Earnings call transcript: Phibro Animal Health beats Q3 2025 expectations

Phibro Animal Health Corporation reported strong financial results for Q3 2025, exceeding both earnings and revenue forecasts. The company posted an adjusted diluted EPS of $0.63, surpassing the expected $0.53, and achieved revenue of $347.8 million against a forecast of $309.5 million. Following the announcement, Phibro’s stock surged 11.4%, reflecting investor optimism about the company’s performance and future outlook. According to InvestingPro data, the company maintains a healthy financial position with a current ratio of 3.2, indicating strong liquidity. InvestingPro analysis suggests the stock is trading above its Fair Value, with 6 additional key insights available to subscribers.

Key Takeaways

• Phibro’s Q3 2025 revenue increased by 32% year-over-year.
• Adjusted EBITDA rose by 85%, indicating improved profitability.
• The integration of the Zoetis MFA portfolio contributed significantly to sales growth.
• The company’s stock price increased by 11.4% following the earnings announcement.

Company Performance

Phibro Animal Health demonstrated robust performance in Q3 2025, driven by substantial growth across its segments. The Animal Health segment led the charge with a 42% increase in sales, while Mineral Nutrition and Performance Products segments grew by 4% and 28%, respectively. The successful integration of the Zoetis MFA portfolio played a pivotal role in enhancing the company’s market position and driving revenue.

Financial Highlights

• Revenue: $347.8 million, up 32% year-over-year
• Adjusted EBITDA: $25.2 million, an 85% increase
• Adjusted diluted EPS: $0.63, more than double the previous year
• Positive free cash flow: $49 million for the 12 months ending March 31, 2025

Earnings vs. Forecast

Phibro’s Q3 2025 results exceeded expectations, with EPS of $0.63 versus a forecast of $0.53, a 19% positive surprise. Revenue also outperformed forecasts, reaching $347.8 million compared to the anticipated $309.5 million, marking a 12.4% beat.

Market Reaction

Following the earnings release, Phibro’s stock experienced a significant boost, climbing 11.4% to $21.60. This movement reflects investor confidence in the company’s ability to sustain growth and profitability. The stock’s performance stands out, especially considering its proximity to the 52-week high of $26.55.

Outlook & Guidance

Looking ahead, Phibro provided an optimistic outlook for the full year 2025, projecting net sales between $1.260 billion and $1.290 billion, representing a 24-27% increase. Adjusted EBITDA is expected to grow by 59-66%, and adjusted diluted EPS is projected to be between $1.96 and $2.09. InvestingPro analysts expect continued profitability, though the stock’s P/E ratio of 49.67 suggests premium pricing relative to earnings. For deeper insights into Phibro’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The company anticipates minimal tariff impact in 2025, with potential pressures expected in 2026.

Executive Commentary

"Our performance this quarter reflects continued strength across the business," said CEO Jack Bantine, highlighting the company’s strategic investments in procurement and supply chain resilience. CFO Glenn David expressed confidence in Phibro’s ability to drive strong income growth in the coming year.

Risks and Challenges

• Tariff pressures expected to impact 2026, with an anticipated 5-10% effect.
• Supply chain disruptions could pose challenges despite current resilience strategies.
• Market saturation in certain segments may limit growth potential.

Q&A

During the earnings call, analysts inquired about Phibro’s strategies for mitigating tariff impacts and the performance of the MFA business. Executives clarified the company’s manufacturing locations and addressed foreign exchange impacts, providing insights into their strategic approach to navigating these challenges.

Full transcript - Phibro Animal Health Corporation (PAHC) Q3 2025:

Regina, Conference 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 Fibro Animal Health Corporation Third Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

I would now like to turn the conference over to Glenn David, Chief Financial Officer. Please go ahead.

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: Thank you, Regina. Good day, and welcome to the Fibro Animal Health Corporation earnings call for our third quarter ended 03/31/2025. My name is Glenn David, and I’m the Chief Financial Officer of Fibro Animal Health Corporation. I’m joined on today’s call by Jack Bantine, Fibro’s Chairman, President and Chief Executive Officer Donnie Bantine, Director and Executive Vice President of Corporate Strategy and Larry Miller, our Chief Operating Officer. Today, we will cover our financial performance for our third quarter and provide updated financial guidance for our fiscal year ending 06/30/2025.

At the conclusion of our remarks, we will open the lines for your questions. I would like to remind you that we are providing a simultaneous webcast of this call on our website, pahc.com. Also on the Investors section of our website, you will find copies of the earnings press release and quarterly Form 10 Q as well as the transcript and slides discussed and presented on this call. Our remarks today will include forward looking statements, and actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward looking statements section in our earnings press release.

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

S. GAAP measures are included in the financial tables that accompany the earnings press release. We present our results on a GAAP basis and on an adjusted basis. Our adjusted results exclude acquisition related items, unusual nonoperational or nonrecurring items, including stock based compensation, other income expense as separately reported in the consolidated statements of operations, including foreign currency losses gains net and income taxes related to pretax income adjustments and unusual or nonrecurring income tax items. Now let me introduce our Chairman, President and Chief Executive Officer, Jack Bantine, to share his opening remarks.

Jack? Thanks, Glenn. Good morning, everyone. I’m pleased

Jack Bantine, Chairman, President and Chief Executive Officer, Fibro Animal Health Corporation: to report another solid quarter for Fiber Animal Health Corporation. Our performance this quarter reflects continued strength across the business, supported by the integration of the Zoetis MFA portfolio and steady execution across our teams. Total sales increased 32 year over year, while adjusted EBITDA rose 85% and adjusted diluted EPS more than doubled. These results reflect both top line growth and improved operating leverage. By segment, Animal Health led the way with 42% revenue growth.

Within that, the sales of our newly integrated MSA and other products increased 68%. Our legacy MSA and other sales had a slight decline and vaccines grew 1% largely due to the timing of customer orders. Overall, the segment continues to perform well. The Nutritional Specialties maintained its positive momentum with 8% revenue growth, while minimum efficient and performance products posted strong gains of 428%, respectively, highlighting the strength of our diversified portfolio. Across all segments, this quarter’s results demonstrate how our focus execution and operational excellence, central themes of our Fiber Forward strategy is helping drive meaningful progress.

While Fiber Forward is a long term initiative, its emphasis on disciplined operations and continuous improvement is already contributing to our performance. The same focus is helping us navigate external challenges like the evolving tariff environment. While the situation remains fluid, we do not expect any material impact on our financial results for the remainder of fiscal twenty twenty five. Through fiber forward, we’ve made targeted investments in procurement and supply chain resilience that are already helping us manage potential disruptions. Looking ahead to fiscal twenty twenty six, based on currently announced tariffs, we anticipate some pressure on certain inputs and markets in the range of 5,000,000 to $10,000,000 but we believe we’re well positioned to manage these impacts effectively and still deliver growth.

Now turning to guidance. Based on our strong third quarter results and improved visibility into the remainder of the year, we are narrowing our full year guidance ranges and in most case, raising the midpoint. We now expect net sales between $1,260,000,000 and $1,290,000,000 adjusted EBITDA of $177,000,000 to $183,000,000 and adjusted EPS of $1.96 to $2.09 GAAP EPS is projected to be in the range of $0.98 to $1.11 This updated guidance reflects solid execution across our businesses and continued momentum as we close out the fiscal year. I’ll now turn it back to Glenn for additional color on the quarter’s performance. I look forward to your questions at the end.

Glenn?

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: Thanks, Jack. And starting with our Q3 performance on Slide four. Consolidated net sales for the quarter ended 03/31/2025 were $347,800,000 reflecting an increase of $84,600,000 or a 32% increase over the same quarter one year ago. The Animal Health segment grew 42%, while Mineral Nutrition grew at 4%, and the Performance Products segment grew by 28%. GAAP net income and diluted EPS increased significantly, driven by the integration of the new MFA business, increases in demand, improved gross margin due to favorable mix and lower input costs, offset by increased SG and A due to higher employee related costs.

After making our standard adjustments to GAAP results, including acquisition related items, foreign currency losses and certain one off items, the third quarter adjusted EBITDA increased $25,200,000 or 85% versus prior year. Adjusted net income and adjusted diluted EPS both significantly increased as well. Increased gross profit, driven by sales growth, was partially offset by higher adjusted SG and A and higher adjusted interest expense. Moving to segment level financial performance. The Animal Health segment posted $258,400,000 of net sales for the quarter, an increase of $77,100,000 or 42% versus the same quarter prior year.

Within the Animal Health segment, we reported legacy MFA and other net sales decline of $3,500,000 or negative 3% due to the timing of specific customer orders and strong performance in Q3 last year. The new MFA business contributed a full quarter of sales of $77,000,000 in the quarter, driving the total MFA and other growth to 68%. Nutritional specialty specialty products net sales increased $3,200,000 or 8%, mostly due to higher sales of microbial and companion animal products. Vaccine net sales growth of $05,000,000 or 1% was driven by vaccines in Latin America plus an increase in domestic demand, offset by timing of specific international market registration renewals, which was expected and resolved with limited sales for the quarter. Animal Health adjusted EBITDA was $63,100,000 a 73% increase driven by the new MFA business, higher gross profit from improved mix in the legacy business, partially offset by higher SG and A.

For comparison purposes only, we are providing a rough estimate of Zoetis EBITDA contribution. Please note that many expenses are not easily attributed to the new business. Our estimated EBITDA of $23,400,000 includes only those expenses that can be directly attributed to the new MFA business. Moving on to the third quarter financial performance of our other business segments on Slide six. Starting with Mineral Nutrition.

Net sales for the quarter was $66,800,000 an increase of $2,500,000 or 4% due to increased sales volume and price. Mineral Nutrition adjusted EBITDA was $5,800,000 reflecting the year on year increase of $1,100,000 driven by higher gross profit and improved cost positions. Looking at our Performance Products segment. Net sales of $22,700,000 reflects an increase of $5,000,000 or 28% as a result of higher demand for the ingredients used in personal care products. Adjusted EBITDA was $3,300,000 and grew $1,000,000 versus the same quarter prior year.

Corporate expenses increased $3,400,000 driven by increased employee related costs. Turning to key capitalization related metrics on slide seven. We generated $49,000,000 of positive free cash flow for the twelve months ended 03/31/2025. We generated $87,000,000 of operating cash flow and invested $38,000,000 in capital expenditures. Cash and cash equivalents were $70,000,000 at the end of the quarter.

Our gross leverage ratio was 3.0x at the end of the third quarter based on $734,000,000 of total debt and $245,000,000 of trailing twelve month adjusted EBITDA. Please note that the trailing twelve months of adjusted EBITDA includes twelve months from the Zoetis Medicaid feed additive portfolio, seven months of Zoetis history and five months from FIBRO ownership. Our net leverage ratio was 2.7x at the end of the third quarter based on six sixty four million dollars of net debt and $245,000,000 of trailing twelve month adjusted EBITDA. As a reminder, dollars 300,000,000 of our debt is at a fixed rate of 0.51% plus the applicable margin through June 2025. In September of twenty twenty four, we entered into a new swap arrangement $150,000,000 at a fixed rate of 3.18% plus the applicable margin that runs through September 2029.

In March of twenty twenty five, we entered into a new swap arrangement for $275,000,000 at a fixed rate of 3.64% plus the applicable margin that runs through February 2030. In March 2025, we also entered into a forward starting interest rate collar starting in July 2025 for $250,000,000 with an interest rate cap and floor of 4.751.99% respectively through June 2026. Turning to dividends. Consistent with our history, we paid a quarterly dividend of $0.12 per share or 4,900,000 in aggregate. Let’s turn to Slide eight, which lays out our guidance for fiscal year twenty twenty five.

Please note that our guidance includes the acquisition of the Zoetis Medicaid feed additive portfolio. Included in this guidance for fiscal year twenty twenty five are early benefits related to our fiber forward income growth initiative that will help drive additional EBITDA and margin growth. One time costs related to this initiative are also included in our GAAP guidance and primarily consist of one time consulting fees. The initiative is focused on unlocking additional areas of revenue growth and cost savings, areas such as potential price increases, expanded product offerings, procurement initiatives and other cost savings initiatives. Our revised guidance for fiscal year twenty twenty five is as follows: total net sales of $1,260,000,000 dollars to $1,290,000,000 dollars This represents a total growth range 24% to 27% and a midpoint of approximately 25%.

Total adjusted EBITDA of 177,000,000 to $183,000,000 This represents a growth range of 59% to 66% and a midpoint of approximately 62%. Total adjusted net income of $80,000,000 to $85,000,000 This represents growth of 65% to 76% with a midpoint of approximately 70%. The estimates for the Zoetis MFA contribution to fiscal year twenty twenty five include some of the unusual impacts you would expect during the integration such as destocking of inventory, the impact of blackout periods and incremental costs related to transition service and distribution service agreements. GAAP net income and EPS assumes constant currency and no further gains or losses from FX movements. Also included in our GAAP net income and EPS are onetime costs related to our Fibro Forward income growth initiative and acquisition related costs from the new MFA products.

We are confident in our ability to deliver total adjusted diluted EPS between $1.96 and $2.09 for the fiscal year of twenty twenty five, which represents a growth of 65% to 76% with a midpoint of approximately 70%. Regarding tariffs, as Jack mentioned and based on what we know today, we expect very limited income from tariffs to our fiscal year twenty twenty five results and expect the impacts of fiscal year twenty twenty six to be manageable and remain confident in our ability to drive strong income growth next year. This growth will come from continued strong performance in our legacy business, driving revenue growth at or above the livestock market rate accelerated EBITDA growth from our five Go Forward income growth initiatives and a full year of revenue and adjusted net income contribution from the Zoetis MFA portfolio versus eight months in fiscal year twenty twenty five. With that, Regina, could you please open the line for questions?

Regina, Conference Operator: We will now begin the question and answer session. Our first question will come from the line of Ekaterina Kieshkova with JPMorgan. Please go ahead.

Ekaterina Kieshkova, Analyst, JPMorgan: Hi, thank you so much. So first, just on tariffs, you’ve touched upon this, but maybe you can elaborate and give a little bit more color as to how you’re thinking about exposure for the company. I think specifically around the upcoming pharma tariffs, how much of The U. S. Animal health business do you think could be potentially exposed from a manufacturing standpoint?

And just can you potentially mitigate some of the headwinds via price? And then second question is just around the Medicaid fee added business. Just kind of adjusting for the Zoetis acquisition, I think the core business performed a little bit worse than recent trends. Just elaborate a bit on what drove that and maybe how to think about performance for that segment going forward. Thank you.

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: Sure. So I’ll start with the tariffs and the growth in MFAs and others. We’ll certainly add on. From tariffs, like to be catarrina, one of the things when you look at our manufacturing, the majority of our manufacturing is done in The U. S.

As well as with manufacturing in Brazil and Israel. We do have manufacturing sites in Italy and China as well. But the majority of our manufacturing is done locally and provided for local markets. There are certain inputs, as we called out in our prepared remarks, that we do get from other markets, and those tariffs are reflected in our guidance and our estimates. But we believe there are ways to mitigate impacts of tariffs there, we’ve taken many of those actions.

So some of the ways that we do that are we have built inventory on certain of those inputs. We’ve also switched suppliers to other markets where we could. We’ve also renegotiated with a number of suppliers to absorb the tariff impact. And as you mentioned, we do have the ability to take price increases, and we have announced price increases on products that have been particularly impacted by the tariffs. So there are a number of mitigation items that in areas that we’ve been able to implement already.

Regarding the slower MFA growth of negative 3% in this quarter, that was driven by factors. The main one just being the timing of orders to some of our larger customers, which negatively impacted growth for the quarter. But overall, our MFA and other segment, from a year to date perspective, has grown 7%. The other thing to think about in the quarter is we had particularly strong growth in Q3 of last year. So in Q3 of last year, our MFA and Other segment grew over 16%.

So it was a very difficult comparative quarter for this year. But overall, we remain confident in the performance of that segment and the underlying demand with our customers.

Ekaterina Kieshkova, Analyst, JPMorgan: Thank you.

Regina, Conference Operator: Our next question will come from the line of Michael Ryskin at Bank of America. Please go ahead.

Michael Ryskin, Analyst, Bank of America: Great. Thanks for taking the question. Congrats on the quarter guys. Want to talk about the guide update. You’re keeping revenues more or less unchanged through the midpoints the same, but you took up your EBITDA and EPS guide pretty meaningfully for where we are in the year.

Could just talk about what’s driving that? Is it mix? Is it the Fibro Forward initiative? Just sort of unpack that a little bit, just given how late we are in the year, is a pretty impressive bump. And I’ve

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: got a follow-up. Mike. So thanks for the question. I think there are a number of factors that are driving the increase in the guide. To your point, a bit of it is mix and continued strong performance that we expect for the year in our vaccine portfolio.

It is the five point forward income growth initiative continuing to drive incremental growth for the year, but also equal or not the greatest contributor would be the Zoetis MFA portfolio and the improved margins that we continue to see. I think we’ve been able to leverage our global infrastructure even to a greater extent than we initially anticipated, and we’re seeing very positive margin contribution from that. Again, we’ll caution that the numbers that we share our estimates, they don’t fully reflect costs that aren’t 100% dedicated to the Zoetis portfolio. But overall, we’re seeing greater profitability come from the inclusion of that portfolio into our business.

Michael Ryskin, Analyst, Bank of America: Okay. And that’s helpful. And a follow-up on tariffs. I know this was just previously asked, but could you give us a little more color on you mentioned the geos, but is there any particular product or product category where the tariff is coming from? Is it more from sort of the API and the raw underlying chemicals or subcomponents?

Is it specific to China? Just trying to think of not only what’s been seen now, but potential future tariffs, whether it’s pharma tariffs or regional tariffs, just so we can continue to model this as the situation evolves. Thanks.

Jack Bantine, Chairman, President and Chief Executive Officer, Fibro Animal Health Corporation: I’ll take it, Mike. It’s Jack. Thank you. And it’s a great question. I think the impact we’re seeing are not necessarily from China.

I think as Glenn had said, we produce most of our active ingredients in The US, in Brazil and in Israel, and we get very, very little of the active ingredients in China. It’s more the inputs that come from the overall sort of 10% tariffs across the board that we’re seeing from inputs from all over the world. So there, it’s a combination of looking how we use those products, can we use a few of those products. It’s going back to suppliers and asking them to absorb the cost and maybe changing some more materials. So it’s not a huge amount of money, but it’s we’re reflecting it in the sort of de minimis discussion of how we have to handle it, but we’re working on it.

Michael Ryskin, Analyst, Bank of America: Okay. Thanks. I’ll leave it there.

Regina, Conference Operator: Our next question comes from the line of Nevan Tighe with BNP Paribas. Please go ahead.

Nevan Tighe, Analyst, BNP Paribas: Hi, good morning. Just a follow-up on tariffs. If you do expect or are you lobbying for an exception for animal health from potential pharma tariffs? We know that the bigger players are discussing that. And second, if you can discuss the FX impact on the quarter and the rest of the year.

Thank you.

Jack Bantine, Chairman, President and Chief Executive Officer, Fibro Animal Health Corporation: So to the first question, we’re involved with all of the animal health companies in lobbying in the various markets for exceptions for the animal health. And as you’re well aware, the end result of these products are in the price of food, at least for our sector of the business. And to that extent, no one is really eager to increase the inputs. So I think we are lobbying. And as of right now, the initial reactions we’re seeing

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: are positive, but we’ll know in the next couple of weeks where this thing ends. And regarding FX for the quarter, we saw limited impact in the quarter. One of the things we’ve talked about and discussed in the past is in many of the international markets, particularly at the revenue line, we try to act and transact in U. S. Dollars and match our pricing to U.

S. Dollars so that we see limited impact from FX. On a year over year basis, there is some favorability within our costs related to FX, but overall limited impact for the quarter and the year.

Nevan Tighe, Analyst, BNP Paribas: Thank you very much.

Regina, Conference Operator: And we have no further questions at this time. I will hand the call back over to Glenn David for any closing comments.

Glenn David, Chief Financial Officer, Fibro Animal Health Corporation: Thank you, Regina, and thank you, everyone, for listening in on today’s call. We really appreciate your time, attention and interest and support of Fiber Animal Health. Have a great day.

Regina, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.