Phibro Animal Health Corp (PAHC) Reports First Quarter Fiscal 2024 Results
Phibro Animal Health Corp (NASDAQ:PAHC) reports a slight decrease in net sales by 1% year-over-year.
Adjusted EBITDA and adjusted net income both saw significant declines of 16% and 33%, respectively.
Animal Health segment shows resilience with a 4% increase in net sales, despite broader company challenges.
Updated fiscal year 2024 guidance reflects reduced expectations due to challenging business fundamentals.
Phibro Animal Health Corp (NASDAQ:PAHC) announced its financial results for the first quarter ended September 30, 2023, on November 8, 2023. The company faced a challenging quarter with a net loss of $8.0 million, a stark contrast to the net income of $3.9 million reported in the same period last year. This decrease is attributed to a combination of factors including higher selling, general and administrative expenses, increased interest expenses, and foreign currency losses.
Financial Performance Overview
Net sales for the quarter were $231.3 million, a marginal decrease from the previous year's $232.5 million. The Animal Health segment showed growth with a 4% increase in net sales, while the Mineral Nutrition and Performance Products segments experienced declines. Adjusted EBITDA for the quarter was $18.7 million, down from $22.1 million in the prior year, and adjusted net income decreased by 33% to $5.5 million.
Segment Performance and Challenges
The Animal Health segment's net sales increase was driven by growth in poultry vaccines and nutritional specialty products. However, the Mineral Nutrition and Performance Products segments saw reduced sales due to lower demand and inventory rationalization by customers. The company's gross profit margin slightly decreased to 29.3% from 29.5% year-over-year.
Operational and Financial Highlights
SG&A expenses increased significantly by 25%, including a $10.4 million pension settlement cost. Interest expenses also rose due to new debt issuance and higher variable interest rates. The company reported a net foreign currency loss of $6.7 million, primarily due to fluctuations in the Argentine and Brazilian currencies against the U.S. dollar.
Income Taxes and Net Loss
The benefit for income taxes was $4.0 million for the quarter, compared to a provision for income taxes of $1.6 million in the same period last year. The effective income tax rate for the quarter was 33.1%. The reported net loss reflects the operational challenges faced during the quarter, including increased expenses and foreign currency losses.
Balance Sheet and Cash Flows
Phibro's total debt stood at $484 million, with an Adjusted EBITDA of $109 million for the twelve months ended September 30, 2023. The company's cash flow activities showed a net cash provided by operating activities of $16.2 million, a positive change from the previous year.
Updated Fiscal Year 2024 Guidance
Phibro has updated its fiscal year 2024 guidance, reflecting reduced expectations due to the challenging fundamentals in various segments of its business. The company is also navigating manufacturing disruptions and inefficiencies arising from the conflict in Israel.
Conclusion
Despite the challenges faced in the first quarter, Phibro's Animal Health segment continues to demonstrate growth potential. The company is making strategic investments and remains focused on medium-term opportunities, particularly in the companion animal pipeline. Investors and stakeholders will be watching closely to see how Phibro navigates the current challenges and capitalizes on growth opportunities in the coming quarters.
For more detailed information and analysis, investors are encouraged to review the full earnings report and financial statements on Phibro's website and to join the upcoming webcast and conference call where the company will discuss these results and respond to questions.
Explore the complete 8-K earnings release (here) from Phibro Animal Health Corp for further details.
This article first appeared on GuruFocus.
