PAHC - Earnings call 1 2024 | Phibro Animal Health Corporation

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Phibro Animal Health Corporation FY 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Dick Johnson, Chief Financial Officer. Please go ahead.

Richard Johnson

and call to quarter for XX. Regina, to and ended you, earnings Phibro's our thank good everyone, morning welcome September Well, fiscal first name My Johnson. Dick is of I'm Financial Phibro Animal the Officer Health Chief Corporation. call the Executive Executive Chief also Vice on today of and joined by Bendheim, Strategy. President Officer; Director Phibro's Bendheim, Daniel Corporate Jack by President and Chairman, and I'm

June conclusion for Today, update on an our quarter and our fiscal we'll lines we'll full provide open cover the financial for performance for XXXX. year remarks, opening your ending financial of our guidance At first the our questions.

to that SEC section of from yesterday first presentation press slides release and remind also I'd the you our a quarter like pahc.com, and the transcripts call the earnings Form Investors the today, you copies of simultaneous this webcast find the of with on website, morning. as and website. providing filed our our as XX-Q on well Later we're will this

the just X, Slide standard to disclaimers. Turning

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

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

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

adjusted a on on results and our an present basis. basis We GAAP

tax other stock-based currency unusual in separately statement reported operations, any those the or losses; income nonoperational Our effects foreign or adjusted unusual, expenses related acquisition-related to results tax of nonrecurring items. income plus pretax and any the nonrecurring primarily adjustments items, or of and consolidated income including gains exclude compensation; items;

year to Bendheim, Officer, outlook first XXXX. on President share introduce and Jack? Phibro's and our fiscal Jack let Chief quarter Chairman, me financial our his Now the Executive performance perspective for

Jack Bendheim

Dick. everyone, thank you, for Good us you today. Thank and morning, joining

had quarter results. first despite overall disappointing Our the strong some positives

Health measures some vaccines. grew taken And pleased growth have X Health X%. healthy margin to especially the Animal X%. that of an to of in Health, helped Animal by counteract Our sales saw in grow at business all we We see I EBITDA XX% faster the even core Animal a growth at product categories across rate led was erosion

launched South vaccines, as vaccine increased a our across we where uptake had new are America especially We of several as vaccines commercial in Brazil. in new seeing regions, well facility [indiscernible] multiple but opened has

nutritional vaccines our specialty successes. poultry nutritional we U.S. and have behind and We necessary continuing double-digit as of our term, achieve specialties just of in additional medium a the products vaccines sales We're to new annual investments We see for to are the enable are line the recorded to producers. us introduce opportunities invest first and to our Americas for and targets. looking short making

such initiatives our considering companion continuing curtail as some challenging targeting We are environment, delay are But spend. to the other macro also or to of support the we animal. ways

in are environment. we mentioned, macro challenging As a

have movements and has margins even price inventory commodity drop seen wrong business drop more on we Nutritional Mineral revenue the Our of and as been side some recently positions.

fiscal to historical longer could some levels to year, through take recover. we returning margins our anticipate the volumes as progress we While

in our feedlot the some and businesses China including weaknesses Latin Similarly, the other in we see dairy in America. and end markets, U.S. of

to our operations attacks have Finally, Israel costs the horrific the terrorist Israel. a month increased the ago war in and subsequent in relating

customers. our supply ability in confidence our to have meet commitments We to

at the will all the guidance remainder year, Dick this his greater of of for go as our to lower end fiscal detail presentation. these we reasons, For into have decided in

targeting to it recent close most The Dick, action has early I piglets safely and relating to Before critical been is to period XX to healthy hand Mecadox. a FDA's help lives. to the United be It's FDA I want the on and for been baby their for very product keep producers for of Mecadox to the touch States used. years a continues Mecadox important back during sold swine be to over available decade. in

We and ability it. product defend customers' to to our support will this use continue

efficacy. We confident its in are extremely and safety

look I our following Dick's that, of forward your review questions With to financials. hearing

Richard Johnson

Thanks, a and financial segment-level factors, performance start Jack. of on to conclude then Well, updated on the guidance. with consolidated me our move with review I'll let other and performance Slide financial X,

sales million or net a $X year quarter same the September about of were ago. consolidated for reflecting X% ending decrease the a million, Our with quarter compared $XXX

As earlier. Animal Performance Health a the Jack increase, and decreased segment the year both saw mentioned, from Nutrition while nice Products Mineral

by cost. and settlement pension GAAP-based million income expenses a net notably decreased, in for diluted part share SG&A charge earnings and driven by $XX.X higher per

increased higher of We due primarily rates, by all income provision. were offset foreign tax losses, increased also exchange saw some reduced to interest partially expense which

by sales EBITDA Mineral decreased $XX.X $X.X $X.X costs. spending line EBITDA million gross increased Animal which and that, and was million Our growth Health and at higher Nutrition adjusted That Within quarter lower $X.X margins, to million. was to higher favorable due the million. first of SG&A. was partially due a sales decrease offset

in employee-related also $X due increased million timing compared year-over-year expenses driving about some And gross line to down. corporate lower to driving Performance and profit due to dropped last which year investments, increased at higher $X.X costs. was finally, Products that and EBITDA sales -- strategic million of the

$X.XX. diluted higher the year EPS by driven income adjusted was earlier, we saw lines, That G&A down primarily X/X adjusted net of expenses. SG&A the and a from EPS At -- adjusted

in and by charge expense, -- the spending but adjusted Just SG&A as reminder, partially included reduced a interest net large by one-off taxes. income, income pension driven offset is other higher not again, was

$X first $XXX of a increase segment in for Jack product sales increase, our partial saw, financial U.S. also poultry XX% quarter That or to regions. in quarter. increase we in the sector, to due $X deliveries by performance, the segment-level net there was out, was offset close X%. And America of increase performance growth better introductions sales within our was or Health. primarily Health in but driven Animal growth as that offset to a So swine segment, and now The million Latin vaccine of million if posted other international an million largest pointed we of sales. timing -- Animal move some than

primarily sales domestic market. MFA in X%. $X or driven In and increased X%, is nutritional used specialties, about And the fermentation or we And $X aids it by that poultry was in the million another, processing U.S. finally, products, by a of industry. of about driven in growth there, ethanol was increased increased saw million increase volumes

year terms to million, In quarter in the $XX.X up the of a EBITDA segment. the for was from profit profitability the Animal in and XX Health X% margin improvement basis same segment, improved point a gross earlier adjusted due EBITDA adjusted

at $X.X Moving -- X% quarter were X down in Mineral business $XX our a last decline in quarter year-on-year, financial volumes prices driven XX% due declined or the the performance $X on And sales EBITDA It reduced the Slide to to sales first Mineral was year. costs. about same and due demand. decline million, other lower a to and declines and Net million. with drop by segments average There million Nutrition. more adjusted dropped Nutrition higher selling versus sales was strongly starting on even

(sic) ingredients or quarter, demand at products, X% personal corporate about for for million XX%, a and care Looking [ and XX% by percentage driven expenses sales was of in lower were this used small up drove in the were driven net reduced $X down strategic $X.X decline primarily Products, Performance million about about investments And decline large a costs. ]. that And $XX on adjusted base. relatively sales employee-related a EBITDA million, as

to key capitalization-related Turning metrics.

for free positive ending that September was period cash trailing That's first flow. free XX-month the cash a flow $X million. some time time positive seen a Our in we've XX-month

our in flows. a working that's progress work cash news reflects making good of So we're our and capital managing lot and and

was with $XXX it simple gross ratio of, total of debt And activities, million of of million operating of million math a expenditures. overall trailing adjusted That's X.Xx. of that capital million $XX over of a by divided XX-month less $XXX We leverage $XX quarter the just comprised period, from ended EBITDA.

which which not a a portion in of the at paid dividends, our plus are our determined with we've a is quarterly to The exposed fixed floating interest -- rate by the the Looking is rising margin a SOFR, of we during interest debt the is rates subject to quarter aggregate. debt XX fixed million for interest $XXX the share, our of million of $X.XX dividend by as $X.X rate rates, remainder adder. points reminder, history, replacement variable to the the now LIBOR. basis consistent of is our about because And which

We also earnings, are offset short-term partial from investments. interest income earned seeing on some higher our

let's now look guidance. our at And updated

boxes we those show So updated look if on the the we guidance. you right-hand at new side,

see are couple -- and EBITDA, and the that expected lines. you XXX numbers driven and now between out $XXX of a $X,XXX metrics. And other Sales million; be Just those key call million to X million. by $XXX million between adjusted $XXX

pace similar and including of Products compared plus some above. difficult we the be guidance. reflects issues for in December international of roughly certain would last and Performance China parts year and the fundamentals the guidance year, due segments, quarter see note expectations previous current reduced to in updated conflict reflecting Israel. recovery in expect our manufacturing sectors feedlots, less our business, the disruptions I cost and inefficiencies than Nutrition We our that to or to of dairy the fiscal The described U.S. the the with of Mineral beef,

us. a around is longer-term confident the opportunities perspectives, world in So our demand this the we from remain in ahead for products closing, environment of various and challenging but the

would the Thank And with you. please you operator, if line questions. for that, open

Operator

will Instructions] Balaji the Prasad from Barclays. of line first come [Operator question Our with

Mikaela Franceschina

for on Balaji. This is Mikaela

potential Just to in Mecadox. and the recent wanted for FDA's a carbadox for more the implications dig around notice bit

it prior you safety deal provided FDA great a As the seems you to of mentioned, in data instances.

here your steps next look will what like. wondering just So

Jack Bendheim

because the go steps effective It's product think and next release, safe battling the said fully as been and long in years. we it's there's this we it. don't what leftover XX it press [ to an on are. the But They law, products has meat, our Can't as been product I've use. of for market sort like as And carcinogenic by products in have no safe this I earlier But product. carcinogenic through has some said FDA. in ] our

that, over these over, and up on we've seen we've with it proven FDA last and the of tested years. we've And some us that XX

it's again, FDA, changes might hog And the product the be mindset safe used producers effective. is but in and United some in So the of most this by there States.

Mikaela Franceschina

one just follow-up. us just And Great. has how remind been tracking? Rejensa of Can you

Daniel Bendheim

I'll take is This that. Donny.

continues So not Rejensa of nicely. the on the the channel vet sales we've immune grow to to throughout industry. seen It's out in slowdown kind

has a overall, be pace its growth little happy So bit, the planned. slowed to we but with and it's getting continue

Operator

of the Bank Your with of next America. Ryskin question from line comes Michael

Michael Ryskin

been And Dick, ask comments welcome regarding of outlook 'XX. year It's some on first I fiscal your back. want a while. for to further

out called feedlots. international specifically OUS, You beef

on as pressures Just going We and what's there, contraction as what's not wondering some if of you beef could herd much feedlots U.S. hear expand discussion internationally. the and often a about little on happening bit there. but

helpful. could color really be any So

Jack Bendheim

put of the pressure of business some higher Latin America, is mean production beef our businesses. the I generally where cost has it's is and loss -- in some the of which into businesses grain, of and these turned color which around

seen So us the on sold. cows feedlot, for translates products in fewer drop volume into fewer and we've which

now Xs. the down starting corn and We States. they're higher get They in projecting production were the -- USDA prices drop. corn in to higher into the see of is United Xs,

that's prices see driver. and that the And should dropped business the turn have further, So been around. we basically

Michael Ryskin

Okay.

interpretation? quick So like feed to that and it's input primarily costs, turn the it that tied costs. will macro-driven be And right hopefully, especially to sounds relatively Is around.

Jack Bendheim

that's we're seeing what business. we're the Exactly. seeing, what in dairy that's I also and mean

Michael Ryskin

my questions. going Okay. dairy actually another was of Great. be to one No,

the So technology. Or that into broad LatAm, out? acquisition guys of portfolio I what that really you ago novel a for strength. we're you be really an especially of? did you good it vaccine in that's really dive strength, in benefits would the couple you years a vaccine Is If effect? introduction know emphasized I ask the could business been called a that if I where great. then a particular vaccine on now, brought well. but product that be is that could some . mean while that should doing Is was quarter just seeing this any for you vaccines,

Jack Bendheim

of we the our technology the a use seeing the the easier virus, the developed. in I it we've the it's always which mean that ability field. things, And or to see these the the in vaccine, market. that using novel have I to we're TAbic So is tabletize both mean remember been growth need combination that seeing you and products makes a in few you virus those we markets. to are -- also

virus And So spreading, the very we the effective is virus product the vaccine spreading. have and with a follows.

Michael Ryskin

Okay. Great. one. can last squeeze I If in one

you are efforts expand again tied control in back where in little you Rejensa? comments that part that cost product Is the the on you that mentioned little bit bit business? Some kind development? Could like to -- of in companion think anything or pulling companion spend sales -- Is that? or a of your to just on -- want I Just promotions new business. you any the control a

Daniel Bendheim

Donny I'll take Yes, that, again.

with So pipeline. it deals our

we gates look think again. And at when a it kind stage I we misses stage strong gate, of throughout. have a product

products. of of dealing our oral care One with in products our our pipeline, one

down We one opportunity it the In cats. the light slow -- in at for have for one the on really in X the we we're decided results dog because dog, care looking getting. there products we're product, doesn't our pipeline, of spend oral to

our spend respect. curtailing are that we So in

Operator

Your go line Wright of from MKM. with next question the will Brian ROTH

Brian Wright

quick real questions. Two

the read a XX-Q, and pension what Just but was exactly happened trying little trying the the settlement just I've understanding about -- understand to that there? to more get detail

Richard Johnson

Sure.

me years the ago. was a words, into say other So for I event. let noncash pension -- funded that corporation, first, put think the this In we money plan we

essentially a So the paying have it's of company assume many the was the group We inside an insurance many, people agreed got are benefits that irrevocably been something transaction liability doing. that pension plan. -- this that corporations a pension those happens future to plan, in for for and

And the company is on million liability. that precise the a basically, pension was insurance million. the its basis, company insurance there, present The -- a the to company take liability. took -- And so of $XX paid $XX present plan insurance of value over the a the million value over took but assets it and $XX number over took

million into recognize to the and from rules on, to there a recognition Phibro. we charge, noncash some where again, but then get corporation, to item -- accounting So had you this $XX

Brian Wright

Okay.

So that's books. the still off

that's As charge. there's million that far as here being the insurance $XX company has recorded that obligation, no counterparty risk impact in

Richard Johnson

insurance we No, highly there's liability this to very risk. the insurance to no counterparty In companies. were careful transferring consider rated very company, only

pay assumed but very future. this rated, to financially forget the over is insurance -- So stable the obligation a this who rating I system the works, very in highly has irrevocably is these company time benefits how

Brian Wright

-- of Okay. And how then first follow-up. on Of as lien? just the that characterized debt, is much the one detail gross

Richard Johnson

think gross exception of is and with There's various the It's it. it's every a It's debt -- million, collateral supported loan the a credit it's piece, but within the remainder all small -- $XX facility. the into one pieces. revolver broken all a of piece of around term Fundamentally package. by same all -- I

Operator

Your the with Morgan next Erin Stanley. line from question will of Wright come

Linda Bolduc

This for is Erin Wright. Bolduc on Linda

(sic) MAF And the dynamics the this about questions. of X the the So speak for you we you core thinking [ year? seeing across you're are how business? ] balance to have Can MFA dynamics

Jack Bendheim

repeat question? Just the can you first

Linda Bolduc

about the are there? please year you the Can of to balance dynamics yes. the how business? Yes, speak [indiscernible] And for dynamic you thinking the

Jack Bendheim

rest was is -- MFA sector. dynamics out something your you cut Sorry, the the question? the the about the what question of And of on

Linda Bolduc

for thinking balance And of how this about dynamics the you're year?

Jack Bendheim

into -- billion business, would a business way shared to $X which say, a it's words, In by it's cow. product we the very few it's it's the or mean a is is So category. that additives, strong very, MFA and generic and animal, medically get business. translates producers, worldwide, category. efficient a is and products few a into has a It's comes exactly. I pig the any -- know producers whether feed a that -- $X registrations to other big a chicken, And most to don't billion very that

it disease product, seen, how we've see be forward. and business. we growing that we but And about, population see line we've on going with talked that always depending been what And with to steady growth. this history pressures, seen economic and a in we've our that's That's always

Linda Bolduc

That's quick helpful. us On remind that business? And drivers key there in one commitment any Performance of overall Products, follow-up. your to you can

Richard Johnson

couple products of segment. businesses are -- a segments kind or key -- that of smaller within there's Our within

the of for important personal end-market care we categories One represent ingredients is products.

ingredients that sell like shampoos, ingredients that. So -- into to importantly, for toothpaste would products go some other that manufacturers,

then products, And Phibro legacy that long has a business copper-based the -- had of second our piece is where time. that's for business a that

that opportunistic. positive. It's of have is business distracting. We something It's part the It's small a terribly said relatively flow the not not core. cash company. It's is that

So up until the this point, business. we've retained

Operator

hand remarks. I'll for to call any that, Dick Johnson closing With the back

Richard Johnson

it's and to next Phibro, We with on and Q&A back talk for on interest morning. nice time the the again our earnings thank this you and to be Well, we'll phone in call. enjoyed your you your folks

now. have a day, you're So hope nice Bye everybody, doing and Take well. care.

Operator

That and joining. today's you will conclude thank call, all we for

You may now disconnect.

Phibro Animal Health (PAHC) 9 Nov 232024 Q1 Earnings call transcript