Episode Details

Phibro Animal Health (PAHC) Q4 FY2026 — FY2026 (year ended June 30, 2026): net sales $1,518.1m vs $1,296.2m, up 17.1%; adjusted EBITDA $255.0m vs $183.7m, up 38.8%; adjusted diluted EPS $3.22 vs $2.17; GAAP diluted EPS $2.43. Q4 adjusted EPS $0.85 against a $0.71 bar, a 19% beat, on sales of $396.7m. Free cash flow $9.9m. The stock opened +9.1% at $39.39 on August 27, traded to $35.01 and closed $36.35, up 0.72% on 432,907 shares, 2.4x its 30-session median. Phibro filed its 10-K at 16:14 Eastern on August 26 and the results 8-K at 16:30, both just after the close, and the stock opened up 9.1% the next morning before closing up 0.72%. Nearly the whole gap was given back in one session. The record is real: net sales $1,518.1m, adjusted EBITDA $255.0m up 38.8%, adjusted EPS $3.22 against a $0.71 fourth-quarter bar it beat by 19%, and FY2027 guidance that came in 5.4% ABOVE the published consensus rather than below it. But $146.1m of the $221.9m sales increase is the company's own disclosed incremental revenue from the Zoetis MFA portfolio, which closed October 31, 2024 - four extra months on a calendar. And $255.0m of adjusted EBITDA produced $9.9m of free cash flow. THE CALL: HOLD (3/5, A REAL BEAT AND A REAL RECORD YEAR THAT CONVERTED ALMOST NONE OF ITSELF INTO CASH) — base-case value ~$37.03 vs ~$36.35 today. KEY METRICS: - THE SPINE: $255.0m of adjusted EBITDA produced $9.9m of free cash flow - 3.9% conversion, against 22.8% the year before. - SAME TWELVE MONTHS: adjusted EBITDA rose $71.3m while operating cash flow FELL $11.2m, from $80.1m to $69.0m. - WHERE IT WENT: working capital absorbed $95.1m, $86.3m of it inventory. Capex rose 54% to $59.1m against $51.5m of D&A. - THE GROWTH: $146.1m of the $221.9m sales increase is disclosed incremental Zoetis MFA revenue - four extra months of a deal that closed Oct 31, 2024. - ONCE LAPPED: in Q4, with both years carrying a full acquisition, MFAs grew $1.1m on $206.5m. Mineral Nutrition was 71% of the quarterly increase. - THE CONCESSION: the beat is real on the proven adjusted basis, guidance came in 5.4% above consensus, and Animal Health margin expanded 303bp. - THE GUIDE: FY2027 adjusted EBITDA +3.1%, but adjusted EPS +8.7% - and 58% of that earnings growth is the tax rate going 23.7% to about 20%. - OUR CALL: HOLD, 3/5, fair value $37.03 vs $36.35. Bear $27.81, base $38.90, bull $48.19. Street average $45.00 across five analysts. What to watch: UP: the Q4 beat is real on the proven basis - $0.85 against $0.713, with sales 4.1% ahead; FY2027 adjusted EPS guidance of $3.41-$3.59 is 5.4% above the $3.32 consensus; Animal Health adjusted EBITDA margin expanded 303bp to 26.1%; Brazil virginiamycin, about $27m of FY2026 sales, is already assumed at near zero in guidance, so registration is unbooked upside; Phibro Forward closed June 30 and management traces nearly one in five guided EBITDA dollars to it; gross leverage 2.9x and no large maturity until $406.6m in FY2030. DOWN: free cash flow $9.9m against $255.0m of adjusted EBITDA, a 3.9% conversion versus 22.8%; operating cash flow FELL $11.2m to $69.0m while adjusted EBITDA rose $71.3m; working capital took $95.1m, of which inventory was $86.3m; inventory $534.9m is 194 days of COGS against 181; capex +54% to $59.1m; the dividend cost $19.5m, twice free cash flow; guidance is +3.1% EBITDA growth and assumes zero FX losses after $12.6m. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.