Phibro Animal Health (PAHC) Q4 2025 Earnings Call August 28, 2025 09:00 AM ET Company ParticipantsGlenn David - CFOJack Bendheim - Chairman, President & CEODaniel Bendheim - EVP - Corporate Strategy & DirectorLarry Miller - COOMichael Ryskin - Managing DirectorConference Call ParticipantsErin Wright - Senior Equity Research Analyst - HealthcareEkaterina Knyazkova - AnalystNavann Ty - Lead Analyst - HealthcareOperatorHello, and thank you for standing by. My name is Regina, and I will be your conference opera ...

Financial Data and Key Metrics Changes - Consolidated net sales for Q4 2025 were $378.7 million, reflecting a 39% increase year-over-year [12] - For the full year, consolidated net sales were $1.296 billion, a 27% increase compared to the previous year [13] - Adjusted EBITDA for Q4 increased by 49% to $50.2 million, while for the full year, it rose by 65% to $184.4 million [13][14] - GAAP net income and diluted EPS saw significant increases, driven by the integration of the new MFA business and improved gross margins [12][14] Business Line Data and Key Metrics Changes - The Animal Health segment reported Q4 net sales of $292.5 million, a 53% increase year-over-year [15] - For the full year, Animal Health net sales reached $962.8 million, a 36% increase [17] - Nutritional specialties and vaccines saw substantial growth, with nutritional specialties increasing by 11% in Q4 and 9% for the full year, while vaccines grew by 21% in Q4 and 13% for the full year [15][17] - The Mineral Nutrition segment had Q4 net sales of $64.2 million, a 3% increase, and for the full year, $253.2 million, a 4% increase [18][19] Market Data and Key Metrics Changes - The company experienced strong demand across various geographies, particularly in Latin America for poultry products and in the U.S. for swine products [16][17] - The integration of the Zoetis medicated feed additive portfolio is progressing well, with expectations to operate independently by Q4 2025 [41][42] Company Strategy and Development Direction - The company is focused on its "Fiber Forward" strategy, which aims to enhance operations, global footprint, and innovation pipeline [10][11] - Investments are being made in scaling operations and strengthening customer relationships through initiatives like global procurement [34][35] - The guidance for fiscal year 2026 reflects confidence in continued growth, with projected net sales between $1.425 billion and $1.475 billion [10][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for products globally and anticipates continued improvement in business performance [24] - The guidance for fiscal year 2026 includes expectations for organic growth driven by the full twelve months of Zoetis contributions and continued strong performance in vaccines and nutritional specialties [27][28] Other Important Information - The company generated $42 million in positive free cash flow for the twelve months ended June 30, 2025 [20] - Corporate expenses increased due to higher employee-related costs and strategic investments [19] Q&A Session Summary Question: What does guidance now assume in terms of the underlying organic growth? - Management indicated that the guidance assumes a mix of growth from the Zoetis portfolio and continued strong performance in vaccines and nutritional specialties, with legacy MFA growth expected to be flat to low single digits [27][28] Question: Can you quantify expectations for the Fiber Forward initiative? - Management expects contributions from the Fiber Forward initiative to continue driving growth, with significant earnings growth anticipated in fiscal year 2026 [31][32] Question: Where are we in terms of the Zoetis integration process? - The integration is progressing well, with major system implementations complete and expectations to operate independently by Q4 2025 [41][42] Question: What is the expected growth of the legacy MFA business? - The legacy MFA business is expected to grow flat to low single digits, with no significant pull forward in sales due to tariffs [56][58]

Financial Performance - Consolidated - Q4 Net Sales increased by 39% to $378.7 million compared to $273.2 million in FY24[13] - Q4 Adjusted EBITDA increased by 49% to $50.0 million compared to $33.4 million in FY24[13] - Full Year Net Sales increased by 27% to $1,296.2 million compared to $1,017.7 million in FY24[16] - Full Year Adjusted EBITDA increased by 65% to $183.7 million compared to $111.2 million in FY24[16] Financial Performance - Animal Health - Q4 Animal Health Net Sales increased by 53% to $292.5 million[11,19] - Q4 Legacy Animal Health Net Sales increased by 3% to $197.9 million[11,19] - Full Year Animal Health Net Sales increased by 36% to $962.8 million[11,22] - Full Year Legacy Animal Health Net Sales increased by 7% to $754.6 million[11,22] Financial Guidance - Fiscal Year 2026 - The company projects Net Sales between $1.425 billion and $1.475 billion[12] - The company projects Adjusted EBITDA between $225 million and $235 million[12]

Financial Performance - Q3 FY2025 - Consolidated net sales increased to $347.8 million, compared to $263.2 million in Q3 FY24[12] - Consolidated adjusted EBITDA increased to $45 million, an 85% increase compared to $29.7 million in Q3 FY24[12] - Animal Health sales increased by 42% to $258.4 million[10, 16] - Animal Health adjusted EBITDA increased by 73% to $63.1 million[10, 16] - Mineral Nutrition net sales increased by 4% to $66.8 million[10, 20] - Performance Products net sales increased by 28% to $22.7 million[10, 21] FY2025 Guidance - Net sales are projected to be between $1.260 billion and $1.290 billion[11] - Adjusted EBITDA is projected to be between $177 million and $183 million[11] - Adjusted EPS is projected to be between $1.96 and $2.09[11] Capitalization - Free cash flow was $49 million for the trailing twelve months[25] - The company has a gross leverage ratio of 3.0x, with $734 million in total debt[25] - The company has a net leverage ratio of 2.7x, with $664 million in net debt[25]

Core Insights - Phibro Animal Health (PAHC) reported a revenue of $347.8 million for the quarter ended March 2025, marking a year-over-year increase of 32.1% and an EPS of $0.63 compared to $0.31 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $350.54 million by 0.78%, while the EPS exceeded the consensus estimate of $0.52 by 21.15% [1] Financial Performance - The company’s net sales by region showed varied performance: - United States: $209.94 million, a 31.8% increase year-over-year, but below the estimated $221.68 million [4] - Asia Pacific: $28.22 million, a significant 65.2% increase year-over-year, exceeding the estimate of $23.44 million [4] - Europe, Middle East and Africa: $38.91 million, a 17.3% increase year-over-year, below the estimate of $48.03 million [4] - Latin America and Canada: $70.75 million, a 31.9% increase year-over-year, surpassing the estimate of $55.39 million [4] Segment Performance - Animal Health segment reported net sales of $258.40 million, a 42.5% increase year-over-year, but below the estimate of $265.65 million [4] - Mineral Nutrition segment reported net sales of $66.80 million, a 4% increase year-over-year, slightly below the estimate of $66.88 million [4] - Animal Health Vaccines reported net sales of $33.40 million, a 1.5% increase year-over-year, below the estimate of $38.78 million [4] - Animal Health MFAs and other reported net sales of $181.60 million, a substantial 67.8% increase year-over-year, exceeding the estimate of $155.57 million [4] - Performance Products reported net sales of $22.70 million, a 28.5% increase year-over-year, surpassing the estimate of $18.01 million [4] EBITDA Performance - Adjusted EBITDA for the Animal Health segment was $63.10 million, above the average estimate of $60.59 million [4] - Adjusted EBITDA for the Corporate segment was -$17.30 million, better than the estimated -$19.57 million [4] Stock Performance - Phibro's shares have returned +6.5% over the past month, compared to the Zacks S&P 500 composite's +10.6% change, with a current Zacks Rank of 3 (Hold) indicating potential performance in line with the broader market [3]