Phibro Animal Health Files Q1 FY25 10-Q

TL;DR

Phibro Animal Health's Q1 FY25 10-Q is in. Check financials.

AI Summary

Phibro Animal Health Corporation filed its 10-Q for the period ending September 30, 2024. The company reported financial results for its first quarter of fiscal year 2025. Key financial figures and operational details for this period are detailed within the filing.

Why It Matters

This filing provides investors with the latest financial performance and operational updates for Phibro Animal Health, crucial for understanding the company's current standing and future prospects.

Risk Assessment

Risk Level: medium — 10-Q filings are standard disclosures for public companies, but the specific financial performance and any disclosed risks within this report could impact investment decisions.

Key Players & Entities

• PHIBRO ANIMAL HEALTH CORP (company) — Filer
• 20240930 (date) — Period of Report
• 20241106 (date) — Filed as of Date
• TEANECK, NJ (location) — Business Address

FAQ

Filing Documents

• pahc-20240930x10q.htm (10-Q) — 1786KB
• pahc-20240930xex31d1.htm (EX-31.1) — 8KB
• pahc-20240930xex31d2.htm (EX-31.2) — 8KB
• pahc-20240930xex32d1.htm (EX-32.1) — 4KB
• pahc-20240930xex32d2.htm (EX-32.2) — 4KB
• 0001558370-24-014644.txt ( ) — 8341KB
• pahc-20240930.xsd (EX-101.SCH) — 59KB
• pahc-20240930_cal.xml (EX-101.CAL) — 76KB
• pahc-20240930_def.xml (EX-101.DEF) — 297KB
• pahc-20240930_lab.xml (EX-101.LAB) — 428KB
• pahc-20240930_pre.xml (EX-101.PRE) — 462KB
• pahc-20240930x10q_htm.xml (XML) — 1454KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item 1.

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income (Loss) 4 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 6 Consolidated Statements of Changes in Stockholders' Equity 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 36 Item 4.

Controls and Procedures

Controls and Procedures 36

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 37 Item 1A.

Risk Factors

Risk Factors 37 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37 Item 3. Defaults Upon Senior Securities 37 Item 4. Mine Safety Disclosures 37 Item 5. Other Information 37 Item 6. Exhibits 37

SIGNATURES

SIGNATURES 38 2 Table of Contents

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months For the Periods Ended September 30 2024 2023 (unaudited) (in thousands, except per share amounts) Net sales $ 260,432 $ 231,349 Cost of goods sold 176,937 163,623 Gross profit 83,495 67,726 Selling, general and administrative expenses 65,796 68,452 Operating income (loss) 17,699 ( 726 ) Interest expense, net 7,641 4,564 Foreign currency losses, net 438 6,689 Income (loss) before income taxes 9,620 ( 11,979 ) Provision (benefit) for income taxes 2,645 ( 3,964 ) Net income (loss) $ 6,975 $ ( 8,015 ) Net income (loss) per share basic $ 0.17 $ ( 0.20 ) diluted $ 0.17 $ ( 0.20 ) Weighted average common shares outstanding basic 40,504 40,504 diluted 40,582 40,504 The accompanying notes are an integral part of these consolidated financial sta tements 3 Table of Contents PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three Months For the Periods Ended September 30 2024 2023 (unaudited) (in thousands) Net income (loss) $ 6,975 $ ( 8,015 ) Change in fair value of derivative instruments ( 4,848 ) ( 1,891 ) Foreign currency translation adjustment 3,168 ( 3,560 ) Pension settlement recognition — 10,425 Unrecognized net pension gains 78 644 Benefit (provision) for income taxes 1,194 ( 2,264 ) Other comprehensive (loss) income ( 408 ) 3,354 Comprehensive income (loss) $ 6,567 $ ( 4,661 ) The accompanying notes are an integral part of these consolidated financial sta tements 4 Table of Contents PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, June 30, As of 2024 2024 (unaudited) (in thousands, except share and per share amounts) ASSETS Cash and cash equivalents $ 51,837 $ 70,613

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share amounts) (unaudited) 1. Description of Business Phibro Animal Health Corporation ("Phibro" or "PAHC") and its subsidiaries (together, the "Company") is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food and companion animals including poultry, swine, beef and dairy cattle, aquaculture and dogs. The Company is also a manufacturer and marketer of performance products for use in the personal care, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to "we," "our," "us," and similar expressions refer to Phibro and its subsidiaries. The unaudited consolidated financial information for the three months ended September 30, 2024 and 2023, is presented on the same basis as the financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "Annual Report"), filed with the Securities and Exchange Commission on August 28, 2024 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June 30, 2024, was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report. The consolidated financia

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) New Accounting Standards Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, requires the disclosure of significant segment expenses that are included in segment profit or loss and how the segment measures are used for decision-making. The ASU will be effective for Phibro's fiscal year ending June 30, 2025 , including retrospective disclosure for all prior periods presented, and interim periods subsequent to June 30, 2025. We are evaluating the impact to our segment disclosures. ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, enhances income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The ASU outlines specific categories to be provided in the rate reconciliation and requires additional information for those reconciling items that meet a quantitative threshold. The ASU requires disaggregated disclosure of federal, state and foreign income taxes paid, including disaggregation by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received). The ASU also requires disaggregated disclosure of federal, state and foreign income (loss) from continuing operations before income taxes. The enhanced disclosures will be applied on a prospective basis and are required for Phibro's fiscal year ending June 30, 2026. We are evaluating the impact of the additional income tax-related disclosures. 3. Statements of Operations—Additional Information Disaggregated revenue, deferred revenue and customer payment terms We develop, manufacture and market a broad range of products for food and companion animals including poultry, swine, beef and dairy cattle, aquaculture, and dogs. The products help prevent, control and treat

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Mineral Nutrition The Mineral Nutrition business is comprised of formulations and concentrations of trace minerals such as zinc, manganese, copper, iron and other compounds, with a focus on customers in North America. Our customers use these products to fortify the daily feed requirements of their livestock's diets and maintain an optimal balance of trace elements in each animal. We manufacture and market a broad range of mineral nutrition products for food animals including poultry, swine, and beef and dairy cattle. Performance Products The Performance Products business manufactures and markets specialty ingredients for use in the personal care, industrial chemical and chemical catalyst industries. The following tables present our revenues disaggregated by major product category and geographic region: Net Sales by Product Type Three Months For the Periods Ended September 30 2024 2023 Animal Health MFAs and other $ 107,844 $ 94,104 Nutritional specialties 42,649 40,210 Vaccines 32,030 26,216 Total Animal Health $ 182,523 $ 160,530 Mineral Nutrition 59,062 56,026 Performance Products 18,847 14,793 Total $ 260,432 $ 231,349 Net Sales by Region Three Months For the Periods Ended September 30 2024 2023 United States $ 143,549 $ 131,287 Latin America and Canada 71,151 58,703 Europe, Middle East and Africa 31,125 26,879 Asia Pacific 14,607 14,480 Total $ 260,432 $ 231,349 Net sales by region are based on country of destination. Our customer payment terms generally range from 30 to 120 days globally and do not include any significant financing components. Payment terms vary based on industry and business practices within the regions in which we operate. Our average worldwide collection period for accounts receivable is approximately 60 days after the revenue is recognized. 10 Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Interest Expense, Net Three Months For the Periods Ended September 30 2024 2023 Interest expense, net Credit Facilities $ 6,200 $ 5,101 2022 Term Loan 12 216 Amortization of debt issuance costs 367 260 Refinancing expense 1,960 — Other 226 68 Interest expense 8,765 5,645 Interest income ( 1,124 ) ( 1,081 ) $ 7,641 $ 4,564 For the three months ended September 30, 2024, refinancing expense included $ 1,446 of new creditor and third-party financing costs and $ 514 in debt extinguishment costs resulting from the the writeoff of unamortized deferred financing costs on previously outstanding debt. Depreciation and Amortization Three Months For the Periods Ended September 30 2024 2023 Depreciation and amortization Depreciation of property, plant and equipment $ 6,742 $ 6,431 Amortization of intangible assets 2,262 2,440 $ 9,004 $ 8,871 Pension Settlement In July 2023, we entered into an annuity purchase agreement to irrevocably transfer a portion of our pension benefit obligation to a third-party insurance company. The annuity purchase price was $ 26,381 and was approximately equal to the benefit obligation transferred. The annuity purchase was funded from pension assets. During the three months ended September 30, 2023, we recognized a partial settlement of the pension plan and recorded $ 10,425 in selling, general and administrative expenses in our consolidated statement of operations, resulting from the recognition of net pension losses previously included in Accumulated other comprehensive loss. 4. Balance Sheets—Additional Information September 30, June 30, As of 2024 2024 Inventories Raw materials $ 76,795 $ 72,799 Work-in-process 25,040 23,550 Finished goods 170,721 169,562 $ 272,556 $ 265,911 11 Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) September 30, June 30, As of 2024 2024 Other assets ROU operating lease assets $ 37,559 $ 37,604 Deferred income taxes 25,526 19,371 Deposits 623 1,646 Insurance investments 6,395 6,305 Equity method investments 5,453 5,183 Debt issuance costs 8,844 911 Other 7,284 7,277 $ 91,684 $ 78,297 September 30, June 30, As of 2024 2024 Accrued expenses and other current liabilities Employee related $ 29,979 $ 37,612 Current operating lease liabilities 7,897 7,460 Commissions and rebates 4,617 7,875 Professional fees 11,911 8,918 Income and other taxes 5,543 2,931 Insurance-related 1,484 1,265 Insurance premium financing 3,241 5,185 Other 18,194 17,540 $ 82,866 $ 88,786 September 30, June 30, As of 2024 2024 Other liabilities Long-term operating lease liabilities $ 29,819 $ 29,915 Long-term and deferred income taxes 15,036 14,218 Supplemental retirement benefits, deferred compensation and other 6,749 6,678 U.S. pension plan, net 2,210 2,237 International retirement plans 3,240 3,212 Derivative instruments 653 — Other long-term liabilities 6,493 6,846 $ 64,200 $ 63,106 September 30, June 30, As of 2024 2024 Accumulated other comprehensive loss Derivative instruments $ 8,256 $ 13,104 Foreign currency translation adjustment ( 120,836 ) ( 124,004 ) Unrecognized net pension losses ( 12,934 ) ( 13,012 ) Income tax benefit 1,579 385 $ ( 123,935 ) $ ( 123,527 ) 12 Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 5. Debt Term Loans and Revolving Credit Facilities 2024 Credit Agreement In July 2024, we entered into a Credit Agreement, (the "2024 Credit Agreement") with a group of lenders. Initial borrowings were used to refinance all our outstanding debt, to pay fees and expenses of the transaction and for ongoing working capital requirements and general corporate purposes. Borrowings under the Delayed Draw Term A-1 Loans (as defined below) and Delayed Draw Term A-2 Loans (as defined below) were drawn on October 31, 2024 and used to finance the purchase price of the Acquisition discussed in "Note 12 — Subsequent Events." Under the 2024 Credit Agreement, there are (i) Initial Term A-1 Loans in an initial aggregate principal amount of $ 162,000 (the "Initial Term A-1 Loans"), (ii) Delayed Draw Term A-1 Loans in an initial aggregate principal amount of $ 189,000 (the "Delayed Draw Term A-1 Loans" and, together with the Initial Term A-1 Loans, the "Term A-1 Loans"), (iii) Initial Term A-2 Loans in an initial aggregate principal amount of $ 138,000 (the "Initial Term A-2 Loans"), (iv) Delayed Draw Term A-2 Loans in an initial aggregate principal amount of $ 161,000 (the "Delayed Draw Term A-2 Loans" and, together with the Initial Term A-2 Loans, the "Term A-2 Loans"), and (v) Revolving Credit Commitments in an initial aggregate principal amount of $ 310,000 (the "Revolving Credit Commitments" and, together with the Term A-1 Loans and Term A-2 Loans, the "2024 Credit Facilities"). The 2024 Credit Facilities mature in July 2029 in the case of the Term A-1 Loans and the Revolving Credit Commitments and in July 2031 in the case of the Term A-2 Loans. Borrowings under the 2024 Credit Facilities bear interest at rates based on the ratio of the Company and its subsidiaries' net consolidated indebtedness to the Company and its subsidiaries' consolidated EBITDA (the "Net Leverage Ratio"). The interest rates per annum for loan

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The 2024 Credit Agreement requires, among other things, compliance with financial covenants that permit: (i) a maximum Net Leverage Ratio and (ii) a minimum interest coverage ratio, each calculated on a trailing four-quarter basis, as follows: Period maximum Net Leverage Ratio minimum interest coverage ratio Prior to October 31, 2024 4.00 :1.00 3.00 :1.00 First fiscal quarter ending after October 31, 2024 through April 30, 2026 4.75 :1.00 2.50 :1.00 After April 30, 2026 to April 30, 2027 4.50 :1.00 2.75 :1.00 After April 30, 2027 to April 30, 2028 4.25 :1.00 3.00 :1.00 After April 30, 2028 4.00 :1.00 3.00 :1.00 As of September 30, 2024, we were in compliance with the financial covenants of the 2024 Credit Agreement. For the three months ended September 30, 2024, we paid $ 10,377 in lender and other fees related to the 2024 Credit Facilities, which are being amortized to interest

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