Phibro Animal Health Corporation Reports Strong Third Quarter Results and Raises Financial Outlook
NASDAQ: PAHC reported strong financial results for the third quarter of fiscal 2026, reflecting continued momentum across its core Animal Health operations and prompting the company to raise portions of its full-year guidance. The company announced that net sales for the quarter ended March 31, 2026 climbed 10% year over year to $383.5 million, supported by solid demand for medicated feed additives, nutritional specialty products, and vaccines.
Quarterly net income rose to $24.0 million, an increase of 15% compared with the same period last year, while diluted earnings per share improved 16% to $0.59. Adjusted EBITDA increased 11% to $60.8 million, and adjusted diluted EPS advanced 19% to $0.76, highlighting operational strength and improved profitability across key business segments.
Chairman, President, and Chief Executive Officer Jack Bendheim said the company delivered a strong quarter driven primarily by continued growth in the Animal Health business. According to Bendheim, sales within the segment increased 13% during the quarter as demand remained robust across medicated feed additives (MFAs), nutritional specialties, and vaccine products.
The company also highlighted several strategic developments occurring after the quarter’s close. Phibro announced a regulatory development in Brazil impacting certain antimicrobial products and expanded its revolving credit facility by $125 million through an oversubscribed financing process. The increased credit capacity is intended to strengthen liquidity and provide greater financial flexibility for future operations and investments.
Additionally, Phibro recently launched its Sustainable Solutions Platform, including the introduction of VERRATAIN™ Verified Sustainability Solutions, which is designed to support sustainability initiatives within the global animal agriculture industry.
Based on strong year-to-date performance and improved visibility into the remainder of fiscal 2026, management updated its full-year financial outlook by raising the lower end of several guidance ranges, resulting in higher midpoint expectations across major financial metrics.
The company’s Animal Health segment remained the primary growth engine during the quarter. Segment sales increased to $291.2 million, up 13% from the prior-year period. Much of the growth came from the MFA portfolio acquired on October 31, 2024, which contributed an $18.9 million increase in quarterly sales. Additional gains were driven by increased demand for legacy MFA products in North America and stronger sales of anti-microbial products tied to the company’s ethanol performance business.
Nutritional specialty product sales increased 8%, fueled by higher demand in North America and continued growth in companion animal products. Vaccine sales rose 16%, supported by stronger international demand, particularly in Israel, along with improved domestic swine demand and increased sales of autogenous vaccines.
The Mineral Nutrition segment also posted growth during the quarter. Net sales increased 10% to $73.4 million as customer demand strengthened for zinc and trace mineral products. Meanwhile, the Performance Products segment experienced weaker conditions. Sales declined 17% to $18.9 million because of softer demand for ingredients used in personal care applications.
Gross profit for the quarter increased significantly to $125.7 million, representing a 20% improvement compared with the prior-year period. Gross margin expanded to 32.8% of net sales, compared with 30.1% a year earlier. Excluding certain acquisition-related costs and prior-period inventory write-offs, adjusted gross margin improved to 33.5%.
The stronger profitability was driven by increased sales volumes, favorable product mix, and higher average selling prices. These gains were partially offset by higher input costs and elevated distribution expenses.
Within Animal Health, gross profit growth was especially strong due to increased volume and improved product mix. Mineral Nutrition experienced a slight decline in gross profit as higher unit costs outweighed volume increases. Performance Products gross profit decreased because of lower overall demand.
Selling, general, and administrative expenses rose 14% to $81.0 million during the quarter. Excluding acquisition-related costs, stock-based compensation, and Phibro Forward initiative expenses, adjusted SG&A increased mainly because of higher employee-related costs across the business.
Interest expense, net, increased to $10.4 million due largely to the expiration of a favorable interest rate swap agreement covering $300 million in notional debt. However, lower interest rates and higher patronage income from certain lenders partially offset the increase.
Foreign currency fluctuations also impacted quarterly performance. The company recorded net foreign currency losses of $1.9 million during the quarter, compared with gains of $5.5 million in the same period last year. Currency volatility involving the Euro and Brazilian Real contributed significantly to the losses.
Phibro’s income tax provision totaled $8.3 million during the quarter, compared with $8.8 million a year earlier. The effective tax rate improved to 25.7% from 29.7% in the prior-year period. On an adjusted basis, the effective tax rate was 24.6%, compared with 25.8% in the comparable quarter last year.
Operating income improved substantially due to stronger gross profit performance, though gains were partially offset by higher SG&A costs, increased interest expense, and unfavorable foreign exchange impacts. Adjusted net income climbed 19% to $31.2 million, driven primarily by higher sales and improved profitability within Animal Health.
The company’s balance sheet and liquidity profile also remained solid. Free cash flow for the trailing twelve months ended March 31, 2026 totaled $12.8 million. Total debt stood at $740.9 million, while cash and short-term investments totaled $77.5 million. Phibro reported a gross leverage ratio of 3.1x and trailing twelve-month adjusted EBITDA of $240.7 million.
The recently expanded revolving credit facility increased borrowing capacity from $310 million to $435 million, providing the company with enhanced operational flexibility and additional financial resources to support strategic initiatives and growth opportunities.
Looking ahead, Phibro updated its fiscal 2026 guidance and now expects net sales between $1.46 billion and $1.50 billion, representing approximately 14% annual growth based on the midpoint of the range. Net income is projected between $92 million and $100 million, while diluted EPS is expected to range from $2.25 to $2.44.
The company forecasts adjusted EBITDA between $247 million and $255 million, representing expected growth of 37% year over year. Adjusted net income is projected between $122 million and $127 million, while adjusted diluted EPS is expected between $2.98 and $3.10. Phibro also anticipates an adjusted effective tax rate of approximately 25% for fiscal 2026.
Management noted that its guidance assumes no additional foreign exchange gains or losses for the remainder of the fiscal year and no recovery of tariffs previously imposed under the International Emergency Economic Powers Act.
Phibro Animal Health Corporation will host a webcast and conference call to discuss its third-quarter financial results, business performance, and updated fiscal 2026 outlook with investors and analysts.
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