Phibro Animal Health Corp (PAHC) Q4 2026 Earnings Call Transcript

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 fourth 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 one on your telephone keypad. To withdraw your question, press star 1 again. I would 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 fourth quarter and full year ended June 30, 2026. 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 Donny Bantime, President and Chief Executive Officer, and Larry Miller, Chief Operating Officer. Today, we will cover financial performance for our fourth quarter and full year 2026 and provide financial guidance for our fiscal year ending June 30, 2027. 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 investor section of our website, you will find copies of the earnings press release in Annual Form 10-K, as well as the transcript 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 gap 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 losses gains net and income taxes related to pre-tax income adjustments and unusual or non-recurring income tax items. Now, let me introduce our President and Chief Executive Officer, Sonny Bantheim, to share his opening remarks.

Thanks, Glenn, and good morning, everyone. Fiscal 2026 was a strong year for Fibro. We delivered record net sales of more than $1.5 billion and increased adjusted EBITDA by 39% to $255 million. In the fourth quarter, sales grew 5% and adjusted EBITDA grew 29%. More importantly, these results reflect a company that is executing better, operating more efficiently, and positioning itself for long-term growth. Let me spend a few minutes discussing the key themes behind those results. We experienced continuous sales momentum throughout the year. Our total legacy business grew 10% in the fourth quarter and 7% in the full year. Minimal nutrition delivered particularly strong performance, with sales increasing 20% in the quarter and 11% for the year. Growth came from multiple parts of the portfolio and reflects the benefits of serving as a diverse set of customers, species, and end markets. Animal health, our core business, remained the primary growth engine. Our legacy animal health business grew 8% in the quarter and 7% for the full year. Legacy MFA's increased 11% during the quarter, while nutritional nutritional specialties, and vaccines grew 5% and 4% respectively. For the full year, legacy MFA increased 4%, nutritional specialties increased 9%, and vaccines increased 14%. Sales from the acquired YSMFA portfolio were down 11% in the quarter, largely reflecting a difficult comparison against a strong prior year period. The result was in line with our expectations and internal planning. For the full year, the portfolio grew 70%, and beyond the strong sales of the acquired products themselves we are extremely pleased with both the integration and the strategic benefits the acquisition is bringing to the company which we believe will continue to play out across our entire portfolio now that we have completed a full fiscal year with the integrated business we do not expect to continue reporting the acquired portfolio separately before turning to fiscal 2027 guidance let me touch on two important business updates mark the formal conclusion of fibro forward our three-year transformation program While the program has for the most part ended, the capabilities it created remain embedded throughout the organization. The stronger execution, accountability, and discipline developed through Fiber Forward continues to shape how we run the company today. Based on our current outlook, the expected cumulative EBITDA contributions from the program reaches approximately $50 million in fiscal 2027 compared with our fiscal 2024 baseline. Second, we announced yesterday the planned closure of our Chicago Heights manufacturing facility following a comprehensive review of the manufacturing network added to the MFA acquisition. This was a difficult decision, particularly because of the impact on our employees, and it is certainly not a reflection of their dedication or performance. I believe leadership requires balancing multiple responsibilities. We have a responsibility to our employees to treat them with honesty, respect, and fairness. We also have a responsibility to our customers, shareholders, and the long-term health of the business. Those responsibilities occasionally require difficult decisions, and this is one of them. This action better aligns our manufacturing footprint with the future needs and supports stronger long-term returns. Our focus now is on supporting employees, maintaining customer service, and managing the transition responsibly. One of the key uncertainties we considered in developing our Fiscal 2027 outlook is the regulatory status of Virginia Mice in Brazil. We continue to work constructively with Brazilian regulatory authorities and remain very optimistic regarding the long-term outcome. However, we have assumed only a minimal contribution from Virginia Mice in sales in Brazil in our planning for this fiscal year. As a result, a favorable outcome will represent upside to our expectations rather than something required to achieve. With that context, our Fiscal 2027 guidance reflects confidence in the underlying business while taking a prudent view of known uncertainties. We expect debt sales of $1.55 billion to $1.6 billion, adjusted EBITDA of $258 million to $258 million, and adjusted diluted EPS of $3.41 to $3.59. In closing, as I begin my tenure as CEO, my priorities are straightforward. serve our customers, advance innovation, improve operating performance, allocate capital with discipline, and create long-term value for all stakeholders. We enter Fiscal 2027 with a broader portfolio, a more profitable animal health business, and a stronger operating model. I believe the actions we are taking today are setting the stage for us to exit Fiscal 2027 in an even stronger position, with a more competitive company, a more efficient asset base, and an additional opportunity to reevaluate. We've made significant progress for the last several years, but I believe our best opportunities remain ahead of us. With that, let me turn the call back to Glenn.

Thanks, Donnie. And starting with our Q4 performance on slide four, consolidated net sales for the quarter ended June 30, 2026 with $396.7 million, reflecting an increase of $18.1 million dollars or a five percent increase over the same quarter one year ago. The animal health segment grew two percent while mineral nutrition grew at 20 percent and the performance product segment grew by one percent. Gap net income and diluted EPS increased 26 percent driven by the successful integration of the new MFA business, increases in demand, improved gross margin due to favorable mix and lower input costs, and the net impact of tariff recoveries, partially offset by 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 fourth-quarter adjusted EBITDA increased $14.3 million, or 29 percent, versus prior year. • Adjusted net income increased 37% and adjusted diluted EPS increased 35% • Increased gross profit, driven by sales growth and an improved adjusted tax rate, was partially offset by higher adjusted SG&A and higher adjusted interest expense. Moving to the full year, consolidated net sales for the year ended June 30, 30th, 2026, were $1,518,000, reflecting an increase of $221.9 million, or a 17% increase over the prior year. The animal health segment grew 21%, while mineral nutrition grew 11%, and performance products decreased by 8%. Gap net income and diluted EPS increased significantly, driven by the successful integration of the new MFA business, the positive impact of our Fibro Forward Initiative, and favorable gross profit due to higher product demand in the animal health segment, which were partially offset with increased SG&A due to higher employee-related costs and higher interest expense. After making our standard adjustments to GAAP results, including acquisition-related items, foreign currency losses, and certain one-off items, full-year adjusted EBITDA increased $71.3 million, or 39 percent. Adjusted net income and adjusted diluted EPS both significantly increased as well. Increased gross profit, driven by sales growth, was partially offset by higher adjusted SG&A and higher adjusted interest expense. Moving to segment-level financial performance, The animal health segment posted $297.6 million net sales for the quarter, an increase of $5.1 million, or 2%, versus the same quarter prior year. Within the animal health segment, we reported legacy MFA net sales increase of $11.7 million, or an increase of 11%, primarily due to increased demand for certain antimicrobials sold by our ethanol performance business. The new MFA business had sales of $83.9 million in the quarter, a decrease of $10.6 million or 11%, driven by a strong comparator quarter in Q4 2025. Nutritional specialties net sales increased $2.5 million or 5% due to increased dairy demand in North America. Vaccine net sales growth of $1.5 million, or 4%, primarily due to continued growth of poultry products in Latin America and higher international demand, particularly in Israel. Animal health adjusted EBITDA was $75.4 million, a 25% increase driven by the new MFA business, higher gross profit from improved mix and the legacy business, a one-time tariff recovery in the quarter, partially offset by higher SG&A, moving to full-year performance for animal health on Slide 7. The animal health segment posted $1,162,000,000 of net sales for the year, an increase of $199.4 million, or 21%, versus the prior year. Within the animal health segment, we reported legacy MFA and other net sales growth of $18.2 million dollars or 4% due to demand for certain MFA's in Mexico and Southeast Asia and for products sold by our ethanol performance business including antimicrobials and processing aids used in the fermentation industry. The new MFA business contributed $354.3 million in sales growing 70% versus the prior year. Nutritional specialties met sales increased $15.8 million dollars or nine percent due to increased worldwide demand particularly in north america and south america and higher companion animal sales vaccine net sales growth of 19.3 million dollars a 14 increase driven by continued growth of poultry products in latin america and an increase in domestic and international demand in israel and southeast asia animal health adjusted EBITDA was $303.6 million, a 37% 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 fourth quarter financial performance for our other business segments on slide eight. Starting with mineral nutrition, net sales for the quarter were $77 million, an increase of $12.8 million, or 20%, due to a combination of demand for premixes and an increased cost of underlying commodities like zinc and copper. Looking at our performance product segment, net sales of $22.2 million, an increase of $0.1 million, or 1%, primarily as a result of increase in demand for copper-based products, offset by lower demand to the ingredients used in personal care products. Mineral Nutrition adjusted EBITDA increased 1% versus prior year with revenue growth offset by higher input costs, while performance products adjusted EBITDA was up 12%. Corporate expenses increased $1 million driven by higher employee-related costs and strategic investments. Moving on to the full year of financial performance of our other business segments. Starting with mineral nutrition, net sales for the year were $282.3 million, an increase of $29.1 million, or 11%, due to increases in demand for copper, zinc, and trace minerals. Mineral nutrition adjusted EBITDA was $21.7 million, reflecting a year-on-year increase of $0.8 million, or 4%. Looking at our performance product segment, net sales of $73.5 million for the year reflects a decrease of $6.6 million, or a decrease of 8%, as a result of lower demand for the ingredients used in personal care products. Adjusted EBITDA was $8.1 million, a decrease of $2.5 million versus the prior year. Corporate expenses increased $8.4 million due to higher employee-related costs and strategic investments. Turning to key capitalization-related metrics on slide 10, we generated $10 million of positive free cash flow for the 12 months ended June 30, 2026. We generated $69 million of operating cash flow and invested $59 million in capital expenditures. Cash flow was negatively impacted by inventory growing $86.3 million in fiscal year 2026, primarily in the newly acquired MFA portfolio. Cash and cash equivalents and short-term investments were $82 million at the end of the year. Our gross leverage ratio was 2.9 times at the end of the fourth quarter based on $738 million of total debt and $255 million of trailing 12-month adjusted EBITDA. Our net leverage ratio was 2.6 times at the end of the fourth quarter based on $656 million of net debt and $255 million of trailing 12-month adjusted EBITDA. 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 11, which lays out our guidance for fiscal year 2027. As Bonnie mentioned, included in this guidance are benefits related to our Fibro Forward Income Growth Initiative that will help drive additional EBITDA and margin growth, and this guidance reflects a prudent view of known uncertainties, most notably the regulatory status of virginia myosin in Brazil. Minimal sales of virginia myosin in Brazil negatively impacts revenue growth in the year and has a much greater impact on EBITDA growth due to the higher margin profile of the product and unabsorbed overhead in addition the closer of our chicago heights facility will have a small benefit to adjusted ebitda in fiscal year 2027 with the majority of the benefit in fiscal year 2028 and beyond estimated to be between 15 to 20 million dollars on an annual basis please note that during the transition period of fiscal year 2027 we will be building some additional inventory at the site, but inventory growth in fiscal year 2027 for the company will be significantly less than fiscal year 2026. Our guidance for fiscal year 2027 is as follows. Net sales of $1,550,000,000 to $1,600,000,000. This represents a growth range of two to five percent and a midpoint of approximately four percent total adjusted EBITDA of 258 to 268 million dollars this represents a growth range of one to five percent and a midpoint of approximately three percent an adjusted effective income tax rate of approximately 20 the improvement versus fiscal year 26 is driven by an anticipated favorable mix of earnings Adjust a net income of $140 to $147 million. This represents growth of 6% to 11% with a midpoint of approximately 9%. Gap net income, NEPS, assumes constant currency and no gains or losses from FX moves. In addition, Gap net income, NEPS, does not currently reflect any one-time costs related to the Chicago Heights plan closure. While we don't provide quarterly guidance, I do want to remind everybody that Q1 tends to be a low order in terms of absolute revenue dollars. As we were building the infrastructure to support the newly acquired business in fiscal year 2026, we ended the year at a higher SG&A base that will carry forward into fiscal year 2027. Due to this dynamic, we expect Q1 EBIT growth to be negative and then positive for the rest of the year. In closing, we're excited about the strong performance we saw throughout fiscal year 2026 and the momentum we are carrying forward into fiscal year 2027. With that, Regina, could you please open the lines for questions?

Thank you. We will now begin the question and answer session. To ask a question, press star and the number one on your telephone keypad. Our first question will come from the line of Erin Wright with Morgan Stanley. Please go ahead.

Great. Thanks for taking my question. So the first one, I guess, is how do you think about that underlying new MFA business? It dropped down kind of in the quarter, but you've been doing really well with that before. Is there anything to call out in terms of timing? I know you mentioned the tough comp, but is there anything timing last year to call out on that front? And what are you expecting then in terms of that growth across that business into 2027? I know you won't be breaking that out, but just conceptually, how should we think of think about it. Thanks.

Thanks for the question, Aaron. So, the Q4 decline in the Zoetis MFA portfolio was something we always anticipated and expected as part of our forecasting and really is driven by the difficult comparator to Q4 in last year versus any negative underlying growth trends. We really continue to believe this portfolio will outpace the overall revenue growth for FIRO in fiscal year 2027, and some of the positive drivers are a continued strong momentum in North america and we also do expect some positive growth drivers in international as well in addition i also want to remind we did have a negative impact on revenue in q2 of fiscal year 2026 due to returns related to the tier 3 market transitions which will help revenue growth in fiscal year 2027 though it won't have any impact on gross profit or even though and maybe larry can add some more color to some of the uh commercial drivers sure thanks uh in poultry a key part of the acquisition was a very strong anticoxidial MFA portfolio

that really complements our legacy products and gives fibro a broad set of molecules across several compound classes for strategic rotation programs. Our team has integrated these MFAs well and is promoting combined MFA, nutrition specialty product, and vaccine solutions for prevention, control, and treatment of disease. In the beef segment, we are repositioning the key acquired cattle products in feedlots as our start strong package. Bobatech is the platform supporting higher feed intake complemented by DECOX for coccidiosis prevention and oriomycin for treatment and control of bacterial pneumonia or respiratory disease. Our team is re-educating customers on how these products can help cattle start strong and protect their investments.

Okay that that's Helpful. And then can you speak to just broadly underlying demand trends kind of by species group, I guess, how would you characterize that in terms of overall animal health? And what do you expect in terms of animal health performance into 2027 on that front? If you back out kind of obviously the Virginia mice and Brazil headwind on an underlying basis, what are those key drivers, years, fundamentally speaking, into 2027?

So again, we're investing in this portfolio. Again, the medicated feed ad has been complemented with the nutrition specialties and vaccines. As you know, you know, the market demand and the meat sector and the dairy sector continue to be in good state with good underlying demand. And animals in all species are at an all-time record high in value. So our customers are very, you know, motivated and interested in investing to protect the health and well-being of their animals. And those animals, obviously, that are healthy are going to perform better. So we think it's still a really good opportunity and a good market environment.

Okay. And sorry, one quick last one for me. Just the virginia myosin exposure, I guess anything else to call out, you know, from a regulatory perspective that we should be paying attention to, or is this just really isolated to Brazil at the moment? And can you remind us of your overall exposure to virginia myosin?

Yeah, so the exposure to virginia myosin is isolated to Brazil related to the therapeutic claims. In fiscal year 2026, we had about $27 million in sales related to virginia myosin in Brazil. We are assuming very minimal sales in fiscal year 2027. Essentially, we had some sales, you know, in the first couple of months of the year, but we don't expect any sales post that once the therapeutic period ends. We do believe there is a chance we may get approval within that period, but to be conservative, we haven't included any sales post Q1.

And we don't break out the sales overall for the company.

Yep, just thought I'd try. Thank you so much. Our next question will come from the line of Ekaterinikiskova with JP Morgan. Please go ahead.

Thanks and congrats on the quarter. So first, just on margins, can you elaborate a bit on what you're assuming for both gross margins and SG&A, and just what's a good way to think about gross margins given the vitriomycin dynamic? Second question is just around business development, just, you know, latest thoughts on your appetite as well as the type of assets you could be interested in. And then a third question is just to follow up on the Brazil discussion, just any updates on the regulatory kind of review process? Has there been any interactions with the regulators? And have any other kind of competitors potentially gotten their labels already? Just any kind of snippets you can share there.

Thanks, Ekaterina. So I'll take the first question and let Donny address the BD and regulatory developments in Brazil. So related to margins, moving into next year, we expect gross margins to be essentially flat. Obviously, the impact of Virginia myosin is negative to margins as we move into next year, but we will offset that with other efficiencies that we look to get through our Fibro Forward Initiative, as well as some of the gains that we do expect related to the Chicago Heights closure that will materialize in fiscal year 2027. Related to SG&A, because of the run rate that we left fiscal year 2026 with, we do expect SG&A to be a little above that of revenue growth but not materially above.

As far as business development is concerned, you know, I think we have a lot of opportunities internally and definitely there's a lot that we are doing in support of those. But if there are business development opportunities that complement our internal, you know, targets, we're obviously looking and we're active. Just a reminder, you know, kind of vaccines and nutritional specialties are the two areas that we most focus on. And we've also obviously identified pets as an animal as an area, as well as climate. So I think those are the key areas that we're pursuing. And, you know, I think we'll do it prudently as we've done in the past and continue to invest both internally and let me pass it to Larry actually to deal with the Brazil question.

Yeah, as Donnie mentioned in his opening comments, we continue to work constructively. With the Brazilian regulatory authorities, we remain optimistic about receiving therapeutic use approvals, very similar indications to what we have in other leading livestock markets, and we hope and expect to have those within the 180-day transition period, which ends at the end of October. virginomycin is a very unique and important therapeutic product in helping our customers keep their cattle and poultry flocks healthy and protecting their investment yeah i mean i think the the issue that brazil is facing with um just particularly is uh the eu put in some new regulations as far as the ability of countries to to sell to the eu and some of them deal with

with hormones some of them deal with antibiotics there are other countries there are many other countries that sells that have permission to sell and continue to sell in the EU that have Virginia Bison for therapeutic claims um and Brazil is aware of that and understands that that you know is putting them at a competitive disadvantage if they don't do that um however this is you know a very big you know political football right now in in Brazil um there are local elections or federal elections I guess in the next couple of weeks um which the first round second round will be a couple weeks after that so while we're we're again optimistic that we can get this done within the uh or cautiously optimistic we can get this done within the the period of of the 180 days i think you know prudently we're saying hey this might slip post-elections um because of you know the the noise around it and therefore our fiscal 27 guidance you know we do believe though we're very happy to claim eventually

thanks appreciate all the color our next question will come from the line of Daniel Rosleit with Citi.

Please go ahead.

Hi, guys. Thanks for taking the question. I want to focus a little bit on free cash flow and working capital dynamics in 27. Obviously, you mentioned you had that big inventory build in fiscal 26 due to the Zoetis MFA acquisition. And I think you mentioned that you'll still need to build some inventory in 27, but not nearly as much as you did in 26. Can you just talk to us a little bit about the working capital investment needed in fiscal 27 and you know what's your expectations for for capex and free cash flow conversion are into fiscal 27 thanks

yeah thanks for the question daniel i agree that free cash flow was uh was limited in 2026 with about 10 million dollars in free cash flow you know as you mentioned this was greatly impacted by the inventory build due to the Zoetis Potter portfolio of about $86 million.

The good news is that inventory bill did stabilize in Q4, and for fiscal year 2027, we really do expect any inventory bill to be limited to the Chicago Heights transition. We expect to be that in the range of $25 to $30 million. Also, as part of our Fiber Forward initiative, we have enhanced our focus on inventory as the company and become implementing more robust S&OP processes across the organization. Related to CapEx, we spent about $59 million in CapEx in fiscal year 2026. We do expect this number to be higher in fiscal year 2027 and 2028 as we continue to invest to grow our vaccine capacity to support the building demand in our manufacturing sites in both Ireland There will also be some other small capital investments required to shift some of the Chicago Heights production to other internal sites, but net-net, we expect significantly greater free cash flow in fiscal year 27 than fiscal year 2026.

Got it. That's helpful. And on the closing of the Chicago Heights facility, are you able to quantify the expected one-time cash charges related to that? and it sounds like much of the anticipated benefit is going to come through starting in the second half of the year is that right and and when will the the benefits of that closure uh be fully uh fully realized here

yeah so in terms of the overall one-time cost and it's a little difficult to estimate the exact amount based on what the ultimate um end will be for the uh for the site in terms of whether it's, you know, purchase is an ongoing consideration or not.

In terms of some of the cash costs, you know, we do expect cash costs related to the site closure to be around $10 million and then about another $10 million in CapEx. But some of the other, you know, non-cash costs, asset write-offs, things of that nature, they're still unknown as well as the ultimate purchase of value of the site as well. But cash costs, you know, relatively, you know, smaller in terms of around $10 million cash, one-time costs, and then CAPEX around $10 million as well. And then you asked about the impact. Yeah, in terms of the impact between fiscal year 2027 and fiscal year 2028, as we're beginning the process right now, as we mentioned in the prepare remarks, the impact in fiscal year 2027 will be relatively minimal to adjusted EBITDA, but a small positive contribution. As we said in the prepared remarks, the ongoing impact we expect to be about 15 to 20 million dollars, of which we expect that to materialize in fiscal year 2028 and beyond.

Yeah, and last one for me, just sticking with the cash theme here, Gross leverage is now down to under three times. Seems like most of the major integration work with Zoetis is complete. How are you thinking about capital deployment and in particular returns to shareholders, maybe liquidity limits, which you can do on the share buyback side of things? But how are you thinking about further debt pay down, perhaps a buyback or dividend? in, and you already kind of touched on the M&A front, but maybe a little bit more detail on how you're thinking about organic versus inorganic growth, too.

Sure, Donnie. I'll start, and then I'll let Donnie add some additional color. So, A, you know, we continue to see organic growth opportunities within the business, and that's going to continue to be our first priority. We mentioned a little bit about the elevated CapEx in fiscal year 27 and 28, you know, regarding building capacity at our vaccine manufacturing sites in ireland and israel also some greater funding in r d to support combination products some market expansion as well as supporting our companion animal business second priority you know continues to be business development and looking to expand in areas of higher growth and margins such as vaccines environmental companion animal and then in terms of returning capital shareholders We'll continue to support our dividends. We'll continue to look to pay down debt as well. And then beyond fiscal year 2027, you'll continue to evaluate other options. Tony, I don't know if you have any additional calls.

I'll just echo what Glenn said. I think we're pretty excited about the opportunities, as I mentioned earlier, within our portfolio. But some of that does require, you know, investment, either capital or OPEX. And that is going to be our first priority. And, you know, we think that that's the prudent way to go here. There's a lot to do within what we have.

Thanks, guys.

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

Great. Thanks for a susan, man. Maybe first I'll ask on mineral nutrition. That's done better the last couple quarters. I mean, I know you guys always talk about that being a pretty much pass-through business. So reflecting underlying commodity pricing, but still there's been a, you know, 11% growth in 26 and 20% in the fourth quarter. Just how much visibility do you have into trends there into 2027? I guess kind of my question is like how quickly can those prices swing and what are your assumptions there for, you know, at least the first half of the year? Do you expect the strength to continue, these elevated prices to persist?

Yeah, so I'll start, Mike. Thanks for the question. So in terms of mineral nutrition, as you mentioned, we did have very strong revenue growth in both the quarter and the year. However, when you look at our EBITDA growth, it was much slower, growing 1% in the quarter and 4% for the year. That's really due to the fact that prices of some of these materials have increased significantly, so the cost to us has increased significantly, and our ability to pass that price all the way to the customer wasn't at 100% in this year. So the EBITDA growth didn't necessarily follow. We do expect actually stronger EBITDA growth next year with potentially lower revenue growth, not necessarily in that, you know, call it 11% range that we see year to date. So somewhat slower revenue growth, but more EBITDA growth following forward.

That's fair. And then maybe on Fibro Forward, you know, as you called out, you're sort of like wrapping that up in terms of the actions. But, you know, $50 million EBITDA is a pretty impressive number for fiscal year 27 versus the 24 baseline. So congrats on that. Just thoughts on sort of like the next leg or the next opportunity there. Is there a Fibro Forward 2.0? So what do you see going forward now that you've taken those first initial steps?

Yeah, so I'll take that. Thank you. You know, I think the company has really changed within Fiber Forward and basically how we operate is really the legacy. So there's not a transformation 2.0, but there definitely is a forward plan for a three-year planning cycle, which includes a lot of the learnings and the implementation aspects within Fiber Forward. and we've set ourselves some fairly lofty goals, and, you know, we expect to deliver on it because we've seen that we can. So, there's not going to be a formal transformation program, but there is, you know, the learnings and the way that we operate will continue, and we put together, you know, what we call a transformation office, might change to kind of more of a strategy implementation office, but we do expect to continue to reap the benefit of the way that we operate now.

And then, last one, if I could squeeze in, I didn't hear too much in the prepared remarks on the companion animal, you know, Regenza, Restoris, just would be great to get an update on that, how that's trended in the quarter, just sort of, you know, expectations for 27 at a high level.

I'll take that the last time actually because Glenn has taken over this business. But the, you know, actually it was called out within our nutritional specialties as far as why it was up was was uh partly because of companion animal um so we continue to see growth um especially with with regensa uh as we've brought in from initially we had one distributor now we've brought in that to multiple distributors and we're seeing a nice uptick with that with restorers um frankly you know it's growing obviously it has a zero base it's growing we're seeing a lot of reorders now which is very strong but we have not had the success that we had anticipated we are starting to see a snowball effect so early days on that uh but you know the longer we're out there and the more kind of evidence we are able to show from real use cases uh the stronger our proposition the product you know really does what we say it does and so uh while disappointed with our performance uh last fiscal year and and you know in this fiscal year we've tempered our our expectations within our guidance uh we do believe that this is something that really could do very well for us. Thank you.

Our next question will come from the line of Nevin T with BNP Paribas.

Please go ahead. Hi, good morning. Thanks for taking my questions. I just have one left. Do you have early thoughts on the impact of the phased Mexican border reopening for for the cattle herd and for FIBO? Thank you.

Thanks for the question. This will initially have very modest impact on U.S. beef production in 2026 by increasing number of cattle available to fill some of the excess feedlot capacity. And it's unlikely to have any material impact on lowering consumer prices for beef in the near future. This is being implemented in a controlled phase approach with veterinary inspection of each animal. The first port of entry opened last week for cattle coming across in Arizona, and a second will open near Chihuahua, with total imports in the next year to be projected about 12,000 cattle per month or less than 150,000 head by mid-27. That equates to about one-half of 1% of the 27 million head of annual beef feedlot production. Assuming that the Mexican cattle imports resumes to what had been normal historic averages of about 1.2 million head per year, that equals about 3% of the U.S. feedlot production. So it does have potential to have impact. It should be noted that the beef on dairy market development and growth is having a much more significant impact on feeder cattle availability, currently supplying about 5.5 million or 20% of the 27 million fed for slaughter in the United States. And the consistency of supply uniformity and quality is adding significant value to the U.S. beef industry.

Thank you. That's very exhaustive and helpful. Thank you.

And once again, to ask a question, press star followed by the number one on your telephone keypad. And this will conclude our question and answer session. I'll hand the call back over to Glenn David for any closing comments.

Thank you, Regina, and thank you, everyone, for listening on today's call. We appreciate your attention, interest, and support of Fibronum Health Corporation. Have a great day.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.