A month has gone by since the last earnings report for Phibro Animal Health (PAHC). Shares have lost about 14.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Phibro Q4 Earnings Fall Short of Estimates, Margins Up
Phibro reported adjusted earnings per share of 17 cents in the fourth quarter of fiscal 2020, reflecting a 48.5% fall from the year-ago 33 cents. The figure also lagged the Zacks Consensus Estimate by 22.7%.
Full-year adjusted earnings per share was $1.08, reflecting a 29.4% decrease from the year-earlier $1.53. The metric again fell short of the Zacks Consensus Estimate by 2.7%.
Meanwhile, without adjustments, GAAP earnings per share for the fourth quarter was 14 cents, down 36.4% from the year-ago count.
Full-year GAAP earnings per share was 83 cents, reflecting a 38.5% fall from the year-earlier $1.35.
In the quarter under review, net sales totaled $185.9 million, down 8.8% year over year primarily due to pandemic-led challenges. The industries that the company caters to (especially swine and cattle customers) also faced issues like lack of processing availability and sudden drops in demand. However, this was partially offset by progress made in Nutritional Specialties and Vaccines offerings.
Full-year revenues were $800.4 million, reflecting a 3.3% drop from the year-ago period.
Segmental Sales Break-Up
During the fourth quarter, Animal Health net sales declined 7.3% to $122.4 million. Within this segment, sales of medicated feed additives (MFAs) and other were $72.6 million, reflecting a 15.9% year-over-year decline. The decline in MFAs resulted from lower sales volume in China, South America and other international regions. The drop in volumes in China was driven by continued effects of African Swine Fever and regulatory changes effective Jan 1, 2020.
Within Animal Health, nutritional specialty product sales rose 8.7% to $31.1 million, primarily due to the acquisition of Osprey Biotechnics.
Apart from this, net vaccine sales totaled $18.6 million, showing an increase of 8.1% year over year on higher international volume.
Net sales at the Mineral Nutrition segment fell 10.9% year over year to $49.9 million owing to lower average selling prices and reduced overall unit volumes.
Net sales at the Performance Products segment fell 14.5% to $13.6 million owing to lower volume of copper-based and industrial chemical products.
Phibro’s fourth-quarter gross profit declined 7.2% year over year to $60.6 million. However, gross margin expanded 57 basis points (bps) to 32.6%.
Selling, general and administrative expenses in the reported quarter were $42.4 million, down 20.3% from the year-ago quarter.
Adjusted operating profit rose 50.4% year over year to $18.2 million and adjusted operating margin expanded 386 bps to 9.8% in the quarter under review.
The company exited fiscal 2020 with cash and short-term investments on hand of $91 million compared with $82 million at the end of fiscal 2019.
Cumulative net cash provided by operating activities at the end of fiscal 2020 was $59.3 million compared with $47.2 million at the end of fiscal 2019.
Cumulative capital expenditure amounted to $34 million at the end of fiscal 2020, reflecting an increase from the year-ago $29.9 million.
Despite the pandemic-led business disruptions across the globe, Phibro has provided its financial guidance for the first quarter of fiscal 2021.
The company projects net sales at around $190 million, suggesting almost no movement from the year-ago figure. Net income is projected within $5-$6 million, indicating an increase of $2.5-$3.5 million from the year-ago figure.
Adjusted earnings per share is projected at 18-20 cents, indicating a loss of a penny to a gain of a penny from the year-ago figure. GAAP earnings per share is anticipated within 13-15 cents, reflecting an increase of 7-9 cents year over year.
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.
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