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Phibro Animal Health Corporation (PAHC - Free Report) reported adjusted earnings per share (EPS) of 39 cents in the second quarter of fiscal 2017, up 5.4% year over year. Adjusted EPS also exceeded the Zacks Consensus Estimate by 8.3%.
Including one-time items, the company reported EPS of 34 cents, reflecting a decline of 17.1% from the year-ago quarter’s 41 cents.
Net Sales
In the reported quarter, Phibro’s net sales were $191.6 million, down a marginal 0.2% year over year.
The improvement was driven by volume growth at the Animal Health segment, which was partially offset by a decline in Mineral Nutrition sales.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Net sales at the Animal Health segment increased 2% to $123.7 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. Sales from vaccines increased 45%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives (MFAs) and Other (the biggest section of this segment) declined 9% primarily due to international volume declines resulting from economic conditions in Brazil and the timing of orders in certain other markets. Domestic net sales of MFAs and Other declined slightly due to reduced volumes of medically important antibacterials, partially offset by growth in other products.
Nutritional specialty products sales rose 21%, owing to volume growth in the U.S. for Phibro’s dairy and poultry products.
Net sales at the Mineral Nutrition segment declined 4% to $56.7 million on lower average selling prices due to fall in underlying raw material commodity prices.
Net sales at the Performance Products segment declined 2% to $11.2 million. This was due to lower average selling prices of personal care ingredients and copper-based products and lower volumes of copper-based products, partially offset by higher volumes of personal care ingredients.
Operational Update
Phibro’s fiscal second-quarter gross profit increased 3.3% year over year to $63.5 million. The gross margin also expanded 108 basis points (bps) to 33.1%.
Selling, general and administrative expenses increased 5.4% to $40.9 million. Operating margin contracted 4 bps year over year to 11.8% in the quarter.
Financial Update
Year to date, Phibro generated $47.7 million in cash flow from operations compared with $5.6 million in the year-ago period. Capital expenditure amounted to $10.6 million in this period, reflecting a reduction from $17.7 million in the first six months of fiscal 2016.
FY17 Outlook
Phibro reaffirmed its fiscal 2017 guidance. The company currently expects to generate net sales of $750–$770 million, reflecting 0–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $758.8 million falls within the guided range.
Phibro still expects to deliver adjusted EPS in the range of $1.38–$1.45, displaying an annualized decline of 3% to growth of 1%. The current Zacks Consensus Estimate of $1.42 for lies within the company's guided range.
Our Take
Phibro ended second-quarter fiscal 2017 on a mixed note, with bottom line exceeding the Zacks Consensus Estimate and revenues declining marginally on a year-over-year basis. Nonetheless, Animal Health remained the key contributing business, delivering positive growth on a year-over-year basis. The company’s strong gross margin is encouraging.
Segment-wise, a persistent decline in Mineral Nutrition segment sales is also likely to prove a drag.
Zacks Rank & Key Picks
Phibro currently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks include Glaukos Corporation (GKOS - Free Report) , Cardiovascular Systems and Neogen Corp. (NEOG - Free Report) . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos gained over 100% in the last one year in comparison to the S&P 500’s gain of only 19.1%. The company has a stellar four-quarter average earnings surprise of over 100%.
Cardiovascular Systems surged over 100% in the last one year in comparison to the S&P 500. It has a four-quarter average earnings surprise of 67.8%.
Neogen gained 25.8% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth of 16.7% for the next five years compared to the industry average of 15.2%.
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Phirbo Animal (PAHC) Tops Q2 Earnings, Reaffirms FY17 View
Phibro Animal Health Corporation (PAHC - Free Report) reported adjusted earnings per share (EPS) of 39 cents in the second quarter of fiscal 2017, up 5.4% year over year. Adjusted EPS also exceeded the Zacks Consensus Estimate by 8.3%.
Including one-time items, the company reported EPS of 34 cents, reflecting a decline of 17.1% from the year-ago quarter’s 41 cents.
Net Sales
In the reported quarter, Phibro’s net sales were $191.6 million, down a marginal 0.2% year over year.
The improvement was driven by volume growth at the Animal Health segment, which was partially offset by a decline in Mineral Nutrition sales.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Phibro Animal Health Corporation Price, Consensus and EPS Surprise | Phibro Animal Health Corporation Quote
Sales by Segments
Net sales at the Animal Health segment increased 2% to $123.7 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. Sales from vaccines increased 45%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives (MFAs) and Other (the biggest section of this segment) declined 9% primarily due to international volume declines resulting from economic conditions in Brazil and the timing of orders in certain other markets. Domestic net sales of MFAs and Other declined slightly due to reduced volumes of medically important antibacterials, partially offset by growth in other products.
Nutritional specialty products sales rose 21%, owing to volume growth in the U.S. for Phibro’s dairy and poultry products.
Net sales at the Mineral Nutrition segment declined 4% to $56.7 million on lower average selling prices due to fall in underlying raw material commodity prices.
Net sales at the Performance Products segment declined 2% to $11.2 million. This was due to lower average selling prices of personal care ingredients and copper-based products and lower volumes of copper-based products, partially offset by higher volumes of personal care ingredients.
Operational Update
Phibro’s fiscal second-quarter gross profit increased 3.3% year over year to $63.5 million. The gross margin also expanded 108 basis points (bps) to 33.1%.
Selling, general and administrative expenses increased 5.4% to $40.9 million. Operating margin contracted 4 bps year over year to 11.8% in the quarter.
Financial Update
Year to date, Phibro generated $47.7 million in cash flow from operations compared with $5.6 million in the year-ago period. Capital expenditure amounted to $10.6 million in this period, reflecting a reduction from $17.7 million in the first six months of fiscal 2016.
FY17 Outlook
Phibro reaffirmed its fiscal 2017 guidance. The company currently expects to generate net sales of $750–$770 million, reflecting 0–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $758.8 million falls within the guided range.
Phibro still expects to deliver adjusted EPS in the range of $1.38–$1.45, displaying an annualized decline of 3% to growth of 1%. The current Zacks Consensus Estimate of $1.42 for lies within the company's guided range.
Our Take
Phibro ended second-quarter fiscal 2017 on a mixed note, with bottom line exceeding the Zacks Consensus Estimate and revenues declining marginally on a year-over-year basis. Nonetheless, Animal Health remained the key contributing business, delivering positive growth on a year-over-year basis. The company’s strong gross margin is encouraging.
Segment-wise, a persistent decline in Mineral Nutrition segment sales is also likely to prove a drag.
Zacks Rank & Key Picks
Phibro currently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks include Glaukos Corporation (GKOS - Free Report) , Cardiovascular Systems and Neogen Corp. (NEOG - Free Report) . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos gained over 100% in the last one year in comparison to the S&P 500’s gain of only 19.1%. The company has a stellar four-quarter average earnings surprise of over 100%.
Cardiovascular Systems surged over 100% in the last one year in comparison to the S&P 500. It has a four-quarter average earnings surprise of 67.8%.
Neogen gained 25.8% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth of 16.7% for the next five years compared to the industry average of 15.2%.
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In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>