UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2021~~2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36410

Phibro Animal Health Corporation

(Exact name of registrant as specified in its charter)



Delaware	13-1840497
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Glenpointe Centre East, 3rd Floor
300 Frank W. Burr Boulevard, Suite 21

Teaneck, New Jersey	07666-6712
(Address of Principal Executive Offices)	(Zip Code)

(201) 329-7300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, ~~$0.0001~~$0.0001 par value per share		PAHC		Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February ~~2, 2022,~~3, 2023, there were 20,337,574 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 20,166,034 shares of the registrant’s Class B common stock, par value $0.0001 per share, outstanding.

Table of Contents

PHIBRO ANIMAL HEALTH CORPORATION

TABLE OF CONTENTS

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months				Six Months				Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020		2022		2021		2022		2021

	(unaudited)								(unaudited)
	(in thousands, except per share amounts)								(in thousands, except per share amounts)
Net sales	$	232,712	$	206,149	$	447,377	$	401,343	$	244,646	$	232,712	$	477,167	$	447,377
Cost of goods sold		162,040		137,884		312,027		268,959		167,261		162,040		331,136		312,027
Gross profit		70,672		68,265		135,350		132,384		77,385		70,672		146,031		135,350
Selling, general and administrative expenses		48,378		48,375		98,444		96,806		61,541		48,378		116,503		98,444
Operating income		22,294		19,890		36,906		35,578		15,844		22,294		29,528		36,906
Interest expense, net		2,953		3,214		5,842		6,024		3,884		2,953		6,951		5,842
Foreign currency (gains) losses, net		(4,189)		624		(2,061)		(3,007)		(149)		(4,189)		5,051		(2,061)
Income before income taxes		23,530		16,052		33,125		32,561		12,109		23,530		17,526		33,125
Provision for income taxes		6,065		3,251		9,126		7,458		4,899		6,065		6,460		9,126
Net income	$	17,465	$	12,801	$	23,999	$	25,103	$	7,210	$	17,465	$	11,066	$	23,999

Net income per share
basic	$	0.43	$	0.32	$	0.59	$	0.62
diluted	$	0.43	$	0.32	$	0.59	$	0.62
basic and diluted									$	0.18	$	0.43	$	0.27	$	0.59
Weighted average common shares outstanding
basic		40,504		40,454		40,504		40,454
diluted		40,504		40,504		40,504		40,504
basic and diluted										40,504		40,504		40,504		40,504

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months				Six Months				Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020		2022		2021		2022		2021

	(unaudited)								(unaudited)
	(in thousands)								(in thousands)
Net income	$	17,465	$	12,801	$	23,999	$	25,103	$	7,210	$	17,465	$	11,066	$	23,999
Change in fair value of derivative instruments		4,810		3,729		4,781		4,818		(1,536)		4,810		5,569		4,781
Foreign currency translation adjustment		(10,311)		9,500		(17,275)		4,777		4,271		(10,311)		128		(17,275)
Unrecognized net pension gains		117		137		234		272		192		117		368		234
Provision for income taxes		(1,231)		(966)		(1,253)		(1,272)
Other comprehensive (loss) income		(6,615)		12,400		(13,513)		8,595
(Provision) benefit for income taxes										337		(1,231)		(1,483)		(1,253)
Other comprehensive income (loss)										3,264		(6,615)		4,582		(13,513)
Comprehensive income	$	10,850	$	25,201	$	10,486	$	33,698	$	10,474	$	10,850	$	15,648	$	10,486

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	December 31,		June 30,		December 31,		June 30,
As of	2021		2021		2022		2022

	(unaudited)				(unaudited)
	(in thousands, except share and per share amounts)				(in thousands, except share and per share amounts)
ASSETS
Cash and cash equivalents	$	63,385	$	50,212	$	68,422	$	74,248
Short-term investments		32,100		43,000		10,000		17,000
Accounts receivable, net		142,495		146,852		151,830		166,537
Inventories, net		230,784		216,312		288,984		259,158
Other current assets		39,846		42,533		62,453		49,289
Total current assets		508,610		498,909		581,689		566,232
Property, plant and equipment, net		154,584		154,706		186,122		165,490
Intangibles, net		57,971		62,282		59,064		63,861
Goodwill		52,679		52,679		53,228		53,226
Other assets		75,114		72,749		81,730		82,890
Total assets	$	848,958	$	841,325	$	961,833	$	931,699
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt	$	13,125	$	9,375	$	15,420	$	15,000
Accounts payable		80,663		68,362		80,487		95,596
Accrued expenses and other current liabilities		72,840		86,379		71,662		80,236
Total current liabilities		166,628		164,116		167,569		190,832
Revolving credit facility		107,000		95,000		184,000		145,000
Long-term debt		280,317		287,710		276,806		272,925
Other liabilities		55,719		55,970		65,088		60,500
Total liabilities		609,664		602,796		693,463		669,257
Commitments and contingencies (Note 7)
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,337,574 shares issued and outstanding at December 31, 2021 and June 30, 2021; 30,000,000 Class B shares authorized, 20,166,034 shares issued and outstanding at December 31, 2021 and June 30, 2021		4		4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, 0 shares issued and outstanding		—		—
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,337,574 shares issued and outstanding at December 31, 2022, and June 30, 2022; 30,000,000 Class B shares authorized, 20,166,034 shares issued and outstanding at December 31, 2022, and June 30, 2022						4		4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding						—		—
Paid-in capital		135,803		135,803		135,803		135,803
Retained earnings		232,293		218,015		249,094		247,748
Accumulated other comprehensive loss		(128,806)		(115,293)		(116,531)		(121,113)
Total stockholders’ equity		239,294		238,529		268,370		262,442
Total liabilities and stockholders’ equity	$	848,958	$	841,325	$	961,833	$	931,699

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months
For the Periods Ended December 31

2021

2020

(unaudited)

(in thousands)
OPERATING ACTIVITIES




Net income

$
23,999

$
25,103
Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization

15,855

16,124
Amortization of debt issuance costs

295

441
Stock-based compensation

0

1,129
Deferred income taxes

(537)

(201)
Foreign currency (gains) losses, net

(2,890)

(7,174)
Gain on sale of investment

(1,203)

—
Other

259

258
Changes in operating assets and liabilities, net of business acquisitions:

Accounts receivable, net

1,427

2,633
Inventories, net

(21,975)

(10,514)
Other current assets

(561)

(1,327)
Other assets

(2,578)

97
Accounts payable

13,859

(285)
Accrued expenses and other liabilities

(2,007)

2,327
Net cash provided by operating activities

23,943

28,611
INVESTING ACTIVITIES




Purchases of short-term investments

(32,100)

(31,000)
Maturities of short-term investments

43,000

25,000
Capital expenditures

(15,139)

(14,738)
Cash proceeds from the sale of investment

1,353

—
Other, net

(212)

(521)
Net cash used by investing activities

(3,098)

(21,259)
FINANCING ACTIVITIES

Revolving credit facility borrowings

163,000

76,000
Revolving credit facility repayments

(151,000)

(67,000)
Payments of long-term debt and other

(3,750)

(9,375)
Dividends paid

(9,721)

(9,709)
Payment of contingent consideration

(4,840)

—
Net cash used by financing activities

(6,311)

(10,084)
Effect of exchange rate changes on cash

(1,361)

923
Net increase (decrease) in cash and cash equivalents

13,173

(1,809)
Cash and cash equivalents at beginning of period

50,212

36,343
Cash and cash equivalents at end of period

$
63,385

$
34,534


	Six Months
For the Periods Ended December 31	2022		2021

	(unaudited)
	(in thousands)
OPERATING ACTIVITIES
Net income	$	11,066	$	23,999
Adjustments to reconcile net income to
net cash (used) provided by operating activities:
Depreciation and amortization		16,949		15,855
Amortization of debt issuance costs		326		295
Deferred income taxes		(121)		(537)
Foreign currency gains, net		(875)		(2,890)
Gain on sale of investment		—		(1,203)
Other		(702)		259
Changes in operating assets and liabilities:
Accounts receivable, net		14,839		1,427
Inventories, net		(29,082)		(21,975)
Other current assets		(7,744)		(561)
Other assets		1,035		(2,578)
Accounts payable		(14,614)		13,859
Accrued expenses and other liabilities		(4,264)		(2,007)
Net cash (used) provided by operating activities		(13,187)		23,943
INVESTING ACTIVITIES
Purchases of short-term investments		(10,000)		(32,100)
Maturities of short-term investments		17,000		43,000
Capital expenditures		(32,995)		(15,139)
Cash proceeds from the sale of investment		—		1,353
Other, net		36		(212)
Net cash used by investing activities		(25,959)		(3,098)
FINANCING ACTIVITIES
Revolving credit facility borrowings		197,000		163,000
Revolving credit facility repayments		(158,000)		(151,000)
Proceeds from long-term debt		12,000		—
Payments of long-term debt		(7,605)		(3,750)
Debt issuance costs		(640)		—
Dividends paid		(9,720)		(9,721)
Payment of contingent consideration		—		(4,840)
Net cash (used) provided by financing activities		33,035		(6,311)
Effect of exchange rate changes on cash		285		(1,361)
Net (decrease) increase in cash and cash equivalents		(5,826)		13,173
Cash and cash equivalents at beginning of period		74,248		50,212
Cash and cash equivalents at end of period	$	68,422	$	63,385

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


										Accumulated													Accumulated
										Others													Other
	Shares of									Comprehensive				Shares of									Comprehensive
	Common	Common		Preferred		Paid-in		Retained		Income				Common	Common		Preferred		Paid-in		Retained		Income
	Stock	Stock		Stock		Capital		Earnings		(Loss)		Total		Stock	Stock		Stock		Capital		Earnings		(Loss)		Total

	(unaudited)													(unaudited)
	(in thousands, except share and per share amounts)													(in thousands, except share and per share amounts)
As of June 30, 2021	40,503,608	$	4	$	—	$	135,803	$	218,015	$	(115,293)	$	238,529
Comprehensive income (loss)	—		—		—		—		6,534		(6,898)		(364)
As of June 30, 2022														40,503,608	$	4	$	—	$	135,803	$	247,748	$	(121,113)	$	262,442
Comprehensive income														—		—		—		—		3,856		1,318		5,174
Dividends declared ($0.12 per share)	—		—		—		—		(4,860)		—		(4,860)	—		—		—		—		(4,860)		—		(4,860)
As of September 30, 2021	40,503,608	$	4	$	—	$	135,803	$	219,689	$	(122,191)	$	233,305
Comprehensive income (loss)	—		—		—		—		17,465		(6,615)		10,850
As of September 30, 2022														40,503,608	$	4	$	—	$	135,803	$	246,744	$	(119,795)	$	262,756
Comprehensive income														—		—		—		—		7,210		3,264		10,474
Dividends declared ($0.12 per share)	—		—		—		—		(4,861)		—		(4,861)	—		—		—		—		(4,860)		—		(4,860)
As of December 31, 2021	40,503,608	$	4	$	—	$	135,803	$	232,293	$	(128,806)	$	239,294
As of December 31, 2022														40,503,608	$	4	$	—	$	135,803	$	249,094	$	(116,531)	$	268,370


																							Accumulated
										Other													Other
	Shares of									Comprehensive				Shares of									Comprehensive
	Common	Common		Preferred		Paid-in		Retained		Income				Common	Common		Preferred		Paid-in		Retained		Income
	Stock	Stock		Stock		Capital		Earnings		(Loss)		Total		Stock	Stock		Stock		Capital		Earnings		(Loss)		Total

	(unaudited)													(unaudited)
	(in thousands, except share and per share amounts)													(in thousands, except share and per share amounts)
As of June 30, 2020	40,453,608	$	4	$	—	$	135,525	$	183,060	$	(130,385)	$	188,204
As of June 30, 2021														40,503,608	$	4	$	—	$	135,803	$	218,015	$	(115,293)	$	238,529
Comprehensive income (loss)	—		—		—		—		12,302		(3,805)		8,497	—		—		—		—		6,534		(6,898)		(364)
Dividends declared ($0.12 per share)	—		—		—		—		(4,854)		—		(4,854)	—		—		—		—		(4,860)		—		(4,860)
Stock-based compensation expense	—		—		—		565		—		—		565
As of September 30, 2020	40,453,608	$	4	$	—	$	136,090	$	190,508	$	(134,190)	$	192,412
Comprehensive income	—		—		—		—		12,801		12,400		25,201
As of September 30, 2021														40,503,608	$	4	$	—	$	135,803	$	219,689	$	(122,191)	$	233,305
Comprehensive income (loss)														—		—		—		—		17,465		(6,615)		10,850
Dividends declared ($0.12 per share)	—		—		—		—		(4,855)		—		(4,855)	—		—		—		—		(4,861)		—		(4,861)
Stock-based compensation expense	—		—		—		564		—		—		564
As of December 31, 2020	40,453,608	$	4	$	—	$	136,654	$	198,454	$	(121,790)	$	213,322
As of December 31, 2021														40,503,608	$	4	$	—	$	135,803	$	232,293	$	(128,806)	$	239,294

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

(unaudited)

1. Description of Business

Phibro Animal Health Corporation (“Phibro” or “PAHC”) and its subsidiaries (together, the “Company”) is a diversified global developer, manufacturer, and marketer of a broad range of animal health and mineral nutrition products for food and companion animals including poultry, swine, beef and dairy cattle, aquaculture and ~~beef cattle, swine, and aquaculture.~~dogs. The Company is also a manufacturer and marketer of performance products for use in the personal care, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to “we,” “our,” “us,” and similar expressions refer to Phibro and its subsidiaries.

The unaudited consolidated financial information for the three and six months ended December 31, ~~2021~~2022 and ~~2020,~~2021, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2021~~2022 (the “Annual Report”), filed with the Securities and Exchange Commission on August ~~25, 2021~~24, 2022 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June 30, ~~2021,~~2022 was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain. Although vaccines are now available, distribution efforts vary widely country-by-country and state-by-state. New information may continue to emerge concerning COVID-19, and the actions required to contain or treat it may affect the duration and severity of the pandemic. The pandemic may have significant economic impacts on customers, suppliers and markets. The pandemic may affect our future revenues, expenses, reserves and allowances, manufacturing operations and employee-related costs. Our financial statements include estimates of the effects of COVID-19 and there may be changes to those estimates in future periods.

~~The~~ consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated from the consolidated financial statements. The decision to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity.

2. Summary of Significant Accounting Policies and New Accounting Standards

Our significant accounting policies are described in the notes to the consolidated financial statements included in our Annual Report. As of December 31, ~~2021,~~2022, there have been no material changes to any of the significant accounting policies contained therein.

Net Income per Share and Weighted Average Shares

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.

Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to ~~potential~~ dilutive common ~~shares resulting from~~share equivalents. There were no common share equivalents in the ~~assumed vesting of~~periods included in the consolidated financial statements.


	Three Months				Six Months
For the Periods Ended December 31	2022		2021		2022		2021
Net income	$	7,210	$	17,465	$	11,066	$	23,999

Weighted average number of shares – basic and diluted		40,504		40,504		40,504		40,504

Net income per share - basic and diluted	$	0.18	$	0.43	$	0.27	$	0.59

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

restricted stock units. All common share equivalents were included in the calculation of diluted net income per share in the periods included in the consolidated financial statements. There are no outstanding restricted stock units as of December 31, 2021.

Three Months

Six Months
For the Periods Ended December 31

2021

2020

2021

2020
Net income

$
17,465

$
12,801

$
23,999

$
25,103
Weighted average number of shares – basic

40,504

40,454

40,504

40,454
Dilutive effect of restricted stock units

—

50

—

50
Weighted average number of shares – diluted

40,504

40,504

40,504

40,504

Net income per share




basic

$
0.43

$
0.32

$
0.59

$
0.62
diluted

$
0.43

$
0.32

$
0.59

$
0.62

New Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistancehas established annual disclosure requirements over transactions with a government that are accounted for by applying a grant accounting ~~model to~~model. The disclosures include the nature of the transactions and the related accounting policy used to account for the transactions, the line items and ~~the~~ amounts included in the consolidated balance sheet and ~~income~~consolidated statement of operations, and the significant terms and conditions of the transactions, ~~(including~~including commitments and ~~contingencies).~~contingencies. The disclosures are required for the annual periods beginning after December 15, 2021. We ~~continue~~intend to ~~evaluate the effect of adoption of this guidance on our consolidated financial statements.~~

~~ASU 2021-08,~~ ~~Business Combinations (Topic 805), Accounting~~include these disclosures for ~~Contract Assets and Contract Liabilities from Contracts with Customers,~~ requires revenue contract assets and liabilities acquired in a business combination be recognized and measured under the revenue standard provided in Topic 606. Under previous guidance, revenue contract assets and liabilities would have been measured at fair value. The ASU is required to be adopted for annual periods beginning after December 15, 2022. Early adoption is permitted and would be applied retrospectively in the year ~~adopted. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.~~ending June 30, 2023.

ASU 2020-04, 2021-01 and ~~2021-01,~~2022-06, Reference Rate Reform (Topic 848), provide optional expedients ~~and exceptions~~ to GAAP guidance if certain criteria are met for contracts, hedging relationships and derivative instruments that reference the London Interbank Offered Rate ~~(LIBOR) and other interbank offered rates expected~~(“LIBOR”) planned to be discontinued ~~or modified~~ by rate reform. ~~The overall purpose~~In November 2022, we amended our 2021 Credit Agreement and our 2020 interest rate swap agreement to replace LIBOR as the interest rate benchmark with the Secured Overnight Financing Rate (“SOFR”), as provided for under ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of ~~Topic 848 is~~the SOFR Overnight Index Swap (OIS) Rate as a Benchmark for Hedge Accounting Purposes. We applied the optional expedients to ~~ease~~treat the ~~financial reporting burdens related to~~amendments as a continuation of existing contracts at the expected market transition to alternative reference rates. These ASUs may be applied prospectively to contract modifications made and hedging relationships entered on or before December 31, 2022. We continue to evaluatetime the ~~effect of adoption of this guidance on our consolidated financial statements.~~

~~ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, removes certain exceptions and amends certain requirements in the existing income tax guidance to ease accounting requirements. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and must be applied on a retrospective basis. The adoption did not have a material effect on our consolidated financial statements.amendments were executed.

3. Statements of Operations—Additional Information

Disaggregated revenue, deferred revenue and customer payment terms

We develop, manufacture and market a broad range of products for food and companion animals including poultry, swine, beef and dairy cattle, ~~swine,~~aquaculture, and ~~aquaculture.~~dogs. The products help prevent, control and treat diseases ~~enhance~~and support nutrition to help improve animal health and ~~contribute to balanced mineral nutrition.~~well-being. The animal health and mineral nutrition products are sold directly to integrated poultry, cattle, and swine integrators and through commercial animal feed manufacturers, wholesalers, distributors and ~~distributors.~~veterinarians. The animal health industry and demand for many of the animal health products in a particular region are affected by changing disease pressures and by weather conditions, as

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

product usage follows varying weather patterns and seasons. Our operations are primarily focused on regions where the majority of livestock production is consolidated in large commercial farms.

We have a diversified portfolio of products that are classified within our three business segments—Animal Health, Mineral Nutrition and Performance Products. Each segment has its own dedicated management and sales team.

Animal Health

The Animal Health business develops, manufactures and markets products in three main categories:

●

MFAs and other: MFAs and other products primarily consist of concentrated medicated products that are administered through animal feeds, commonly referred to as Medicated Feed Additives (“MFAs”). Specific product classifications include antibacterials, which inhibit the growth of pathogenic bacteria that cause bacterial infections in animals; anticoccidials, which inhibit the growth of coccidia (parasites) that damage the intestinal tract of animals; and other related products. The MFAs and other category also ~~include~~includes other antibacterial products and processing aids used ~~to improve production efficiency~~ in the ethanol fermentation industry.

●

Nutritional specialties: Nutritional specialty products enhance nutrition to help improve health and performance in areas such as immune system function and digestive health. We are also a developer, manufacturer and marketer of microbial products and bioproducts for a variety of applications serving animal health and nutrition, environmental, industrial and agricultural customers.

●

Vaccines: ~~Our vaccines~~Vaccine products are primarily focused on preventing diseases in poultry and swine. They protect animals from either viral or bacterial disease challenges. We develop, manufacture and market conventionally licensed and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

autogenous vaccine products, ~~and produce and market~~as well as adjuvants, tofor animal vaccine manufacturers. We have also developed and market an innovative and proprietary delivery platform for vaccines.

Mineral Nutrition

The Mineral Nutrition business is comprised of formulations and concentrations of trace minerals such as zinc, manganese, copper, iron and other compounds, with a focus on customers in North America. Our customers use these products to fortify the daily feed requirements of their livestock’s diets and maintain an optimal balance of trace elements in each animal. We manufacture and market a broad range of mineral nutrition products for food animals including poultry, swine, and beef and dairy ~~cattle, swine and poultry.~~cattle.

Performance Products

The Performance Products business manufactures and markets specialty ingredients for use in the personal care, industrial chemical and chemical catalyst ~~industries, predominantly in the United States.~~industries.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

The following tables present our revenues disaggregated by major product category and geographic region:

Net Sales by Product Type


	Three Months				Six Months				Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020		2022		2021		2022		2021

Animal Health
MFAs and other	$	91,724	$	81,577	$	175,482	$	160,280	$	97,179	$	91,724	$	189,969	$	175,482
Nutritional specialties		37,330		36,394		73,327		68,994		43,856		37,330		82,910		73,327
Vaccines		21,873		18,267		43,122		35,333		22,768		21,873		45,783		43,122
Total Animal Health	$	150,927	$	136,238	$	291,931	$	264,607	$	163,803	$	150,927	$	318,662	$	291,931
Mineral Nutrition		66,655		54,157		121,087		105,597		61,644		66,655		121,290		121,087
Performance Products		15,130		15,754		34,359		31,139		19,199		15,130		37,215		34,359
Total	$	232,712	$	206,149	$	447,377	$	401,343	$	244,646	$	232,712	$	477,167	$	447,377

Net Sales by Region


	Three Months				Six Months				Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020		2022		2021		2022		2021
United States	$	139,145	$	122,307	$	265,464	$	241,077	$	149,386	$	139,145	$	285,190	$	265,464
Latin America and Canada		48,013		40,664		90,674		78,421		53,820		48,013		106,066		90,674
Europe, Middle East and Africa		30,029		30,285		60,961		57,157		27,827		30,029		57,344		60,961
Asia Pacific		15,525		12,893		30,278		24,688		13,613		15,525		28,567		30,278
Total	$	232,712	$	206,149	$	447,377	$	401,343	$	244,646	$	232,712	$	477,167	$	447,377

Net sales by region are based on country of destination.

Deferred revenue was ~~$3,024~~$1,505 and ~~$3,674~~$2,051 as of December 31, ~~2021,~~2022, and June 30, ~~2021,~~2022, respectively. Accrued expenses and other current liabilities included ~~$1,675~~$448 and ~~$1,560~~$822 of the total deferred revenue as of December 31, ~~2021,~~2022, and June 30, ~~2021,~~2022, respectively. The deferred revenue resulted primarily from certain customer arrangements, including technology licensing fees and discounts on future product sales. The transaction price associated with our deferred revenue arrangements is generally based on the stand-alone sales prices of the individual products or services.

Our customer payment terms generally range from 30 to 120 days globally and ~~do not include~~exclude any significant financing components. Payment terms vary based on industry and business practices within the regions in which we operate. Our average worldwide collection period for accounts receivable is approximately 60 days after the revenue is recognized.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest Expense ~~and Depreciation and Amortization~~


	Three Months				Six Months				Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020		2022		2021		2022		2021
Interest expense, net
Term loan	$	2,264	$	2,064	$	4,537	$	3,939
2021 Term A loan									$	2,604	$	2,264	$	3,386	$	4,537
Revolving credit facility		647		1,133		1,246		2,079		1,648		647		4,413		1,246
2022 Term loan										188		—		188		—
Amortization of debt issuance costs		147		220		295		441		179		147		326		295
Other		44		59		89		126		9		44		10		89
Interest expense		3,102		3,476		6,167		6,585		4,628		3,102		8,323		6,167
Interest income		(149)		(262)		(325)		(561)		(744)		(149)		(1,372)		(325)
	$	2,953	$	3,214	$	5,842	$	6,024	$	3,884	$	2,953	$	6,951	$	5,842

	Three Months				Six Months
For the Periods Ended December 31	2021		2020		2021		2020
Depreciation and amortization
Depreciation of property, plant and equipment	$	5,864	$	5,885	$	11,578	$	11,716
Amortization of intangible assets		2,137		2,203		4,277		4,408
	$	8,001	$	8,088	$	15,855	$	16,124

Depreciation and Amortization


	Three Months				Six Months
For the Periods Ended December 31	2022		2021		2022		2021
Depreciation and amortization
Depreciation of property, plant and equipment	$	6,059	$	5,864	$	12,110	$	11,578
Amortization of intangible assets		2,440		2,137		4,839		4,277
	$	8,499	$	8,001	$	16,949	$	15,855

4. Balance Sheets—Additional Information


	December 31,		June 30,		December 31,		June 30,
As of	2021		2021		2022		2022
Inventories
Raw materials	$	71,286	$	59,775	$	96,552	$	87,030
Work-in-process		11,886		12,738		20,009		15,468
Finished goods		147,612		143,799		172,423		156,660
	$	230,784	$	216,312	$	288,984	$	259,158

December 31,

June 30,
As of

2021

2021
Other assets

ROU operating lease assets

$
32,253

$
32,962
Deferred income taxes

8,187

9,861
Deposits

5,235

5,663
Insurance investments

6,054

5,964
Equity method investments

4,717

4,141
Derivative instruments

5,608

2,696
U.S. pension plan

2,048

1,184
Debt issuance costs

1,623

1,811
Other

9,389

8,467

$
75,114

$
72,749


	December 31,		June 30,
As of	2022		2022
Other assets
ROU operating lease assets	$	35,759	$	37,680
Deferred income taxes		6,311		5,849
Deposits		5,932		5,905
Insurance investments		6,073		5,984
Equity method investments		5,056		4,362
Derivative instruments		13,367		12,976
Debt issuance costs		1,656		1,436
Other		7,576		8,698
	$	81,730	$	82,890

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	December 31,		June 30,		December 31,		June 30,
As of	2021		2021		2022		2022
Accrued expenses and other current liabilities
Employee related	$	27,867	$	35,375	$	27,338	$	34,278
Current operating lease liabilities		6,601		6,618		5,748		6,051
Commissions and rebates		6,005		6,312		5,375		7,125
Professional fees		4,637		4,380		6,318		5,493
Income and other taxes		6,532		6,107		7,187		7,211
Derivative instruments		1,590		3,486
Contingent consideration		0		4,840
Restructuring costs		0		735
Insurance-related		1,218		1,176		1,180		1,174
Other		18,390		17,350		18,516		18,904
	$	72,840	$	86,379	$	71,662	$	80,236

December 31,

June 30,
As of

2021

2021
Other liabilities

Long-term operating lease liabilities

$
27,694

$
28,003
Long-term and deferred income taxes

8,064

6,646
Supplemental retirement benefits, deferred compensation and other

8,631

8,382
International retirement plans

5,427

5,345
Derivative instruments

27

—
Other long-term liabilities

5,876

7,594

$
55,719

$
55,970

December 31,

June 30,
As of

2021

2021
Accumulated other comprehensive loss




Derivative instruments

$
3,991

$
(790)
Foreign currency translation adjustment

(117,370)

(100,095)
Unrecognized net pension losses

(19,739)

(19,973)
(Provision) benefit for income taxes on derivative instruments

(1,098)

97
Benefit for incomes taxes on long-term intercompany investments

8,166

8,166
Provision for income taxes on net pension losses

(2,756)

(2,698)

$
(128,806)

$
(115,293)


	December 31,		June 30,
As of	2022		2022
Other liabilities
Long-term operating lease liabilities	$	29,768	$	31,508
Long-term and deferred income taxes		12,386		9,264
Supplemental retirement benefits, deferred compensation and other		7,543		7,368
U.S. pension plan		1,781		1,793
International retirement plans		4,436		4,620
Other long-term liabilities		9,174		5,947
	$	65,088	$	60,500


	December 31,		June 30,
As of	2022		2022
Accumulated other comprehensive loss
Derivative instruments	$	26,460	$	20,891
Foreign currency translation adjustment		(118,906)		(119,034)
Unrecognized net pension losses		(23,840)		(24,208)
Provision for income taxes on derivative instruments		(6,672)		(5,281)
Benefit for income taxes on long-term intercompany investments		8,166		8,166
Provision for income taxes on net pension losses		(1,739)		(1,647)
	$	(116,531)	$	(121,113)

5. Debt

Term Loans and Revolving Credit Facilities

In April 2021, we entered into an amended and restated credit agreement (the “2021 Credit Agreement”) under which we ~~have~~had a term A loan in an aggregate initial principal amount of $300,000 (the “2021 Term A Loan”) and a revolving credit facility under which we ~~can~~could borrow up to an aggregate amount of $250,000, subject to the terms of the 2021 Credit Agreement (the “2021 Revolver” and together with the 2021 Term A Loan, the “2021 Credit Facilities”). In November 2022, we amended the 2021 Credit Facilities to increase the revolving commitments under the 2021 Revolver to an aggregate amount of $310,000 and adopt SOFR as the reference for the fluctuating rate of interest on the 2021 Credit Facilities, replacing the LIBOR reference rate. All other terms and conditions of the 2021 Credit Agreement were unchanged.

The 2021 Term A Loan is repayable in quarterly installments, with the balance payable at maturity. The 2021 Revolver contains a letter of credit facility. The interest rate per annum applicable to the loans under the 2021 Credit Facilities is based on a fluctuating rate of interest plus an applicable rate equal to 2.00%, 1.75% or 1.50%, in the case of ~~LIBOR and~~ ~~Eurodollar~~adjusted SOFR rate loans and 1.00%, 0.75% or 0.50%, in the case of base rate ~~loans; the~~loans. The applicable rates are based on the First Lien Net Leverage Ratio (as defined in the 2021 Credit Agreement). The 2021 Credit Facilities mature in April ~~2026.~~2026.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The 2021 Credit Agreement requires, among other things, compliance with financial covenants that permit: (i) a maximum First Lien Net Leverage Ratio of 4.00:1.00 and (ii) a minimum interest coverage ratio of 3.00:1.00, each calculated on a trailing four-quarter basis. The 2021 Credit Agreement contains an acceleration clause should an event of default (as defined in the 2021 Credit Agreement) occur. As of December 31, ~~2021,~~2022, we were in compliance with the financial covenants.

As of December 31, ~~2021,~~2022, we had ~~$107,000~~$184,000 in borrowings drawn under the 2021 Revolver and had outstanding letters of credit of ~~$2,709,~~$2,479, leaving ~~$140,291~~$123,521 available for further borrowings and letters of credit under the 2021 Revolver, subject to restrictions in our 2021 Credit Facilities. We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The terms of these letters of credit are all less than one year.

In July 2017, we entered into an interest rate swap agreement on $150,000 of notional principal that effectively ~~converts~~converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed interest rate of ~~1.8325%~~1.83%. The agreement ~~matures~~matured in June ~~2022.~~2022. We designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “Note 8 — Derivatives.”

In March 2020, we entered into an interest rate swap agreement on ~~an additional~~ $150,000 of notional principal that effectively ~~converts~~converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed rate of 0.62%. In July 2022, this agreement ~~increases~~increased to a notional principal amount of ~~$300,000 through June 2025, and~~$300,000. In November 2022, we amended the March 2020 interest rate swap agreement to convert the floating portion of our interest obligation to SOFR. The agreement effectively converts the floating ~~LIBOR~~ portion of our interest obligation on $300,000 of debt to a fixed interest rate of ~~0.62%~~0.61% through June 2025. We have designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “Note 8 — Derivatives.”

~~The 2017 and 2020 interest rate swap agreements will continue to remain in place on our interest obligations associated with the 2021 Credit Facilities.~~

As of December 31, ~~2021,~~2022, the interest rates for the 2021 Revolver and the 2021 Term A Loan were ~~1.86%~~5.76% and ~~2.99%~~2.36%, respectively. The weighted-average interest rates for the 2021 Revolver were 4.57% and ~~the prior revolving credit facility were~~ 1.83% ~~and 2.24%~~ for the six months ended December 31, ~~2021,~~2022 and ~~2020,~~2021, respectively. The weighted-average interest rates for the 2021 Term A Loan were 2.37% and ~~the prior term A loan were~~ 2.98% ~~and 3.33%~~ for six months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

Other Long-Term Debt

December 31,

June 30,
As of

2021

2021
2021 Term A Loan due April 2026

$
294,375

$
298,125
Unamortized debt issuance costs

(933)

(1,040)

293,442

297,085
Less: current maturities

(13,125)

(9,375)

$
280,317

$
287,710

In September 2022, we entered into a credit agreement (the “2022 Term Loan”) in the amount of $12,000, collateralized by certain facilities. The 2022 Term Loan matures in September 2027. The interest rate per annum applicable to the 2022 Term Loan is based on a fluctuating rate of interest, at the Company’s election from time to time, equal to either (i) one-month Adjusted SOFR plus 1.00%, or (ii) a base rate determined by reference to the greater of (a) the prime rate and (b) the Federal Funds Effective Rate plus 0.50%. The 2022 Term Loan is repayable in monthly installments of $35, with the balance payable at maturity. The weighted-average interest rate was 5.74% for the period during which the 2022 Term Loan was outstanding during the six months ended December 31, 2022.

Maturities of Long-Term Debt


	December 31,		June 30,
As of	2022		2022
2021 Term A Loan due April 2026	$	281,250	$	288,750
2022 Term Loan due September 2027		11,895		-
		293,145		288,750
Unamortized debt issuance costs		(919)		(825)
		292,226		287,925
Less: current maturities		(15,420)		(15,000)
	$	276,806	$	272,925

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Related Party Transactions

Certain relatives of Jack C. Bendheim, our Chairman, President and Chief Executive Officer, provided services to the Company as employees or consultants and received aggregate compensation and benefits of approximately ~~$471~~$397 and ~~$394~~$471 during the three months ended December 31, 2022 and 2021, and ~~2020, respectively,~~$1,177 and $1,300 ~~and $925~~ during the six months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

7. Commitments and Contingencies

Environmental

Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, “Environmental Laws”). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination, and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the period during which such costs are likely to be incurred are difficult to predict.

While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.

The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based on our experience, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

The United States Environmental Protection Agency (the “EPA”) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (“Omega Chemical Site”), which is upgradient of the Santa Fe Springs, California facility of our subsidiary, Phibro-Tech, Inc. ~~("Phibro-Tech"~~(“Phibro-Tech”). The EPA has entered into a settlement agreement with a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling ~~("OPOG"~~(“OPOG”) to remediate the contaminated groundwater that has migrated from the Omega Chemical Site in accordance with a general remedy selected by the EPA. The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (“PRPs”) due to groundwater contamination from Phibro-Tech’s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September 2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that any groundwater contamination at its site is localized and due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

groundwater plume affected by the Omega Chemical Site. PAHC and Phibro-Tech ~~has~~have vigorously contested this position and ~~has~~have asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. ~~Furthermore, the~~In 2014, several members of OPOG filed a complaint under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and the Resource Conservation and Recovery Act in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. ~~Due~~In August 2022, the United States Department of Justice (the “DOJ”), on behalf of the EPA, sent Phibro-Tech and certain other PRPs a pre-litigation notice letter regarding potential CERCLA Sec. 107 cost recovery claims seeking unrecovered past costs related to the ~~ongoing nature~~groundwater plume affected by the Omega Chemical Site, along with a declaration allocating liability for future costs.

In January 2023, the plaintiffs in the OPOG lawsuit, the EPA and certain defendants in the OPOG lawsuit, including Phibro-Tech, reached a tentative settlement that would provide for a “cash-out” settlement, with contribution protection, for Phibro-Tech and its affiliates (as well as certain other defendants) releasing Phibro-Tech and its affiliates from liability for contamination of the ~~EPA’s investigation,~~groundwater plume affected by the ~~preliminary stage~~Omega Chemical Site (with certain exceptions), including past and future EPA response costs that were the subject of the ~~ongoing litigation~~letter sent by the DOJ on behalf of the EPA in August 2022. As part of the tentative settlement, Phibro-Tech would also resolve all claims for indemnification and ~~Phibro-Tech’s dispute~~contribution between Phibro-Tech and the successor to the prior owner of the Phibro-Tech site. The terms of the tentative settlement, which is subject to negotiation and court approval of a definitive settlement agreement, contemplate cash payments by Phibro-Tech and one of its affiliates, with the ~~prior owner’s successor, at this time~~option for payments to be made in installments over several years with interest. In the three months ended December 31, 2022, we ~~cannot predict with any degree~~have recognized a reserve for the OPOG lawsuit representing the cash payments contemplated under the tentative settlement and other related costs, which is included in our consolidated statement of ~~certainty what, if any, liability Phibro-Tech~~

~~Table of Contents~~operations as selling, general and administrative expenses.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.~~

Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, including the reserve for the OPOG lawsuit referred to in the preceding paragraph, to be approximately ~~$4,309~~$10,480 and ~~$4,293~~$4,287 at December 31, ~~2021,~~2022, and June 30, ~~2021,~~2022, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries are liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.

Claims and Litigation

PAHC and its subsidiaries are party to various claims and lawsuits arising out of the normal course of business including product liabilities, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, such claims are covered by insurance. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

Development Agreements

We have entered into various licensing agreements for the development, manufacture and commercialization of certain companion animal products. Under the agreements, we may be liable for future payments upon the achievement of certain development milestones and as a percentage of net sales.

8. Derivatives

We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded in accumulated other comprehensive income (loss).

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative no longer is an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.

We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “Note 9 — Fair Value Measurements.”

In July 2017, we entered into an interest rate swap agreement on the first $150,000 of notional principal that effectively ~~converts~~converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed interest rate of ~~1.8325%~~1.83%. The agreement ~~matures~~matured in June ~~2022.~~2022. In March 2020, we entered into an interest rate swap agreement on an additional $150,000 of notional principal that effectively ~~converts~~converted the floating LIBOR portion of our interest obligation on that amount of debt to a fixed rate of 0.62%. ~~Upon the maturity of the~~In July ~~2017~~2022, this agreement ~~the March 2020 agreement increases~~increased to a notional principal amount of ~~$300,000 through June 2025, and~~$300,000. In November 2022, we amended the March 2020 interest rate swap agreement to convert the floating portion of our interest obligation to SOFR. The agreement effectively converts the floating ~~LIBOR~~ portion of our interest obligation on $300,000 of debt to a fixed interest rate of ~~0.62%~~0.61% through June 2025. ~~The forecasted transactions are probable of occurring, and~~We have designated the interest rate ~~swaps have been designated~~swap as a highly effective cash flow ~~hedges.~~hedge.

We have entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through August 2023. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.

The consolidated balance sheet includes the net fair values of our outstanding foreign currency option contracts within the respective line items, based on the net financial position and maturity date of the individual contracts. The consolidated balance sheet includes the net fair values of our outstanding interest rate swap within the respective balance sheet line items, based on the expected timing of the cash flows. The consolidated balance sheet includes assets for the fair values of outstanding derivatives that are designated and effective as cash flow hedges as follows:


	December 31,		June 30,
As of	2022		2022
Other current assets
Brazil Real options, net	$	453	$	498
Interest rate swap		12,640		7,417
Other assets
Brazil Real options, net		—		104
Interest rate swap		13,367		12,871
Total Fair Value
Brazil Real options, net		453		602
Interest rate swap		26,007		20,288

Notional amounts of the derivatives as of the balance sheet date were:


	December 31,
As of	2022
Brazil Real call options	R$	40,000
Brazil Real put options	R$	(40,000)
Interest rate swap	$	300,000

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The consolidated balance sheet includes the net fair values of our outstanding foreign currency option contracts within the respective line items, based on the net financial position and maturity date of the individual contracts. The consolidated balance sheet includes the net fair values of our outstanding interest rate swaps within the respective balance sheet line items, based on the expected timing of the cash flows. The consolidated balance sheet includes assets and liabilities for the fair values of outstanding derivatives that are designated and effective as cash flow hedges as follows:

December 31,

June 30,
As of

2021

2021
Other assets




Brazil Real options, net

$
—

$
355
Interest rate swaps

5,608

2,341
Accrued expense and other current liabilities




Brazil Real options, net

(175)

(150)
Interest rate swaps

(1,415)

(3,336)
Other liabilities




Brazil Real options, net

(27)

—
Interest rate swaps

—

—
Total Fair Value


Brazil Real options, net

(202)

205
Interest rate swaps

4,193

(995)

~~Notional amounts of the derivatives as of the balance sheet date were:~~

December 31,
As of

2021
Brazil Real call options

R$
112,000
Brazil Real put options

R$
112,000
Interest rate swaps

$
300,000

The consolidated statements of operations and statements of other comprehensive income (“OCI”) for the periods ended December 31, ~~2021~~2022 and ~~2020~~2021 included the effects of derivatives as follows:

Three Months

Six Months
For the Periods Ended December 31

2021

2020

2021

2020
Brazil Real options, net








Expense recorded in consolidated statement of operations

$
99

$
139

$
527

$
136
Consolidated statement of operations - total cost of goods sold

$
162,040

$
137,884

$
312,027

$
268,959
(Income) expense recorded in OCI

$
(360)

$
(1,955)

$
407

$
(2,331)
Interest rate swaps








Expense recorded in consolidated statements of operations

$
874

$
828

$
1,742

$
1,642
Consolidated statement of operations - total interest expense, net

$
2,953

$
3,214

$
5,842

$
6,024
Income recorded in OCI

$
(4,450)

$
(1,774)

$
(5,188)

$
(2,487)


	Three Months				Six Months
For the Periods Ended December 31	2022		2021		2022		2021
Brazil Real options, net
Expense recorded in consolidated statements of operations	$	355	$	99	$	792	$	527
Consolidated statement of operations - total cost of goods sold	$	167,261	$	162,040	$	331,136	$	312,027
Expense (income) recorded in OCI	$	(18)	$	(360)	$	150	$	407
Interest rate swap
Expense (income) recorded in consolidated statements of operations	$	(2,298)	$	874	$	(3,508)	$	1,742
Consolidated statement of operations - total interest expense, net	$	3,884	$	2,953	$	6,951	$	5,842
Expense (income) recorded in OCI	$	1,554	$	(4,450)	$	(5,719)	$	(5,188)

We recognize gains and losses related to foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Inventory as of December 31, ~~2021,~~2022, included realized net losses of ~~$1,930~~$101 related to matured contracts. We anticipate the net losses included in inventory will be recognized in cost of goods sold within the next eighteen months.

9. Fair Value Measurements

Short-term ~~investments~~Investments

Our short-term investments consist of cash deposits held at financial institutions. We consider the carrying amounts of these short-term investments to be representative of their fair value.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

Current Assets and Liabilities

We consider the carrying amounts of current assets and current liabilities to be representative of their fair value because of the current nature of these items.

~~Contingent Consideration on Acquisitions~~

We determine the fair value of contingent consideration on acquisitions based on contractual terms, our current forecast of performance factors related to the acquired business and an applicable discount rate.

Debt

We record debt, including term loans and revolver balances, at amortized cost in our consolidated financial statements. We believe the carrying value of the debt is approximately equal to its fair value, due to the variable nature of the instruments and our evaluation of estimated market prices.

Derivatives

We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates.

Non-financial ~~assets~~Assets

Our non-financial assets, which primarily consist of goodwill, other intangible assets, property and equipment, and lease-related ROU assets, are not required to be measured at fair value on a recurring basis, and instead are reported at carrying value in the consolidated balance sheet. ~~We assess the carrying values of non-financial assets for impairment~~Assets and liabilities may be required to be measured at fair value on a ~~periodic~~non-recurring basis, either upon initial recognition or ~~whenever events~~for subsequent accounting or ~~changes~~reporting, including the initial recognition of net assets acquired in ~~circumstances indicate an asset may not be fully recoverable.~~a business combination. These fair value measurements involve unobservable inputs that reflect estimates and assumptions that represent Level 3 inputs.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value of Assets ~~(Liabilities)~~


As of	December 31, 2021						June 30, 2021						December 31, 2022						June 30, 2022
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Short-term investments	$	32,100	$	0	$	0	$	43,000	$	0	$	0	$	10,000	$	—	$	—	$	17,000	$	—	$	—
Foreign currency derivatives	$	0	$	(202)	$	0	$	0	$	205	$	0	$	—	$	453	$	—	$	—	$	602	$	—
Interest rate swaps	$	0	$	4,193	$	0	$	0	$	(995)	$	0
Contingent consideration on acquisitions	$	0	$	0	$	0	$	0	$	0	$	(4,840)
Interest rate swap													$	—	$	26,007	$	—	$	—	$	20,288	$	—

There were 0no transfers between levels during the periods presented.

~~The contingent consideration on acquisitions was the minimum amount payable in accordance with the acquisition agreement for Osprey. The contingent consideration of $4,840 was paid in October 2021.~~

10. Business Segments

We evaluate performance and allocate resources, based on the Animal Health, Mineral Nutrition and Performance Products segments. Certain of our costs and assets are not directly attributable to these segments and we refer to these items as Corporate. We do not allocate Corporate costs or assets to the segments because they are not used to evaluate the segments’ operating results or financial position. Corporate ~~costs include~~includes certain costs related to executive management, business technology, legal, finance, human resources and business development.

We evaluate performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as income before income taxes plus (a) interest expense, net, (b) depreciation and amortization, (c) (income) loss from, and disposal of, discontinued operations, and (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency (gains) losses, net and certain items that we consider to be unusual, non-operational or non-recurring.

The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

operations, and (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency (gains) losses, net and certain items that we consider to be unusual, non-operational or non-recurring.


	Three Months				Six Months
For the Periods Ended December 31	2022		2021		2022		2021
Net sales
Animal Health	$	163,803	$	150,927	$	318,662	$	291,931
Mineral Nutrition		61,644		66,655		121,290		121,087
Performance Products		19,199		15,130		37,215		34,359
Total segments	$	244,646	$	232,712	$	477,167	$	447,377

Depreciation and amortization
Animal Health	$	6,934	$	6,517	$	13,845	$	12,937
Mineral Nutrition		659		660		1,314		1,299
Performance Products		453		437		895		856
Total segments	$	8,046	$	7,614	$	16,054	$	15,092
Adjusted EBITDA
Animal Health	$	37,059	$	33,696	$	64,023	$	61,333
Mineral Nutrition		4,399		5,525		9,696		10,058
Performance Products		2,292		1,324		4,656		3,462
Total segments	$	43,750	$	40,545	$	78,375	$	74,853
Reconciliation of income before income taxes to Adjusted EBITDA
Income before income taxes	$	12,109	$	23,530	$	17,526	$	33,125
Interest expense, net		3,884		2,953		6,951		5,842
Depreciation and amortization – Total segments		8,046		7,614		16,054		15,092
Depreciation and amortization – Corporate		453		387		895		763
Corporate costs		12,838		11,453		25,329		23,295
Environmental remediation costs		6,569		—		6,569		—
Gain on sale of investment		—		(1,203)		—		(1,203)
Foreign currency (gains) losses, net		(149)		(4,189)		5,051		(2,061)
Adjusted EBITDA – Total segments	$	43,750	$	40,545	$	78,375	$	74,853

~~The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.~~


	Three Months				Six Months				December 31,		June 30,
For the Periods Ended December 31	2021		2020		2021		2020
Net sales
As of									2022		2022
Identifiable assets
Animal Health	$	150,927	$	136,238	$	291,931	$	264,607	$	670,336	$	654,862
Mineral Nutrition		66,655		54,157		121,087		105,597		95,190		87,379
Performance Products		15,130		15,754		34,359		31,139		51,097		39,490
Total segments	$	232,712	$	206,149	$	447,377	$	401,343		816,623		781,731

Depreciation and amortization
Animal Health	$	6,517	$	6,498	$	12,937	$	13,019
Mineral Nutrition		660		747		1,299		1,396
Performance Products		437		423		856		868
Total segments	$	7,614	$	7,668	$	15,092	$	15,283
Adjusted EBITDA
Animal Health	$	33,696	$	33,349	$	61,333	$	63,450
Mineral Nutrition		5,525		4,185		10,058		7,232
Performance Products		1,324		2,266		3,462		4,238
Total segments	$	40,545	$	39,800	$	74,853	$	74,920
Reconciliation of income before income taxes to Adjusted EBITDA
Income before income taxes	$	23,530	$	16,052	$	33,125	$	32,561
Interest expense, net		2,953		3,214		5,842		6,024
Depreciation and amortization – Total segments		7,614		7,668		15,092		15,283
Depreciation and amortization – Corporate		387		420		763		841
Corporate costs		11,453		11,258		23,295		22,089
Gain on sale of investment		(1,203)		0		(1,203)		—
Stock-based compensation		—		564		—		1,129
Foreign currency (gains) losses, net		(4,189)		624		(2,061)		(3,007)
Adjusted EBITDA – Total segments	$	40,545	$	39,800	$	74,853	$	74,920
Corporate										145,210		149,968
Total									$	961,833	$	931,699

December 31,

June 30,
As of

2021

2021
Identifiable assets




Animal Health

$
589,809

$
595,315
Mineral Nutrition

77,122

67,338
Performance Products

38,099

36,847
Total segments

705,030

699,500
Corporate

143,928

141,825
Total

$
848,958

$
841,325

The Animal Health segment includes all goodwill of the Company. Corporate assets include cash and cash equivalents, short-term investments, debt issuance costs, income tax-related assets and certain other assets.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Our management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided to assist readers in understanding our performance, as reflected in the results of our operations, our financial condition and our cash flows. The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. This MD&A should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Our future results could differ materially from our historical performance as a result of various factors such as those discussed in “Risk Factors” in Item 1A of our Annual Report and “Forward-Looking Statements.”

Overview of our business

Phibro Animal Health Corporation is a global diversified animal health and mineral nutrition company. We develop, manufacture and market a broad range of products for food and companion animals including poultry, swine, beef and dairy cattle, ~~swine,~~aquaculture, and ~~aquaculture.~~dogs. Our products help prevent, control and treat diseases, ~~enhance~~and support nutrition to help improve health and ~~performance and contribute to balanced mineral nutrition.~~well-being. In addition to animal health and mineral nutrition products, we manufacture and market specific ingredients for use in the personal care, industrial chemical and chemical catalyst industries.

Armed Conflict between Russia and Ukraine

In response to the armed conflict between Russia and Ukraine that began in February 2022, we and our employees have provided support to Ukraine in the form of monetary donations, free products and humanitarian services. Our limited intent for the Russian market is to continue to provide medicines and vaccines, and related regulatory and technical support, to help existing customers combat disease challenges in the production of food animals on their farms. We have no production or direct distribution operations and no planned investments in Russia.

Since the conflict began, the United States and other North Atlantic Treaty Organization (“NATO”) member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises. The continuation or escalation of the conflict may trigger additional economic and other sanctions, as well as broader military conflict. The potential impacts of any resulting bans, sanctions, boycotts or broader military conflicts on our business is uncertain at the current time due to the fluid nature of the conflict. The potential impacts could include supply chain and logistics disruptions, macroeconomic impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy as well as heightened cybersecurity threats. Our annual sales to Russia and Ukraine represent approximately 1% of consolidated net sales.

We cannot know if the conflict could escalate and result in broader economic and security concerns that could adversely affect our business, financial condition, or results of operations.

Effects of the COVID-19 pandemic

The global food and animal production industry has experienced demand disruption, production impacts, price volatility and ~~international~~ currency volatility in international markets due to the COVID-19 pandemic. The response to the global outbreak of COVID-19 continues to evolve. Governmental authorities continue to implement measures to contain virus outbreaks, such as travel bans, quarantines, shelter-in-place orders, site closures and business shutdowns. Although vaccines are now available, distribution efforts vary widely country-by-country and state-by-state. The pandemic has had significant economic impacts on customers, suppliers and markets. New information may continue to emerge concerning COVID-19 and the actions required to contain or treat it may affect the duration and severity of the economic impact. We believe the global food and animal production industry is returning to stability, but the potential impact of COVID-19 continues to evolve and future industry outlooks remain uncertain.

Phibro is an integral participant in the essential production of meat, milk, eggs and fish for human consumption. In the face of the pandemic, we have focused on the safety of our employees, while continuing to supply our customers. Our global production facilities have continued to operate without interruption, despite supply chain and logistical challenges. Our sales and technical service people remain in close virtual contact with our customers in instances where face-to-face interactions are not available. Some of our administrative and management staff are still working remotely, while others have returned to the office with varying frequency. We have experienced some cost increases from supply chain disruptions as well as the safety measures implemented to protect our employees. We have maintained headcount and compensation at or above constant levels. We continue to monitor sales trends, cash flow and liquidity.

~~The uncertainties~~situation surrounding the COVID-19 pandemic ~~remain fluid, particularly regarding the emergence of virus variants and the effectiveness of vaccines against the current and any future variants.~~remains fluid. We are ~~still~~ unable to predict ~~with confidence~~ the ~~effectiveness~~future impact of ~~measures to contain~~ COVID-19 ~~and hence the impact~~ on the economies where we manufacture ~~and~~and/or sell our products. While we continue to adapt our operations and mitigate the risks and challenges posed by COVID-19, the demand for our products will be dependent upon economic conditions and the ability of our customers and end users of our products to operate their businesses and production facilities. Our current operational results have been impacted while our future operational results may continue to be impacted by government mandated response efforts, supply chain and manufacturing disruptions, increased volatility in raw material costs and decreased demand due to changes in our customer purchasing patterns and preferences. We are unable to predict with confidence the nature and timing of when any of these events may occur and the effects COVID-19 will have on our business, our consolidated results and the broader economic environment going forward. We will continue to evaluate the nature and extent of the effects of COVID-19 on our business, consolidated results of operations, financial condition and liquidity. For additional considerations and risks associated with COVID-19 on our business, see “Risk Factors” in Item 1A of our Annual Report.

Table of Contents

~~Trends and uncertainties~~Regulatory Developments

In April 2016, the Food and Drug Administration ~~("FDA"~~(“FDA”) began initial steps to withdraw approval of carbadox (the active ingredient in our Mecadox product) via a regulatory process known as a Notice of Opportunity for Hearing ~~("NOOH"~~(“NOOH”), due to concerns that certain residues from the product may persist in animal tissues for longer than previously determined. ~~The NOOH process provided~~In the years following, Phibro ~~with an opportunity to defend the safety of carbadox prior to the FDA taking final steps to remove carbadox from the market. Over the next four years, as part of~~has continued an ongoing process of responding collaboratively and transparently to the ~~inquiries from the FDA's~~FDA’s Center for Veterinary Medicine ~~("CVM"~~(“CVM”)~~, we~~ inquiries and has provided extensive and meticulous research and data that confirmed the safety of carbadox. In ~~March 2018, the FDA indefinitely stayed the withdrawal proceedings. In~~ July 2020, the FDA announced it ~~does~~would not ~~agree with Phibro's scientific conclusions that carbadox is safe under the current conditions of use. Instead of proceeding~~proceed to a hearing on the scientific concerns raised in the 2016 NOOH, consistent with the normal regulatory procedure, ~~the FDA~~but instead announced that it was withdrawing the ~~current~~2016 NOOH and issuing a proposed order to review the regulatory method for carbadox. The approved regulatory method determines if there are residues of carcinogenic concern in animal tissue at the time of slaughter. If the order is finalized, the FDA has indicated it plans to issue a new NOOH proposing the withdrawal of carbadox from the market because of a lack of an approved regulatory method.

~~In September 2020,~~ Phibro ~~commented on the proposed order, reiterating~~reiterated the safety of carbadox and the appropriateness of the regulatory method and ~~further~~ offered to work with the CVM to generate additional data to support the existing regulatory method or select a suitable alternative regulatory method. Phibro disagreed with the agency's actions and submitted a request to the FDA Office of the Commissioner that the agency continue the NOOH process it started in 2016 and proceed with a hearing to review the substantial body of data supporting the safety of carbadox.

On January 12, 2022, the FDA announced that it will hold a virtual public hearing on March 10, 2022, seeking data and information related to the safety of carbadox. Phibro has continued an ongoing process of responding collaboratively and transparently to CVM’s inquiries to provide extensive and meticulous research and data that confirm the safety of carbadox. Carbadox has been approved and sold in the United States for 50 years and is a widely used treatment for controlling bacterial diseases in swine, including Salmonella and swine dysentery. In the event ~~that, following the hearing,~~ the FDA continues to assert that carbadox should be removed from the market, we will argue that we are entitled to and expect to have a full evidentiary hearing on the merits before an administrative law judge. 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, ~~2021,~~2022, were ~~$22~~$20.0 million. As of the date of this Quarterly Report on Form 10-Q, Mecadox continues to be available for use by swine producers. For additional information, see also “Business - Compliance with Government Regulations - United States - Carbadox”; and “Business - Compliance with Government Regulations - Global policy and guidance” in Item 1 of our Annual Report.

Table of Contents

Analysis of the consolidated statements of operations

Summary Results of Operations


	Three Months										Six Months										Three Months										Six Months
For the Periods Ended December 31	2021			2020			Change				2021			2020			Change				2022			2021			Change				2022			2021			Change

	(in thousands, except per share amounts and percentages)																								(in thousands, except per share amounts and percentages)
Net sales	$	232,712		$	206,149		$	26,563	13	%	$	447,377		$	401,343		$	46,034	11	%	$	244,646		$	232,712		$	11,934	5	%	$	477,167		$	447,377		$	29,790	7	%
Gross profit		70,672			68,265			2,407	4	%		135,350			132,384			2,966	2	%		77,385			70,672			6,713	9	%		146,031			135,350			10,681	8	%
Selling, general and administrative expenses		48,378			48,375			3	—			98,444			96,806			1,638	2	%		61,541			48,378			13,163	27	%		116,503			98,444			18,059	18	%
Operating income		22,294			19,890			2,404	12	%		36,906			35,578			1,328	4	%		15,844			22,294			(6,450)	(29)	%		29,528			36,906			(7,378)	(20)	%
Interest expense, net		2,953			3,214			(261)	(8)	%		5,842			6,024			(182)	(3)	%		3,884			2,953			931	32	%		6,951			5,842			1,109	19	%
Foreign currency (gains) losses, net		(4,189)			624			(4,813)	*			(2,061)			(3,007)			946	*			(149)			(4,189)			4,040	*			5,051			(2,061)			7,112	*
Income before income taxes		23,530			16,052			7,478	47	%		33,125			32,561			564	2	%		12,109			23,530			(11,421)	(49)	%		17,526			33,125			(15,599)	(47)	%
Provision for income taxes		6,065			3,251			2,814	87	%		9,126			7,458			1,668	22	%		4,899			6,065			(1,166)	(19)	%		6,460			9,126			(2,666)	(29)	%
Net income	$	17,465		$	12,801		$	4,664	36	%	$	23,999		$	25,103		$	(1,104)	(4)	%	$	7,210		$	17,465		$	(10,255)	(59)	%	$	11,066		$	23,999		$	(12,933)	(54)	%

Net income per share
Basic	$	0.43		$	0.32		$	0.11			$	0.59		$	0.62		$	(0.03)
Diluted	$	0.43		$	0.32		$	0.11			$	0.59		$	0.62		$	(0.03)
basic and diluted																					$	0.18		$	0.43		$	(0.25)	(59)	%	$	0.27		$	0.59		$	(0.32)	(54)	%

Weighted average number of shares outstanding
Basic		40,504			40,454							40,504			40,454
Diluted		40,504			40,504							40,504			40,504
basic and diluted																						40,504			40,504							40,504			40,504

Ratio to net sales
Gross profit		30.4	%		33.1	%						30.3	%		33.0	%						31.6	%		30.4	%						30.6	%		30.3	%
Selling, general and administrative expenses		20.8	%		23.5	%						22.0	%		24.1	%						25.2	%		20.8	%						24.4	%		22.0	%
Operating income		9.6	%		9.6	%						8.2	%		8.9	%						6.5	%		9.6	%						6.2	%		8.2	%
Income before income taxes		10.1	%		7.8	%						7.4	%		8.1	%						4.9	%		10.1	%						3.7	%		7.4	%
Net income		7.5	%		6.2	%						5.4	%		6.3	%						2.9	%		7.5	%						2.3	%		5.4	%
Effective tax rate		25.8	%		20.3	%						27.6	%		22.9	%						40.5	%		25.8	%						36.9	%		27.6	%

Certain amounts and percentages may reflect rounding adjustments.

*	Calculation not meaningful

Net sales, Adjusted EBITDA and reconciliation of GAAP net income to Adjusted EBITDA

We report Net sales and Adjusted EBITDA by segment to understand the operating performance of each segment. This enables us to monitor changes in net sales, costs and other actionable operating metrics at the segment level. See “—General description of non-GAAP financial measures.”

Table of Contents

Segment net sales and Adjusted EBITDA:


	Three Months										Six Months										Three Months										Six Months
For the Periods Ended December 31	2021			2020			Change				2021			2020			Change				2022			2021			Change				2022			2021			Change

Net sales	(in thousands, except percentages)																									(in thousands, except percentages)
MFAs and other	$	91,724		$	81,577		$	10,147	12	%	$	175,482		$	160,280		$	15,202	9	%	$	97,179		$	91,724		$	5,455	6	%	$	189,969		$	175,482		$	14,487	8	%
Nutritional specialties		37,330			36,394			936	3	%		73,327			68,994			4,333	6	%		43,856			37,330			6,526	17	%		82,910			73,327			9,583	13	%
Vaccines		21,873			18,267			3,606	20	%		43,122			35,333			7,789	22	%		22,768			21,873			895	4	%		45,783			43,122			2,661	6	%
Animal Health		150,927			136,238			14,689	11	%		291,931			264,607			27,324	10	%		163,803			150,927			12,876	9	%		318,662			291,931			26,731	9	%
Mineral Nutrition		66,655			54,157			12,498	23	%		121,087			105,597			15,490	15	%		61,644			66,655			(5,011)	(8)	%		121,290			121,087			203	0	%
Performance Products		15,130			15,754			(624)	(4)	%		34,359			31,139			3,220	10	%		19,199			15,130			4,069	27	%		37,215			34,359			2,856	8	%
Total	$	232,712		$	206,149		$	26,563	13	%	$	447,377		$	401,343		$	46,034	11	%	$	244,646		$	232,712		$	11,934	5	%	$	477,167		$	447,377		$	29,790	7	%

Adjusted EBITDA
Animal Health	$	33,696		$	33,349		$	347	1	%	$	61,333		$	63,450		$	(2,117)	(3)	%	$	37,059		$	33,696		$	3,363	10	%	$	64,023		$	61,333		$	2,690	4	%
Mineral Nutrition		5,525			4,185			1,340	32	%		10,058			7,232			2,826	39	%		4,399			5,525			(1,126)	(20)	%		9,696			10,058			(362)	(4)	%
Performance Products		1,324			2,266			(942)	(42)	%		3,462			4,238			(776)	(18)	%		2,292			1,324			968	73	%		4,656			3,462			1,194	34	%
Corporate		(11,453)			(11,258)			(195)	(2)	%		(23,295)			(22,089)			(1,206)	(5)	%		(12,838)			(11,453)			(1,385)	12	%		(25,329)			(23,295)			(2,034)	9	%
Total	$	29,092		$	28,542		$	550	2	%	$	51,558		$	52,831		$	(1,273)	(2)	%	$	30,912		$	29,092		$	1,820	6	%	$	53,046		$	51,558		$	1,488	3	%

Adjusted EBITDA ratio to segment net sales
Animal Health		22.3	%		24.5	%						21.0	%		24.0	%						22.6	%		22.3	%						20.1	%		21.0	%
Mineral Nutrition		8.3	%		7.7	%						8.3	%		6.8	%						7.1	%		8.3	%						8.0	%		8.3	%
Performance Products		8.8	%		14.4	%						10.1	%		13.6	%						11.9	%		8.8	%						12.5	%		10.1	%
Corporate⁽¹⁾		(4.9)	%		(5.5)	%						(5.2)	%		(5.5)	%						(5.2)	%		(4.9)	%						(5.3)	%		(5.2)	%
Total⁽¹⁾		12.5	%		13.8	%						11.5	%		13.2	%						12.6	%		12.5	%						11.1	%		11.5	%

(1)	Reflects ratio to total net sales

The table below sets forth a reconciliation of net income, as reported under GAAP, to Adjusted EBITDA:


	Three Months								Six Months								Three Months									Six Months
For the Periods Ended December 31	2021		2020		Change				2021		2020		Change				2022		2021			Change				2022		2021		Change

	(in thousands, except percentages)																				(in thousands, except percentages)
Net income	$	17,465	$	12,801	$	4,664	36	%	$	23,999	$	25,103	$	(1,104)	(4)	%	$	7,210	$	17,465		$	(10,255)	(59)	%	$	11,066	$	23,999	$	(12,933)	(54)	%
Interest expense, net		2,953		3,214		(261)	(8)	%		5,842		6,024		(182)	(3)	%		3,884		2,953			931	32	%		6,951		5,842		1,109	19	%
Provision for income taxes		6,065		3,251		2,814	87	%		9,126		7,458		1,668	22	%		4,899		6,065			(1,166)	(19)	%		6,460		9,126		(2,666)	(29)	%
Depreciation and amortization		8,001		8,088		(87)	(1)	%		15,855		16,124		(269)	(2)	%		8,499		8,001			498	6	%		16,949		15,855		1,094	7	%
EBITDA		34,484		27,354		7,130	26	%		54,822		54,709		113	0	%		24,492		34,484			(9,992)	(29)	%		41,426		54,822		(13,396)	(24)	%
Environmental remediation costs																		6,569		—			6,569	*			6,569		—		6,569	*
Gain on sale of investment		(1,203)		—		(1,203)	*			(1,203)		—		(1,203)	*			—		(1,203)			1,203	*			—		(1,203)		1,203	*
Stock-based compensation		—		564		(564)	*			—		1,129		(1,129)	*
Foreign currency (gains) losses, net		(4,189)		624		(4,813)	*			(2,061)		(3,007)		946	*			(149)		(4,189)			4,040	*			5,051		(2,061)		7,112	*
Adjusted EBITDA	$	29,092	$	28,542	$	550	2	%	$	51,558	$	52,831	$	(1,273)	(2)	%	$	30,912	$	29,092		$	1,820	6	%	$	53,046	$	51,558	$	1,488	3	%

Certain amounts may reflect rounding adjustments.

* Calculation not meaningful

Table of Contents

Comparison of three months ended December 31, ~~2021~~2022 and ~~2020~~2021

Net sales

Net sales of ~~$232.7~~$244.6 million for the three months ended December 31, ~~2021,~~2022, increased ~~$26.6~~$11.9 million, or ~~13%~~5%, as compared to the three months ended December 31, ~~2020.~~2021. Animal Health and Performance Products increased $12.9 million and $4.1 million, respectively. Mineral Nutrition ~~increased $14.7 million and $12.5 million, respectively, while Performance Products~~ decreased ~~$0.6~~$5.0 million.

Animal Health

Net sales of ~~$150.9~~$163.8 million for the three months ended December 31, ~~2021,~~2022, increased ~~$14.7~~$12.9 million, or ~~11%~~9%. Net sales of MFAs and other increased ~~$10.1~~$5.5 million, or ~~12%~~6%, ~~driven by higher~~due to increased demand for our MFAs in ~~North~~Latin America and ~~South America, reflecting continued recovery from the effects of the pandemic. Our~~for processing aids used ~~by producers of~~in the ethanol ~~distillers corn oil and distillers grain products contributed $3.5 million to the overall net increase in sales in MFAs and other.~~fermentation industry. Net sales of nutritional specialty products increased ~~$0.9~~$6.5 million, or 3%17%, due mostly to ~~increased~~higher domestic demand and higher average selling prices ~~and volumes, plus increased revenues from our~~for dairy products, along with growth in the companion animal product. Net sales of vaccines increased ~~$3.6~~$0.9 million, or ~~20%~~4%, due to increased ~~domestic and international volumes.~~demand.

Mineral Nutrition

Net sales of ~~$66.7~~$61.6 million for the three months ended December 31, ~~2021, increased $12.5~~2022, decreased $5.0 million, or ~~23%~~8%, ~~primarily~~ driven by a decrease in demand for trace minerals, partially offset by higher average selling ~~prices of trace minerals.~~prices. The increase in average selling prices is correlated ~~with~~to the movement of the underlying raw material costs.

Performance Products

Net sales of ~~$15.1~~$19.2 million for the three months ended December 31, ~~2021, decreased $0.6~~2022, increased $4.1 million, or 4%27%, primarily as a result of ~~lower~~increased demand for copper-based products and higher average selling prices ~~and lower volumes in~~for copper-based products ~~partially offset by higher sales of~~and ingredients for personal care ~~product ingredients.~~products.

Gross profit

Gross profit of ~~$70.7~~$77.4 million for the three months ended December 31, ~~2021,~~2022, increased ~~$2.4~~$6.7 million, or 4%9%, as compared to the three months ended December 31, ~~2020.~~2021. Gross margin ~~decreased 270~~increased 120 basis points to ~~30.4%~~31.6% of net sales for the three months ended December 31, ~~2021,~~2022, as compared to ~~33.1%~~30.4% for the three months ended December 31, ~~2020.~~2021, due to favorable product and geographical mix and lower production costs.

Animal Health gross profit increased ~~$2.0~~$6.3 million, ~~or 3%,~~ primarily driven by higher sales ~~volume across all product lines, partially offset by increased raw material~~volumes and ~~logistics costs and unfavorable product mix.~~favorable production costs. Mineral Nutrition gross profit ~~increased $1.4~~decreased $1.1 million, driven primarily by ~~higher average selling prices, partially offset by~~lower sales volume and an increase in raw material costs. Performance Products gross profit ~~decreased $1.0~~increased $1.5 million ~~primarily driven by~~as a result of increased demand and higher ~~raw material and production costs.~~average selling prices for copper-based products.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) of ~~$48.4~~$61.5 million for the three months ended December 31, ~~2021, were comparable~~2022, increased $13.2 million, or 27%, as compared to the three months ended December 31, ~~2020.~~2021. SG&A for the three months ended December 31, 2022, included $6.6 million of environmental remediation costs. The majority of these environmental remediation costs relate to a tentative settlement we have reached in a lawsuit concerning alleged historical environmental contamination from a facility in California we acquired years ago within our Performance Products segment. SG&A for the three months ended December 31, 2021, included a $1.2 million gain on sale of investment. ~~SG&A for~~Excluding the ~~three months ended December 31, 2020, included $0.6 million~~environmental remediation costs and the gain on sale of ~~stock-based compensation. Excluding these items,~~investment, SG&A increased ~~$1.8~~$5.4 million, or 4%11%.

Animal Health SG&A increased ~~$1.6~~$3.4 million, primarily due to an increase in ~~headcount~~employee-related and ~~related employee~~other miscellaneous costs. Mineral Nutrition ~~and~~SG&A was comparable to prior year. Performance Products SG&A ~~were comparable~~increased $0.5 million. Corporate costs increased by $1.4 million, driven by net changes in costs related to ~~the prior year. Excluding the gain on sale of investment~~employees and ~~the stock-based compensation, Corporate expenses increased $0.2 million due to~~ strategic investments.

Table of Contents

Interest expense, net

Interest expense, net of ~~$3.0~~$3.9 million for the three months ended December 31, ~~2021, decreased $0.3~~2022, increased by $0.9 million, ~~or 8%,~~ as compared to the three months ended December 31, ~~2020. Interest expense decreased~~2021, due to ~~favorable borrowing rates,~~increased debt outstanding, partially offset by ~~higher debt levels.~~an increase in interest income and lower average fixed rates in our interest rate swap agreement.

Foreign currency ~~(gains) losses,~~gains, net

Foreign currency ~~(gains) losses,~~gains, net for the three months ended December 31, ~~2021, amounted to net gains of $4.2~~2022, were $0.1 million, as compared to ~~$0.6~~$4.2 million of net ~~losses~~gains for the three months ended December 31, ~~2020. Foreign currency (gains) losses, net primarily arose from intercompany balances. Current~~2021. Prior period gains were driven by the weakening of ~~the Turkish and Brazilian~~certain currencies relative to the U.S. dollar.

Provision for income taxes

The provision for income taxes was ~~$6.1~~$4.9 million and ~~$3.3~~$6.1 million for the three months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The effective income tax rate was ~~25.8%~~40.5% and ~~20.3%~~25.8% for the three months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The current provision for income taxes was impacted by the final foreign tax credit regulations that were in effect during the three months ended December 31, ~~2021, included a $0.2~~2022, in addition to losses generated in international jurisdictions where no tax benefit is being recognized.

Net income

Net income of $7.2 million benefit related to the finalized regulations for the Global Intangible Low-Taxed Income (“GILTI”) tax and a $0.1 million expense related to an uncertain tax position adjustment. The effective income tax rate, without these items, would have been 26.5% for the three months ended December 31, ~~2021.~~

~~Net income~~

~~Net~~2022, decreased $10.3 million, as compared to net income of $17.5 million for the three months ended December 31, ~~2021,~~2021. Operating income decreased $6.5 million, driven by higher SG&A, partially offset by favorable gross profit. Excluding the $6.6 million environmental remediation costs, operating income would have increased ~~$4.7~~$0.1 million. The increase in gross profit was due to higher product demand and higher selling prices. Interest expense, net increased $0.9 million ~~as compared to~~and foreign currency gains, net ~~income~~decreased $4.0 million. Income tax expense decreased by $1.2 million.

Adjusted EBITDA

Adjusted EBITDA of ~~$12.8~~$30.9 million for the three months ended December 31, ~~2020. Operating income~~2022, increased ~~$2.4~~$1.8 million, driven by favorable gross profit. The increase in gross profit in the Animal Health and Mineral Nutrition segments was due to higher sales volume and higher average selling prices, partially offset by increases in raw material costs and unfavorable product mix. Gross profit in the Performance Products segment decreased due to higher raw material and production costs. Interest expense decreased by $0.3 million, while foreign currency (gains) losses, net increased $4.8 million. Income tax expense increased $2.8 million.

~~Adjusted EBITDA~~

~~Adjusted EBITDA of $29.1 million for the three months ended December 31, 2021, increased by $0.6 million~~as compared to the three months ended December 31, ~~2020.~~2021. Animal Health Adjusted EBITDA increased ~~$0.3~~$3.4 million due to higher gross profit margin, partially offset by higher SG&A. Performance Products Adjusted EBITDA increased $1.0 million due to higher gross profit, also partially offset by higher SG&A. Mineral Nutrition Adjusted EBITDA decreased $1.1 million, driven by lower gross profit. Corporate expenses increased ~~$1.3~~$1.4 million, driven by increased ~~gross profit. Performance Products Adjusted EBITDA decreased $0.9 million, primarily driven by higher raw material~~ costs related to employees and ~~production costs. Corporate expenses increased $0.2 million, primarily due to~~ strategic investments.

Comparison of six months ended December 31, ~~2021~~2022 and ~~2020~~2021

Net sales

Net sales of ~~$447.4~~$477.2 million for the six months ended December 31, ~~2021,~~2022, increased ~~$46.0~~$29.8 million, or ~~11%~~7%, as compared to the six months ended December 31, ~~2020.~~2021. Animal Health, Mineral Nutrition and Performance Products sales increased ~~$27.3~~$26.7 million, ~~$15.5~~$0.2 million, and ~~$3.2~~$2.9 million, respectively.

Animal Health

Net sales of ~~$291.9~~$318.7 million for the six months ended December 31, ~~2021,~~2022, increased ~~$27.3~~$26.7 million, or ~~10%~~9%. Net sales of MFAs and other increased ~~$15.2~~$14.5 million, or 9%8%, due to higher demand for ~~certain products outside the U.S. Our~~MFAs primarily in Latin America and for processing aids used ~~by producers of~~in the ethanol ~~distillers corn oil and distillers grain products contributed $6.4 million to the overall net increase in sales in MFAs and other.~~fermentation industry. Net sales of nutritional specialty products grew ~~$4.3~~$9.6 million, or 6%13%, driven by strong demand in dairy products and increased sales of our companion animal product. Net sales of vaccines increased $2.7 million, or 6%, due to increased domestic and international volumes.

Table of Contents

~~higher revenues of our companion animal product. Net sales of vaccines increased $7.8 million, or 22%, due to increased domestic and international volumes.~~

Mineral Nutrition

Net sales of ~~$121.1~~$121.3 million for the six months ended December 31, ~~2021,~~2022, increased ~~$15.5~~$0.2 million, ~~or 15%. The increase was mainly attributable to an increase in~~driven by higher average selling prices ~~partially~~for trace minerals, mostly offset by a decrease in ~~volume.~~demand. The increase in average selling prices is correlated ~~with~~to the movement of the underlying raw material costs.

Performance Products

Net sales of ~~$34.4~~$37.2 million for the six months ended December 31, ~~2021,~~2022, increased ~~$3.2~~$2.9 million, or ~~10%~~8%, driven by ~~higher volume and~~ higher average selling prices of ~~copper-based products, partially offset by lower sales of~~ personal care product ~~ingredients.~~ingredients and copper-related products.

Gross profit

Gross profit of ~~$135.4~~$146.0 million for the six months ended December 31, ~~2021,~~2022, increased ~~$3.0~~$10.7 million, or 2%8%, as compared to the six months ended December 31, ~~2020.~~2021. Gross margin ~~decreased 270~~increased 30 basis points to ~~30.3%~~30.6% of net sales for the six months ended December 31, ~~2021,~~2022, as compared to ~~33.0%~~30.3% for the six months ended December 31, ~~2020.~~2021.

Animal Health gross profit increased ~~$0.7~~$8.9 million as ~~increases in product demand and~~a result of average selling prices, ~~were largely~~partially offset by higher raw material and logistics ~~costs and unfavorable product mix.~~costs. Mineral Nutrition gross profit ~~increased $3.1 million, with increases in average selling prices partially offset by increased raw material costs.~~decreased $0.2 million. Performance Products gross profit ~~decreased $0.8~~increased $2.0 million due to higher sales, partially offset higher raw material ~~costs and production costs and unfavorable product mix.~~costs.

Selling, general and administrative expenses

SG&A of ~~$98.4~~$116.5 million for the six months ended December 31, ~~2021,~~2022, increased ~~$1.6~~$18.1 million, or 2%18%, as compared to the six months ended December 31, ~~2020.~~2021. SG&A for the six months ended December 31, 2022, included $6.6 million of environmental remediation costs. SG&A for the six months ended December 31, 2021, included a $1.2 million gain on sale of investment. ~~SG&A for the six months ended December 31, 2020, included $1.1 million of stock-based compensation.~~ Excluding these items, SG&A increased ~~$4.0~~$10.3 million, or 4%10%.

Animal Health SG&A increased ~~$2.7~~$7.1 million primarily due to an increase in ~~headcount~~employee-related and ~~employee-related~~other miscellaneous costs. Mineral Nutrition ~~and Performance Products~~ SG&A ~~were~~was comparable to the prior year. ~~Excluding the gain on sale of investment and stock-based compensation,~~Performance Products SG&A increased $0.8 million, mainly due to an increase in employee costs. Corporate expenses increased ~~$1.1~~$2.1 million due to ~~strategic investments.~~an increase in employee and employee-related costs.

Interest expense, net

Interest expense, net of ~~$5.8~~$7.0 million for the six months ended December 31, ~~2021, decreased $0.2~~2022, increased $1.1 million, or 3%19%, as compared to the six months ended December 31, ~~2020.~~2021. Interest expense ~~decreased due to favorable borrowing rates,~~increased as a result of increased debt outstanding, partially offset by ~~higher levels of debt outstanding~~an increase in interest income and lower average fixed rates in our interest ~~income from short-term investments.~~rate swap agreement.

Foreign currency (gains) losses, net

Foreign currency ~~gains,~~(gains) losses, net for the six months ended December 31, ~~2021,~~2022, amounted to net ~~gains~~losses of ~~$2.1~~$5.1 million, as compared to net ~~gains~~(gains) of ~~$3.0~~$(2.1) million for the six months ended December 31, ~~2020. Foreign currency (gains) losses, net primarily arose from intercompany balances.~~2021. Current period ~~gains~~losses were driven by the ~~movement~~weakening of the ~~Turkish and Brazilian~~certain currencies relative to the U.S. dollar.

Provision for income taxes

The provision for income taxes was ~~$9.1~~$6.5 million and ~~$7.5~~$9.1 million for the six months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The effective income tax rate was ~~27.6%~~36.9% and ~~22.9%~~27.6% for the six months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The provision for income taxes for the six months ended December 31, ~~2021,~~2022, included a ~~$0.5~~$0.9 million benefit related to exchange rate differences on intercompany dividends and a $0.2 million expense from changes in uncertain tax positions related to prior years. The effective income tax rate, without these items, would have been 41.0% for the six months ended December 31, 2022.

Table of Contents

~~uncertain tax positions related to prior years and a $0.2~~Net income

Net income of $11.1 million ~~benefit related to final regulations for the GILTI tax. The effective income tax rate, without this expense, would have been 26.7%~~ for the six months ended December 31, ~~2021.~~

~~Net income~~

~~Net~~2022, decreased $12.9 million, as compared to net income of $24.0 million for the six months ended December 31, ~~2021, decreased $1.1 million, as compared to net income of $25.1 million for the six months ended December 31, 2020.~~2021. Operating income ~~increased $1.3~~decreased $7.4 million driven by higher gross profit offset by higher SG&A. The increase in gross profit was driven by higher average selling prices in ~~Mineral Nutrition,~~Animal Health and Performance Products, partially offset by ~~a decrease in gross profit in Performance Products due to~~ higher raw material cost and production costs. SG&A expenses increased due to environmental remediation costs, higher employee-related costs and strategic investments. The ~~variance~~change in foreign currency ~~gains (losses)~~(gains) losses resulted in a ~~$0.9~~$7.1 million reduction in income before income taxes. Income tax expense ~~increased $1.7~~decreased $2.7 million.

Adjusted EBITDA

Adjusted EBITDA of ~~$51.6~~$53.0 million for the six months ended December 31, ~~2021, decreased $1.3~~2022, increased $1.5 million, or 2%3%, as compared to the six months ended December 31, ~~2020.~~2021. Animal Health Adjusted EBITDA ~~decreased $2.1~~increased $2.7 million, resulting from ~~an increase in SG&A, partially offset by~~ higher sales and increased gross ~~profit.~~profit, partially offset by higher SG&A. Performance Products Adjusted EBITDA increased $1.2 million, driven by higher sales and gross profit, partially offset by an increase in SG&A. Mineral Nutrition Adjusted EBITDA ~~increased $2.8 million with higher sales and related gross profit. Performance Products Adjusted EBITDA~~ decreased ~~$0.8 million with lower gross profit.~~$0.4 million. Corporate expenses increased ~~$1.2~~$2.0 million due to increased ~~strategic investments.~~employee and employee-related costs.

Analysis of financial condition, liquidity and capital resources

Net (decrease) increase ~~(decrease)~~ in cash and cash equivalents was:


	Six Months						Six Months
For the Periods Ended December 31	2021		2020		Change		2022		2021		Change

	(in thousands)						(in thousands)
Cash provided (used) by:
Cash (used) provided by:
Operating activities	$	23,943	$	28,611	$	(4,668)	$	(13,187)	$	23,943	$	(37,130)
Investing activities		(3,098)		(21,259)		18,161		(25,959)		(3,098)		(22,861)
Financing activities		(6,311)		(10,084)		3,773		33,035		(6,311)		39,346
Effect of exchange-rate changes on cash and cash equivalents		(1,361)		923		(2,284)		285		(1,361)		1,646
Net increase (decrease) in cash and cash equivalents	$	13,173	$	(1,809)	$	14,982
Net (decrease) increase in cash and cash equivalents							$	(5,826)	$	13,173	$	(18,999)

Certain amounts may reflect rounding adjustments.

Net cash (used) provided by operating activities was comprised of:


	Six Months						Six Months
For the Periods Ended December 31	2021		2020		Change		2022		2021		Change

	(in thousands)						(in thousands)
EBITDA	$	54,822	$	54,709	$	113	$	41,426	$	54,822	$	(13,396)
Adjustments:
Environmental remediation costs								6,569		—		6,569
Gain on sale of investment		(1,203)		—		(1,203)		—		(1,203)		1,203
Stock-based compensation		—		1,129		(1,129)
Foreign currency (gains) losses, net		(2,061)		(3,007)		946		5,051		(2,061)		7,112
Interest paid, net		(5,471)		(5,464)		(7)		(6,606)		(5,471)		(1,135)
Income taxes paid		(6,048)		(10,356)		4,308		(9,319)		(6,048)		(3,271)
Changes in operating assets and liabilities and other items		(16,096)		(8,400)		(7,696)		(50,308)		(16,096)		(34,212)
Net cash provided by operating activities	$	23,943	$	28,611	$	(4,668)
Net cash (used) provided by operating activities							$	(13,187)	$	23,943	$	(37,130)

Certain amounts may reflect rounding adjustments.

Operating activities

Operating activities used $13.2 million of net cash for the six months ended December 31, 2022. Cash provided by net income and non-cash items, including depreciation and amortization, was $26.8 million. Cash used in the ordinary course of business

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~~Operating~~for changes in operating assets and liabilities and other items was $50.3 million. Cash provided by receivables was $14.8 million as a result of changes in sales levels from seasonality and a favorable reduction in days sales outstanding. Cash used for inventory was $29.1 million due to increased raw material and production costs, product mix, and a projected increase in demand. Other current assets used $7.7 million of cash, primarily due to prepayment of taxes, including value-added tax. Accounts payable used $14.6 million of cash due to timing of purchases and payments. Accrued expenses and other liabilities used cash of $4.3 million, primarily due to changes in employee-related liabilities and lease payments.

Investing activities

~~Operating~~Investing activities ~~provided $23.9~~used $26.0 million of net cash for the six months ended December 31, ~~2021. Cash~~2022. Capital expenditures totaled $33.0 million, which included $15.0 million for the purchase of additional land and building at an operating facility, primarily for continued investments in expanded production capacity and productivity improvements. Maturities of our short-term investments provided ~~by net income and non-cash items, including depreciation and amortization, was $35.8~~$7.0 million. Cash used in the ordinary course of business for changes in operating assets and liabilities and other items was $16.1 million. Cash used for inventory was $22.0 million. Inventory increases were primarily due to forecasted future demand and internal production schedules. For certain products, we are maintaining safety stocks to mitigate potential disruptions in production. Accounts payable

Financing activities

Financing activities provided $13.9 million of cash due to timing of purchases. Accrued expenses and other liabilities used cash of $5.7 million primarily due to timing of payments for employee-related liabilities. Accounts receivable provided $1.4 million of cash due to a higher proportion of domestic sales, which have a shorter customer collection period.

~~Investing activities~~

~~Investing activities used $3.1~~$33.0 million of net cash for the six months ended December 31, 2021. Capital expenditures were $15.1 million as we continued to invest in expanding production capacity and productivity improvements. In addition, our short-term investments provided $10.9 million of cash. We received $1.4 million of cash proceeds from the sale of an investment.

~~Financing activities~~

~~Financing activities used $6.3 million of net cash for the six months ended December 31, 2021.~~2022. Net borrowings on our 2021 Revolver provided $39.0 million. Proceeds from the 2022 Term Loan provided $12.0 million. We paid $7.6 million in scheduled debt maturities. We paid $9.7 million in dividends to holders of our Class A and Class B common stock. ~~We paid $3.8 million in scheduled debt and other requirements. In October 2021, we made a $4.8 million payment for the contingent consideration related to a previous acquisition.~~

Liquidity and capital resources

We believe our cash on hand, operating cash flows and financing arrangements, including the availability of borrowings under the 2021 Revolver and foreign credit lines, will be sufficient to support our ongoing cash needs. We are aware of the current and potential future effects of ~~COVID-19 on~~the macroeconomic market conditions in the financial markets. WeAt this time, we expect adequate liquidity for at least the next twelve months. However, we can provide no assurance that our liquidity and capital resources will be adequate for future funding requirements. We believe we will comply with the terms of the covenants under the 2021 Credit Facilities and foreign credit lines based on our operating plan. In the event of adverse operating results and/or violation of covenants under the facilities, there can be no assurance we would be able to obtain waivers or amendments. Other risks to our meeting future funding requirements include global economic conditions and macroeconomic, business and financial disruptions that could arise, including those caused by ~~COVID-19, as well as shipping and labor costs and material availability.~~COVID-19. There can be no assurance that a challenging economic environment or an economic downturn would not affect our liquidity or ability to obtain future financing or fund operations or investment opportunities. In addition, our debt covenants may restrict our ability to invest.

Certain relevant measures of our liquidity and capital resources follow:


	December 31,		June 30,		December 31,		June 30,
As of	2021		2021		2022		2022

	(in thousands, except ratios)				(in thousands, except ratios)
Cash and cash equivalents and short-term investments	$	95,485	$	93,212	$	78,422	$	91,248
Working capital		259,622		250,956		351,118		299,152
Ratio of current assets to current liabilities		2.69:1		2.62:1		3.31:1		2.70:1

We define working capital as total current assets (excluding cash and cash equivalents and short-term investments) less total current liabilities (excluding current portion of long-term debt). We calculate the ratio of current assets to current liabilities based on this definition.

As of December 31, ~~2021,~~2022, we had ~~$107.0~~$184.0 million in outstanding borrowings under the 2021 Revolver and ~~had~~ outstanding letters of credit and other commitments of ~~$2.7~~$2.5 million, leaving ~~$140.3~~$123.5 million available for further borrowings and letters of credit, subject to restrictions in our 2021 Credit Facilities.

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We currently intend to pay quarterly dividends on our Class A and Class B common stock, subject to approval from the Board of Directors. Our Board of Directors declared a cash dividend of $0.12 per share on Class A and Class B common stock, payable on March ~~23, 2022.~~22, 2023. Our future ability to pay dividends will depend upon our results of operations, financial condition, capital

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requirements, our ability to obtain funds from our subsidiaries and other factors that our Board of Directors deems relevant. Additionally, the terms of our current and any future agreements governing our indebtedness could limit our ability to pay dividends or make other distributions.

As of December 31, ~~2021,~~2022, our cash and cash equivalents and short-term investments included ~~$95.4~~$75.3 million held by our international subsidiaries. There are no restrictions on cash distributions to PAHC from our international subsidiaries.

Contractual obligations

As of December 31, ~~2021,~~2022, there were no material changes in payments due under contractual obligations from those disclosed in the Annual Report. Subsequent to December 31, 2021, we entered into a lease amendment for certain manufacturing facilities that provides options to extend the lease an additional 10 years. The annual lease payments for years 2036 through 2045 range between $0.7 million and $0.8 million annually.

Off-balance sheet arrangements

We do not currently use off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, investment or other financial purposes.

In the ordinary course of business, we may indemnify our counterparties against certain liabilities that may arise. These indemnifications typically pertain to environmental matters. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications generally are subject to certain restrictions and limitations.

General description of non-GAAP financial measures

Adjusted EBITDA

Adjusted EBITDA is an alternative view of performance used by management as our primary operating measure, and we believe that investors’ understanding of our performance is enhanced by disclosing this performance measure. We report Adjusted EBITDA to ~~portray~~reflect the results of our operations prior to considering certain income statement elements. We have defined EBITDA as net income (loss) plus (i) interest expense, net, (ii) provision for income taxes or less benefit for income taxes, and (iii) depreciation and amortization. We have defined Adjusted EBITDA as EBITDA plus (a) (income) loss from, and disposal of, discontinued operations, (b) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses, and (c) certain items that we consider to be unusual, non-operational or non-recurring. The Adjusted EBITDA measure is not, and should not be viewed as, a substitute for GAAP reported net income.

The Adjusted EBITDA measure is an important internal measurement for us. We measure our overall performance on this basis in conjunction with other performance metrics. The following are examples of how our Adjusted EBITDA measure is utilized:

●

senior management receives a monthly analysis of our operating results that is prepared on an Adjusted EBITDA basis;

●

our annual budgets are prepared on an Adjusted EBITDA basis; and

●

other goal setting and performance measurements are prepared on an Adjusted EBITDA basis.

Despite the importance of this measure to management in goal setting and performance measurement, Adjusted EBITDA is a non-GAAP financial measure that has no standardized meaning prescribed by GAAP and, therefore, has limits in its usefulness to investors. Because of its non-standardized definition, Adjusted EBITDA, unlike GAAP net income, may not be comparable to the

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calculation of similar measures of other companies. Adjusted EBITDA is presented to permit investors to more fully understand how management assesses performance.

We also recognize that, as an internal measure of performance, the Adjusted EBITDA measure has limitations, and we do not restrict our performance management process solely to this metric. A limitation of the Adjusted EBITDA measure is that it provides a

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view of our operations without including all events during a period, such as the depreciation of property, plant and equipment or amortization of ~~purchased~~acquired intangibles, and does not provide a comparable view of our performance to other companies.

Certain significant items

Adjusted EBITDA is calculated prior to considering certain items. We evaluate such items on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual or non-operational nature. Unusual, in this context, may represent items that are not part of our ongoing ~~business and~~business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis.

We consider acquisition-related activities and business restructuring costs related to productivity and ~~cost-saving~~cost saving initiatives, including employee separation costs, to be unusual items that we do not expect to occur as part of our normal business on a regular basis. We consider foreign currency gains and losses to be non-operational because they arise principally from intercompany transactions and are largely non-cash in nature.

New accounting standards

For discussion of new accounting standards, see “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies and New Accounting Standards.”

Critical Accounting Policies

Critical accounting policies are those that require application of management’s most difficult, subjective and/or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all accounting policies require management to make difficult, subjective or complex judgments or estimates. In presenting our consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP), we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results that differ from our estimates and assumptions could have an unfavorable effect on our financial position and results of operations. Critical accounting policies include revenue recognition, business combinations, long-lived assets, goodwill, and income taxes.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain. The pandemic may affect our future sales, expenses, reserves and allowances, manufacturing operations and employee-related costs. The pandemic may have significant economic impacts on our customers, suppliers and markets where we compete and operate. New information may continue to emerge concerning COVID-19, and the actions required to contain or treat it may affect the duration and severity of the pandemic. Our financial statements include estimates of the effects of COVID-19 and there may be changes to those estimates in future periods.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future

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operations, growth or initiatives, strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Examples of such risks and uncertainties include:

●

the negative effects of a pandemic, epidemic, or outbreak of an infectious disease in humans, such as COVID-19, on our business, financial results, manufacturing facilities and supply chain, as well as our customers, protein processors and markets;

●

perceived adverse effects on human health linked to the consumption of food derived from animals that utilize our products could cause a decline in the sales of those products;

●

restrictions on the use of antibacterials in food-producing animals may become more prevalent;

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●

the potential FDA withdrawal of approval of our Mecadox (carbadox) product;

●

a material portion of our sales and gross profits are generated by antibacterials and other related products;

●

competition in each of our markets from a number of large and small companies, some of which have greater financial, research and development (“R&D”), production and other resources than we have;

●

outbreaks of animal diseases could significantly reduce demand for our products;

●

our business may be negatively affected by weather conditions and the availability of natural resources;

●

climate change could have a material adverse impact on our operations and our customers’ businesses;

●

actions of regulatory bodies, including obtaining approvals related to the testing, manufacturing and marketing of certain of our products;

●

the continuing trend toward consolidation of certain customer groups as well as the emergence of large buying groups;

●

our ability to control costs and expenses;

●

any unforeseen material loss or casualty;

●

misuse or extra-label use of our products;

●

exposure relating to rising costs and reduced customer income;

●

heightened competition, including those from generics and those deriving from advances in veterinary medical practices and animal health technologies;

●

unanticipated safety or efficacy concerns;

●

our dependence on suppliers having current regulatory approvals;

●

our raw materials are subject to price fluctuations and their availability can be limited;

●

natural and man-made disasters, including but not limited to fire, snow and ice storms, flood, hail, hurricanes and earthquakes;

●

business interruption from political and social instability, including crime, civil disturbance, terrorist activities, outbreaks of disease and pandemics and armed conflicts, such as the current armed conflict between Russia and Ukraine;

●

terrorist attacks, particularly attacks on or within markets in which we operate;

●

risks related to changes in tax rates and exposure;

●

our ability to successfully implement our strategic initiatives;

●

our reliance on the continued operation of our manufacturing facilities and application of our intellectual property;

●

adverse U.S. and international economic market conditions, including currency fluctuations;

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●

failure of our product approval, R&D, acquisition and licensing efforts to generate new products;

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●

the risks of product liability claims, legal proceedings and general litigation expenses;

●

the impact of current and future laws and regulatory ~~changes;~~changes, including risks related to the protection of our customers’ privacy and risks related to environmental, health and safety laws and regulations;

●

modification of foreign trade policy may harm our food animal product customers;

●

our dependence on our Israeli and Brazilian operations;

●

impact of increased or decreased inventory levels at our direct customers or channel distributors;

●

our substantial level of indebtedness and related debt-service obligations;

●

restrictions imposed by covenants in our debt agreements;

●

the risk of work stoppages; and

●

other factors as described in “Risk Factors” in Item 1A of our Annual Report.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of operations, we are exposed to market risks arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. As a result, future earnings, cash flows and fair values of assets and liabilities are subject to uncertainty. We use, from time to time, foreign currency contracts and interest rate swaps as a means of hedging exposure to foreign currency risks and fluctuating interest rates, respectively. We do not utilize derivative instruments for trading or speculative purposes. We do not hedge our exposure to market risks in a manner that eliminates the effects of changing market conditions on earnings, cash flows and fair values. We monitor the financial stability and credit standing of our major counterparties.

For financial market risks related to changes in interest rates and foreign currency exchange rates, reference is made to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosures about Market Risk” section in the Annual Report and to the notes to the consolidated financial statements included therein. As of the date of this report, there were no material changes in the Company’s financial market risks from the risks disclosed in the Annual Report.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation as of December 31, ~~2021,~~2022, our Chief Executive Officer and Chief Financial Officer each concluded that, as of the end of such period, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended December 31, ~~2021.~~2022.

PART II—OTHER INFORMATION

Item 1.Legal Proceedings

Information required by this Item is incorporated herein by reference to “Notes to the Consolidated Financial Statements—Commitments and Contingencies” in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in the “Risk Factors” section in the Annual Report, which could materially affect our business, financial condition or future results.

There were no material changes in the Company’s risk factors from the risks disclosed in the Annual Report.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

~~Damian Finio Severance Protection Letter Agreement~~None.

On February 7, 2022, the Company entered into a severance protection letter agreement with Mr. Finio (the “Severance Protection Letter”). Pursuant to the Severance Protection Letter, if Mr. Finio’s employment by the Company is involuntarily terminated without “Cause” or if he resigns for “Good Reason,” then, in addition to any accrued payments or benefits, he will be entitled to receive (a) a lump-sum cash payment equal to the sum of 100% of his annual base salary in effect immediately prior to the date of termination and (b) a pro rata portion of his annual bonus under the Company’s Management Incentive Plan for the year in which such termination occurs (pro-rated based on the period of employment in the year of termination and actual performance through the date of the most recently completed month prior to the date of termination) (the sum of (a) and (b), the “Severance Amount”). Payment of the Severance Amount is subject to (i) the execution and non-revocation by Mr. Finio of a general release of

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~~claims and (ii) his continued compliance with any non-competition, non-solicitation, and other restrictive covenant obligations in favor of the Company to which he is subject.~~

For purposes of the Severance Protection Letter, “Cause” is defined as Mr. Finio’s (i) willful or repeated failure to substantially perform his duties to the Company and its affiliates, other than a failure resulting from his complete or partial incapacity due to physical or mental illness or impairment (as determined by the Board in good faith); (ii) material and willful violation of a federal or state law or regulation applicable to the business of the Company or that adversely affects the image of the Company; (iii) commission of a willful act that constitutes gross misconduct and is injurious to the Company; or (iv) willful breach of a material provision of the Severance Protection Letter or the Offer Letter, dated as of September 14, 2020, by and between Mr. Finio and the Company. “Good Reason” is defined in the Severance Protection Letter as a (i) material adverse change in Mr. Finio’s duties, responsibilities or authority (including status, office, title, reporting relationships or working conditions), or (ii) relocation of his principal place of employment to a location more than 50 miles from Teaneck, New Jersey, in each case, without his written consent, and provided that Mr. Finio must notify the Company within 30 days of either such occurrence and the Company shall have 30 days to cure such occurrence, after which time, if the Company fails to cure such occurrence, termination must occur within 30 days following the cure period in order constitute a termination for Good Reason.

The foregoing description of the Severance Protection Letter does not purport to be complete and is qualified in its entirety by reference to the full text and terms of the agreement, a copy of which is filed as Exhibit 10.25 hereto and incorporated herein by reference.

Item 6.Exhibits


Exhibit ~~10.25~~10.1		~~Severance Protection Letter, dated February 7, 2022, by~~First Amendment to Amended and ~~between Damian Finio and~~Restated Credit Agreement, among Phibro Animal Health Corporation, Bank of America, N.A., and each lender party thereto, dated as of November 8, 2022 (incorporated by reference to Exhibit 10.1 to Phibro Animal Health Corporation’s Quarterly Report on Form 10-Q filed on November 9, 2022 (File No. 001-36410)).
Exhibit 31.1		Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 31.2		Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 32.1		Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 32.2		Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 101 .INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the XBRL document
Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Phibro Animal Health Corporation

February ~~9, 2022~~8, 2023	By:	/s/ Jack C. Bendheim
		Jack C. Bendheim
		Chairman, President and Chief Executive Officer

February ~~9, 2022~~8, 2023	By:	/s/ Damian Finio
		Damian Finio
		Chief Financial Officer

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Changes in Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
SIGNATURES		35