Investors have been cautious about medicated feed maker Phibro Animal Health ($PAHC), as concerns about food producers moving away from antibiotics have been on the rise of late. But if the company's fiscal fourth-quarter and full-year results are any indication, the company seems to be weathering the market shifts.
On Wednesday, New Jersey-based Phibro announced that its net sales during the fourth quarter nudged up just 1% year over year to $185 million but its adjusted earnings doubled to $17.6 million, or $0.44 a share. Jack Bendheim, Phibro's CEO, attributed the growth to strong demand for the company's specialty animal nutrition products and vaccines. "Once again, our Animal Health business delivered strong operating performance, with double-digit income growth," Bendheim said in a press release announcing the earnings.
For the full fiscal year, Phibro reported that net sales jumped 8% to $749 million, while adjusted earnings grew 21% to $110 million, or $1.72 a share.
Much of the growth came from Phibro's expanding animal vaccines business. In January, Phibro acquired exclusive North American distribution rights to swine vaccine technology made by MJ Biologics, plus the rights to additional products to be developed in the future. During the most recent quarter, sales of Phibro's animal vaccines, including MJ's products, rose by 10%, or $1.1 million, the company announced.
Phibro has also been working to improve its operating margins--an expansion that the company predicts will extend into the current fiscal year. Phibro told analysts to expect its operating margin to expand by 70 basis points to 14.5% in fiscal 2016, excluding vaccine-related licensing revenues. The company said it expects the profit growth to come from a combination of a more favorable product mix and currency gains on manufacturing costs.
For the coming year, Phibro told analysts that net sales should come in between $780 million and $800 million, and it expects adjusted earnings to finish at $113 million to $117 million, which would represent double-digit growth. The growth could come from several sources, Bendheim said. "We are focused on our organic growth opportunities and continue to seek acquisitions that will complement our strategy."
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