Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2019 | Jan. 28, 2020 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Entity Registrant Name | PHIBRO ANIMAL HEALTH CORP | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001069899 | |
Amendment Flag | false | |
Trading Symbol | pahc | |
Common stock-Class A | ||
Entity Common Stock, Shares Outstanding | 20,287,574 | |
Common stock-Class B | ||
Entity Common Stock, Shares Outstanding | 20,166,034 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 214,012 | $ 218,223 | $ 403,732 | $ 418,376 |
Cost of goods sold | 144,908 | 149,579 | 276,965 | 283,927 |
Gross profit | 69,104 | 68,644 | 126,767 | 134,449 |
Selling, general and administrative expenses | 49,495 | 42,938 | 97,011 | 85,890 |
Operating income | 19,609 | 25,706 | 29,756 | 48,559 |
Interest expense, net | 3,432 | 3,015 | 6,786 | 5,798 |
Foreign currency (gains) losses, net | (718) | 2,617 | 2,503 | (18) |
Income before income taxes | 16,895 | 20,074 | 20,467 | 42,779 |
Provision for income taxes | 5,001 | 5,326 | 6,058 | 11,717 |
Net income | $ 11,894 | $ 14,748 | $ 14,409 | $ 31,062 |
Net income per share | ||||
basic (in dollars per share) | $ 0.29 | $ 0.37 | $ 0.36 | $ 0.77 |
diluted (in dollars per share) | $ 0.29 | $ 0.36 | $ 0.36 | $ 0.77 |
Weighted average common shares outstanding | ||||
basic (in shares) | 40,454 | 40,383 | 40,454 | 40,376 |
diluted (in shares) | 40,504 | 40,523 | 40,504 | 40,523 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 11,894 | $ 14,748 | $ 14,409 | $ 31,062 |
Change in fair value of derivative instruments | 1,080 | (2,243) | (4) | (1,702) |
Foreign currency translation adjustment | 2,203 | 4,163 | (4,620) | (3,519) |
Unrecognized net pension gains (losses) | 138 | 124 | 258 | 232 |
(Provision) benefit for income taxes | (303) | 527 | (63) | 365 |
Other comprehensive income (loss) | 3,118 | 2,571 | (4,429) | (4,624) |
Comprehensive income (loss) | $ 15,012 | $ 17,319 | $ 9,980 | $ 26,438 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 26,180 | $ 57,573 |
Short-term investments | 49,000 | 24,000 |
Accounts receivable, net | 147,441 | 159,022 |
Inventories, net | 193,509 | 198,322 |
Other current assets | 29,357 | 27,245 |
Total current assets | 445,487 | 466,162 |
Property, plant and equipment, net | 144,733 | 140,235 |
Intangibles, net | 75,541 | 47,478 |
Goodwill | 52,679 | 27,348 |
Other assets | 69,878 | 45,448 |
Total assets | 788,318 | 726,671 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current portion of long-term debt | 15,625 | 12,540 |
Accounts payable | 58,263 | 73,189 |
Accrued expenses and other current liabilities | 73,171 | 68,498 |
Total current liabilities | 147,059 | 154,227 |
Revolving credit facility | 149,000 | 96,000 |
Long-term debt | 208,446 | 217,635 |
Other liabilities | 66,398 | 42,794 |
Total liabilities | 570,903 | 510,656 |
Commitments and contingencies (Note 9) | ||
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,287,574 shares issued and outstanding at December 31, 2019 and June 30, 2019; 30,000,000 Class B shares authorized, 20,166,034 shares issued and outstanding at December 31, 2019 and June 30, 2019 | 4 | 4 |
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding | ||
Paid-in capital | 134,395 | 133,266 |
Retained earnings | 173,626 | 168,926 |
Accumulated other comprehensive income (loss) | (90,610) | (86,181) |
Total stockholders' equity | 217,415 | 216,015 |
Total liabilities and stockholders' equity | $ 788,318 | $ 726,671 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2019 | Jun. 30, 2019 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 16,000,000 | 16,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock-Class A | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 20,287,574 | 20,287,574 |
Common stock, shares outstanding | 20,287,574 | 20,287,574 |
Common stock-Class B | ||
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 20,166,034 | 20,166,034 |
Common stock, shares outstanding | 20,166,034 | 20,166,034 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net income | $ 14,409 | $ 31,062 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 15,929 | 13,532 |
Amortization of debt issuance costs and debt discount | 442 | 441 |
Stock-based compensation | 1,129 | 1,129 |
Acquisition-related costs of goods sold | 280 | |
Acquisition-related accrued interest | 132 | |
Deferred income taxes | (565) | 135 |
Foreign currency (gains) losses, net | (132) | 12 |
Other | 374 | (1,071) |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Accounts receivable, net | 12,906 | (8,906) |
Inventories, net | 3,412 | (16,278) |
Other current assets | (2,300) | (3,616) |
Other assets | (1,395) | 866 |
Accounts payable | (14,108) | 5,169 |
Accrued expenses and other liabilities | (1,992) | (5,839) |
Net cash (used) provided by operating activities | 28,521 | 16,636 |
INVESTING ACTIVITIES | ||
Purchases of short-term investments | (25,000) | (10,000) |
Maturities of short-term investments | 11,000 | |
Capital expenditures | (16,115) | (12,117) |
Business acquisitions | (54,549) | (9,838) |
Other, net | (1,045) | 27 |
Net cash (used) by investing activities | (96,709) | (20,928) |
FINANCING ACTIVITIES | ||
Revolving credit facility borrowings | 155,000 | 103,000 |
Revolving credit facility repayments | (102,000) | (85,000) |
Payments of long-term debt and other | (6,361) | (6,359) |
Issuance of acquisition note payable | 3,775 | |
Proceeds from common shares issued | 341 | |
Dividends paid | (9,709) | (8,883) |
Net cash used by financing activities | 36,930 | 6,874 |
Effect of exchange rate changes on cash | (135) | (414) |
Net increase (decrease) in cash and cash equivalents | (31,393) | 2,168 |
Cash and cash equivalents at beginning of period | 57,573 | 29,168 |
Cash and cash equivalents at end of period | $ 26,180 | $ 31,336 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Jun. 30, 2018 | $ 4 | $ 129,873 | $ 131,560 | $ (76,483) | $ 184,954 |
Balance (in shares) at Jun. 30, 2018 | 40,357,708 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new revenue standard | 1,245 | 1,245 | |||
Comprehensive income (loss) | 16,314 | (7,195) | 9,119 | ||
Exercise of stock options | 211 | 211 | |||
Exercise of stock options (in shares) | 17,860 | ||||
Dividends declared | (4,037) | (4,037) | |||
Stock-based compensation expense | 565 | 565 | |||
Balance at Sep. 30, 2018 | $ 4 | 130,649 | 145,082 | (83,678) | 192,057 |
Balance (in shares) at Sep. 30, 2018 | 40,375,568 | ||||
Balance at Jun. 30, 2018 | $ 4 | 129,873 | 131,560 | (76,483) | 184,954 |
Balance (in shares) at Jun. 30, 2018 | 40,357,708 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income (loss) | 26,438 | ||||
Balance at Dec. 31, 2018 | $ 4 | 131,343 | 154,984 | (81,107) | 205,224 |
Balance (in shares) at Dec. 31, 2018 | 40,386,568 | ||||
Balance at Sep. 30, 2018 | $ 4 | 130,649 | 145,082 | (83,678) | 192,057 |
Balance (in shares) at Sep. 30, 2018 | 40,375,568 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income (loss) | 14,748 | 2,571 | 17,319 | ||
Exercise of stock options | 130 | 130 | |||
Exercise of stock options (in shares) | 11,000 | ||||
Dividends declared | (4,846) | (4,846) | |||
Stock-based compensation expense | 564 | 564 | |||
Balance at Dec. 31, 2018 | $ 4 | 131,343 | 154,984 | (81,107) | 205,224 |
Balance (in shares) at Dec. 31, 2018 | 40,386,568 | ||||
Balance at Jun. 30, 2019 | $ 4 | 133,266 | 168,926 | (86,181) | 216,015 |
Balance (in shares) at Jun. 30, 2019 | 40,453,608 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income (loss) | 2,515 | (7,547) | (5,032) | ||
Dividends declared | (4,854) | (4,854) | |||
Stock-based compensation expense | 565 | 565 | |||
Balance at Sep. 30, 2019 | $ 4 | 133,831 | 166,587 | (93,728) | 206,694 |
Balance (in shares) at Sep. 30, 2019 | 40,453,608 | ||||
Balance at Jun. 30, 2019 | $ 4 | 133,266 | 168,926 | (86,181) | 216,015 |
Balance (in shares) at Jun. 30, 2019 | 40,453,608 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income (loss) | 9,980 | ||||
Balance at Dec. 31, 2019 | $ 4 | 134,395 | 173,626 | (90,610) | 217,415 |
Balance (in shares) at Dec. 31, 2019 | 40,453,608 | ||||
Balance at Sep. 30, 2019 | $ 4 | 133,831 | 166,587 | (93,728) | 206,694 |
Balance (in shares) at Sep. 30, 2019 | 40,453,608 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Comprehensive income (loss) | 11,894 | 3,118 | 15,012 | ||
Dividends declared | (4,855) | (4,855) | |||
Stock-based compensation expense | 564 | 564 | |||
Balance at Dec. 31, 2019 | $ 4 | $ 134,395 | $ 173,626 | $ (90,610) | $ 217,415 |
Balance (in shares) at Dec. 31, 2019 | 40,453,608 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parentheticals) - $ / shares | 3 Months Ended | |||
Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||
Dividends declared per share | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.10 |
Description of Business
Description of Business | 6 Months Ended |
Dec. 31, 2019 | |
Description of Business | |
Description of Business | 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 animals including poultry, swine, dairy and beef cattle, and aquaculture. 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, 2019 and 2018, 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, 2019 (the “Annual Report”), filed with the Securities and Exchange Commission on August 27, 2019 (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, 2019, 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 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 whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and New Accounting Standards | 6 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and New Accounting Standards | |
Summary of Significant Accounting Policies and New Accounting Standards | 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. We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), effective July 1, 2019. See “New Accounting Standards” and “Note 7—Leases.” As of December 31, 2019, there have been no other material changes to our significant accounting policies. Leases We determine at the inception of an arrangement whether the arrangement contains a lease. If an arrangement contains a lease, we assess the lease term when the underlying asset is available for use (“lease commencement.”) Individual lease terms reflect the non-cancellable period of the lease, reasonably certain renewal periods and consideration of termination options. We determine the lease classification as either operating or financing at lease commencement, which governs the pattern of expense recognition and presentation in our consolidated financial statements. Our current lease portfolio only includes operating leases. We recognize a right-of-use (“ROU”) asset and a corresponding lease liability at lease commencement for leases with terms exceeding twelve months. Short-term leases with terms of twelve months or less are not recognized on the consolidated balance sheet and lease payments are recognized on a straight-line basis over the term. The values of the ROU assets and lease liabilities are calculated based on the present value of the fixed payment obligations over the lease term, using our incremental borrowing rate (“IBR”), determined at lease commencement. The IBR reflects the rate of interest we would expect to pay on a secured basis to borrow an amount equal to the lease payments under similar terms. The IBR incorporates the term and economic environment of the respective lease arrangements. We have elected to account for lease and non-lease components together as a single lease component and include fixed payment obligations related to such non-lease components in the measurement of ROU assets and lease liabilities. Fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments can include index-based lease payments, real estate taxes, maintenance costs, utilization charges and other non-lease services paid to lessors and are not determinable at lease commencement. Variable lease payments are not included in the measurement of ROU assets and lease liabilities and are recognized in the period incurred. 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 the assumed exercise of stock options and vesting of 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. Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Net income $ 11,894 $ 14,748 $ 14,409 $ 31,062 Weighted average number of shares – basic 40,454 40,383 40,454 40,376 Dilutive effect of stock options and restricted stock units 50 140 50 147 Weighted average number of shares – diluted 40,504 40,523 40,504 40,523 Net income per share basic $ 0.29 $ 0.37 $ 0.36 $ 0.77 diluted $ 0.29 $ 0.36 $ 0.36 $ 0.77 New Accounting Standards 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. This ASU 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. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018‑14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715‑20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans , modifies existing disclosure requirements for defined benefit pension and other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020 and must be applied on a retrospective basis. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018‑13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , modifies existing disclosure requirements for fair value measurement. This ASU is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income allows reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects related to adjustments resulting from the United States Tax Cuts and Jobs Act. This ASU is effective for our consolidated financial statements beginning July 1, 2019. The adoption of this guidance did not have a material effect on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) requires an entity to recognize assets and liabilities on the balance sheet for both financing and operating leases and requires additional qualitative and quantitative disclosures regarding leasing arrangements. We adopted ASU 2016-02 and its amendments effective July 1, 2019, using a modified retrospective transition approach, which does not require modifications to periods prior to the date of initial application. We utilized certain permitted practical expedients intended to ease transition to the new standard, including carrying forward the original lease classifications without reassessment. We did not use hindsight in our assessment of lease terms as of the effective date. Upon adoption of ASU 2016-02 on July 1, 2019, we recognized initial ROU assets and lease liabilities of $18,576 and $19,368 respectively, on the consolidated balance sheet. The difference in the amounts of the ROU assets and lease liabilities recognized relates to landlord incentives and deferred rent. An adjustment to opening retained earnings was not required, and the recognition of lease expense in the consolidated statements of operations did not change significantly. Refer to “Note 7–Leases” for further information. |
Acquisition
Acquisition | 6 Months Ended |
Dec. 31, 2019 | |
Acquisition | |
Acquisition | 3. Acquisition In August 2019, we acquired the business and assets of Osprey Biotechnics, Inc. (“Osprey”). Osprey is a developer, manufacturer and marketer of microbial products and bioproducts for a variety of applications, serving customers in the animal health and nutrition, environmental, industrial and plant protection industries. The business is included in the Animal Health segment. We acquired assets used in Osprey’s business, including intellectual property, working capital and property, plant and equipment, for an aggregate net cash payment of $54,549. The agreement also includes a future additional payment to be determined based on Osprey’s financial performance for the year ending June 30, 2021. We recorded a $7,553 liability for the estimated future payment. The additional payment will be no less than $4,840 and has no maximum limit. We accounted for the acquisition as a business combination in accordance with FASB Accounting Standards Codification No. 805, Business Combinations . Pro forma information giving effect to the acquisition has not been provided because the results are not material to the consolidated financial statements. The preliminary fair values of the acquired assets and liabilities as of the acquisition date were: Working capital, net $ 2,366 Property, plant and equipment 2,005 Definite-lived intangible assets 32,400 Goodwill 25,331 Net assets acquired $ 62,102 We may further refine the determination of certain assets during the measurement period. The definite-lived intangible assets relate to trade names, developed products and customer relationships and will be amortized over estimated useful lives ranging from five to twelve years. The preliminary amount of goodwill has been allocated to our Animal Health segment and is deductible for income taxes. |
Statements of Operations-Additi
Statements of Operations-Additional Information | 6 Months Ended |
Dec. 31, 2019 | |
Statements of Operations-Additional Information | |
Statements of Operations-Additional Information | 4 . Statements of Operations—Additional Information We develop, manufacture and market a broad range of products for food animals including poultry, swine, beef and dairy cattle and aquaculture. The products help prevent, control and treat diseases, enhance nutrition to help improve health and contribute to balanced mineral nutrition. The animal health and mineral nutrition products are sold directly to integrated poultry, swine and cattle integrators and through commercial animal feed manufacturers, wholesalers and distributors. 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 product usage follows varying weather patterns and seasons. Our operations are primarily focused in 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. · Nutritional Specialties: Nutritional specialty products enhance nutrition to help improve health and performance in areas such as immune system function and digestive health. · Vaccines: Our vaccines are primarily focused on preventing diseases in poultry, swine and cattle. They protect animals from either viral or bacterial disease challenges. We develop, manufacture and market conventionally licensed and autogenous vaccine products and also produce and market adjuvants to vaccine manufacturers. We have 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. The 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. Performance Products The Performance Products business manufactures and markets a number of specialty ingredients for use in the personal care, industrial chemical and chemical catalyst industries, predominantly in the United States. The following tables present our revenues disaggregated by major product category and geographic region: Net Sales by Product Type Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Animal Health MFAs and other $ 91,955 $ 93,054 $ 166,989 $ 180,058 Nutritional specialties 33,062 29,460 63,495 56,430 Vaccines 18,672 17,048 35,055 34,263 Total Animal Health $ 143,689 $ 139,562 $ 265,539 $ 270,751 Mineral Nutrition 55,685 62,319 108,334 117,157 Performance Products 14,638 16,342 29,859 30,468 Total $ 214,012 $ 218,223 $ 403,732 $ 418,376 Net Sales by Region Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 United States $ 122,917 $ 126,065 $ 241,404 $ 240,552 Latin America and Canada 42,704 40,273 79,445 79,156 Europe, Middle East and Africa 27,660 26,186 51,353 51,022 Asia Pacific 20,731 25,699 31,530 47,646 Total $ 214,012 $ 218,223 $ 403,732 $ 418,376 Net sales by region are based on country of destination. Deferred revenue was $5,130 and $5,464 as of December 31, 2019 and June 30, 2019, respectively. Accrued expenses and other current liabilities included $1,082 and $965 of the total deferred revenue as of December 31, 2019 and June 30, 2019, 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 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 to 70 days after the revenue is recognized. Interest Expense and Depreciation and Amortization Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Interest expense, net Term loan $ 2,031 $ 2,202 $ 4,079 $ 4,314 Revolving credit facility 1,530 920 2,961 1,667 Amortization of debt issuance costs and debt discount 221 220 442 441 Acquisition-related accrued interest 79 — 132 — Other 76 120 156 283 Interest expense 3,937 3,462 7,770 6,705 Interest (income) (505) (447) (984) (907) $ 3,432 $ 3,015 $ 6,786 $ 5,798 Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Depreciation and amortization Depreciation of property, plant and equipment $ 5,840 $ 5,308 $ 11,571 $ 10,496 Amortization of intangible assets 2,296 1,521 4,334 3,012 Amortization of other assets 12 12 24 24 $ 8,148 $ 6,841 $ 15,929 $ 13,532 |
Balance Sheets-Additional Infor
Balance Sheets-Additional Information | 6 Months Ended |
Dec. 31, 2019 | |
Balance Sheets Additional Information | |
Balance Sheets-Additional Information | 5. Balance Sheets—Additional Information December 31, June 30, As of 2019 2019 Inventories Raw materials $ 73,394 $ 64,441 Work-in-process 10,489 10,699 Finished goods 109,626 123,182 $ 193,509 $ 198,322 December 31, June 30, As of 2019 2019 Goodwill roll-forward Balance at beginning of period $ 27,348 $ 27,348 Osprey acquisition 25,331 — Balance at end of period $ 52,679 $ 27,348 We evaluate our investments in equity method investees for impairment if circumstances indicate that the fair value of the investment may be impaired. The assets underlying a $3,548 equity investment are currently idled; we have concluded the investment is not currently impaired, based on expected future operating cash flows and/or disposal value. December 31, June 30, As of 2019 2019 Other assets ROU operating lease assets $ 23,115 $ — Deferred income taxes 17,039 16,770 Deposits 6,809 7,024 Insurance investments 5,521 5,431 Equity method investments 4,902 4,196 Indemnification asset 3,000 3,000 Deferred financing fees 1,276 1,531 Other 8,216 7,496 $ 69,878 $ 45,448 December 31, June 30, As of 2019 2019 Accrued expenses and other current liabilities Employee related $ 29,845 $ 28,298 Current operating lease liabilities 6,672 — Commissions and rebates 7,942 8,397 Insurance-related 1,291 1,279 Professional fees 5,222 5,212 Income and other taxes 4,791 6,067 Restructuring costs 2,568 3,590 Other 14,840 15,655 $ 73,171 $ 68,498 During the three months ended June 30, 2019, we initiated business restructuring activities related to productivity and cost saving initiatives in the Animal Health segment. We recorded pre-tax charges of $6,281 for these activities, including $3,500 related to the termination of a contract manufacturing agreement and $2,781 for employee separation charges. As of June 30, 2019, $691 had been paid. During the three months ended September 30, 2019, we recorded $425 related to employee separation charges. The charges are included in selling, general and administrative expenses in our consolidated statements of operations. The following table summarizes the activity of the restructuring liability during the six months ended December 31, 2019: Liability balance at June 30, 2019 $ 5,590 Charges 425 Payments (1,847) Liability balance at December 31, 2019 $ 4,168 As of December 31, 2019, $2,568 was included in accrued expenses and other current liabilities and $1,600 was included in other liabilities. We expect to record an additional charge for employee separation costs of an estimated $500 and plan to complete the additional separation actions by June 30, 2020. December 31, June 30, As of 2019 2019 Other liabilities Long-term operating lease liabilities $ 17,453 $ — Long term and deferred income taxes 9,520 8,978 Supplemental retirement benefits, deferred compensation and other 7,837 7,605 Acquisition-related consideration 7,678 — International retirement plans 5,247 5,133 U.S. pension plan 3,146 3,934 Restructuring costs 1,600 2,000 Other long term liabilities 13,917 15,144 $ 66,398 $ 42,794 December 31, June 30, As of 2019 2019 Accumulated other comprehensive income (loss) Derivative instruments $ (598) $ (594) Foreign currency translation adjustment (75,845) (71,225) Unrecognized net pension gains (losses) (19,792) (20,050) (Provision) benefit for income taxes on derivative instruments 149 148 (Provision) benefit for incomes taxes on long-term intercompany investments 8,166 8,166 (Provision) benefit for income taxes on pension gains (losses) (2,690) (2,626) $ (90,610) $ (86,181) |
Debt
Debt | 6 Months Ended |
Dec. 31, 2019 | |
Debt | |
Debt | 6. Debt Term Loans and Revolving Credit Facilities Pursuant to a credit agreement (the “Credit Agreement”), we have a revolving credit facility (the “Revolver”), where we can borrow up to $250,000, subject to the terms of the agreement, and a term A loan with an aggregate initial principal amount of $250,000 (the “Term A Loan,” and together with the Revolver, the “Credit Facilities”). The Credit Facilities have applicable margins equal to 2.00%, 1.75% or 1.50%, in the case of LIBOR and Eurodollar rate loans and 1.00%, 0.75% or 0.50%, in the case of base rate loans; the applicable margins are based on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. The LIBOR rate is subject to a floor of 0.00%. The Credit Facilities mature on June 29, 2022. The Credit Facilities require, among other things, the maintenance of (i) a maximum First Lien Net Leverage Ratio and (ii) a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis, and contain an acceleration clause should an event of default (as defined in the Credit Agreement) occur. As of December 31, 2019, we were in compliance with the financial covenants. As of December 31, 2019, we had $149,000 in borrowings under the Revolver and had outstanding letters of credit of $2,709, leaving $98,291 available for borrowings and letters of credit under the Revolver. 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. As of December 31, 2019, the interest rates for the Revolver and the Term A Loan were 3.51% and 3.61%, respectively. The weighted-average interest rates for the outstanding revolving credit facilities were 3.58% and 3.71% for the six months ended December 31, 2019 and 2018, respectively. The weighted-average interest rates for the term loans were 3.46% and 3.47% for the six months ended December 31, 2019 and 2018, respectively. In July 2017, we entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. We designated the interest rate swap as a highly effective cash flow hedge. For additional details, see “—Derivatives.” Long-Term Debt December 31, June 30, As of 2019 2019 Term A Loan due June 2022 $ 225,000 $ 231,250 Other — 40 225,000 231,290 Unamortized debt issuance costs and debt discount (929) (1,115) 224,071 230,175 Less: current maturities (15,625) (12,540) $ 208,446 $ 217,635 |
Leases
Leases | 6 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 7. Leases Our lease portfolio consists of real estate, vehicles and equipment ROU assets, classified as operating leases. As of December 31, 2019, the remaining non-cancelable lease terms, inclusive of renewal options reasonably certain of exercise, range from one to 16 years. The following table summarizes the ROU assets and the related lease liabilities recorded on the consolidated balance sheet: December 31, As of 2019 Balance Sheet Classification Assets: Operating lease ROU assets $ 23,115 Other Assets Liabilities: Current portion 6,672 Accrued expenses and other current liabilities Non-current portion 17,453 Other liabilities Total operating lease liabilities $ 24,125 The following table summarizes the composition of net lease cost: Three months Six months For the Periods Ended December 31 2019 2019 Operating lease expense $ 1,911 $ 3,762 Variable lease expense 307 631 Short-term lease expense 214 417 Total lease cost $ 2,432 $ 4,810 The following tables include other supplemental information: Three months Six months For the Periods Ended December 31 2019 2019 Operating cash flows used for ROU operating leases $ 1,968 $ 3,645 Right of use assets obtained in exchange for new operating lease liabilities $ 3,972 $ 7,762 As of December 31, 2019 Weighted average remaining lease term (in years) - ROU operating leases 6.4 Weighted average discount rate - ROU operating leases 4.17 % At December 31, 2019, maturities of future lease liabilities were: For the Years Ending June 30 2020 $ 3,853 2021 6,627 2022 5,012 2023 2,765 2024 2,283 2025 and thereafter 7,273 Total lease payments 27,813 Less: interest 3,688 Total operating lease liabilities $ 24,125 There were no significant future payment obligations related to executed lease agreements for which the related lease had not yet commenced as of December 31, 2019. Our lease agreements do not contain any material restrictive covenants or residual value guarantee provisions. Future minimum lease payments for operating leases accounted for under ASC 840, " Leases ," with remaining non-cancelable terms in excess of one year at June 30, 2019 were: For the Years Ending June 30 2020 $ 5,815 2021 4,160 2022 3,191 2023 1,445 2024 865 Thereafter 765 Total minimum lease payments $ 16,241 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | 8. Related Party Transactions Certain relatives of Jack C. Bendheim, our Chairman, President and Chief Executive Officer, provided services to us as employees or consultants and received aggregate compensation and benefits of approximately $390 and $430 during the three months ended December 31, 2019 and 2018, respectively, and $841 and $1,213 during the six months ended December 31, 2019 and 2018, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9 . 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 time 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 upon our experience to date, 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 Phibro-Tech’s Santa Fe Springs, California facility. 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 groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA and RCRA 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 to the ongoing nature of the EPA’s investigation, the preliminary stage of the ongoing litigation and Phibro-Tech’s dispute with the prior owner’s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech 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, to be approximately $5,096 and $5,890 at December 31, 2019 and June 30, 2019, 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 is 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 a number of 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. |
Derivatives
Derivatives | 6 Months Ended |
Dec. 31, 2019 | |
Derivatives | |
Derivatives | 10. 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). We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be 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 “—Fair Value Measurements.” We entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The forecasted transactions are probable of occurring, and the interest rate swap has been designated as a highly effective cash flow hedge. We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June 2021. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges. Outstanding derivatives that are designated and effective as cash flow hedges as of December 31, 2019 were: Notional Asset (Liability) Amount at fair value as of December 31, Consolidated December 31, June 30, Instrument Hedge 2019 Balance Sheet 2019 2019 Options Brazilian Real calls R$ 108,000 (1) $ 659 $ 413 Options Brazilian Real puts R$ 108,000 (1) $ (217) $ (30) Swap Interest rate swap $ 150,000 Other liabilities $ (1,040) $ (977) (1) We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. Other current assets as of December 31, 2019 and June 30, 2019, included net fair values of $442 and $383, respectively. The following tables show the effects of derivatives on the consolidated statements of operations and other comprehensive income for the three and six months ended December 31, 2019 and 2018. Consolidated Statement Gain (Loss) recognized in consolidated of Operations Line For the Three Months Ended December 31 Gain (Loss) recorded in OCI statements of operations Item Total Consolidated Statement of Instrument Hedge 2019 2018 Operations 2019 2018 2019 2018 Options Brazilian Real calls $ 422 $ 513 Cost of goods sold $ (63) $ — $ 144,908 $ 149,579 Swap Interest rate swap $ 658 $ (2,756) Interest expense, net $ — $ — $ 3,432 $ 3,015 Consolidated Statement Gain (Loss) recognized in of Operations Line For the Six Months Ended December 31 Gain (Loss) recorded in OCI consolidated statements of operations Item Total Consolidated Statement Instrument Hedge 2019 2018 of Operations 2019 2018 2019 2018 Options Brazilian Real calls $ 59 $ 404 Cost of goods sold $ (108) $ 1,084 $ 276,965 $ 283,927 Swap Interest rate swap $ (63) $ (2,106) Interest expense, net $ — $ — $ 6,786 $ 5,798 We recognize gains (losses) related to foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 11. Fair Value Measurements Short-term investments As of December 31, 2019, 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. 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. Letters of Credit We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The carrying values of these letters of credit are considered to be representative of their fair values because of the nature of the instruments. Debt We record debt, including term loans and revolver balances, at book value 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. 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 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 on a periodic basis or whenever events or changes in circumstances indicate an asset may not be fully recoverable. Fair Value of Assets (Liabilities) December 31, 2019 June 30, 2019 As of Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Short-term investments $ 49,000 $ — $ — $ 24,000 $ — $ — Foreign currency derivatives $ — $ 442 $ — $ — $ 383 $ — Interest rate swap $ — $ (1,040) $ — $ — $ (977) $ — Contingent consideration on acquisitions $ — $ — $ (7,678) $ — $ — $ — The table below provides a summary of the changes in the fair value of Level 3 liabilities: Balance at June 30, 2019 $ — Osprey acquisition (7,553) Acquisition-related accrued interest (125) Balance at December 31, 2019 $ (7,678) |
Business Segments
Business Segments | 6 Months Ended |
Dec. 31, 2019 | |
Business Segments | |
Business Segments | 12. 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 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, (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (e) 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. Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Net sales Animal Health $ 143,689 $ 139,562 $ 265,539 $ 270,751 Mineral Nutrition 55,685 62,319 108,334 117,157 Performance Products 14,638 16,342 29,859 30,468 Total segments $ 214,012 $ 218,223 $ 403,732 $ 418,376 Depreciation and amortization Animal Health $ 6,711 $ 5,493 $ 13,095 $ 10,849 Mineral Nutrition 629 616 1,242 1,213 Performance Products 417 279 794 552 Total segments $ 7,757 $ 6,388 $ 15,131 $ 12,614 Adjusted EBITDA Animal Health $ 33,838 $ 35,925 $ 58,899 $ 71,641 Mineral Nutrition 3,684 4,084 7,159 6,647 Performance Products 1,457 1,514 2,309 2,230 Total segments $ 38,979 $ 41,523 $ 68,367 $ 80,518 Reconciliation of income before income taxes to Adjusted EBITDA Income before income taxes $ 16,895 $ 20,074 $ 20,467 $ 42,779 Interest expense, net 3,432 3,015 6,786 5,798 Depreciation and amortization – Total segments 7,757 6,388 15,131 12,614 Depreciation and amortization – Corporate 391 453 798 918 Corporate costs 10,491 9,918 20,219 18,804 Restructure costs — — 425 — Stock-based compensation 564 564 1,129 1,129 Acquisition-related cost of goods sold — — 280 — Acquisition-related transaction costs — — 462 — Acquisition-related other 167 — 167 — Other, net — (1,506) — (1,506) Foreign currency (gains) losses, net (718) 2,617 2,503 (18) Adjusted EBITDA – Total segments $ 38,979 $ 41,523 $ 68,367 $ 80,518 December 31, June 30, As of 2019 2019 Identifiable assets Animal Health $ 572,921 $ 508,864 Mineral Nutrition 69,988 67,662 Performance Products 33,530 32,886 Total segments 676,439 609,412 Corporate 111,879 117,259 Total $ 788,318 $ 726,671 The Animal Health segment includes all goodwill of the Company. The Animal Health segment includes advances to and investment in an equity method investee of $3,548 and $3,287 as of December 31, 2019 and June 30, 2019, respectively. The Performance Products segment includes an investment in an equity method investee of $852 and $759 as of December 31, 2019 and June 30, 2019, respectively. Corporate assets include cash and cash equivalents, short-term investments, debt issuance costs, income tax related assets and certain other assets. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and New Accounting Standards (Policies) | 6 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and New Accounting Standards | |
Leases | Leases We determine at the inception of an arrangement whether the arrangement contains a lease. If an arrangement contains a lease, we assess the lease term when the underlying asset is available for use (“lease commencement.”) Individual lease terms reflect the non-cancellable period of the lease, reasonably certain renewal periods and consideration of termination options. We determine the lease classification as either operating or financing at lease commencement, which governs the pattern of expense recognition and presentation in our consolidated financial statements. Our current lease portfolio only includes operating leases. We recognize a right-of-use (“ROU”) asset and a corresponding lease liability at lease commencement for leases with terms exceeding twelve months. Short-term leases with terms of twelve months or less are not recognized on the consolidated balance sheet and lease payments are recognized on a straight-line basis over the term. The values of the ROU assets and lease liabilities are calculated based on the present value of the fixed payment obligations over the lease term, using our incremental borrowing rate (“IBR”), determined at lease commencement. The IBR reflects the rate of interest we would expect to pay on a secured basis to borrow an amount equal to the lease payments under similar terms. The IBR incorporates the term and economic environment of the respective lease arrangements. We have elected to account for lease and non-lease components together as a single lease component and include fixed payment obligations related to such non-lease components in the measurement of ROU assets and lease liabilities. Fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments can include index-based lease payments, real estate taxes, maintenance costs, utilization charges and other non-lease services paid to lessors and are not determinable at lease commencement. Variable lease payments are not included in the measurement of ROU assets and lease liabilities and are recognized in the period incurred. |
Net Income per Share and Weighted Average Shares | 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 the assumed exercise of stock options and vesting of 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. Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Net income $ 11,894 $ 14,748 $ 14,409 $ 31,062 Weighted average number of shares – basic 40,454 40,383 40,454 40,376 Dilutive effect of stock options and restricted stock units 50 140 50 147 Weighted average number of shares – diluted 40,504 40,523 40,504 40,523 Net income per share basic $ 0.29 $ 0.37 $ 0.36 $ 0.77 diluted $ 0.29 $ 0.36 $ 0.36 $ 0.77 |
New Accounting Standards | New Accounting Standards 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. This ASU 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. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018‑14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715‑20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans , modifies existing disclosure requirements for defined benefit pension and other postretirement plans. This ASU is effective for fiscal years ending after December 15, 2020 and must be applied on a retrospective basis. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018‑13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , modifies existing disclosure requirements for fair value measurement. This ASU is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements. ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income allows reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects related to adjustments resulting from the United States Tax Cuts and Jobs Act. This ASU is effective for our consolidated financial statements beginning July 1, 2019. The adoption of this guidance did not have a material effect on our consolidated financial statements. ASU 2016-02, Leases (Topic 842) requires an entity to recognize assets and liabilities on the balance sheet for both financing and operating leases and requires additional qualitative and quantitative disclosures regarding leasing arrangements. We adopted ASU 2016-02 and its amendments effective July 1, 2019, using a modified retrospective transition approach, which does not require modifications to periods prior to the date of initial application. We utilized certain permitted practical expedients intended to ease transition to the new standard, including carrying forward the original lease classifications without reassessment. We did not use hindsight in our assessment of lease terms as of the effective date. Upon adoption of ASU 2016-02 on July 1, 2019, we recognized initial ROU assets and lease liabilities of $18,576 and $19,368 respectively, on the consolidated balance sheet. The difference in the amounts of the ROU assets and lease liabilities recognized relates to landlord incentives and deferred rent. An adjustment to opening retained earnings was not required, and the recognition of lease expense in the consolidated statements of operations did not change significantly. Refer to “Note 7–Leases” for further information. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and New Accounting Standards (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies and New Accounting Standards | |
Schedule of net income per share and weighted average shares | Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Net income $ 11,894 $ 14,748 $ 14,409 $ 31,062 Weighted average number of shares – basic 40,454 40,383 40,454 40,376 Dilutive effect of stock options and restricted stock units 50 140 50 147 Weighted average number of shares – diluted 40,504 40,523 40,504 40,523 Net income per share basic $ 0.29 $ 0.37 $ 0.36 $ 0.77 diluted $ 0.29 $ 0.36 $ 0.36 $ 0.77 |
Acquisition (Tables)
Acquisition (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Acquisition | |
Summary of preliminary fair values of the acquired assets and liabilities | Working capital, net $ 2,366 Property, plant and equipment 2,005 Definite-lived intangible assets 32,400 Goodwill 25,331 Net assets acquired $ 62,102 |
Statements of Operations-Addi_2
Statements of Operations-Additional Information (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Statements of Operations-Additional Information | |
Schedule of revenues disaggregated by major product category and geographic region | Net Sales by Product Type Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Animal Health MFAs and other $ 91,955 $ 93,054 $ 166,989 $ 180,058 Nutritional specialties 33,062 29,460 63,495 56,430 Vaccines 18,672 17,048 35,055 34,263 Total Animal Health $ 143,689 $ 139,562 $ 265,539 $ 270,751 Mineral Nutrition 55,685 62,319 108,334 117,157 Performance Products 14,638 16,342 29,859 30,468 Total $ 214,012 $ 218,223 $ 403,732 $ 418,376 Net Sales by Region Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 United States $ 122,917 $ 126,065 $ 241,404 $ 240,552 Latin America and Canada 42,704 40,273 79,445 79,156 Europe, Middle East and Africa 27,660 26,186 51,353 51,022 Asia Pacific 20,731 25,699 31,530 47,646 Total $ 214,012 $ 218,223 $ 403,732 $ 418,376 |
Schedule of additional information of statements of operations | Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Interest expense, net Term loan $ 2,031 $ 2,202 $ 4,079 $ 4,314 Revolving credit facility 1,530 920 2,961 1,667 Amortization of debt issuance costs and debt discount 221 220 442 441 Acquisition-related accrued interest 79 — 132 — Other 76 120 156 283 Interest expense 3,937 3,462 7,770 6,705 Interest (income) (505) (447) (984) (907) $ 3,432 $ 3,015 $ 6,786 $ 5,798 Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Depreciation and amortization Depreciation of property, plant and equipment $ 5,840 $ 5,308 $ 11,571 $ 10,496 Amortization of intangible assets 2,296 1,521 4,334 3,012 Amortization of other assets 12 12 24 24 $ 8,148 $ 6,841 $ 15,929 $ 13,532 |
Balance Sheets-Additional Inf_2
Balance Sheets-Additional Information (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Balance Sheets Additional Information | |
Schedule of additional information of balance sheets | December 31, June 30, As of 2019 2019 Inventories Raw materials $ 73,394 $ 64,441 Work-in-process 10,489 10,699 Finished goods 109,626 123,182 $ 193,509 $ 198,322 December 31, June 30, As of 2019 2019 Goodwill roll-forward Balance at beginning of period $ 27,348 $ 27,348 Osprey acquisition 25,331 — Balance at end of period $ 52,679 $ 27,348 December 31, June 30, As of 2019 2019 Other assets ROU operating lease assets $ 23,115 $ — Deferred income taxes 17,039 16,770 Deposits 6,809 7,024 Insurance investments 5,521 5,431 Equity method investments 4,902 4,196 Indemnification asset 3,000 3,000 Deferred financing fees 1,276 1,531 Other 8,216 7,496 $ 69,878 $ 45,448 December 31, June 30, As of 2019 2019 Accrued expenses and other current liabilities Employee related $ 29,845 $ 28,298 Current operating lease liabilities 6,672 — Commissions and rebates 7,942 8,397 Insurance-related 1,291 1,279 Professional fees 5,222 5,212 Income and other taxes 4,791 6,067 Restructuring costs 2,568 3,590 Other 14,840 15,655 $ 73,171 $ 68,498 Liability balance at June 30, 2019 $ 5,590 Charges 425 Payments (1,847) Liability balance at December 31, 2019 $ 4,168 December 31, June 30, As of 2019 2019 Other liabilities Long-term operating lease liabilities $ 17,453 $ — Long term and deferred income taxes 9,520 8,978 Supplemental retirement benefits, deferred compensation and other 7,837 7,605 Acquisition-related consideration 7,678 — International retirement plans 5,247 5,133 U.S. pension plan 3,146 3,934 Restructuring costs 1,600 2,000 Other long term liabilities 13,917 15,144 $ 66,398 $ 42,794 December 31, June 30, As of 2019 2019 Accumulated other comprehensive income (loss) Derivative instruments $ (598) $ (594) Foreign currency translation adjustment (75,845) (71,225) Unrecognized net pension gains (losses) (19,792) (20,050) (Provision) benefit for income taxes on derivative instruments 149 148 (Provision) benefit for incomes taxes on long-term intercompany investments 8,166 8,166 (Provision) benefit for income taxes on pension gains (losses) (2,690) (2,626) $ (90,610) $ (86,181) |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Debt | |
Schedule of long term debt | December 31, June 30, As of 2019 2019 Term A Loan due June 2022 $ 225,000 $ 231,250 Other — 40 225,000 231,290 Unamortized debt issuance costs and debt discount (929) (1,115) 224,071 230,175 Less: current maturities (15,625) (12,540) $ 208,446 $ 217,635 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Leases | |
Summary of the ROU assets and the related lease liabilities recorded on the consolidated balance sheet | The following table summarizes the ROU assets and the related lease liabilities recorded on the consolidated balance sheet: December 31, As of 2019 Balance Sheet Classification Assets: Operating lease ROU assets $ 23,115 Other Assets Liabilities: Current portion 6,672 Accrued expenses and other current liabilities Non-current portion 17,453 Other liabilities Total operating lease liabilities $ 24,125 |
Summary of the composition of net lease cost | The following table summarizes the composition of net lease cost: Three months Six months For the Periods Ended December 31 2019 2019 Operating lease expense $ 1,911 $ 3,762 Variable lease expense 307 631 Short-term lease expense 214 417 Total lease cost $ 2,432 $ 4,810 |
Summary of other supplemental information | The following tables include other supplemental information: Three months Six months For the Periods Ended December 31 2019 2019 Operating cash flows used for ROU operating leases $ 1,968 $ 3,645 Right of use assets obtained in exchange for new operating lease liabilities $ 3,972 $ 7,762 As of December 31, 2019 Weighted average remaining lease term (in years) - ROU operating leases 6.4 Weighted average discount rate - ROU operating leases 4.17 % |
Summary of maturities of future lease liabilities | At December 31, 2019, maturities of future lease liabilities were: For the Years Ending June 30 2020 $ 3,853 2021 6,627 2022 5,012 2023 2,765 2024 2,283 2025 and thereafter 7,273 Total lease payments 27,813 Less: interest 3,688 Total operating lease liabilities $ 24,125 |
Summary of future minimum lease payments for operating leases accounted for under ASC 840, "Leases," with remaining non-cancelable terms in excess of one year | Future minimum lease payments for operating leases accounted for under ASC 840, " Leases ," with remaining non-cancelable terms in excess of one year at June 30, 2019 were: For the Years Ending June 30 2020 $ 5,815 2021 4,160 2022 3,191 2023 1,445 2024 865 Thereafter 765 Total minimum lease payments $ 16,241 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Derivatives | |
Schedule of significant outstanding derivatives employed to manage market risk and designated as cash flow hedges | Notional Asset (Liability) Amount at fair value as of December 31, Consolidated December 31, June 30, Instrument Hedge 2019 Balance Sheet 2019 2019 Options Brazilian Real calls R$ 108,000 (1) $ 659 $ 413 Options Brazilian Real puts R$ 108,000 (1) $ (217) $ (30) Swap Interest rate swap $ 150,000 Other liabilities $ (1,040) $ (977) (1) We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. Other current assets as of December 31, 2019 and June 30, 2019, included net fair values of $442 and $383, respectively. |
Schedule of consolidated statements of operations and other comprehensive income | Consolidated Statement Gain (Loss) recognized in consolidated of Operations Line For the Three Months Ended December 31 Gain (Loss) recorded in OCI statements of operations Item Total Consolidated Statement of Instrument Hedge 2019 2018 Operations 2019 2018 2019 2018 Options Brazilian Real calls $ 422 $ 513 Cost of goods sold $ (63) $ — $ 144,908 $ 149,579 Swap Interest rate swap $ 658 $ (2,756) Interest expense, net $ — $ — $ 3,432 $ 3,015 Consolidated Statement Gain (Loss) recognized in of Operations Line For the Six Months Ended December 31 Gain (Loss) recorded in OCI consolidated statements of operations Item Total Consolidated Statement Instrument Hedge 2019 2018 of Operations 2019 2018 2019 2018 Options Brazilian Real calls $ 59 $ 404 Cost of goods sold $ (108) $ 1,084 $ 276,965 $ 283,927 Swap Interest rate swap $ (63) $ (2,106) Interest expense, net $ — $ — $ 6,786 $ 5,798 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements | |
Schedule of fair value of assets and liabilities | December 31, 2019 June 30, 2019 As of Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Short-term investments $ 49,000 $ — $ — $ 24,000 $ — $ — Foreign currency derivatives $ — $ 442 $ — $ — $ 383 $ — Interest rate swap $ — $ (1,040) $ — $ — $ (977) $ — Contingent consideration on acquisitions $ — $ — $ (7,678) $ — $ — $ — |
Schedule of changes in the fair value of Level 3 liabilities | Balance at June 30, 2019 $ — Osprey acquisition (7,553) Acquisition-related accrued interest (125) Balance at December 31, 2019 $ (7,678) |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Business Segments | |
Schedule of information regarding reportable segments | Three Months Six Months For the Periods Ended December 31 2019 2018 2019 2018 Net sales Animal Health $ 143,689 $ 139,562 $ 265,539 $ 270,751 Mineral Nutrition 55,685 62,319 108,334 117,157 Performance Products 14,638 16,342 29,859 30,468 Total segments $ 214,012 $ 218,223 $ 403,732 $ 418,376 Depreciation and amortization Animal Health $ 6,711 $ 5,493 $ 13,095 $ 10,849 Mineral Nutrition 629 616 1,242 1,213 Performance Products 417 279 794 552 Total segments $ 7,757 $ 6,388 $ 15,131 $ 12,614 Adjusted EBITDA Animal Health $ 33,838 $ 35,925 $ 58,899 $ 71,641 Mineral Nutrition 3,684 4,084 7,159 6,647 Performance Products 1,457 1,514 2,309 2,230 Total segments $ 38,979 $ 41,523 $ 68,367 $ 80,518 Reconciliation of income before income taxes to Adjusted EBITDA Income before income taxes $ 16,895 $ 20,074 $ 20,467 $ 42,779 Interest expense, net 3,432 3,015 6,786 5,798 Depreciation and amortization – Total segments 7,757 6,388 15,131 12,614 Depreciation and amortization – Corporate 391 453 798 918 Corporate costs 10,491 9,918 20,219 18,804 Restructure costs — — 425 — Stock-based compensation 564 564 1,129 1,129 Acquisition-related cost of goods sold — — 280 — Acquisition-related transaction costs — — 462 — Acquisition-related other 167 — 167 — Other, net — (1,506) — (1,506) Foreign currency (gains) losses, net (718) 2,617 2,503 (18) Adjusted EBITDA – Total segments $ 38,979 $ 41,523 $ 68,367 $ 80,518 December 31, June 30, As of 2019 2019 Identifiable assets Animal Health $ 572,921 $ 508,864 Mineral Nutrition 69,988 67,662 Performance Products 33,530 32,886 Total segments 676,439 609,412 Corporate 111,879 117,259 Total $ 788,318 $ 726,671 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and New Accounting Standards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies and New Accounting Standards | ||||
Net income | $ 11,894 | $ 14,748 | $ 14,409 | $ 31,062 |
Weighted average number of shares - basic (in shares) | 40,454 | 40,383 | 40,454 | 40,376 |
Dilutive effect of stock options and restricted stock units | 50 | 140 | 50 | 147 |
Weighted average number of shares - diluted (in shares) | 40,504 | 40,523 | 40,504 | 40,523 |
Net income per share | ||||
basic (in dollars per share) | $ 0.29 | $ 0.37 | $ 0.36 | $ 0.77 |
diluted (in dollars per share) | $ 0.29 | $ 0.36 | $ 0.36 | $ 0.77 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and New Accounting Standards - Additional Information (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Dec. 31, 2019 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
ROU operating lease assets | $ 23,115 | |
Lease liabilities | $ 24,125 | |
ASU 2016-02 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Lease, Practical Expedient, Land Easement | true | |
Lease, Practical Expedient, Use of Hindsight | false | |
ROU operating lease assets | $ 18,576 | |
Lease liabilities | $ 19,368 |
Acquisition - Acquired Assets a
Acquisition - Acquired Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Aug. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 |
The preliminary fair values of the acquired assets and liabilities as of the acquisition date | ||||
Goodwill | $ 52,679 | $ 27,348 | $ 27,348 | |
Osprey Biotechnics, Inc. ("Osprey") | ||||
The preliminary fair values of the acquired assets and liabilities as of the acquisition date | ||||
Working capital, net | $ 2,366 | |||
Property, plant and equipment | 2,005 | |||
Definite-lived intangible assets | 32,400 | |||
Goodwill | 25,331 | |||
Net assets acquired | $ 62,102 |
Acquisition - Additional Inform
Acquisition - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Aug. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | |||
Aggregate cash consideration | $ 54,549 | $ 9,838 | |
Minimum | |||
Business Acquisition [Line Items] | |||
Estimated useful life of definite-lived intangible assets | 5 years | ||
Maximum | |||
Business Acquisition [Line Items] | |||
Estimated useful life of definite-lived intangible assets | 12 years | ||
Osprey Biotechnics, Inc. ("Osprey") | |||
Business Acquisition [Line Items] | |||
Aggregate cash consideration | $ 54,549 | ||
Estimated future payment, liability | 7,553 | ||
Minimum additional consideration | $ 4,840 |
Statements of Operations (Detai
Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statements Of Operations Additional Information [Line Items] | ||||
Total | $ 214,012 | $ 218,223 | $ 403,732 | $ 418,376 |
United States | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 122,917 | 126,065 | 241,404 | 240,552 |
Latin America and Canada | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 42,704 | 40,273 | 79,445 | 79,156 |
Europe, Middle East and Africa | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 27,660 | 26,186 | 51,353 | 51,022 |
Asia Pacific | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 20,731 | 25,699 | 31,530 | 47,646 |
Animal Health | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 143,689 | 139,562 | 265,539 | 270,751 |
Animal Health | MFAs and other | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 91,955 | 93,054 | 166,989 | 180,058 |
Animal Health | Nutritional Specialties | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 33,062 | 29,460 | 63,495 | 56,430 |
Animal Health | Vaccines | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 18,672 | 17,048 | 35,055 | 34,263 |
Mineral Nutrition | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | 55,685 | 62,319 | 108,334 | 117,157 |
Performance Products | ||||
Statements Of Operations Additional Information [Line Items] | ||||
Total | $ 14,638 | $ 16,342 | $ 29,859 | $ 30,468 |
Statements of Operations - Inte
Statements of Operations - Interest Expense and Depreciation and Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Interest expense, net | ||||
Amortization of debt issuance costs and debt discount | $ 221 | $ 220 | $ 442 | $ 441 |
Acquisition-related accrued interest | 79 | 0 | 132 | |
Other | 76 | 120 | 156 | 283 |
Interest expense | 3,937 | 3,462 | 7,770 | 6,705 |
Interest (income) | (505) | (447) | (984) | (907) |
Interest expense, net | 3,432 | 3,015 | 6,786 | 5,798 |
Depreciation and amortization | ||||
Depreciation of property, plant and equipment | 5,840 | 5,308 | 11,571 | 10,496 |
Amortization of intangible assets | 2,296 | 1,521 | 4,334 | 3,012 |
Amortization of other assets | 12 | 12 | 24 | 24 |
Depreciation and amortization | 8,148 | 6,841 | 15,929 | 13,532 |
Term Loan | ||||
Interest expense, net | ||||
Interest expense | 2,031 | 2,202 | 4,079 | 4,314 |
Revolving credit facility | ||||
Interest expense, net | ||||
Interest expense | $ 1,530 | $ 920 | $ 2,961 | $ 1,667 |
Statements of Operations - Addi
Statements of Operations - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2019 | Jun. 30, 2019 | |
Statements Of Operations Additional Information [Line Items] | ||
Deferred revenue | $ 5,130 | $ 5,464 |
Current deferred revenue, included in accrued expense and other current liabilities | $ 1,082 | $ 965 |
Customer | Maximum | ||
Statements Of Operations Additional Information [Line Items] | ||
Payment term | 120 days | |
Average worldwide collection period for accounts receivable | 70 days | |
Customer | Minimum | ||
Statements Of Operations Additional Information [Line Items] | ||
Payment term | 30 days | |
Average worldwide collection period for accounts receivable | 60 days |
Balance Sheets-Additional Inf_3
Balance Sheets-Additional Information - Schedule of inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Inventories | ||
Raw materials | $ 73,394 | $ 64,441 |
Work-in-process | 10,489 | 10,699 |
Finished goods | 109,626 | 123,182 |
Inventory, net | $ 193,509 | $ 198,322 |
Balance Sheets-Additional Inf_4
Balance Sheets-Additional Information - Other balance sheet items (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2019 | |
Goodwill roll-forward | |||
Balance at beginning of period | $ 27,348 | $ 27,348 | |
Osprey acquisition | 25,331 | ||
Balance at end of period | $ 27,348 | 52,679 | |
Other assets | |||
ROU operating lease assets | 23,115 | ||
Deferred income taxes | 16,770 | 17,039 | |
Deposits | 7,024 | 6,809 | |
Insurance investments | 5,431 | 5,521 | |
Equity method investments | 4,196 | 4,902 | |
Indemnification asset | 3,000 | 3,000 | |
Deferred financing fees | 1,531 | 1,276 | |
Other | 7,496 | 8,216 | |
Other assets, total | 45,448 | 69,878 | |
Accrued expenses and other current liabilities | |||
Employee related | 28,298 | 29,845 | |
Current operating lease liabilities | 6,672 | ||
Commissions and rebates | 8,397 | 7,942 | |
Insurance-related | 1,279 | 1,291 | |
Professional fees | 5,212 | 5,222 | |
Income and other taxes | 6,067 | 4,791 | |
Restructuring costs | 3,590 | 2,568 | |
Other | 15,655 | 14,840 | |
Accrued expenses and other current liabilities, total | 68,498 | 73,171 | |
Restructuring Reserve [Roll Forward] | |||
Liability balance at June 30, 2019 | 5,590 | 5,590 | |
Charges | $ 425 | 425 | |
Payments | (1,847) | ||
Liability balance at December 31, 2019 | 5,590 | 4,168 | |
Other liabilities | |||
Long-term operating lease liabilities | 17,453 | ||
Long term and deferred income taxes | 8,978 | 9,520 | |
Supplemental retirement benefits, deferred compensation and other | 7,605 | 7,837 | |
Acquisition-related consideration | 7,678 | ||
International retirement plans | 5,133 | 5,247 | |
U.S. pension plan | 3,934 | 3,146 | |
Restructuring costs | 2,000 | 1,600 | |
Other long term liabilities | 15,144 | 13,917 | |
Other liabilities, total | 42,794 | 66,398 | |
Accumulated other comprehensive income (loss) | |||
Derivative instruments | (594) | (598) | |
Foreign currency translation adjustment | (71,225) | (75,845) | |
Unrecognized net pension gains (losses) | (20,050) | (19,792) | |
(Provision) benefit for income taxes on derivative instruments | 148 | 149 | |
(Provision) benefit for income taxes on long-term intercompany investments | 8,166 | 8,166 | |
(Provision) benefit for income taxes on pension gains (losses) | (2,626) | (2,690) | |
Accumulated other comprehensive income (loss) | $ (86,181) | $ (90,610) |
Balance Sheets-Additional Inf_5
Balance Sheets-Additional Information - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2019 | |
Additional Information Of Balance Sheet [Line Items] | |||
Equity method investments | $ 4,196 | $ 4,902 | |
Expense paid for restructuring | 1,847 | ||
Restructuring Charges | $ 425 | 425 | |
Accrued expenses and other current liabilities | 68,498 | 73,171 | |
Other liabilities | 42,794 | 66,398 | |
Animal Health | |||
Additional Information Of Balance Sheet [Line Items] | |||
Equity method investments | 3,287 | 3,548 | |
Pre tax restructuring charges | 6,281 | ||
Charges related to termination of a contract manufacturing agreement | 3,500 | ||
Employee separation costs | 2,781 | ||
Expense paid for restructuring | $ 691 | ||
Accrued expenses and other current liabilities | 2,568 | ||
Other liabilities | 1,600 | ||
Additional charge for employee separation costs | $ 500 |
Debt - Summary of long-term deb
Debt - Summary of long-term debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Debt | ||
Term A Loan due June 2022 | $ 225,000 | $ 231,250 |
Other | 40 | |
Long-term debt including current maturities | 225,000 | 231,290 |
Unamortized debt issuance costs and debt discount | (929) | (1,115) |
Long-term debt after debt issuance costs | 224,071 | 230,175 |
Less: current maturities | (15,625) | (12,540) |
Long-term debt | $ 208,446 | $ 217,635 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 6 Months Ended | |||
Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jul. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Revolving credit facility | $ 149,000,000 | $ 96,000,000 | ||
Interest Rate Swap | ||||
Debt Instrument [Line Items] | ||||
Percentage of interest rate | 1.8325% | |||
Derivative, Notional Amount | 150,000 | $ 150,000 | ||
Credit Agreement [Member] | Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 250,000,000 | |||
Revolving credit facility | 149,000,000 | |||
Outstanding letters of credit | 2,709,000 | |||
Aggregate available credit facilities | $ 98,291,000 | |||
Weighted-average interest rates | 3.58% | 3.71% | ||
Percentage of interest rate | 3.51% | |||
Credit Agreement [Member] | Term A Loans And Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Maturity dates | June 29, 2022 | |||
Covenant requirement, permitted leverage ratio | a maximum First Lien Net Leverage Ratio and (ii) a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis | |||
Debt instrument, covenant compliance | we were in compliance with the financial covenants | |||
Credit Agreement [Member] | Term A Loans And Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 2.00%, 1.75% or 1.50% | |||
Floor rate | 0.00% | |||
Credit Agreement [Member] | Term A Loans And Revolving Credit Facility [Member] | Eurodollar [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 2.00%, 1.75% or 1.50% | |||
Credit Agreement [Member] | Term A Loans And Revolving Credit Facility [Member] | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 1.00%, 0.75% or 0.50% | |||
Credit Agreement [Member] | Term A Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 250,000,000 | |||
Weighted-average interest rates | 3.46% | 3.47% | ||
Percentage of interest rate | 3.61% |
Leases - ROU assets and the rel
Leases - ROU assets and the related lease liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases | |
Remaining non-cancelable lease terms | 16 years |
Operating lease ROU assets included in Other Assets | $ 23,115 |
Operating lease ROU assets included in Other Assets | us-gaap:OtherAssetsNoncurrent |
Current portion included in Accrued expenses and other current liabilities | $ 6,672 |
Current portion included in Accrued expenses and other current liabilities | us-gaap:AccruedLiabilitiesCurrent |
Non-current portion included in Other liabilities | $ 17,453 |
Non-current portion included in Other liabilities | us-gaap:OtherLiabilitiesNoncurrent |
Total operating lease liabilities | $ 24,125 |
Leases - Composition of net lea
Leases - Composition of net lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 31, 2019 | Dec. 31, 2019 | |
Leases | ||
Operating lease expense | $ 1,911 | $ 3,762 |
Variable lease expense | 307 | 631 |
Short-term lease expense | 214 | 417 |
Total lease cost | $ 2,432 | $ 4,810 |
Leases - Other supplemental inf
Leases - Other supplemental information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Leases | ||
Operating cash flows used for ROU operating leases | $ 1,968 | $ 3,645 |
Right of use assets obtained in exchange for new operating lease liabilities (non-cash) | $ 3,972 | $ 7,762 |
Weighted average remaining lease term (in years) - ROU operating leases | 6 years 4 months 24 days | 6 years 4 months 24 days |
Weighted average discount rate - ROU operating leases | 4.17% | 4.17% |
Leases - Maturities of future l
Leases - Maturities of future lease liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases | |
2020 | $ 3,853 |
2021 | 6,627 |
2022 | 5,012 |
2023 | 2,765 |
2024 | 2,283 |
2025 and thereafter | 7,273 |
Total lease payments | 27,813 |
Less: interest | 3,688 |
Total operating lease liabilities | $ 24,125 |
Leases - Future minimum lease p
Leases - Future minimum lease payments for operating leases accounted for under ASC 840 (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases | |
2020 | $ 5,815 |
2021 | 4,160 |
2022 | 3,191 |
2023 | 1,445 |
2024 | 865 |
Thereafter | 765 |
Total minimum lease payments | $ 16,241 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Certain relatives of Jack C. Bendheim | Compensation and benefit for services provided | ||||
Related Party Transaction [Line Items] | ||||
Aggregate compensation and benefits | $ 390 | $ 430 | $ 841 | $ 1,213 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Dec. 31, 2019USD ($)item | Jun. 30, 2019USD ($) | |
Commitments And Contingencies [Line Items] | ||
Number of potentially responsible parties | item | 140 | |
Current And Long Term Liabilities | ||
Commitments And Contingencies [Line Items] | ||
Accrual for environmental loss contingencies payments | $ | $ 5,096 | $ 5,890 |
Derivatives - Company's Outstan
Derivatives - Company's Outstanding Derivatives (Details) R$ in Thousands, $ in Thousands | Dec. 31, 2019BRL (R$) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) |
Equity Option | Brazilian Real puts | |||
Derivative [Line Items] | |||
Notional amount | R$ | R$ 108000 | ||
Fair value | $ 659 | $ 413 | |
Fair value | (217) | (30) | |
Swap | Interest Rate Swap | |||
Derivative [Line Items] | |||
Notional amount | 150,000 | ||
Swap | Interest Rate Swap | Other liabilities | |||
Derivative [Line Items] | |||
Fair value | $ (1,040) | $ (977) |
Derivatives - Effects of Deriva
Derivatives - Effects of Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | ||||
Cost of goods sold | $ 144,908 | $ 149,579 | $ 276,965 | $ 283,927 |
Interest expense, net | 3,432 | 3,015 | 6,786 | 5,798 |
Equity Option | Cash Flow Hedging | Brazilian Real puts | Cost of Sales | ||||
Derivative [Line Items] | ||||
Gain (loss) recognized in consolidated statements of operations | (63) | (108) | 1,084 | |
Equity Option | Cash Flow Hedging | Brazilian Real puts | Other Comprehensive Income (Loss) | ||||
Derivative [Line Items] | ||||
Gain (loss) recorded in OCI | 422 | 513 | 59 | 404 |
Swap | Interest Rate Swap | Cash Flow Hedging | Other Comprehensive Income (Loss) | ||||
Derivative [Line Items] | ||||
Gain (loss) recorded in OCI | $ 658 | $ (2,756) | $ (63) | $ (2,106) |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) | 6 Months Ended | ||
Dec. 31, 2019 | Jun. 30, 2019 | Jul. 31, 2017 | |
Derivative [Line Items] | |||
Maximum maturity period for Foreign Currency Derivatives | Jun. 30, 2021 | ||
Other Current Assets | |||
Derivative [Line Items] | |||
Fair values of total foreign currency derivatives outstanding | $ 442 | $ 383 | |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative, Notional Amount | $ 150,000 | $ 150,000 | |
Percentage of interest rate | 1.8325% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Fair Value of Assets (Liabilities) | ||
Short-term investments | $ 49,000 | $ 24,000 |
Level 1 | ||
Fair Value of Assets (Liabilities) | ||
Short-term investments | 49,000 | 24,000 |
Level 2 | ||
Fair Value of Assets (Liabilities) | ||
Foreign currency derivatives | 442 | 383 |
Interest rate swap (liability) | (1,040) | $ (977) |
Level 3 | ||
Fair Value of Assets (Liabilities) | ||
Contingent consideration on acquisitions | $ (7,678) |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in fair value of Level 3 liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Business Combination Contingent Consideration Liability [Roll Forward] | |||
Acquisition-related accrued interest | $ (79) | $ 0 | $ (132) |
Level 3 | |||
Business Combination Contingent Consideration Liability [Roll Forward] | |||
Acquisition-related accrued interest | (125) | ||
Balance at December 31, 2019 | $ (7,678) | (7,678) | |
Osprey Biotechnics, Inc. ("Osprey") | Level 3 | |||
Business Combination Contingent Consideration Liability [Roll Forward] | |||
Acquisition | $ (7,553) |
Business Segments - Segments in
Business Segments - Segments in Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Segment Reporting Information | |||||
Net sales | $ 214,012 | $ 218,223 | $ 403,732 | $ 418,376 | |
Depreciation and amortization | 8,148 | 6,841 | 15,929 | 13,532 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Income before income taxes | 16,895 | 20,074 | 20,467 | 42,779 | |
Interest expense, net | 3,432 | 3,015 | 6,786 | 5,798 | |
Depreciation and amortization | 8,148 | 6,841 | 15,929 | 13,532 | |
Stock-based compensation | 1,129 | 1,129 | |||
Acquisition-related costs of goods sold | 280 | ||||
Foreign currency (gains) losses, net | (718) | 2,617 | 2,503 | (18) | |
Identifiable assets | 788,318 | $ 726,671 | 788,318 | ||
Animal Health | |||||
Segment Reporting Information | |||||
Net sales | 143,689 | 139,562 | 265,539 | 270,751 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Restructure costs | 6,281 | ||||
Mineral Nutrition | |||||
Segment Reporting Information | |||||
Net sales | 55,685 | 62,319 | 108,334 | 117,157 | |
Performance Products | |||||
Segment Reporting Information | |||||
Net sales | 14,638 | 16,342 | 29,859 | 30,468 | |
Operating Segments | |||||
Segment Reporting Information | |||||
Net sales | 214,012 | 218,223 | 403,732 | 418,376 | |
Depreciation and amortization | 7,757 | 6,388 | 15,131 | 12,614 | |
Adjusted EBITDA - Total segments | 38,979 | 41,523 | 68,367 | 80,518 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Income before income taxes | 16,895 | 20,074 | 20,467 | 42,779 | |
Interest expense, net | 3,432 | 3,015 | 6,786 | 5,798 | |
Depreciation and amortization | 7,757 | 6,388 | 15,131 | 12,614 | |
Restructure costs | 425 | ||||
Stock-based compensation | 564 | 564 | 1,129 | 1,129 | |
Acquisition-related costs of goods sold | 280 | ||||
Acquisition-related transaction costs | 462 | ||||
Acquisition-related other | 167 | 167 | |||
Other, net | (1,506) | (1,506) | |||
Foreign currency (gains) losses, net | (718) | 2,617 | 2,503 | (18) | |
Adjusted EBITDA - Total segments | 38,979 | 41,523 | 68,367 | 80,518 | |
Identifiable assets | 676,439 | 609,412 | 676,439 | ||
Operating Segments | Animal Health | |||||
Segment Reporting Information | |||||
Net sales | 143,689 | 139,562 | 265,539 | 270,751 | |
Depreciation and amortization | 6,711 | 5,493 | 13,095 | 10,849 | |
Adjusted EBITDA - Total segments | 33,838 | 35,925 | 58,899 | 71,641 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Depreciation and amortization | 6,711 | 5,493 | 13,095 | 10,849 | |
Adjusted EBITDA - Total segments | 33,838 | 35,925 | 58,899 | 71,641 | |
Identifiable assets | 572,921 | 508,864 | 572,921 | ||
Operating Segments | Mineral Nutrition | |||||
Segment Reporting Information | |||||
Net sales | 55,685 | 62,319 | 108,334 | 117,157 | |
Depreciation and amortization | 629 | 616 | 1,242 | 1,213 | |
Adjusted EBITDA - Total segments | 3,684 | 4,084 | 7,159 | 6,647 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Depreciation and amortization | 629 | 616 | 1,242 | 1,213 | |
Adjusted EBITDA - Total segments | 3,684 | 4,084 | 7,159 | 6,647 | |
Identifiable assets | 69,988 | 67,662 | 69,988 | ||
Operating Segments | Performance Products | |||||
Segment Reporting Information | |||||
Net sales | 14,638 | 16,342 | 29,859 | 30,468 | |
Depreciation and amortization | 417 | 279 | 794 | 552 | |
Adjusted EBITDA - Total segments | 1,457 | 1,514 | 2,309 | 2,230 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Depreciation and amortization | 417 | 279 | 794 | 552 | |
Adjusted EBITDA - Total segments | 1,457 | 1,514 | 2,309 | 2,230 | |
Identifiable assets | 33,530 | 32,886 | 33,530 | ||
Corporate | |||||
Segment Reporting Information | |||||
Depreciation and amortization | 391 | 453 | 798 | 918 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||||
Depreciation and amortization | 391 | 453 | 798 | 918 | |
Corporate costs | 10,491 | $ 9,918 | 20,219 | $ 18,804 | |
Identifiable assets | $ 111,879 | $ 117,259 | $ 111,879 |
Business Segments - Additional
Business Segments - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jun. 30, 2019 |
Equity method investments | ||
Equity method investments | $ 4,902 | $ 4,196 |
Animal Health | ||
Equity method investments | ||
Equity method investments | 3,548 | 3,287 |
Performance Products | ||
Equity method investments | ||
Equity method investments | $ 852 | $ 759 |