PAHC - Earnings call transcript Q2 2019 | Phibro Animal Health Corporation

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Operator

Good day, ladies and gentleman, and welcome to the Phibro Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. Officer. Financial Chief Johnson, Richard Sir, you begin. may

Richard Johnson

Thank the Phibro operator, quarter December and for good to welcome ended and everyone, XXXX. Animal second morning, our you, Health call earnings

today Financial Officer. Executive call On our Jack Richard Chief myself Chief the Johnson, Officer; are and Bendheim,

lines an the your will we'll provide results then of overview We questions. quarterly our and open for

this We're on well, Before also morning's the website financial tables today. and on call we press earnings and and release our webcast webcast simultaneous let begin, a of be which available providing can me be later of accessed and a on the the found call transcript slides of be the website as will also at section today's presentation remind pahc.com. you the that replay Investors can

will forward-looking differ actual results today those remarks and include could projections. statements from materially Our

certain a statements the that factors could description cause in to section and our release. For to you forward-looking I press list refer of differ, results earnings

release of Reconciliation these most accompany include the these financial financial will a earnings of included Principles remarks the to for GAAP directly measures financial measures. accordance to I U.S. measures Generally in U.S. Accepted non-GAAP information tables measures, prepared not that section refer references in GAAP. financial Our our which or to Accounting non-GAAP were comparable are the press with the discussion in today also press you certain release.

an to basis. we GAAP the want into that a basis get we Before on adjusted everyone our on we numbers, remind present and results

related any income or on income expenses as well unusual income our pre-tax we separately adjustments, non-operational it non-recurring results or to items; as effects non-recurring or Our the items. adjusted P&L; tax and tax other exclude report acquisition-related unusual items;

financial for out formalities the comments, few opening back in Bendheim then a of turn more those Jack to Jack? with I'll the describe come performance detail. over and I'll to it way, So

Jack Bendheim

really am us. we faster the of core in Health the a than faced everyone a of proud business line overall Animal for years. X%, despite Dick, that grew meaningfully I you, on growth, and thank is you conditions at have some that challenging market Thank joining our that number most the pace

continuous Asia within expanding as as market, have these investment able economic as fourth key signs now countries. the significantly market, the our especially volatility of to the clearly saw the America we unfavorable reach and dairy taken see we the not were drive face as last currency up and of headwinds spring distribution in dairy United results, in export in South cycle of this and hold. more agreement worldwide begun regions gains in significant to a vaccine has struggles disappointing some make continue in improvement for States, year the the loss the to to It's of Our are well than we

noting far, the worth while it's performance neighboring and factor swine monitoring a not African material our fever in that countries. effect of we're China Additionally, outbreak actively the on so

smartly to pleased we challenges the I'm company reacted the as the have growth delivering also a Beyond in we seen, marketplace. that

will questions it -- forward can be Nutrition not have we be discretionary in below and initiatives some to about to years drive we in the our issues reached now with details for a business would strengthening the the back are Though pricing are place are on turn Mineral some cutting I the of by continue delaying this at year. quarter. resolution profitability spending we Dick growth of more from come. within segment back the even I continues as many last and but segment. to progressive take likely We of and encouraged look China hopeful [ph] your this volatility programs that trade our cost to Within out actively quarter, to squashing the the to

Richard Johnson

Thanks Jack.

quarter on December by highlights our for you'd that the find we'll Page reviewing five. So start XXXX

The Our volume same across businesses. consolidated was sales year. the were driven increase $XXX million for our revenue growth the increase all X% of quarter, by last quarter a versus

due In addition, from to higher selling Mineral costs. average Nutrition resulting commodity revenues underlying increased prices

last reported initial result was income and diluted some net of expense tax to year other were U.S. income cost GAAP which and more tax $X.XX $XX.X items. per than elevated for quarter -- each year income the last was expense of a Our the million share EPS current due reform discrete last double year,

adjusted So let's results. at turn look and Page to six

total from line the items So in X%. now the at sales up net P&L, were looking selected

said, and increases As in we sales the growth detail sales, I we'll discuss segments. look the at more as the

profitability, growth. the initiatives. projects the spending federal expense corporate interest was the gross we months expectations. The adjusted And expenses. an prior effective protect our on for QX on ourselves in revised increase constrained increased Nutrition to was favorable with That's increased the margins Adjusted adjusted development very higher last Mineral from sales consistent levels year. those interest also In an well with six was due reduced that million other and X% Our effective to mix for the of saw even and year in business, income products. increase increase strategic of profit in compared rate. The rate on over total two At on SG&A, last year for future the pricing saw major tax strategically due to environment. year-to-date year last XX.X% held all administrative million product Health reduced benefited rate in general position with $X.X in and competitive modest was while year. expenses selling We've line, profit saw and factors. unfavorable maintaining higher Animal -- a gross certain as we as rates mix in to to adjusted to due a $X.X similar segment, net last tax to increased the a for our largely manufacturing second costs quarter XX% gross operating adjustment The statutory debt we and

negative So that was one of comparisons. year-over-year the

sort GILTI provision for current income -- taxes the for Intangible as in unexpectedly. year we GILTI these the talked of provisions discussion tax In legislation. provisions rate. was an our new we Global up last And X.X that includes income GILTI to the points And about caught addition Low-Taxed about percentage acronym quarterly our effective in Income. adds tax the provision the is of

quarter, The were economic certain closely more the $XX on year volume effects the Page specialty industry million million $X.X of other. conditions. looking $XXX growth Sales the or product $XX.X increases year. Animal sales in now America XX% increase was others in $X despite and driven million international $XX more currency Vaccine demand quarter conditions International last lower quarter. primary sales or by as certain We that million of last sales the turbulent last year. compared international X% particularly in and million in in the poultry decline were and million from unfavorable the countries. million, than So weak an Sales declined driver X, $XX XX% almost Asia-Pacific a affected on million by were our on dairy declined or saw last to Nutritional was markets of and Latin business. $X.X good year the Health regions. growth MFAs growth MFAs and in over from X% grew in at with

In the during growth. was the volume addition, Gross negative as Animal segment quarter the profit the loss also on expected the for the of agreement $XXX,XXX Health comparison. a for distribution increased

the increase. costs muted However, mix the unfavorable from changed little Segment manufacturing and year. business spending was SG&A prior

approximately $XX of or and just profit. for result under As by million segment gross increased sales growth EBITDA a X% $X driven adjusted million the the favorable

pricing presentation. nutrition for segments net the million at sales of X last increased improved and year, volumes. the or due looking X% on Mineral quarter million of So, Page higher now to from $X.X our other $XX commodity

generally were the million net in competitive unfavorable million investments in selling and correlation strategic last of due primarily last that costs. at Segment looking last improved year growth sheet expenses resulted $XX capitalization the of pricing from EBITDA. finally $X.X mix balance underlying almost sales of development of to direct briefly environment. projects sales and ahead year, the Our in with prices million on commodity Page of million $X.X Corporate a adjusted move Products million product Performance a decrease and business $X.X $XX.X just EBITDA to year due was in and minerals adjusted increased X.

had gross Our was quarter at at ratio cash adjusted and of X.X the EBITDA million the leverage $XX of books of times short-term on end we investments and quarter-end. debt the to

December in in $XX a same and finally, also we cash quarter, generated activities level investments. $X.XX March used Seasonal the investing changes XXXX. short-term be And For and excluding paid from paid operating declared we've we of share to working per capital dividend needs in cash. the million XXXX

please you for our the conclusion that's So would you. open if prepared the And of line questions. remarks. Thank operator

Operator

Instructions] of our [Operator with the first America. Ryskin Bank Michael comes And line question of from

Michael Ryskin

taking the highlighted. and you on Jack. others international my growth and for on question congrats question quarter, Thanks quick the Richard A and that and MFAs

that is a to part bacterials the MFAs Asia was away And strongest in from important your could of you're in characterize segments of in specifically of One pickup some seen that the if Southeast and different feed States. medically directive there they've which competitors United what that? you recently there? veterinary saw similarly seen in a number with we curious products of indicated I the slight you've any movement of seeing parts understanding in growth if others

Jack Bendheim

a in we're So growth business. seeing

we've and been Asia. more on I put markets especially years in Southeast think, recently have couple we've in as we last in, my mentioned people before remarks, in I of into the not where

there the of markets would anti-coccidial off we're seen because down the WHO of our be the or because going of we mission considered the first rest them of criteria range the the list fit there the on world so lower our products those our And call some list second they gets world But of products products on the category. to and of they're So into fall, not what our characteristics. products list, the the of competitors' people of that's competitors growing across or in category. rest more human-only. the complicated third not when at instead works categories the of are more many where to It our in those these products, look them call the the the MIA of some in rest favorably have get U.S. you products. the Mostly would fair, where some world look of WHO

of range this no product. If works the going to is there and your use they're and diseases, end are whole products thing there one use of business more treating diseases, become day, are the going these are to whole quite a this products complicated. them. So whatever diseases. for At no If

Michael Ryskin

then just the quick for one on year. outlook the follow-on And

the You press recognize in mentioned overall fever. your some comments the that the part could small is release on relatively remarks swine I in of and but a you what if market sales, swine underlying just prepared and African ASF on Health provide your some Animal conditions for the poultry the factors outlook year across details various both for for businesses? for rest into of dairy,

Jack Bendheim

the countries a is So swine it's it big it's that an that around is. it countries big world. In U.S. not the eat Obviously, do swine us, not swine, consumed where for eat market is in in the while market that important a market. for don't market

in in other about China. China that's country swine inability the and with just African many a world, many China in depressed. XXX I in But pigs problem that think, China, very raised and But the pigs. we've growing fever good million farms many, spoken times this a markets Specifically, small the not raises business is is the biosecurity to on past. do and In are around

of a lot at of not like we and our But that's there clear why day, surviving are are yet remarks there that end it's this -- not put of the So are cautiously. they sort fever. look pigs the

because farms. the when have difference ones have We haven't might don't that count what the say a they The product sell to in. to see tend in not a now to our ultimately this can they product fact farms seen a and be big the I a affect is sure the because and larger they we often not in, we're the MFA when effect up products

the we'll this six months, So year something over that or unfold is years. a next

to now. But, and clear overall affecting is it's population pig not moving in right it's the clearly, China So markets. it again other

Operator

our comes line G-Research. [Operator Kevin Instructions] next of And [ph] with question the from

Your open. line is now

Unidentified Analyst

you we past First, couple and at Animal rate should these guys be I ask want know have some that have the EBITDA of those as vaccines. level on I'm been pretty something the Performance business to either in the the we margin is run as Health, in seen of nutritional thinking that or talk if and Products on going long-term And kind to weakness thinking half I just about strong led now last the on of looked margins being the year on margins expect? we've way going forward longer-term growth-driving there for for about don't being quarters. would nutritional vaccine both quarters. specialties wondering first normally at view is specialties Wondering businesses. something few has changed EBITDA you the to than temporary right higher for if then anything but the be about that's business, secondly, your about really

Jack Bendheim

a a key forward. I of in our vaccine part other the what of spoken facility about mean past our and we're we've So in half, investing spoke are We strategy vaccines part to the growth to specialties nutritional Ireland. go Sligo, key about and new first investments.

-- of vaccine think an the aqua we spoke acquisition the in last company Israel. I about during quarter

in not years. we've than up in and that that the but we this It's but lost the quick, distribution it is vaccines. quick over So I more of next will to make mostly continue vaccine months States ensuing think six we growth, one United over the the make decline investments

investing even date out a to the United moving that from we and the industry, States. those swine are very poultry and strategy. and tied of industry to So is specialties Nutritional our products the products the part is growth and out still rest though dairy of moving to the growth our those important the to more world away to

States. think continued that will the So in investing decline confident what this growth United market dairy are we and the I and ahead. years are But, like seeing in that looks industry again, shift in the see in come the back we we're we'll business and

pillars So the... they're important very To both our business. to important,

Richard Johnson

Performance products.

Jack Bendheim

and any but not business, not well, know, you full, Products, would it, take sometimes -- anomaly; much time capacity sometimes full, on core still it when …Performance we I work we spend money spend I our sort happy so too don't an better have plant it It's one do out. we're it. does time happy to we're when the it's numbers, of on doesn't think but it's plant, the run is the

Operator

questions And I Johnson now at back not am remarks. for any like I you. any the this time. to would further Thank showing call turn Richard over to closing

Richard Johnson

everyone we'll for I'll It's been thanks XX pleasure you just a days. Bye now. say to listening. talk and in again

Operator

thank day. today's all participating Ladies Everyone and may This for does conclude in wonderful and disconnect. today's you you gentlemen, program have a conference.

Phibro Animal Health (PAHC) 8 Feb 192019 Q2 Earnings call transcript