Phibro's Q4 2025 Earnings Call: Contradictions in MFA Growth, Zoetis Integration, Tariff Impact, and Inventory Strategy Revealed

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $378.7M in Q4 FY2025, up 39% YOY; $1.296B for FY2025, up 27% YOY

Guidance:

• FY2026 net sales: $1.425B–$1.475B (+10% to +14% YOY; midpoint ~12%).
• FY2026 adjusted EBITDA: $225M–$235M (+22% to +28%; midpoint ~25%).
• FY2026 adjusted EPS: $2.52–$2.70.
• FY2026 adjusted net income: $103M–$110M (+21% to +29%).
• Assumes full 12 months of Zoetis MFA; includes benefits from Fibro Forward.
• GAAP EPS includes one-time Fibro Forward consulting costs; constant currency, no FX gains/losses assumed.
• Guidance includes current tariffs; major changes not embedded.
• Fibro Forward expected to continue and peak in FY2027.

Business Commentary:

• Strong Revenue Growth and EBITDA Increase:
• Fibro Animal Health Corporation reported a 39% increase in consolidated net sales to $378.7 million for Q4 fiscal 2025.

• The adjusted EBITDA increased by 49% to $60.6 million, driven by the new MFA business and improved gross profit mix.

• Animal Health Segment Performance:

• The Animal Health segment posted $292.5 million in net sales for Q4, up 53% year-on-year.

• Growth was primarily driven by a 77% increase in MFA and other portfolio sales, bolstered by the Zoetis MFA integration.

• Zoetis Medicated Feed Additive Integration:

• The acquisition of the Zoetis medicated feed additive portfolio contributed $94.5 million in sales in Q4.

• The integration is progressing well, with expected full independence by calendar Q4 2025.

• Fibro Forward Initiative and Strategic Investments:

• Fibro Forward contributed significantly to earnings growth, with expected peak impact in fiscal 2027.
• Strategic investments include setting up a global procurement organization and enhancing R&D efforts to focus on growth opportunities in both livestock and companion animal segments.

Sentiment Analysis:

• Management reported Q4 net sales up 39% and FY net sales up 27%. Adjusted EBITDA rose 49% in Q4 and 65% for the year. FY2026 outlook guides to double-digit revenue growth and higher profitability: net sales $1.425–$1.475B, adjusted EBITDA $225–$235M, adjusted EPS $2.52–$2.70. Integration of Zoetis MFA is on track, with ~90% of revenue operating independently and full independence expected by calendar Q4.

Q&A:

• Question from Erin Wright (Morgan Stanley): What organic growth is embedded in FY2026 guidance and key headwinds/tailwinds?
  Response: Legacy MFA is modeled flat to low-single-digit; Vaccines and Nutritional Specialties continue strong but normalize; the main uplift is full 12 months of Zoetis MFA plus ongoing momentum across portfolios.

• Question from Erin Wright (Morgan Stanley): Quantify Fibro Forward benefits and characterize strategic investments—one-time or ongoing?
  Response: EBITDA growth of ~$40–$50M in FY2026 is partly Zoetis annualization with the remainder from legacy and Fibro Forward; Fibro Forward spans sales/CRM, global procurement, and R&D; costs are embedded in SG&A (not one-time) and contributions should build into FY2027.

• Question from Ekaterina Kiszkoye (JPMorgan): Status of Zoetis medicated feed additives integration and any added resources? Also, tariff assumptions (e.g., Brazil)?
  Response: Integration is largely complete with ~90% of revenue operating independently; full independence expected by calendar Q4, enabling geographic and segment expansion (incl. U.S. beef); guidance includes current tariffs but not major new changes.

• Question from Michael Ryskin (Bank of America): Quantify Zoetis MFA revenue/EBITDA contribution in FY2026 versus FY2025 and the lapping effect on EPS/EBITDA.
  Response: Zoetis contributed ~$208M in FY2025 (8 months); run-rate suggests slightly more than half for the remaining 4 months; of the FY2026 incremental ~$40–$50M EBITDA, at least half comes from Zoetis annualization with the balance from legacy and Fibro Forward.

• Question from Michael Ryskin (Bank of America): What drove the 7% legacy Animal Health growth in FY2025 versus historical trends?
  Response: Easier MFA comps from early FY2024 plus broad-based strength in Vaccines and Nutritional Specialties, aided by new product introductions and deeper market penetration.

• Question from Nevan Tighe (BNP Paribas): Outlook for legacy MFA growth vs. market and any tariff-related pull-forward in sales?
  Response: Legacy MFA is expected to track a mature market (flat to low-single-digit); inventory was positioned ahead of potential tariffs, but no sales pull-forward—Q4/FY2025 sales reflect underlying demand.