PAHC · Phibro Animal Health Corporation

Period Performance

Period Performance

For the three months ended December 31, 2025, Phibro Animal Health reported net sales of $373.9 million, a 21% increase from $309.3 million in the prior year period. The growth was primarily driven by the acquisition of Zoetis's medicated feed additive (MFA) portfolio, which contributed $57.5 million in incremental revenue. Gross profit rose 30% to $132.7 million, with gross margin expanding 260 basis points to 35.5%, reflecting favorable product mix, higher average selling prices, and lower acquisition-related cost of goods sold ($0.8 million vs. $1.6 million). Operating income surged 97% to $50.3 million, as higher gross profit more than offset an 8% increase in SG&A. Net income jumped to $27.5 million ($0.67 per diluted share) from $3.2 million ($0.08 per diluted share) a year ago, aided by a significant reduction in foreign currency losses ($2.1 million vs. $11.7 million).

Segment Dynamics

• Animal Health: Segment sales increased 26% to $290.0 million, led by MFA and other revenues (+34%) driven by the Zoetis acquisition, though partially offset by timing of large customer purchases. Nutritional specialties rose 9% on North American dairy demand, and vaccines grew 13% on poultry strength in Latin America and Southeast Asia. Adjusted EBITDA for the segment increased 41% to $82.2 million, with margin improving from 25.4% to 28.3%.
• Mineral Nutrition: Sales grew 9% to $68.9 million on higher demand for copper, zinc, and trace minerals. Adjusted EBITDA rose 12% to $6.4 million, with margin slightly up to 9.2%.
• Performance Products: Sales declined 10% to $15.0 million due to weaker demand for personal care ingredients. Adjusted EBITDA fell 56% to $0.8 million, with margin contracting to 5.5%.

Forward View

Management did not provide explicit numeric guidance but expressed confidence in sufficient liquidity from cash, operating cash flows, and credit facilities to meet near-term obligations. The company continues to integrate the Zoetis MFA acquisition and is executing the Phibro Forward initiative focused on revenue growth and cost savings. Key risks include regulatory developments for carbadox (Mecadox), operating exposure in Israel (16% of assets and sales), and trade tariff uncertainties. The acquisition contributed $382.8 million to cumulative net sales since closing, indicating strong early returns.

Notes & Operating Detail

Balance Sheet & Liquidity

As of December 31, 2025, Phibro held $55.5M in cash and equivalents plus $19.0M in short-term investments. Total debt stood at $731.2M, comprising $630M in term loans (net of $5.8M unamortized costs), $107M drawn on the revolver, and $20.6M current portion. Shareholders' equity grew to $332.4M from $285.7M at June 30, 2025, driven by net income. The net leverage ratio remained within the 4.75x covenant.

Commitments & Contractual Obligations

The Notes disclose no specific purchase commitments; environmental remediation liabilities were estimated at $4.2M. Letters of credit outstanding totaled $2.9M.

Capital Allocation

Dividends: $0.12 per share quarterly, totaling $9.7M for six months, unchanged YoY. Debt: Net increase of $12.6M largely from revolver draws; term loan repayments of $8.1M. Capex: $24.9M, or 3.4% of sales, down from $17.4M in prior year (but prior year included acquisition).

Segment / Geographic Mix

Animal Health segment generated $573.4M in revenue (up 39% YoY), operating income of $143.9M (25.1% margin), and Adjusted EBITDA of $157.0M. Mineral Nutrition revenue grew 8% to $131.9M with a 4.4% margin. Performance Products declined 9% to $32.4M. Geographically, US sales were $424.1M (57% of total), Latin America/Canada $174.8M, EMEA $89.7M, and Asia Pacific $49.1M.