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PA

PHIBRO ANIMAL HEALTH CORP (PAHC)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered strong top-line growth: net sales rose 39% to $378.7M; adjusted diluted EPS increased 39% to $0.57; adjusted EBITDA rose 49% to $50.0M .
  • Versus S&P Global consensus, PAHC posted a beat on revenue ($378.7M vs $362.2M*) and EPS ($0.57 vs $0.52*), with a slight miss on EBITDA ($49.1M vs $50.6M*) — driven by robust Animal Health demand and Zoetis MFA integration, offset by higher SG&A and interest expense .
  • FY2026 guidance calls for continued momentum: net sales $1.43B–$1.48B, adjusted EBITDA $225M–$235M, adjusted EPS $2.52–$2.70; management cited ongoing strength across MFAs, nutritional specialties, and vaccines, plus execution of “Phibro Forward” initiatives .
  • Capital and cash: TTM free cash flow $41.8M, gross leverage 3.1x (total debt $725.1M, cash/short-term investments $77.0M); quarterly dividend maintained at $0.12 per share (declared July 29, 2025) .
  • Stock catalysts: integration milestones (90% independent operations for Zoetis MFAs, full independence expected by calendar Q4), estimate beats in Q4, and above-trend FY2026 growth guide; ongoing tariff monitoring and SG&A investments are watch items .

What Went Well and What Went Wrong

  • What Went Well

    • Animal Health strength: segment sales +53% to $292.5M in Q4, with MFAs & Other +77% (Zoetis MFA contribution $94.5M), nutritional specialties +11%, vaccines +21% .
    • Strategic execution: “Phibro delivered exceptional fourth-quarter and full-year results… Zoetis MFA portfolio exceeded expectations… Phibro Forward initiatives… unlocking efficiencies and driving sustainable growth” — CEO Jack Bendheim .
    • Integration progress and portfolio expansion: “All major system implementations are now complete… operating independently for ~90% of revenue… full independence by calendar Q4” — CFO Glenn David; entry into U.S. beef cattle segment broadens market access — COO Larry Miller .

  • What Went Wrong

    • Margin compression: Q4 gross margin decreased 290 bps YoY to 29.0% (29.7% ex-purchase accounting), reflecting higher distribution costs, inventory write-offs, and unfavorable mix .
    • Elevated SG&A and interest: Q4 SG&A +11% YoY to $76.3M; interest expense +82% YoY to $8.6M due to acquisition financing; these dampened EBITDA vs consensus .
    • Tax rate volatility and FX: Q4 effective tax rate at 27.8% (with GILTI impact); FX losses of $1.3M (vs $7.3M losses prior year) still a headwind, with notable shekel and peso fluctuations .

Financial Results

Summary Financials (Quarterly)

MetricQ2 FY2025Q3 FY2025Q4 FY2025
Net Sales ($USD Millions)$309.3 $347.8 $378.7
Diluted EPS (GAAP, $USD)$0.08 $0.51 $0.42
Adjusted Diluted EPS ($USD)$0.54 $0.63 $0.57
Gross Margin %32.9% 30.1% 29.0%
Operating Income ($USD Millions)$25.5 $33.5 $33.7
Operating Margin %8.3% 9.6% 8.9%
Net Income ($USD Millions)$3.2 $20.9 $17.2
Net Income Margin %1.0% 6.0% 4.5%
Adjusted EBITDA ($USD Millions)$48.2 $54.9 $50.0

Q4 FY2025 Actuals vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($USD Millions)$378.7 $362.2*+$16.5M / +4.6%*
EPS (Primary/Adjusted, $USD)$0.57 $0.52*+$0.05 / +9.4%*
EBITDA ($USD Millions)$49.1 $50.6*-$1.5 / -2.9%*
Values retrieved from S&P Global.*

Segment Net Sales and Adjusted EBITDA (Q4 YoY)

SegmentQ4 FY2024 Net SalesQ4 FY2025 Net SalesYoY Change
MFAs & Other ($USD Millions)$116.7 $206.5 +$89.8 / +77%
Nutritional Specialties ($USD Millions)$42.8 $47.4 +$4.6 / +11%
Vaccines ($USD Millions)$32.0 $38.6 +$6.6 / +21%
Animal Health Total ($USD Millions)$191.5 $292.5 +$101.0 / +53%
Mineral Nutrition ($USD Millions)$62.1 $64.2 +$2.1 / +3%
Performance Products ($USD Millions)$19.6 $22.1 +$2.5 / +13%
Adjusted EBITDA – Animal Health ($USD Millions)$41.3 $60.6 +$19.3 / +47%
Adjusted EBITDA – Mineral Nutrition ($USD Millions)$5.4 $5.6 +$0.2 / +4%
Adjusted EBITDA – Performance Products ($USD Millions)$3.1 $3.0 -$0.0 / -1%

KPIs and Capital

KPIQ4 FY2025
Free Cash Flow (TTM, $USD Millions)$41.8
Gross Leverage (Debt/TTM Adj. EBITDA, x)3.1x
Total Debt ($USD Millions)$725.1
Cash & Short-term Investments ($USD Millions)$77.0
Net Leverage (x)2.8x
Quarterly Dividend per Share ($)$0.12 (declared 7/29/25; payable 9/24/25)

Non-GAAP adjustments: Q4 gross profit included $2.3M acquisition-related COGS; excluding this, gross margin would have been 29.7% (vs reported 29.0%) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)FY2026N/A$1.43–$1.48 New
Net Income ($USD Millions)FY2026N/A$73–$83 New
Diluted EPS (GAAP, $)FY2026N/A$1.79–$2.03 New
Adjusted EBITDA ($USD Millions)FY2026N/A$225–$235 New
Adjusted Net Income ($USD Millions)FY2026N/A$103–$110 New
Adjusted Diluted EPS ($)FY2026N/A$2.52–$2.70 New
Adjusted Effective Tax Rate (%)FY2026N/A~25% New
Dividend per Share ($ quarterly)FY2025–FY2026$0.12 (historical)$0.12 (declared 7/29/25) Maintained

Notes: GAAP guidance assumes no FX gains/losses; FY2026 includes full 12 months of Zoetis MFA portfolio and contributions from Phibro Forward .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Zoetis MFA integrationIncremental revenues and integration costs post-close (Oct 31, 2024) ; strong Q3 contribution with temporary order timing 90% revenue operating independently; full independence targeted by calendar Q4; geographic/segment expansion including U.S. beef Improving; near completion
Phibro Forward initiativesCosts incurred; focus on revenue growth and cost savings (procurement, SKU rationalization) Expected to contribute to FY2026 growth; peak impact by FY2027; embedded across sales, procurement, R&D Ramping contributions
Tariffs/MacroMonitoring; manageable impact anticipated; mitigation strategies initiated Tariffs embedded as known; major shifts not assumed in guidance Managed risk; monitored
Product performanceVaccines growth (+12% Q2; timing and Asia import regs tempered Q3) Vaccines +21% YoY; continued Latin America strength; international demand higher Strong; expected to stabilize
Regional dynamicsBrazil FX swings and employment tax litigation in prior year ; Asia import regulations affected vaccine sales timing FX losses modest; shekel/peso pressures; favorable Euro; LatAm poultry strength Mixed FX; LatAm strong
Capital structure/interestRefinancing in July 2024; higher interest expense; leverage ~3.0x Interest rate swaps ($150M @ 3.18% + margin; $275M @ 3.64% + margin); forward collar $250M; net leverage 2.8x Hedged rates; improving net leverage

Management Commentary

  • “Phibro delivered exceptional fourth-quarter and full-year results… driven by sustained demand across MFAs, nutritional specialties, and vaccines… Zoetis MFA portfolio exceeded expectations… [Phibro Forward] initiatives… unlocking efficiencies and driving sustainable growth.” — CEO Jack Bendheim .
  • “Consolidated net sales… $378.7M… Animal Health grew 53%… Adjusted EBITDA increased 49%… Increased gross profit driven by sales growth was partially offset by higher adjusted SG&A and higher adjusted interest expense.” — CFO Glenn David .
  • “All of the major system implementations are now complete… ~90% operating independently… full independence by calendar Q4… entry into U.S. beef cattle segment.” — CFO Glenn David; COO Larry Miller .
  • “FY2026 guidance… net sales $1.425B–$1.475B; adjusted EBITDA $225M–$235M; adjusted EPS $2.52–$2.70… benefits related to our Phibro Forward income growth initiative… constant currency, no FX gains/losses assumed.” — CFO Glenn David .

Q&A Highlights

  • Organic growth assumptions: Legacy MFAs expected flat to low-single-digit growth; vaccines and nutritional specialties to continue higher growth, though vaccines may stabilize from 13% FY2025 levels .
  • Phibro Forward quantification: EBITDA growth of ~$40M–$50M in FY2026; at least half from annualizing Zoetis MFAs, remainder from legacy growth and Phibro Forward; initiatives peak expected in FY2027 .
  • Zoetis integration and resource allocation: System implementations complete; market transitions ongoing; expansion into Asia, Western Europe, and U.S. beef cattle; resource deployment across manufacturing and commercial .
  • Tariffs: Known tariffs embedded; major changes not assumed; inventory actions may preempt impacts; sales reflect underlying demand without pull-forward .

Estimates Context

  • Q4 FY2025 vs S&P Global consensus: Revenue beat ($378.7M vs $362.2M*), EPS beat ($0.57 vs $0.52*), EBITDA slight miss ($49.1M vs $50.6M*) — reflecting strong Animal Health growth (Zoetis MFA integration, pricing, FX tailwinds), partially offset by higher SG&A and interest costs .
  • Forward look: Next-quarter consensus (Q1 FY2026) indicated revenue of ~$345.4M*, EPS ~$0.60*, EBITDA ~$49.8M*; PAHC subsequently reported actuals above consensus for revenue ($363.9M*) and EPS ($0.73*), and above for EBITDA ($61.7M*), indicating early FY2026 momentum consistent with guidance [GetEstimates Q1 2026].
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 delivered a high-quality beat on revenue and EPS versus consensus, validating Zoetis MFA integration benefits and broad Animal Health strength; EBITDA softness reflects higher SG&A and interest expense that should moderate as integration completes .
  • Gross margin pressure (290 bps YoY) was primarily mix and distribution cost-related; excluding acquisition accounting, margin was 29.7% — improving underlying profitability trajectory into FY2026 .
  • FY2026 guide (net sales $1.43B–$1.48B; adj. EBITDA $225M–$235M; adj. EPS $2.52–$2.70) implies double-digit top-line and mid-20s EBITDA growth; integration completion and Phibro Forward levers are key execution drivers .
  • Balance sheet is manageable: 3.1x gross leverage and 2.8x net leverage with active interest-rate hedging; free cash flow generation supports dividend continuity ($0.12 quarterly) and strategic investments .
  • Watch items: tariff changes (not assumed in guide), FX volatility (shekel/peso), and SG&A investments tied to scaling; management embeds known tariffs in guidance and continues mitigation efforts .
  • Near-term trading: positive estimate revisions likely for revenue/EPS given beats and early FY2026 Q1 outperformance*, with sentiment supported by integration milestones and guidance confidence [GetEstimates Q4/Q1].
    Values retrieved from S&P Global.