Phibro revolver borrowings cause higher fourth quarter interest cost

By Devika Patel

Knoxville, Tenn., Aug. 30 – Phibro Animal Health Corp. reported that its interest expenses increased $800,000 quarter over quarter to a net level of $4.5 million for the three months ended June 30, due to interest on increased borrowings under its revolving credit facility

Net interest expense also increased by $2.3 million, or 16%, year over year to $16.6 million for the year ended June 30. This was also attributed to increased revolver debt, as well as $900,000 of increased acquisition-related accrued interest.

The company said it had a bullish outlook as it approached 2017, despite changes in the animal health industry.

“We’ve just completed our fiscal year 2016, it was and is our outlook for 2017 to be a year of transitions,” chief executive officer Brian said in the company’s earnings call on Tuesday. “The U.S. markets are moving away from various uses of antibiotics, and we have positioned ourselves to benefit from these moves by adding vaccines and nutritional specialties to our portfolio.

“We remain very bullish about our industry, our customers, and for these trends to increase protein consumption. Phibro is benefiting from these trends and we’re looking forward to increasing our performance in the New Year.”

Financial highlights

Phibro’s net sales increased to $189 million in fiscal 2016, a 2% increase from fiscal 2015.

EBITDA increased by 4% to $28 million and diluted earnings per share increased 46% to $0.38.

Net income was up 46% as well, to $15 million.

Credit facility

The company's $390 million senior secured credit facility with lead banks Bank of America Merrill Lynch and Morgan Stanley Senior Funding Inc. consists of a $100 million revolver and a $290 million seven-year covenant-light term loan. It was negotiated in March 2014.

Phibro is a Teaneck, N.J.-based animal health and mineral nutrition company.

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