Phibro(US:PAHC)2025-11-05 21:14Financial Performance - Net sales for the three months ended September 30, 2025, were $363.9 million, a 40% increase from $260.4 million in the same period of 2024[118] - Gross profit increased to $119.8 million, representing a 43% increase from $83.5 million year-over-year[118] - Operating income rose significantly to $51.3 million, compared to $17.7 million in the prior year[118] - Adjusted EBITDA for the three months ended September 30, 2025, was $61.9 million, an increase of $31.2 million compared to $30.7 million in 2024[139] - Net income for the three months ended September 30, 2025, was $26.5 million, an increase of $19.6 million compared to $7.0 million in 2024[139] - Adjusted net income for the three months ended September 30, 2025, was $29.8 million, an increase of $15.8 million compared to $14.1 million in 2024[141] Sales and Revenue Contributions - The acquisition of Zoetis's medicated feed additive portfolio contributed $288.7 million to overall net sales, with $80.5 million recorded in the three months ended September 30, 2025[104] - Animal Health segment net sales increased by $100.9 million or 55%, driven by an $87.4 million increase in MFAs and other products due to the acquisition and higher demand in North and South America[125] - Sales of Mecadox (carbadox) for the twelve months ended September 30, 2025, were approximately $22 million[116] - Performance Products segment net sales decreased by $1.4 million or 7% due to lower demand for ingredients used in personal care products[128] Expenses and Financial Obligations - Interest expense increased by 58% to $12.1 million from $7.6 million in the previous year[118] - Selling, general and administrative expenses increased by 4% to $68.5 million from $65.8 million year-over-year[118] - Selling, general and administrative expenses (SG&A) increased by $2.7 million or 4% to $68.5 million, with a significant portion attributed to employee-related costs[131] - Interest expense for the three months ended September 30, 2025, was $12.1 million, an increase of $4.4 million due to higher debt levels from the acquisition financing[133] Taxation - The effective tax rate for the three months ended September 30, 2025, was 26.9%, slightly lower than 27.5% in the prior year[118] - The effective income tax rate for the three months ended September 30, 2025, was 26.9%, slightly lower than 27.5% in 2024[135] Cash Flow and Liquidity - For the three months ended September 30, 2025, the company reported a net cash provided by operating activities of $9.3 million, a decrease of $3.3 million compared to $12.6 million in the same period of 2024[144] - Total cash used in investing activities was $21.0 million, which included capital expenditures of $13.8 million aimed at expanding production capacity[146] - Financing activities generated $16.3 million in net cash, primarily from net revolver borrowings of $28.0 million[147] - As of September 30, 2025, the company had cash and cash equivalents and short-term investments totaling $85.3 million, an increase from $77.0 million as of June 30, 2025[149] - The company's working capital increased to $498.8 million, up from $456.3 million as of June 30, 2025, with a current assets to current liabilities ratio of 2.98:1[149] - The company expects adequate liquidity for at least the next twelve months, despite potential risks from macroeconomic conditions[148] Regulatory and Market Risks - The company has requested a full evidentiary hearing regarding the regulatory status of carbadox, which could impact future sales[116] - A material portion of the company's sales and gross profits are generated by antibacterials and related products, which are subject to regulatory scrutiny[167] - The company faces risks from outbreaks of animal diseases that could significantly reduce demand for its products or availability of raw materials[167] - The company is exposed to market risks from adverse changes in interest rates, foreign currency exchange rates, and commodity prices[171] - The company has substantial levels of indebtedness and related debt-service obligations, which may impact financial stability[170] - The company is dependent on suppliers having current regulatory approvals, which can impact raw material availability[170] - The company is subject to risks related to changes in tax rates and exposure, which could affect profitability[170] Strategic Initiatives - The company has acquired a medicated feed additive product portfolio from Zoetis Inc., which it aims to successfully integrate[170] - The company utilizes foreign currency contracts and interest rate swaps to hedge exposure to market risks, but does not eliminate the effects of changing market conditions[171] - The company relies on the continued operation of its manufacturing facilities and the application of its intellectual property for business continuity[170] - The company is affected by competition from both large and small companies, some of which have greater resources[167] Dividends - The company declared a cash dividend of $0.12 per share on Class A and Class B common stock, payable on December 17, 2025[151]