0001144204-19-005324.txt : 20190206 0001144204-19-005324.hdr.sgml : 20190206 20190206161659 ACCESSION NUMBER: 0001144204-19-005324 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20181231 FILED AS OF DATE: 20190206 DATE AS OF CHANGE: 20190206 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: 19571774 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 tv511757-10q.htm FORM 10-Q tv511757-10q - none - 5.576386s
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, 2018
OR

TRANSITION REPORT PURSUANT TO SECTION 13 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
incorporation or organization)
(I.R.S. Employer
Identification No.)
Glenpointe Centre East, 3rd Floor
300 Frank W. Burr Boulevard, Suite 21
Teaneck, New Jersey
(Address of Principal Executive Offices)
07666-6712
(Zip Code)
(201) 329-7300
(Registrant’s telephone number, including area code)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 (Do not check if a smaller reporting company)
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 30, 2019, there were 20,283,777 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
3
3
4
5
6
7
20
33
33
PART II—OTHER INFORMATION
34
34
34
34
34
34
35
36
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
2018
2017
2018
2017
(unaudited)
(in thousands, except per share amounts)
Net sales
$ 218,223 $ 205,876 $ 418,376 $ 399,288
Cost of goods sold
149,579 138,957 283,927 268,987
Gross profit
68,644 66,919 134,449 130,301
Selling, general and administrative expenses
42,938 42,981 85,890 83,976
Operating income
25,706 23,938 48,559 46,325
Interest expense, net
3,015 3,050 5,798 6,168
Foreign currency (gains) losses, net
2,617 (323) (18) 2
Income before income taxes
20,074 21,211 42,779 40,155
Provision for income taxes
5,326 14,179 11,717 17,231
Net income
$ 14,748 $ 7,032 $ 31,062 $ 22,924
Net income per share
basic
$ 0.37 $ 0.17 $ 0.77 $ 0.57
diluted
$ 0.36 $ 0.17 $ 0.77 $ 0.57
Weighted average common shares outstanding
basic
40,383 40,186 40,376 40,065
diluted
40,523 40,364 40,523 40,329
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
2018
2017
2018
2017
(unaudited)
(in thousands)
Net income
$ 14,748 $ 7,032 $ 31,062 $ 22,924
Change in fair value of derivative instruments
(2,243) (276) (1,702) (898)
Foreign currency translation adjustment
4,163 (5,005) (3,519) (1,772)
Unrecognized net pension gains (losses)
124 95 232 226
(Provision) benefit for income taxes
527 809 365 996
Other comprehensive income (loss)
2,571 (4,377) (4,624) (1,448)
Comprehensive income
$ 17,319 $ 2,655 $ 26,438 $ 21,476
The accompanying notes are an integral part of these consolidated financial statements
4

PHIBRO ANIMAL HEALTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
December 31,
2018
June 30,
2018
(unaudited)
(in thousands, except share
and per share amounts)
ASSETS
Cash and cash equivalents
$ 31,336 $ 29,168
Short-term investments
49,000 50,000
Accounts receivable, net
144,050 135,742
Inventories, net
193,099 178,170
Other current assets
23,605 22,381
Total current assets
441,090 415,461
Property, plant and equipment, net
132,711 130,108
Intangibles, net
50,509 51,978
Goodwill
27,348 27,348
Other assets
45,634 46,784
Total assets
$ 697,292 $ 671,679
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt
$ 12,577 $ 12,579
Accounts payable
65,095 59,498
Accrued expenses and other current liabilities
58,157 71,144
Total current liabilities
135,829 143,221
Revolving credit facility
88,000 70,000
Long-term debt
223,699 229,802
Other liabilities
44,540 43,702
Total liabilities
492,068 486,725
Commitments and contingencies (Note 8)
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,220,534 and 19,992,204 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively; 30,000,000 Class B shares authorized, 20,166,034 and 20,365,504 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively
4 4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding
Paid-in capital
131,343 129,873
Retained earnings
154,984 131,560
Accumulated other comprehensive income (loss)
(81,107) (76,483)
Total stockholders’ equity
205,224 184,954
Total liabilities and stockholders’ equity
$ 697,292 $ 671,679
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
2018
2017
(unaudited)
(in thousands)
OPERATING ACTIVITIES
Net income
$ 31,062 $ 22,924
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization
13,532 13,275
Amortization of debt issuance costs and debt discount
441 441
Stock-based compensation
1,129
Acquisition-related cost of goods sold
1,671
Acquisition-related accrued compensation
924
Acquisition-related accrued interest
505
Deferred income taxes
135 5,725
Foreign currency (gains) losses, net
12 11
Other
(1,071) 418
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable, net
(8,906) (5,075)
Inventories, net
(16,278) (10,845)
Other current assets
(3,616) (4,751)
Other assets
866 664
Accounts payable
5,169 7,473
Accrued expenses and other liabilities
(5,839) 3,733
Net cash provided (used) by operating activities
16,636 37,093
INVESTING ACTIVITIES
Purchases of short-term investments
(10,000) (27,000)
Maturities of short-term investments
11,000
Capital expenditures
(12,117) (8,851)
Business acquisitions
(9,838) (15,000)
Other, net
27 (716)
Net cash provided (used) by investing activities
(20,928) (51,567)
FINANCING ACTIVITIES
Revolving credit facility borrowings
103,000 109,870
Revolving credit facility repayments
(85,000) (103,870)
Payments of long-term debt, capital leases and other
(6,359) (3,236)
Issuance of acquisition note payable
3,775
Proceeds from common shares issued
341 3,700
Dividends paid
(8,883) (8,008)
Net cash provided (used) by financing activities
6,874 (1,544)
Effect of exchange rate changes on cash
(414) 120
Net increase (decrease) in cash and cash equivalents
2,168 (15,898)
Cash and cash equivalents at beginning of period
29,168 56,083
Cash and cash equivalents at end of period
$ 31,336 $ 40,185
The accompanying notes are an integral part of these consolidated financial statements
6

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, cattle, dairy 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, 2018 and 2017, 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, 2018 (the “Annual Report”), filed with the Securities and Exchange Commission on August 27, 2018 (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, 2018, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, 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 consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in the consolidated financial statements. The decision whether or not 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. We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), effective July 1, 2018. See “New Accounting Standards” and “Statements of Operations—Additional Information.” As of December 31, 2018, there have been no other material changes to our significant accounting policies
Revenue Recognition
We recognize revenue from product sales when control of the products has transferred to the customer, typically when title and risk of loss transfer to the customer. Certain of our businesses have terms where control of the underlying products transfers to the customer on shipment, while others have terms where control transfers to the customer on delivery.
Revenue reflects the total consideration to which we expect to be entitled, in exchange for delivery of products or services, net of variable consideration. Variable consideration includes customer programs and incentive offerings, including pricing arrangements, rebates and other volume-based incentives. We record reductions to revenue for estimated variable consideration at the time we record the sale. Our estimates for variable consideration primarily use the most-likely amount method. Such estimates are generally based on contractual terms and historical experience, and are adjusted to reflect future expectations as new information becomes available. Historically, we have not had significant adjustments to our estimates of customer incentives. Sales returns and product recalls have been insignificant and infrequent due to the nature of the products we sell.
7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Net sales include shipping and handling fees billed to customers. The associated costs are
considered fulfillment activities, not additional promised services to the customer, and are included in costs of goods sold in the consolidated statements of operations when the related revenue is recognized. Net sales exclude value-added and other taxes based on sales.
Net Income per Share, Weighted Average Shares and Dividends per Share
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
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 for all periods presented.
Three Months
Six Months
For the Periods Ended December 31
2018
2017
2018
2017
Net income
$ 14,748 $ 7,032 $ 31,062 $ 22,924
Weighted average number of shares – basic
40,383 40,186 40,376 40,065
Dilutive effect of stock options and restricted stock units
140 178 147 264
Weighted average number of shares – diluted
40,523 40,364 40,523 40,329
Net income per share
basic
$ 0.37 $ 0.17 $ 0.77 $ 0.57
diluted
$ 0.36 $ 0.17 $ 0.77 $ 0.57
Dividends per share
$ 0.12 $ 0.10 $ 0.22 $ 0.20
New Accounting Standards
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. This ASU 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. This ASU is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, allows reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects related to adjustments resulting from the United States Tax Cuts and Jobs Act. This ASU is effective for annual reporting periods beginning after December 15, 2018. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. We adopted this guidance during the three months ended September 30, 2018, and it did not have a material effect on our consolidated financial statements.
8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance, requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU and its amendments are effective for our consolidated financial statements beginning July 1, 2019. The new standard requires a modified retrospective method. We expect the adoption of this guidance will increase the assets and liabilities reported on our consolidated balance sheet. We continue to evaluate the effects of this guidance.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. We adopted ASU 2014-09 and its amendments effective July 1, 2018, using the modified retrospective method. Comparative prior period amounts were not restated and continue to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material effect on reported net sales or retained earnings.
The total cumulative effect of initial adoption of the new standard resulted in the following changes to our consolidated balance sheet:
As of July 1, 2018
Effect of
Adoption
Post-adoption
Other current assets
$ 2,100 $ 24,481
Other assets
2,325 49,109
Accrued expenses and other current liabilities
343 71,487
Other liabilities
2,837 46,539
Retained earnings
$ 1,245 $ 132,805
The current year effect of the adoption of the new standard resulted in the following changes to our consolidated balance sheet and consolidated statement of operations:
As of December 31. 2018
Effect of
adoption
As reported
Other current assets
$ 100 $ 23,605
Other assets
125 45,634
Other liabilities
(108) 44,540
Retained earnings
$ 333 $ 154,984
Three Months
Six Months
For the Periods Ended December 31, 2018
Effect of
adoption
As reported
Effect of
adoption
As reported
Net sales
$ 198 $ 218,223 $ 396 $ 418,376
Provision for income taxes
32 5,326 63 11,717
Net income
$ 166 $ 14,748 $ 333 $ 31,062
For changes to our policy resulting from the adoption of ASU 2014-09, see “—Summary of Significant Accounting Policies and New Accounting Standards—Revenue Recognition.” See “Statements of Operations—Additional Information” for our disclosures regarding disaggregated revenue, deferred revenue and customer payment terms.
9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3.
Statements of Operations—Additional Information
Disaggregated revenue, deferred revenue and customer payment terms
We develop, manufacture and market products for a broad range of 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 either directly to integrated poultry, swine and cattle integrators or 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.
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:   The MFAs and other business primarily consists 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 also manufacture and distribute autogenous vaccine products and market adjuvants to vaccine manufacturers. We have developed 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. The 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. Mineral nutrition products are manufactured and marketed for a broad range of food animals including poultry, swine and beef and dairy cattle.
Performance Products
The Performance Products business manufactures and markets a number of specialty ingredients for use in the personal care, industrial chemical and chemical catalyst industries, predominantly in the United States.
10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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
2018
2017
2018
2017
Animal Health
MFAs and other
$ 93,054 $ 82,018 $ 180,058 $ 161,621
Nutritional specialties
29,460 32,623 56,430 63,400
Vaccines
17,048 18,204 34,263 36,665
Total Animal Health
$ 139,562 $ 132,845 $ 270,751 $ 261,686
Mineral Nutrition
62,319 59,616 117,157 111,689
Performance Products
16,342 13,415 30,468 25,913
Total
$ 218,223 $ 205,876 $ 418,376 $ 399,288
Net Sales by Region
Three Months
Six Months
For the Periods Ended December 31
2018
2017
2018
2017
United States
$ 127,750 $ 129,379 $ 243,842 $ 242,548
Latin America and Canada
39,316 36,126 77,575 68,452
Europe, Middle East and Africa
26,181 27,672 51,040 53,054
Asia Pacific
24,976 12,699 45,919 35,234
Total
$ 218,223 $ 205,876 $ 418,376 $ 399,288
Net sales by region are based on country of destination.
Total deferred revenue was $6,416 and $4,530 as of December 31, 2018 and June 30, 2018, respectively. Accrued expenses and other current liabilities included $1,471 and $508 of the total deferred revenue as of December 31, 2018 and June 30, 2018, 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.
11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Interest expense and Depreciation and amortization
Three Months
Six Months
For the Periods Ended December 31
2018
2017
2018
2017
Interest expense, net
Term loan
$ 2,202 $ 2,110 $ 4,314 $ 4,143
Revolving credit facility
920 739 1,667 1,420
Amortization of debt issuance costs and debt discount
220 220 441 441
Acquisition-related accrued interest
252 505
Other
120 2 283 241
Interest expense
3,462 3,323 6,705 6,750
Interest (income)
(447) (273) (907) (582)
$ 3,015 $ 3,050 $ 5,798 $ 6,168
Depreciation and amortization
Depreciation of property, plant and equipment
$ 5,308 $ 5,222 $ 10,496 $ 10,405
Amortization of intangible assets
1,521 1,397 3,012 2,846
Amortization of other assets
12 12 24 24
$ 6,841 $ 6,631 $ 13,532 $ 13,275
4.
Balance Sheets—Additional Information
As of
December 31,
2018
June 30,
2018
Inventories
Raw materials
$ 80,649 $ 62,373
Work-in-process
14,907 14,731
Finished goods
97,543 101,066
$ 193,099 $ 178,170
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 $3,141 equity investment are currently idled; we have concluded the investment is not currently impaired, based on expected future operating cash flows and/or disposal value.
As of
December 31,
2018
June 30,
2018
Accrued expenses and other current liabilities
Employee related
$ 21,282 $ 27,333
Commissions and rebates
7,510 7,341
Insurance-related
1,563 1,168
Professional fees
4,599 4,350
Income and other taxes
4,122 3,610
Acquisition-related consideration
3,928 12,845
Other
15,153 14,497
$ 58,157 $ 71,144
12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In July 2018, we accelerated the closing date and completed the purchase of intellectual property and certain other assets comprising the MJ Biologics, Inc. (“MJB”) business relating to animal vaccines. The Company and MJB had originally agreed to the purchase business combination in January 2015, with a contemplated final closing date in January 2021. The final amount due, net of previously paid amounts, was $12,775, including $9,000 paid in July 2018 and $3,775 paid in January 2019.
As of
December 31,
2018
June 30,
2018
Accumulated other comprehensive income (loss)
Derivative instruments
$ 3,284 $ 4,986
Foreign currency translation adjustment
(70,617) (67,098)
Unrecognized net pension gains (losses)
(17,981) (18,213)
(Provision) benefit for income taxes on derivative instruments
(818) (1,241)
(Provision) benefit for income taxes on long-term intercompany investments
8,166 8,166
(Provision) benefit for income taxes on pension gains (losses)
(3,141) (3,083)
$ (81,107) $ (76,483)
5.
Debt
Term Loans and Revolving Credit Facilities
Pursuant to a credit agreement (the “Credit Agreement”), we have a revolving credit facility (the “Revolver”), where 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 Credit Facilities have applicable margins 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 margins 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 Facilities require, among other things, the maintenance of  (i) a maximum First Lien Net Leverage Ratio and (ii) a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis, and contain an acceleration clause should an event of default (as defined in the agreement governing the Credit Facilities) occur. As of December 31, 2018, we were in compliance with the covenants of the Credit Facilities.
As of December 31, 2018, we had $88,000 in borrowings under the Revolver and had outstanding letters of credit of  $4,191, leaving $157,809 available for borrowings and letters of credit under the Revolver. We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The terms of these letters of credit are one year or less.
As of December 31, 2018, the interest rates for the Revolver and the Term A Loan were 4.00% and 3.58%, respectively. The weighted-average interest rates for the outstanding revolving credit facilities were 3.71% and 3.01% for the six months ended December 31, 2018 and 2017, respectively. The weighted-average interest rates for the term loans were 3.47% and 3.29% for the six months ended December 31, 2018 and 2017, respectively.
In July 2017, we entered into an interest rate swap agreement on $150 million of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The interest rate swap has been designated as a highly effective cash flow hedge. For additional details, see “—Derivatives.”
13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Long-Term Debt
As of
December 31,
2018
June 30,
2018
Term A Loan due June 2022
$ 237,500 $ 243,750
Capitalized lease obligations
77 118
237,577 243,868
Unamortized debt issuance costs and debt discount
(1,301) (1,487)
236,276 242,381
Less: current maturities
(12,577) (12,579)
$ 223,699 $ 229,802
6.
Related Party Transactions
Certain relatives of Jack C. Bendheim, our Chairman, President and Chief Executive Officer, provided services to us as employees or consultants and received aggregate compensation and benefits of approximately $430 and $409 during the three months ended December 31, 2018 and 2017, respectively, and $1,213 and $1,129 during the six months ended December 31, 2018 and 2017, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family.
7.
Income Taxes
In December 2017, the United States government enacted comprehensive income tax legislation (the “Tax Act”). The Tax Act makes broad and complex changes to United States income tax law and includes numerous elements that affect the Company, including a reduced federal corporate income tax rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings and changes to business-related exclusions, deductions and credits. The Tax Act also has consequences related to our international operations.
We have elected to record Global Intangible Low-Taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation as a current period expense. The provision for income taxes for the three and six months ended December 31, 2018, included $315 and $672 of expense, respectively, from the effects of GILTI.
During the three months ended December 31, 2018, we completed our analysis and accounting for the Tax Act and recorded a $715 reduction in the provision for income taxes, related to the previously recorded one-time mandatory toll charge on the deemed repatriation of undistributed earnings of foreign subsidiaries.
8.
Commitments and Contingencies
Environmental
Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, “Environmental Laws”). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of
14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.
While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.
The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
The United States Environmental Protection Agency (the “EPA”) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (“Omega Chemical Site”), which is upgradient of Phibro-Tech’s Santa Fe Springs, California facility. The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (“PRPs”) due to groundwater contamination from Phibro-Tech’s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September 2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that any groundwater contamination at its site is localized and due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA and RCRA in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA’s investigation, the preliminary stage of the ongoing litigation and Phibro-Tech’s dispute with the prior owner’s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.
Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be approximately $6,598 and $6,833 at December 31, 2018 and June 30, 2018, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could
15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.
Claims and Litigation
PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liabilities, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, our insurance policies will cover such claims. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
9.
Derivatives
We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded as an asset or liability with a corresponding amount recorded in accumulated other comprehensive income (loss).
We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.
We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”
We entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The forecasted transactions are probable of occurring, and the interest rate swap has been designated as a highly effective cash flow hedge.
We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June 2020. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.
The following table summarizes the outstanding derivatives that are designated and effective as cash flow hedges as of December 31, 2018:
Instrument
Hedge
Notional
Amount at
December 31,
2018
Consolidated
Balance Sheet
Fair value as of
December 31,
2018
June 30,
2018
Options
Brazilian Real calls
R$75,000
(1) $ 551 $ 71
Options
Brazilian Real puts
R$75,000
(1) $ (146) $
Swap
Interest rate swap
$150,000
Other assets
$ 2,972 $ 5,078
(1)
We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. The net fair values of  $405 and $71 were included in other current assets as of December 31, 2018 and June 30, 2018, respectively.
16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables show the effects of derivatives on the consolidated statements of operations and other comprehensive income for the three and six months ended December 31, 2018 and 2017.
For the Three Months Ended December 31
Instrument
Hedge
Gain (Loss) recorded in OCI
Gain (Loss) recognized in
consolidated statements of operations
Consolidated Statement
of Operations Line
Item Total
2018
2017
Consolidated
Statement
of Operations
2018
2017
2018
2017
Options
Brazilian Real puts and calls $ 513 $ (1,781) Cost of goods sold $ $ 517 $ 149,579 $ 138,957
Swap
Interest rate swap $ (2,756) $ 1,505
Interest expense, net
$ $ $ 3,015 $ 3,050
For the Six Months Ended December 31
Instrument
Hedge
Gain (Loss) recorded in OCI
Gain (Loss) recognized in
consolidated statements of operations
Consolidated Statement
of Operations Line
Item Total
2018
2017
Consolidated
Statement
of Operations
2018
2017
2018
2017
Options
Brazilian Real puts and calls $ 404 $ (2,686) Cost of goods sold $ 1,084 $ 703 $ 283,927 $ 268,987
Swap
Interest rate swap $ (2,106) $ 1,788
Interest expense, net
$ $ $ 5,798 $ 6,168
We recognize gains (losses) related to these foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Realized net gains of $1,084 related to matured contracts were recorded as a component of inventory as of June 30, 2018 and were fully recognized as an offset to costs of goods sold during the three months ended September 30, 2018.
10.
Fair Value Measurements
Short-term investments
As of December 31, 2018, our short-term investments consist of cash deposits held at financial institutions. We consider the carrying amounts of these short-term investments to be representative of their fair value.
Derivatives
We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates, and interest rate curves.
Fair Value of Assets (Liabilities)
As of
December 31, 2018
June 30, 2018
Level 1
Level 2
Level 1
Level 2
Short-term investments
$ 49,000 $ $ 50,000 $
Derivatives asset (liability)
$ $ 405 $ $ 71
Interest rate swap
$ $ 2,972 $ $ 5,078
There were no Level 3 fair value measurements as of the periods presented.
17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
11.
Business Segments
We evaluate performance and allocate resources based on the Animal Health, Mineral Nutrition and Performance Products segments. Certain of our costs and assets are not directly attributable to these segments and we refer to these items as Corporate. We do not allocate Corporate costs or assets to the segments because they are not used to evaluate the segments’ operating results or financial position. Corporate costs include certain costs related to executive management, business technology, legal, finance, human resources and business development. Corporate assets include cash and cash equivalents, certain debt issue costs, income tax related assets and certain other assets.
We evaluate performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as income before income taxes plus (a) interest expense, net, (b) depreciation and amortization, (c) (income) loss from, and disposal of, discontinued operations, (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (e) certain items that we consider to be unusual, non-operational or non-recurring.
The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.
Three Months
Six Months
For the Periods Ended December 31
2018
2017
2018
2017
Net sales
Animal Health
$ 139,562 $ 132,845 $ 270,751 $ 261,686
Mineral Nutrition
62,319 59,616 117,157 111,689
Performance Products
16,342 13,415 30,468 25,913
Total segments
$ 218,223 $ 205,876 $ 418,376 $ 399,288
Depreciation and amortization
Animal Health
$ 5,493 $ 5,265 $ 10,849 $ 10,519
Mineral Nutrition
616 584 1,213 1,169
Performance Products
279 259 552 505
Total segments
$ 6,388 $ 6,108 $ 12,614 $ 12,193
Adjusted EBITDA
Animal Health
$ 35,925 $ 35,036 $ 71,641 $ 68,778
Mineral Nutrition
4,084 5,614 6,647 9,330
Performance Products
1,514 264 2,230 512
Total segments
$ 41,523 $ 40,914 $ 80,518 $ 78,620
18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Three Months
Six Months
For the Periods Ended December 31
2018
2017
2018
2017
Reconciliation of income before income taxes to Adjusted EBITDA
Income before income taxes
$ 20,074 $ 21,211 $ 42,779 $ 40,155
Interest expense, net
3,015 3,050 5,798 6,168
Depreciation and amortization – Total segments
6,388 6,108 12,614 12,193
Depreciation and amortization – Corporate
453 523 918 1,082
Corporate costs
9,918 8,436 18,804 16,025
Stock-based
compensation
564 1,129
Acquisition-related cost of goods sold
1,422 1,671
Acquisition-related accrued compensation
487 924
Acquisition-related transaction costs
400
Other, net
(1,506) (1,506)
Foreign currency (gains) losses, net
2,617 (323) (18) 2
Adjusted EBITDA – Total segments
$ 41,523 $ 40,914 $ 80,518 $ 78,620
As of
December 31,
2018
June 30,
2018
Identifiable assets
Animal Health
$ 472,534 $ 455,704
Mineral Nutrition
77,351 69,779
Performance Products
32,430 24,040
Total segments
582,315 549,523
Corporate
114,977 122,156
Total
$ 697,292 $ 671,679
The Animal Health segment includes all goodwill of the Company. The Animal Health segment includes advances to and investment in an equity method investee of  $3,141 and $3,432 as of December 31, 2018 and June 30, 2018, respectively. The Performance Products segment includes an investment in an equity method investee of  $629 and $437 as of December 31, 2018 and June 30, 2018, respectively. Corporate assets include cash and cash equivalents, short-term investments, certain debt issuance costs, income tax related assets and certain other assets.
19

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
Our management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided to assist readers in understanding our performance, as reflected in the results of our operations, our financial condition and our cash flows. The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. This MD&A should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Our future results could differ materially from our historical performance as a result of various factors such as those discussed in “Risk Factors” and “Forward-Looking Statements.”
Overview of our business
Phibro Animal Health Corporation is a global diversified animal health and mineral nutrition company. We develop, manufacture and market products for a broad range of food animals including poultry, swine, beef and dairy cattle and aquaculture. Our products help prevent, control and treat diseases, enhance nutrition to help improve health and performance and contribute to balanced mineral nutrition. In addition to animal health and mineral nutrition products, we manufacture and market specific ingredients for use in the personal care, industrial chemical and chemical catalyst industries.
20

Analysis of the consolidated statements of operations
Summary Results of Operations
Three Months
Six Months
For the Periods Ended December 31
2018
2017
Change
2018
2017
Change
(in thousands, except per share amounts and percentages)
Net sales
$ 218,223 $ 205,876 $ 12,347
6%
$ 418,376 $ 399,288 $ 19,088
5%
Gross profit
68,644 66,919 1,725
3%
134,449 130,301 4,148
3%
Selling, general and administrative
expenses
42,938 42,981 (43)
(0)%
85,890 83,976 1,914
2%
Operating income
25,706 23,938 1,768
7%
48,559 46,325 2,234
5%
Interest expense, net
3,015 3,050 (35)
(1)%
5,798 6,168 (370)
(6)%
Foreign currency (gains) losses,
net 
2,617 (323) 2,940
*
(18) 2 (20)
*
Income before income taxes
20,074 21,211 (1,137)
(5)%
42,779 40,155 2,624
7%
Provision for income taxes 
5,326 14,179 (8,853)
(62)%
11,717 17,231 (5,514)
(32)%
Net income
$ 14,748 $ 7,032 $ 7,716
110%
$ 31,062 $ 22,924 $ 8,138
35%
Net income per share
basic
$ 0.37 $ 0.17 $ 0.20 $ 0.77 $ 0.57 $ 0.20
diluted
$ 0.36 $ 0.17 $ 0.19 $ 0.77 $ 0.57 $ 0.20
Weighted average number of shares outstanding
basic
40,383 40,186 40,376 40,065
diluted
40,523 40,364 40,523 40,329
Ratio to net sales
Gross profit
31.5%
32.5%
32.1%
32.6%
Selling, general and administrative expenses
19.7%
20.9%
20.5%
21.0%
Operating income
11.8%
11.6%
11.6%
11.6%
Income before income taxes
9.2%
10.3%
10.2%
10.1%
Net income
6.8%
3.4%
7.4%
5.7%
Effective tax rate
26.5%
66.8%
27.4%
42.9%
Certain amounts and percentages may reflect rounding adjustments.
*
Calculation not meaningful
21

Net sales, Adjusted EBITDA and reconciliation of GAAP net income to Adjusted EBITDA
We report Net sales and Adjusted EBITDA by segment to understand the operating performance of each segment. This enables us to monitor changes in net sales, costs and other actionable operating metrics at the segment level. See “—General description of non-GAAP financial measures.”
Segment net sales and Adjusted EBITDA:
Three Months
Six Months
For the Periods Ended December 31
2018
2017
Change
2018
2017
Change
(in thousands, except percentages)
Net sales
MFAs and other
$ 93,054 $ 82,018 $ 11,036
13%
$ 180,058 $ 161,621 $ 18,437
11%
Nutritional specialties
29,460 32,623 (3,163)
(10)%
56,430 63,400 (6,970)
(11)%
Vaccines
17,048 18,204 (1,156)
(6)%
34,263 36,665 (2,402)
(7)%
Animal Health
139,562 132,845 6,717
5%
270,751 261,686 9,065
3%
Mineral Nutrition
62,319 59,616 2,703
5%
117,157 111,689 5,468
5%
Performance Products
16,342 13,415 2,927
22%
30,468 25,913 4,555
18%
Total
$ 218,223 $ 205,876 $ 12,347
6%
$ 418,376 $ 399,288 $ 19,088
5%
Adjusted EBITDA
Animal Health
$ 35,925 $ 35,036 $ 889
3%
$ 71,641 $ 68,778 $ 2,863
4%
Mineral Nutrition
4,084 5,614 (1,530)
(27)%
6,647 9,330 (2,683)
(29)%
Performance Products
1,514 264 1,250
*
2,230 512 1,718
*
Corporate
(9,918) (8,436) (1,482)
*
(18,804) (16,025) (2,779)
*
Total
$ 31,605 $ 32,478 $ (873)
(3)%
$ 61,714 $ 62,595 $ (881)
(1)%
Adjusted EBITDA ratio to segment net sales
Animal Health
25.7%
26.4%
26.5%
26.3%
Mineral Nutrition
6.6%
9.4%
5.7%
8.4%
Performance Products
9.3%
2.0%
7.3%
2.0%
Corporate(1)
(4.5)%
(4.1)%
(4.5)%
(4.0)%
Total(1)
14.5%
15.8%
14.8%
15.7%
(1)
reflects ratio to total net sales
22

The table below sets forth a reconciliation of net income, as reported under GAAP, to Adjusted EBITDA:
Three Months
Six Months
For the Periods Ended December 31
2018
2017
Change
2018
2017
Change
(in thousands, except percentages)
Net income
$ 14,748 $ 7,032 $ 7,716
110%
$ 31,062 $ 22,924 $ 8,138
35%
Interest expense, net
3,015 3,050 (35)
(1)%
5,798 6,168 (370)
(6)%
Provision for income taxes
5,326 14,179 (8,853)
(62)%
11,717 17,231 (5,514)
(32)%
Depreciation and amortization
6,841 6,631 210
3%
13,532 13,275 257
2%
EBITDA
29,930 30,892 (962)
(3)%
62,109 59,598 2,511
4%
Stock-based compensation
564 564
*
1,129 1,129
*
Acquisition-related cost of goods sold 
1,422 (1,422)
*
1,671 (1,671)
*
Acquisition-related accrued compensation
487 (487)
*
924 (924)
*
Acquisition-related transaction
cost
*
400 (400)
*
Other, net
(1,506) (1,506)
*
(1,506) (1,506)
*
Foreign currency (gains) losses, net
2,617 (323) 2,940
*
(18) 2 (20)
*
Adjusted EBITDA
$ 31,605 $ 32,478 $ (873)
(3)%
$ 61,714 $ 62,595 $ (881)
(1)%
Certain amounts and percentages may reflect rounding adjustments.
*
Calculation not meaningful
Comparison of three months ended December 31, 2018 and 2017
Net sales
Net sales of $218.2 million for the three months ended December 31, 2018, increased $12.3 million, or 6%, as compared to the three months ended December 31, 2017. Animal Health, Mineral Nutrition and Performance Products grew $6.7 million, $2.7 million and $2.9 million, respectively.
Animal Health
Net sales of $139.6 million for the three months ended December 31, 2018, increased $6.7 million, or 5%. Net sales of MFAs and other increased $11.0 million, or 13%, driven by continued international volume growth, particularly in the Asia Pacific and Latin America regions. Reduced selling prices in certain countries due to unfavorable exchange rate movements partially offset the international growth. Net sales of domestic MFAs and other declined slightly from the prior year. Net sales of nutritional specialty products declined by $3.2 million, or 10%, due to volume declines from continued negative dairy industry conditions and reduced demand from poultry customers. Net sales of vaccines declined $1.2 million, or 6%, due to turbulent economic conditions in certain international countries and the loss of a domestic distribution arrangement; volume growth in other international markets partially offset the reductions.
Mineral Nutrition
Net sales of $62.3 million for the three months ended December 31, 2018, increased $2.7 million, or 5%. Higher average selling prices, plus increased volumes, were the drivers of the increase. Our selling prices of mineral nutrition products generally move in direct correlation with the underlying commodity costs.
Performance Products
Net sales of $16.3 million for the three months ended December 31, 2018, increased $2.9 million, or 22%, due to volume growth of copper-based and personal care products.
23

Gross profit
Gross profit of $68.6 million for the three months ended December 31, 2018, increased $1.7 million, or 3%, as compared to the three months ended December 31, 2017. Gross profit decreased to 31.5% of net sales for the three months ended December 31, 2018, as compared to 32.5% for the three months ended December 31, 2017. Gross profit for the three months ended December 31, 2017 included $1.4 million of acquisition-related cost of goods sold.
Animal Health gross profit increased $0.8 million due to volume growth of MFAs and other, mostly offset by volume declines in the nutritional specialty and vaccine categories and increased vaccine manufacturing costs. Mineral Nutrition gross profit decreased $1.5 million, primarily due to unfavorable product mix and constrained pricing in a competitive environment. Performance Products gross profit increased $1.0 million, primarily due to volume growth. Gross profit increased $1.4 million due to acquisition-related cost of goods sold included in the three months ended December 31, 2017.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) of $42.9 million for the three months ended December 31, 2018, was approximately equal to the three months ended December 31, 2017. SG&A for the three months ended December 31, 2018, included $0.6 million of stock-based compensation and a $1.5 million benefit from the cancellation of a certain business arrangement. SG&A for the three months ended December 31, 2017, included $0.5 million in acquisition-related compensation costs. Excluding the effects of these costs, SG&A increased $1.4 million, or 3%.
Animal Health, Mineral Nutrition and Performance Products SG&A were each little changed from the prior year. Corporate costs increased $1.4 million due to increased business development expenses. The stock-based compensation, cancellation of the business arrangement and acquisition-related compensation costs resulted in a $1.4 million reduction in SG&A.
Interest expense, net
Interest expense, net of $3.0 million for the three months ended December 31, 2018, was approximately equal to the three months ended December 31, 2017.
Foreign currency (gains) losses, net
Foreign currency (gains) losses, net for the three months ended December 31, 2018, amounted to net losses of $2.6 million, as compared to $0.3 million in net gains for the three months ended December 31, 2017. Foreign currency net losses for the three months ended December 31, 2018, were primarily due to the movement of the Turkish and Brazilian currencies relative to the U.S. dollar. Foreign currency gains and losses primarily arose from cash and intercompany balances.
Provision for income taxes
The provision for income taxes was $5.3 million and $14.2 million for the three months ended December 31, 2018 and 2017, respectively. The effective income tax rate was 26.5% and 66.8% for the three months ended December 31, 2018 and 2017, respectively. The provision for income taxes for the three months ended December 31, 2018 included a $0.7 million benefit from an adjustment to the previously recorded mandatory toll charge on deemed repatriation of undistributed earnings of foreign subsidiaries and a $0.1 million benefit from the exercise of employee stock options. The effective income tax rate, without these benefits, would have been 30.5% for the three months ended December 31, 2018, including a $0.3 million provision for the U.S. federal Global Intangible Low-Taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation. The effective income tax rate reflects the statutory 21% U.S. federal income tax rate.
24

The effective income tax rate for the three months ended December 31, 2017, would have been 26.2% without the discrete items listed below. This effective rate for the three months ended December 31, 2017, included the benefit of adjusting the year-to-date income tax provision to reflect the statutory 28.1% weighted-average U.S. federal income tax rate. The provision for income taxes for the three months ended December 31, 2017, included the effects of the Tax Act and other discrete items:

a $2.5 million provision for the remeasurement of deferred tax assets and liabilities to reflect the reduced U.S. federal income tax rate;

a $4.2 million provision to reflect the mandatory toll charge on the deemed repatriation of undistributed earnings of foreign subsidiaries;

a $0.5 million provision to eliminate the income taxes remaining in accumulated other comprehensive income (“AOCI”) after all related foreign currency derivatives had matured and were completely cleared from AOCI;

a $1.0 million provision for the remeasurement of deferred tax assets to reflect a reduced income tax rate in certain international jurisdictions;

a $0.4 million net provision from the exercise of employee stock options, including a $0.5 million provision to adjust the benefit recognized in the three months ended September 30, 2017, to the reduced income tax rate.
Net income
Net income of $14.8 million for the three months ended December 31, 2018, increased $7.7 million, as compared to net income of $7.0 million for the three months ended December 31, 2017. A $2.9 million increase in foreign currency losses offset a $1.8 million improvement in operating income, resulting in a $1.1 million decrease in income before income taxes. The provision for income taxes decreased by $8.9 million, primarily because the three months ended December 31, 2017 included additional expense from the initial application of the comprehensive U.S. income tax legislation and other discrete items.
Adjusted EBITDA
Adjusted EBITDA of $31.6 million for the three months ended December 31, 2018, decreased $0.9 million or 3%, as compared to the three months ended December 31, 2017. Mineral Nutrition Adjusted EBITDA decreased $1.5 million, or 27%, due to the effect of unfavorable product mix and constrained pricing in a competitive environment. Corporate expenses increased $1.5 million due to increased business development expenses. Performance Products and Animal Health Adjusted EBITDA increased $1.2 million and $0.9 million, respectively, due to sales growth and increased gross profit.
Comparison of six months ended December 31, 2018 and 2017
Net sales
Net sales of $418.4 million for the six months ended December 31, 2018, increased $19.1 million, or 5%, as compared to the six months ended December 31, 2017. Animal Health, Mineral Nutrition and Performance Products grew $9.1 million, $5.5 million and $4.5 million, respectively.
Animal Health
Net sales of $270.8 million for the six months ended December 31, 2018, increased $9.1 million, or 3%. Net sales of MFAs and other increased $18.4 million, or 11%, driven by continued international volume growth, particularly in the Asia Pacific and Latin America regions. Reduced selling prices in certain countries due to unfavorable exchange rate movements partially offset the international growth. Net sales of domestic MFAs and other were approximately equal to the prior year. Net sales of nutritional specialty products declined by $7.0 million, or 11%, primarily due to volume declines from the continued negative
25

dairy industry conditions and reduced demand from poultry customers. Net sales of vaccines declined $2.4 million, or 7%, due to turbulent economic conditions in certain international countries and the loss of a domestic distribution arrangement; volume growth in other international markets partially offset the reductions.
Mineral Nutrition
Net sales of  $117.2 million for the six months ended December 31, 2018, increased $5.5 million, or 5%. Higher average selling prices were the primary driver of the increased revenue, while volumes were approximately level with the prior year. Our selling prices of mineral nutrition products generally move in direct correlation with the underlying commodity costs.
Performance Products
Net sales of $30.5 million for the six months ended December 31, 2018, increased $4.5 million, or 18%, due to volume growth of copper-based products, coupled with higher average selling prices of certain industrial chemical products.
Gross profit
Gross profit of $134.4 million for the six months ended December 31, 2018, increased $4.1 million, or 3%, as compared to the six months ended December 31, 2017. Gross profit decreased to 32.1% of net sales for the six months ended December 31, 2018, as compared to 32.6% for the six months ended December 31, 2017. Gross profit for the six months ended December 31, 2017 included $1.7 million of acquisition-related cost of goods sold.
Animal Health gross profit increased $3.8 million due to volume growth and favorable unit costs and product mix in MFAs and other, partially offset by volume declines in both the nutritional specialty and vaccine categories and increased vaccine manufacturing costs. Mineral Nutrition gross profit decreased $2.7 million, primarily due to unfavorable product mix and constrained pricing in a competitive environment. Performance Products gross profit increased $1.4 million, primarily due to volume growth. Gross profit increased $1.7 million due to acquisition-related cost of goods sold included in the three months ended December 31, 2017.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) of $85.9 million for the six months ended December 31, 2018, increased $1.9 million, or 2%, as compared to the six months ended December 31, 2017. SG&A for the six months ended December 31, 2018, included $1.1 million of stock-based compensation and a $1.5 million benefit from the cancellation of a certain business arrangement. SG&A for the six months ended December 31, 2017, included $0.4 million in acquisition-related transaction costs and $0.9 million in acquisition-related compensation costs. Excluding the effects of these costs, SG&A increased $3.6 million, or 4%.
Animal Health SG&A increased $1.3 million, driven by sales force expansion and increased investments in marketing and product development. Mineral Nutrition and Performance Products SG&A were each little changed from the prior year. Corporate costs increased $2.6 million due to higher business development expenses and professional fees. The stock-based compensation, cancellation of the business arrangement, acquisition-related transaction costs and acquisition-related compensation costs resulted in a $1.7 million reduction in SG&A.
Interest expense, net
Interest expense, net of $5.8 million for the six months ended December 31, 2018, decreased $0.4 million, or 6%, as compared to the six months ended December 31, 2017, primarily due to increased interest earnings on short-term investments.
Foreign currency (gains) losses, net
Foreign currency (gains) losses, net were insignificant for the six-month periods ended December 31, 2018 and 2017.
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Provision for income taxes
The provision for income taxes was $11.7 million and $17.2 million for the six months ended December 31, 2018 and 2017, respectively. The effective income tax rate was 27.4% and 42.9% for the six months ended December 31, 2018 and 2017, respectively. The provision for income taxes for the six months ended December 31, 2018 included a $0.7 million benefit from an adjustment to the previously recorded mandatory toll charge on deemed repatriation of undistributed earnings of foreign subsidiaries and a $0.2 million benefit from the exercise of employee stock options . The effective income tax rate, without these benefits, would have been 29.6% for the six months ended December 31, 2018, including a $0.7 million provision for the U.S. federal Global Intangible Low-Taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation. The effective income tax rate reflects the statutory 21% U.S. federal income tax rate.
The effective income tax rate for the six months ended December 31, 2017, would have been 28.3% without the discrete items listed below. The provision for income taxes for the six months ended December 31, 2017 included the effects of the Tax Act and other discrete items:

a $2.5 million provision for the remeasurement of deferred tax assets and liabilities to reflect the reduced income tax rate;

a $4.2 million provision to reflect the mandatory toll charge on the deemed repatriation of undistributed earnings of foreign subsidiaries;

a $0.5 million provision to eliminate the income taxes remaining in AOCI after all related foreign currency derivatives had matured and were completely cleared from AOCI;

a $1.0 million provision for the remeasurement of deferred tax assets to reflect a reduced income tax rate in certain international jurisdictions;

a $2.4 million net provision from the exercise of employee stock options, including a $0.5 million provision to adjust the benefit recognized in the three months ended September 30, 2017, to the reduced income tax rate.
Net income
Net income of $31.1 million for the six months ended December 31, 2018, increased $8.1 million, as compared to net income of $22.9 million for the six months ended December 31, 2017. Increased operating income of $2.2 million and lower interest expense of $0.4 million resulted in a $2.6 million increase in income before income taxes. The provision for income taxes decreased by $5.5 million, primarily because the six months ended December 31, 2017 included additional expense from the initial application of the comprehensive U.S. income tax legislation and other discrete items.
Adjusted EBITDA
Adjusted EBITDA of  $61.7 million for the six months ended December 31, 2018, decreased $0.9 million, or 1% as compared to the six months ended December 31, 2017. Animal Health Adjusted EBITDA increased $2.9 million, or 4%, due to sales growth and increased gross profit, partially offset by increased SG&A for investments in organization and business development. Mineral Nutrition Adjusted EBITDA decreased $2.7 million, or 29%, due to the effect of unfavorable product mix and constrained pricing in a competitive environment. Performance Products Adjusted EBITDA increased $1.7 million, primarily due to sales growth and increased gross profit. Corporate expenses increased $2.8 million due to higher business development expenses and professional fees.
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Analysis of financial condition, liquidity and capital resources
Net increase (decrease) in cash and cash equivalents was:
Six Months
For the Periods Ended December 31
2018
2017
Change
(in thousands)
Cash provided by/(used in):
Operating activities
$ 16,636 $ 37,093 $ (20,457)
Investing activities
(20,928) (51,567) 30,639
Financing activities
6,874 (1,544) 8,418
Effect of exchange-rate changes on cash
and cash equivalents
(414) 120 (534)
Net increase/(decrease) in cash and cash equivalents
$ 2,168 $ (15,898) $ 18,066
Certain amounts may reflect rounding adjustments.
Net cash provided (used) by operating activities was comprised of:
Six Months
For the Periods Ended December 31
2018
2017
Change
(in thousands)
EBITDA
$ 62,109 $ 59,598 $ 2,511
Adjustments
Stock-based compensation
1,129 1,129
Acquisition-related cost of goods sold
1,671 (1,671)
Acquisition-related accrued compensation
924 (924)
Acquisition-related transaction costs
400 (400)
Other, net
(1,506) (1,506)
Foreign currency (gains) losses, net
(18) 2 (20)
Interest paid
(5,874) (5,595) (279)
Income taxes paid
(10,490) (9,708) (782)
Changes in operating assets and liabilities and other items
(28,714) (9,799) (18,915)
Cash used for acquisition-related transaction costs
(400) 400
Net cash provided (used) by operating activities
$ 16,636 $ 37,093 $ (20,457)
Certain amounts may reflect rounding adjustments.
Operating activities
Net cash provided by operating activities was $16.6 million for the six months ended December 31, 2018. Cash provided by net income and non-cash items, including depreciation and amortization, was partially offset by $28.7 million of cash used in the ordinary course of business for changes in operating assets and liabilities and other items. Increased inventories used $16.3 million of cash due to the timing of sales, purchases and production. Accounts receivable used $8.9 million of cash due to the timing of sales and collections in international regions.
Investing activities
Net cash used in investing activities was $20.9 million for the six months ended December 31, 2018. Capital expenditures were $12.1 million as we continued to invest in our existing asset base and for capacity expansion and productivity improvements. Cash used for business acquisitions was $9.8 million. The use of cash was partially offset by $1.0 million of net proceeds provided by short-term investments.
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Financing activities
Net cash provided by financing activities was $6.9 million for the six months ended December 31, 2018. Net borrowings on our Revolver provided $18.0 million. We partially financed an acquisition of a business through the issuance of a $3.8 million short-term note payable. We received $0.3 million from the issuance of common shares related to the exercise of stock options. We paid $8.9 million in dividends to holders of our Class A and Class B common stock. We paid $6.3 million in scheduled debt and other requirements.
Liquidity and capital resources
We believe our cash on hand, our operating cash flows and our financing arrangements, including the availability of borrowings under the Revolver and foreign credit lines, will be sufficient to support our future cash needs. Our operating plan projects adequate liquidity throughout the year. However, we can provide no assurance that our liquidity and capital resources will be adequate for future funding requirements. We believe we will be able to comply with the terms of the covenants under the Credit Facilities and foreign credit lines based on our operating plan. In the event of adverse operating results and/or violation of covenants under the facilities, there can be no assurance we would be able to obtain waivers or amendments. Other risks to our meeting future funding requirements include global economic conditions and macroeconomic, business and financial disruptions that could arise. There can be no assurance that a challenging economic environment or an economic downturn would not affect our liquidity or our ability to obtain future financing. In addition, our debt covenants may restrict our ability to invest.
Certain relevant measures of our liquidity and capital resources follow:
As of
December 31,
2018
June 30,
2018
Change
(in thousands, except ratios)
Cash and cash equivalents and short-term investments
$ 80,336 $ 79,168 $ 1,168
Working capital
237,502 205,651 31,851
Ratio of current assets to current liabilities
2.93:1 2.57:1
We define working capital as total current assets (excluding cash and cash equivalents and short-term investments) less total current liabilities (excluding the current portion of long-term debt). We calculate the ratio of current assets to current liabilities based on this definition.
At December 31, 2018, we had $88.0 million in outstanding borrowings under the Revolver. We had outstanding letters of credit and other commitments of  $4.2 million, leaving $157.8 million available for borrowings and letters of credit.
On February 6, 2019, our Board of Directors declared a cash dividend of  $0.12 per share on each share of our Class A and Class B common stock outstanding on the record date of March 6, 2019, payable on March 27, 2019. The quarterly dividend declared on February 6, 2019 and the quarterly dividend paid in December 2018 represent a 20% increase over the $0.10 per share quarterly dividend declared and paid during previous quarters. We expect to pay future quarterly dividends of $0.12 per share on our Class A and Class B common stock, representing approximately $19.4 million annually, subject to approval from the Board of Directors.
At December 31, 2018, our cash and cash equivalents and short-term investments included $78.1 million held by our international subsidiaries. There are no restrictions on cash distributions to PAHC from our international subsidiaries.
Contractual obligations
As of December 31, 2018, there were no material changes in payments due under contractual obligations from those disclosed in the Annual Report on Form 10-K for the year ended June 30, 2018.
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Off-balance sheet arrangements
We do not currently use off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, investment or other financial purposes.
In the ordinary course of business, we may indemnify our counterparties against certain liabilities that may arise. These indemnifications typically pertain to environmental matters. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications generally are subject to certain restrictions and limitations.
General description of non-GAAP financial measures
Adjusted EBITDA
Adjusted EBITDA is an alternative view of performance used by management as our primary operating measure, and we believe that investors’ understanding of our performance is enhanced by disclosing this performance measure. We report Adjusted EBITDA to portray the results of our operations prior to considering certain income statement elements. We have defined EBITDA as net income (loss) plus (i) interest expense, net, (ii) provision for income taxes or less benefit for income taxes, and (iii) depreciation and amortization. We have defined Adjusted EBITDA as EBITDA plus (a) (income) loss from, and disposal of, discontinued operations, (b) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (c) certain items that we consider to be unusual, non-operational or non-recurring. The Adjusted EBITDA measure is not, and should not be viewed as, a substitute for GAAP reported net income.
The Adjusted EBITDA measure is an important internal measurement for us. We measure our overall performance on this basis in conjunction with other performance metrics. The following are examples of how our Adjusted EBITDA measure is utilized:

senior management receives a monthly analysis of our operating results that is prepared on an Adjusted EBITDA basis;

our annual budgets are prepared on an Adjusted EBITDA basis; and

other goal setting and performance measurements are prepared on an Adjusted EBITDA basis.
Despite the importance of this measure to management in goal setting and performance measurement, Adjusted EBITDA is a non-GAAP financial measure that has no standardized meaning prescribed by GAAP and, therefore, has limits in its usefulness to investors. Because of its non-standardized definition, Adjusted EBITDA, unlike GAAP net income, may not be comparable to the calculation of similar measures of other companies. Adjusted EBITDA is presented to permit investors to more fully understand how management assesses performance.
We also recognize that, as an internal measure of performance, the Adjusted EBITDA measure has limitations, and we do not restrict our performance management process solely to this metric. A limitation of the Adjusted EBITDA measure is that it provides a view of our operations without including all events during a period, such as the depreciation of property, plant and equipment or amortization of purchased intangibles, and does not provide a comparable view of our performance to other companies.
Certain significant items
Adjusted EBITDA is calculated prior to considering certain items. We evaluate such items on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual or non-operational nature. Unusual, in this context, may represent items that are not part of our ongoing business; items that, either as a result of their nature or size, we would not expect to occur as part of our normal business on a regular basis. We consider foreign currency gains and losses to be non-operational because they arise principally from intercompany transactions and are largely non-cash in nature.
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New accounting standards
For discussion of new accounting standards, see “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies and New Accounting Standards.”
Critical Accounting Policies
Critical accounting policies are those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Not all of these significant accounting policies require management to make difficult, subjective or complex judgments or estimates. However, management is required to make certain estimates and assumptions during the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Significant estimates include depreciation and amortization periods of long-lived and intangible assets, recoverability of long-lived and intangible assets and goodwill, realizability of deferred income tax and value-added tax assets, legal and environmental matters and actuarial assumptions related to our pension plans. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period they are determined to be necessary. Actual results could differ from those estimates. Our significant accounting policies are described in the notes to the consolidated financial statements included in the Annual Report. As of December 31, 2018, there have been no material changes to any of the critical accounting policies contained therein, except for the adoption of the new standard related to revenue recognition. See “Notes to Consolidated Financial Statements—Summary of Significant Accounting Policies and New Accounting Standards” for the changes made to our revenue recognition policy, following the adoption of Financial Accounting Standards Board Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).
Forward-Looking Statements
This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “believe,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Examples of such risks and uncertainties include:

perceived adverse effects on human health linked to the consumption of food derived from animals that utilize our products could cause a decline in the sales of those products;

restrictions on the use of antibacterials in food-producing animals may become more prevalent;

a material portion of our sales and gross profits are generated by antibacterials and other related products;

competition in each of our markets from a number of large and small companies, some of which have greater financial, research and development (“R&D”), production and other resources than we have;
31


outbreaks of animal diseases could significantly reduce demand for our products;

our business may be negatively affected by weather conditions and the availability of natural resources;

the continuing trend toward consolidation of certain customer groups as well as the emergence of large buying groups;

our ability to control costs and expenses;

any unforeseen material loss or casualty;

exposure relating to rising costs and reduced customer income;

competition deriving from advances in veterinary medical practices and animal health technologies;

unanticipated safety or efficacy concerns;

our dependence on suppliers having current regulatory approvals;

our raw materials are subject to price fluctuations and their availability can be limited;

natural and man-made disasters, including but not limited to fire, snow and ice storms, flood, hail, hurricanes and earthquakes;

terrorist attacks, particularly attacks on or within markets in which we operate;

our ability to successfully implement our strategic initiatives;

our reliance on the continued operation of our manufacturing facilities and application of our intellectual property;

adverse U.S. and international economic market conditions, including currency fluctuations;

failure of our product approval, R&D, acquisition and licensing efforts to generate new products;

the risks of product liability claims, legal proceedings and general litigation expenses;

the impact of current and future laws and regulatory changes;

modification of foreign trade policy may harm our food animal product customers

our dependence on our Israeli and Brazilian operations;

our substantial level of indebtedness and related debt-service obligations;

restrictions imposed by covenants in our debt agreements;

the risk of work stoppages; and

other factors as described in “Risk Factors” in Item 1A. of our Annual Report.
While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any
32

forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
Item 3.   Quantitative and Qualitative Disclosures about Market Risk
In the normal course of operations, we are exposed to market risks arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. As a result, future earnings, cash flows and fair values of assets and liabilities are subject to uncertainty. We use, from time to time, foreign currency contracts and interest rate swaps as a means of hedging exposure to foreign currency risks and fluctuating interest rates, respectively. We also utilize, on a limited basis, certain commodity derivatives, primarily on copper used in manufacturing processes, to hedge the cost of anticipated purchase or supply requirements. We do not utilize derivative instruments for trading or speculative purposes. We do not hedge our exposure to market risks in a manner that completely eliminates the effects of changing market conditions on earnings, cash flows and fair values. We monitor the financial stability and credit standing of our major counterparties.
For financial market risks related to changes in interest rates, foreign currency exchange rates and commodity prices, reference is made to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosures about Market Risk” section in the Annual Report and to the notes to the consolidated financial statements included therein. There were no material changes in the Company’s financial market risks from the risks disclosed in the Annual Report.
Item 4.   Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation as of December 31, 2018, our Chief Executive Officer and Chief Financial Officer each concluded that, as of the end of such period, our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting, as described in Management’s Report on Internal Control over Financial Reporting in “Item 9A. Controls and Procedures” in the Annual Report on Form 10-K for the year ended June 30, 2018.
Material Weakness Remediation Efforts
We continue to make further progress in implementing a broad range of changes to strengthen our internal control over financial reporting and to remediate the material weaknesses that existed as of June 30, 2018. Our actions to address material weaknesses have included the design and implementation of additional formal accounting policies and procedures to ensure transactions are properly initiated, recorded, processed, reported, appropriately authorized and approved. Also, our efforts to ensure maintenance of the appropriate level of segregation of duties includes restricting access to key financial systems and records to appropriate users. We have decreased the level of segregation of duties conflicts and continue to determine the extent it is necessary to limit access and modify responsibilities of certain personnel, as well as designing and implementing additional user access controls and compensating controls. We will continue to build on the progress we have made in our remediation plan. We cannot determine when our remediation plan will be fully completed, and we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting during the three months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
33

PART II—OTHER INFORMATION
Item 1.
Legal Proceedings
Information required by this Item is incorporated herein by reference to “Notes to the Consolidated Financial Statements—Commitments and Contingencies” in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Item 1A.
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in the “Risk Factors” section in the Annual Report, which could materially affect our business, financial condition or future results.
There were no material changes in the Company’s risk factors from the risks disclosed in the Annual Report.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
None.
Item 5.
Other Information
None.
34

Item 6.
Exhibits
Exhibit 31.1 Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 31.2 Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 302
Exhibit 32.1 Chief Executive Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 32.2 Chief Financial Officer—Certification pursuant to Sarbanes-Oxley Act of 2002 Section 906
Exhibit 101.INS* XBRL Instance Document
Exhibit 101.SCH* XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB* XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
*
Furnished with this Quarterly Report. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933 and are deemed not filed for purposes of section 18 of the Exchange Act.
35

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Phibro Animal Health Corporation
February 6, 2019 By:
/s/ Jack C. Bendheim
Jack C. Bendheim
Chairman, President and Chief Executive Officer
February 6, 2019 By:
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer
36

EX-31.1 2 tv511757-exh31x1.htm EXHIBIT 31.1 tv511757-10q_DIV_07-exh31x1 - none - 0.903355s
EXHIBIT 31.1​
CERTIFICATIONS
I, Jack C. Bendheim, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Phibro Animal Health Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 6, 2019
/s/ Jack C. Bendheim
Jack C. Bendheim
Chairman, President and Chief Executive Officer

EX-31.2 3 tv511757-exh31x2.htm EXHIBIT 31.2 tv511757-10q_DIV_08-exh31x2 - none - 0.8711272s
EXHIBIT 31.2​
CERTIFICATIONS
I, Richard G. Johnson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Phibro Animal Health Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 6, 2019
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer

EX-32.1 4 tv511757-exh32x1.htm EXHIBIT 32.1 tv511757-10q_DIV_09-exh32x1 - none - 0.918004s
EXHIBIT 32.1​
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Dated: February 6, 2019
/s/ Jack C. Bendheim
Jack C. Bendheim
Chairman, President and Chief Executive Officer

EX-32.2 5 tv511757-exh32x2.htm EXHIBIT 32.2 tv511757-10q_DIV_10-exh32x2 - none - 0.9160508s
EXHIBIT 32.2​
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.
Dated: February 6, 2019
/s/ Richard G. Johnson
Richard G. Johnson
Chief Financial Officer

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style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: 400; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">Phibro Animal Health Corporation (&#8220;Phibro&#8221; or &#8220;PAHC&#8221;) and its subsidiaries (together, the &#8220;Company&#8221;) 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, cattle, dairy 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 &#8220;we,&#8221; &#8220;our,&#8221; &#8220;us,&#8221; and similar expressions refer to Phibro and its subsidiaries.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: 400; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The unaudited consolidated financial information for the three and six&#160;months ended December&#160;31, 2018 and 2017, is presented on the same basis as the financial statements included in the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended June&#160;30, 2018 (the &#8220;Annual Report&#8221;), filed with the Securities and Exchange Commission on August&#160;27, 2018 (File no.&#160;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&#160;30, 2018, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, but does not include all disclosures required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: 400; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">The consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in the consolidated financial statements. The decision whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity.</div> <div style="text-align: left; line-height: 11pt; margin-top: 0pt; white-space: nowrap; margin-bottom: 0pt; float: left; font-weight: bold;"><font style="font-family: times new roman,times;" size="2">2&#160;&#160;&#160;&#160;&#160;Summary of Significant Accounting Policies and New Accounting Standards</font></div> <div style="line-height: 0pt; margin: 0pt; clear: both; font-size: 0pt; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;"><font style="font-family: times new roman,times;" size="2">Our significant accounting policies are described in the notes to the consolidated financial statements included in our Annual Report. 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The Tax Act also has consequences related to our international operations.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: 400; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">We have elected to record Global Intangible Low-Taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation as a current period expense. The provision for income taxes for the three and six months ended December&#160;31, 2018, included $315 and $672 of expense, respectively, from the effects of GILTI.</div> <div style="line-height: 12pt; widows: 2; text-transform: none; font-style: normal; margin-top: 6pt; text-indent: 40pt; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 13px; font-weight: 400; word-spacing: 0px; font-variant-ligatures: normal; font-variant-caps: normal; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial;">During the three&#160;months ended December&#160;31, 2018, we completed our analysis and accounting for the Tax Act and recorded a $715 reduction in the provision for income taxes, related to the previously recorded one-time mandatory toll charge on the deemed repatriation of undistributed earnings of foreign subsidiaries.</div> <div style="widows: 2; text-transform: none; font-variant: normal; font-style: normal; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 10pt; font-weight: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; break-after: page;"> <div style="text-align: left; line-height: 11pt; margin-top: 0pt; white-space: nowrap; margin-bottom: 0pt; float: left; font-weight: bold;">8.&#160;&#160;&#160;&#160;&#160;Commitments and Contingencies</div> <div style="line-height: 0pt; margin: 0pt; clear: both; font-size: 0pt; padding: 0pt;">&#160;</div> <div style="line-height: 11pt; font-style: italic; margin-top: 12pt;">Environmental</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, &#8220;Environmental Laws&#8221;). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.</div> </div> <div style="widows: 2; text-transform: none; font-variant: normal; font-style: normal; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 10pt; font-weight: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; break-after: page;"> <div style="line-height: 12pt; margin-top: 10pt; text-indent: 40pt;">While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">The United States Environmental Protection Agency (the &#8220;EPA&#8221;) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (&#8220;Omega Chemical Site&#8221;), which is upgradient of Phibro-Tech&#8217;s Santa Fe Springs, California facility. The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (&#8220;PRPs&#8221;) due to groundwater contamination from Phibro-Tech&#8217;s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September&#160;2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that any groundwater contamination at its site is localized and due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA and RCRA in the United&#160;States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA&#8217;s investigation, the preliminary stage of the ongoing litigation and Phibro-Tech&#8217;s dispute with the prior owner&#8217;s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be approximately $6,598 and $6,833 at December&#160;31, 2018 and June&#160;30, 2018, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.</div> </div> <div style="widows: 2; text-transform: none; font-variant: normal; font-style: normal; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 10pt; font-weight: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; break-after: page;"> <div style="line-height: 11pt; font-style: italic; margin-top: 10pt;">Claims and Litigation</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liabilities, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, our insurance policies will cover such claims. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.</div> </div> <div style="widows: 2; text-transform: none; font-variant: normal; font-style: normal; text-indent: 0px; font-family: 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; font-size: 10pt; font-weight: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; break-after: page;"> <div style="text-align: left; line-height: 11pt; margin-top: 0pt; white-space: nowrap; margin-bottom: 0pt; float: left; font-weight: bold;">9.&#160;&#160;&#160;&#160;&#160;Derivatives</div> <div style="line-height: 0pt; margin: 0pt; clear: both; font-size: 0pt; padding: 0pt;">&#160;</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded as an asset or liability with a corresponding amount recorded in accumulated other comprehensive income (loss).</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see &#8220;&#8212;Fair Value Measurements.&#8221;</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">We entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The forecasted transactions are probable of occurring, and the interest rate swap has been designated as a highly effective cash flow hedge.</div> <div style="line-height: 12pt; margin-top: 6pt; text-indent: 40pt;">We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June&#160;2020. 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Document and Entity Information - shares
6 Months Ended
Dec. 31, 2018
Jan. 30, 2019
Entity Registrant Name PHIBRO ANIMAL HEALTH CORP  
Entity Central Index Key 0001069899  
Trading Symbol pahc  
Current Fiscal Year End Date --06-30  
Entity Filer Category Accelerated Filer  
Document Type 10-Q  
Document Period End Date Dec. 31, 2018  
Amendment Flag false  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Entity Small Business false  
Entity Emerging Growth Company true  
Entity Ex Transition Period true  
Class A common stock    
Entity Common Stock, Shares Outstanding   20,283,777
Class B common stock    
Entity Common Stock, Shares Outstanding   20,166,034
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]        
Net sales $ 218,223 $ 205,876 $ 418,376 $ 399,288
Cost of goods sold 149,579 138,957 283,927 268,987
Gross profit 68,644 66,919 134,449 130,301
Selling, general and administrative expenses 42,938 42,981 85,890 83,976
Operating income 25,706 23,938 48,559 46,325
Interest expense, net 3,015 3,050 5,798 6,168
Foreign currency (gains) losses, net 2,617 (323) (18) 2
Income before income taxes 20,074 21,211 42,779 40,155
Provision for income taxes 5,326 14,179 11,717 17,231
Net income $ 14,748 $ 7,032 $ 31,062 $ 22,924
Net income per share        
basic (in dollars per share) $ 0.37 $ 0.17 $ 0.77 $ 0.57
diluted (in dollars per share) $ 0.36 $ 0.17 $ 0.77 $ 0.57
Weighted average common shares outstanding        
basic (in shares) 40,383 40,186 40,376 40,065
diluted (in shares) 40,523 40,364 40,523 40,329
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]        
Net income $ 14,748 $ 7,032 $ 31,062 $ 22,924
Change in fair value of derivative instruments (2,243) (276) (1,702) (898)
Foreign currency translation adjustment 4,163 (5,005) (3,519) (1,772)
Unrecognized net pension gains (losses) 124 95 232 226
(Provision) benefit for income taxes 527 809 365 996
Other comprehensive income (loss) 2,571 (4,377) (4,624) (1,448)
Comprehensive income $ 17,319 $ 2,655 $ 26,438 $ 21,476
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CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
ASSETS    
Cash and cash equivalents $ 31,336 $ 29,168
Short-term investments 49,000 50,000
Accounts receivable, net 144,050 135,742
Inventories, net 193,099 178,170
Other current assets 23,605 22,381
Total current assets 441,090 415,461
Property, plant and equipment, net 132,711 130,108
Intangibles, net 50,509 51,978
Goodwill 27,348 27,348
Other assets 45,634 46,784
Total assets 697,292 671,679
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current portion of long-term debt 12,577 12,579
Accounts payable 65,095 59,498
Accrued expenses and other current liabilities 58,157 71,144
Total current liabilities 135,829 143,221
Revolving credit facility 88,000 70,000
Long-term debt 223,699 229,802
Other liabilities 44,540 43,702
Total liabilities 492,068 486,725
Commitments and contingencies (Note 8)
Common stock, par value $0.0001 per share; 300,000,000 Class A shares authorized, 20,220,534 and 19,992,204 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively; 30,000,000 Class B shares authorized, 20,166,034 and 20,365,504 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively 4 4
Preferred stock, par value $0.0001 per share; 16,000,000 shares authorized, no shares issued and outstanding
Paid-in capital 131,343 129,873
Retained earnings 154,984 131,560
Accumulated other comprehensive income (loss) (81,107) (76,483)
Total stockholders' equity 205,224 184,954
Total liabilities and stockholders' equity $ 697,292 $ 671,679
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CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares
Dec. 31, 2018
Jun. 30, 2018
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 16,000,000 16,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Class A common stock    
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 300,000,000 300,000,000
Common stock, shares issued 20,220,534 19,992,204
Common stock, shares outstanding 20,220,534 19,992,204
Class B common stock    
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 30,000,000 30,000,000
Common stock, shares issued 20,166,034 20,365,504
Common stock, shares outstanding 20,166,034 20,365,504
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
OPERATING ACTIVITIES    
Net income $ 31,062 $ 22,924
Adjustments to reconcile net income to net cash provided (used) by operating activities:    
Depreciation and amortization 13,532 13,275
Amortization of debt issuance costs and debt discount 441 441
Stock-based compensation 1,129  
Acquisition-related cost of goods sold   1,671
Acquisition-related accrued compensation   924
Acquisition-related accrued interest   505
Deferred income taxes 135 5,725
Foreign currency (gains) losses, net 12 11
Other (1,071) 418
Changes in operating assets and liabilities, net of business acquisitions:    
Accounts receivable, net (8,906) (5,075)
Inventories, net (16,278) (10,845)
Other current assets (3,616) (4,751)
Other assets 866 664
Accounts payable 5,169 7,473
Accrued expenses and other liabilities (5,839) 3,733
Net cash provided (used) by operating activities 16,636 37,093
INVESTING ACTIVITIES    
Purchases of short-term investments (10,000) (27,000)
Maturities of short-term investments 11,000  
Capital expenditures (12,117) (8,851)
Business acquisitions (9,838) (15,000)
Other, net 27 (716)
Net cash provided (used) by investing activities (20,928) (51,567)
FINANCING ACTIVITIES    
Revolving credit facility borrowings 103,000 109,870
Revolving credit facility repayments (85,000) (103,870)
Payments of long-term debt, capital leases and other (6,359) (3,236)
Issuance of acquisition note payable 3,775  
Proceeds from common shares issued 341 3,700
Dividends paid (8,883) (8,008)
Net cash provided (used) by financing activities 6,874 (1,544)
Effect of exchange rate changes on cash (414) 120
Net increase (decrease) in cash and cash equivalents 2,168 (15,898)
Cash and cash equivalents at beginning of period 29,168 56,083
Cash and cash equivalents at end of period $ 31,336 $ 40,185
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Description of Business
6 Months Ended
Dec. 31, 2018
Description Of Business [Abstract]  
Description of Business
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, cattle, dairy 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, 2018 and 2017, 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, 2018 (the “Annual Report”), filed with the Securities and Exchange Commission on August 27, 2018 (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, 2018, was derived from the audited consolidated financial statements, which include the accounts of Phibro and its consolidated subsidiaries, 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 consolidated financial statements include the accounts of Phibro and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in the consolidated financial statements. The decision whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective control over the entity.
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Summary of Significant Accounting Policies and New Accounting Standards
6 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies and New Accounting Standards
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. We adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), effective July 1, 2018. See “New Accounting Standards” and “Statements of Operations—Additional Information.” As of December 31, 2018, there have been no other material changes to our significant accounting policies
Revenue Recognition
We recognize revenue from product sales when control of the products has transferred to the customer, typically when title and risk of loss transfer to the customer. Certain of our businesses have terms where control of the underlying products transfers to the customer on shipment, while others have terms where control transfers to the customer on delivery.
Revenue reflects the total consideration to which we expect to be entitled, in exchange for delivery of products or services, net of variable consideration. Variable consideration includes customer programs and incentive offerings, including pricing arrangements, rebates and other volume-based incentives. We record reductions to revenue for estimated variable consideration at the time we record the sale. Our estimates for variable consideration primarily use the most-likely amount method. Such estimates are generally based on contractual terms and historical experience, and are adjusted to reflect future expectations as new information becomes available. Historically, we have not had significant adjustments to our estimates of customer incentives. Sales returns and product recalls have been insignificant and infrequent due to the nature of the products we sell.
Net sales include shipping and handling fees billed to customers. The associated costs are
considered fulfillment activities, not additional promised services to the customer, and are included in costs of goods sold in the consolidated statements of operations when the related revenue is recognized. Net sales exclude value-added and other taxes based on sales.
Net Income per Share, Weighted Average Shares and Dividends per Share
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
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 for all periods presented.
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Net income
      $   14,748         $ 7,032         $ 31,062         $ 22,924    
Weighted average number of shares – basic
        40,383           40,186           40,376           40,065    
Dilutive effect of stock options and restricted stock units
        140           178           147           264    
Weighted average number of shares – diluted
        40,523           40,364           40,523           40,329    
Net income per share                                                  
basic
      $   0.37         $ 0.17         $ 0.77         $ 0.57    
diluted
      $   0.36         $ 0.17         $ 0.77         $ 0.57    
Dividends per share
      $   0.12         $ 0.10         $ 0.22         $ 0.20    
 New Accounting Standards
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. This ASU 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. This ASU is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, allows reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects related to adjustments resulting from the United States Tax Cuts and Jobs Act. This ASU is effective for annual reporting periods beginning after December 15, 2018. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. We adopted this guidance during the three months ended September 30, 2018, and it did not have a material effect on our consolidated financial statements.
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance, requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU and its amendments are effective for our consolidated financial statements beginning July 1, 2019. The new standard requires a modified retrospective method. We expect the adoption of this guidance will increase the assets and liabilities reported on our consolidated balance sheet. We continue to evaluate the effects of this guidance.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. We adopted ASU 2014-09 and its amendments effective July 1, 2018, using the modified retrospective method. Comparative prior period amounts were not restated and continue to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material effect on reported net sales or retained earnings.
The total cumulative effect of initial adoption of the new standard resulted in the following changes to our consolidated balance sheet:
As of July 1, 2018
   
Effect of 
Adoption
   
Post-adoption
 
Other current assets
      $ 2,100         $ 24,481    
Other assets
        2,325           49,109    
Accrued expenses and other current liabilities
        343           71,487    
Other liabilities
        2,837           46,539    
Retained earnings
      $ 1,245         $ 132,805    
The current year effect of the adoption of the new standard resulted in the following changes to our consolidated balance sheet and consolidated statement of operations:
As of December 31. 2018
   
Effect of 
adoption
   
As reported
 
Other current assets
      $ 100         $ 23,605    
Other assets
        125           45,634    
Other liabilities
        (108)           44,540    
Retained earnings
      $ 333         $ 154,984    
     
Three Months
   
Six Months
 
For the Periods Ended December 31, 2018
   
Effect of 
adoption
   
As reported
   
Effect of 
adoption
   
As reported
 
Net sales
      $ 198         $ 218,223         $ 396         $ 418,376    
Provision for income taxes
        32           5,326           63           11,717    
Net income
      $ 166         $ 14,748         $ 333         $ 31,062    
For changes to our policy resulting from the adoption of ASU 2014-09, see “—Summary of Significant Accounting Policies and New Accounting Standards—Revenue Recognition.” See “Statements of Operations—Additional Information” for our disclosures regarding disaggregated revenue, deferred revenue and customer payment terms. 
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Statements of Operations-Additional Information
6 Months Ended
Dec. 31, 2018
Statements Of Operations Additional Information [Abstract]  
Statements of Operations-Additional Information
3.      Statements of Operations—Additional Information
 
Disaggregated revenue, deferred revenue and customer payment terms
We develop, manufacture and market products for a broad range of 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 either directly to integrated poultry, swine and cattle integrators or 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.
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:   The MFAs and other business primarily consists 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 also manufacture and distribute autogenous vaccine products and market adjuvants to vaccine manufacturers. We have developed 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. The 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. Mineral nutrition products are manufactured and marketed for a broad range of food animals including poultry, swine and beef and dairy cattle.
Performance Products
The Performance Products business manufactures and markets a number of 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
   
2018
   
2017
   
2018
   
2017
 
Animal Health                                                  
MFAs and other
      $ 93,054         $ 82,018         $ 180,058         $ 161,621    
Nutritional specialties
        29,460           32,623           56,430           63,400    
Vaccines
        17,048           18,204           34,263           36,665    
Total Animal Health
      $ 139,562         $ 132,845         $ 270,751         $ 261,686    
Mineral Nutrition
        62,319           59,616           117,157           111,689    
Performance Products
        16,342           13,415           30,468           25,913    
Total
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
 
Net Sales by Region
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
United States
      $ 127,750         $ 129,379         $ 243,842         $ 242,548    
Latin America and Canada
        39,316           36,126           77,575           68,452    
Europe, Middle East and Africa
        26,181           27,672           51,040           53,054    
Asia Pacific
        24,976           12,699           45,919           35,234    
Total
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
 
Net sales by region are based on country of destination.
Total deferred revenue was $6,416 and $4,530 as of December 31, 2018 and June 30, 2018, respectively. Accrued expenses and other current liabilities included $1,471 and $508 of the total deferred revenue as of December 31, 2018 and June 30, 2018, 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
   
2018
   
2017
   
2018
   
2017
 
Interest expense, net                                                  
Term loan
      $ 2,202         $ 2,110         $ 4,314         $ 4,143    
Revolving credit facility
        920           739           1,667           1,420    
Amortization of debt issuance costs and debt discount
        220           220           441           441    
Acquisition-related accrued interest
                  252                     505    
Other
        120           2           283           241    
Interest expense
        3,462           3,323           6,705           6,750    
Interest (income)
        (447)           (273)           (907)           (582)    
        $ 3,015         $ 3,050         $ 5,798         $ 6,168    
Depreciation and amortization                                                  
Depreciation of property, plant and equipment
      $ 5,308         $ 5,222         $ 10,496         $ 10,405    
Amortization of intangible assets
        1,521           1,397           3,012           2,846    
Amortization of other assets
        12           12           24           24    
        $ 6,841         $ 6,631         $ 13,532         $ 13,275    
 
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Balance Sheets-Additional Information
6 Months Ended
Dec. 31, 2018
Balance Sheets Additional Information [Abstract]  
Balance Sheets-Additional Information
4.     Balance Sheets—Additional Information
 
As of
   
December 31,
2018
   
June 30,
2018
 
Inventories                          
Raw materials
      $ 80,649         $ 62,373    
Work-in-process
        14,907           14,731    
Finished goods
        97,543           101,066    
        $ 193,099         $ 178,170    
 
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 $3,141 equity investment are currently idled; we have concluded the investment is not currently impaired, based on expected future operating cash flows and/or disposal value.
As of
   
December 31,
2018
   
June 30,
2018
 
Accrued expenses and other current liabilities                          
Employee related
      $ 21,282         $ 27,333    
Commissions and rebates
        7,510           7,341    
Insurance-related
        1,563           1,168    
Professional fees
        4,599           4,350    
Income and other taxes
        4,122           3,610    
Acquisition-related consideration
        3,928           12,845    
Other
        15,153           14,497    
        $ 58,157         $ 71,144    
 
In July 2018, we accelerated the closing date and completed the purchase of intellectual property and certain other assets comprising the MJ Biologics, Inc. (“MJB”) business relating to animal vaccines. The Company and MJB had originally agreed to the purchase business combination in January 2015, with a contemplated final closing date in January 2021. The final amount due, net of previously paid amounts, was $12,775, including $9,000 paid in July 2018 and $3,775 paid in January 2019.
As of
   
December 31,
2018
   
June 30,
2018
 
Accumulated other comprehensive income (loss)                          
Derivative instruments
      $ 3,284         $ 4,986    
Foreign currency translation adjustment
        (70,617)           (67,098)    
Unrecognized net pension gains (losses)
        (17,981)           (18,213)    
(Provision) benefit for income taxes on derivative instruments
        (818)           (1,241)    
(Provision) benefit for income taxes on long-term intercompany investments
        8,166           8,166    
(Provision) benefit for income taxes on pension gains (losses)
        (3,141)           (3,083)    
        $ (81,107)         $ (76,483)
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Debt
6 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Debt
5.     Debt
 
Term Loans and Revolving Credit Facilities
Pursuant to a credit agreement (the “Credit Agreement”), we have a revolving credit facility (the “Revolver”), where 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 Credit Facilities have applicable margins 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 margins 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 Facilities require, among other things, the maintenance of  (i) a maximum First Lien Net Leverage Ratio and (ii) a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis, and contain an acceleration clause should an event of default (as defined in the agreement governing the Credit Facilities) occur. As of December 31, 2018, we were in compliance with the covenants of the Credit Facilities.
As of December 31, 2018, we had $88,000 in borrowings under the Revolver and had outstanding letters of credit of  $4,191, leaving $157,809 available for borrowings and letters of credit under the Revolver. We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The terms of these letters of credit are one year or less.
As of December 31, 2018, the interest rates for the Revolver and the Term A Loan were 4.00% and 3.58%, respectively. The weighted-average interest rates for the outstanding revolving credit facilities were 3.71% and 3.01% for the six months ended December 31, 2018 and 2017, respectively. The weighted-average interest rates for the term loans were 3.47% and 3.29% for the six months ended December 31, 2018 and 2017, respectively.
In July 2017, we entered into an interest rate swap agreement on $150 million of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The interest rate swap has been designated as a highly effective cash flow hedge. For additional details, see “—Derivatives.”
Long-Term Debt
As of
   
December 31,
2018
   
June 30,
2018
 
Term A Loan due June 2022
      $ 237,500         $ 243,750    
Capitalized lease obligations
        77           118    
          237,577           243,868    
Unamortized debt issuance costs and debt discount
        (1,301)           (1,487)    
          236,276           242,381    
Less: current maturities
        (12,577)           (12,579)    
        $ 223,699         $ 229,802    
 
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Related Party Transactions
6 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
6.     Related Party Transactions
 
Certain relatives of Jack C. Bendheim, our Chairman, President and Chief Executive Officer, provided services to us as employees or consultants and received aggregate compensation and benefits of approximately $430 and $409 during the three months ended December 31, 2018 and 2017, respectively, and $1,213 and $1,129 during the six months ended December 31, 2018 and 2017, respectively. Mr. Bendheim has sole authority to vote shares of our stock owned by BFI Co., LLC, an investment vehicle of the Bendheim family.
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Income Taxes
6 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
7.     Income Taxes
 
In December 2017, the United States government enacted comprehensive income tax legislation (the “Tax Act”). The Tax Act makes broad and complex changes to United States income tax law and includes numerous elements that affect the Company, including a reduced federal corporate income tax rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings and changes to business-related exclusions, deductions and credits. The Tax Act also has consequences related to our international operations.
We have elected to record Global Intangible Low-Taxed Income (GILTI) aspects of the comprehensive U.S. income tax legislation as a current period expense. The provision for income taxes for the three and six months ended December 31, 2018, included $315 and $672 of expense, respectively, from the effects of GILTI.
During the three months ended December 31, 2018, we completed our analysis and accounting for the Tax Act and recorded a $715 reduction in the provision for income taxes, related to the previously recorded one-time mandatory toll charge on the deemed repatriation of undistributed earnings of foreign subsidiaries.
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Commitments and Contingencies
6 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
8.     Commitments and Contingencies
 
Environmental
Our operations and properties are subject to extensive federal, state, local and foreign laws and regulations, including those governing pollution; protection of the environment; the use, management, and release of hazardous materials, substances and wastes; air emissions; greenhouse gas emissions; water use, supply and discharges; the investigation and remediation of contamination; the manufacture, distribution, and sale of regulated materials, including pesticides; the importing, exporting and transportation of products; and the health and safety of our employees (collectively, “Environmental Laws”). As such, the nature of our current and former operations exposes us to the risk of claims with respect to such matters, including fines, penalties, and remediation obligations that may be imposed by regulatory authorities. Under certain circumstances, we might be required to curtail operations until a particular problem is remedied. Known costs and expenses under Environmental Laws incidental to ongoing operations, including the cost of litigation proceedings relating to environmental matters, are included within operating results. Potential costs and expenses may also be incurred in connection with the repair or upgrade of facilities to meet existing or new requirements under Environmental Laws or to investigate or remediate potential or actual contamination and from time to time we establish reserves for such contemplated investigation and remediation costs. In many instances, the ultimate costs under Environmental Laws and the time period during which such costs are likely to be incurred are difficult to predict.
While we believe that our operations are currently in material compliance with Environmental Laws, we have, from time to time, received notices of violation from governmental authorities, and have been involved in civil or criminal action for such violations. Additionally, at various sites, our subsidiaries are engaged in continuing investigation, remediation and/or monitoring efforts to address contamination associated with historic operations of the sites. We devote considerable resources to complying with Environmental Laws and managing environmental liabilities. We have developed programs to identify requirements under, and maintain compliance with Environmental Laws; however, we cannot predict with certainty the effect of increased and more stringent regulation on our operations, future capital expenditure requirements, or the cost of compliance.
The nature of our current and former operations exposes us to the risk of claims with respect to environmental matters and we cannot assure we will not incur material costs and liabilities in connection with such claims. Based upon our experience to date, we believe that the future cost of compliance with existing Environmental Laws, and liabilities for known environmental claims pursuant to such Environmental Laws, will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
The United States Environmental Protection Agency (the “EPA”) is investigating and planning for the remediation of offsite contaminated groundwater that has migrated from the Omega Chemical Corporation Superfund Site (“Omega Chemical Site”), which is upgradient of Phibro-Tech’s Santa Fe Springs, California facility. The EPA has named Phibro-Tech and certain other subsidiaries of PAHC as potentially responsible parties (“PRPs”) due to groundwater contamination from Phibro-Tech’s Santa Fe Springs facility that has allegedly commingled with contaminated groundwater from the Omega Chemical Site. In September 2012, the EPA notified approximately 140 PRPs, including Phibro-Tech and the other subsidiaries, that they have been identified as potentially responsible for remedial action for the groundwater plume affected by the Omega Chemical Site and for EPA oversight and response costs. Phibro-Tech contends that any groundwater contamination at its site is localized and due to historical operations that pre-date Phibro-Tech and/or contaminated groundwater that has migrated from upgradient properties. In addition, a successor to a prior owner of the Phibro-Tech site has asserted that PAHC and Phibro-Tech are obligated to provide indemnification for its potential liability and defense costs relating to the groundwater plume affected by the Omega Chemical Site. Phibro-Tech has vigorously contested this position and has asserted that the successor to the prior owner is required to indemnify Phibro-Tech for its potential liability and defense costs. Furthermore, a group of companies that sent chemicals to the Omega Chemical Site for processing and recycling has filed a complaint under CERCLA and RCRA in the United States District Court for the Central District of California against many of the PRPs allegedly associated with the groundwater plume affected by the Omega Chemical Site (including Phibro-Tech) for contribution toward past and future costs associated with the investigation and remediation of the groundwater plume affected by the Omega Chemical Site. Due to the ongoing nature of the EPA’s investigation, the preliminary stage of the ongoing litigation and Phibro-Tech’s dispute with the prior owner’s successor, at this time we cannot predict with any degree of certainty what, if any, liability Phibro-Tech or the other subsidiaries may ultimately have for investigation, remediation and the EPA oversight and response costs associated with the affected groundwater plume.
Based upon information available, to the extent such costs can be estimated with reasonable certainty, we estimated the cost for further investigation and remediation of identified soil and groundwater problems at operating sites, closed sites and third-party sites, and closure costs for closed sites, to be approximately $6,598 and $6,833 at December 31, 2018 and June 30, 2018, respectively, which is included in current and long-term liabilities on the consolidated balance sheets. However, future events, such as new information, changes in existing Environmental Laws or their interpretation, and more vigorous enforcement policies of regulatory agencies, may give rise to additional expenditures or liabilities that could be material. For all purposes of the discussion under this caption and elsewhere in this report, it should be noted that we take and have taken the position that neither PAHC nor any of our subsidiaries is liable for environmental or other claims made against one or more of our other subsidiaries or for which any of such other subsidiaries may ultimately be responsible.
Claims and Litigation
PAHC and its subsidiaries are party to a number of claims and lawsuits arising out of the normal course of business including product liabilities, payment disputes and governmental regulation. Certain of these actions seek damages in various amounts. In many cases, our insurance policies will cover such claims. We believe that none of the claims or pending lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, cash flows or liquidity.
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Derivatives
6 Months Ended
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
9.     Derivatives
 
We monitor our exposure to foreign currency exchange rates and interest rates and from time-to-time use derivatives to manage certain of these risks. We designate derivatives as a hedge of a forecasted transaction or of the variability of the cash flows to be received or paid in the future related to a recognized asset or liability (cash flow hedge). All changes in the fair value of a highly effective cash flow hedge are recorded as an asset or liability with a corresponding amount recorded in accumulated other comprehensive income (loss).
We routinely assess whether the derivatives used to hedge transactions are effective. If we determine a derivative ceases to be an effective hedge, we discontinue hedge accounting in the period of the assessment for that derivative, and immediately recognize any unrealized gains or losses related to the fair value of that derivative in the consolidated statements of operations.
We record derivatives at fair value in the consolidated balance sheets. For additional details regarding fair value, see “—Fair Value Measurements.”
We entered into an interest rate swap agreement on $150,000 of notional principal that effectively converts the floating LIBOR or base rate portion of our interest obligation on that amount of debt, to a fixed interest rate of 1.8325% plus the applicable rate. The agreement matures concurrent with the Credit Agreement. The forecasted transactions are probable of occurring, and the interest rate swap has been designated as a highly effective cash flow hedge.
We entered into foreign currency option contracts to hedge cash flows related to monthly inventory purchases. The individual option contracts mature monthly through June 2020. The forecasted inventory purchases are probable of occurring and the individual option contracts were designated as highly effective cash flow hedges.
The following table summarizes the outstanding derivatives that are designated and effective as cash flow hedges as of December 31, 2018:
Instrument
   
Hedge
   
Notional 
Amount at 
December 31, 
2018
   
Consolidated 
Balance Sheet
   
Fair value as of
 
 
December 31, 
2018
   
June 30, 
2018
 
Options
   
Brazilian Real calls
   
R$75,000
        (1)         $ 551         $ 71    
Options
   
Brazilian Real puts
   
R$75,000
        (1)         $ (146)         $    
Swap
    Interest rate swap    
$150,000
   
Other assets
      $ 2,972         $ 5,078    
 
(1)     We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. The net fair values of  $405 and $71 were included in other current assets as of December 31, 2018 and June 30, 2018, respectively.
 
The following tables show the effects of derivatives on the consolidated statements of operations and other comprehensive income for the three and six months ended December 31, 2018 and 2017.
For the Three Months Ended December 31
 
Instrument
   
Hedge
   
Gain (Loss) recorded in OCI
   
Gain (Loss) recognized in 
consolidated statements of operations
   
Consolidated Statement 
of Operations Line 
Item Total
 
 
2018
   
2017
   
Consolidated 
Statement 
of Operations
   
2018
   
2017
   
2018
   
2017
 
Options
    Brazilian Real puts and calls       $ 513         $ (1,781)       Cost of goods sold       $         $ 517         $ 149,579         $ 138,957    
Swap
    Interest rate swap       $ (2,756)         $ 1,505      
Interest expense, net
      $         $         $ 3,015         $ 3,050    
For the Six Months Ended December 31
 
Instrument
   
Hedge
   
Gain (Loss) recorded in OCI
   
Gain (Loss) recognized in 
consolidated statements of operations
   
Consolidated Statement 
of Operations Line 
Item Total
 
 
2018
   
2017
   
Consolidated 
Statement 
of Operations
   
2018
   
2017
   
2018
   
2017
 
Options
    Brazilian Real puts and calls       $ 404         $ (2,686)       Cost of goods sold       $ 1,084         $ 703         $ 283,927         $ 268,987    
Swap
    Interest rate swap       $ (2,106)         $ 1,788      
Interest expense, net
      $         $         $ 5,798         $ 6,168    
We recognize gains (losses) related to these foreign currency derivatives as a component of cost of goods sold at the time the hedged item is sold. Realized net gains of $1,084 related to matured contracts were recorded as a component of inventory as of June 30, 2018 and were fully recognized as an offset to costs of goods sold during the three months ended September 30, 2018.
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Fair Value Measurements
6 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
10.   Fair Value Measurements
 
Short-term investments
As of December 31, 2018, our short-term investments consist of cash deposits held at financial institutions. We consider the carrying amounts of these short-term investments to be representative of their fair value.
Derivatives
We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates, and interest rate curves.
Fair Value of Assets (Liabilities)
As of
   
December 31, 2018
   
June 30, 2018
 
     
Level 1
   
Level 2
   
Level 1
   
Level 2
 
Short-term investments
      $ 49,000         $         $ 50,000         $    
Derivatives asset (liability)
      $         $ 405         $         $ 71    
Interest rate swap
      $         $ 2,972         $         $ 5,078    
There were no Level 3 fair value measurements as of the periods presented.
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Business Segments
6 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Business Segments
11.   Business Segments
 
We evaluate performance and allocate resources based on the Animal Health, Mineral Nutrition and Performance Products segments. Certain of our costs and assets are not directly attributable to these segments and we refer to these items as Corporate. We do not allocate Corporate costs or assets to the segments because they are not used to evaluate the segments’ operating results or financial position. Corporate costs include certain costs related to executive management, business technology, legal, finance, human resources and business development. Corporate assets include cash and cash equivalents, certain debt issue costs, income tax related assets and certain other assets.
We evaluate performance of our segments based on Adjusted EBITDA. We define Adjusted EBITDA as income before income taxes plus (a) interest expense, net, (b) depreciation and amortization, (c) (income) loss from, and disposal of, discontinued operations, (d) other expense or less other income, as separately reported on our consolidated statements of operations, including foreign currency gains and losses and loss on extinguishment of debt, and (e) certain items that we consider to be unusual, non-operational or non-recurring.
The accounting policies of our segments are the same as those described in the summary of significant accounting policies included herein.
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Net sales                                                  
Animal Health
      $ 139,562         $ 132,845         $ 270,751         $ 261,686    
Mineral Nutrition
        62,319           59,616           117,157           111,689    
Performance Products
        16,342           13,415           30,468           25,913    
Total segments
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
Depreciation and amortization                                                  
Animal Health
      $ 5,493         $ 5,265         $ 10,849         $ 10,519    
Mineral Nutrition
        616           584           1,213           1,169    
Performance Products
        279           259           552           505    
Total segments
      $ 6,388         $ 6,108         $ 12,614         $ 12,193    
Adjusted EBITDA                                                  
Animal Health
      $ 35,925         $ 35,036         $ 71,641         $ 68,778    
Mineral Nutrition
        4,084           5,614           6,647           9,330    
Performance Products
        1,514           264           2,230           512    
Total segments
      $ 41,523         $ 40,914         $ 80,518         $ 78,620    
 
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Reconciliation of income before income taxes to Adjusted EBITDA
                                                 
Income before income taxes
      $ 20,074         $ 21,211         $ 42,779         $ 40,155    
Interest expense, net
        3,015           3,050           5,798           6,168    
Depreciation and amortization – Total segments
        6,388           6,108           12,614           12,193    
Depreciation and amortization – Corporate
        453           523           918           1,082    
Corporate costs
        9,918           8,436           18,804           16,025    
Stock-based 
compensation
        564                     1,129              
Acquisition-related cost of goods sold
                  1,422                     1,671    
Acquisition-related accrued compensation
                  487                     924    
Acquisition-related transaction 
costs
                                      400    
Other, net
        (1,506)                     (1,506)              
Foreign currency (gains) losses, 
net
        2,617           (323)           (18)           2    
Adjusted EBITDA – Total segments
      $ 41,523         $ 40,914         $ 80,518         $ 78,620    
 
As of
   
December 31,
2018
   
June 30,
2018
 
Identifiable assets                          
Animal Health
      $ 472,534         $ 455,704    
Mineral Nutrition
        77,351           69,779    
Performance Products
        32,430           24,040    
Total segments
        582,315           549,523    
Corporate
        114,977           122,156    
Total
      $ 697,292         $ 671,679    
 
The Animal Health segment includes all goodwill of the Company. The Animal Health segment includes advances to and investment in an equity method investee of  $3,141 and $3,432 as of December 31, 2018 and June 30, 2018, respectively. The Performance Products segment includes an investment in an equity method investee of  $629 and $437 as of December 31, 2018 and June 30, 2018, respectively. Corporate assets include cash and cash equivalents, short-term investments, certain debt issuance costs, income tax related assets and certain other assets.
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Summary of Significant Accounting Policies and New Accounting Standards (Policies)
6 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Revenue Recognition
Revenue Recognition
We recognize revenue from product sales when control of the products has transferred to the customer, typically when title and risk of loss transfer to the customer. Certain of our businesses have terms where control of the underlying products transfers to the customer on shipment, while others have terms where control transfers to the customer on delivery.
Revenue reflects the total consideration to which we expect to be entitled, in exchange for delivery of products or services, net of variable consideration. Variable consideration includes customer programs and incentive offerings, including pricing arrangements, rebates and other volume-based incentives. We record reductions to revenue for estimated variable consideration at the time we record the sale. Our estimates for variable consideration primarily use the most-likely amount method. Such estimates are generally based on contractual terms and historical experience, and are adjusted to reflect future expectations as new information becomes available. Historically, we have not had significant adjustments to our estimates of customer incentives. Sales returns and product recalls have been insignificant and infrequent due to the nature of the products we sell.
Net sales include shipping and handling fees billed to customers. The associated costs are
considered fulfillment activities, not additional promised services to the customer, and are included in costs of goods sold in the consolidated statements of operations when the related revenue is recognized. Net sales exclude value-added and other taxes based on sales.
Net Income per Share, Weighted Average Shares and Dividends per Share
Net Income per Share, Weighted Average Sharesand Dividends per Share
Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period.
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 for all periods presented.
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Net income
      $ 14,748         $ 7,032         $ 31,062         $ 22,924    
Weighted average number of shares – basic
        40,383           40,186           40,376           40,065    
Dilutive effect of stock options and restricted stock units
        140           178           147           264    
Weighted average number of shares – diluted
        40,523           40,364           40,523           40,329    
Net income per share                                                  
basic
      $ 0.37         $ 0.17         $ 0.77         $ 0.57    
diluted
      $ 0.36         $ 0.17         $ 0.77         $ 0.57    
Dividends per share
      $ 0.12         $ 0.10         $ 0.22         $ 0.20    
New Accounting Standards
New Accounting Standards
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. This ASU 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. This ASU is effective for fiscal years beginning after December 15, 2019. We continue to evaluate the effect of adoption of this guidance on our consolidated financial statements.
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, allows reclassification from accumulated other comprehensive income to retained earnings of stranded tax effects related to adjustments resulting from the United States Tax Cuts and Jobs Act. This ASU is effective for annual reporting periods beginning after December 15, 2018. We do not expect adoption of this guidance to have a material effect on our consolidated financial statements.
ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides specific guidance for the classification of certain transactions within the statement of cash flows. We adopted this guidance during the three months ended September 30, 2018, and it did not have a material effect on our consolidated financial statements.
ASU 2016-02, Leases (Topic 842), supersedes the current lease accounting guidance, requires an entity to recognize assets and liabilities for both financing and operating leases on the balance sheet and requires additional qualitative and quantitative disclosures regarding leasing arrangements. This ASU and its amendments are effective for our consolidated financial statements beginning July 1, 2019. The new standard requires a modified retrospective method. We expect the adoption of this guidance will increase the assets and liabilities reported on our consolidated balance sheet. We continue to evaluate the effects of this guidance.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606), establishes principles for the recognition of revenue from contracts with customers. The underlying principle is to identify the performance obligations of a contract, allocate the revenue to each performance obligation and then to recognize revenue when the company satisfies a specific performance obligation of the contract. We adopted ASU 2014-09 and its amendments effective July 1, 2018, using the modified retrospective method. Comparative prior period amounts were not restated and continue to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard did not have a material effect on reported net sales or retained earnings.
The total cumulative effect of initial adoption of the new standard resulted in the following changes to our consolidated balance sheet:
As of July 1, 2018
   
Effect of 
Adoption
   
Post-adoption
 
Other current assets
      $ 2,100         $ 24,481    
Other assets
        2,325           49,109    
Accrued expenses and other current liabilities
        343           71,487    
Other liabilities
        2,837           46,539    
Retained earnings
      $ 1,245         $ 132,805    
The current year effect of the adoption of the new standard resulted in the following changes to our consolidated balance sheet and consolidated statement of operations:
As of December 31. 2018
   
Effect of 
adoption
   
As reported
 
Other current assets
      $ 100         $ 23,605    
Other assets
        125           45,634    
Other liabilities
        (108)           44,540    
Retained earnings
      $ 333         $ 154,984    
     
Three Months
   
Six Months
 
For the Periods Ended December 31, 2018
   
Effect of 
adoption
   
As reported
   
Effect of 
adoption
   
As reported
 
Net sales
      $ 198         $ 218,223         $ 396         $ 418,376    
Provision for income taxes
        32           5,326           63           11,717    
Net income
      $ 166         $ 14,748         $ 333         $ 31,062    
For changes to our policy resulting from the adoption of ASU 2014-09, see “—Summary of Significant Accounting Policies and New Accounting Standards—Revenue Recognition.” See “Statements of Operations—Additional Information” for our disclosures regarding disaggregated revenue, deferred revenue and customer payment terms. 
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Summary of Significant Accounting Policies and New Accounting Standards (Tables)
6 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Schedule of Net Income per Share, Weighted Average Shares and Dividends per Share
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Net income
      $ 14,748         $ 7,032         $ 31,062         $ 22,924    
Weighted average number of shares – basic
        40,383           40,186           40,376           40,065    
Dilutive effect of stock options and restricted stock units
        140           178           147           264    
Weighted average number of shares – diluted
        40,523           40,364           40,523           40,329    
Net income per share                                                  
basic
      $ 0.37         $ 0.17         $ 0.77         $ 0.57    
diluted
      $ 0.36         $ 0.17         $ 0.77         $ 0.57    
Dividends per share
      $ 0.12         $ 0.10         $ 0.22         $ 0.20    
Schedule of adoption to reported results
As of July 1, 2018
   
Effect of 
Adoption
   
Post-adoption
 
Other current assets
      $ 2,100         $ 24,481    
Other assets
        2,325           49,109    
Accrued expenses and other current liabilities
        343           71,487    
Other liabilities
        2,837           46,539    
Retained earnings
      $ 1,245         $ 132,805    
As of December 31. 2018
   
Effect of 
adoption
   
As reported
 
Other current assets
      $ 100         $ 23,605    
Other assets
        125           45,634    
Other liabilities
        (108)           44,540    
Retained earnings
      $ 333         $ 154,984    
     
Three Months
   
Six Months
 
For the Periods Ended December 31, 2018
   
Effect of 
adoption
   
As reported
   
Effect of 
adoption
   
As reported
 
Net sales
      $ 198         $ 218,223         $ 396         $ 418,376    
Provision for income taxes
        32           5,326           63           11,717    
Net income
      $ 166         $ 14,748         $ 333         $ 31,062    
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations-Additional Information (Tables)
6 Months Ended
Dec. 31, 2018
Statements Of Operations Additional Information [Abstract]  
Schedule of revenues disaggregated by major product category and geographic region
Net Sales by Product Type
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Animal Health                                                  
MFAs and other
      $ 93,054         $ 82,018         $ 180,058         $ 161,621    
Nutritional specialties
        29,460           32,623           56,430           63,400    
Vaccines
        17,048           18,204           34,263           36,665    
Total Animal Health
      $ 139,562         $ 132,845         $ 270,751         $ 261,686    
Mineral Nutrition
        62,319           59,616           117,157           111,689    
Performance Products
        16,342           13,415           30,468           25,913    
Total
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
 
Net Sales by Region
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
United States
      $ 127,750         $ 129,379         $ 243,842         $ 242,548    
Latin America and Canada
        39,316           36,126           77,575           68,452    
Europe, Middle East and Africa
        26,181           27,672           51,040           53,054    
Asia Pacific
        24,976           12,699           45,919           35,234    
Total
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
 
Schedule of additional information of statements of operations
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Interest expense, net                                                  
Term loan
      $ 2,202         $ 2,110         $ 4,314         $ 4,143    
Revolving credit facility
        920           739           1,667           1,420    
Amortization of debt issuance costs and debt discount
        220           220           441           441    
Acquisition-related accrued interest
                  252                     505    
Other
        120           2           283           241    
Interest expense
        3,462           3,323           6,705           6,750    
Interest (income)
        (447)           (273)           (907)           (582)    
        $ 3,015         $ 3,050         $ 5,798         $ 6,168    
Depreciation and amortization                                                  
Depreciation of property, plant and equipment
      $ 5,308         $ 5,222         $ 10,496         $ 10,405    
Amortization of intangible assets
        1,521           1,397           3,012           2,846    
Amortization of other assets
        12           12           24           24    
        $ 6,841         $ 6,631         $ 13,532         $ 13,275    
 
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets-Additional Information (Tables)
6 Months Ended
Dec. 31, 2018
Balance Sheets Additional Information [Abstract]  
Schedule of additional information of balance sheets
As of
   
December 31,
2018
   
June 30,
2018
 
Inventories                          
Raw materials
      $ 80,649         $ 62,373    
Work-in-process
        14,907           14,731    
Finished goods
        97,543           101,066    
        $ 193,099         $ 178,170    
 
As of
   
December 31,
2018
   
June 30,
2018
 
Accrued expenses and other current liabilities                          
Employee related
      $ 21,282         $ 27,333    
Commissions and rebates
        7,510           7,341    
Insurance-related
        1,563           1,168    
Professional fees
        4,599           4,350    
Income and other taxes
        4,122           3,610    
Acquisition-related consideration
        3,928           12,845    
Other
        15,153           14,497    
        $ 58,157         $ 71,144    
 
As of
   
December 31,
2018
   
June 30,
2018
 
Accumulated other comprehensive income (loss)                          
Derivative instruments
      $ 3,284         $ 4,986    
Foreign currency translation adjustment
        (70,617)           (67,098)    
Unrecognized net pension gains (losses)
        (17,981)           (18,213)    
(Provision) benefit for income taxes on derivative instruments
        (818)           (1,241)    
(Provision) benefit for income taxes on long-term intercompany investments
        8,166           8,166    
(Provision) benefit for income taxes on pension gains (losses)
        (3,141)           (3,083)    
        $ (81,107)         $ (76,483)    
 
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Debt (Tables)
6 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Schedule of long term debt
As of
   
December 31,
2018
   
June 30,
2018
 
Term A Loan due June 2022
      $ 237,500         $ 243,750    
Capitalized lease obligations
        77           118    
          237,577           243,868    
Unamortized debt issuance costs and debt discount
        (1,301)           (1,487)    
          236,276           242,381    
Less: current maturities
        (12,577)           (12,579)    
        $ 223,699         $ 229,802    
 
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivatives (Tables)
6 Months Ended
Dec. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of significant outstanding derivatives employed to manage market risk and designated as cash flow hedges
Instrument
   
Hedge
   
Notional 
Amount at 
December 31, 
2018
   
Consolidated 
Balance Sheet
   
Fair value as of
 
 
December 31, 
2018
   
June 30, 
2018
 
Options
   
Brazilian Real calls
   
R$75,000
        (1)         $ 551         $ 71    
Options
   
Brazilian Real puts
   
R$75,000
        (1)         $ (146)         $    
Swap
    Interest rate swap    
$150,000
   
Other assets
      $ 2,972         $ 5,078    
 
(1)     We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. The net fair values of  $405 and $71 were included in other current assets as of December 31, 2018 and June 30, 2018, respectively.
 
For the Three Months Ended December 31
 
Instrument
   
Hedge
   
Gain (Loss) recorded in OCI
   
Gain (Loss) recognized in 
consolidated statements of operations
   
Consolidated Statement 
of Operations Line 
Item Total
 
 
2018
   
2017
   
Consolidated 
Statement 
of Operations
   
2018
   
2017
   
2018
   
2017
 
Options
    Brazilian Real puts and calls       $ 513         $ (1,781)       Cost of goods sold       $         $ 517         $ 149,579         $ 138,957    
Swap
    Interest rate swap       $ (2,756)         $ 1,505      
Interest expense, net
      $         $         $ 3,015         $ 3,050    
For the Six Months Ended December 31
 
Instrument
   
Hedge
   
Gain (Loss) recorded in OCI
   
Gain (Loss) recognized in 
consolidated statements of operations
   
Consolidated Statement 
of Operations Line 
Item Total
 
 
2018
   
2017
   
Consolidated 
Statement 
of Operations
   
2018
   
2017
   
2018
   
2017
 
Options
    Brazilian Real puts and calls       $ 404         $ (2,686)       Cost of goods sold       $ 1,084         $ 703         $ 283,927         $ 268,987    
Swap
    Interest rate swap       $ (2,106)         $ 1,788      
Interest expense, net
      $         $         $ 5,798         $ 6,168    
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Fair Value Measurements (Tables)
6 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Schedule of fair value derivatives, assets and liabilities
As of
   
December 31, 2018
   
June 30, 2018
 
     
Level 1
   
Level 2
   
Level 1
   
Level 2
 
Short-term investments
      $ 49,000         $         $ 50,000         $    
Derivatives asset (liability)
      $         $ 405         $         $ 71    
Interest rate swap
      $         $ 2,972         $         $ 5,078    
There were no Level 3 fair value measurements as of the periods presented.
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Business Segments (Tables)
6 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Schedule of information regarding reportable segments
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Net sales                                                  
Animal Health
      $ 139,562         $ 132,845         $ 270,751         $ 261,686    
Mineral Nutrition
        62,319           59,616           117,157           111,689    
Performance Products
        16,342           13,415           30,468           25,913    
Total segments
      $ 218,223         $ 205,876         $ 418,376         $ 399,288    
Depreciation and amortization                                                  
Animal Health
      $ 5,493         $ 5,265         $ 10,849         $ 10,519    
Mineral Nutrition
        616           584           1,213           1,169    
Performance Products
        279           259           552           505    
Total segments
      $ 6,388         $ 6,108         $ 12,614         $ 12,193    
Adjusted EBITDA                                                  
Animal Health
      $ 35,925         $ 35,036         $ 71,641         $ 68,778    
Mineral Nutrition
        4,084           5,614           6,647           9,330    
Performance Products
        1,514           264           2,230           512    
Total segments
      $ 41,523         $ 40,914         $ 80,518         $ 78,620    
 
     
Three Months
   
Six Months
 
For the Periods Ended December 31
   
2018
   
2017
   
2018
   
2017
 
Reconciliation of income before income taxes to Adjusted EBITDA
                                                 
Income before income taxes
      $ 20,074         $ 21,211         $ 42,779         $ 40,155    
Interest expense, net
        3,015           3,050           5,798           6,168    
Depreciation and amortization – Total segments
        6,388           6,108           12,614           12,193    
Depreciation and amortization – Corporate
        453           523           918           1,082    
Corporate costs
        9,918           8,436           18,804           16,025    
Stock-based 
compensation
        564                     1,129              
Acquisition-related cost of goods sold
                  1,422                     1,671    
Acquisition-related accrued compensation
                  487                     924    
Acquisition-related transaction 
costs
                                      400    
Other, net
        (1,506)                     (1,506)              
Foreign currency (gains) losses, 
net
        2,617           (323)           (18)           2    
Adjusted EBITDA – Total segments
      $ 41,523         $ 40,914         $ 80,518         $ 78,620    
 
As of
   
December 31,
2018
   
June 30,
2018
 
Identifiable assets                          
Animal Health
      $ 472,534         $ 455,704    
Mineral Nutrition
        77,351           69,779    
Performance Products
        32,430           24,040    
Total segments
        582,315           549,523    
Corporate
        114,977           122,156    
Total
      $ 697,292         $ 671,679    
 
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Accounting Policies [Abstract]        
Net income $ 14,748 $ 7,032 $ 31,062 $ 22,924
Weighted average number of shares - basic (in shares) 40,383 40,186 40,376 40,065
Dilutive effect of stock options and restricted stock units 140 178 147 264
Weighted average number of shares - diluted (in shares) 40,523 40,364 40,523 40,329
Net income per share        
basic (in dollars per share) $ 0.37 $ 0.17 $ 0.77 $ 0.57
diluted (in dollars per share) 0.36 0.17 0.77 0.57
Dividends per share (in dollars per share) $ 0.12 $ 0.10 $ 0.22 $ 0.20
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details 1) - USD ($)
$ in Thousands
Dec. 31, 2018
Jul. 01, 2018
Jun. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Other current assets $ 23,605   $ 22,381
Other assets 45,634   46,784
Accrued expenses and other current liabilities 58,157   71,144
Other liabilities 44,540   43,702
Retained earnings 154,984   $ 131,560
Effect of adoption      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Other current assets 100    
Other assets 125    
Other liabilities (108)    
Retained earnings $ 333    
Effect of adoption | ASU 2014-09, Revenue from Contracts with Customers (Topic 606)      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Other current assets   $ 2,100  
Other assets   2,325  
Accrued expenses and other current liabilities   343  
Other liabilities   2,837  
Retained earnings   1,245  
Post-adoption | ASU 2014-09, Revenue from Contracts with Customers (Topic 606)      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]      
Other current assets   24,481  
Other assets   49,109  
Accrued expenses and other current liabilities   71,487  
Other liabilities   46,539  
Retained earnings   $ 132,805  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details 2) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
ASSETS    
Other current assets $ 23,605 $ 22,381
Other assets 45,634 46,784
Other liabilities 44,540 43,702
Retained earnings 154,984 $ 131,560
Effect of adoption    
ASSETS    
Other current assets 100  
Other assets 125  
Other liabilities (108)  
Retained earnings $ 333  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies and New Accounting Standards (Details 3) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Net sales $ 218,223 $ 205,876 $ 418,376 $ 399,288
Provision for income taxes 5,326 14,179 11,717 17,231
Net income 14,748 $ 7,032 31,062 $ 22,924
Effect of adoption        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Net sales 198   396  
Provision for income taxes 32   63  
Net income $ 166   $ 333  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations-Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Statements Of Operations Additional Information [Line Items]        
Total $ 218,223 $ 205,876 $ 418,376 $ 399,288
United States        
Statements Of Operations Additional Information [Line Items]        
Total 127,750 129,379 243,842 242,548
Latin America and Canada        
Statements Of Operations Additional Information [Line Items]        
Total 39,316 36,126 77,575 68,452
Europe, Middle East and Africa        
Statements Of Operations Additional Information [Line Items]        
Total 26,181 27,672 51,040 53,054
Asia Pacific        
Statements Of Operations Additional Information [Line Items]        
Total 24,976 12,699 45,919 35,234
Animal Health        
Statements Of Operations Additional Information [Line Items]        
Total 139,562 132,845 270,751 261,686
Animal Health | MFAs and other        
Statements Of Operations Additional Information [Line Items]        
Total 93,054 82,018 180,058 161,621
Animal Health | Nutritional specialties        
Statements Of Operations Additional Information [Line Items]        
Total 29,460 32,623 56,430 63,400
Animal Health | Vaccines        
Statements Of Operations Additional Information [Line Items]        
Total 17,048 18,204 34,263 36,665
Mineral Nutrition        
Statements Of Operations Additional Information [Line Items]        
Total 62,319 59,616 117,157 111,689
Performance Products        
Statements Of Operations Additional Information [Line Items]        
Total $ 16,342 $ 13,415 $ 30,468 $ 25,913
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations-Additional Information (Details 1) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Interest expense, net        
Amortization of debt issuance costs and debt discount $ 220 $ 220 $ 441 $ 441
Acquisition-related accrued interest 0 252   505
Other 120 2 283 241
Interest expense 3,462 3,323 6,705 6,750
Interest (income) (447) (273) (907) (582)
Interest expense, net 3,015 3,050 5,798 6,168
Depreciation and amortization        
Depreciation of property, plant and equipment 5,308 5,222 10,496 10,405
Amortization of intangible assets 1,521 1,397 3,012 2,846
Amortization of other assets 12 12 24 24
Depreciation and amortization 6,841 6,631 13,532 13,275
Term loan        
Interest expense, net        
Interest expense 2,202 2,110 4,314 4,143
Revolving credit facility        
Interest expense, net        
Interest expense $ 920 $ 739 $ 1,667 $ 1,420
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Statements of Operations-Additional Information (Detail Textuals) - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2018
Jun. 30, 2018
Statements Of Operations Additional Information [Line Items]    
Deferred revenue $ 6,416 $ 4,530
Current deferred revenue, included in accrued expense and other current liabilities $ 1,471 $ 508
Customer    
Statements Of Operations Additional Information [Line Items]    
Average worldwide collection period for accounts receivable 60 days  
Customer | Maximum    
Statements Of Operations Additional Information [Line Items]    
Payment term 120 days  
Customer | Minimum    
Statements Of Operations Additional Information [Line Items]    
Payment term 30 days  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets-Additional Information (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
Inventories    
Raw materials $ 80,649 $ 62,373
Work-in-process 14,907 14,731
Finished goods 97,543 101,066
Inventory, net $ 193,099 $ 178,170
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets-Additional Information (Details 1) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
Accrued expenses and other current liabilities    
Employee related $ 21,282 $ 27,333
Commissions and rebates 7,510 7,341
Insurance-related 1,563 1,168
Professional fees 4,599 4,350
Income and other taxes 4,122 3,610
Acquisition-related consideration 3,928 12,845
Other 15,153 14,497
Accrued expenses and other current liabilities, total 58,157 71,144
Accumulated other comprehensive income (loss)    
Derivative instruments 3,284 4,986
Foreign currency translation adjustment (70,617) (67,098)
Unrecognized net pension gains (losses) (17,981) (18,213)
(Provision) benefit for income taxes on derivative instruments (818) (1,241)
(Provision) benefit for income taxes on long-term intercompany investments 8,166 8,166
(Provision) benefit for income taxes on pension gains (losses) (3,141) (3,083)
Accumulated other comprehensive income (loss) $ (81,107) $ (76,483)
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Balance Sheets-Additional Information (Detail Textuals) - USD ($)
$ in Thousands
1 Months Ended 6 Months Ended
Jul. 31, 2018
Dec. 31, 2018
Dec. 31, 2017
Additional Information Of Balance Sheet [Line Items]      
Equity method investments   $ 3,141  
Amount of acquired business approximately   9,838 $ 15,000
Amount of acquisition payable in January 2019   3,775  
MJ Biologics, Inc. ("MJB")      
Additional Information Of Balance Sheet [Line Items]      
Total amount due for business acquisition paid $ 12,775    
Amount of acquired business approximately $ 9,000    
Amount of acquisition payable in January 2019   $ 3,775  
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Debt - Summary of long-term debt (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
Debt Disclosure [Abstract]    
Term A Loan due June 2022 $ 237,500 $ 243,750
Capitalized lease obligations 77 118
Long-term debt including current maturities 237,577 243,868
Unamortized debt issuance costs and debt discount (1,301) (1,487)
Long-term debt after debt issuance costs 236,276 242,381
Less: current maturities (12,577) (12,579)
Long-term debt $ 223,699 $ 229,802
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Debt (Detail Textuals) - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2018
Jun. 30, 2018
Dec. 31, 2017
Jul. 31, 2017
Debt Instrument [Line Items]        
Revolving credit facility $ 88,000 $ 70,000    
Interest rate swap        
Debt Instrument [Line Items]        
Percentage of interest rate 1.8325% 1.8325%   1.8325%
Derivative, notional amount $ 150,000 $ 150,000   $ 150,000
Credit agreement (the "Credit Agreement") | Revolving credit facility (the "Revolver")        
Debt Instrument [Line Items]        
Maximum borrowing capacity 250,000      
Revolving credit facility 88,000      
Outstanding letters of credit 4,191      
Aggregate available credit facilities $ 157,809      
Weighted-average interest rates 3.71%   3.01%  
Percentage of interest rate 4.00%      
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities"        
Debt Instrument [Line Items]        
Maturity dates June 29, 2022      
Covenant requirement, permitted leverage ratio a minimum consolidated interest coverage ratio, each calculated on a trailing four quarter basis      
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | LIBOR        
Debt Instrument [Line Items]        
Interest rate, description 2.00%, 1.75% or 1.50      
Floor rate 0.00%      
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | Eurodollar        
Debt Instrument [Line Items]        
Interest rate, description 2.00%, 1.75% or 1.50      
Credit agreement (the "Credit Agreement") | Term A Loan and together with the Revolver, "Credit Facilities" | Base Rate        
Debt Instrument [Line Items]        
Interest rate, description 1.00%, 0.75% or 0.50      
Credit agreement (the "Credit Agreement") | Term A Loan        
Debt Instrument [Line Items]        
Maximum borrowing capacity $ 250,000      
Weighted-average interest rates 3.47%   3.29%  
Percentage of interest rate 3.58%      
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
Related Party Transactions (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Relatives of Jack C. Bendheim | Compensation and benefit for services provided        
Related Party Transaction [Line Items]        
Aggregate compensation and benefits $ 430 $ 409 $ 1,213 $ 1,129
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
Income Taxes (Detail Textuals) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2018
Income Tax Disclosure [Line Items]    
Current period expense from effects of GILTI $ 315 $ 672
Reduction in the provision for income taxes from effect of U.S. Tax Reform $ 715  
Tax year 2017    
Income Tax Disclosure [Line Items]    
Federal corporate income tax rate   35.00%
Tax year 2018    
Income Tax Disclosure [Line Items]    
Federal corporate income tax rate   21.00%
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
Commitments and Contingencies (Detail Textuals)
$ in Thousands
6 Months Ended 12 Months Ended
Dec. 31, 2018
USD ($)
PRPs
Jun. 30, 2018
USD ($)
Commitments And Contingencies [Line Items]    
Number of potentially responsible parties | PRPs 140  
Current and long-term liabilities    
Commitments And Contingencies [Line Items]    
Accrual for environmental loss contingencies payments | $ $ 6,598 $ 6,833
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivatives (Details) - Cash flow hedges
R$ in Thousands, $ in Thousands
Dec. 31, 2018
USD ($)
Dec. 31, 2018
BRL (R$)
Jun. 30, 2018
USD ($)
Options | Brazilian Real calls      
Derivative [Line Items]      
Notional amount | R$   R$ 75,000  
Fair value [1] $ 551   $ 71
Options | Brazilian Real puts      
Derivative [Line Items]      
Notional amount | R$   R$ 75,000  
Fair value (146)   0
Swap | Interest rate swap      
Derivative [Line Items]      
Notional amount 150,000    
Swap | Interest rate swap | Other assets      
Derivative [Line Items]      
Fair value $ 2,972   $ 5,078
[1] We record the net fair values of our outstanding foreign currency option contracts within the respective balance sheet line item based on the net financial position and maturity date of the individual contracts as of the balance sheet date. The net fair values of $405 and $71 were included in other current assets as of December 31, 2018 and June 30, 2018, respectively.
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivatives (Details 1) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Derivative [Line Items]        
Cost of goods sold $ 149,579 $ 138,957 $ 283,927 $ 268,987
Interest expense, net 3,015 3,050 5,798 6,168
Options | Cash flow hedges | Brazilian Real calls | Cost of goods sold        
Derivative [Line Items]        
Gain (loss) recognized in consolidated statements of operations 0 517 1,084 703
Options | Cash flow hedges | Brazilian Real calls | Other comprehensive income (loss)        
Derivative [Line Items]        
Gain (loss) recorded in OCI 513 (1,781) 404 (2,686)
Swap | Interest rate swap | Cash flow hedges | Interest expense, net        
Derivative [Line Items]        
Gain (loss) recognized in consolidated statements of operations 0 0 0 0
Swap | Interest rate swap | Cash flow hedges | Other comprehensive income (loss)        
Derivative [Line Items]        
Gain (loss) recorded in OCI $ (2,756) $ 1,505 $ (2,106) $ 1,788
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
Derivatives (Detail Textuals) - USD ($)
$ in Thousands
6 Months Ended
Dec. 31, 2018
Jun. 30, 2018
Jul. 31, 2017
Derivative [Line Items]      
Maximum maturity period for Foreign Currency Derivatives Jun. 30, 2020    
Other current assets      
Derivative [Line Items]      
Fair values of total foreign currency derivatives outstanding $ 405 $ 71  
Interest rate swap      
Derivative [Line Items]      
Derivative, notional amount $ 150,000 $ 150,000 $ 150,000
Percentage of interest rate 1.8325% 1.8325% 1.8325%
Cash flow hedges | Cost of goods sold      
Derivative [Line Items]      
Realized gains related to matured contracts recorded as a component of inventory   $ 1,084  
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.10.0.1
Fair Value Measurements (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Short-term investments $ 49,000 $ 50,000
Level 1    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Short-term investments 49,000 50,000
Derivatives asset (liability) 0 0
Interest rate swap 0 0
Level 2    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Short-term investments 0 0
Derivatives asset (liability) 405 71
Interest rate swap $ 2,972 $ 5,078
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.10.0.1
Business Segments (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Jun. 30, 2018
Segment Reporting Information [Line Items]          
Net sales $ 218,223 $ 205,876 $ 418,376 $ 399,288  
Depreciation and amortization 6,841 6,631 13,532 13,275  
Reconciliation of income before income taxes to Adjusted EBITDA          
Income before income taxes 20,074 21,211 42,779 40,155  
Interest expense 3,015 3,050 5,798 6,168  
Depreciation and amortization 6,841 6,631 13,532 13,275  
Stock-based compensation     1,129    
Acquisition-related cost of goods sold       1,671  
Acquisition-related accrued compensation       924  
Foreign currency (gains) losses, net 2,617 (323) (18) 2  
Identifiable assets 697,292   697,292   $ 671,679
Animal Health          
Segment Reporting Information [Line Items]          
Net sales 139,562 132,845 270,751 261,686  
Mineral Nutrition          
Segment Reporting Information [Line Items]          
Net sales 62,319 59,616 117,157 111,689  
Performance Products          
Segment Reporting Information [Line Items]          
Net sales 16,342 13,415 30,468 25,913  
Operating Segments          
Segment Reporting Information [Line Items]          
Net sales 218,223 205,876 418,376 399,288  
Depreciation and amortization 6,388 6,108 12,614 12,193  
Adjusted EBITDA - Total segments 41,523 40,914 80,518 78,620  
Reconciliation of income before income taxes to Adjusted EBITDA          
Income before income taxes 20,074 21,211 42,779 40,155  
Interest expense 3,015 3,050 5,798 6,168  
Depreciation and amortization 6,388 6,108 12,614 12,193  
Stock-based compensation 564 0 1,129 0  
Acquisition-related cost of goods sold 0 1,422 0 1,671  
Acquisition-related accrued compensation 0 487 0 924  
Acquisition-related transaction costs 0 0 0 400  
Other, net (1,506) 0 (1,506) 0  
Foreign currency (gains) losses, net 2,617 (323) (18) 2  
Adjusted EBITDA - Total segments 41,523 40,914 80,518 78,620  
Identifiable assets 582,315   582,315   549,523
Operating Segments | Animal Health          
Segment Reporting Information [Line Items]          
Net sales 139,562 132,845 270,751 261,686  
Depreciation and amortization 5,493 5,265 10,849 10,519  
Adjusted EBITDA - Total segments 35,925 35,036 71,641 68,778  
Reconciliation of income before income taxes to Adjusted EBITDA          
Depreciation and amortization 5,493 5,265 10,849 10,519  
Adjusted EBITDA - Total segments 35,925 35,036 71,641 68,778  
Identifiable assets 472,534   472,534   455,704
Operating Segments | Mineral Nutrition          
Segment Reporting Information [Line Items]          
Net sales 62,319 59,616 117,157 111,689  
Depreciation and amortization 616 584 1,213 1,169  
Adjusted EBITDA - Total segments 4,084 5,614 6,647 9,330  
Reconciliation of income before income taxes to Adjusted EBITDA          
Depreciation and amortization 616 584 1,213 1,169  
Adjusted EBITDA - Total segments 4,084 5,614 6,647 9,330  
Identifiable assets 77,351   77,351   69,779
Operating Segments | Performance Products          
Segment Reporting Information [Line Items]          
Net sales 16,342 13,415 30,468 25,913  
Depreciation and amortization 279 259 552 505  
Adjusted EBITDA - Total segments 1,514 264 2,230 512  
Reconciliation of income before income taxes to Adjusted EBITDA          
Depreciation and amortization 279 259 552 505  
Adjusted EBITDA - Total segments 1,514 264 2,230 512  
Identifiable assets 32,430   32,430   24,040
Corporate          
Segment Reporting Information [Line Items]          
Depreciation and amortization 453 523 918 1,082  
Reconciliation of income before income taxes to Adjusted EBITDA          
Depreciation and amortization 453 523 918 1,082  
Corporate costs 9,918 $ 8,436 18,804 $ 16,025  
Identifiable assets $ 114,977   $ 114,977   $ 122,156
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.10.0.1
Business Segments (Detail Textuals) - USD ($)
$ in Thousands
Dec. 31, 2018
Jun. 30, 2018
Segment Reporting Information [Line Items]    
Equity method investments $ 3,141  
Animal Health    
Segment Reporting Information [Line Items]    
Equity method investments 3,141 $ 3,432
Performance Products    
Segment Reporting Information [Line Items]    
Equity method investments $ 629 $ 437
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