PAHC Stock Falls Despite Q2 Earnings & Revenue Beat, Margins Increase

Phibro Animal Health PAHC delivered adjusted earnings per share (EPS) of 54 cents in the second quarter of fiscal 2025 compared with 33 cents in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 28.5%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Without adjustments, the GAAP EPS in the quarter was 8 cents compared with 3 cents in the prior-year period.Net sales in the quarter totaled $309.3 million, up 23.8% from the year-ago quarter’s level. The figure also exceeded the Zacks Consensus Estimate by 3.6%.Following the announcement, PAHC shares fell 2.8% in the after-hours trading yesterday. Phibro’s Q2 Segmental SalesThe company conducts its operations via three segments — Animal Health, Mineral Nutrition and Performance Products.In the second quarter of fiscal 2025, Animal Health’s net sales increased 32.5% to $229.4 million. The figure surpassed our model’s projection of $195.6 million.Within the segment, net sales of medicated feed additives (MFAs) and others reflected 47% year-over-year growth. This was driven by incremental revenues of $36.7 million from sales of products from the Zoetis MFA portfolio acquired on Oct. 31, 2024. Increased demand for the company’s MFA products in international regions and processing aids used in the ethanol fermentation industry also contributed.Phibro Animal Health Corporation Price, Consensus and EPS Surprise Phibro Animal Health Corporation price-consensus-eps-surprise-chart | Phibro Animal Health Corporation QuoteNutritional specialty product sales rose 11% due to increased domestic dairy demand and higher sales of microbial and companion animal products.Net vaccine sales showed a year-over-year rise of 12%, primarily due to the continued growth of poultry products in Latin America, along with an increase in international demand.Net sales in the Mineral Nutrition segment rose 5% year over year to $59.1 million due to an increase in demand for trace minerals. Our model forecast was $58.7 million.Net sales in the Performance Products segment rose 7% to $16.6 million due to higher demand for the ingredients used in personal care products. This also surpassed our model’s projection of $15.6 million.PAHC’s Margin PerformancePhibro’s fiscal second-quarter gross profit rose 29.6% year over year to $101.9 million. The gross margin expanded 149 basis points (bps) to 32.9% despite a 21% rise in the cost of goods sold.Selling, general and administrative expenses in the reported quarter were $76.3 million, up 21.3% from the year-ago quarter’s levels. The operating profit totaled $25.6 million, an increase of 63.1% year over year. The operating margin expanded 199 bps year over year to 8.3%.          PAHC’s Financial UpdateThe company exited the second quarter of fiscal 2025 with cash and short-term investments of $67.1 million compared with $89.8 million at the end of the first quarter.Cumulative net cash provided by operating activities at the end of the second quarter was $15.7 million compared with $47.8 million in the year-ago period.Phibro’s Updated Fiscal 2025 GuidancePhibro’s updated guidance includes the acquisition of the Zoetis Medicated Feed Additive portfolio.For fiscal 2025, the company now expects net sales in the range of $1.25-$1.30 billion (earlier $1.05-$1.10 billion), implying 25% growth (previously 6%). The Zacks Consensus Estimate for the metric is pegged at $1.18 billion.Adjusted EPS is expected in the range of $1.87-$2.01 (earlier $1.34-$1.48). The revised outlook indicates a 63% improvement compared to the earlier projected 18%. The Zacks Consensus Estimate is pegged at $1.62.Our Take on PAHCPhibro delivered better-than-expected earnings and revenues in the second quarter of fiscal 2025. The performance reflects the strength of the company’s diversified portfolio, particularly the robust demand in the company’s Animal Health segment. Phibro’s successful integration of the Zoetis MFA portfolio helped drive strong MFA and other growth. The revised outlook for fiscal 2025 also instills optimism.Encouragingly, both margins expanded in the fiscal second quarter. The Phibro Forward initiative continues to drive operational excellence, helping identify opportunities for growth while improving efficiency and execution.PAHC’s Zacks Rank & Other Key PicksPhibro currently carries a Zacks Rank #2 (Buy).Some other top-ranked stocks from the broader medical space are ResMed RMD, Cardinal Health CAH and Bio-Rad Laboratories BIO.ResMed reported second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%. RMD carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.Cardinal Health, carrying a Zacks Rank #2, posted second-quarter fiscal 2025 adjusted EPS of $1.93, topping the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.Bio-Rad Laboratories, carrying a Zacks Rank #2, posted third-quarter 2024 adjusted EPS of $2.01, topping the Zacks Consensus Estimate by 57%. Revenues of $649.7 million exceeded the Zacks Consensus Estimate by 2%.BIO has an earnings yield of 3.3% compared with the industry’s 0.6% yield. 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Click to get this free report Cardinal Health, Inc. (CAH): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report Bio-Rad Laboratories, Inc. (BIO): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks