Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2018 | Oct. 30, 2018 | |
Entity Registrant Name | PHIBRO ANIMAL HEALTH CORP | |
Entity Central Index Key | 1,069,899 | |
Trading Symbol | pahc | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 20,209,534 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 20,166,034 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||
Net sales | $ 200,153 | $ 193,412 |
Cost of goods sold | 134,348 | 130,030 |
Gross profit | 65,805 | 63,382 |
Selling, general and administrative expenses | 42,952 | 40,995 |
Operating income | 22,853 | 22,387 |
Interest expense, net | 2,783 | 3,118 |
Foreign currency (gains) losses, net | (2,635) | 325 |
Income before income taxes | 22,705 | 18,944 |
Provision for income taxes | 6,391 | 3,052 |
Net income | $ 16,314 | $ 15,892 |
Net income per share | ||
basic (in dollars per share) | $ 0.40 | $ 0.40 |
diluted (in dollars per share) | $ 0.40 | $ 0.39 |
Weighted average common shares outstanding | ||
basic (in shares) | 40,369 | 39,944 |
diluted (in shares) | 40,560 | 40,293 |
Dividends per share (in dollars per share) | $ 0.10 | $ 0.10 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 16,314 | $ 15,892 |
Change in fair value of derivative instruments | 541 | (622) |
Foreign currency translation adjustment | (7,682) | 3,233 |
Unrecognized net pension gains (losses) | 108 | 131 |
(Provision) benefit for income taxes | (162) | 187 |
Other comprehensive income (loss) | (7,195) | 2,929 |
Comprehensive income | $ 9,119 | $ 18,821 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 25,860 | $ 29,168 |
Short-term investments | 50,000 | 50,000 |
Accounts receivable, net | 134,815 | 135,742 |
Inventories, net | 185,794 | 178,170 |
Other current assets | 23,324 | 22,381 |
Total current assets | 419,793 | 415,461 |
Property, plant and equipment, net | 130,786 | 130,108 |
Intangibles, net | 51,888 | 51,978 |
Goodwill | 27,348 | 27,348 |
Other assets | 48,660 | 46,784 |
Total assets | 678,475 | 671,679 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current portion of long-term debt | 12,580 | 12,579 |
Accounts payable | 61,870 | 59,498 |
Accrued expenses and other current liabilities | 54,281 | 71,144 |
Total current liabilities | 128,731 | 143,221 |
Revolving credit facility | 85,000 | 70,000 |
Long-term debt | 226,750 | 229,802 |
Other liabilities | 45,937 | 43,702 |
Total liabilities | 486,418 | 486,725 |
Commitments and contingencies (Note 8) | ||
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,209,534 and 19,992,204 shares issued and outstanding at September 30, 2018 and June 30, 2018, respectively; 30,000,000 Class B shares authorized, 20,166,034 and 20,365,504 shares issued and outstanding at September 30, 2018 and June 30, 2018, respectively | 4 | 4 |
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding | ||
Paid-in capital | 130,649 | 129,873 |
Retained earnings | 145,082 | 131,560 |
Accumulated other comprehensive income (loss) | (83,678) | (76,483) |
Total stockholders' equity | 192,057 | 184,954 |
Total liabilities and stockholders' equity | $ 678,475 | $ 671,679 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Sep. 30, 2018 | Jun. 30, 2018 |
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 |
Class A common stock | ||
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 | 20,209,534 | 19,992,204 |
Common stock, shares outstanding | 20,209,534 | 19,992,204 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 20,166,034 | 20,365,504 |
Common stock, shares outstanding | 20,166,034 | 20,365,504 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
OPERATING ACTIVITIES | ||
Net income | $ 16,314 | $ 15,892 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 6,691 | 6,644 |
Amortization of debt issuance costs and debt discount | 221 | 221 |
Stock-based compensation | 565 | |
Acquisition-related cost of goods sold | 249 | |
Acquisition-related accrued compensation | 437 | |
Acquisition-related accrued interest | 253 | |
Deferred income taxes | (473) | 770 |
Foreign currency (gains) losses, net | (2,981) | 345 |
Other | 266 | 213 |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Accounts receivable, net | (85) | (8,386) |
Inventories, net | (9,504) | (5,196) |
Other current assets | (3,654) | (4,458) |
Other assets | 371 | 332 |
Accounts payable | 2,794 | 3,652 |
Accrued expenses and other liabilities | (9,245) | (6,165) |
Net cash provided (used) by operating activities | 1,280 | 4,803 |
INVESTING ACTIVITIES | ||
Capital expenditures | (6,049) | (4,998) |
Business acquisitions | (9,838) | (11,562) |
Other, net | (262) | (272) |
Net cash provided (used) by investing activities | (16,149) | (16,832) |
FINANCING ACTIVITIES | ||
Revolving credit facility borrowings | 71,000 | 61,870 |
Revolving credit facility repayments | (56,000) | (41,870) |
Payments of long-term debt, capital leases and other | (3,215) | (1,652) |
Issuance of acquisition note payable | 3,775 | |
Proceeds from common shares issued | 211 | 3,486 |
Dividends paid | (4,037) | (3,989) |
Net cash provided (used) by financing activities | 11,734 | 17,845 |
Effect of exchange rate changes on cash | (173) | 198 |
Net increase (decrease) in cash and cash equivalents | (3,308) | 6,014 |
Cash and cash equivalents at beginning of period | 29,168 | 56,083 |
Cash and cash equivalents at end of period | $ 25,860 | $ 62,097 |
Description of Business
Description of Business | 3 Months Ended |
Sep. 30, 2018 | |
Description Of Business [Abstract] | |
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, cattle, dairy 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 months ended September 30, 2018 and 2017, 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, 2018 (the “Annual Report”), filed with the Securities and Exchange Commission on August 27, 2018 (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, 2018, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, 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 in 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 | 3 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
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”) 2014-09, Revenue from Contracts with Customers (Topic 606), Revenue Recognition We recognize revenue from product sales when control of the products has transferred to the customer, typically when title and risk of loss transfer to the customer. Certain of our businesses have terms where control of the underlying products transfers to the customer on shipment, while others have terms where control transfers to the customer on delivery. Revenue reflects the total consideration to which we expect to be entitled, in exchange for delivery of products or services, net of variable consideration. Variable consideration includes customer programs and incentive offerings, including pricing arrangements, rebates and other volume-based incentives. We record reductions to revenue for estimated variable consideration at the time we record the sale. Our estimates for variable consideration primarily use the most-likely amount method. Such estimates are generally based on contractual terms and historical experience, and are adjusted to reflect future expectations as new information becomes available. Historically, we have not had significant adjustments to our estimates of customer incentives. Sales returns and product recalls have been insignificant and infrequent due to the nature of the products we sell. Net sales include shipping and handling fees billed to customers. The associated costs are considered fulfillment activities, not additional promised services to the customer, and are included in costs of goods sold in the consolidated statements of operations when the related revenue is recognized. Net sales exclude value-added and other taxes based on sales. 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 for all periods presented. Three Months For the Periods Ended September 30 2018 2017 Net income $ 16,314 $ 15,892 Weighted average number of shares – basic 40,369 39,944 Dilutive effect of stock options and restricted stock units 191 349 Weighted average number of shares – diluted 40,560 40,293 Net income per share basic $ 0.40 $ 0.40 diluted $ 0.40 $ 0.39 Dividends We declared and paid a quarterly cash dividend of $0.10 per share, totaling $4,037 during the three months ended September 30, 2018, to holders of our Class A common stock and Class B common stock. On November 5, 2018, we declared a dividend of $0.12 per share, to be paid December 19, 2018. New Accounting Standards ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ASU 2016-02, Leases (Topic 842) ASU 2014-09, Revenue from Contracts with Customers (Topic 606) The total cumulative effect of initial adoption of the new standard resulted in the following changes to our consolidated balance sheet: As of July 1, 2018 Effect of Adoption Post-adoption Other current assets $ 2,100 $ 24,481 Other assets 2,325 49,109 Accrued expenses and other current liabilities 343 71,487 Other liabilities 2,837 46,539 Retained earnings $ 1,245 $ 132,805 The effect of the adoption of the new revenue standard on our consolidated balance sheet and consolidated statement of operations was: As of September 30, 2018 Effect of adoption As reported ASSETS Other current assets $ 56 $ 23,324 Other assets 56 48,660 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued expenses and other current liabilities (80 ) 54,281 Other liabilities 26 45,937 Retained earnings $ 166 $ 145,082 Three Months For the Period Ended September 30, 2018 Effect of adoption As reported Net sales $ 198 $ 200,153 Provision for income taxes 32 6,391 Net income $ 166 $ 16,314 For changes to our policy as a result of the adoption of ASU 2014-09, see “—Summary of Significant Accounting Policies and New Accounting Standards—Revenue Recognition.” See “Statements of Operations—Additional Information” for our disclosures regarding disaggregated revenue, deferred revenue and customer payment terms. |
Statements of Operations-Additi
Statements of Operations-Additional Information | 3 Months Ended |
Sep. 30, 2018 | |
Statements Of Operations Additional Information [Abstract] | |
Statements of Operations-Additional Information | 3. Statements of Operations—Additional Information Disaggregated revenue, deferred revenue and customer payment terms We develop, manufacture and market products for a broad range of 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 either directly to integrated poultry, swine and cattle integrators or 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: The MFAs and other business primarily consists 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 and swine. They protect animals from either viral or bacterial disease challenges. We also manufacture and distribute autogenous vaccine products and market adjuvants to vaccine manufacturers. We have developed 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. Mineral nutrition products are manufactured and marketed for a broad range of 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 For the Periods Ended September 30 2018 2017 Animal Health MFAs and other $ 87,004 $ 79,603 Nutritional specialties 26,970 30,777 Vaccines 17,215 18,461 Total Animal Health $ 131,189 $ 128,841 Mineral Nutrition 54,838 52,073 Performance Products 14,126 12,498 Total $ 200,153 $ 193,412 Net Sales by Region Three Months For the Periods Ended September 30 2018 2017 United States $ 116,093 $ 113,079 Latin America and Canada 38,258 32,368 Europe, Middle East and Africa 24,858 25,308 Asia Pacific 20,944 22,657 Total $ 200,153 $ 193,412 Net sales by region are based on country of destination. Total deferred revenue was $7,414 and $4,530 as of September 30, 2018 and June 30, 2018, respectively. Accrued expenses and other current liabilities included $778 and $508 of the total deferred revenue as of September 30, 2018 and June 30, 2018, 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 days after the revenue is recognized. Interest expense and Depreciation and amortization Three Months For the Periods Ended September 30 2018 2017 Interest expense, net Term loan $ 2,112 $ 2,033 Revolving credit facility 747 681 Amortization of debt issuance costs and debt discount 221 221 Acquisition-related accrued interest — 253 Other 163 239 Interest expense 3,243 3,427 Interest (income) (460 ) (309 ) $ 2,783 $ 3,118 Depreciation and amortization Depreciation of property, plant and equipment $ 5,188 $ 5,183 Amortization of intangible assets 1,491 1,449 Amortization of other assets 12 12 $ 6,691 $ 6,644 |
Balance Sheets-Additional Infor
Balance Sheets-Additional Information | 3 Months Ended |
Sep. 30, 2018 | |
Balance Sheets Additional Information [Abstract] | |
Balance Sheets-Additional Information | 4. Balance Sheets—Additional Information As of September 30, 2018 June 30, 2018 Inventories Raw materials $ 79,384 $ 62,373 Work-in-process 14,707 14,731 Finished goods 91,703 101,066 $ 185,794 $ 178,170 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 $3,491 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. As of September 30, 2018 June 30, 2018 Accrued expenses and other current liabilities Employee related $ 19,852 $ 27,333 Commissions and rebates 5,784 7,341 Insurance-related 1,236 1,168 Professional fees 4,331 4,350 Income and other taxes 4,406 3,610 Acquisition-related consideration 3,877 12,845 Fair value of derivatives 60 — Other 14,735 14,497 $ 54,281 $ 71,144 During the quarter ended September 30, 2018, we accelerated the closing date and completed the purchase of intellectual property and certain other assets comprising the MJ Biologics, Inc. (“MJB”) business relating to animal vaccines. The Company and MJB had originally agreed in January 2015 to the purchase business combination, with a contemplated final closing date in January 2021. The final amount due, net of previously paid amounts, was $12,775, including $9,000 paid in July 2018 and a $3,775 acquisition note payable in January 2019. As of September 30, 2018 June 30, 2018 Accumulated other comprehensive income (loss) Derivative instruments $ 5,527 $ 4,986 Foreign currency translation adjustment (74,780 ) (67,098 ) Unrecognized net pension gains (losses) (18,105 ) (18,213 ) (Provision) benefit for income taxes on derivative instruments (1,376 ) (1,241 ) (Provision) benefit for income taxes on long-term intercompany investments 8,166 8,166 (Provision) benefit for income taxes on pension gains (losses) (3,110 ) (3,083 ) $ (83,678 ) $ (76,483 ) |
Debt
Debt | 3 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 5. 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 agreement governing the Credit Facilities) occur. As of September 30, 2018, we were in compliance with the covenants of the Credit Facilities. As of September 30, 2018, we had $85,000 in borrowings under the Revolver and had outstanding letters of credit of $4,191, leaving $160,809 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 one year or less. As of September 30, 2018, the interest rates for the Revolver and the Term A Loan were 3.76% and 3.49%, respectively. The weighted-average interest rates for the outstanding revolving credit facilities were 3.68% and 2.98% for the three months ended September 30, 2018 and 2017, respectively. The weighted-average interest rates for the term loans were 3.43% and 3.22% for the three months ended September 30, 2018 and 2017, respectively. In July 2017, we entered into an interest rate swap agreement on $150 million of notional principal that effectively converts the floating LIBOR or base rate 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 interest rate swap has been designated as a highly effective cash flow hedge. For additional details, see “—Derivatives.” Long-Term Debt As of September 30, 2018 June 30, 2018 Term A Loan due June 2022 $ 240,625 $ 243,750 Capitalized lease obligations 99 118 240,724 243,868 Unamortized debt issuance costs and debt discount (1,394 ) (1,487 ) 239,330 242,381 Less: current maturities (12,580 ) (12,579 ) $ 226,750 $ 229,802 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 6. 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 $783 and $720 during the three months ended September 30, 2018 and 2017, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family. |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes In December 2017, the United States government enacted comprehensive income tax legislation (the “Tax Act”). The Tax Act makes broad and complex changes to United States income tax law and includes numerous elements that affect the Company, including a reduced federal corporate income tax rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings and changes to business-related exclusions, deductions and credits. The Tax Act also has consequences related to our international operations. We have substantially completed our analysis and accounting for the Tax Act. However, the ultimate financial statement effects of the Tax Act could differ from the amounts we have recognized to date, due to additional information that becomes available, changes in regulations or interpretations, legislative action to address questions around the Tax Act or changes in accounting standards for income taxes or related interpretations. As such, the amounts we have recorded are provisional and we could adjust such amounts in the three months ended December 31, 2018, if additional new information so requires. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. 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 $6,581 and $6,833 at September 30, 2018 and June 30, 2018, 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, our insurance policies will cover such claims. 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 | 3 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | 9. 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 as an asset or liability with a corresponding amount 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 or base rate 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 2020. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges. The following table summarizes the outstanding derivatives that are designated and effective as cash flow hedges as of September 30, 2018: Instrument Hedge Notional Consolidated Fair value as of September 30, June 30, Options Brazilian Real calls R$94,500 (1 ) $ 496 $ 71 Options Brazilian Real puts R$94,500 (1 ) $ (556 ) $ — Swap Interest rate swap $150,000 Other assets $ 5,728 $ 5,078 (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. As of September 30, 2018, the net fair value of $60 was included in accrued expenses and other current liabilities. As of June 30, 2018, the net fair value of $71 was included in other current assets. The following tables show the effects of derivatives on the consolidated statements of operations and other comprehensive income for the periods ended September 30, 2018 and 2017. For the Three Months Ended September 30 Instrument Hedge Gain (Loss) recorded in OCI Gain (Loss) recognized in Consolidated Statement 2018 2017 Consolidated 2018 2017 2018 2017 Options Brazilian Real puts and calls $ (109 ) $ (905 ) Cost of goods sold $ 1,084 $ 186 $ 134,348 $ 130,030 Swap Interest rate swap $ 650 $ 283 Interest expense, net $ — $ — $ 2,783 $ 3,118 We recognize gains (losses) related to these foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Realized net gains of $1,084 related to matured contracts were recorded as a component of inventory as of June 30, 2018 and were recognized as an offset to costs of goods sold during the three months ended September 30, 2018. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 10. Fair Value Measurements Short-term investments As of September 30, 2018, 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. 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, and interest rate curves. Fair Value of Assets (Liabilities) As of September 30, 2018 June 30, 2018 Level 1 Level 2 Level 1 Level 2 Short-term investments $ 50,000 $ — $ 50,000 $ — Derivatives asset (liability) $ — $ (60 ) $ — $ 71 Interest rate swap $ — $ 5,728 $ — $ 5,078 There were no Level 3 fair value measurements for the periods presented. |
Business Segments
Business Segments | 3 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Business Segments | 11. 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. Corporate assets include cash and cash equivalents, certain debt issue costs, income tax related assets and certain other assets. 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 For the Periods Ended September 30 2018 2017 Net sales Animal Health $ 131,189 $ 128,841 Mineral Nutrition 54,838 52,073 Performance Products 14,126 12,498 Total segments $ 200,153 $ 193,412 Depreciation and amortization Animal Health $ 5,356 $ 5,254 Mineral Nutrition 597 585 Performance Products 273 246 Total segments $ 6,226 $ 6,085 Adjusted EBITDA Animal Health $ 35,716 $ 33,742 Mineral Nutrition 2,563 3,716 Performance Products 716 248 Total segments $ 38,995 $ 37,706 Three Months For the Periods Ended September 30 2018 2017 Reconciliation of income before income taxes to Adjusted EBITDA Income before income taxes $ 22,705 $ 18,944 Interest expense, net 2,783 3,118 Depreciation and amortization – Total segments 6,226 6,085 Depreciation and amortization – Corporate 465 559 Corporate costs 8,886 7,589 Stock-based compensation 565 — Acquisition-related cost of goods sold — 249 Acquisition-related accrued compensation — 437 Acquisition-related transaction costs — 400 Foreign currency (gains) losses, net (2,635 ) 325 Adjusted EBITDA – Total segments $ 38,995 $ 37,706 As of September 30, 2018 June 30, 2018 Identifiable assets Animal Health $ 461,119 $ 455,704 Mineral Nutrition 73,895 69,779 Performance Products 29,048 24,040 Total segments 564,062 549,523 Corporate 114,413 122,156 Total $ 678,475 $ 671,679 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 $3,491 and $3,432 as of September 30, 2018 and June 30, 2018, respectively. The Performance Products segment includes an investment in an equity method investee of $528 and $437 as of September 30, 2018 and June 30, 2018, respectively. Corporate assets include cash and cash equivalents, short-term investments, certain 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) | 3 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize revenue from product sales when control of the products has transferred to the customer, typically when title and risk of loss transfer to the customer. Certain of our businesses have terms where control of the underlying products transfers to the customer on shipment, while others have terms where control transfers to the customer on delivery. Revenue reflects the total consideration to which we expect to be entitled, in exchange for delivery of products or services, net of variable consideration. Variable consideration includes customer programs and incentive offerings, including pricing arrangements, rebates and other volume-based incentives. We record reductions to revenue for estimated variable consideration at the time we record the sale. Our estimates for variable consideration primarily use the most-likely amount method. Such estimates are generally based on contractual terms and historical experience, and are adjusted to reflect future expectations as new information becomes available. Historically, we have not had significant adjustments to our estimates of customer incentives. Sales returns and product recalls have been insignificant and infrequent due to the nature of the products we sell. Net sales include shipping and handling fees billed to customers. The associated costs are considered fulfillment activities, not additional promised services to the customer, and are included in costs of goods sold in the consolidated statements of operations when the related revenue is recognized. Net sales exclude value-added and other taxes based on sales. |
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 for all periods presented. Three Months For the Periods Ended September 30 2018 2017 Net income $ 16,314 $ 15,892 Weighted average number of shares – basic 40,369 39,944 Dilutive effect of stock options and restricted stock units 191 349 Weighted average number of shares – diluted 40,560 40,293 Net income per share basic $ 0.40 $ 0.40 diluted $ 0.40 $ 0.39 |
Dividends | Dividends We declared and paid a quarterly cash dividend of $0.10 per share, totaling $4,037 during the three months ended September 30, 2018, to holders of our Class A common stock and Class B common stock. On November 5, 2018, we declared a dividend of $0.12 per share, to be paid December 19, 2018. |
New Accounting Standards | New Accounting Standards ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ASU 2016-02, Leases (Topic 842) ASU 2014-09, Revenue from Contracts with Customers (Topic 606) The total cumulative effect of initial adoption of the new standard resulted in the following changes to our consolidated balance sheet: As of July 1, 2018 Effect of Adoption Post-adoption Other current assets $ 2,100 $ 24,481 Other assets 2,325 49,109 Accrued expenses and other current liabilities 343 71,487 Other liabilities 2,837 46,539 Retained earnings $ 1,245 $ 132,805 The effect of the adoption of the new revenue standard on our consolidated balance sheet and consolidated statement of operations was: As of September 30, 2018 Effect of adoption As reported ASSETS Other current assets $ 56 $ 23,324 Other assets 56 48,660 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued expenses and other current liabilities (80 ) 54,281 Other liabilities 26 45,937 Retained earnings $ 166 $ 145,082 Three Months For the Period Ended September 30, 2018 Effect of adoption As reported Net sales $ 198 $ 200,153 Provision for income taxes 32 6,391 Net income $ 166 $ 16,314 For changes to our policy as a result of the adoption of ASU 2014-09, see “—Summary of Significant Accounting Policies and New Accounting Standards—Revenue Recognition.” See “Statements of Operations—Additional Information” for our disclosures regarding disaggregated revenue, deferred revenue and customer payment terms. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and New Accounting Standards (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of net income per share and weighted average shares | Three Months For the Periods Ended September 30 2018 2017 Net income $ 16,314 $ 15,892 Weighted average number of shares – basic 40,369 39,944 Dilutive effect of stock options and restricted stock units 191 349 Weighted average number of shares – diluted 40,560 40,293 Net income per share basic $ 0.40 $ 0.40 diluted $ 0.40 $ 0.39 |
Schedule of adoption to reported results | As of July 1, 2018 Effect of Post-adoption Other current assets $ 2,100 $ 24,481 Other assets 2,325 49,109 Accrued expenses and other current liabilities 343 71,487 Other liabilities 2,837 46,539 Retained earnings $ 1,245 $ 132,805 As of September 30, 2018 Effect of As reported ASSETS Other current assets $ 56 $ 23,324 Other assets 56 48,660 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued expenses and other current liabilities (80 ) 54,281 Other liabilities 26 45,937 Retained earnings $ 166 $ 145,082 Three Months For the Period Ended September 30, 2018 Effect of As reported Net sales $ 198 $ 200,153 Provision for income taxes 32 6,391 Net income $ 166 $ 16,314 |
Statements of Operations-Addi_2
Statements of Operations-Additional Information (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Statements Of Operations Additional Information [Abstract] | |
Schedule of revenues disaggregated by major product category and geographic region | Net Sales by Product Type Three Months For the Periods Ended September 30 2018 2017 Animal Health MFAs and other $ 87,004 $ 79,603 Nutritional specialties 26,970 30,777 Vaccines 17,215 18,461 Total Animal Health $ 131,189 $ 128,841 Mineral Nutrition 54,838 52,073 Performance Products 14,126 12,498 Total $ 200,153 $ 193,412 Net Sales by Region Three Months For the Periods Ended September 30 2018 2017 United States $ 116,093 $ 113,079 Latin America and Canada 38,258 32,368 Europe, Middle East and Africa 24,858 25,308 Asia Pacific 20,944 22,657 Total $ 200,153 $ 193,412 |
Schedule of additional information of statements of operations | Three Months For the Periods Ended September 30 2018 2017 Interest expense, net Term loan $ 2,112 $ 2,033 Revolving credit facility 747 681 Amortization of debt issuance costs and debt discount 221 221 Acquisition-related accrued interest — 253 Other 163 239 Interest expense 3,243 3,427 Interest (income) (460 ) (309 ) $ 2,783 $ 3,118 Depreciation and amortization Depreciation of property, plant and equipment $ 5,188 $ 5,183 Amortization of intangible assets 1,491 1,449 Amortization of other assets 12 12 $ 6,691 $ 6,644 |
Balance Sheets-Additional Inf_2
Balance Sheets-Additional Information (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Balance Sheets Additional Information [Abstract] | |
Schedule of additional information of balance sheets | As of September 30, 2018 June 30, 2018 Inventories Raw materials $ 79,384 $ 62,373 Work-in-process 14,707 14,731 Finished goods 91,703 101,066 $ 185,794 $ 178,170 As of September 30, 2018 June 30, 2018 Accrued expenses and other current liabilities Employee related $ 19,852 $ 27,333 Commissions and rebates 5,784 7,341 Insurance-related 1,236 1,168 Professional fees 4,331 4,350 Income and other taxes 4,406 3,610 Acquisition-related consideration 3,877 12,845 Fair value of derivatives 60 — Other 14,735 14,497 $ 54,281 $ 71,144 As of September 30, 2018 June 30, 2018 Accumulated other comprehensive income (loss) Derivative instruments $ 5,527 $ 4,986 Foreign currency translation adjustment (74,780 ) (67,098 ) Unrecognized net pension gains (losses) (18,105 ) (18,213 ) (Provision) benefit for income taxes on derivative instruments (1,376 ) (1,241 ) (Provision) benefit for income taxes on long-term intercompany investments 8,166 8,166 (Provision) benefit for income taxes on pension gains (losses) (3,110 ) (3,083 ) $ (83,678 ) $ (76,483 ) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long term debt | As of September 30, 2018 June 30, 2018 Term A Loan due June 2022 $ 240,625 $ 243,750 Capitalized lease obligations 99 118 240,724 243,868 Unamortized debt issuance costs and debt discount (1,394 ) (1,487 ) 239,330 242,381 Less: current maturities (12,580 ) (12,579 ) $ 226,750 $ 229,802 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of significant outstanding derivatives employed to manage market risk and designated as cash flow hedges | Instrument Hedge Notional Consolidated Fair value as of September 30, June 30, Options Brazilian Real calls R$94,500 (1 ) $ 496 $ 71 Options Brazilian Real puts R$94,500 (1 ) $ (556 ) $ — Swap Interest rate swap $150,000 Other assets $ 5,728 $ 5,078 (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. As of September 30, 2018, the net fair value of $60 was included in accrued expenses and other current liabilities. As of June 30, 2018, the net fair value of $71 was included in other current assets. For the Three Months Ended September 30 Instrument Hedge Gain (Loss) recorded in OCI Gain (Loss) recognized in Consolidated Statement 2018 2017 Consolidated 2018 2017 2018 2017 Options Brazilian Real puts and calls $ (109 ) $ (905 ) Cost of goods sold $ 1,084 $ 186 $ 134,348 $ 130,030 Swap Interest rate swap $ 650 $ 283 Interest expense, net $ — $ — $ 2,783 $ 3,118 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value derivatives, assets and liabilities | As of September 30, 2018 June 30, 2018 Level 1 Level 2 Level 1 Level 2 Short-term investments $ 50,000 $ — $ 50,000 $ — Derivatives asset (liability) $ — $ (60 ) $ — $ 71 Interest rate swap $ — $ 5,728 $ — $ 5,078 There were no Level 3 fair value measurements for the periods presented. |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of information regarding reportable segments | Three Months For the Periods Ended September 30 2018 2017 Net sales Animal Health $ 131,189 $ 128,841 Mineral Nutrition 54,838 52,073 Performance Products 14,126 12,498 Total segments $ 200,153 $ 193,412 Depreciation and amortization Animal Health $ 5,356 $ 5,254 Mineral Nutrition 597 585 Performance Products 273 246 Total segments $ 6,226 $ 6,085 Adjusted EBITDA Animal Health $ 35,716 $ 33,742 Mineral Nutrition 2,563 3,716 Performance Products 716 248 Total segments $ 38,995 $ 37,706 Three Months For the Periods Ended September 30 2018 2017 Reconciliation of income before income taxes to Adjusted EBITDA Income before income taxes $ 22,705 $ 18,944 Interest expense, net 2,783 3,118 Depreciation and amortization – Total segments 6,226 6,085 Depreciation and amortization – Corporate 465 559 Corporate costs 8,886 7,589 Stock-based compensation 565 — Acquisition-related cost of goods sold — 249 Acquisition-related accrued compensation — 437 Acquisition-related transaction costs — 400 Foreign currency (gains) losses, net (2,635 ) 325 Adjusted EBITDA – Total segments $ 38,995 $ 37,706 As of September 30, 2018 June 30, 2018 Identifiable assets Animal Health $ 461,119 $ 455,704 Mineral Nutrition 73,895 69,779 Performance Products 29,048 24,040 Total segments 564,062 549,523 Corporate 114,413 122,156 Total $ 678,475 $ 671,679 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and New Accounting Standards (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Net income | $ 16,314 | $ 15,892 |
Weighted average number of shares - basic (in shares) | 40,369 | 39,944 |
Dilutive effect of stock options and restricted stock units | 191 | 349 |
Weighted average number of shares - diluted (in shares) | 40,560 | 40,293 |
Net income per share | ||
basic (in dollars per share) | $ 0.40 | $ 0.40 |
diluted (in dollars per share) | $ 0.40 | $ 0.39 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and New Accounting Standards (Details 1) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Jun. 30, 2018 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Other current assets | $ 23,324 | $ 22,381 | |
Other assets | 48,660 | 46,784 | |
Accrued expenses and other current liabilities | 54,281 | 71,144 | |
Other liabilities | 45,937 | 43,702 | |
Retained earnings | 145,082 | $ 131,560 | |
Effect of adoption | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Other current assets | 56 | ||
Other assets | 56 | ||
Accrued expenses and other current liabilities | (80) | ||
Other liabilities | 26 | ||
Retained earnings | $ 166 | ||
Effect of adoption | ASU 2014-09, Revenue from Contracts with Customers (Topic 606) | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Other current assets | $ 2,100 | ||
Other assets | 2,325 | ||
Accrued expenses and other current liabilities | 343 | ||
Other liabilities | 2,837 | ||
Retained earnings | 1,245 | ||
Post-adoption | ASU 2014-09, Revenue from Contracts with Customers (Topic 606) | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Other current assets | 24,481 | ||
Other assets | 49,109 | ||
Accrued expenses and other current liabilities | 71,487 | ||
Other liabilities | 46,539 | ||
Retained earnings | $ 132,805 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and New Accounting Standards (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | $ 200,153 | $ 193,412 |
Provision for income taxes | 6,391 | 3,052 |
Net income | 16,314 | $ 15,892 |
Effect of adoption | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 198 | |
Provision for income taxes | 32 | |
Net income | $ 166 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies and New Accounting Standards (Details 3) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
ASSETS | ||
Other current assets | $ 23,324 | $ 22,381 |
Other assets | 48,660 | 46,784 |
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||
Accrued expenses and other current liabilities | 54,281 | 71,144 |
Other liabilities | 45,937 | 43,702 |
Retained earnings | 145,082 | $ 131,560 |
Effect of adoption | ||
ASSETS | ||
Other current assets | 56 | |
Other assets | 56 | |
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||
Accrued expenses and other current liabilities | (80) | |
Other liabilities | 26 | |
Retained earnings | $ 166 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies and New Accounting Standards (Detail Textuals) $ / shares in Units, $ in Thousands | 3 Months Ended |
Sep. 30, 2018USD ($)$ / shares | |
Accounting Policies [Abstract] | |
Cash dividend per share declared and paid | $ 0.10 |
Total cash dividend declared and paid | $ | $ 4,037 |
Dividends payable date declared | Nov. 5, 2018 |
Dividend per share to be paid | $ 0.12 |
Dividends date to be Paid | Dec. 19, 2018 |
Statements of Operations-Addi_3
Statements of Operations-Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statements Of Operations Additional Information [Line Items] | ||
Total | $ 200,153 | $ 193,412 |
United States | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 116,093 | 113,079 |
Latin America and Canada | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 38,258 | 32,368 |
Europe, Middle East and Africa | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 24,858 | 25,308 |
Asia Pacific | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 20,944 | 22,657 |
Animal Health | MFAs and other | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 87,004 | 79,603 |
Animal Health | Nutritional specialties | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | 26,970 | 30,777 |
Animal Health | Vaccines | ||
Statements Of Operations Additional Information [Line Items] | ||
Total | $ 17,215 | $ 18,461 |
Statements of Operations-Addi_4
Statements of Operations-Additional Information (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Interest expense, net | ||
Amortization of debt issuance costs and debt discount | $ 221 | $ 221 |
Acquisition-related accrued interest | 253 | |
Other | 163 | 239 |
Interest expense | 3,243 | 3,427 |
Interest (income) | (460) | (309) |
Interest expense | 2,783 | 3,118 |
Depreciation and amortization | ||
Depreciation of property, plant and equipment | 5,188 | 5,183 |
Amortization of intangible assets | 1,491 | 1,449 |
Amortization of other assets | 12 | 12 |
Depreciation and amortization | 6,691 | 6,644 |
Term loan | ||
Interest expense, net | ||
Interest expense | 2,112 | 2,033 |
Revolving credit facility | ||
Interest expense, net | ||
Interest expense | $ 747 | $ 681 |
Statements of Operations-Addi_5
Statements of Operations-Additional Information (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Jun. 30, 2018 | |
Statements Of Operations Additional Information [Line Items] | ||
Deferred revenue | $ 7,414 | $ 4,530 |
Current deferred revenue, included in accrued expense and other current liabilities | $ 778 | $ 508 |
Customer | ||
Statements Of Operations Additional Information [Line Items] | ||
Average worldwide collection period for accounts receivable | 60 days | |
Customer | Maximum | ||
Statements Of Operations Additional Information [Line Items] | ||
Payment term | 120 days | |
Customer | Minimum | ||
Statements Of Operations Additional Information [Line Items] | ||
Payment term | 30 days |
Balance Sheets-Additional Inf_3
Balance Sheets-Additional Information (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Inventories | ||
Raw materials | $ 79,384 | $ 62,373 |
Work-in-process | 14,707 | 14,731 |
Finished goods | 91,703 | 101,066 |
Inventory, net | $ 185,794 | $ 178,170 |
Balance Sheets-Additional Inf_4
Balance Sheets-Additional Information (Details 1) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Accrued expenses and other current liabilities | ||
Employee related | $ 19,852 | $ 27,333 |
Commissions and rebates | 5,784 | 7,341 |
Insurance-related | 1,236 | 1,168 |
Professional fees | 4,331 | 4,350 |
Income and other taxes | 4,406 | 3,610 |
Acquisition-related consideration | 3,877 | 12,845 |
Fair value of derivatives | 60 | 0 |
Other | 14,735 | 14,497 |
Accrued expenses and other current liabilities, total | 54,281 | 71,144 |
Accumulated other comprehensive income (loss) | ||
Derivative instruments | 5,527 | 4,986 |
Foreign currency translation adjustment | (74,780) | (67,098) |
Unrecognized net pension gains (losses) | (18,105) | (18,213) |
(Provision) benefit for income taxes on derivative instruments | (1,376) | (1,241) |
(Provision) benefit for income taxes on long-term intercompany investments | 8,166 | 8,166 |
(Provision) benefit for income taxes on pension gains (losses) | (3,110) | (3,083) |
Accumulated other comprehensive income (loss) | $ (83,678) | $ (76,483) |
Balance Sheets-Additional Inf_5
Balance Sheets-Additional Information (Detail Textuals) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jul. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Additional Information Of Balance Sheet [Line Items] | |||
Equity method investments | $ 3,491 | ||
Amount of acquired business approximately | 9,838 | $ 11,562 | |
Amount of acquisition payable in January 2019 | 3,775 | ||
MJ Biologics, Inc. ("MJB") | |||
Additional Information Of Balance Sheet [Line Items] | |||
Total amount due for business acquisition paid | $ 12,775 | ||
Amount of acquired business approximately | $ 9,000 | ||
Amount of acquisition payable in January 2019 | $ 3,775 |
Debt (Detail Textuals)
Debt (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Jul. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Revolving credit facility | $ 85,000 | $ 70,000 | ||
Interest rate swap | ||||
Debt Instrument [Line Items] | ||||
Percentage of interest rate | 1.8325% | 1.8325% | ||
Derivative, notional amount | $ 150,000 | $ 150,000 | ||
Credit agreement (the "Credit Agreement") | Revolving credit facility (the "Revolver") | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 250,000 | |||
Revolving credit facility | 85,000 | |||
Outstanding letters of credit | 4,191 | |||
Aggregate available credit facilities | $ 160,809 | |||
Weighted-average interest rates | 3.68% | 2.98% | ||
Percentage of interest rate | 3.76% | |||
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | ||||
Debt Instrument [Line Items] | ||||
Maturity dates | June 29, 2022 | |||
Covenant requirement, permitted leverage ratio | a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis | |||
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 2.00%, 1.75% or 1.50 | |||
Floor rate | 0.00% | |||
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 2.00%, 1.75% or 1.50 | |||
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate, description | 1.00%, 0.75% or 0.50 | |||
Credit agreement (the "Credit Agreement") | Term A Loan | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 250,000 | |||
Weighted-average interest rates | 3.43% | 3.22% | ||
Percentage of interest rate | 3.49% |
Related Party Transactions (Det
Related Party Transactions (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Relatives of Jack C. Bendheim | Compensation and benefit for services provided | ||
Related Party Transaction [Line Items] | ||
Aggregate compensation and benefits | $ 783 | $ 720 |
Income Taxes (Detail Textuals)
Income Taxes (Detail Textuals) | 3 Months Ended |
Sep. 30, 2018 | |
Tax year 2017 | |
Income Tax Disclosure [Line Items] | |
Federal corporate income tax rate | 35.00% |
Tax year 2018 | |
Income Tax Disclosure [Line Items] | |
Federal corporate income tax rate | 21.00% |
Commitments and Contingencies (
Commitments and Contingencies (Detail Textuals) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 30, 2018USD ($)PRPs | Jun. 30, 2018USD ($) | |
Commitments And Contingencies [Line Items] | ||
Number of potentially responsible parties | PRPs | 140 | |
Current and long-term liabilities | ||
Commitments And Contingencies [Line Items] | ||
Accrual for environmental loss contingencies payments | $ | $ 6,581 | $ 6,833 |
Derivatives (Details)
Derivatives (Details) - Cash flow hedges R$ in Thousands, $ in Thousands | Sep. 30, 2018USD ($) | Sep. 30, 2018BRL (R$) | Jun. 30, 2018USD ($) | |
Options | Brazilian Real calls | ||||
Derivative [Line Items] | ||||
Notional amount | R$ | R$ 94500 | |||
Options | Brazilian Real calls | Other current assets | ||||
Derivative [Line Items] | ||||
Fair value | [1] | $ 496 | $ 71 | |
Options | Brazilian Real puts | ||||
Derivative [Line Items] | ||||
Notional amount | R$ | R$ 94500 | |||
Options | Brazilian Real puts | Other current assets | ||||
Derivative [Line Items] | ||||
Fair value | [1] | (556) | 0 | |
Swap | Interest rate swap | ||||
Derivative [Line Items] | ||||
Notional amount | 150,000 | |||
Swap | Interest rate swap | Other assets | ||||
Derivative [Line Items] | ||||
Fair value | $ 5,728 | $ 5,078 | ||
[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. As of September 30, 2018, the net fair value of $60 was included in accrued expenses and other current liabilities. As of June 30, 2018, the net fair value of $71 was included in other current assets. |
Derivatives (Details 1)
Derivatives (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative [Line Items] | ||
Cost of goods sold | $ 134,348 | $ 130,030 |
Interest expense, net | 2,783 | 3,118 |
Options | Cash flow hedges | Brazilian Real calls | Cost of goods sold | ||
Derivative [Line Items] | ||
Gain (loss) recognized in consolidated statements of operations | 1,084 | 186 |
Options | Cash flow hedges | Brazilian Real calls | Other comprehensive income (loss) | ||
Derivative [Line Items] | ||
Gain (loss) recorded in OCI | (109) | (905) |
Swap | Interest rate swap | Cash flow hedges | Interest expense, net | ||
Derivative [Line Items] | ||
Gain (loss) recognized in consolidated statements of operations | 0 | 0 |
Swap | Interest rate swap | Cash flow hedges | Other comprehensive income (loss) | ||
Derivative [Line Items] | ||
Gain (loss) recorded in OCI | $ 650 | $ 283 |
Derivatives (Detail Textuals)
Derivatives (Detail Textuals) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Jun. 30, 2018 | Jul. 31, 2017 | |
Derivative [Line Items] | |||
Maximum maturity period for Foreign Currency Derivatives | Jun. 30, 2020 | ||
Other current assets | |||
Derivative [Line Items] | |||
Fair values of total foreign currency derivatives outstanding | $ 71 | ||
Other current liabilities | |||
Derivative [Line Items] | |||
Fair values of total foreign currency derivatives outstanding | $ 60 | ||
Interest rate swap | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 150,000 | $ 150,000 | |
Percentage of interest rate | 1.8325% | 1.8325% | |
Cash flow hedges | Cost of goods sold | |||
Derivative [Line Items] | |||
Realized gains related to matured contracts recorded as a component of inventory | $ 1,084 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | $ 50,000 | $ 50,000 |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 50,000 | 50,000 |
Derivatives asset (liability) | 0 | 0 |
Interest rate swap | 0 | 0 |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 0 | 0 |
Derivatives asset (liability) | (60) | 71 |
Interest rate swap | $ 5,728 | $ 5,078 |
Business Segments (Details)
Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 200,153 | $ 193,412 | |
Depreciation and amortization | 6,691 | 6,644 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Income before income taxes | 22,705 | 18,944 | |
Interest expense | 2,783 | 3,118 | |
Depreciation and amortization | 6,691 | 6,644 | |
Stock-based compensation | 565 | ||
Acquisition-related cost of goods sold | 249 | ||
Acquisition-related accrued compensation | 437 | ||
Foreign currency (gains) losses, net | (2,635) | 325 | |
Identifiable assets | 678,475 | $ 671,679 | |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Net sales | 200,153 | 193,412 | |
Depreciation and amortization | 6,226 | 6,085 | |
Adjusted EBITDA - Total segments | 38,995 | 37,706 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Income before income taxes | 22,705 | 18,944 | |
Interest expense | 2,783 | 3,118 | |
Depreciation and amortization | 6,226 | 6,085 | |
Stock-based compensation | 565 | 0 | |
Acquisition-related cost of goods sold | 0 | 249 | |
Acquisition-related accrued compensation | 0 | 437 | |
Acquisition-related transaction costs | 0 | 400 | |
Foreign currency (gains) losses, net | (2,635) | 325 | |
Adjusted EBITDA - Total segments | 38,995 | 37,706 | |
Identifiable assets | 564,062 | 549,523 | |
Operating Segments | Animal Health | |||
Segment Reporting Information [Line Items] | |||
Net sales | 131,189 | 128,841 | |
Depreciation and amortization | 5,356 | 5,254 | |
Adjusted EBITDA - Total segments | 35,716 | 33,742 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Depreciation and amortization | 5,356 | 5,254 | |
Adjusted EBITDA - Total segments | 35,716 | 33,742 | |
Identifiable assets | 461,119 | 455,704 | |
Operating Segments | Mineral Nutrition | |||
Segment Reporting Information [Line Items] | |||
Net sales | 54,838 | 52,073 | |
Depreciation and amortization | 597 | 585 | |
Adjusted EBITDA - Total segments | 2,563 | 3,716 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Depreciation and amortization | 597 | 585 | |
Adjusted EBITDA - Total segments | 2,563 | 3,716 | |
Identifiable assets | 73,895 | 69,779 | |
Operating Segments | Performance Products | |||
Segment Reporting Information [Line Items] | |||
Net sales | 14,126 | 12,498 | |
Depreciation and amortization | 273 | 246 | |
Adjusted EBITDA - Total segments | 716 | 248 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Depreciation and amortization | 273 | 246 | |
Adjusted EBITDA - Total segments | 716 | 248 | |
Identifiable assets | 29,048 | 24,040 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | 465 | 559 | |
Reconciliation of income before income taxes to Adjusted EBITDA | |||
Depreciation and amortization | 465 | 559 | |
Corporate costs | 8,886 | $ 7,589 | |
Identifiable assets | $ 114,413 | $ 122,156 |
Business Segments (Detail Textu
Business Segments (Detail Textuals) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Segment Reporting Information [Line Items] | ||
Equity method investments | $ 3,491 | |
Animal Health | ||
Segment Reporting Information [Line Items] | ||
Equity method investments | 3,491 | $ 3,432 |
Performance Products | ||
Segment Reporting Information [Line Items] | ||
Equity method investments | $ 528 | $ 437 |
Debt - Summary of long-term deb
Debt - Summary of long-term debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 |
Debt Disclosure [Abstract] | ||
Term A Loan due June 2022 | $ 240,625 | $ 243,750 |
Capitalized lease obligations | 99 | 118 |
Long-term debt including current maturities | 240,724 | 243,868 |
Unamortized debt issuance costs and debt discount | (1,394) | (1,487) |
Long-term debt after debt issuance costs | 239,330 | 242,381 |
Less: current maturities | (12,580) | (12,579) |
Long-term debt | $ 226,750 | $ 229,802 |