It has been about a month since the last earnings report for Phibro Animal Health (PAHC - Free Report) . Shares have lost about 13.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Phibro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Phibro Sees Y/Y Rise in Earnings & Revenues in Q4
Phibro reported adjusted earnings per share (EPS) of 46 cents in the fourth quarter of fiscal 2018, up 17.9% year over year. Adjusted EPS surpassed the Zacks Consensus Estimate of 44 cents.
According to the company, the year-over-year improvement was primarily driven by higher gross profit, reduced interest expenses as well as a drop in effective income tax rate.
Reported EPS of 55 cents was up 44.7% from a year ago.
Full-year adjusted EPS came in at $1.74, up from the year-ago $1.51. Also, the figure beat the Zacks Consensus Estimate of $1.71.
In the reported quarter, net sales totaled $211.8 million, up 8.7% year over year. The improvement was driven by sales growth at the Animal Health, Mineral Nutrition and Performance Products segments.
Fiscal 2018 revenues of $820 million were up 7.3% from the year-ago figure. The figure also surpassed the Zacks Consensus Estimate of $817.2 million.
Sales by Segments
Net sales at the Animal Health segment increased 7% to $137.7 million in the reported quarter on volume increase at Nutritional specialty and Vaccine product groups within the segment. Nutritional specialty products grew less than 1%, principally on volume growth of products for poultry which was largely offset by decreased sales to the dairy sector which is grappling with weak conditions. Further, sales from Vaccines increased 7%, majorly on global volume growth.
Moreover, sales at Medicated feed additives (MFAs) and other grew 9% primarily on strength in international business. International net sales were driven by growth in most regions, including benefits from a recent buyout and additional penetration in the cattle sector. Domestic net sales at MFAs and Other remained flat year over year.
Net sales at the Mineral Nutrition segment rose 14% to $60.3 million on higher average selling prices resulting from an increase in underlying raw material commodity price.
Net sales at the Performance Products segment rose 3% to $13.8 million on higher average selling prices of copper-based products and rising volumes of personal care ingredients. However, this growth was partially offset by reduced volumes of copper-based products.
Phibro’s fourth-quarter gross profit increased 7% year over year to $67.5 million. However, gross margin contracted 50 basis points (bps) to 31.9%.
Selling, general and administrative expenses rose 5% to $41.4 million. However, operating margin expanded 20 bps to 12.3% in the quarter.
Phibro generated $70 million of cash flow from operations in fiscal 2018, down from the year-ago $98.4 million. Capital expenditure amounted to $18.5 million in this period, reflecting a reduction from $20.9 million in the year-ago period.
FY19 View Issued
Phibro has issued its guidance for fiscal 2019. The company expects to generate net sales of $850-$875 million. The current Zacks Consensus Estimate of $851.3 million is within the guided range.
Phibro projects adjusted EPS in the $1.72-$1.77 band. The current Zacks Consensus Estimate of $1.88 is above the company's guided range.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.