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Phibro(PAHC) - 2025 Q2 - Quarterly Report
PAHCPhibro(PAHC)2025-02-05 21:18
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Acquisition and Expansion - The company completed the acquisition of Zoetis's medicated feed additive portfolio for approximately 301.8million,whichgenerated301.8 million, which generated 407.6 million in revenue in 2023[106]. - The acquisition includes six manufacturing sites across the U.S., Italy, and China, enhancing the company's global operational footprint[106]. - The company incurred 12.2 million in acquisition-related costs within SG&A for the six months ended December 31, 2024[145]. - Total acquisition-related items, net of income taxes, amounted to 9.2 million for Q4 2024, compared to 2.1millioninQ42023,indicatingasignificantincrease[157].−Thecompanyisactivelypursuingstrategicinitiatives,includingtheintegrationofacquiredbusinessesandexpansionofitsproductportfolio[183].FinancialPerformance−NetsalesforthethreemonthsendedDecember31,2024,were2.1 million in Q4 2023, indicating a significant increase[157]. - The company is actively pursuing strategic initiatives, including the integration of acquired businesses and expansion of its product portfolio[183]. Financial Performance - Net sales for the three months ended December 31, 2024, were 309.3 million, an increase of 59.3millionor2459.3 million or 24% compared to the same period in 2023[124]. - Gross profit for the same period was 101.9 million, up 23.3millionor3023.3 million or 30%, with a gross margin of 32.9%, an increase of 140 basis points from 31.5% in the prior year[129]. - Operating income increased to 25.5 million, a 63% rise from 15.7millioninthesamequarterof2023[1].−Netincomeforthethreemonthswas15.7 million in the same quarter of 2023[1]. - Net income for the three months was 3.2 million, compared to 1.3millionintheprioryear,markingasignificantimprovement[1].−AdjustedEBITDAforthethreemonthswas1.3 million in the prior year, marking a significant improvement[1]. - Adjusted EBITDA for the three months was 48.2 million, a 64% increase from 29.5millioninthesameperiodlastyear[120].−NetsalesforthesixmonthsendedDecember31,2024,were29.5 million in the same period last year[120]. - Net sales for the six months ended December 31, 2024, were 569.7 million, an increase of 88.4millionor1888.4 million or 18% compared to the same period in 2023[138]. - Animal Health segment net sales increased by 78.3 million or 23% for the six months ended December 31, 2024, driven by incremental revenues from the Zoetis MFA portfolio acquired on October 31, 2024[139]. - Gross profit for the six months ended December 31, 2024, was 185.4million,anincreaseof185.4 million, an increase of 39.0 million or 27% compared to the same period in 2023, with a gross margin increase of 210 basis points to 32.5%[143]. - Net income for the six months ended December 31, 2024, was 10.2million,comparedtoanetlossof10.2 million, compared to a net loss of 6.7 million for the same period in 2023, reflecting an operating income increase of 28.3million[151].−AdjustednetincomeforQ42024was28.3 million[151]. - Adjusted net income for Q4 2024 was 21.9 million, an increase of 8.5millionor638.5 million or 63% compared to Q4 2023[154]. - GAAP diluted EPS for Q4 2024 was 0.08, up from 0.03inQ42023,whileadjusteddilutedEPSincreasedto0.03 in Q4 2023, while adjusted diluted EPS increased to 0.54 from 0.33,representinga640.33, representing a 64% growth[155]. Costs and Expenses - Interest expense increased by 93% to 9.0 million, reflecting higher borrowing costs[1]. - SG&A expenses for Q4 2024 were 76.3million,anincreaseof76.3 million, an increase of 13.4 million or 21% compared to Q4 2023, including 8.8millionforacquisition−relatedcosts[132].−InterestexpenseforthesixmonthsendedDecember31,2024,was8.8 million for acquisition-related costs[132]. - Interest expense for the six months ended December 31, 2024, was 16.6 million, an increase of 7.4millionor807.4 million or 80% compared to the same period in 2023, due to higher debt levels from the acquisition financing[147]. Currency and Taxation - The effective tax rate decreased to 34.2% from 64.3% in the prior year, positively impacting net income[1]. - The effective income tax rate for the six months ended December 31, 2024, was 29.7%, compared to a tax benefit rate of 19.9% for the same period in 2023[149]. - The company reported a significant increase in foreign currency losses, which rose by 56% to 11.7 million[1]. - Foreign currency losses for the six months ended December 31, 2024, were 12.1million,adecreasefrom12.1 million, a decrease from 14.2 million in the same period in 2023[148]. - Adjusted net income for the six months ended December 31, 2024, was significantly impacted by acquisition-related costs and foreign currency losses, totaling 18.7millioninadjustments[157].MarketandOperationalRisks−Thecompanyisexposedtomarketrisksfromadversechangesininterestrates,foreigncurrencyexchangerates,andcommodityprices,whichmayaffectfutureearningsandcashflows[186].−Thecompanyanticipatespotentialrisksincludingcompetition,regulatorychanges,andmarketconditionsthatcouldmateriallyaffectitsoperationsandfinancialresults[181].−Thecompanyacknowledgesthepotentialimpactofclimatechangeandpandemicsonitsoperationsandmarketdemand[181].−Macroeconomicdevelopmentsandpotentialtariffscouldadverselyimpactthecompany′sabilitytosellproductsandservicesinvariousmarkets[117].LiquidityandCashFlow−Cashprovidedbyoperatingactivitieswas18.7 million in adjustments[157]. Market and Operational Risks - The company is exposed to market risks from adverse changes in interest rates, foreign currency exchange rates, and commodity prices, which may affect future earnings and cash flows[186]. - The company anticipates potential risks including competition, regulatory changes, and market conditions that could materially affect its operations and financial results[181]. - The company acknowledges the potential impact of climate change and pandemics on its operations and market demand[181]. - Macroeconomic developments and potential tariffs could adversely impact the company's ability to sell products and services in various markets[117]. Liquidity and Cash Flow - Cash provided by operating activities was 15.7 million for the six months ended December 31, 2024, a decrease of 32.1millioncomparedtothesameperiodin2023[158].−Investingactivitiesresultedinacashoutflowof32.1 million compared to the same period in 2023[158]. - Investing activities resulted in a cash outflow of 263.4 million for the six months ended December 31, 2024, primarily due to the acquisition cost of 290.8million[160].−Financingactivitiesgenerated290.8 million[160]. - Financing activities generated 247.1 million in net cash, reflecting the refinancing of the debt portfolio and financing of the acquisition[161]. - As of December 31, 2024, cash and cash equivalents and short-term investments totaled 67.1million,downfrom67.1 million, down from 114.6 million as of June 30, 2024[163]. - The company's working capital increased to 462.1millionasofDecember31,2024,comparedto462.1 million as of December 31, 2024, compared to 312.0 million as of June 30, 2024, with a current assets to current liabilities ratio of 3.13:1[163]. - The company expects adequate liquidity for at least the next twelve months, considering current macroeconomic conditions[162]. Manufacturing and Operations - The company's Israeli manufacturing facilities account for 17% of consolidated assets and 20% of consolidated net sales for the six months ended December 31, 2024[110]. - The company has three manufacturing sites in Israel, producing various animal health products, with approximately 480 employees located there[109]. - The company’s sales to Russia and Ukraine represented approximately 1% of consolidated net sales for the twelve months ended December 31, 2024[112]. - The company is actively defending the safety of carbadox amid regulatory challenges, which could adversely affect financial results if unsuccessful[116]. - Sales of Mecadox (carbadox) for the twelve months ended December 31, 2024, were approximately $23 million[116].