Phibro Animal Health (NASDAQ:PAHC) reported fiscal second-quarter results that management said reflected continued momentum from its animal health strategy and the integration of its medicated feed additive (MFA) acquisition, while also raising its full-year fiscal 2026 guidance.
Second-quarter results: sales up 21%, adjusted EBITDA up 41%
For the quarter ended December 31, 2025, CFO Glenn David said consolidated net sales were $373.9 million, an increase of $64.6 million, or 21%, versus the prior-year period. Segment performance was led by Animal Health, with additional growth in Mineral Nutrition and a decline in Performance Products.
On an adjusted basis, Phibro reported a $19.9 million, or 41%, increase in adjusted EBITDA versus the prior year. David added that adjusted net income increased 60% and adjusted diluted EPS increased 58%, with higher gross profit from sales growth partially offset by higher adjusted SG&A and higher adjusted interest expense.
Animal Health growth driven by MFA, with gains in Nutritional Specialties and Vaccines
Chairman, President, and CEO Jack Bendheim highlighted 26% growth in Animal Health sales and a 41% increase in Animal Health adjusted EBITDA, calling it “a clear sign our strategy is working.” He said medicated feed additives led with 34% growth, supported by gains in Nutritional Specialties and Vaccines, while the “total legacy business” grew 3%.
David provided additional detail, noting Animal Health segment net sales of $290 million, up $60.6 million, or 26% year over year.
- Legacy MFA net sales decreased 5%, which management attributed to the timing of inventory purchases by a large customer. David said excluding that timing impact, legacy MFA growth would have been +3%. He later quantified the impact at roughly $10 million in the quarter and said the company expects it to reverse in the second half of the fiscal year.
- The new MFA business contributed $94.1 million of sales (a full quarter versus a partial quarter last year), helping drive total MFA and other growth to 34%.
- Nutritional Specialties net sales rose $4.3 million, or 9%, driven by increased North American dairy demand.
- Vaccines net sales increased $4.5 million, or 13%, driven by growth in poultry products in Latin America and higher international demand.
Animal Health adjusted EBITDA was $82.2 million, up 41%, which management attributed to the new MFA business and higher gross profit from improved mix in the legacy business, partially offset by higher SG&A.
Gross margin commentary: pricing, mix, and a small one-time benefit
In response to questions on gross margins, management cited several factors. David said Phibro has been successful taking additional price, “particularly on the Zoetis portfolio,” which he said exceeded expectations and helped improve margin. He also pointed to favorable mix from strong Nutritional Specialties and Vaccine performance, which carry higher margins.
He also noted a quarter-specific benefit tied to returns during a transition from “Tier Three markets to Tier One markets.” Those returns came at full cost, he said, and partially elevated gross margin for the quarter by “less than…100 basis points.”
Mineral Nutrition grew; Performance Products declined
Outside Animal Health, David said Mineral Nutrition net sales were $68.9 million, up $5.7 million, or 9%, driven by increased demand for zinc and trace minerals.
Performance Products net sales were $15 million, down $1.6 million, or 10%, due to lower demand for ingredients used in personal care products.
Adjusted EBITDA for Mineral Nutrition and Performance Products was $6.4 million and $0.8 million, respectively. Corporate expenses increased $3.7 million, driven by higher employee-related costs.
Cash flow, leverage, dividend, and raised fiscal 2026 guidance
Phibro reported $47 million of positive free cash flow over the 12 months ended December 31, 2025, including $93 million of operating cash flow and $46 million in capital expenditures. David said cash generation was negatively impacted by inventory buildup ahead of tariffs and to meet increasing demand, but the company expects inventory to stabilize in coming quarters.
At quarter end, cash and equivalents and short-term investments were $74.5 million. Phibro reported a gross leverage ratio of 3.1x and net leverage of 2.8x, based on $737 million of total debt, $662 million of net debt, and $235 million of trailing 12-month adjusted EBITDA. The company also paid a quarterly dividend of $0.12 per share, or $4.9 million in aggregate.
Based on “strong performance year to date and continuing momentum,” David said the company raised its fiscal 2026 guidance:
- Net sales: increased to $1.45 billion to $1.5 billion (from $1.425 billion to $1.475 billion), implying 12% to 16% growth.
- Total adjusted EBITDA: increased to $245 million to $255 million (from $230 million to $240 million), implying 33% to 39% growth.
- Adjusted net income: increased to $120 million to $127 million (from $108 million to $115 million), implying 41% to 49% growth.
Management said the improved outlook reflects strong revenue performance, outperformance in the acquired portfolio, better leverage of existing infrastructure, and improved mix. David added that GAAP net income and EPS guidance assumes constant currency and no additional FX gains or losses, and includes one-time costs related to the company’s Phibro Forward income growth initiative.
On Phibro Forward, management did not provide specific dollar amounts, but David said the company is “halfway through fiscal year 2026” and expects contributions to accelerate through the remainder of fiscal 2026, with the “optimal” or maximum impact coming in fiscal 2027. Donnie Bendheim, recently announced CEO designate, said the initiative touches all parts of the company, including structural changes, revenue strategies, R&D, and technology.
The call also included leadership transition commentary. Jack Bendheim said the company’s momentum made it “an opportune moment for a leadership transition,” and Donnie Bendheim said he expects to step into the CEO role in July, with Jack Bendheim continuing as executive chairman.
About Phibro Animal Health (NASDAQ:PAHC)
Phibro Animal Health Corporation (NASDAQ: PAHC) is a diversified global animal health and mineral nutrition company headquartered in Teaneck, New Jersey. The company develops, manufactures and markets a broad range of pharmaceutical, mineral nutrition and performance products designed to support the health and productivity of livestock, companion animals and aquaculture species. Phibro’s portfolio includes vaccines, anti-infective therapies, coccidiostats, disinfectants, premix minerals and specialty feed additives aimed at enhancing growth, immunity and overall animal well-being.
The company operates through three principal business segments: Animal Health, Mineral Nutrition and Performance Products.
