Phibro Animal Health (PAHC) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Strategic vision and growth outlook

• Focus on expanding core animal health business, with strong growth in MFA, nutritional specialties, and vaccines over the next 3–10 years.

• Phibro Forward initiative targets both revenue and EBITDA growth, emphasizing margin expansion and operational efficiencies.

• Pending acquisition of Zoetis MFA portfolio expected to significantly increase scale, EBITDA margin, and geographic reach, especially in Eastern Europe, China, and U.S. beef cattle.

• Continued investment in R&D for companion animal products, targeting large markets such as dermatology and oral care.

• Long-term growth expected to align with low- to mid-single digit livestock market growth, with potential acceleration from new product launches.

Market trends and business performance

• Strong demand and pricing across all livestock sectors, with low grain costs supporting margins; positive outlook through 2025.

• U.S. swine industry remains profitable if supply is managed; China dairy sector is restructuring due to overproduction and low prices.

• Fiscal 2024 saw 9% growth in medicated feed additives and 21% growth in vaccines; vaccine growth expected to moderate but remain positive in 2025.

• Recovery in mineral nutrition and performance products in the second half of 2024 expected to continue into 2025.

M&A and financial strategy

• Zoetis MFA acquisition is immediately accretive, adding at least $0.60 EPS in the first year and raising company EBITDA margin from 11% to low twenties.

• Acquisition expands product portfolio with minimal overlap and enhances presence in key markets.

• Regulatory approvals progressing as planned, with U.S. clearance received and one additional market pending.

• Net leverage expected to rise post-acquisition but targeted to fall below 3x by fiscal 2027 through strong cash generation.