PHIBRO ANIMAL HEALTH CORP

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 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.

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 $302.9 million ($291.9 million, as adjusted, net of cash acquired), subject to certain further 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). 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.

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). Although a ceasefire was brokered between Israel and Hezbollah in November 2024, and in January 2025, a temporary ceasefire went into effect between Israel and Hamas, hostilities in the region have recently resumed. The possibility of negotiations for renewed ceasefire agreements between Israel and Hamas and Israel and Hezbollah remain uncertain and difficult to predict and until resolved, may continue to cause conflict in the region.

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, 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.

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, 2025, 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.

Previous 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.

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 16% of our consolidated assets as of March 31, 2025, and 19% of our consolidated net sales for the nine months ended March 31, 2025.

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 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.

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 March 31, 2025 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.

Previous wording

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 wording

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 instituted or proposed changes in trade policies that include the renegotiation or termination of existing trade agreements, the imposition of higher tariffs on imports into the United States, and other government regulations affecting trade between the United States and other countries. 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. 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.

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

(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. For the three and nine months ended March 31, 2025, this includes $5.3 million for non-cash asset write-offs, of which $3.8 million was recorded within cost of goods sold, and $1.5 million was recorded within selling, general, and administrative expenses, related to the closure of an immaterial business within the Animal Health segment.

Previous 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.

Current wording

Net sales of $347.8 million for the three months ended March 31, 2025 increased $84.6 million, or 32%, as compared to the three months ended March 31, 2024. Animal Health increased $77.0 million, while Mineral Nutrition and Performance Products increased $2.5 million and $5.0 million, respectively.

Previous wording

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 wording

Net sales of $258.4 million for the three months ended March 31, 2025 increased $77.0 million, or 42%. Net sales of MFAs and other increased $73.4 million, or 68%, due to incremental revenues of $77.0 million from sales of products from the Zoetis MFA portfolio acquired on October 31, 2024, partially offset by lower poultry sales due in part to lower demand and the timing of sales.

Previous 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.

Current wording

Net sales of nutritional specialty products increased $3.2 million, or 8%, primarily due to increased poultry demand and higher sales of microbial and companion animal products.

Previous 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.

Current wording

Net sales of vaccines increased $0.5 million, or 1%, primarily due to continued growth of poultry products in Latin America, significantly offset by the timing of sales, impacted in part by import and other regulations in Asia.

Previous 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.

Current wording

Net sales of $22.7 million for the three months ended March 31, 2025 increased $5.0 million, or 28%, as a result of higher demand for the ingredients used in personal care products.

Previous wording

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 wording

Gross profit of $104.6 million for the three months ended March 31, 2025 increased $25.0 million, or 31%, as compared to the three months ended March 31, 2024. Gross margin decreased 10 basis points to 30.1% of net sales for the three months ended March 31, 2025, as compared to 30.2% for the three months ended March 31, 2024. The comparison to the prior year includes $3.8 million of current period inventory write-offs attributable to the closure of an immaterial business and a net increase of $1.5 million for acquisition-related cost of goods sold related to purchase accounting adjustments for acquisitions. Excluding these items, gross profit increased $30.3 million, or 38%, and gross margin increased 140 basis points to 31.6% of net sales due to increased sales, an increase in average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs.

Previous 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.

Current wording

Animal Health gross profit increased $27.8 million, primarily driven by higher sales volume, higher average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs. Mineral Nutrition gross profit increased $1.2 million, driven by higher average selling prices. Performance Products gross profit increased by $1.2 million, driven by increased sales volumes.

Previous 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.

Current wording

Selling, general and administrative expenses (“SG&A”) of $71.1 million for the three months ended March 31, 2025 increased $11.4 million, or 19%, as compared to the three months ended March 31, 2024. SG&A for the three months ended March 31, 2025 included $4.0 million of costs associated with Phibro Forward income growth initiatives, $0.6 million for acquisition-related costs, and $0.2 million of stock-based compensation expense, partially offset by $1.5 million related to an insurance settlement gain. SG&A for the three months ended March 31, 2024 included $0.5 million of acquisition-related costs and $0.1 million of stock-based compensation expense, partially offset by $0.3 million related to an insurance settlement gain. Excluding these items, SG&A increased $8.5 million.

Previous wording

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 wording

Animal Health SG&A increased $5.1 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 $3.2 million due to an increase in employee-related costs and professional fees.

Previous wording

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 wording

Interest expense, net of $9.4 million for the three months ended March 31, 2025 increased by $4.8 million, as compared to the three months ended March 31, 2024, due to the higher debt levels associated with the financing of the Acquisition.

Previous wording

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 wording

Foreign currency gains for the three months ended March 31, 2025 were $5.5 million, as compared to $2.4 million of net losses for the three months ended March 31, 2024. Current period gains were driven by fluctuations in certain currencies related to the U.S. dollar, most prominently, in the Brazil Real and in the Euro. Prior year period losses were driven in large part by fluctuations in the Brazil Real.

Previous wording

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 wording

The provision for income taxes was $8.8 million and $4.5 million for the three months ended March 31, 2025 and 2024, respectively. The effective income tax rates were 29.7% and 35.0% for the three months ended March 31, 2025 and 2024, respectively. The lower effective income tax rate for the three months ended March 31, 2025 is primarily due to higher pretax earnings and higher forecasted annual pretax earnings in the current period, which more significantly reduced the impact of certain items such as Global Intangible Low-Taxed Income (“GILTI”) when compared to the prior year. In addition, the effective tax rate for the three months ended March 31, 2024 includes the impact of changes in valuation allowances and other reserves, which more significantly increased the effective tax rate in the prior year than in the current year.

Previous wording

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 wording

Net income of $20.9 million for the three months ended March 31, 2025 increased $12.5 million, as compared to net income of $8.4 million for the three months ended March 31, 2024. Operating income increased $13.6 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 $11.4 million, which included $4.0 million of costs associated with Phibro Forward income growth initiatives and higher employee-related costs due in part to the incremental headcount added as part of the Acquisition. Interest expense, net increased $4.8 million due to higher debt levels, due in part to the financing of the Acquisition. Foreign currency gains were $5.5 million, net increased by $8.0 million, as compared to $2.4 million of net losses for the three months ended March 31, 2024. Income tax expense increased by $4.3 million.

Previous wording

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 wording

Net sales of $917.5 million for the nine months ended March 31, 2025 increased $173.0 million, or 23%, as compared to the nine months ended March 31, 2024. Animal Health sales increased $155.4 million. Mineral Nutrition and Performance Products sales increased $7.5 million and $10.2 million, respectively.

Previous 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.

Current wording

Net sales of $670.3 million for the nine months ended March 31, 2025 increased $155.4 million, or 30%. Net sales of MFAs and other increased $135.6 million, or 45%, due to incremental revenues of $113.7 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

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 wording

Net sales of nutritional specialty products increased $10.1 million, or 8%, primarily due to increased domestic dairy demand and higher sales of microbial and companion animal products.

Previous wording

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 wording

Net sales of vaccines increased $9.7 million, or 11%, due primarily to continued growth of poultry products in Latin America and increased domestic demand for swine products, partially offset the impact of import and other regulations in Turkey and Asia.

Previous wording

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 wording

Net sales of $189.1 million for the nine months ended March 31, 2025 increased $7.5 million, or 4%, due to an increase in demand for copper and trace minerals.

Previous wording

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.

Current wording

Net sales of $58.1 million for the nine months ended March 31, 2025 increased $10.2 million, or 21%, as a result of higher demand for the ingredients used in personal care products.

Previous wording

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 wording

Gross profit of $289.9 million for the nine months ended March 31, 2025 increased $64.0 million, or 28%, as compared to the nine months ended March 31, 2024. Gross margin increased 130 basis points to 31.6% of net sales for the nine months ended March 31, 2025, as compared to 30.3% for the nine months ended March 31, 2024. The comparison to the prior year includes $3.8 million of current period inventory write-offs attributable to the closure of an immaterial business and a net increase of $2.8 million for acquisition-related cost of goods sold related to purchase accounting adjustments for acquisitions. Excluding these items, gross profit increased $70.6 million, or 31%, and gross margin increased 200 basis points to 32.4% of net sales due to increased sales, an increase in average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs.

Previous wording

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 wording

Animal Health gross profit increased $62.4 million, primarily driven by higher sales volume, higher average selling prices, and the favorable impact of foreign currency exchange rates, partially offset by higher distribution costs. Mineral Nutrition gross profit increased $4.6 million, driven by higher average selling prices. Performance Products gross profit increased $3.6 million, driven by increased sales volumes.

Previous wording

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 wording

SG&A of $213.2 million for the nine months ended March 31, 2025 increased $22.1 million, or 12%, as compared to the nine months ended March 31, 2024. SG&A for the nine months ended March 31, 2025, included $12.9 million for acquisition-related costs, $6.0 million of costs associated with Phibro Forward income growth initiatives, and $0.5 million of stock-based compensation expense, partially offset by $2.8 million related to insurance settlement gains. SG&A for the nine months ended March 31, 2024, 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, $0.5 million for acquisition-related costs, $0.3 million of stock-based compensation expense, partially offset by a $0.3 million insurance settlement gain. Excluding these items, SG&A increased $20.9 million.

Previous 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.

Current wording

Animal Health SG&A increased $12.3 million primarily due to an increase in employee-related costs due in part 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 $8.3 million due to an increase in employee-related costs and professional fees.

Previous 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.

Current wording

Interest expense, net of $26.0 million for the nine months ended March 31, 2025 increased $12.2 million, or 88%, as compared to the nine months ended March 31, 2024, 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

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.

Current wording

Foreign currency losses for the nine months ended March 31, 2025 were $6.6 million, as compared to net losses of $16.6 million for the nine months ended March 31, 2024. Current period losses were driven by fluctuations in certain currencies related to the U.S. dollar, most prominently, in the Brazil Real, the Argentine Peso, and the Mexican Peso. Prior year period losses were driven in large part by a major currency devaluation in Argentina.

Previous wording

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 wording

The provision for income taxes for the nine months ended March 31, 2025 was increased by various items, including (i) different tax rates on exchange rate losses, (ii) changes in uncertain tax positions related to prior years and (iii) certain non-deductible write-offs in connection with the closure of an immaterial business included as part of the Phibro Forward initiatives. The provision for income taxes for the nine months ended March 31, 2024 was changed by various items, including (i) a tax benefit from a foreign tax credit related to the prior year based on Internal Revenue Service guidance provided subsequent to our fiscal year-end, (ii) a tax benefit related to the release of certain valuation allowances on non-U.S. companies, (iii) expenses from changes in uncertain tax positions related to prior years, and (iv) different tax rates on exchange rate losses. Excluding the impact of these items, the effective income tax rate was 25.3% and 28.6% for the nine months ended March 31, 2025 and 2024, respectively.

Previous 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.

Current wording

Net income was $31.0 million for the nine months ended March 31, 2025, as compared to net income of $1.7 million for the nine months ended March 31, 2024. Operating income increased $41.8 million driven by higher gross profit, partially offset by higher SG&A of $22.1 million, which included a net increase of $12.4 million in acquisition-related costs and $6.0 million of costs associated with Phibro Forward income growth initiatives. Interest expense, net increased $12.2 million due to higher debt levels and the associated with the refinancing of the Company’s debt. Foreign currency losses, net decreased by $10.0 million. Income tax expense increased by $10.3 million.

Previous wording

A reconciliation of net income (loss), as reported under GAAP, to adjusted net income, is as follows:

Current wording

A reconciliation of net income, as reported under GAAP, to adjusted net income, is as follows:

Previous wording

A reconciliation of reported diluted loss per share, as reported under GAAP, to non-GAAP adjusted diluted EPS is:

Current wording

A reconciliation of reported diluted earnings per share, as reported under GAAP, to non-GAAP adjusted diluted EPS is:

Previous wording

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

Current wording

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

Previous 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.

Current wording

Operating activities provided $58.9 million of net cash for the nine months ended March 31, 2025. Cash provided by net income, adjusted for the non-cash items, including depreciation and amortization, was $66.2 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 $7.3 million. Accounts receivable used $29.3 million of cash due to higher sales. Inventories used $38.1 million of cash due to increased quantities on hand due to timing of inventory purchases and forecasted future demand. Accounts payable provided $42.9 million of cash due to timing of purchases and payments. Accrued expenses and other liabilities provided cash of $21.0 million, primarily due to timing of incurrence.

Previous 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.

Current wording

Investing activities used $281.7 million of net cash for the nine months ended March 31, 2025, which includes the purchase price paid for the Acquisition of $291.9 million, net of cash acquired. Capital expenditures totaled $25.2 million, as we continue to invest in expanding production capacity and productivity improvements. Purchases of our short-term investments used $10.0 million of cash, and maturities of our short-term investments provided $44.0 million in cash.