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Phibro (PAHC) Posts In Line Earnings in Q3, Revises View
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Phibro Animal Health Corporation (PAHC - Free Report) reported adjusted earnings per share (EPS) of 37 cents in the third quarter of fiscal 2017, down 7.5% year over year. Adjusted EPS, however, remained in line with the Zacks Consensus Estimate. According to the company, the year-over-year decline was primarily due to lower gross margin and a higher effective income tax rate.
Including one-time items, the company reported EPS of 59 cents, reflecting a 28.3% jump from the year-ago quarter.
Net Sales
In the reported quarter, Phibro’s net sales were $189.9 million, up 3.5% year over year. The improvement was driven by sales growth in the Animal Health and Mineral Nutrition segment, which was partially offset by sluggish Performance Products sales.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Net sales at the Animal Health segment increased 2% to $121 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. While nutritional specialty products grew 21%, sales from vaccines increased 30%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives and Other fell 7% primarily due to volume declines both domestically and internationally. This resulted from reduced volumes of medically important antibacterials and economic conditions in Brazil.
Net sales at the Mineral Nutrition segment increased 8% to $57.2 million on increased volumes and higher average selling prices resulting from underlying raw material commodity price increase.
Net sales at the Performance Products segment declined 3% to $11.7 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 third-quarter gross profit increased 3.1% year over year to $60.6 million. The gross margin, however, contracted 10 basis points (bps) to 31.9%.
Selling, general and administrative expenses dropped 19% to $30.6 million. Operating margin expanded 420 bps year over year to 15.8% in the quarter.
Financial Update
Year to date, Phibro generated $84.8 million in cash flow from operations compared with $10.6 million in the year-ago period. Capital expenditure amounted to $15.4 million in this period, reflecting a reduction from $28.6 million in the first nine months of fiscal 2016.
FY17 Outlook
Phibro narrowed its fiscal 2017 revenue guidance. The company currently expects to generate net sales of $760–$765 million compared with the earlier range of $750–$770 million, reflecting 1–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $756.8 million falls in the guided range.
Phibro, however, increased its adjusted EPS guidance to the range of $1.44–$1.47 from earlier range of $1.38–$1.45, displaying an annualized growth of 1–3%. The current Zacks Consensus Estimate of $1.45 lies in the company's guided range.
Our Take
Phibro ended the fiscal third-quarter on a sluggish note, with earnings in line with the Zacks Consensus Estimate but declining year over year. Segment-wise, a persistent decline in Performance Products segment sales also proved to be a drag.
Nonetheless, revenues increased on a year-over-year basis with Animal Health remaining the key contributing business. The company’s strong operating margin is encouraging. Improved full-year earnings guidance is an upside too.
Zacks Rank & Key Picks
Phibro currently has a Zacks Rank #3 (Hold).Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic sports a Zacks Rank 1 (Strong Buy) while Baxter International and Progenics Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 32.9% in the last one year compared with the S&P 500’s 16.4% growth. The company posted a four-quarter average positive earnings surprise of over 4.16%.
Baxter International rose around 23.9% in the last one year compared with the S&P 500’s gain. It delivered a four-quarter average positive earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 26.1% in the past one year, better than the S&P 500 mark. It reported a four-quarter positive average earnings surprise of 10.01%.
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Phibro (PAHC) Posts In Line Earnings in Q3, Revises View
Phibro Animal Health Corporation (PAHC - Free Report) reported adjusted earnings per share (EPS) of 37 cents in the third quarter of fiscal 2017, down 7.5% year over year. Adjusted EPS, however, remained in line with the Zacks Consensus Estimate. According to the company, the year-over-year decline was primarily due to lower gross margin and a higher effective income tax rate.
Including one-time items, the company reported EPS of 59 cents, reflecting a 28.3% jump from the year-ago quarter.
Net Sales
In the reported quarter, Phibro’s net sales were $189.9 million, up 3.5% year over year. The improvement was driven by sales growth in the Animal Health and Mineral Nutrition segment, which was partially offset by sluggish Performance Products 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 $121 million in the reported quarter on the back of volume increases in the nutritional specialty and vaccine product groups within the segment. While nutritional specialty products grew 21%, sales from vaccines increased 30%, principally on volume growth of products for poultry and swine industries.
However, sales at Medicated feed additives and Other fell 7% primarily due to volume declines both domestically and internationally. This resulted from reduced volumes of medically important antibacterials and economic conditions in Brazil.
Net sales at the Mineral Nutrition segment increased 8% to $57.2 million on increased volumes and higher average selling prices resulting from underlying raw material commodity price increase.
Net sales at the Performance Products segment declined 3% to $11.7 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 third-quarter gross profit increased 3.1% year over year to $60.6 million. The gross margin, however, contracted 10 basis points (bps) to 31.9%.
Selling, general and administrative expenses dropped 19% to $30.6 million. Operating margin expanded 420 bps year over year to 15.8% in the quarter.
Financial Update
Year to date, Phibro generated $84.8 million in cash flow from operations compared with $10.6 million in the year-ago period. Capital expenditure amounted to $15.4 million in this period, reflecting a reduction from $28.6 million in the first nine months of fiscal 2016.
FY17 Outlook
Phibro narrowed its fiscal 2017 revenue guidance. The company currently expects to generate net sales of $760–$765 million compared with the earlier range of $750–$770 million, reflecting 1–2% annualized growth for the fiscal year. The current Zacks Consensus Estimate of $756.8 million falls in the guided range.
Phibro, however, increased its adjusted EPS guidance to the range of $1.44–$1.47 from earlier range of $1.38–$1.45, displaying an annualized growth of 1–3%. The current Zacks Consensus Estimate of $1.45 lies in the company's guided range.
Our Take
Phibro ended the fiscal third-quarter on a sluggish note, with earnings in line with the Zacks Consensus Estimate but declining year over year. Segment-wise, a persistent decline in Performance Products segment sales also proved to be a drag.
Nonetheless, revenues increased on a year-over-year basis with Animal Health remaining the key contributing business. The company’s strong operating margin is encouraging. Improved full-year earnings guidance is an upside too.
Zacks Rank & Key Picks
Phibro currently has a Zacks Rank #3 (Hold).Better-ranked medical stocks include Hologic, Inc. (HOLX - Free Report) , Baxter International Inc. (BAX - Free Report) and Progenics Pharmaceuticals, Inc. . Hologic sports a Zacks Rank 1 (Strong Buy) while Baxter International and Progenics Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic gained 32.9% in the last one year compared with the S&P 500’s 16.4% growth. The company posted a four-quarter average positive earnings surprise of over 4.16%.
Baxter International rose around 23.9% in the last one year compared with the S&P 500’s gain. It delivered a four-quarter average positive earnings surprise of 17.14%.
Progenics Pharmaceuticals gained 26.1% in the past one year, better than the S&P 500 mark. It reported a four-quarter positive average earnings surprise of 10.01%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>