0001104659-21-011566.txt : 20210203 0001104659-21-011566.hdr.sgml : 20210203 20210203163105 ACCESSION NUMBER: 0001104659-21-011566 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20201231 FILED AS OF DATE: 20210203 DATE AS OF CHANGE: 20210203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHIBRO ANIMAL HEALTH CORP CENTRAL INDEX KEY: 0001069899 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 131840497 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36410 FILM NUMBER: 21586596 BUSINESS ADDRESS: STREET 1: GLENPOINTE CENTRE EAST, 3RD FLOOR STREET 2: 300 FRANK W. BURR BLVD., SUITE 21 CITY: TEANECK STATE: NJ ZIP: 07666 BUSINESS PHONE: 201-329-7300 MAIL ADDRESS: STREET 1: GLENPOINTE CENTRE EAST, 3RD FLOOR STREET 2: 300 FRANK W. BURR BLVD., SUITE 21 CITY: TEANECK STATE: NJ ZIP: 07666 FORMER COMPANY: FORMER CONFORMED NAME: PHILIPP BROTHERS CHEMICALS INC DATE OF NAME CHANGE: 19980908 10-Q 1 pahc-20201231x10q.htm FORM 10-Q
0001069899--06-302021Q2false20287574202875740000000000002016603420166034PHIBRO ANIMAL HEALTH CORP2.00%, 1.75% or 1.50%2022-09-300001069899us-gaap:RetainedEarningsMember2020-12-310001069899us-gaap:AdditionalPaidInCapitalMember2020-12-310001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001069899us-gaap:RetainedEarningsMember2020-09-300001069899us-gaap:AdditionalPaidInCapitalMember2020-09-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-3000010698992020-09-300001069899us-gaap:RetainedEarningsMember2020-06-300001069899us-gaap:AdditionalPaidInCapitalMember2020-06-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001069899us-gaap:RetainedEarningsMember2019-12-310001069899us-gaap:AdditionalPaidInCapitalMember2019-12-310001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001069899us-gaap:RetainedEarningsMember2019-09-300001069899us-gaap:AdditionalPaidInCapitalMember2019-09-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-3000010698992019-09-300001069899us-gaap:RetainedEarningsMember2019-06-300001069899us-gaap:AdditionalPaidInCapitalMember2019-06-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001069899us-gaap:CommonStockMember2020-12-310001069899us-gaap:CommonStockMember2020-09-300001069899us-gaap:CommonStockMember2020-06-300001069899us-gaap:CommonStockMember2019-12-310001069899us-gaap:CommonStockMember2019-09-300001069899us-gaap:CommonStockMember2019-06-300001069899pahc:VaccinesMemberpahc:AnimalHealthMember2020-10-012020-12-310001069899pahc:NutritionalSpecialtiesMemberpahc:AnimalHealthMember2020-10-012020-12-310001069899pahc:MedicatedFeedAdditivesAndOthersMemberpahc:AnimalHealthMember2020-10-012020-12-310001069899srt:AsiaPacificMember2020-10-012020-12-310001069899pahc:PerformanceProductsMember2020-10-012020-12-310001069899pahc:MineralNutritionMember2020-10-012020-12-310001069899pahc:LatinAmericaAndCanadaMember2020-10-012020-12-310001069899pahc:EuropeMiddleEastAndAfricaMember2020-10-012020-12-310001069899pahc:AnimalHealthMember2020-10-012020-12-310001069899country:US2020-10-012020-12-310001069899pahc:VaccinesMemberpahc:AnimalHealthMember2020-07-012020-12-310001069899pahc:NutritionalSpecialtiesMemberpahc:AnimalHealthMember2020-07-012020-12-310001069899pahc:MedicatedFeedAdditivesAndOthersMemberpahc:AnimalHealthMember2020-07-012020-12-310001069899srt:AsiaPacificMember2020-07-012020-12-310001069899pahc:PerformanceProductsMember2020-07-012020-12-310001069899pahc:MineralNutritionMember2020-07-012020-12-310001069899pahc:LatinAmericaAndCanadaMember2020-07-012020-12-310001069899pahc:EuropeMiddleEastAndAfricaMember2020-07-012020-12-310001069899pahc:AnimalHealthMember2020-07-012020-12-310001069899country:US2020-07-012020-12-310001069899pahc:VaccinesMemberpahc:AnimalHealthMember2019-10-012019-12-310001069899pahc:NutritionalSpecialtiesMemberpahc:AnimalHealthMember2019-10-012019-12-310001069899pahc:MedicatedFeedAdditivesAndOthersMemberpahc:AnimalHealthMember2019-10-012019-12-310001069899srt:AsiaPacificMember2019-10-012019-12-310001069899pahc:PerformanceProductsMember2019-10-012019-12-310001069899pahc:MineralNutritionMember2019-10-012019-12-310001069899pahc:LatinAmericaAndCanadaMember2019-10-012019-12-310001069899pahc:EuropeMiddleEastAndAfricaMember2019-10-012019-12-310001069899pahc:AnimalHealthMember2019-10-012019-12-310001069899country:US2019-10-012019-12-310001069899pahc:VaccinesMemberpahc:AnimalHealthMember2019-07-012019-12-310001069899pahc:NutritionalSpecialtiesMemberpahc:AnimalHealthMember2019-07-012019-12-310001069899pahc:MedicatedFeedAdditivesAndOthersMemberpahc:AnimalHealthMember2019-07-012019-12-310001069899srt:AsiaPacificMember2019-07-012019-12-310001069899pahc:PerformanceProductsMember2019-07-012019-12-310001069899pahc:MineralNutritionMember2019-07-012019-12-310001069899pahc:LatinAmericaAndCanadaMember2019-07-012019-12-310001069899pahc:EuropeMiddleEastAndAfricaMember2019-07-012019-12-310001069899pahc:AnimalHealthMember2019-07-012019-12-310001069899country:US2019-07-012019-12-310001069899pahc:CompensationAndBenefitForServicesMemberus-gaap:ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember2020-10-012020-12-310001069899pahc:CompensationAndBenefitForServicesMemberus-gaap:ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember2020-07-012020-12-310001069899pahc:CompensationAndBenefitForServicesMemberus-gaap:ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember2019-10-012019-12-310001069899pahc:CompensationAndBenefitForServicesMemberus-gaap:ImmediateFamilyMemberOfManagementOrPrincipalOwnerMember2019-07-012019-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:OtherComprehensiveIncomeMember2020-10-012020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherComprehensiveIncomeMemberus-gaap:LongMember2020-10-012020-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:OtherComprehensiveIncomeMember2020-07-012020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherComprehensiveIncomeMemberus-gaap:LongMember2020-07-012020-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:OtherComprehensiveIncomeMember2019-10-012019-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherComprehensiveIncomeMemberus-gaap:LongMember2019-10-012019-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:OtherComprehensiveIncomeMember2019-07-012019-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherComprehensiveIncomeMemberus-gaap:LongMember2019-07-012019-12-310001069899pahc:TermALoansAndRevolvingCreditFacilityMemberpahc:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-07-012020-12-310001069899pahc:TermALoansAndRevolvingCreditFacilityMemberpahc:CreditAgreementMemberus-gaap:EurodollarMember2020-07-012020-12-310001069899pahc:TermALoansAndRevolvingCreditFacilityMemberpahc:CreditAgreementMemberus-gaap:BaseRateMember2020-07-012020-12-310001069899us-gaap:RevolvingCreditFacilityMember2020-10-012020-12-310001069899pahc:TermLoanMember2020-10-012020-12-310001069899us-gaap:RevolvingCreditFacilityMember2020-07-012020-12-310001069899pahc:TermLoanMember2020-07-012020-12-310001069899us-gaap:RevolvingCreditFacilityMember2019-10-012019-12-310001069899pahc:TermLoanMember2019-10-012019-12-310001069899us-gaap:RevolvingCreditFacilityMember2019-07-012019-12-310001069899pahc:TermLoanMember2019-07-012019-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:InterestExpenseMember2020-10-012020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:LongMember2020-10-012020-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:InterestExpenseMember2020-07-012020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:LongMember2020-07-012020-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:InterestExpenseMember2019-10-012019-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:LongMember2019-10-012019-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMemberus-gaap:InterestExpenseMember2019-07-012019-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:LongMember2019-07-012019-12-310001069899us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMember2020-12-310001069899us-gaap:OtherCurrentAssetsMemberus-gaap:ForeignExchangeOptionMember2020-12-310001069899pahc:AccruedAndOtherCurrentLiabilitiesMemberus-gaap:InterestRateSwapMember2020-12-310001069899pahc:AccruedAndOtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeOptionMember2020-12-310001069899us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMember2020-06-300001069899us-gaap:OtherLiabilitiesMemberus-gaap:ForeignExchangeOptionMember2020-06-300001069899pahc:AccruedAndOtherCurrentLiabilitiesMemberus-gaap:InterestRateSwapMember2020-06-300001069899pahc:AccruedAndOtherCurrentLiabilitiesMemberus-gaap:ForeignExchangeOptionMember2020-06-3000010698992019-07-012020-06-300001069899pahc:AnimalHealthMember2020-12-310001069899pahc:March2020AgreementMember2020-12-310001069899us-gaap:InterestRateSwapMemberpahc:March2020AgreementMember2020-03-310001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMember2020-06-300001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:ShortMember2020-06-300001069899us-gaap:InterestRateSwapMemberpahc:July2017AgreementMember2017-07-310001069899us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:FairValueInputsLevel2Member2020-12-310001069899us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2020-06-300001069899us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2020-06-300001069899us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2020-06-300001069899us-gaap:ForeignExchangeOptionMemberus-gaap:FairValueInputsLevel3Member2020-06-300001069899us-gaap:ForeignExchangeOptionMemberus-gaap:FairValueInputsLevel2Member2020-06-300001069899us-gaap:ForeignExchangeOptionMemberus-gaap:FairValueInputsLevel1Member2020-06-300001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:LongMember2020-06-300001069899us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMemberus-gaap:SwapMember2020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:ShortMember2020-12-310001069899us-gaap:ForeignExchangeOptionMemberus-gaap:CashFlowHedgingMemberus-gaap:LongMember2020-12-310001069899us-gaap:CorporateNonSegmentMember2020-10-012020-12-310001069899us-gaap:CorporateNonSegmentMember2020-07-012020-12-310001069899us-gaap:CorporateNonSegmentMember2019-10-012019-12-310001069899us-gaap:CorporateNonSegmentMember2019-07-012019-12-310001069899us-gaap:RevolvingCreditFacilityMemberpahc:CreditAgreementMember2019-12-310001069899pahc:TermALoanMemberpahc:CreditAgreementMember2019-12-310001069899us-gaap:RevolvingCreditFacilityMemberpahc:CreditAgreementMember2020-12-310001069899us-gaap:InterestRateSwapMemberpahc:March2020AgreementMember2020-12-310001069899us-gaap:InterestRateSwapMemberpahc:July2017AgreementMember2020-12-310001069899pahc:July2017AgreementMember2020-12-310001069899pahc:TermALoanMemberpahc:CreditAgreementMember2020-12-310001069899pahc:TermALoansAndRevolvingCreditFacilityMemberpahc:CreditAgreementMember2020-07-012020-12-310001069899us-gaap:RetainedEarningsMember2020-10-012020-12-310001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-10-012020-12-310001069899us-gaap:RetainedEarningsMember2020-07-012020-09-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001069899us-gaap:RetainedEarningsMember2019-10-012019-12-310001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-10-012019-12-310001069899us-gaap:RetainedEarningsMember2019-07-012019-09-300001069899us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001069899us-gaap:CommonClassBMember2020-12-310001069899us-gaap:CommonClassBMember2020-06-300001069899us-gaap:CommonClassAMember2020-12-310001069899us-gaap:CommonClassAMember2020-06-3000010698992019-12-3100010698992019-06-300001069899us-gaap:FairValueInputsLevel3Member2020-12-310001069899us-gaap:FairValueInputsLevel3Member2020-06-300001069899us-gaap:FairValueInputsLevel2Member2020-06-300001069899us-gaap:FairValueInputsLevel1Member2020-06-300001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2020-12-310001069899us-gaap:OperatingSegmentsMember2020-12-310001069899us-gaap:CorporateNonSegmentMember2020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2020-06-300001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2020-06-300001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2020-06-300001069899us-gaap:OperatingSegmentsMember2020-06-300001069899us-gaap:CorporateNonSegmentMember2020-06-300001069899us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-3100010698992020-10-012020-12-310001069899us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-3000010698992020-07-012020-09-300001069899us-gaap:AdditionalPaidInCapitalMember2019-10-012019-12-310001069899us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-3000010698992019-07-012019-09-300001069899pahc:CurrentAndLongTermLiabilitiesMember2020-12-310001069899pahc:CurrentAndLongTermLiabilitiesMember2020-06-300001069899us-gaap:FairValueInputsLevel1Member2020-07-012020-12-310001069899us-gaap:FairValueInputsLevel3Member2019-07-012020-06-300001069899us-gaap:FairValueInputsLevel2Member2019-07-012020-06-300001069899us-gaap:FairValueInputsLevel1Member2019-07-012020-06-300001069899us-gaap:CostOfSalesMember2020-12-310001069899pahc:CustomerMembersrt:MinimumMember2020-07-012020-12-310001069899pahc:CustomerMembersrt:MaximumMember2020-07-012020-12-310001069899pahc:TermALoansAndRevolvingCreditFacilityMemberpahc:CreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-12-310001069899pahc:CustomerMember2020-07-012020-12-3100010698992019-10-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2020-10-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2020-10-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2020-10-012020-12-310001069899us-gaap:OperatingSegmentsMember2020-10-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2020-07-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2020-07-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2020-07-012020-12-310001069899us-gaap:OperatingSegmentsMember2020-07-012020-12-310001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2019-10-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2019-10-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2019-10-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:PerformanceProductsMember2019-07-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:MineralNutritionMember2019-07-012019-12-310001069899us-gaap:OperatingSegmentsMemberpahc:AnimalHealthMember2019-07-012019-12-3100010698992019-07-012019-12-310001069899us-gaap:OperatingSegmentsMember2019-10-012019-12-310001069899us-gaap:OperatingSegmentsMember2019-07-012019-12-3100010698992020-12-3100010698992020-06-300001069899us-gaap:CommonClassBMember2021-01-270001069899us-gaap:CommonClassAMember2021-01-2700010698992020-07-012020-12-31xbrli:sharesiso4217:USDxbrli:purepahc:itemiso4217:USDxbrli:sharesiso4217:BRL

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to______

Commission File Number: 001-36410

Phibro Animal Health Corporation

(Exact name of registrant as specified in its charter)

Delaware

13-1840497

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

Glenpointe Centre East, 3rd Floor

07666-6712

300 Frank W. Burr Boulevard, Suite 21

(Zip Code)

Teaneck, New Jersey

(Address of Principal Executive Offices)

(201) 329-7300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Class A Common Stock, $0.0001
par value per share

PAHC

Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of January 27, 2021, there were 20,287,574 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 20,166,034 shares of the registrant’s Class B common stock, par value $0.0001 per share, outstanding.

PHIBRO ANIMAL HEALTH CORPORATION

TABLE OF CONTENTS

Page

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

3

 

Consolidated Statements of Operations

3

 

Consolidated Statements of Comprehensive Income

4

 

Consolidated Balance Sheets

5

 

Consolidated Statements of Cash Flows

6

 

Consolidated Statements of Changes in Stockholders’ Equity

7

 

Notes to Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

32

Item 4.

Controls and Procedures

32

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

SIGNATURES

35

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

(unaudited)

(in thousands, except per share amounts)

Net sales

$

206,149

$

214,012

$

401,343

$

403,732

Cost of goods sold

 

137,884

 

144,908

 

268,959

 

276,965

Gross profit

 

68,265

 

69,104

 

132,384

 

126,767

Selling, general and administrative expenses

 

48,375

 

49,495

 

96,806

 

97,011

Operating income

 

19,890

 

19,609

 

35,578

 

29,756

Interest expense, net

 

3,214

 

3,432

 

6,024

 

6,786

Foreign currency (gains) losses, net

 

624

 

(718)

 

(3,007)

 

2,503

Income before income taxes

 

16,052

 

16,895

 

32,561

 

20,467

Provision for income taxes

 

3,251

 

5,001

 

7,458

 

6,058

Net income

$

12,801

$

11,894

$

25,103

$

14,409

Net income per share

 

  

 

  

 

  

 

  

basic

$

0.32

$

0.29

$

0.62

$

0.36

diluted

$

0.32

$

0.29

$

0.62

$

0.36

Weighted average common shares outstanding

 

 

 

 

basic

 

40,454

 

40,454

 

40,454

 

40,454

diluted

 

40,504

 

40,504

 

40,504

 

40,504

The accompanying notes are an integral part of these consolidated financial statements

3

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

(unaudited)

(in thousands)

Net income

$

12,801

$

11,894

$

25,103

$

14,409

Change in fair value of derivative instruments

 

3,729

 

1,080

 

4,818

 

(4)

Foreign currency translation adjustment

 

9,500

 

2,203

 

4,777

 

(4,620)

Unrecognized net pension gains

 

137

 

138

 

272

 

258

(Provision) benefit for income taxes

 

(966)

 

(303)

 

(1,272)

 

(63)

Other comprehensive income (loss)

 

12,400

 

3,118

 

8,595

 

(4,429)

Comprehensive income (loss)

$

25,201

$

15,012

$

33,698

$

9,980

The accompanying notes are an integral part of these consolidated financial statements

4

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 

June 30, 

As of

    

2020

    

2020

 

(in thousands, except share and per share amounts)

ASSETS

Cash and cash equivalents

$

34,534

$

36,343

Short-term investments

 

61,000

 

55,000

Accounts receivable, net

 

126,026

 

126,522

Inventories, net

 

213,331

 

196,659

Other current assets

 

42,276

 

37,313

Total current assets

 

477,167

 

451,837

Property, plant and equipment, net

 

150,337

 

148,109

Intangibles, net

 

66,630

 

70,997

Goodwill

 

52,679

 

52,679

Other assets

 

56,838

 

60,478

Total assets

$

803,651

$

784,100

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

  

Current portion of long-term debt

$

21,875

$

18,750

Accounts payable

 

63,306

 

66,091

Accrued expenses and other current liabilities

 

81,722

 

72,397

Total current liabilities

 

166,903

 

157,238

Revolving credit facility

 

178,000

 

169,000

Long-term debt

 

186,943

 

199,257

Other liabilities

 

58,483

 

70,401

Total liabilities

 

590,329

 

595,896

Commitments and contingencies (Note 7)

 

  

 

  

Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,287,574 shares issued and outstanding at December 31, 2020 and June 30, 2020; 30,000,000 Class B shares authorized, 20,166,034 shares issued and outstanding at December 31, 2020 and June 30, 2020

 

4

 

4

Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding

 

Paid-in capital

 

136,654

 

135,525

Retained earnings

 

198,454

 

183,060

Accumulated other comprehensive (loss)

 

(121,790)

 

(130,385)

Total stockholders’ equity

 

213,322

 

188,204

Total liabilities and stockholders’ equity

$

803,651

$

784,100

The accompanying notes are an integral part of these consolidated financial statements

5

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months

For the Periods Ended December 31

    

2020

    

2019

(unaudited)

(in thousands)

OPERATING ACTIVITIES

 

  

 

  

Net income

$

25,103

$

14,409

Adjustments to reconcile net income to

 

 

net cash provided (used) by operating activities:

 

 

Depreciation and amortization

 

16,124

 

15,929

Amortization of debt issuance costs

 

441

 

442

Stock-based compensation

 

1,129

 

1,129

Acquisition-related items

 

 

412

Deferred income taxes

 

(201)

 

(565)

Foreign currency (gains) losses, net

 

(7,174)

 

(132)

Other

 

258

 

374

Changes in operating assets and liabilities, net of business acquisitions:

 

 

Accounts receivable, net

 

2,633

 

12,906

Inventories, net

 

(10,514)

 

3,412

Other current assets

 

(1,327)

 

(2,300)

Other assets

 

97

 

(1,395)

Accounts payable

 

(285)

 

(14,108)

Accrued expenses and other liabilities

 

2,327

 

(1,992)

Net cash provided by operating activities

 

28,611

 

28,521

INVESTING ACTIVITIES

 

  

 

  

Purchases of short-term investments

 

(31,000)

 

(25,000)

Maturities of short-term investments

 

25,000

 

Capital expenditures

(14,738)

(16,115)

Business acquisitions

 

 

(54,549)

Other, net

 

(521)

 

(1,045)

Net cash (used) by investing activities

 

(21,259)

 

(96,709)

FINANCING ACTIVITIES

 

 

Revolving credit facility borrowings

 

76,000

 

155,000

Revolving credit facility repayments

 

(67,000)

 

(102,000)

Payments of long-term debt and other

 

(9,375)

 

(6,361)

Dividends paid

 

(9,709)

 

(9,709)

Net cash provided (used) by financing activities

 

(10,084)

 

36,930

Effect of exchange rate changes on cash

 

923

 

(135)

Net increase (decrease) in cash and cash equivalents

 

(1,809)

 

(31,393)

Cash and cash equivalents at beginning of period

 

36,343

 

57,573

Cash and cash equivalents at end of period

$

34,534

$

26,180

The accompanying notes are an integral part of these consolidated financial statements

6

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Accumulated

Shares of

Other

Common

Common

Preferred

Paid-in

Retained

Comprehensive

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Income (Loss)

    

Total

(unaudited)

(in thousands, except share amounts)

As of June 30, 2020

    

40,453,608

$

4

$

$

135,525

$

183,060

$

(130,385)

$

188,204

Comprehensive income (loss)

12,302

(3,805)

8,497

Dividends declared ($0.12 per share)

 

 

 

 

 

(4,854)

 

 

(4,854)

Stock-based compensation expense

 

 

 

 

565

 

 

 

565

As of September 30, 2020

40,453,608

$

4

$

$

136,090

$

190,508

$

(134,190)

$

192,412

Comprehensive income (loss)

12,801

12,400

25,201

Dividends declared ($0.12 per share)

(4,855)

(4,855)

Stock-based compensation expense

564

564

As of December 31, 2020

 

40,453,608

$

4

$

$

136,654

$

198,454

$

(121,790)

$

213,322

    

    

  

    

  

Accumulated

Shares of

Other

Common

Common

Preferred

Paid-in

Retained

Comprehensive

    

Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Income (Loss)

    

Total

(unaudited)

(in thousands, except share amounts)

As of June 30, 2019

40,453,608

$

4

$

$

133,266

$

168,926

$

(86,181)

$

216,015

Comprehensive income (loss)

 

 

 

 

 

2,515

 

(7,547)

 

(5,032)

Dividends declared ($0.12 per share)

 

 

 

 

 

(4,854)

 

 

(4,854)

Stock-based compensation expense

 

 

 

 

565

 

 

 

565

As of September 30, 2019

40,453,608

$

4

$

$

133,831

$

166,587

$

(93,728)

$

206,694

Comprehensive income (loss)

11,894

3,118

15,012

Dividends declared ($0.12 per share)

(4,855)

(4,855)

Stock-based compensation expense

564

564

As of December 31, 2019

 

40,453,608

$

4

$

$

134,395

$

173,626

$

(90,610)

$

217,415

The accompanying notes are an integral part of these consolidated financial statements

7

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share amounts)

(unaudited)

1. Description of Business

Phibro Animal Health Corporation (“Phibro” or “PAHC”) and its subsidiaries (together, the “Company”) is a diversified global developer, manufacturer and marketer of a broad range of animal health and mineral nutrition products for food animals including poultry, swine, dairy and beef cattle, and aquaculture. The Company is also a manufacturer and marketer of performance products for use in the personal care, industrial chemical and chemical catalyst industries. Unless otherwise indicated or the context requires otherwise, references in this report to “we,” “our,” “us,” and similar expressions refer to Phibro and its subsidiaries.

The unaudited consolidated financial information for the three and six months ended December 31, 2020 and 2019, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (the “Annual Report”), filed with the Securities and Exchange Commission on August 26, 2020 (File no. 001-36410). In the opinion of management, these financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of June 30, 2020, was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain. Although vaccines are now available, supplies are constrained and distribution efforts vary widely country-by-country and state-by-state. New information may continue to emerge concerning COVID-19, and the actions required to contain or treat it may affect the duration and severity of the pandemic. The pandemic may have significant economic impacts on customers, suppliers and markets. The pandemic may affect our future revenues, expenses, reserves and allowances, manufacturing operations and employee-related costs. Our financial statements include estimates of the effects of COVID-19 and there may be changes to those estimates in future periods.

The consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated from the consolidated financial statements. The decision to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity.

2. Summary of Significant Accounting Policies and New Accounting Standards

Our significant accounting policies are described in the notes to the consolidated financial statements included in our Annual Report. As of December 31, 2020, there have been no material changes to any of the significant accounting policies contained therein.

Net Income per Share and Weighted Average Shares

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.

8

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Diluted net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period after giving effect to potential dilutive common shares resulting from the assumed exercise of stock options and vesting of restricted stock units. All common share equivalents were included in the calculation of diluted net income per share in the periods included in the consolidated financial statements.

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

Net income

$

12,801

$

11,894

$

25,103

$

14,409

Weighted average number of shares – basic

 

40,454

 

40,454

 

40,454

 

40,454

Dilutive effect of stock options and restricted stock units

 

50

 

50

 

50

 

50

Weighted average number of shares – diluted

 

40,504

 

40,504

 

40,504

 

40,504

Net income per share

 

 

  

 

 

  

basic

$

0.32

$

0.29

$

0.62

$

0.36

diluted

$

0.32

$

0.29

$

0.62

$

0.36

New Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2020-04 and 2021-01, Reference Rate Reform (Topic 848), provide optional expedients and exceptions to GAAP guidance, if certain criteria are met, for contracts, hedging relationships and derivative instruments that reference the London Interbank Offered Rate (LIBOR) and other interbank offered rates expected to be discontinued or modified by rate reform. The overall purpose of Topic 848 is to ease the financial reporting burdens related to the expected market transition to alternative reference rates. These ASUs may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.

ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, removes certain exceptions and amends certain requirements in the existing income tax guidance to ease accounting requirements. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and must be applied on a retrospective basis. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.

ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, modifies existing disclosure requirements for defined benefit pension and other postretirement plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.

ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, modifies existing disclosure requirements for fair value measurement. ASU 2018-13 was effective for fiscal years beginning after December 15, 2019. The adoption did not have a material effect on our fair value measurement disclosures.

3. Statements of Operations—Additional Information

Disaggregated revenue, deferred revenue and customer payment terms

We develop, manufacture and market a broad range of products for food animals including poultry, swine, beef and dairy cattle, and aquaculture. The products help prevent, control and treat diseases, enhance nutrition to help improve health and contribute to balanced mineral nutrition. The animal health and mineral nutrition products are sold directly to integrated poultry, swine and cattle integrators and through commercial animal feed manufacturers, wholesalers and distributors. The animal health industry and demand for many of the animal health products in a particular region are affected by changing disease pressures and by weather conditions, as product usage follows varying weather patterns and seasons. Our operations are primarily focused in regions where the majority of livestock production is consolidated in large commercial farms.

9

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We have a diversified portfolio of products that are classified within our three business segments—Animal Health, Mineral Nutrition and Performance Products. Each segment has its own dedicated management and sales team.

Animal Health

The Animal Health business develops, manufactures and markets products in three main categories:

MFAs and Other: MFAs and other products primarily consist of concentrated medicated products that are administered through animal feeds, commonly referred to as Medicated Feed Additives (“MFAs”). Specific product classifications include antibacterials, which inhibit the growth of pathogenic bacteria that cause bacterial infections in animals; anticoccidials, which inhibit the growth of coccidia (parasites) that damage the intestinal tract of animals; and other related products.
Nutritional Specialties: Nutritional specialty products enhance nutrition to help improve health and performance in areas such as immune system function and digestive health.
Vaccines: Our vaccines are primarily focused on preventing diseases in poultry and swine. They protect animals from either viral or bacterial disease challenges. We develop, manufacture and market conventionally licensed and autogenous vaccine products and produce and market adjuvants to vaccine manufacturers. We have developed and market an innovative and proprietary delivery platform for vaccines.

Mineral Nutrition

The Mineral Nutrition business is comprised of formulations and concentrations of trace minerals such as zinc, manganese, copper, iron, and other compounds, with a focus on customers in North America. Our customers use these products to fortify the daily feed requirements of their livestock’s diets and maintain an optimal balance of trace elements in each animal. We manufacture and market a broad range of mineral nutrition products for food animals including poultry, swine and beef and dairy cattle.

Performance Products

The Performance Products business manufactures and markets specialty ingredients for use in the personal care, industrial chemical and chemical catalyst industries, predominantly in the United States.

The following tables present our revenues disaggregated by major product category and geographic region:

Net Sales by Product Type

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

Animal Health

 

  

 

  

  

 

  

MFAs and other

$

81,577

$

91,955

$

160,280

$

166,989

Nutritional specialties

 

36,394

 

33,062

 

68,994

 

63,495

Vaccines

 

18,267

 

18,672

 

35,333

 

35,055

Total Animal Health

$

136,238

$

143,689

$

264,607

$

265,539

Mineral Nutrition

 

54,157

 

55,685

 

105,597

 

108,334

Performance Products

 

15,754

 

14,638

 

31,139

 

29,859

Total

$

206,149

$

214,012

$

401,343

$

403,732

10

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net Sales by Region

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

United States

$

122,307

$

122,917

$

241,077

$

241,404

Latin America and Canada

 

40,664

 

42,704

 

78,421

 

79,445

Europe, Middle East and Africa

 

30,285

 

27,660

 

57,157

 

51,353

Asia Pacific

 

12,893

 

20,731

 

24,688

 

31,530

Total

$

206,149

$

214,012

$

401,343

$

403,732

Net sales by region are based on country of destination.

Deferred revenue was $4,729 and $4,570 as of December 31, 2020, and June 30, 2020, respectively. Accrued expenses and other current liabilities included $1,868 and $1,109 of the total deferred revenue as of December 31, 2020, and June 30, 2020, respectively. The deferred revenue resulted primarily from certain customer arrangements, including technology licensing fees and discounts on future product sales. The transaction price associated with our deferred revenue arrangements is generally based on the stand-alone sales prices of the individual products or services.

Our customer payment terms generally range from 30 to 120 days globally and do not include any significant financing components. Payment terms vary based on industry and business practices within the regions in which we operate. Our average worldwide collection period for accounts receivable is approximately 60 days after the revenue is recognized.

Interest Expense and Depreciation and Amortization

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

Interest expense, net

Term loan

$

2,064

$

2,031

$

3,939

$

4,079

Revolving credit facility

 

1,133

 

1,530

 

2,079

 

2,961

Amortization of debt issuance costs

 

220

 

221

 

441

 

442

Other

 

59

 

155

 

126

 

288

Interest expense

 

3,476

 

3,937

 

6,585

 

7,770

Interest income

 

(262)

 

(505)

 

(561)

 

(984)

$

3,214

$

3,432

$

6,024

$

6,786

Three Months

Six Months

For the Periods Ended December 31

    

2020

    

2019

    

2020

    

2019

Depreciation and amortization

 

 

  

 

 

  

Depreciation of property, plant and equipment

$

5,885

$

5,840

$

11,716

$

11,571

Amortization of intangible assets

 

2,203

 

2,296

 

4,408

 

4,334

Amortization of other assets

 

 

12

 

 

24

$

8,088

$

8,148

$

16,124

$

15,929

11

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Balance Sheets—Additional Information

December 31, 

June 30, 

As of

    

2020

    

2020

Inventories

  

Raw materials

$

71,070

$

73,837

Work-in-process

11,636

8,881

Finished goods

130,625

113,941

$

213,331

$

196,659

    

December 31, 

    

June 30, 

As of

    

2020

    

2020

Goodwill roll-forward

 

  

 

  

Balance at beginning of period

 

$

52,679

$

27,348

Osprey acquisition

 

 

25,331

Balance at end of period

 

$

52,679

$

52,679

    

December 31, 

June 30, 

As of

    

2020

    

2020

Other assets

ROU operating lease assets

$

22,827

 

$

22,873

Deferred income taxes

 

10,382

 

11,430

Deposits

 

5,439

 

5,158

Insurance investments

 

5,891

 

5,801

Equity method investments

 

4,638

 

4,219

Indemnification asset

 

 

3,000

Debt issuance costs

 

766

 

1,021

Other

 

6,895

 

6,976

$

56,838

 

$

60,478

We evaluate our investments in equity method investees for impairment if circumstances indicate that the fair value of the investment may be impaired. The assets underlying a $3,098 equity investment are currently idle. We concluded the investment is not impaired based on expected future operating cash flows and disposal value.

    

December 31, 

    

June 30, 

As of

2020

2020

Accrued expenses and other current liabilities

 

  

 

  

Employee related

$

29,115

$

25,825

Current operating lease liabilities

 

7,075

 

6,439

Commissions and rebates

5,570

5,782

Professional fees

 

5,848

 

5,766

Income and other taxes

4,217

3,821

Derivatives

4,952

5,757

Contingent consideration

 

4,840

 

Restructuring costs

 

1,535

 

2,314

Insurance-related

 

1,299

 

1,272

Other

 

17,271

 

15,421

$

81,722

$

72,397

In connection with productivity and cost-saving initiatives in the Animal Health segment, we incurred business restructuring costs related to the termination of a contract manufacturing agreement and employee separation charges.

12

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the activity of the restructuring liability during the six months ended December 31, 2020:

Liability balance at June 30, 2020

    

$

2,860

Charges

 

Payments

 

(1,325)

Liability balance at December 31, 2020

$

1,535

As of December 31, 2020, $1,200 and $335 of the liability balance related to contract termination and employee separation costs, respectively.

    

December 31, 

    

June 30, 

As of

    

2020

    

2020

Other liabilities

Long-term operating lease liabilities

$

17,076

$

17,276

Long-term and deferred income taxes

 

12,052

11,680

Derivatives

3,840

7,691

Supplemental retirement benefits, deferred compensation and other

8,331

8,067

Contingent consideration

4,840

International retirement plans

 

5,664

 

5,499

U.S. pension plan

 

2,424

 

3,563

Restructuring costs

 

 

546

Other long-term liabilities

 

9,096

 

11,239

$

58,483

$

70,401

December 31, 

    

June 30, 

As of

    

2020

    

2020

Accumulated other comprehensive income (loss)

  

  

Derivative instruments

$

(8,630)

$

(13,448)

Foreign currency translation adjustment

 

(98,961)

 

(103,738)

Unrecognized net pension losses

 

(22,299)

 

(22,571)

Benefit for income taxes on derivative instruments

 

2,052

 

3,256

Benefit for incomes taxes on long-term intercompany investments

8,166

8,166

Provision for income taxes on net pension losses

(2,118)

(2,050)

$

(121,790)

$

(130,385)

5. Debt

Term Loans and Revolving Credit Facilities

Pursuant to a credit agreement entered into in June 2017 (the “Credit Agreement”), we have a revolving credit facility (the “Revolver”), under which we can borrow up to $250,000, subject to the terms of the agreement, and a term A loan with an aggregate initial principal amount of $250,000 (the “Term A Loan,” and together with the Revolver, the “Credit Facilities”). The interest rate per annum applicable to the loans under the Credit Facilities is based on the fluctuating rate of interest plus an applicable rate equal to 2.00%, 1.75% or 1.50%, in the case of LIBOR and Eurodollar rate loans and 1.00%, 0.75% or 0.50%, in the case of base rate loans; the applicable rates are based on the First Lien Net Leverage Ratio, as defined in the Credit Agreement. The LIBOR rate is subject to a floor of 0.00%. The Credit Facilities mature on June 29, 2022.

The Credit Agreement requires, among other things, compliance with financial covenants that permit: (i) a maximum First Lien Net Leverage Ratio of 4.00:1.00 and (ii) a minimum interest coverage ratio of 3.00:1.00, each calculated on a trailing four-quarter basis. The Credit Agreement contains an acceleration clause should an event