Phibro(US:PAHC)2023-02-09 19:12Financial Performance - Consolidated net sales for Q2 FY2023 were $244.6 million, reflecting a 5% increase year-over-year driven by improvements in both Animal Health and Performance Products segments [7][45] - Adjusted EBITDA increased by $1.8 million or 6% compared to the prior year's quarter, driven by higher adjusted EBITDA in both Animal Health and Performance Products segments [9][50] - Adjusted net income and adjusted diluted EPS decreased by 9% respectively, due to higher SG&A expenses and taxes, offset by higher gross profit [9][14] Business Segment Performance - Animal Health segment reported net sales of $163.8 million, a 9% increase year-over-year, driven by increased demand for MFAs and nutritional specialties [10][50][73] - Performance Products segment net sales were $19.2 million, reflecting a 27% improvement driven primarily by increased demand for copper-based products [11][21] - Mineral Nutrition segment net sales declined by 8% to $61.6 million, driven by decreased demand for trace minerals and economic challenges [51][68] Market Performance - Latin America and Canada experienced a 12% growth, while the U.S. market saw a 7% growth; however, markets in Europe, the Middle East, Africa, and Asia Pacific declined due to COVID-19 and economic challenges [5][6] - The company is optimistic about continued growth in Latin America, attributing it to prior investments and market expansion [34][35] Company Strategy and Industry Competition - The company remains focused on maintaining supply continuity by increasing inventory levels to mitigate supply chain disruptions [22][41] - The management emphasizes the importance of product development, particularly in non-antibiotic specialties and vaccines, to maintain competitive positioning in the market [25][41] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the global economy's improvement but acknowledged ongoing challenges, particularly regarding input costs and supply chain issues [6][22] - The company projects a stronger second half of FY2023, consistent with prior fiscal performance [6][14] Other Important Information - The company has $202 million in liquidity available, including cash and short-term investments of $78 million [13] - A tentative settlement related to environmental litigation was reached, which may impact future financial performance [8][49] Q&A Session Summary Question: Can you quantify the higher SG&A costs? - Management indicated that higher employee costs were due to filling vacancies and increased labor costs [17] Question: What factors are contributing to the success of the Animal Health business? - Management attributed success to effective management and product development, particularly in non-antibiotic solutions [23][25] Question: What is the outlook for the poultry market given the ongoing bird flu situation? - Management noted that while the company is not heavily exposed, the situation remains concerning and could impact prices in the poultry market [64]