PAHC - Earnings call transcript Q3 2019 | Phibro Animal Health Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Phibro Third Quarter Financial Results. [Operator Instructions]. I would now like to introduce your host for today’s conference, Mr. Richard Johnson, Chief Financial Officer.

You may begin.

Richard Johnson

good and operator, you, morning, everyone. Thank Phibro quarter ending to Animal Health third our for call in earnings Welcome March XXXX.

On Johnson, We’ll Jack and our the Bendheim, our your line then and Chief are call we’ll questions. Executive quarterly open results, myself, Chief an provide Richard Officer. Financial overview of for today the Officer;

begin, release Investors can tables on the and section pahc.com. let our be remind at that you me we financial Before the press website of earnings found

this of presentation morning’s which We’re replay also the webcast providing today. website will Today’s a accessed website be well. and call the on slides call, on be the simultaneous can a available also later transcript as of and

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

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

accepted were GAAP. measures in Financial Our accordance to certain the to in remarks financial Information generally principles also discussion accompany references non-GAAP section today our not prepared these release. include earnings are for refer you a accounting which in or measures will with U.S. most tables I non-GAAP directly to press of press comparable GAAP these measures. Reconciliations financial included the the financial release earnings measures that of the U.S.

results transaction results adjusted the statement currency as compensation. any get accrued unusual non-operational including of separately compensation operations, we present sold, unusual GAAP and income a items. on accrued basis amortization, cost our losses, items, adjustments, exclude non-recurring to recorded everyone and into gains pretax basis. other cost tax and net, interest, and stock-based tax excluding and including foreign income Other effects those income present and We or non-recurring intangible Before the including and expenses consolidated an goods we numbers, remind we acquisition-related to cost, that of on adjusted items want that related in or

review some our introduce me Jack of the financials, into Bendheim I with Jack? comments. introductory Before get let

Jack Bendheim

us Dick, on you, Thank joining morning. this for call this everyone, and thank you,

release, a short quarter international customers program unexpected warmer was I winter. on sector, of we one by the reacting choices light on some softness poultry press us. in our As made saw a noted seasonal in the expected for of this some were in end certain markets, We past disease and than disappointing to U.S. pressures our

current memory. we In this continue addition, see lasted cycle decline prices assuming we are low domestic forward, a milk we the dairy in normal. longer are new in are the And our The moving dairy changing approach decline the recent now in to any the U.S. as has to sector. of than sector

the adjusting a key in be into result, the presentations marketing product coming segment. will our months, products to our approach our As and we

for have strong U.S. we enacting products Our farmers. us to U.S. the confident this in will And value be proven we the are a changes are to to sector growth return market. give that

into has species of term, to XXX greater to markets recently of China ago, on days million-plus understood. production countries opinion curtailing loss loss full few last is not few in where personal China herd are protein. fill the in our the published XX% have in an in impact expect without my will made will multiple occur the months be gap forward, China to in would Phibro the worldwide impact protein to try necessary a of point pigs swine of that loss protein In Looking of From we most presence. trips be we order visibility the strong But this at we severely of to product the Fever. view, in in time. have beginning do understand I African market estimate Rabobank QX. and just and anything be precedent global of a better Phibro a near we much the that. sales entering a Swine medium the this period than supply of over to production The

So as results Dick I African fourth of your expectations a back questions this conclusion quarter year Fever, the to result are and our down the Swine reduced will now due our hand at full to forward look quarter conversation third as of our for presentation. we I bringing to guidance.

Richard Johnson

Jack. Thanks,

The the and XXXX quarter Mineral were reviewing growth– driven same did decrease by quarter. year. partially declines growth Nutrition. volume Products, We That by sales a last in have March start offset Performance the revenue other versus for Consolidated results in quarter. Let’s which our the the $XXX some million was volume decline for was Health X% declines. Animal

Health with by poultry for Animal challenges negatively reduced business domestic during Our quarter combined continuing products our was the the the demands impacted sector domestic dairy in business. in

Our on declined volumes. Mineral Nutrition revenues reduced

prior and per the year share Diluted Page the the segment to of results comparable adjusted into the the lower was profit presentation. the quarter X. EPS page, an increase than for more the period. million $X.XX to prior later the current discuss due was next $XX.X gross below in on on effective detail rate. I’ll prior-year was tax $X.XX on results of in net million lower income the Reported We’ll get profitability year. $X However,

Adjusted So profit from the selected down the gross line year. compared let’s P&L. look items $X.X with at prior was million

unfavorable or operating by product partially declines. along I Health Nutrition Adjusted offset Mineral our segment Performance said, the in profit lower in with business in Products or mix to X%. the gross and decreased $XXX,XXX driven efficiencies SG&A mix profit. favorable manufacturing Increased expenses gross Animal contributed declines and volume volumes the reduced As

control whenever to growth. investments We our operating for monitor position wherever continuing possible projects to expenses and future closely while spending to ourselves on continue and strategic key development make

was current rate law. XX.X% this last slightly Our rates unfavorable adjusted of to and rate the in slightly an effects taxable on mix federal quarter, tax the interest new The to rate of reduced provisions income offset compared increased GILTI interest plus year global income for the the expense higher X% tax the The adjusted the by levels. year. net higher prior debt favorable statutory effective was in

months, For XX.X%. the nine rate effective our was tax

were Page million to declines approximately and $XXX looking million volume X% growth declined in lower and both and from as million partially the was compared nutritional Asia last were sectors. poultry or MFAs in million swine the Sales and $X growth Health other about of offset the Pacific in closely X sales the X% Sales year. in demand International region in $X quarter, MFAs the partially increase at Animal of more or volume Sales specialties categories, $XX a business. Now other. and domestic offset to by the by vaccines product prior year.

gross in the Nutritional of volume year growth EBITDA loss we expect seasonal certain due poultry declined $X $X.X specialty now at weak lower or to turbulent Asia EBITDA markets. million domestic increase the to fiscal partially profit substantially year for Pacific declined volume The sales industry region of our international last approximately with Swine customers unfavorable $X.X was incentive Vaccine do to partially a and year. a about Mineral of While our Animal overall continued our partially for or earlier Fever during poultry prior decrease of on dairy nutritional Adjusted sales Nutrition last of $X.X $X.X product and by compared offset was products sales other expenses. That program million, the million. or in of weaker reduces African with and in conditions mix. a offset declined the quarter, the sales by largely spend the gross and domestic lower operating X%, and was declined to selling decline a specialty of the as X% we of saw decline in profit, $XX.X from Gross million $XX Close profitability. segment segment forward X% our SG&A demand. year China in vaccine demand million going and sales agreement Health products. reduced reduced from million in choices modest in control affect segment volumes, million year. X. Segment-adjusted million or declines to reduced prices. conditions And looking due due XX% was made economic to also the $XX.X and this decline product compensation distribution international demand last due $X.X even that offset million $XX.X Page due profit million decline segments for that net continue as in

increased $XXX,XXX volume We continue also to pricing of million operational on the profit gross due growth some increase expenses volume sales mix gross appropriate care sales in Performance growth last over increased with and with net a controls favorable improved testing progress personal optimizing and the Products $X.X $XX.X new spending EBITDA increased profit competitive reporting. million to year, and million Adjusted where $X.X in products. highly of cost million environment. $X.X along also and internal expenses making on over increased business favorable by due to product primarily manufacturing due the to development of Corporate strengthening driven efficiencies. reduce and financial

the Page balance sheet at X. our capital on allocation and Now looking

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

$X.XX March million source of driven the for investments. cash reported $X financing For was almost paid was XXXX. in and dividend primarily flow capital $XX and an same to We the declared be $X by level million cash a in activities the June we in from million before quarter, during paid million that used $X share approximately while operating quarter a activities,

page up sales million between That’s updated made Animal million. sales to described year $XXX sales and million reference earnings. ago. We million, Jack and Expectations as our expectations earlier, and for be for year our in to a even and between now we $XXX for guidance reduced press turning expect year. we consolidated Health last have Now XX, and fiscal slightly are release our $XXX from our $XXX with to and approximately

at to behind some also be finally the million as range $X.XX to the the range to $X.XX result, now declines, That’s last per year. million of decline. a adjusted Given sales $XXX year. diluted And expectations. be for And million expected in major now expected $X EPS $XXX XX% adjusted our is $XX of decline, of a with factors share, million to the reduced decline the EBITDA looking an to of in XX% compared to

a our poultry results decline March in see of dairy in Some the domestic our saw seasonal we programs continued in quarter sector. where we demand, reduced including domestic the business

could now Swine Fever. African programmed on it be significantly to Although positive into expect QX go uncertain weaker forward. forward sales China as strong response timing, us And sales global our as on we for deliveries, were but to the finally, production be we is

So please of if prepared our line Thank you. Operator, that’s conclusion for the remarks. questions. you’d open the

Operator

Thank question Merrill Michael America of you.[Operator Bank first Ryskin Instructions] from And comes Lynch. with our

may You proceed.

Michael Ryskin

taking will conclusion guys. bit ones. the think a this come the curious markets. dairy of Hi your made a road, that to question. while, is I upturn. XX what little It’s I months comments that we’ve for One, that start just challenging Because see no a be cautiously – could six new want down you quick to the Thanks the there the optimistic to I been normal but want been an was of for recovery. we I’m I to on and on couple it have

change this in see changing little that the mentioned that. in your could you about are this and to – methods? did if you made some So mindset? the current Is sales projects you you more market, your nutritional And approach you there. on you’re more discussing talking this then quarter a R&D specialties Just category? give investment clarity what your when future that changing Does color

Jack Bendheim

Thanks.

compared after produce have beaten being products think our dairy the nothing milk five customers, the I and market milk the and dairy prices for or up So last to and will just sort four think years, we changed. the of, way

low very this thousands again cows there these were in the moving and thousands those resulted has price ability make larger to U.S., I the much where dairy small and at in farmers So that thousands have closing of farms prices. low farms think money of to even

that’s when happens, that So economically, shift. a

have United What think being a future. for new the prices, the will that fewer the require so And dairy to to and said into dairy it farms to norm will dairy in I production earlier, the we States. us see low will the there be of carrying because does significant is approach products as are market that we different us

are we responding. So

different products, to okay, are of not to going quarter, be And around We’re different next will solution. better, have looking waiting, sitting programs. and again, presentations be a really prices just the

the our we’re will be approach I So to test-marketed recently. products it think – attacking successful. market I think the and We’ve

dairy need these those again, we’re markets. U.S., just change, so And the has optimistic. farms to And it doesn’t small the farms and from really shifted cows amount different of approaches to larger in

Michael Ryskin

Great. the MFAs I domestic And I in follow particularly then and appreciate other that mentioned, sales to category. that on want the Jack. swine and poultry up you

to right, expect given decent phasing so your we growth You’ve sense change, temporary had this there particularly global that there. to poultry ASF? a offsetting now, X%, the respond the that purchases, seasonal XX%. sort I get really with is strong five should a of last there of on more of Is for a comments quarters pretty couple, you’re the that recovery demand particularly mentioning over

Jack Bendheim

think I yes that is to yes. the and answer So

I the day, is by end animal are to our often mean we – the caused different think of we’ve and responding seen products at diseases, I conditions. – the respond weather marketplace which

So the we were poultry wrong side warming in an sector. the early of on

the used So that more in predominantly in climate. it weren’t of got the winter our colder some times, products –

at So history. sort of that looking is

be China, follower started it. McCracken I focus that there a such missing of couple feels everyone think would for – so think people slaughtering in world. opposite empty I’m shift sort businesses more are the And Rabobank. up. pigs be pigs empty. be market. the of But will demand, to China affected I the been are quick she hogs we’ll the won’t there the cattle, pigs a as be and dropped from a She’s is know, shift. the even so change. or that to mean and in started that demand very demand. is while poultry, anybody in closely. infrastructure aqua, cupboards African of we Chinese forward. protein ability missing even whether protein to go chicken, it’s the big increased haven’t who from There will I increased Fever, it freezers has go to and to forward, next thing Swine starting more we And getting And will putting the and think sick industry, also there months, it the pigs as global and the for some China seen we sort many prices, see I articles increased that Looking but as the Christine might be all And studying are shift pressure the grow proteins, much and of prices. But pigs And will demand, this dairy going from will put is it so humongous We’ve to a seen raise on it around

in industry, we’re which I’ve beginning my think back than, ever just seen going that a we’re it. quickly. long I I not happen a So see to in It’s think, involvement goes think different to to climate And fast respond. business time. about to see It’s I this

quickly lot can’t add pigs. a You more

quickly add can’t chickens. a You more lot

you You’ve to build prices. got et in cetera. increased we the response the Europe, these to board Argentina, U.S., the et in across in approvals, will in productions need cetera, higher in see But Brazil, houses,

Michael Ryskin

there. could my to was about talk That color be the all appreciate depth question, ASF. if next you I actually more going in

entire that longer-term five long how sort years? mean situation play thoughts of the for from mentioned been out? now international You investors. offsetting from response I’m status XXXX? have is to a recent it the mentioned become two taking region? just endemic We’ve closely following you you some – beyond now, curious do What’s I the And interest to from protein now, a going your going you in two, three, to just production. next there had ASF years a few is year be quo this in What of of visited see do you months. new the your on very vision times think and in lot certainly

Jack Bendheim

animal is The Fever past think don’t will in African I XX health about to with problem starting is are Swine the so virulent that, people that this So endemic. be virus pigs live often, industry endemic talk the days. being

you not exactly does It’s it. what pigs? it being like So mean no can endemic have live with if you

good So and successful making managing I have very, people like years. But into are think else, is the vaccine, getting a this of Swine we, virus. I looking to been date, bio-security for vaccine. around has with virus the responded Fever very rest this everyone responding. There of the this been, at that’s And XXX vaccine. mean potential world African most no is

So I they’ll farms. farms, happened. various, you raised pigs for XXX good China, a year. mean backyard many world, are I the of I considering in China hard to be bio-security. various Even like the pigs managing It’s rest in smaller for because it’s extremely in think investment driving of mean them the it’s the what or get reasons and pigs not farms this. so just the understand – economics million larger consumes – raises the

and this XXX. if like which pigs So It’s basically and other midsized just you or one kill, China, then XXX have a have or that you’re to you raising put, nicely at not farm a have the in it’s virus farm smaller million pigs pig dies, XXX kill, virus. has pigs, the

now is There is you is there want – going no Because methods. to there insurance. to again. do are no this happen you repopulate? no to So then And

often, as And I I see XX%, are what’s XX%. what’s not she’s this said, repopulate. China are we willing in over people about China, in to that’s People about Rabobank talking shortage. talking call happening and driving So XX%. And

if pigs, about my the makes XXX raise. That’s number, take XXX pigs. that pigs the and you equivalent easier million me, So world you’re XX%, that’s all math rest of for to because the it’s million talking

can’t to just this a time. solve be problem. long you So is think going And with us this I for

of think, people are there on lot working a smart I a vaccine. yes,

do able breakthrough. here. seven up not bio-security. I a again, all will will a with China, you this in a will a problem little hope five, Someone but But of bit come four, solve with breakthrough. protein us, six, it’s be And be with that, will even years. better someone will there up for changes. come do And Everyone they’ll to

move to from poultry. pigs You’ll

more move aqua. You’ll to

little effect going the to change with is always to production. at with the for think going help. it’s is how going look or so is I problem, thing other the will every this a this on all us the But So is of time. of and yourself, opportunity, And and I think to have to long protein for us a great going analysts, industry phenomenal which the a world. to the around size And side look problem have is be like production the at protein while, a that this be

Operator

our portion I Instructions] now the like call back for to over would Okay. of closing concludes [Operator now conference. any turn today’s That Richard Q&A to remarks. Johnson

Richard Johnson

results. now. our Okay. We’ll talk morning. this bye joining of Thanks, we when financial and Thanks, release again end you towards for full the August us year everyone, to

Operator

a thank for does you you great and program, disconnect. Ladies conference. may Everyone, conclude have today’s all the attending gentlemen, day. This and

Phibro Animal Health (PAHC) 10 May 192019 Q3 Earnings call transcript