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Net sales of $187 million, an increase of 8%
Phibro Animal Health Corporation (Nasdaq:PAHC) today announced its financial results for its third quarter ended March 31, 2015.
– Highlights for the March 2015 quarter (compared to the March 2014 quarter)
– Net sales of $187 million, an increase of 8%
– Adjusted EBITDA of $27.5 million, an increase of 23%
– Adjusted diluted EPS of $0.41
Commenting on the quarter, Jack Bendheim, Phibro’s Chairman, President and Chief Executive Officer, said, “We are pleased with the development of our Animal Health and Mineral Nutrition segments and believe we are well positioned to take advantage of the continued global growth in animal protein and the need to maintain the health and safety of production animals. In addition, we continue to seek reasonably sized opportunities where we can extend the reach of our sales force into adjacent categories or line extensions, similar to the MJ Biologics agreement we announced in January.”
QUARTERLY RESULTS
Net sales
Net sales of $187.5 million increased $14.2 million, or 8%, for the three months ended March 31, 2015, as compared to the three months ended March 31, 2014, due to growth in Animal Health and Mineral Nutrition of $9.5 million and $7.4 million, respectively, offset by declines in Performance Products of $2.7 million.
The consolidated statement of operations for the three months ended March 31, 2015 included $2.0 million of revenue and gross profit related to an existing license agreement with a global animal health company pursuant to which we share the use of our proprietary vaccine delivery technology. We recognized the revenue and profit during the period because certain contractual and regulatory milestones were achieved by the licensee, and we had no performance obligations under the agreement. Excluding the $2.0 million in licensing revenue, net sales growth was $12.2 million, or 7%.
Animal Health
Net sales of $117.3 million grew $9.5 million, or 9%, primarily due to volume growth. Excluding the $2.0 million in licensing revenue, net sales growth was $7.5 million, or 7%. Medicated Feed Additives and other grew $2.0 million, or 2%, primarily due to volume growth in the United States and Latin America. Nutritional specialty products grew $3.7 million, or 23%, primarily due to domestic volume growth of products for the dairy industry. Excluding the effect of the $2.0 million in licensing revenue, vaccines grew $1.9 million, or 19%, principally from volume growth in the U.S. and certain international markets. Vaccine revenue included the benefit of sales recognized in connection with the Collaboration and Distribution Agreement with MJ Biologic, Inc. from the date of that transaction.
Mineral Nutrition
Net sales of $57.3 million increased $7.4 million, or 15%. Increased volumes accounted for nearly all of the sales growth, as current market conditions improved demand for certain trace mineral products. Partially offsetting the sales increase was lower average selling prices due to lower underlying raw material commodity prices.
Performance Products
Net sales of $12.8 million decreased $2.7 million, or 18%, as a result of lower volumes of personal care ingredients and copper-based products.
Gross profit
Gross profit of $59.1 million increased $6.3 million, or 12%, to 31.5% of net sales, with most of the improvement coming from Animal Health. Gross profit growth was $4.3 million, or 8%, excluding the effect of the $2.0 million in licensing revenue. Animal Health gross profit increased $3.5 million, excluding the effect of the licensing revenue, due to volume growth and reduced production costs from favorable currency movements. Within Animal Health, MFAs and other contributed $2.2 million of the increase due to volume growth and favorable production costs and nutritional specialty products contributed $1.9 million of the increase primarily due to volume growth and lower unit costs from improved operating efficiencies. Excluding the current period gross profit from the licensing revenue for the vaccine delivery technology, vaccines gross profit decreased $0.7 million principally due to unfavorable product mix. Mineral Nutrition gross profit increased $1.2 million due to higher volumes and lower product costs, partially offset by lower average selling prices. Performance Products gross profit decreased $0.4 million due to lower average selling prices, higher product costs and lower volumes.
