Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fibro Animal Health Corporation's second quarter 2026 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 during this time, simply press star, then the number 1 on your telephone keypad. To withdraw your question, press star 1 again. I'd now like to turn the conference over to Glenn David, Chief Financial Officer. Please go ahead.

Thank you, Regina. Good day, and welcome to the Fibro Animal Health Corporation earnings call for our fiscal second quarter ending December 31st, 2025. My name is Glenn David, and I'm the Chief Financial Officer of Fibro Animal Health Corporation. I am joined on today's call by Jack Dantyne, Fibro's Chairman, President, and Chief Executive Officer, Donnie Vantheim, Director and Executive Vice President of Corporate Strategy, and as recently announced, our CEO-designate, and Larry Miller, Chief Operating Officer. Today, we will cover financial performance for our second quarter and provide updated financial guidance for our fiscal year ending June 30, 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, PAHC.com. Also, on the Investors section 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. Reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in the financial table that accompany the earnings price limit. 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 statements of operation including foreign currency losses gained net and 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 bensheim to share his opening remarks thanks in the second quarter, we delivered 26% growth in animal health sales and a 41% increase in animal

health-adjusted EBITDA. A clear sign of our strategy is working. Medicaid Pre-Editors led with a 34% growth, supported by strong gains and nutritional specials. This reflects our continued success integrating the MFA portfolio into our operations. While our total legacy business continues to perform with a 3% growth. Beyond animal health, we saw continued growth in minimums with decline in our performance product segment. Consolidated sales were up 21% in the second quarter, while EBITDA was up 41%. As Glenn will discuss in more detail, we're raising both our four-year sales and earnings guidance. These results are encouraging, but what's impressed me just as much is what I have seen firsthand from our people and our customers in the past few weeks. It's one thing to see performance in the numbers. It's another to hear directly from the teams and customers while living this momentum every day. Earlier this month, more than 150 of our global leaders came together in Barcelona. Our largest meeting of this kind in over a decade. The energy and alignment were outstanding. We heard a consistent message across regions. Our teams remained deeply focused on customer partnerships. We're sharpening our innovation agenda with stronger global coordination. We're executing better and more consistently across the business, and the unity across our leadership team has never been strong. I'm feeling incredibly proud of our people and confident in the direction we're heading. When you see the level of alignment and enthusiasm from long-tenured leaders to newer faces, it tells you that the culture is strong and the strategy is working. Last week, I was in Atlanta for the IPPE, the annual poetry show. While it was a very cold Atlanta, the conversations there were warm and optimistic. IPPE is always a great pulse check on the protein sector, and this year the tone was upbeat. Producers across poultry and broader protein markets are seeing more stability. The band remains strong. Customers are prioritizing performance, reliability, and cost efficiency, all areas where we're delivering real value. And we heard a lot of positive feedback about the MFA integration and the strength of our technical support. It's clear that the work our teams have done over the past year is resonating where it matters most with customers. Taken together with our financial performance, Barcelona and my PPE make it clear that FIWA has real, sustainable momentum. And as I looked at that momentum, the strength of our business, the alignment of our people and the opportunities ahead, it's also clear that this is an opportune moment for the leadership transition.

And with that, I'm deeply grateful for the trust of the board and the university that my father will continue as executive chairman. The culture and foundation he has built over five decades are the bedrock of this company. Having his continued guidance and experience is a significant advantage for Fibro and is incredibly meaningful to me personally. Equally important is the stability of our broader leadership. our full management team remains in place. These are the leaders who know our customers and our global operations individually. That continuity across every region and function is one of our greatest competitive strengths. In short, this leadership transition is occurring from a position of momentum and operational excellence. I'm stepping into this role as a dynamic moment for our industry. We are seeing genuine momentum in the protein markets. Producer confidence is rising and global demand remains resilient. The energy we felt at IDCE recently confirmed this. Our customers are moving forward, investing, and planning for growth. Looking ahead, we are entering a new era of opportunity. Producers today are under pressure to do more with less. At Fibro, we see sustainability and profitability as one and the same. Better gut health, improved feed conversion, and reduce disease pressure, they drive profitability. By investing in R&D and our digital capabilities, we are positioning Fibro to lead the next wave of breakthroughs in it. These efforts are central to our Fibro Forward Strategy and built on the strength of our core business and our unified leadership team. With that, I'll hand it over to Glenn to discuss our performance for the quarter and our outlook for the remainder of the fiscal year.

Thanks, Glenn. Starting with our Q2 performance on slide four. Consolidated net sales for the quarter ended December 31, 2025. for $373.9 million, reflecting an increase of $64.6 million, or a 21% increase over the same quarter one year ago. The animal health segment grew 26%, while minor nutrition grew at 9%, and performance products declined by 10%. 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, partially offset, but increased SG&A due to higher employee-related costs. After making our standard adjustments to GAAP results, including acquisition-related items, foreign currency losses, and certain one-off items, the second quarter adjusted EBITDA increased $19.9 million, or 41%, versus prior year. Adjusted net income increased 60%, and adjusted dual VPS increased 58%. Increased gross profit, driven by sales growth, was partially offset by higher adjusted SG&A and higher adjusted interest expenses. Coming to segment-level financial performance, the animal health segment posted $290 million of net sales for the quarter, an increase of $60.6 million for 26% versus the same quarter prior year. Within the animal health segment, we reported legacy MFA net sales decrease of 5% driven by the timing of inventory purchases from a particular large customer. Excluding the impact of this timing, our legacy MFA growth would have been a positive 3%. The new MFA business contributed a full quarter of sales of $94.1 million versus a partial quarter last year, driving the total MFA and other growth to 34%. The nutritional specialty net sales increased $4.3 million, or 9%, due to increased North American demand for dairy. Vaccine net sales growth of $4.5 million, or a 13% increase, driven by continued growth of poultry products in Latin America and higher international demand. Animal health adjusted EBITDA was $82.2 million, a 41% 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 second quarter financial performance for our other business segments on slide 6. Starting with new nutrition, net sales for the quarter was $68.9 million, an increase of $5.7 million, or 9% due to an increase in demand for zinc and trace minerals. Looking at our performance product segment, net sales of $15 million reflects a decrease of $1.6 million for negative 10% as a result of lower demand for the ingredients used in personal care products. Mineral nutrition and performance products adjusted UBITDA for $6.4 million and $0.8 million respectively. corporate expenses increased 3.7 million dollars driven by higher employee related costs turning to key capitalization related metrics on slide seven we generated 47 million dollars of positive free cash flow for the 12 months ended december 31st 2025. we generated 93 million dollars of operating cash flow and invested 46 million dollars in capital expenditures please note that our cash generation has been negatively impacted by a build-up of inventory in advance of tariffs and to meet increasing customer demand. We expect inventory to stabilize in the coming quarters. Cash and cash equivalents and short-term investments were $74.5 million at the end of the quarter. Our gross leverage ratio was 3.1 times at the end of the quarter, based on $737 million of total debt and $235 million of trailing 12-month adjusted e-visit. Our net-reverage ratio was 2.8 times at the end of the quarter based on $662 million of net debt and $235 million of trailing 12-month adjusted easement. 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 for $4.9 million in aggregate. Let's turn to slide 8, which lays out our updated guidance for fiscal year 2026. Based on our strong performance year date and continuing momentum, we are raising our revenue, EBITDA, and income guidance. Our guidance for fiscal year 2026 is as follows. Net sales increased from a range of $1,425,000,000 to $1,475,000,000 to a range of $1,450,000,000 to $1,500,000. This represents a growth range of 12 to 16 percent and a midpoint of approximately 14 percent. Public adjusted EBITDA increased from a range of $230 to $240 million to $245 to $255 million. This represents a growth range of 33 to 39 percent and a midpoint of approximately 36 percent. Adjusted net income increased from a range of $108 to $115 million to $120 to $127 million. This represents growth of 41 to 49 percent, with a midpoint of approximately 45 percent. Gap net income in EPS assumes constant currency and no additional gains or losses from FX movements. Also included in our gap net income in EPS are one-time costs related to our five-row forward income growth initiative in closing we're excited about the continued strong performance in fiscal year 2026. we're confident in the demand for our products around the world and look forward to seeing continued strong performance in our business with that regina could you please go over the lines for questions we will now begin the question and answer session in order to ask a question simply press star followed by the number one on your telephone keypad.

Our first question will come from the line at Ekaterina Kiskova with J.P. Morgan. Please go ahead.

Thank you so much, and congrats on the results. The first question is just on gross margins, obviously a very strong number this quarter. You've touched upon this, but what are the main drivers of this, and how much is mixed, or anything potentially one time in there, and how should we think about gross margins over the next few quarters? And then second bigger picture question, just on the guidance update, can you just elaborate a bit what's kind of, you know, doing better than expected as you kind of think about the EPS and the EBITDA upside. How much of this is fiber forward versus mixed versus commercial execution versus anything else? Thank you.

Sure. Thanks for the question, Ekaterina. So, in terms of the gross margin, there are a number of factors that are driving it, you know, particularly in this quarter and also on a year-to-date basis as well. So, A, we've been successful in taking additional price, particularly on the Zoetis portfolio, which has exceeded our expectations and helps drive improved margins. We've also seen very positive mix. We continue to see strong performance in our nutritional specialties and our vaccine products, which do come in at a higher margin as well. So really strong mix, strong price, and strong overall performance. And also just a focus internally on driving growth on the higher margin products as well has helped. In the quarter in particular, you know, I think I mentioned in last quarter's call that we should have some returns coming as part of our transition from what we call Tier 3 markets to Tier 1 markets. Those returns came at full cost, so the price of sales and the price of cost was the same, so that partially elevated the gross margin as well for that quarter, but that's less than, you know, call it 100 basis points, but overall really strong underlying the performance from a growth. And from an EPS and guidance perspective, a number of factors that have driven, you know, the positive view that we have for the rest of the year. A strong revenue performance, as I mentioned, a really strong performance in our acquired portfolio, really exceeding our expectations in how we're performing there, and our ability to leverage our existing infrastructure without building, you know, as quite as much additional staff or resources to support the new business as well has continued to perform positively, and the improved mix that we mentioned as well.

Next question will come from the line of Michael Riskin with Bank of America. Please go ahead.

Hi, this is Alexa on for Mike. Thank you so much for taking our question. I was wondering about if you could talk about the impact of the customer timing on the MSA business. If you could give any details on what happened there and if it will flip into 3Q, and how should we think about the legacy MFA business and Zuetis MFA and those normalized growth rates going forward for both businesses, given some of the lumpiness in recent quarters? And then I have a follow-up question.

So in terms of the customer timing that we mentioned for the legacy MFA business, that's one customer that we do a significant amount of business for. They hold different inventory levels at different times, so sometimes within a quarter we'll have pretty significant fluctuations. That ends up varying throughout the year and evening out through the year. It was roughly $10 million in this quarter. We do expect it to improve as we move into the next quarter, so we don't expect that significant negative hit as we move into the second half of the year. In terms of the likes of the MFA and this is what this MFA, as we move into the second half of the year, we'll have a full comparative, right? So this is the last quarter where we sort of had a partial quarter of the previous year. So as we move into the second half, we'll have a full comparative, both the legacy portfolio as well as the recently acquired portfolio, which will obviously slow growth. And, you know, I think what we talked about for the long term is we expect, you know, this business to grow sort of in the low to mid single digits. You know, with the strength that we have from a bill force perspective and technical expertise, we'll look to drive that greater. But overall, you know, we expect this business to be a low- to mid-single-digit growth business.

Okay, got it. That's super helpful. And then my follow-up question is on side markets. So they've been really favorable in livestock in recent quarters with very strong results. Can you just talk about how sustainable this is versus it being a cyclical upswing? Thank you.

Yeah, Larry, you want to address the protein markets and the sustainability?

Yes, sure. Thanks for the question. So the demand for high-quality, clean proteins continues to be very strong, and we see benefits for that, particularly in our beef sector, our chicken broiler sector, pork, turkey, dairy, and also for eggs. We certainly see continued favorable feed costs, which is obviously the largest input cost of producing animals, and that's helping to maintain margins. We'll probably expect to see a little bit of some shift, you know, in trade between certain countries, which is sometimes driven by tariffs and also some disease outbreaks. But I want to emphasize, we really feel good about our diversification amongst our livestock species, as well as geographic presence in all the key global livestock production markets, including many markets which are increasing their domestic production to be more food secure and less reliant on imports. Our diversity has certainly been enhanced with the MFA acquisition.

Thank you. And if I can stress one quick follow-up on the MFA business again, I want to talk about share gains. Are you taking share from others during the strong combined portfolio? And that's my final question, and thank you, and congrats on the great results.

Thank you. So, Meyer, you want to address the share gains?

So I would say that we, in the quarter, in the first half, we've certainly seen strong performance in our poultry anticoxidial range. We were able to offer a much more complete portfolio of offerings, particularly in broiler coccidiosis management. Often people, you know, change and rotate every few months on these, So it's allowed us to have, you know, more opportunities to participate in those anarchypsidial programs. We've also seen good growth in our swine enteritis business.

Again, for any questions, press star 1. Our next question comes from the line of Neb and T with VMP Paribas. Please go ahead.

Good morning. Thanks for taking my question. Just what drove the outperformance of the Zoetis MSA portfolio specifically, and a clarification on the legacy one. So, shall we expect 10 million to come back in Q3, just to make sure? And then I'll have a follow-up.

Yes, so just in terms of the legacy business and the negative impact of the quarter, we will expect that to come back in the second half of the year. Well, how much of it comes between Q3 and Q4, that will depend on the orders that we received, but we do expect it to come back within the second half of the year. I'll start on the drivers of the Zoetis MFA, but Larry, you know, if you could add as well, in terms of the outperformance, I think, A, it's been tremendous execution from the team in terms of the integration. We've built a very strong team that's been, you know, extremely effective in their interactions with our customers. We have been able to take share on some, you know, particular products in the marketplace as we continue to gain momentum, and we expect that, you know, hopefully to continue as well. Larry, I don't know if you have additional things to add on the Zoetis MFA outperformance.

You know, I think our team has done a really good job of focusing on these. We've got a lot of shifts, particularly in the segments. People are – our customers are growing animals to larger, heavier harvest weights. And so that's changing some of the dynamics that they have to deal with, And our team is really doing a great job in promoting and reminding customers of the indications and claims that we have for these new products and how those fit some of these trends and challenges of feeding animals longer. So, you know, we're really seeing good receptivity from our customers. Obviously, the value of animals are at historic highs, So customers are very interested in investing to protect their animals, to keep them healthy. And healthier animals, obviously, are more efficient and help optimize the margin and opportunities for returns. Jack and Donnie talked about our presence at the International Poultry and Egg Conference last week in Atlanta. And I'm actually at the National Beef Cattlemen's Association right now in Nashville, where we're able to have presence, you know, in the trade show and in a lot of the activities here. And we're meeting a lot of great customers here that are in the beef production segment. And I have to say their interest in these products, how they can fit and help them solve the challenges they're facing, really are excited to see us these products and investing in these products and enthusiasm for this beef segment is really high right now. Obviously, consumption of beef has grown for the first time in quite a long time and so people are feeling really good about this acquisition as are we.

Thank you for that. And then in companion animal, can you maybe expand on the commercial attraction and the vet feedback of WestJory since the launch?

So, hi. It's Donnie. I'll take that. So, we launched it, obviously, late last year, you know, into the holiday season. It's actually gone more or less according to plan. I don't know if you had a chance to be in Orlando for BMX. We actually had our first time that we've been an exhibitor. A lot of foot traffic, a lot of interest. We've seen a boost since then. We'll be continuing, you know, on the circuit. We'll be in Vegas for the Western Vet Conference, and overall, there is a lot of excitement within the vet community.

Thank you. And a final reminder, to ask a question, simply press star followed by the number one on your telephone keypad. Our next question will come from the line of Erin Wright with Morgan Stanley. Please go ahead.

Hi, good morning. This is Linda Burbank for Erin Wright. Thanks for taking our questions. So could you please provide an update on the 504 initiative, specifically what's been realized to date versus what may remain ahead? And also how much of the margin expansion embedded in the latest outlook is driven by structural cost initiatives versus cyclical or mixed-related benefits?

Sure. So I'll start on the 504. As in the past, we haven't given specific dollar amounts in terms of the contributions or the expectations. So what we have said is it continues to be a significant driver of our growth. You know, we are now halfway through, you know, fiscal year 26, and we expect sort of the optimal of the max contributions coming, you know, from a full year fiscal year at 27. Let's say, you know, we're sort of halfway through the process, you know, and we expect the contributions from 504 to continue to accelerate as we move through the end of fiscal year 26. And then, you know, and we'll get a full annualization of benefits as we move into fiscal year 27, and that will be a key contributor to growth in fiscal year 27. I'll turn it to Donna, if there's anything in there.

You know, what I'd say is Fiber Forward really touches upon all parts of our company. We're seeing it in some of our revenue strategies, but it's also one of the groundwork for future growth.

Thank you, that's helpful. And then also, there's been a number of innovation developments across companion animal, notably oral health. Is this a meaningful contributor to 2026 or more so going forward?

So that will be more so going forward. So within this quarter, it was a limited contributor. We'll expect, you know, a little more in the second half of the year. But I think we'll start to see more material contributions in fiscal year 27 and then beyond.

And that will conclude our question and answer session. I'll hand the call back to Glenn David for any closing comments.

Thank you, Regina, and thank you, everyone, for listening in on today's call. We really appreciate your time, attention, interest, and support, Fiber Animal Health Corporation. Have a great time.