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Phibro (PAHC) Q3 Earnings and Revenues Beat, Gross Margin Down
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Phibro Animal Health (PAHC - Free Report) delivered adjusted earnings per share (EPS) of 31 cents in the third quarter of fiscal 2024 compared with 29 cents in the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 6.9%.
Without adjustments, the GAAP EPS in the fiscal third quarter was 21 cents compared with 25 cents in the year-ago quarter.
Net Sales
In the quarter under review, net sales totaled $263.2 million, a 7.1% increase from the year-ago quarter. The figure also topped the Zacks Consensus Estimate by 4.5%.
Segmental Sales Breakup
The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.
In the third quarter of fiscal 2024, Animal Health’s net sales increased 10.3% to $181.3 million. The figure surpassed our model’s projected revenues of $171.5 million.
Within the segment, net sales of medicated feed additives (MFAs) and others reflected 16% year-over-year growth. The uptick was driven by the increased demand for MFAs in both domestic and international regions.
Nutritional specialty product sales decreased 11%, primarily due to lower demand for microbial and dairy products. However, net vaccine sales showed a year-over-year rise of 26%, mostly due to poultry product introductions in Latin America, along with an increase in domestic and international demand.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Net sales in the Mineral Nutrition segment rose 2.1% year over year to $64.2 due to increased sales volume, partially offset by the decreased average selling price. Our model projected the segment’s revenues to be $61.1 million.
Net sales in the Performance Products segment fell 3.3% to $17.7 million as a result of the decreased demand for personal care product ingredients and industrial chemicals. Our model projected the segment to report $17.4 million in revenues.
Margins
Phibro’s fiscal third-quarter gross profit rose 5.3% year over year to $79.6 million. However, the gross margin contracted 53 basis points (bps) to 30.2% on a 7.9% rise in the cost of goods sold.
SG&A expenses in the reported quarter were $59.7 million, up 4.7% from the year-ago quarter’s levels. The operating profit rose 7% year over year to $19.9 million.
Financial Update
The company exited the third quarter of fiscal 2024 with cash and short-term investments of $98.7 million compared with $92.5 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $11.4 million compared with $6.3 million in the year-ago period.
Guidance
Phibro reaffirmed its outlook for fiscal 2024 provided at the second quarter’s earnings call.
The company expects net sales between $980 million and $1.020 billion (unchanged). The Zacks Consensus Estimate for the metric is pegged at $994.2 million.
Adjusted EPS is expected in the range of $1.04-$1.16 (unchanged). The Zacks Consensus Estimate is pegged at $1.12.
Our Take
Phibro delivered better-than-expected revenues and earnings in the third quarter of fiscal 2024. The Animal Health segment benefited from the robust performance of the vaccine, MFAs and other businesses. Phibro’s recent announcement to acquire Zoetis’ Medicated Feed Additive portfolio is expected to lead to strong earnings accretion and debt paydown and also drive investments in the faster-growing vaccines, nutritional specialties and companion animal product segments.
Meanwhile, the contraction of the gross margin in the quarter is discouraging. Declining revenues from the Performance Products segment raise concern.
Zacks Rank & Other Key Picks
Phibro currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Inspire Medical Systems (INSP - Free Report) , Hims & Hers Health (HIMS - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a first-quarter 2024 loss of 34 cents per share, narrower than the Zacks Consensus Estimate by 46.0%. Revenues of $164 million topped the Zacks Consensus Estimate by 1.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
INSP has an estimated 2024 earnings growth rate of 51.4% compared with the industry’s 20.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 358.9%.
Hims & Hers Health, sporting a Zacks Rank #1, reported first-quarter 2024 earnings of 5 cents per share, which topped the Zacks Consensus Estimate by a staggering 150%. Revenues of $278.2 million surpassed the Zacks Consensus Estimate by 2.8%.
HIMS has an estimated 2024 earnings growth rate of 218.2% compared to the industry’s 20.2%. In the trailing four quarters, the company delivered an average earnings surprise of 79.2%.
Encompass Health, carrying a Zacks Rank #2, reported a first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
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Phibro (PAHC) Q3 Earnings and Revenues Beat, Gross Margin Down
Phibro Animal Health (PAHC - Free Report) delivered adjusted earnings per share (EPS) of 31 cents in the third quarter of fiscal 2024 compared with 29 cents in the year-ago quarter. However, the metric beat the Zacks Consensus Estimate by 6.9%.
Without adjustments, the GAAP EPS in the fiscal third quarter was 21 cents compared with 25 cents in the year-ago quarter.
Net Sales
In the quarter under review, net sales totaled $263.2 million, a 7.1% increase from the year-ago quarter. The figure also topped the Zacks Consensus Estimate by 4.5%.
Segmental Sales Breakup
The company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.
In the third quarter of fiscal 2024, Animal Health’s net sales increased 10.3% to $181.3 million. The figure surpassed our model’s projected revenues of $171.5 million.
Within the segment, net sales of medicated feed additives (MFAs) and others reflected 16% year-over-year growth. The uptick was driven by the increased demand for MFAs in both domestic and international regions.
Nutritional specialty product sales decreased 11%, primarily due to lower demand for microbial and dairy products. However, net vaccine sales showed a year-over-year rise of 26%, mostly due to poultry product introductions in Latin America, along with an increase in domestic and international demand.
Phibro Animal Health Corporation Price, Consensus and EPS Surprise
Phibro Animal Health Corporation price-consensus-eps-surprise-chart | Phibro Animal Health Corporation Quote
Net sales in the Mineral Nutrition segment rose 2.1% year over year to $64.2 due to increased sales volume, partially offset by the decreased average selling price. Our model projected the segment’s revenues to be $61.1 million.
Net sales in the Performance Products segment fell 3.3% to $17.7 million as a result of the decreased demand for personal care product ingredients and industrial chemicals. Our model projected the segment to report $17.4 million in revenues.
Margins
Phibro’s fiscal third-quarter gross profit rose 5.3% year over year to $79.6 million. However, the gross margin contracted 53 basis points (bps) to 30.2% on a 7.9% rise in the cost of goods sold.
SG&A expenses in the reported quarter were $59.7 million, up 4.7% from the year-ago quarter’s levels. The operating profit rose 7% year over year to $19.9 million.
Financial Update
The company exited the third quarter of fiscal 2024 with cash and short-term investments of $98.7 million compared with $92.5 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $11.4 million compared with $6.3 million in the year-ago period.
Guidance
Phibro reaffirmed its outlook for fiscal 2024 provided at the second quarter’s earnings call.
The company expects net sales between $980 million and $1.020 billion (unchanged). The Zacks Consensus Estimate for the metric is pegged at $994.2 million.
Adjusted EPS is expected in the range of $1.04-$1.16 (unchanged). The Zacks Consensus Estimate is pegged at $1.12.
Our Take
Phibro delivered better-than-expected revenues and earnings in the third quarter of fiscal 2024. The Animal Health segment benefited from the robust performance of the vaccine, MFAs and other businesses. Phibro’s recent announcement to acquire Zoetis’ Medicated Feed Additive portfolio is expected to lead to strong earnings accretion and debt paydown and also drive investments in the faster-growing vaccines, nutritional specialties and companion animal product segments.
Meanwhile, the contraction of the gross margin in the quarter is discouraging. Declining revenues from the Performance Products segment raise concern.
Zacks Rank & Other Key Picks
Phibro currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Inspire Medical Systems (INSP - Free Report) , Hims & Hers Health (HIMS - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a first-quarter 2024 loss of 34 cents per share, narrower than the Zacks Consensus Estimate by 46.0%. Revenues of $164 million topped the Zacks Consensus Estimate by 1.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
INSP has an estimated 2024 earnings growth rate of 51.4% compared with the industry’s 20.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 358.9%.
Hims & Hers Health, sporting a Zacks Rank #1, reported first-quarter 2024 earnings of 5 cents per share, which topped the Zacks Consensus Estimate by a staggering 150%. Revenues of $278.2 million surpassed the Zacks Consensus Estimate by 2.8%.
HIMS has an estimated 2024 earnings growth rate of 218.2% compared to the industry’s 20.2%. In the trailing four quarters, the company delivered an average earnings surprise of 79.2%.
Encompass Health, carrying a Zacks Rank #2, reported a first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.