Hello, and thank you for standing by. Welcome to the Fibro Animal Health Corporation first quarter 2026 webcast and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. I would now like to turn the conference over to Glenn David, Chief Financial Officer. You may begin.

Thank you, Sarah. Good day, and welcome to the Fibro Animal Health Corporation earnings call for our fiscal first quarter ending September 30th, 2025. My name is Glenn David, and I am the Chief Financial Officer of Fibro Animal Health Corporation. I am joined on today's call by Jack Bentheim, Fibro's Chairman, President, and Chief Executive Officer, Donny Bentheim, Director and Executive Vice President of Corporate Strategy, and Larry Miller, our Chief Operating Office. Today, we will cover financial performance for our first quarter and provide updated financial guidance for our fiscal year ending June 30th, 2026. At the conclusion of our remarks, we will open the lines for your questions. I would like to remind you that we are providing a simultaneous webcast of this call on our website, kahc.com. Also, on the investor sections of our website, you will find copies of the earnings press release and quarterly Form 10-Q, as well as the transcripts and slides discussed and presented on this call. Our remarks today will include forward-looking statements, and actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward-looking statements section in our earnings press release. Our remarks include references to certain financial measures which were not prepared in accordance with Generally Accepted Accounting Principles, or U.S. GAAP. I refer you to the non-GAAP financial information section in our earnings press release for a discussion of these measures. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in the financial tables that accompany the earnings press release. We present our results on a GAAP basis and on an adjusted basis. Our adjusted results exclude acquisition-related items, unusual, non-operational, or non-recurring items, including stock-based compensation. Other income expense, as separately reported in the consolidated statement of operations, including foreign currency gains and losses, net. Income taxes related to pre-tax income adjustments and unusual or non-recurring income tax items. Now, let me introduce our Chairman, President, and Chief Executive Officer, Jack Bantyne, to share his opening remarks.

Thanks, Glenn. In the first quarter, we delivered 55% growth in animal health sales and an 85% increase in animal health adjusted EBITDA. Clear evidence that our strategy is working. Medicaid fee additives led the way with 81% growth, supported by solid gains in nutritional specialties and vaccines. This performance reflects our continuous success in seamlessly integrating the acquired MFA portfolio into our operations. At the same time, our legacy animal health business continues to outperform, delivering 11% growth overall and 6% growth in legacy MFA. These results highlight the strong demand across our diversified animal health portfolio and the enduring strength of global protein production. We are also encouraged by emerging research showing that GLP-1 users, while spending less overall on food, are increasingly choosing high-quality animal derived proteins. This evolving consumer preference supports our industry long-term growth and reinforces the relevance and value of Fibro's offerings. Our ability to translate this demand into stronger bottom line performance is being driven by our Fibro Forward initiatives. These efforts continue to enhance operational discipline, accelerate innovation, and sharpen our focus on strategic growth. As a result, we're gaining the flexibility to invest in high impact opportunity across our portfolio, positioning Fibro for sustainable long-term value creation. Looking ahead, we remain focused on innovation and execution. The recent launch of Restoris, our proprietary dental gel for dogs, marks a major milestone in our companion animal strategy. Together with our newly licensed early-stage therapeutic compound targeting canine periodontal disease, we're building a differential oral care portfolio that we believe will drive long-term growth. As Glenn will discuss in more detail, thanks to our strong performance and disciplined approach, we're raising our full-year earnings guidance and continue to invest in the future of animal health. I'll now hand it back to Glenn and I look forward to your questions.

Thanks Jack. Starting with our Q1 performance on slide four. Consolidated net sales for the quarter ended September 30th, 2025 were $363.9 million, reflecting an increase of $103.5 million or a 40% increase over the same quarter one year ago. The animal health segment grew 55%, while mineral nutrition grew at 7%, and the performance product declined by 7%. GAP net income and diluted EPS increased significantly, driven by the successful integration of the new MFA business, increases in demand, improved gross margin due to favorable mix, offset by increased SG&A due to higher employer-related costs. After making our standard adjustments to GAAP results, including acquisition-related items, foreign currency losses, and certain one-off items, the first quarter adjusted EBITDA increased $31.2 million, or 102%, versus prior year. Adjusted netting income increased 112%, and adjusted diluted EPS increased 108%. Increased gross profit driven by sales growth was partially offset by higher adjusted SG&A and higher adjusted interest expense. Moving to segment model financial performance. The animal health segment posted $283.5 million net sales for the quarter, an increase of $100.9 million or 55% versus the same quarter prior year. Within the animal health segment, we reported Legacy MFA's net sales increase of $6.9 million, or an increase of 6%. The new MFA business contributed a full quarter of sales of $80.5 million, driving the total MFA and others' growth to 81%. Nutritional specialties net sales increased $5.5 million, or 13%, mostly due to higher demand for microbial and companion animal products. Vaccine net sales grew $8.1 million, a healthy 25% increase, driven by continued growth of poultry products in Latin America and higher international demand. Animal health-adjusted EBITDA was $74.9 million, an 85% increase, driven by the new MFA business, higher gross profit from improved mix in the legacy business, partially offset by higher SG&A. Moving on to first quarter financial performance for our other business segments on slide six. Starting with mineral nutrition, net sales for the quarter was $63 million, an increase of $3.9 million or 7% due to an increase in demand for copper and trace minerals. Looking at our performance product segment, net sales of $17.4 million reflects a decrease of $1.4 million or a decrease of 7%. as a result of lower demand for the ingredients used in personal care products. Mineral nutrition and performance products adjusted EBITDA for $4.5 million and $1.6 million, respectively. Corporate expenses increased $3.4 million, driven by higher employee-related costs. Turning to key capitalization-related metrics on slide 7, We generated $34 million of positive free cash flow for the 12 months ended September 30, 2025. We generated $77 million of operating cash flow and invested $43 million in capital expenditures. Cash and cash equivalents and short-term investments were $85 million at the end of the quarter. Our gross leverage ratio was 3.3 times at the end of the first quarter, based on $749 million of total debt and $227 million of trailing 12 months adjusted EBITDA. Our net leverage ratio was 2.9 times at the end of the first quarter, based on $664 million of net debt and $227 million of trailing 12 months adjusted EBITDA. Please note that the trailing 12 months of adjusted EBITDA includes 12 months from the Zoetis Medicated Feed Additive Portfolio, one month of Zoetis history, and 11 months from FIBO ownership. On interest rates, there are no changes to our current swap agreements. Turning to dividends, consistent with our history, we paid a quarterly dividend of $0.12 per share, or $4.9 million in aggregate. Let's turn to slide 8, which lays out our guidance for fiscal year 2026. Please note that this guidance includes a full 12 months of the Zoena's Medicaid and feed additive portfolio. Also included in this guidance for fiscal year 2026 are benefits related to our FIBO Forward Income Growth Initiative that will help drive additional EBITDA and margin growth. One-time costs related to this initiative are also included in our GAAP guidance and primarily consist of one-time consulting fees. This initiative is focused on unlocking additional areas of revenue growth and cost safe. Our guidance for fiscal year 2026 is as follows. Net sales remain the same at $1,425,000,000 to $1,475,000,000. This represents a growth range of 10 to 14 percent and a midpoint of approximately 12 percent. Total adjusted EBITDA increased from 225 to 235 million dollars to 230 to 240 million dollars. This represents a growth range of 25 to 30 percent and a midpoint of approximately 28 percent. Adjusted net income increased from 103 to $110 million to $108 million to $115 million. This represents growth of 26% to 34% or the midpoint of approximately 31%. Gap net income and EPS assumes constant currency and no additional gains or losses from FX means. Also included in our gap net income and EPS are one-time costs related to our 5-year-old forward income growth issue. In closing, we're excited about the strong performance and start to fiscal year 2026. We are confident in the demand for our products around the world and look forward to seeing continued improvement in our business as we move forward in the coming months. With that, Sarah, could you please open the line for our questions?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your questions, simply press star 1 again. Please ensure your phone is not on mute when called upon. Thank you. Your first question comes from Erin Wright with Morgan Stanley. Your line is open.

Hi, Gray. Thanks for taking the question. So first on the MFA business. So how are you thinking about the sustainability of growth in that legacy MFA business, I guess? Can you break out a little bit of what you're seeing price versus volume on that front? And what I'm trying to get at here is what's the underlying run rate that we should be thinking about? And I get it there's some other drivers going on, but were there any timing dynamics in the quarter? Is the business growing faster than you would have expected at the core? So yeah, just what's the appropriate run rate for that business as we lap the deal? Thanks.

Hi, this is Larry. Thank you for the question. So we see continued growth, strong demand, particularly across the MFA portfolio and in basically the poultry swine as well as the beef cattle segment you know as we look at indications of protein you know consumption growth etc we continue to see that grow i think that we as far as our expectations for growth in the future we are seeing really nice synergies again between the the fibro legacy products as well as the acquired products and being able to bring more products uh and and design programs to our customers yeah the only

thing i'd add erin also to your question on price versus volume when you look at the first quarter in particular there was limited impact on um on price one of the reasons for that being is all of the legacy or all the zoetis mfa growth gets put into volume just because we have no comparator for the prior year but this has been an area of focus for us is improving the price the overall net price for the Zoetis products which has helped with our overall profitability so as we move forward into Q2 to Q4 we will see an impact on price particularly from the Zoetis portfolio.

Okay um that's helpful and then another run rate question just on the margin profile that definitely stood out to us and maybe that's some of what you were just speaking to but um anything to call out on that front how do we think about the margin profile for the remainder of the year in the context of both what you were saying and any other dynamics from an expense perspective that we should be thinking about?

Yeah, so in terms of the margin profile, we saw good favorability in Q1. A lot of that was driven by mix. Strong growth in the vaccine portfolio of 25%, strong growth in the nutritional specialties of 13%. Those tend to be higher margin products for us, so that certainly helped with the overall margin. We also saw some favorability in our overall expenses versus our initial expectations just based on the timing of building up some of our support for some of the new products and again we'll also be investing in the next future quarters and some of the launches such as restorers so we do you've always had a very good start to the year if you look at our guidance we would expect margins to drop a little bit as we move through the year okay great thank you so much the next question comes from ekaterina kineskova with jp morgan your line is open uh thank you so much uh so first it's just on the guidance update seems like the

ebitda and eps range are coming up but i think the revenue range um isn't despite what looks like a nice top line beat in the quarter just anything you would call out there maybe just some degree of conservatism or some headwinds we should kind of keep in mind on the revenue side of things And then second question is just on the licensing you announced for the dental asset. Just elaborate a bit on, you know, what brought you to the product and how it fits into your strategy, and maybe just more broadly your latest thoughts on the role the company can play in the companion space. Thank you so much.

Yeah, so I'll start with the guidance, and then Donnie will, you know, cover Restore In terms of the guidance, so the favorability that we saw particularly in the first quarter was related to some of our expenses as well as the favorability that we saw in gross margin related to mix very strong performance at the top line but we're really only one quarter into the year so we didn't find it necessary to update the revenue guidance at this point in time but we did you know take the favorability that we saw in the first quarter related to expenses and the favorable mix into account and updating the guidance um and with regard to our dental So we actually, we've announced obviously two assets this quarter.

The first one, which you alluded to, the licensing. We licensed a pharmaceutical product. That will not be anything near-term. It's a long-term play. But the category as a whole, as you see with the Restorist, is something we're very excited about. We think dental is an unmet need within the vet and the dog market. You know, only about 15% of dog owners bring their dogs in for annual dental. Only about 4% of dog owners actually brush their teeth of their dogs every day. As a result, as you can imagine, there is tremendous, you know, need for solutions there. And we think we actually have a nice one-two punch here with our solution. So RestorUs, which is what we launched last week, and which is, you know, actually shipping beginning this week, will allow dentists and their vets to actually treat periodontal disease. It's a medical device, so it allows us to get into the market quickly. But, you know, right now the method that dentists use to treat periodontal disease is extraction. and that's the main method and this we believe will allow them to offer something to their customers that will be able to avoid extraction and it's extremely positive from the vet's perspective as well because in most states I think in 35 states only vets are allowed to do extractions because considered oral surgery whereas the application of Restorist will be able to be done by a vet tech so that will free up the clinic for more high value procedures and then down the road we will look to follow it up hopefully with our licensed product which will we believe will allow people to take you know dogs to take a week daily to a weekly application

and prevent the buildup of the bacteria that leads to periodontal disease thank you the next question comes from michael riskin with bank of america your line is open Hi, thank you so much for taking the question.

This is Alexa on for a mic. My question is on end markets. So you've talked about the strong livestock demand you're seeing and peers have called out the same strength, especially in cattle. Can you talk about what's driving this and how sustainable do you think it is? Is it more protein cycle driven based on input feed dynamics or consumer demand? Additionally, is it geography specific or more broad based? And And should we be thinking about this as a two- to three-year phenomenon, as something shorter term, or something more structural? Thank you.

This is Larry. I'll take that question. I think you might address that really in three aspects. The first would be on the protein demand, and then the second would be on the livestock sector profitability, and then really what fibros position is given those first two market dynamics. First, in protein demand, we continue to see a resurgence in the demand for animal-based proteins, both meat, eggs, and poultry, and dairy. We believe this trend is poised to continue with global population and income growth. And demand is also supported by changing views on things such as diet as consumers increase demand for higher quality, simpler, and more wholesome proteins and move away from how these factors all make animals with consumers dietary uh the second the livestock sector profitability overall profitability for all livestock segments not only you know in north america but in the key segment key markets around the world continues to be positive in the top positive with sound poultry fundamentals strong beef demand disciplined pork supply and good dairy performance demand. All livestock sectors continue to benefit from lower costs of feed and grain input price. The value of each animal is worth more, so livestock producers are willing to invest more in animal health products to prevent disease and keep their animals healthy. Protein matters more than it really ever has. And on Fibro's position, we've had a strong geographic presence in the key livestock production markets around the world, our market reach had complementary, even went with recent acquisition of the MFA business, particularly giving us a stronger base in Asia and in China, Western Europe, Middle East, as well as the U.S. beef and swine sectors. We believe Fibro is really well positioned with our customers on-farm, and we're in a unique position to promote these challenges, including a wide choice of MFAs, nutrition specialties, and vaccine products, combined with a high level of service and end-brings to our customers.

The next question comes from Navin Tee with BNP Peribas. Your line is open.

Thank you. One more. The legacy business, the growth was above our expectations. So what was the better growth than the two last quarters? Was there any non-recurring or pull-forward items to be aware of? And then my second question is on the Lighthouse licensing agreement and rest stories. Does that signal a higher focus on companion animal? And generally, is your BD strategy to target innovation in areas that are not targeted by the big four players? Thank you.

Yes, Nirvana, I'll take the first question in terms of the legacy portfolios. As we said, really strong performance across legacy MFA, nutritional specialty, as well as vaccine. Nothing significant to call out. I think, you know, we're just seeing good underlying demand across the board. One thing I will point out within the legacy MFA, there are certain customers that make larger purchases that if it occurs between one quarter or another could have a small impact on the performance. We did see some of those purchases occur in Q1, probably see a little less of that in Q2, but overall nothing too material to results.

And then, Donnie, as far as our business development, you know, I think we have, for a couple of years now, we have talked about, you know, our main focus remains the production animal side, and specifically on the nutritional level and the vaccine side of production animals. That's where we're probably going to spend our largest dollars. but we are you know looking at opportunities on the companion animal side and to your point um for the most part we we're not looking to you know go head to head um with the the larger companion animal players in in most segments um we're looking for unique opportunities that we think that we can you know play a real role in thank you if there are any further questions please press star one now one moment please with no further questions this will conclude

the question and answer session and we'll conclude today's conference call we thank you for joining you may now disconnect