Phibro (PAHC) Q1 Earnings and Revenues Miss, Margins Down
Phibro Animal Health PAHC delivered adjusted earnings per share (EPS) of 14 cents in the first quarter of fiscal 2024, down 33.3% from the year-ago quarter’s adjusted figure. The metric also missed the Zacks Consensus Estimate by 33.3%.
Without adjustments, the GAAP loss per share in the fiscal first quarter was 20 cents compared to the EPS of 10 cents in the year-ago quarter.
Net Sales
In the quarter under review, net sales totaled $231.3 million, a 0.5% decrease from the year-ago quarter. The figure also missed the Zacks Consensus Estimate by 4.4%.
Segmental Sales Breakup
The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.
In the first quarter of fiscal 2024, Animal Health’s net sales increased 3.6% to $160.5 million. Our model’s projected revenues were $164.3 million.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Phibro Animal Health Corporation price-consensus-eps-surprise-chart | Phibro Animal Health Corporation Quote
Within the segment, net sales of medicated feed additives (MFAs) and others reflected 1% year-over-year growth. The uptick was driven by increased sales of the company’s processing aids used in the ethanol fermentation industry.
Within Animal Health, nutritional specialty product sales rose 3%, with increased volumes in poultry customers, primarily domestic. Also, net vaccine sales showed a year-over-year rise of 14% due to poultry product introductions in Latin America and growth in the U.S. swine sector, partially offset by the timing of deliveries in other international regions.
Net sales in the Mineral Nutrition segment fell 6% year over year due to declines in average selling prices and reduced volumes due to reduced demand. Per our model, revenues from this segment were expected to be $57.7 million in the fiscal first quarter.
Net sales in the Performance Products segment fell 17.8% to $14.8 million as a result of the lower demand for the ingredients used in personal care products. Our model projected the segment to report $18.5 million in revenues.
Margins
Phibro’s fiscal first-quarter gross profit fell 1.3% year over year to $67.7 million. The gross margin contracted 24 basis points (bps) to 29.3% on a 0.2% rise in the cost of goods sold to $163.6 million.
SG&A expenses in the reported quarter were $68.5 million, up 24.6% from the year-ago quarter’s levels. The operating profit fell a staggering 106% year over year to $0.8 million, while the operating margin contracted 620 bps to 0.3% in the quarter under review.
Financial Update
The company exited the fiscal 2024 first quarter with cash and short-term investments of $91.2 million compared with $81.3 million at the end of the fourth quarter of fiscal 2023. Cumulative net cash provided by operating activities at the end of the first quarter was $16.2 million compared with net cash outflow of $10.7 million in the prior year’s comparable period.
Guidance
Phibro provided updated guidance for fiscal 2024.
The company expects net sales between $980 million to $1.02 billion (earlier $1 billion-$1.05 billion). The Zacks Consensus Estimate for the metric is pegged at $1.02 billion.
Adjusted EPS is expected in the range of $1.04-$1.16 (previously $1.12-$1.27). The Zacks Consensus Estimate is pegged at $1.18.
Our Take
Phibro exited the first quarter of fiscal 2024 on a disappointing note, with lower-than-expected revenues and earnings. Both Mineral Nutrition and Performance Products businesses witnessed reduced sales in the quarter, partly because of customers rationalizing their inventory levels and timing issues. The stark decline in the operating profit is highly concerning.
On a positive note, Phibro’s core Animal Health business demonstrated continued growth. Double-digit sales growth in the vaccines product group benefited from the strong customer acceptance of poultry vaccines recently launched in Latin America. Phibro’s ongoing investment in the companion animal pipeline is promising.
Zacks Rank & Key Picks
Phibro currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are DexCom DXCM, Medpace MEDP and The Ensign Group ENSG.
DexCom, carrying a Zacks Rank of 2 (Buy), reported a third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million outpaced the consensus mark by 4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Medpace reported a third-quarter 2023 adjusted EPS of $2.22, beating the Zacks Consensus Estimate by 8.8%. Revenues of $492.5 million surpassed the Zacks Consensus Estimate by 3.4%. It currently carries a Zacks Rank #2.
Medpace has an estimated earnings growth rate of 16.2% for the next year. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 14.6%.
The Ensign Group reported a third-quarter 2023 adjusted EPS of $1.20, beating the Zacks Consensus Estimate by 1.7%. Revenues of $940.8 million surpassed the Zacks Consensus Estimate by 0.2%. It currently carries a Zacks Rank #2.
The Ensign Group has a long-term estimated growth rate of 15%. ENSG’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 1.5%.
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