Q2 2024 Phibro Animal Health Corp Earnings Call

Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Phibro Animal Health Corporation Second Quarter Investor Conference Call. All lines have been placed on mute to prevent any background noise.

Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the Fibril Animal Health Corporation second quarter Investor Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the conference over to Dick Johnson, Chief Financial Officer. Please go ahead.

You ask a question during this time simply press Star then the number one on your telephone keypad, if you'd like to withdraw your question Press Star One again I would now like to turn the conference over to <expletive> Johnson Chief Financial Officer. Please go ahead.

Richard G. Johnson: Thank you, Regina, and welcome to the Phibro Animal Health Corporation earnings call for our fiscal second quarter ended December 31, 2023. As we said, my name is Dick Johnson.

Thank you Regina.

And welcome to the Phibro animal health.

Corporation earnings call for our fiscal second quarter ended December 31 2023.

As we said my name is <expletive> Johnson I'm, the interim Chief Financial Officer.

Richard G. Johnson: I'm the Interim Chief Financial Officer of Phibro Animal Health. I'm joined today by Jack Bendheim, Phibro's Chairman, President, and Chief Executive Officer, by Donny Bendheim, Director and Executive Vice President of Corporate Strategy, and also by Glenn David, the incoming CFO. Today we'll cover financial performance for our second quarter and provide an update on our financial guidance for our fiscal year ending June 2024. At the conclusion of our remarks, we'll open the line for questions. I'd like to remind you that we're providing a simultaneous webcast of this call on our website, pahc.com. Also, on the investor section of our website, you'll find copies of the earnings press release and second quarter Form 10-Q, as well as, later today, the transcript and slides that we discussed on our call this morning.

Animal health I'm joined today by Jack been time, Fibrose, Chairman, President and Chief Executive Officer, Mike Donnie been time director and Executive Vice President of corporate strategy and also by Glenn David The incoming Chief Financial Officer.

Today, we'll cover our financial performance for our second quarter and provide an update on our financial guidance for our fiscal year ending.

June 2024.

Conclusion of our remarks, we'll open the line for questions.

I'd like to remind you that we're providing a simultaneous webcast of this call on our website <unk> dot com and also on that investors section of our website you will find copies of the earnings press release, and second quarter Form 10-Q, as well as later today, the transcript and slides.

That we're discussing.

On our call this morning.

Richard G. Johnson: Turning to slide two, our remarks today will include our standard forward-looking statements, and actual results could differ materially from those projections. For a list and description of certain factors that can cause results to differ, I refer you to the forward-looking statements section in our earnings press release. Our remarks include references to certain financial measures which were not prepared in accordance with generally accepted accounting principles or U.S. GAAP. I refer you to the non-GAAP financial information section of our earnings press release for a discussion of these measures. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in the financial tables that accompany the earnings press release. We present our results on a GAAP basis and on an adjusted basis.

Turning to slide two our remarks today will include our standard forward looking statements and actual results could differ materially from those projections for a list and description of certain factors that could cause results to differ I refer you to the forward looking statements section in our earnings press release.

Our remarks include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles of our U S. GAAP I refer you to the non-GAAP financial information section in our earnings press release for a discussion of these measures reckon.

Reconciliations of these non-GAAP financial measures to the most directly comparable U S. GAAP measures are included in the financial tables that accompany the earnings press release.

We present, our results on a GAAP basis and on an adjusted basis, our adjusted results exclude.

Richard G. Johnson: Our adjusted results exclude acquisition-related items, unusual, non-operational, or non-recurring items, which would include things like stock-based compensation and, in this most recent quarter, Brazil employment taxes. Also, other income and expenses separately reported in the P&L, including foreign currency losses, and also income taxes related to any of those pre-tax income adjustments and any other unusual or non-recurring income tax items. So with that out of the way, let me introduce our Chairman, President, and Chief Executive Officer, Jack Bendheim, to share his opening remarks. Jack

Acquisition related items.

Unusual nonoperational or nonrecurring items, which would include things like stock based compensation and in this most recent quarter.

Brazil employment taxes.

Item also other income and expenses separately reported in the P&L, including foreign currency losses.

And also income taxes related to any of those pretax adjustments and any other unusual or nonrecurring income tax items, so with that out of the way, let me introduce our chairman President and Chief Executive Officer, Jack been time to share his opening remarks Jack thank.

Jack C. Bendheim: Thank you, Dick, and thank you to everyone joining us this morning. Our second quarter showed the resilience of our business and was a positive step up compared with our first quarter. Our core animal health business grew net sales at a healthy 6%, and I was especially pleased to see that adjusted EBITDA also grew at 6%, led by high-value new product introductions in our vaccine product line. A strong 31% increase in net sales of vaccines led the way for animal health. We are seeing the uptake of our vaccines across various regions, especially in South America. We have launched new commercial vaccines and have the added benefit of a new autonomous facility, a vaccine production facility in Brazil.

Thank you <expletive> and thank you to everyone joining us this morning.

Second quarter showed the resilience of our business. It was a positive step up compared with the first quarter.

Core animal health business grew net sales at a healthy 6% and I was especially pleased to see that adjusted EBITDA also grew at 6% led by high value new product introductions and our vaccine product.

A strong 31% increase in net sales of vaccines led the way for animal health, we are seeing in the take of our vaccines across various regions, especially in South America, we have launched new commercial vaccines. The added benefit of renew it attaches facility seem to sell laid this out.

Jack C. Bendheim: Looking ahead, we expect continued growth in the animal health business in the second half of the year. We also expect to see significant improvement in our mineral nutrition and performance product businesses as we work through inventory imbalances and as we see a rebound in demand. We have affirmed our guidance for net sales, adjusted EBITDA, and adjusted diluted EPS, as Dick will go into in greater detail at the end of his presentation. We are continuing to invest behind our successes. We're looking to introduce additional vaccines in the Americas and have just had our first sales of a new line of nutritional specialty products for poultry here in the United States. We see vaccines and increased home specialties and companion animals as continued growth opportunities, and we're making the necessary investments to enable us to achieve our targets.

Looking ahead, we expect to have continued.

Continuing growth in the animal health business in the second half of the year.

We also expect to see significant improvement in our mineral nutrition and performance by instances as we work through inventory and balances and as we see a rebound in demand.

We have affirmed our guidance for net sales adjusted EBITDA and adjusted diluted EPS that will go into in greater detail at the end of his presentation.

We are continuing to invest behind our successes, we're looking to introduce additional vaccines in the Americas and have just had a breast sales of a new line of nutritional specialty products.

In the United States.

We see vaccines and nutritional specialties in companion animal is continued growth opportunities, we're making the necessary investments to enable us to achieve our targets.

Jack C. Bendheim: I'm also pleased to welcome Glenn David to Phibro as Chief Financial Officer. As we recently announced, Glenn brings over 30 years of experience in commercial and financial leadership roles, including a wealth of knowledge in the animal health industry. He brings the capabilities needed to contribute to Farber's future success and to bring value to our shareholders. I look forward to hearing your questions following Dick's review of our financials, but before I hand it back to him, I want to express my gratitude to Dick for agreeing to step in as interim CFO. As a company, we did not miss a beat thanks to Dick's quick return to action, and I am thrilled that Dick will continue to be available to consult with Glenn and assist Phibro as a whole. Thanks, Jeff.

I'm also pleased to welcome Glenn David two fiber laser Chief Financial Officer.

As we recently announced Glenn brings over 30 years of experience commercial financial leadership roles, including a wealth of knowledge in the animal health industry.

He brings the capabilities needed to contribute to <unk> success and to bring value to our shareholders.

I look forward to hearing your questions. Following Dick's review of our financials, but before I hand, it back to him I wanted to express my gratitude to date for agreeing to step in as interim CFO.

As a company we did not Miss a beat thanks. It is quickly transaction.

Throughout the day will continue to be available to solve with Glenn and assist fiber was the whole deck.

Thanks, Jeff.

Richard G. Johnson: So let me start with the consolidated financial performance on slide four, and then we'll move on to segment-level performance and some other information. Consolidated net sales for the quarter were just under $250 million, and that was an increase of $5.3 million, or 2%, over the same quarter a year ago. The animal health segment grew 6% while both mineral nutrition and performance products saw sales decline, gap net income and gap diluted EPS decreased driven by a substantial increase in foreign exchange losses, mostly from a major devaluation in Argentina, also driven by higher operating expenses that we refer to as selling general and administrative expenses that included a $4.2 million charge for a Brazil employment tax issue, and third, increased interest expense driven by higher variable interest rates. Home taxes were a partial offset as they decreased by $2.6 million.

So let me start with the consolidated financial performance on Slide four and then we'll move on to segment level performance add some other information.

Consolidated net sales for the quarter.

We're just under $250 million and that was an increase of $5 $3 million.

2% over the same quarter of a year ago.

The animal health segment grew 6%, while both mineral nutrition and performance products.

<unk> sales decline.

GAAP net income and GAAP diluted EPS decreased driven by.

Driven by a substantial increase in foreign exchange losses, mostly from a major devaluation in Argentina.

Driven by higher operating expenses that we referred to as selling general and administrative expenses that included a $4 $2 million charge for a Brazil employment tax issue and third increased interest expense driven by <unk>.

Higher variable interest rates income taxes were a partial offset as they just decreased $2 $6 million.

Richard G. Johnson: After making our standard adjustments to gap results, including the items I named earlier, overall adjusted EBITDA decreased $1.5 million compared to the year earlier. Animal health adjusted even improved by $2.2 million or 6%, driven by gross profit from increased sales, but partially offset by higher operating expenses. Mineral nutrition decreased almost a million dollars, driven by unfavorable inventory costs and a slight decline in volumes.

After making our standard adjustments to GAAP results.

Including the items I.

Named earlier.

Overall, adjusted EBITDA decreased $1.5 million compared to the year earlier.

Animal health adjusted EBITDA improved by $2 2 million or 6% driven.

Driven by gross profit from increased sales, but partially offset by higher operating expenses.

Mineral nutrition decreased almost $1 million driven by unfavorable inventory cost and a slight decline in volumes performance products.

Richard G. Johnson: Business products decreased $1.5 million year-over-year due to lower product demand and an unfavorable product mix. And finally, we spent more on our corporate expenses. We spent $1.3 million more than last year, which was driven by a planned increase in strategic investments. Adjusted net income and adjusted diluted EPS declined 2%, respectively, reflecting the changes in adjusted EBITDA and the higher interest expense due to the higher variable interest rates.

Decreased one 5 million year over year.

Due to lower product demand and unfavorable product mix and finally, we spent more in our corporate expenses.

We spent $1 $3 million more than last year, which was driven by a planned increase in strategic investments.

Adjusted net income and adjusted diluted EPS declined 2%.

<unk>, reflecting the changes in adjusted EBITDA and the higher interest expense due to the higher variable interest rates.

Richard G. Johnson: The effective income tax rate improved, and it was a partial offset to the negatives. Now looking at slide five and moving to segment-level financial performance, let's first look at animal health. The animal health segment posted sales of about $173 million. That was an increase of over $9 million, or 6%, over the prior year. And within that animal health segment, we saw sales increase, especially in vaccines, as vaccine sales grew $7 million, a healthy 31% increase, driven by product launches in poultry products introduced into Latin America. Plus, we saw an increase in domestic demand. In our MFAs, another category net sales grew $4.8 million, or 5%, due to demand in various international regions and also continuing growth in demand for our processing aids used in the ethanol fermentation industry. Nutritional specialty net sales declined in the quarter by $2.4 million, or about 6%, mostly due to reduced demand from the domestic dairy business.

Thank you your income tax rate improved and it was a partial offset to the negative.

Now looking at slide five and moving to segment level financial performance.

And let's first look at animal health the animals, all segment posted sales of about $173 million.

That was an increase of over $9 million or 6% over the over the prior year.

And within that animal health segment.

We saw sales increase, especially in vaccines as vaccine sales.

Grew $7 million, a healthy 31% increase driven by product launches and poultry products.

Introduced into Latin America, plus we saw an increase in domestic demand.

In our MSA is another category net sales grew $4 $8 million or 5%.

Due to demand in various international regions and also.

Continuing growth.

And demand for our processing agents used in the ethanol fermentation industry.

Nutritional specialties net sales declined in the quarter by $2 $4 million or about 6%.

Mostly due to.

Reduced reduced demand from the domestic bearing business.

Richard G. Johnson: All of that drove animal health adjusted EBITDA of about $39 million, also a 6% increase as the higher gross profit from increased sales was partially offset by increased SG&A. Now moving to the other big business segments on slide six, starting with mineral nutrition. Net sales for the quarter were $61 million, a slight decrease from last year due to a decline in average selling prices and also some reduction in sales volume.

All of that drove animal golf adjusted EBITDA of about $39 million also a 6% increase.

The higher gross profit from increased sales was partially offset by increased SG&A.

Now moving to the other biggest business segments on slide six starting with mineral nutrition.

Net sales for the quarter were $61 million.

A slight decrease from last year due to a decline in average selling prices.

And also some reduction in sales volume.

Richard G. Johnson: Mineral nutrition adjusted EBIT was $3.5 million, reflecting a year-on-year decrease of $900,000 as we worked through some unfavorable inventory positions. Looking at our performance product segment, whose sales of 15 and a half million for the three months reflect a 3.7 million or 19% decline driven by reduced demand for personal care product ingredients and for industrial chemicals, adjusted EBITDA was $800,000 for the quarter, a decline of $1.5 million compared to the prior year, largely reflecting reduced sales and also reflecting an unfavorable product mix. Corporate expenses increased by $1.3 million, driven by the planned increased strategic investments.

Mineral nutrition, adjusted EBITDA was $3 $5 million, reflecting a year on year decrease.

$900000 as we worked through some unfavorable inventory positions.

Looking at our performance products segment net sales of $15 5 million for the three months reflect a $3 7 million or 19% decline driven by.

Reduced demand for personal care product ingredients and our industrial chemicals.

Adjusted EBITDA was $800000 for the quarter, a decline of $1 5 million compared to the prior year, largely reflecting reduced sales.

And also reflecting unfavorable product mix.

Corporate expenses increased $1 $3 million driven by the planned increased strategic investments.

Okay.

Richard G. Johnson: Now, if we turn to the capitalization-related metrics on page 7, we saw positive free cash flow, and for the trailing 12 months, we now have generated positive free cash flow of $37 million, which is comprised of $74 million from operating cash flow and then invested $37 million in capital expenditures. And as a result, we ended December with cash and equivalents and short-term investments with $92 million on the balance sheet at the end of the quarter. Our gross leverage ratio was 4.4 times at the end of the quarter based on 476 million of total debt and 108 million of trailing 12-month adjusted EBITDA. Consistent with our history, we paid a quarterly dividend of $0.12 a share, or $4.9 million in the aggregate.

Now if we turn to the capitalization related metrics on page seven.

We are.

We saw it.

Positive free cash flow and for the trailing 12 months, we now.

We have generated positive free cash flow of $37 million.

Which is comprised of $74 million from operating at cash flow.

And then the invested $37 million in capital expenditures and as a result, we ended December with cash and cash equivalents and short term investments with $92 million on the balance sheet at the end of the quarter.

Our gross leverage ratio was four four times at the end of the quarter based on 476 million of total debt and $108 million of trailing 12 months adjusted EBITDA.

Consistent with our history, we paid a quarterly dividend of <unk> 12, a share.

Or $4 $9 million in the aggregate and as a reminder, about.

Operator: And as a reminder, about... As a reminder, $300 million of our debt is at a fixed rate of... 61 basis points plus an applicable margin of 1.75%. The remaining amount of our debt, or $176 million, is subject to variable interest rates, although offset somewhat by interest earned on our excess cash and short-term investments. Now looking at our guidance and our guidance for the full year. We have affirmed our guidance for net sales, for adjusted EBITDA, and for adjusted diluted EPS, so no changes to those measures. We have updated our guidance for the gap measures to reflect recent developments, which would include that Brazil employment taxes issue, additional foreign currency losses, again, mostly coming out of an Argentina devaluation, and then some other smaller items and the related income tax effects of those things. So, in closing, we are optimistic as we enter the second half of our fiscal year. We're confident in our demand for our products around the world and look forward to seeing continued improvement in our business as we move forward. And with that, Operator, let's please open the line for questions. Thank you.

As a reminder, $300 million of our debt is at a fixed rate of.

61 basis points plus.

The applicable margin of 175%.

The remaining amount.

Out of our debt or $176 million is subject to variable interest rates, although offset somewhat by interest earned on our excess cash and short term investments.

Now looking at.

At our guidance.

And.

And our guidance for the full year.

We have affirmed our guidance for net sales for adjusted EBITDA.

For adjusted diluted EPS, so no changes to those.

So those measures we have updated our guidance for the GAAP measures to reflect recent developments, which would include that Brazil employment taxes issue.

Additional foreign currency losses again.

<unk> coming out of our Argentina devaluation, and then some other smaller items and the related income tax effects of those things.

So in closing we are optimistic as we enter the second half of our fiscal year, we're confident on our demand for our products around the world and look forward to seeing continued improvement in our business as we move forward.

And at that with that operator.

Please open the line for questions. Thank you.

Operator: At this time, I'd like to remind everyone to ask a question. Press star 1 on your telephone keypad. Our first question will come from the line of Aaron Wright with Morgan Stanley. Please go ahead.

At this time I would like to remind everyone to ask a question press star one on your telephone keypad. Our first question will come from the line of Erin Wright with Morgan Stanley. Please go ahead.

Brian Michael Wright: Great, thanks. Can you give us an update on just the underlying demand trends and how you're thinking about fundamentals and some of the key livestock categories for you, like poultry and dairy? And what are you expecting over the next, you know, 6 to 12 months across those categories? Thanks. Aaron.

Great. Thanks can you give us an update on just underlying demand trends and how youre thinking about fundamentals and some of the key lifestyle category for you like poultry.

Larry what are you expecting over the next six to 12 months across the category. Thanks.

Hi, Good morning, Erinn short question long assets.

Jack C. Bendheim: Short question, long answer. Um, So we're seeing around the world positive trends. I mean, the two underlying lines have sort of come back to historic positions. One is.

So with <unk> around the world positive trends.

The underlying the two underlying.

And sort of lines has sort of come back to historic.

Positions one is.

Jack C. Bendheim: The madness has returned. I mean, the effect of COVID, I think we're finally seeing coming to an end in terms of imbalances and inventory and cost of inventory. People are sort of returning to, whether it's to restaurants or, you know, schools, et cetera, et cetera. So the normal buyers have returned or are returning to the market. At the same time, the most important ingredient in raising animals is the cost of feed, and we've seen a decline in both the cost of soybeans and corn, which has returned profitability pretty much across the board.

The Madness saga, we had returned it means the effect of Covid I think we're finally seeing coming to the end in terms of the imbalances and inventory and cost of moving target.

People sort of returning to <unk>.

Whether its restaurants or.

Schools et cetera, et cetera, the normal buyers have returned returning to market same time, the most important ingredient in raising animals as cost of feed and we've seen a decline in both the cost of slight beans, and corn, which says we turn profitability pretty much.

Across the board.

Jack C. Bendheim: I mean, there are still some outliers, which will take some time, like the dairy industry in the States. But even that, the trend is in the right direction. So that's one of the reasons they said we're positive. We're seeing good sales in all regions, and increasing sales. We're seeing price increases holding. So again, it's the reason we're optimistic. Okay, thanks. And then the adjusted EBITDA margin was strong in animal health. Is that just a function of the mixed dynamic with the strengthened vaccines, or what drove that?

Still some.

<unk>, which will take some time like the dairy industry in the state, but even that the trend is in the right direction. So that's.

One of the reasons, we're positive we're seeing good sales.

In all regions.

Increasing scale.

We're seeing price increases holding.

So again and visa we are optimistic.

Okay. Thanks, and then objected EBITDA margin with strong and in animal health is that just a function of the mix dynamic with the strength in that index or what drove that and you mentioned price a second ago Penny quantified what youre. Realizing in terms of price did you take another price increase at the beginning of the year in terms of your animal.

Richard G. Johnson: And you mentioned price a second ago, to kind of quantify what you're realizing in terms of price. Did you take another price increase at the beginning of the year in terms of your animal health business? Yeah, I... It's all those things there.

Thanks.

Yes.

It's all those things are I mean, certainly we're seeing favorable product mix.

Richard G. Johnson: I mean, certainly, we're seeing favorable product mix within animal health; vaccines, in general, have the highest margins. So as we grow that part of our business, we're getting that favorable benefit. And that's, that's allowing us to continue to build a business by making very targeted expense investments in people mostly in certain markets, but we're able to offset that expense increment. You know, that's why the improvement and...

With hidden within animal health.

Vaccines in general have the they have the highest margins so as we grow that part of our business.

Getting that favorable benefit and that's that's allowing us to continue to build the business with by making very targeted.

Expense investments.

And people mostly.

In certain markets.

But we were able to offset that that expense increment. So.

That's that's why the that's why the improvement.

Jack C. Bendheim: I think, you know, as we grow going forward, it's reasonable to expect a kind of bottom line growth at least equal in percentage terms to the top line growth. Okay, that's helpful. And then just if I could speak one more time, like there was a recent deal on the tape for Elanco's aquaculture business to Merck, and Merck is already larger in that space, obviously, but does this change anything from a competitive standpoint for you? How big is or what's your commitment to your aquaculture business? Or how big is that now? So, we are committed, but it's a small business. So, the movement of the products from Milenko to Merck will have no effect on our business.

And I think.

As we grow going forward.

It's reasonable to expect.

Kind of.

Bottom line growth at least equal and as.

In percentage terms to the top line growth.

Okay.

Helpful. And then just if I could sneak one more in here like there was a recent deal on the tape for Alonso is applicable to your business can work and it works already larger in that space, obviously, but does it change anything from a competitive standpoint for you.

Vegas or what's your commitment to your Aqua culture business or how big is that now.

So we are committed but it's a small business.

So.

The movement on the products from Atlanta to America.

I have no effect on our business.

Balaji Prasad: Thank you. Your next question comes from the line of Balaji Prasad with Barclays. Please go ahead. Hi, this is Makayla Anfer-Balaji.

Okay. Thank you.

Your next question comes from the line of <unk> Prasad with Barclays. Please go ahead.

Hi, This is <unk> on for <unk>, Thanks for taking our question.

Balaji Prasad: Thanks for taking our questions. Just two for me, can you first just remind us of how Regenza has been tracking? And following up on the previous question, I guess, could you just talk a little bit more specifically about the geographies that are standing out, and I'll look for them for the rest of the year. Hi, it's Donnie. I'll take a Regenza question. We did not call out specific guidance with regard to Regenza this year in our annual.

Two for me can you first just remind us of how the cancer has been tracking and following up on the previous question I guess could you just talk a little bit more specifically about geographies and species that are standing out and outlook for the rest of the year. Thanks. So much.

Hi, Anthony I'll take the question.

We actually did not call out this year specific guidance with regards to regeneron.

Jack C. Bendheim: So it's part of nutritional specialties. It continues to grow nicely, double-digit growth. But, you know, other than that, for competitive reasons, we don't call out more specific species and geography. Species and geography, in general, poultry accelerates everywhere across the world, for economic and religious reasons.

Our annual so.

As part of our nutritional specialties it continues to grow nicely double digit growth.

But.

Other than that for competitive reasons, we don't call out more specifics.

And.

Species and geographies seasons geographies.

In general poultry accelerates.

I always across the world.

For economic religious reasons.

Jack C. Bendheim: And we're seeing that in most of the geographies we're in. For ourselves, we are increasingly focused on the cattle business. So cattle is forming a more important part of our business, but still, it's a small relative, ex-US anyway, and ex-dairy relative to the United States. My next question comes from the line of Michael Ryskin with Bank of America Securities. Please go ahead. Hi, this is Wolfong from Mike.

And we're seeing that.

Most of the geographies that we're in.

For ourselves.

We are increasing focus on the cattle business ocado is forming a more important part of our business, but it's still small relative ex U S anyway, and ex dairy relative to the United States.

Thanks, so much.

Your next question comes from the line of Michael Rifkin with Banc of America Securities. Please go ahead.

Hi, This is both on for Mike. Thanks for taking the question I was wondering.

Michael Ryskin: Thanks for taking the question. I was wondering, beyond the hit to the P&L, are you seeing any changes in customer behavior related to the drop in the Argentine peso? Do you have any expectations for how the impact operations could play out based on Labrador's history in the country? Well, the good news is Argentina has many decades of experience with economic chaos. So those folks know how to, you know, they know how to run their business. Ow! Whether their currency is up, down, or sideways.

P&L are you, saying that changes in customer behavior related to the drop in the Argentine peso.

You have any expectation for how the impact operations to pull it out based on fiber assessed around the country.

Well the good news is Argentina has.

Many decades of experience with.

Economic chaos.

So those folks know how to do.

They know how to manage their business.

Bob.

Whether their currency is up down or sideways.

Jack C. Bendheim: I think we have not seen any change in customer behavior since the devaluation, which was the middle of December. I think our customers and the industry in Argentina view this as a very positive step toward fiscal sanity and normality in Argentina. So I think, you know, we took some pain there, but we're all hopeful that it's going to be, that we're good. The gain is going to be worth the pain as the business goes forward. Argentina is an agricultural powerhouse, and there's a lot of opportunity there.

So.

I think.

We have not seen any change in customer behavior.

The devaluation, which was middle of December.

Yes.

Our customers and the industry in Argentina.

This is a very positive step toward.

Yes fiscal.

Sanity in abnormality in Argentina, So I think you can get away with.

We took some pain there but.

Yes, we're all hopeful that it's going to be that are good the gain is going to be worth the pain.

As the business goes forward Argentina is.

And agricultural powerhouse.

There's a lot of opportunity there.

Jack C. Bendheim: We like the market. Got it. That makes sense. And then, hopping across the world, can you give us an update on your operations in Israel? It may be a ballpark for the headwind you're facing as the war drags on. And has it changed at all since Red Sea shipping has become more of an issue?

We like the market.

Got it.

And then.

Pop and across the World can you give us an update on your operations in Israel with maybe a ballpark for the headwind you're facing a more drags on and has it changed at all since the Red Sea shipping has become more of an issue.

Jack C. Bendheim: So, you know, as you can tell just reading the papers, it's not the easiest time to be operating in Israel. We have been successful operating our facilities and meeting our shipping commitments, clearly, have been more extensive as some of our people have been called up. But overall, you know, we've slogged through this.

So.

Yes.

Just read the papers.

Not the easiest time to be operating in Israel.

No.

No.

We have it.

<unk> been successful operating our facilities and meeting our ship shipping commitments.

Lately.

And more expensive.

As some of our people have been cooped up.

But overall.

We've slogged through Atlas.

Jack C. Bendheim: And, you know, hopefully this comes to an end soon, and then things will return to normal. Much appreciated. Thanks for the time. Again, for questions, press star one, and your next question will come from the line of Brian Wright with Roth MKM. Please go ahead.

And.

We are hopeful that this comes on its own and then things will return to normalcy.

Much appreciate it thanks for the time.

Again for a question press Star one on your next question will come from the line of Brian Wright with Rotterdam. Please go ahead.

Brian Michael Wright: Thanks, good morning. Can you help us get a feel for how much of the vaccine growth you're aware of from the Autonomous Vaccine? We don't break it down.

Thanks, Good morning.

It will help us get a feel for how much of the vaccine growth.

Year over year, just from the autonomous Hitachi with vaccines.

We don't break it out.

Jack C. Bendheim: So again, for competitive reasons. And overall, the Autages business is small compared to the regular vaccine business. It is, you know, I wrote the name for it, it's a custom vaccine. And I don't know if you understand what happens, but maybe we've spoken in the past. Literally, we go to farms, and we take blood samples.

So again for competitive reasons.

Overall, the <unk> business is small compared to the.

Regular vaccine business.

It is IRA.

Higher up in April.

It's custom vaccine.

I don't know if you understand what happens, but maybe will be spoken in the past.

Literally we got our farms and we take.

Jack C. Bendheim: If they're not, if they're basically, if things are not responding well to the normal, the normal vaccines, the regular vaccines, we develop a custom vaccine for that farm that will respond to the viruses they're seeing, to the bacteria they're seeing. We created a custom-made vaccine. It's much more expensive, but it's more effective, and we go back and sell it. So it's retail, effectively. It's a retail way.

Blood samples.

Yes.

Basically if things are not responding well to that normal the normal bank savings irregular vaccines.

And we develop a constant vaccine for that farm.

What will respond.

Sure there are higher says, it's a bacteria as I say, we created a custom made vaccine it's much more expensive, but it's more effective that we go back and sell it. So it's a retail effectively at a retail way its farm to farm as opposed to the wholesaler.

Jack C. Bendheim: It's farm to farm, as opposed to the wholesale way; if I have a vaccine, they can cover half the cost. That's what it means to me, when you're talking about the..., the poultry product introductions in Latin America, that that's not a custom vaccine for Action. Okay, thank you. And then, um, can you just remind us of the seasonality of the back? So, overall, there's no space. You know, you're talking about viruses; you're not talking about bacterial depression, so it's year-round.

But I have a vaccine that can cover half the country.

Okay.

Sure.

So when you were talking about.

The poultry product introductions in Latin America, that's not.

The cost of vaccine for the poultry.

Correct.

Okay. Thank you and then can you just remind us on the seasonality of the vaccine business.

Okay.

So overall there is no seasons.

And now you are talking about viruses and not talk about criteria of the Brexit so.

It's year round.

Brian Michael Wright: Great. Okay, perfect. And then lastly, if I could just, you know, with the CFO. Is there any kind of, are you envisioning the role changing any at all from what it has been in the past?

Great. Okay, perfect and then lastly, if I could just with the.

Glenn on CF.

CFO is there kind of our year.

Envisioning the role changing.

At all from what it has been in the past.

Jack C. Bendheim: So I'm not, on the other hand, and I'm sure, as you see yourself in the banks, every individual has their own way of doing things, so, you know, and Glenn's in the room, he can answer, but, you know. I surely expect, as that study said, we're all standing on the shoulders of giants. So everyone will make their changes, and all the changes, you know, in, together, you know, make for a better, better job. Great, and then if I can ask one last one, since you took one that's in the room, and this might be a little early, but just, you know, early thoughts, Glenn, as far as your top priorities are. Yeah, no, thanks.

So I'm not.

On the other hand, and I'm sure as you see yourself in the banks every individual has their own way of doing things so Glenn on the move.

He can answer but.

I surely expect like that.

Like I say with new who said it but more standing on the shoulders of Giants. So everyone will make their changes and all the changes.

<unk>.

Together.

<unk> four.

A better better job.

Great and then if I can ask one last one since you said take one is in the room.

And this might be a little early but just.

Early thoughts Glenn as far as like your top priorities as you come in.

Glenn David: First, I'm really excited to be here and join Phibro. Obviously, I have a real passion for the industry and am glad to join one of the key players in the industry again. And I've been really impressed with the management team so far.

Yes. Thanks.

First really excited to be here and joining five road.

Actually I have a real passion for the industry and glad to join what are the key players in the industry again.

Really impressed with the management team so far and it's really just two or three days in so really no ongoing hypotheses, yet, but really look forward to working with the team getting to understand <unk> in more detail and then looking to work with the team to really drive profitable growth moving forward. So more to come and really look forward to working with the analysts and communicating with you.

Glenn David: And we're really just two or three days in, so really no ongoing hypotheses yet, but I really look forward to working with the team, getting to understand Phibro in more detail, and then looking to work with the team to really drive profitable growth moving forward. So more to come, and I really look forward to working with the analysts and communicating with you over the next weeks and months. Great, we'll save that one for next quarter, too. Thanks.

Over the next weeks and months.

Great well save that one for next quarter or two.

Terrific.

Thank you.

And we have no further questions at this time I'll turn the call back to <expletive> Johnson for any closing remarks.

Richard G. Johnson: And we have no further questions at this time. I'll turn the call back to Dick Johnson for any closing remarks. All right, well, I'll add my, let me add my welcome to Glenn and wish him well. And, as Jack said, we'll keep working together. I'll be available for questions as needed.

Alright, well I'll add my let me add my welcome to Glenn.

Good.

Question wish them, well and as Jack said well.

Well, we'll keep working together.

Mailable horror.

Questions as needed and.

With that I wish everyone well, thank you very much for joining us today.

Operator: And with that, I wish everyone well. Thank you very much for joining us today. And take care, and I will talk to you next time. Bye now. That concludes today's conference call. Thank you all for joining us. You may now disconnect. Please wait; the conference will begin shortly. Please wait; the conference will begin shortly.

Take care and talk to you next time bye now.

Yes.

That concludes today's conference call. Thank you all for joining you may now disconnect.

Please wait the conference will begin shortly.

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Okay.

Okay.

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