Phibro (PAHC) Q4 Earnings Miss Estimates, Gross Margin Falls
Phibro Animal Health PAHC delivered adjusted earnings per share (EPS) of 38 cents for the fourth quarter of fiscal 2023, up 5.6% from the year-ago quarter’s adjusted figure. The metric however missed the Zacks Consensus Estimate by 5%.
Without adjustments, GAAP EPS in the fiscal fourth quarter was 28 cents, up 54% from the year-ago quarter’s figure.
The company reported full-year adjusted EPS of $1.21, reflecting an 8% decline from fiscal 2022.
Net Sales
In the quarter under review, net sales totaled $255 million, a 0.1% dip from the year-ago quarter. The figure missed the Zacks Consensus Estimate by 0.7%.
For fiscal 2023, the company reported net sales of $977.9 million, up 4% from the year-ago fiscal.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Phibro Animal Health Corporation price-consensus-eps-surprise-chart | Phibro Animal Health Corporation Quote
Segmental Sales Break-Up
In the fiscal fourth quarter, Animal Health’s net sales increased 6% to $176.8 million. Within the segment, net sales of medicated feed additives (MFAs) and others reflected 2% year-over-year growth. The uptick was driven by increased demand for the company’s processing aids used in the ethanol fermentation industry.
Within Animal Health, nutritional specialty product sales rose 5%, primarily on higher average selling prices and an increase in microbial products.Also, net vaccine sales showed a year-over-year rise of 25% on an increase in domestic and international demand, along with new product launches in Latin America.
Our model projected a 2.2% year-over-year rise in Animal Health business in the fiscal fourth quarter.
Net sales in the Mineral Nutrition segment fell 16% year over year to $58.4 million due to a decline in the demand for trace minerals, partially offset by higher average selling prices.
We expected this business to decline 1% on a year-over-year basis in the fiscal fourth quarter.
Net sales in the Performance Products segment rose 3% to $19.9 million, increased demand and higher average selling prices for copper-related products.
Our model projected a 0.2% year-over-year rise in the Performance Products business in the fiscal fourth quarter.
Margins
Phibro’s fiscal fourth-quarter gross profit fell 2.4% year over year to $76.6 million. The gross margin contracted 71 basis points (bps) to 30% on a 0.9% rise in the cost of goods sold to $170.1 million.
Selling, general and administrative expenses in the reported quarter were $52.9 million, down 4.7% from the year-ago quarter’s levels.
Operating profit rose 3% year over year to $23.7 million and operating margin expanded 29 bps to 9.3% in the quarter under review.
Financial Update
The company exited the fiscal with cash and short-term investments of $248 million compared with $192 million at the end of third-quarter fiscal 2023.
Cumulative net cash provided by operating activities at the end of the fourth quarter was $13.3 million compared with $31.6 million a year ago.
Guidance
Phibro provided its fiscal 2024 guidance.
The company expects net sales between $1 billion and $1.05 billion. The Zacks Consensus Estimate for the metric is pegged at $1.01 billion.
Adjusted EPS is expected in the range of $1.12-$1.27. The Zacks Consensus Estimate for the same is pegged at $1.32.
Our Take
Phibro exited fourth-quarter fiscal 2023 on a disappointing note with lower-than-expected revenues and earnings miss. However, robust performance across the Animal Health segment is encouraging. The business registered increased demand for MFAs, particularly in the U.S. and Latin American regions, coupled with strong demand for processing aids used in the ethanol fermentation industry. Expansion of operating margin is encouraging too.
On the flip side, the Mineral Nutrition Products segment reported a year-over-year decline due to a decline in the demand for trace minerals. Lower demand for copper-based products is also discouraging. Rising costs and the contraction of gross margin are concerns.
Zacks Rank and Key Picks
Phibro currently carries Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. DVA, Integer Holdings Corporation ITGR and McKesson Corporation MCK.
DaVita, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2023 adjusted EPS of $2.08, beating the Zacks Consensus Estimate by 25.3%. Revenues of $3 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has a long-term estimated growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 21.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, beating the Zacks Consensus Estimate by 24.3%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. It currently carries a Zacks Rank #2.
McKesson has a long-term estimated growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.
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Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
