Phibro Q1 Sales Rise 6%, FY2027 Guidance Maintained

Phibro Animal Health Corporation (Nasdaq: PAHC) reported higher fiscal first-quarter sales and earnings and maintained its full-year 2027 guidance, even as profitability in its core Animal Health segment declined. Consolidated net sales increased 6% year over year to $386.8 million for the quarter ended September 30, 2026, while adjusted EBITDA rose 4% to $64.3 million.

GAAP net income increased 11% to $29.5 million, and diluted earnings per share rose 11% to $0.72. Adjusted net income advanced 9% to $32.4 million, while adjusted diluted EPS increased 8% to $0.79. The company’s adjusted measures exclude certain acquisition-related, nonrecurring and other items, including foreign-currency gains and losses.

Animal Health sales rise, margin contracts

Animal Health revenue increased 3% to $293.0 million. Sales of medicated feed additives, or MFAs, and other products rose 6% to $206.5 million, offsetting 2% declines in both nutritional specialties and vaccines, which generated $47.1 million and $39.5 million, respectively.

Despite the increase in segment revenue, Animal Health adjusted EBITDA fell 1% to $73.9 million. The segment’s adjusted EBITDA margin narrowed by 120 basis points to 25.2% from 26.4% a year earlier.

Phibro’s smaller businesses posted faster growth. Mineral Nutrition sales rose 17% to $73.6 million, while adjusted EBITDA increased 36% to $6.2 million. Its adjusted EBITDA margin expanded by 120 basis points to 8.4%.

Performance Products revenue increased 16% to $20.2 million, and adjusted EBITDA climbed 75% to $2.8 million. The segment’s adjusted EBITDA margin reached 13.9%, up 470 basis points. Corporate adjusted EBITDA was negative $18.6 million, compared with negative $19.1 million in the prior-year quarter.

Fiscal 2027 guidance maintained

Phibro maintained its fiscal 2027 outlook for net sales of $1.55 billion to $1.60 billion and adjusted EBITDA of $258 million to $268 million. The company continues to expect GAAP net income of $122 million to $132 million and diluted EPS of $2.98 to $3.22.

Adjusted net income is projected at $140 million to $147 million, with adjusted diluted EPS of $3.41 to $3.59. Phibro expects an adjusted effective tax rate of approximately 20%. The company did not provide a reconciliation of its forward-looking non-GAAP measures to comparable GAAP figures because certain required items are uncertain and potentially variable.

Management said plans remain on track to close a site acquired as part of the Zoetis MFA acquisition during the summer or early fall of 2027. Separately, the transition period for Virginiamycin in Brazil expired at the end of October. The full-year guidance assumes no additional sales of the product in Brazil during fiscal 2027, although discussions with Brazilian regulatory agencies regarding therapeutic claims are continuing.

Cash flow and leverage

Free cash flow totaled $22 million for the trailing 12 months, comprising $86 million of operating cash flow less $64 million of capital expenditures. Phibro had $83 million in cash and cash equivalents as of September 30.

Total debt was $740 million, equivalent to a 2.9 times gross leverage ratio based on trailing-12-month adjusted EBITDA of $257 million. Net debt was $656 million, representing a 2.6 times net leverage ratio. The company paid a quarterly dividend of $0.12 per share, or $4.9 million in total.

Phibro has interest-rate swaps covering $150 million of debt at a fixed rate of 3.18% plus margin through September 2029 and $275 million at 3.64% plus margin through February 2030.

The company cautioned that its outlook remains subject to risks and uncertainties, including future debt and leverage levels, regulatory developments and the assumptions underlying its financial projections. Actual results could differ materially if those assumptions prove incorrect or relevant risks materialize.