Phibro's Q1 Net Income Triples on Strong Sales, Zoetis Acquisition Boost

TL;DR

**PAHC's Q1 results are a clear buy signal, driven by the Zoetis acquisition fueling massive profit growth.**

AI Summary

Phibro Animal Health Corporation (PAHC) reported a significant increase in net sales and net income for the three months ended September 30, 2025. Net sales surged by 39.7% to $363.9 million from $260.4 million in the prior-year period. Net income more than tripled, reaching $26.5 million, up from $7.0 million in the same quarter of 2024, resulting in diluted EPS of $0.65 compared to $0.17. This robust performance was significantly driven by the acquisition of Zoetis, Inc.'s medicated feed additives portfolio, which contributed $80.5 million in revenue for the quarter. Operating income also saw a substantial rise to $51.3 million from $17.7 million. However, interest expense increased to $12.1 million from $7.6 million, and foreign currency losses grew to $2.9 million from $0.4 million. The company's cash and cash equivalents increased to $72.8 million from $68.0 million at June 30, 2025, despite net cash used in investing activities of $21.0 million, primarily due to purchases of short-term investments and capital expenditures.

Why It Matters

This strong performance, particularly the significant revenue contribution from the Zoetis acquisition, signals successful integration and expansion in the animal health market, which could lead to increased market share for Phibro. For investors, the substantial increase in net income and EPS demonstrates improved profitability and operational efficiency, potentially making PAHC a more attractive investment compared to competitors. Employees may see enhanced job security and growth opportunities as the company expands its product portfolio and global presence. Customers benefit from a diversified range of animal health and nutrition products, potentially leading to better animal welfare and productivity. The broader market sees a more competitive landscape in animal health, driven by strategic M&A activity.

Risk Assessment

Risk Level: medium — While net income and sales are up significantly, the company's increased interest expense of $12.1 million (up from $7.6 million) and foreign currency losses of $2.9 million (up from $0.4 million) indicate financial vulnerabilities. The reliance on debt for acquisitions, as evidenced by the $297.5 million Zoetis acquisition funded by credit facilities, also adds to the risk profile.

Analyst Insight

Investors should consider initiating or increasing positions in PAHC, given the strong top-line and bottom-line growth driven by strategic acquisitions. Monitor the integration of the Zoetis assets and the company's ability to manage increased debt and foreign currency exposure in future quarters.

Financial Highlights

debt To Equity

0.99

revenue

$363.9M

operating Margin

14.1%

total Assets

$1.39B

total Debt

$732.96M

net Income

$26.5M

eps

$0.65

gross Margin

32.9%

cash Position

$72.8M

revenue Growth

+39.7%

Revenue Breakdown

Key Numbers

• $363.9M — Net Sales (Increased 39.7% from $260.4M in Q1 2024)
• $26.5M — Net Income (Increased 280% from $7.0M in Q1 2024)
• $0.65 — Diluted EPS (Increased from $0.17 in Q1 2024)
• $80.5M — Acquisition Revenue (Revenue from Zoetis acquisition in Q1 2025)
• $51.3M — Operating Income (Increased from $17.7M in Q1 2024)
• $12.1M — Interest Expense, net (Increased from $7.6M in Q1 2024)
• $2.9M — Foreign Currency Losses, net (Increased from $0.4M in Q1 2024)
• $72.8M — Cash and Cash Equivalents (As of September 30, 2025, up from $68.0M at June 30, 2025)
• $297.5M — Zoetis Acquisition Purchase Price (Funded by Delayed Draw Term A-1 and A-2 Loans)
• 39.7% — Net Sales Growth (Year-over-year increase for the three months ended September 30, 2025)

Key Players & Entities

• PHIBRO ANIMAL HEALTH CORP (company) — registrant
• PAHC (company) — ticker symbol
• Zoetis, Inc (company) — seller of medicated feed additives portfolio
• Securities and Exchange Commission (regulator) — filing recipient
• Nasdaq Stock Market (regulator) — exchange for Class A Common Stock
• FASB (regulator) — Financial Accounting Standards Board
• $363,893 (dollar_amount) — net sales for Q1 2025
• $26,527 (dollar_amount) — net income for Q1 2025
• $297.5 million (dollar_amount) — purchase price for Zoetis acquisition
• $80.5 million (dollar_amount) — revenue attributable to Zoetis acquisition for Q1 2025

FAQ

Risk Factors

• Increased Interest Expense [medium — financial]: Interest expense increased to $12.1 million from $7.6 million in the prior-year period. This increase is likely related to the debt financing for the Zoetis acquisition.
• Foreign Currency Losses [medium — financial]: Foreign currency losses grew to $2.9 million from $0.4 million. This indicates increased exposure to currency fluctuations, potentially impacting profitability.
• Integration of Zoetis Acquisition [high — operational]: The successful integration of the acquired Zoetis portfolio is crucial for realizing projected synergies and revenue growth. Any delays or challenges in integration could negatively impact financial performance.
• Animal Health Regulations [medium — regulatory]: The animal health industry is subject to stringent regulations regarding product safety, efficacy, and manufacturing. Changes in these regulations or non-compliance could lead to product recalls, fines, or reputational damage.
• Competition [medium — market]: The animal health market is competitive, with established players and emerging companies. Maintaining market share and pricing power requires continuous innovation and effective marketing strategies.

Industry Context

Phibro operates in the global animal health and mineral nutrition market, serving food and companion animals. The industry is characterized by increasing demand for animal protein, a focus on animal welfare, and the ongoing need for disease prevention and treatment solutions. Competition is significant, with major players investing heavily in R&D and strategic acquisitions to expand their portfolios and market reach.

Regulatory Implications

The animal health sector is heavily regulated by governmental agencies worldwide, focusing on product safety, efficacy, and environmental impact. Phibro must navigate complex regulatory landscapes for product approvals, manufacturing standards, and marketing claims, with non-compliance posing significant financial and reputational risks.

What Investors Should Do

1. Monitor integration progress of the Zoetis acquisition.
2. Analyze the impact of rising interest expenses and foreign currency fluctuations.
3. Evaluate the company's ability to manage its debt load.
4. Assess the competitive landscape and Phibro's market positioning.

Key Dates

• 2025-09-30: End of Q1 2025 — Reported significant revenue and net income growth, largely driven by the Zoetis acquisition.
• 2025-06-30: End of Fiscal Year 2025 — Previous reporting period for balance sheet comparison.
• 2024-10-31: Completion of Zoetis Acquisition — Major strategic move that is now significantly impacting revenue and operations.
• 2025-08-27: Filing of 2025 Form 10-K — Provided audited financial statements and detailed notes for the prior fiscal year.

Glossary

Medicated Feed Additives

Substances added to animal feed to prevent or treat diseases and promote growth. (A key product category contributing to Phibro's revenue, especially after the Zoetis acquisition.)

Diluted EPS

Earnings per share calculated by dividing net income by the weighted average number of diluted common shares outstanding. (Indicates the profitability on a per-share basis, accounting for potential dilution from stock options or convertible securities.)

Acquisition Method of Accounting

A method used to account for business combinations, requiring assets acquired and liabilities assumed to be recognized at their fair values. (The accounting standard applied to the Zoetis acquisition, impacting how its financial results are reported.)

Foreign Currency Translation Adjustment

Gains or losses arising from the conversion of financial statements of foreign subsidiaries into the reporting currency. (Contributes to Other Comprehensive Income and reflects the impact of currency fluctuations on the company's international operations.)

Weighted Average Common Shares Outstanding

The average number of common shares outstanding during a period, adjusted for the timing of share issuances or repurchases. (Used in the calculation of basic and diluted Earnings Per Share.)

Year-Over-Year Comparison

Compared to the prior-year period, Phibro Animal Health Corporation has demonstrated exceptional growth, with net sales increasing by 39.7% to $363.9 million and net income surging by over 280% to $26.5 million. This dramatic improvement is primarily attributed to the strategic acquisition of Zoetis's medicated feed additives portfolio. While operating income saw a substantial rise, interest expenses and foreign currency losses have also increased, indicating higher financial leverage and international market risks. The company's cash position has slightly improved, but the overall debt structure warrants close monitoring.

Filing Documents

• pahc-20250930x10q.htm (10-Q) — 1797KB
• pahc-20250930xex31d1.htm (EX-31.1) — 8KB
• pahc-20250930xex31d2.htm (EX-31.2) — 8KB
• pahc-20250930xex32d1.htm (EX-32.1) — 4KB
• pahc-20250930xex32d2.htm (EX-32.2) — 4KB
• 0001104659-25-107001.txt ( ) — 8780KB
• pahc-20250930.xsd (EX-101.SCH) — 61KB
• pahc-20250930_cal.xml (EX-101.CAL) — 92KB
• pahc-20250930_def.xml (EX-101.DEF) — 323KB
• pahc-20250930_lab.xml (EX-101.LAB) — 467KB
• pahc-20250930_pre.xml (EX-101.PRE) — 496KB
• pahc-20250930x10q_htm.xml (XML) — 1523KB

—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 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 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 41

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 41 Item 1A.

Risk Factors

Risk Factors 41 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 3. Defaults Upon Senior Securities 41 Item 4. Mine Safety Disclosures 42 Item 5. Other Information 42 Item 6. Exhibits 42

SIGNATURES

SIGNATURES 43 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 2025 2024 (unaudited) (in thousands, except per share amounts) Net sales $ 363,893 $ 260,432 Cost of goods sold 244,110 176,937 Gross profit 119,783 83,495 Selling, general and administrative expenses 68,523 65,796 Operating income 51,260 17,699 Interest expense, net 12,059 7,641 Foreign currency losses, net 2,934 438 Income before income taxes 36,267 9,620 Provision for income taxes 9,740 2,645 Net income $ 26,527 $ 6,975 Net income per share basic $ 0.65 $ 0.17 diluted $ 0.65 $ 0.17 Weighted average common shares outstanding basic 40,534 40,504 diluted 40,877 40,582 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 Three Months For the Periods Ended September 30 2025 2024 (unaudited) (in thousands) Net income $ 26,527 $ 6,975 Change in fair value of derivative instruments ( 805 ) ( 4,848 ) Foreign currency translation adjustment 4,543 3,168 Unrecognized net pension gains 78 78 Benefit for income taxes 181 1,194 Other comprehensive income (loss) 3,997 ( 408 ) Comprehensive income $ 30,524 $ 6,567 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 2025 2025 (unaudited) (in thousands, except share and per share amounts) ASSETS Cash and cash equivalents $ 72,769 $ 68,039 Short-term investments 12,504 9,000 Accounts receivable, net 217,896 227,983 Inventories, net 471,775 444,425 Other current

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, 2025 and 2024, 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, 2025 (the "Annual Report"), filed with the Securities and Exchange Commission on August 27, 2025 (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, 2025, 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) Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to dilutive common share equivalents resulting from the assumed vesting of restricted stock units ("RSUs"), unless the effect would be antidilutive, or if the minimum stock price targets for our performance-based RSUs were not achieved during the reporting period. Common share equivalents related to time- and performance-based RSUs were included in the calculation of diluted net income per share for the three months ended September 30, 2025. Common share equivalents related to time-based RSUs were included in the calculation of diluted net income per share for the three months ended September 30, 2024. Common share equivalents composed of 450,000 performance-based RSUs were not included in the calculation of diluted net income per share for the three months ended September 30, 2024 because the minimum stock price targets were not achieved during that period. Three Months For the Periods Ended September 30 2025 2024 Net income $ 26,527 $ 6,975 Weighted average number of shares – basic 40,534 40,504 Dilutive effect of restricted stock units 343 78 Weighted average number of shares - diluted 40,877 40,582 Net income per share basic $ 0.65 $ 0.17 diluted $ 0.65 $ 0.17 New Accounting Standards Financial Accounting Standards Board ("FASB") Accounting Standards Update ("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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 3. Acquisition On October 31, 2024 , the Company completed its acquisition of the medicated feed additives portfolio, certain water-soluble products and related assets from Zoetis, Inc (the "Acquisition"). The Acquisition was accounted for as a business combination under the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The determination of estimated fair value requires management to make significant estimates and assumptions. The results of operations of the Acquisition are included in our consolidated statements of operations from the date of acquisition and reported within the Animal Health segment. The Acquisition has expanded our medicated feed additives and water-soluble products category, advanced our planned existing product portfolio enhancement and diversified our species and product offerings, which complements our commercial operations and international infrastructure while expanding our global presence. The purchase price for the Acquisition was approximately $ 297.5 million ($ 286.5 million net of cash acquired), which was funded by Delayed Draw Term A-1 Loans and Delayed Draw Term A-2 Loans drawn on 2024 Credit Facilities (each as defined below in Note 6). The purchase and sale agreement underlying the transaction provides for closing working capital and other adjustments to be completed after the Acquisition. These adjustments were completed in May 2025. For the three months ended September 30, 2025 and 2024, we recognized transaction costs related to the Acquisition of $ 0.3 million and $ 3.4 million, respectively. These costs were primarily associated with financial advisory, legal and other professional services related to the Acquisition and are reflected within selling, general and administrative expenses in ou

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Final Purchase Price Allocation Assets acquired: Cash and cash equivalents $ 11,018 Accounts receivable, net 350 Inventories, net 138,981 Property, plant and equipment 144,964 Other assets (1) 13,208 Goodwill (2) 4,948 Total fair value of assets acquired 313,469 Liabilities assumed: Accounts payable 1,411 Accrued expenses and other current liabilities 4,165 Other noncurrent liabilities 10,346 Total fair value of liabilities assumed 15,922 Fair value of net assets acquired $ 297,547 (1) Includes current and noncurrent amounts. (2) Goodwill is reported within the Animal Health segment. An immaterial amount of the goodwill is deductible for tax purposes. In the table above, the estimate of fair value of inventories, net was determined using the replacement cost method, which contemplates the costs to complete the manufacturing and sales process, a reasonable profit allowance from the sales process, and estimated holding costs. The cost basis of raw materials was determined to represent current replacement cost and therefore approximates fair value. The net fair value step-up adjustment to inventories of $ 7.6 million is being amortized to cost of sales as the inventory is sold to customers. Property, plant and equipment is composed of land, buildings, equipment (including machinery, equipment, furniture and fixtures, and computer equipment), and construction-in-progress. The estimate of fair value of property, plant and equipment was determined by the direct cost and indirect cost approaches, as applicable, depending on the nature of the asset. Of the acquired assets, $ 102.1 million of personal property (comprised of machinery and equipment) and $ 38.1 million of real property (comprised of buildings and improvements) were recorded. The amounts allocated to personal and real property were based on management's estimates and assumptions, as well as other infor

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Pro Forma Results The following unaudited pro forma financial information presents the combined results of net sales and operating income of the Company as if the Acquisition had occurred as of July 1, 2023 and does not include any material non-recurring adjustments. The unaudited pro forma financial information is not necessarily indicative of what the Company's net sales and operating income actually would have been had the Acquisition occurred at the beginning of each year presented. In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of the combined company. The pro forma information does not include any potential revenue enhancements, cost synergies or other operating efficiencies that could result from the Acquisition. Three Months For the Periods Ended September 30 2025 2024 Net sales $ 363,893 $ 371,106 Operating income 51,260 50,025 4. 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 diseases and enhance nutrition to help improve animal health and well-being. We sell animal health and mineral nutrition products directly to integrated poultry, cattle and swine customers and through commercial animal feed manufacturers, distributors and veterinarians. The animal health industry and demand for many of the animal health products in a particular region are affected by changing disease pressures and by weather conditions, as product usage follows varying weather patterns and seasons. Our operations are primarily focused on regions where the majority of livestock production is consolidated in large commercial farms. We have a diversified portfol

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 2025 2024 Animal Health MFAs and other $

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