Phibro Animal Health (PAHC) Misses Q1 EPS by 5c, Revenues Miss; Reaffirms Previous FY Guidance

Phibro Animal Health (NASDAQ: PAHC) reported Q1 EPS of $0.19, $0.05 worse than the analyst estimate of $0.24. Revenue for the quarter came in at $190 million versus the consensus estimate of $199.67 million.

Highlights for the September 2019 quarter (compared to the September 2018 quarter)

• Net sales of $190 million, a decrease of $10 million, or 5%
• Net income of $3 million, a decrease of $14 million, or 85%
• Diluted EPS of $0.06, a decrease of $0.34, or 85%
• Adjusted EBITDA of $20 million, a decrease of $10 million, or 35%
• Adjusted diluted EPS of $0.19, a decrease of $0.20, or 51%

COMMENTARY

“Our core animal health sales were in line with our expectations, and, outside of the negative overlaps with China and the exited U.S. vaccine distribution business, roughly equal with last year,” said Jack Bendheim, Phibro’s Chairman, President and Chief Executive Officer. “As we forecast in our financial guidance, our sales in China in the quarter were negligible, as African Swine Fever reduced demand for our MFAs.”

“We anticipate sales and profitability will accelerate over the balance of the fiscal year, and we have seen a number of encouraging signs across our business. Notably, as the quarter progressed we saw a strengthening of demand for our nutritional specialty products in the U.S. dairy sector, with the backdrop of improvement in U.S. and global milk pricing. This positions us well for our early 2020 launch of a next-generation OmniGen™ nutritional specialty product for the dairy industry, where we anticipate a return to growth. Initial orders have been strong for our Provia Prime™ direct-fed microbial product for poultry, and the first of what we believe to be many animal health products to be developed and manufactured by our recently acquired Osprey Biotechnics business.”

“We also saw progress on other major initiatives that are expected to benefit us in the years to come. On the pet side, while still in test marketing, we are seeing strong vet interest and customer testimonials for our Rejensa™ canine joint health product. With regard to our three announced initiatives relating to vaccines, over the last couple of months several major U.S. poultry integrators have trialed our new pHi-Tech™ vaccine injection device and we are thrilled with its performance and are very positive on the value it brings to our customers. We are also encouraged by the incremental progress we made in the development of a vaccine against African Swine Fever, although it is still far too early to know if we will be successful. The build-out of our new vaccine production facility in Ireland continues on plan. In total, we remain convinced our P&L investments in strategic growth initiatives are establishing the foundation for the next phase of the Company’s growth.”

FINANCIAL GUIDANCE

We reaffirm our financial guidance for the fiscal year ending June 30, 2020, as included in our August 27, 2019, press release, including our full-year expectations for net sales, adjusted EBITDA, adjusted net income and adjusted net income per share.

For earnings history and earnings-related data on Phibro Animal Health (PAHC) click here.

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