense from changes in uncertain tax positions related to prior years, and (iii) certain charges, including acquisition-related costs, foreign currency losses, and stock-based compensation, which had lower tax benefit rates.
Previous report
Excluding the items discussed above, the effective income tax rate was 22.8% and 27.6% for the three months ended September 30, 2024 and 2023, respectively, with the improvement primarily driven by a favorable mix of international earnings.
Previous report
Net income (loss)
Reworded paragraphs (30)
Previous wording
In April 2024, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Zoetis Inc., a Delaware corporation (“Zoetis”) to acquire Zoetis’s MFA portfolio, certain water-soluble products and related assets (the “Acquisition”). On October 31, 2024, the Company completed the Acquisition at a purchase price of $350.0 million in cash, subject to certain adjustments set forth in the Purchase Agreement. The Acquisition was funded by term loan borrowings under the 2024 Credit Agreement. The product portfolio acquired, which generated approximately $400.0 million in revenue in 2023, is comprised of more than 37 product lines that are sold in approximately 80 countries. Also included in the Acquisition are six manufacturing sites, comprised of four in the U.S., one in Italy and one in China.
Current wording
In April 2024, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Zoetis Inc., a Delaware corporation (“Zoetis”) to acquire Zoetis’s medicated feed additive (“MFA”) portfolio, certain water-soluble products and related assets (the “Acquisition”). On October 31, 2024, the Company completed the Acquisition at a purchase price of approximately $301.8 million ($290.8 million net of cash acquired), subject to certain adjustments set forth in the Purchase Agreement. The Acquisition was funded by term loan borrowings under the 2024 Credit Agreement. The product portfolio acquired, which generated $407.6 million in revenue in 2023, is comprised of more than 37 product lines that are sold in approximately 80 countries. Also included in the Acquisition are six manufacturing sites, comprised of four in the U.S., one in Italy and one in China. The results of operations of the Acquisition are included in our consolidated statements of operations from the date of acquisition and reported within the Animal Health segment.
Previous wording
On October 7, 2023, Hamas militants crossed into Israel from Gaza in a large-scale, surprise terrorist attack. Hamas terrorists invaded Israel, first firing rockets into the country and then carrying out attacks inflicting mass casualties with hundreds more taken hostage. In order to provide immediate assistance to the victims of the attacks and their families, we and our employees provided monetary donations that were distributed to charities that offered relief services, welfare, equipment, food and other necessities. Since the October 2023 attack, there have been continued and escalating hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen). It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries, will join the hostilities. Such hostilities may escalate in the future into a greater regional conflict.
Current wording
On October 7, 2023, Hamas militants crossed into Israel from Gaza in a large-scale, surprise terrorist attack. Hamas terrorists invaded Israel, first firing rockets into the country and then carrying out attacks inflicting mass casualties with hundreds more taken hostage. In order to provide immediate assistance to the victims of the attacks and their families, we and our employees provided monetary donations that were distributed to charities that offered relief services, welfare, equipment, food and other necessities. Since the October 2023 attack, there have been continued and escalating hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen). In November 2024, a ceasefire was brokered between Israel and Hezbollah, and in January 2025, a temporary ceasefire went into effect between Israel and Hamas. The results of such ceasefire actions and negotiations for a continued ceasefire between Israel and Hamas remain uncertain and difficult to predict. It is possible that hostilities with Hezbollah in Lebanon and with Hamas can resume and escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries, will join the hostilities. Such hostilities may escalate in the future into a greater regional conflict.
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 September 30, 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. Iran has threatened to continue to attack Israel. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. 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 December 31, 2024, we had approximately 480 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. Iran has threatened to continue to attack Israel. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. 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 and their respective allies. 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 25% of our consolidated assets as of September 30, 2024, and 20% of our consolidated net sales, for the three months ended September 30, 2024.
Current wording
The resumption, 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 and their respective allies. 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 17% of our consolidated assets as of December 31, 2024, and 20% of our consolidated net sales, for the six months ended December 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 12 months ended September 30, 2024 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 twelve months ended December 31, 2024 represented approximately 1% of consolidated net sales.
Previous wording
In April 2016, the Food and Drug Administration (“FDA”) began initial steps to withdraw approval of carbadox (the active ingredient in our Mecadox product) via a regulatory process known as a Notice of Opportunity for Hearing (“NOOH”), due to concerns that certain residues from the product may persist in animal tissues for longer than previously determined. In the years following, Phibro has continued an ongoing process of responding collaboratively and transparently to the FDA’s Center for Veterinary Medicine (“CVM”) inquiries and has provided extensive and meticulous research and data that confirmed the safety of carbadox. In July 2020, the FDA announced it would not proceed to a hearing on the scientific concerns raised in the 2016 NOOH,
Current wording
In April 2016, the Food and Drug Administration (“FDA”) began initial steps to withdraw approval of carbadox (the active ingredient in our Mecadox product) via a regulatory process known as a Notice of Opportunity for Hearing (“NOOH”), due to concerns that certain residues from the product may persist in animal tissues for longer than previously determined. In the years following, Phibro has continued an ongoing process of responding collaboratively and transparently to the FDA’s Center for Veterinary Medicine (“CVM”) inquiries and has provided extensive and meticulous research and data that confirmed the safety of carbadox. In July 2020, the FDA announced it would not proceed to a hearing on the scientific concerns raised in the 2016 NOOH, consistent with the normal regulatory procedure, but instead announced that it was withdrawing the 2016 NOOH and issuing a proposed order to review the regulatory method for carbadox. Phibro reiterated the safety of carbadox and the appropriateness of the regulatory method and offered to work with the CVM to generate additional data to support the existing regulatory method or select a suitable alternative regulatory method.
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 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 carbadox residues. The FDA also provided notice in the Federal Register proposing to withdraw approval of all 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 continuing to defend swine producers’ ability to use Mecadox. We have 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 September 30, 2024 were approximately $22 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.
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 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 carbadox residues. The FDA also provided notice in the Federal Register proposing to withdraw approval of all 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 continuing to defend swine producers’ ability to use Mecadox. We have 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, 2024 were approximately $23 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.
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
(1)Phibro Forward is a company-wide initiative focused on unlocking additional areas of revenue growth and cost savings.
Current wording
(1) Phibro Forward is a company-wide initiative focused on unlocking additional areas of revenue growth and cost savings.
Previous wording
Net sales of $260.4 million for the three months ended September 30, 2024, increased $29.1 million, or 13%, as compared to the three months ended September 30, 2023. Animal Health increased $22.0 million, while Mineral Nutrition and Performance Products increased $3.0 million and $4.1 million, respectively.
Current wording
Net sales of $309.3 million for the three months ended December 31, 2024, increased $59.3 million, or 24%, as compared to the three months ended December 31, 2023. Animal Health increased $56.3 million, while Mineral Nutrition and Performance Products increased $1.9 million and $1.1 million, respectively.
Previous wording
Net sales of nutritional specialty products increased $2.4 million, or 6%, primarily due to higher sales of microbial and companion animal products.
Current wording
Net sales of nutritional specialty products increased $4.5 million, or 11%, primarily due to increased domestic dairy demand and higher sales of microbial and companion animal products.
Previous wording
Net sales of vaccines increased $5.8 million, or 22%, primarily due to an increase in poultry product demand in Latin America, plus an increase in both domestic and international demand.
Current wording
Net sales of vaccines increased $3.4 million, or 12%, primarily due to continued growth of poultry products in Latin America, plus an increase in international demand.
Previous wording
Net sales of $59.1 million for the three months ended September 30, 2024, increased $3.0 million, or 5%, primarily due to an increase in demand for trace minerals.
Current wording
Net sales of $63.3 million for the three months ended December 31, 2024, increased $1.9 million, or 3%, due to an increase in demand for copper and trace minerals.
Previous wording
Net sales of $18.8 million for the three months ended September 30, 2024, increased $4.1 million, or 27%, as a result of higher demand for the ingredients used in personal care products.
Current wording
Net sales of $16.6 million for the three months ended December 31, 2024, increased $1.1 million, or 7%, as a result of higher demand for the ingredients used in personal care products.
Previous wording
Selling, general and administrative expenses (“SG&A”) of $65.8 million for the three months ended September 30, 2024, decreased $2.7 million, or 4%, as compared to the three months ended September 30, 2023. SG&A for the three months ended September 30, 2024 included $3.4 million for acquisition-related costs, $0.4 million of costs associated with Phibro Forward income growth initiatives, and $0.2 million of stock-based compensation expense. SG&A for the three months ended September 30, 2023 included $10.4 million of pension settlement cost and $0.1 million of stock-based compensation expense. Excluding these items, SG&A increased $3.9 million.
Current wording
Selling, general and administrative expenses (“SG&A”) of $76.3 million for the three months ended December 31, 2024, increased $13.4 million, or 21%, as compared to the three months ended December 31, 2023. SG&A for the three months ended December 31, 2024, included $8.8 million for acquisition-related costs, $1.7 million of costs associated with Phibro Forward income growth initiatives, and $0.2 million of stock-based compensation expense, partially offset by $1.3 million related to an insurance settlement gain. 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 $0.2 million true-up to the pension settlement cost and $0.1 million of stock-based compensation expense. Excluding these items, SG&A increased $8.5 million.
Previous wording
Foreign currency losses, net for the three months ended September 30, 2024, were $0.4 million, as compared to $6.7 million of net losses for the three months ended September 30, 2023. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar.
Current wording
Foreign currency losses, net for the three months ended December 31, 2024, were $11.7 million, as compared to $7.5 million of net losses for the three months ended December 31, 2023. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar, most prominently, in the Brazil Real. Prior year period losses were driven in large part by a major currency devaluation in Argentina.
Previous wording
Net sales of $182.5 million for the three months ended September 30, 2024, increased $22.0 million, or 14%. Net sales of MFAs and other increased $13.7 million, or 15%, primarily driven by increased sales of processing aids used in the fermentation industry and higher sale volumes due in part to increased demand for our MFAs in both domestic and international regions.
Current wording
Net sales of $411.9 million for the six months ended December 31, 2024, increased $78.3 million, or 23%. Net sales of MFAs and other increased $62.1 million, or 32%, due to incremental revenues of $36.7 million from sales of products from the Zoetis MFA portfolio acquired on October 31, 2024, increased demand for our MFAs in international regions and higher demand for processing aids used in the ethanol fermentation industry.
Previous wording
Animal Health gross profit increased $13.7 million due to higher sales volume. Mineral Nutrition gross profit increased $0.9 million, driven by higher sales volume, partially offset by a decrease in average selling prices. Performance Products gross profit increased $1.1 million primarily as a result of higher demand.
Current wording
Animal Health gross profit increased $34.6 million, primarily driven by higher sales volume, higher average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by unfavorable product mix. Mineral Nutrition gross profit increased $3.4 million, driven by higher average selling price. Performance Products gross profit increased $2.4 million, driven by increased sales volumes.
Previous wording
Animal Health SG&A increased $2.2 million, primarily as a result of an increase in employee-related costs, due in part to support new product launches and business activities related to the Acquisition, and partially offset by lower research and development expense. Mineral Nutrition and Performance Products SG&A were comparable to the prior year. Corporate costs increased by $1.7 million due to an increase in employee-related costs.
Current wording
Animal Health SG&A increased $7.1 million primarily due to an increase in employee-related costs due to incremental headcount added as part of the Acquisition and new product launches in Brazil. Mineral Nutrition and Performance Products SG&A was comparable to the prior year. Corporate expenses increased $5.1 million due to an increase in employee-related costs and professional fees.
Previous wording
Interest expense, net of $7.6 million for the three months ended September 30, 2024, increased by $3.1 million, as compared to the three months ended September 30, 2023, primarily driven by costs associated with the refinancing of the Company’s debt, higher average credit facility borrowings, and higher interest rates in the quarter ended September 30, 2024.
Current wording
Interest expense, net of $16.6 million for the six months ended December 31, 2024, increased $7.4 million, or 80%, as compared to the six months ended December 31, 2023, due to the higher debt levels associated with the financing of the Acquisition and costs associated with the refinancing of the Company’s debt.
Previous wording
Net income of $7.0 million for the three months ended September 30, 2024 increased $15.0 million as compared to net loss of ($8.0) million for the three months ended September 30, 2023. Operating income increased $18.4 million primarily due to higher gross profit. Interest expense, net increased $3.1 million due to the costs associated with the refinancing of the Company’s debt, higher average credit facility borrowings and higher interest rates. Foreign currency losses, net decreased by $6.3 million. Income tax expense increased by $6.6 million.
Current wording
Net income was $10.2 million for the six months ended December 31, 2024, as compared to net loss of ($6.7) million for the six months ended December 31, 2023. Operating income increased $28.3 million driven by higher gross profit, partially offset by higher SG&A of $10.8 million, which included $12.2 million for acquisition-related costs and $2.0 million of costs associated with Phibro Forward income growth initiatives. Interest expense, net increased $7.4 million due to higher debt levels and the associated with the refinancing of the Company’s debt. Foreign currency losses, net decreased by $2.0 million. Income tax expense increased by $6.0 million.
Previous wording
Net (decrease) increase in cash and cash equivalents was as follows:
Current wording
Net increase (decrease) in cash and cash equivalents was as follows:
Previous wording
Operating activities provided $12.6 million of net cash for the three months ended September 30, 2024. Cash provided by net income, adjusted for non-cash items, including depreciation and amortization, was $10.7 million. Cash provided in the ordinary course of business from changes in operating assets and liabilities and other items was $1.9 million. Cash provided by accounts receivable was $9.2 million as a result of quarterly variations in sales levels. Accrued expenses and other liabilities used cash of $3.5 million, primarily due to employee-related liabilities.
Current wording
Operating activities provided $15.7 million of net cash for the six months ended December 31, 2024. Cash provided by net income, adjusted for the non-cash items, including depreciation and amortization, was $31.4 million. Cash used in the ordinary course of business from changes in operating assets and liabilities, net of the impact of the net assets acquired from the Acquisition, was $15.7 million. Accounts receivable used $25.8 million of cash due to higher sales. Inventories used $24.4 million of cash due to increased quantities on hand due to timing of inventory purchases and forecasted future demand. Accounts payable provided $14.6 million of cash due to timing of purchases and payments. Accrued expenses and other liabilities provided cash of $21.2 million, primarily due to timing of incurrence.
Previous wording
Investing activities used $2.9 million of net cash for the three months ended September 30, 2024. Capital expenditures totaled $9.6 million as we continue to invest in expanding production capacity and productivity improvements. Maturities of our short-term investments provided $6.0 million in cash.
Current wording
Investing activities used $263.4 million of net cash for the six months ended December 31, 2024, which includes the purchase price paid for the Acquisition of $290.8 million, net of cash acquired. Capital expenditures totaled $17.4 million, as we continue to invest in expanding production capacity and productivity improvements. Maturities of our short-term investments provided $44.0 million in cash.
Previous wording
Financing activities used $29.2 million of net cash for the three months ended September 30, 2024 and reflect the impact of the refinancing of our debt portfolio in July 2024. Net revolver borrowings on our credit facilities provided $3.0 million in cash. Proceeds of $300.0 million from the refinancing, as well as revolving credit facility borrowings were used to pay the remaining principal balances of the outstanding debt of $313.1 million. We paid $1.9 million in scheduled quarterly principal payments on long-term debt during the quarter ended September 30, 2024. We also paid $10.4 million in debt issuance costs related to the refinancing and $4.9 million in dividends to holders of our Class A common stock and Class B common stock.
Current wording
Financing activities provided $247.1 million of net cash for the six months ended December 31, 2024 and reflect the impact of the refinancing of our debt portfolio in July 2024 and the financing of the Acquisition. Proceeds of $300.0 million from the refinancing, as well as revolving credit facility borrowings were used to pay the remaining principal balances of the outstanding debt of $313.1 million, and we used the proceeds $350.0 million in term loan borrowings to finance the purchase price of the Acquisition. Net revolver payments on our credit facilities used $62.0 million in cash. We paid $3.8 million in scheduled quarterly principal payments on long-term debt during the six months ended December 31, 2024. We also paid $10.4 million in debt issuance costs related to the refinancing and $9.7 million in dividends to holders of our Class A common stock and Class B common stock.
Previous wording
We believe our cash on hand, operating cash flows and financing arrangements, including the availability of borrowings under the 2024 Credit Facility, will be sufficient to support our ongoing cash needs. We have considered the current and potential future effects of the macroeconomic market conditions in the financial markets. At this time, we expect adequate liquidity for at least the next twelve months. We can provide no assurance that our liquidity and capital resources will be adequate for future funding requirements. We believe we will be able to comply with the terms of the covenants under the 2024 Credit Facilities based on our operating plan. In the event of adverse operating results and/or violation of covenants under the facilities, there can be no assurance we would be able to obtain waivers or amendments. Other risks to our meeting future funding requirements include global economic conditions and macroeconomic, business and financial disruptions that could arise, including ongoing conflicts between Israel and Hamas and neighboring factions and countries, and between Russia and Ukraine. There can be no assurance that a challenging economic environment or an economic downturn would not affect our liquidity or ability to obtain future financing or fund operations or investment opportunities. In addition, our debt covenants may restrict our ability to invest.
Current wording
We believe our cash on hand, operating cash flows and financing arrangements, including the availability of borrowings under the 2024 Credit Facility, will be sufficient to support our ongoing cash needs. We have considered the current and potential future effects of the macroeconomic market conditions in the financial markets. At this time, we expect adequate liquidity for at least the next twelve months. We can provide no assurance that our liquidity and capital resources will be adequate for future funding requirements. We believe we will be able to comply with the terms of the covenants under the 2024 Credit Facilities based on our operating plan. In the event of adverse operating results and/or violation of covenants under the facilities, there can be no assurance we would be able to obtain waivers or amendments. Other risks to our meeting future funding requirements include global economic conditions and macroeconomic, business and financial disruptions that could arise, including ongoing conflicts between Russia and Ukraine and potential hostilities in the Middle East. There can be no assurance that a challenging economic environment or an economic downturn would not affect our liquidity or ability to obtain future financing or fund operations or investment opportunities. In addition, our debt covenants may restrict our ability to invest.
Previous wording
Certain relevant measures of our liquidity and capital resources are as follows:
Current wording
Certain relevant measures of our liquidity and capital resources follow:
Previous wording
As of September 30, 2024, we had $179.0 million in outstanding borrowings under the 2024 Revolver and had outstanding letters of credit and other commitments of $2.3 million, leaving $128.7 million available for further borrowings and letters of credit, subject to restrictions in our 2024 Credit Facilities.
Current wording
As of December 31, 2024, we had $114.0 million in outstanding borrowings under the 2024 Revolver and outstanding letters of credit and other commitments of $2.4 million, leaving $193.6 million available for further borrowings and letters of credit, subject to restrictions in our 2021 Credit Facilities.
Previous wording
As of September 30, 2024, our cash and cash equivalents and short-term investments included $87.4 million held by our international subsidiaries. There are no restrictions on cash distributions to PAHC from our international subsidiaries. Distributions may be subject to taxation by U.S. or non-U.S. taxing authorities.
Current wording
As of December 31, 2024, our cash and cash equivalents and short-term investments included $65.0 million held by our international subsidiaries. There are no restrictions on cash distributions to PAHC from our international subsidiaries. Distributions may be subject to taxation by U.S. or non-U.S. taxing authorities.
Previous wording
Adjusted net income and adjusted diluted earnings per share represent alternative views of performance, and we believe investors’ understanding of our performance is enhanced by disclosing these performance measures. We report adjusted net income and adjusted diluted earnings per share to portray the results of our operations prior to considering certain income statement elements. We calculate adjusted net income as net income (loss) plus (i) acquisition-related intangible amortization and other acquisition-related items, (ii) certain items we consider to be unusual, non-operational or non-recurring, (iii) stock-based compensation, (iv) foreign currency (gains) losses, as separately reported on our consolidated statements of operations, and (v) the income tax effect of pre-tax income adjustments and certain income tax items. Adjusted diluted earnings per share is calculated using the adjusted net income divided by the diluted weighted average number of shares. The adjusted net income and adjusted diluted earnings per share measures are not, and should not be viewed as, a substitute for GAAP reported net income (loss).
Current wording
Adjusted net income and adjusted diluted earnings per share represent alternative views of performance, and we believe investors’ understanding of our performance is enhanced by disclosing these performance measures. We report adjusted net income and adjusted diluted earnings per share to portray the results of our operations prior to considering certain income statement elements. We calculate adjusted net income as net income (loss) plus (i) acquisition-related intangible amortization and other acquisition-related items, (ii) certain items we consider to be unusual, non-operational or non-recurring, (iii) stock-based compensation expense, (iv) foreign currency (gains) losses, as separately reported on our consolidated statements of operations, and (v) the income tax effect of pre-tax income adjustments and certain income tax items. Adjusted diluted earnings per share is calculated using the adjusted net income divided by the diluted weighted average number of shares. The adjusted net income and adjusted diluted earnings per share measures are not, and should not be viewed as, a substitute for GAAP reported net income (loss).
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Animal Health SG&A increased $4.9 million, primarily due to an increase in employee-related costs due in part to the incremental headcount added as part of the Acquisition. Mineral Nutrition and Performance Products SG&A was comparable to the prior year. Corporate costs increased by $3.4 million, due to an increase in employee-related costs and professional fees.
Current report — wording carried from elsewhere
Net sales of nutritional specialty products increased $6.9 million, or 8%, primarily due to increased domestic dairy demand and higher sales of microbial and companion animal products.
Current report — wording carried from elsewhere
Net sales of $35.4 million for the six months ended December 31, 2024, increased $5.2 million, or 17%, as a result of higher demand for the ingredients used in personal care products.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
consistent with the normal regulatory procedure, but instead announced that it was withdrawing the 2016 NOOH and issuing a proposed order to review the regulatory method for carbadox. Phibro reiterated the safety of carbadox and the appropriateness of the regulatory method and offered to work with the CVM to generate additional data to support the existing regulatory method or select a suitable alternative regulatory method.