Hello everyone. Thank you for joining us and welcome to Fibro Animal Health Corporation to host webcast and conference call on first quarter results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Glenn David, Chief Financial Officer. Glenn, please go ahead.

Thank you, Kendra. Good day and welcome to the Fibro Animal Health Corporation earnings call for our fiscal first quarter ending September 30th, 2026. My name is Glenn David and I'm the Chief Financial Officer of Fibro Animal Health Corporation. I'm joined on today's call by Donny Bendheim, President and Chief Executive Officer, and Larry Miller, Chief Operating Officer. Also on today's call is Patrick Rodriguez, our Treasurer and new Head of Investor Relations. Welcome Patrick to the call. and I'm going to turn things over to you.

Thank you, Glenn. I look forward to interacting with all of you in the coming months. Today, we will cover financial performance for our first quarter and provide financial guidance for our fiscal year ending June 30th, 2027. At the conclusion of our remarks, we will open the lines for your questions. I would also like to remind you that we're 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 and quarterly form 10-Q, 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 would 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 US GAAP. I refer you to the non-GAAP financial information section in our earnings press release for discussion of these measures. Reconciliations of these non-GAAP financial measures to the most directly comparable US 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 expenses as separately reported in the Consolidated Statements of Operations, including foreign currency losses, gains, net, 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, Donny Bendheim, to share his opening remarks. Donny? Thanks, Patrick, and good morning, everyone. Patrick, welcome to your first call. Fiscal 2027 is off to a good start.

Sales grew 6% to $386.8 million and adjusted EBITDA grew 4% to $64.3 million. And we did that against a tough comparison coming off a very strong first quarter a year ago. Let me spend a few minutes on what drove the quarter and how we're thinking about the rest of the year. Our two non-animal health segments did a lot of the heavy lifting grew 17%. I want to spend a moment on mineral nutrition because I think it's part of our business that tends to get overlooked. Part of this quarter's growth reflects higher prices for zinc, copper, and other underlying commodities. And those prices obviously move up and down. But over time, we've also been moving this business toward the higher margin, faster growing parts of the market, including plant nutrition, dairy, and pet food. Customers in these markets are asking for more on ingredient sourcing, quality, consistency, and technical support. Those requirements play to our strengths because of the investments we've made in talents, facilities, and processes. That's a credit to the minimal nutrition management team who have been patient in building those relationships and capabilities. We expect the business to continue growing in these higher margin areas. In animal health, sales grew 3% about right where we planned. MFA's were up 6% with good demand in North America and Asia and continued growth in ethanol processing aids. And that's net of a $5.2 million decline in Virginia mice and in Brazil. Nutritional specialties and vaccines were each down 2%, mostly on softer poultry purchases in North America and Brazil, plus some timing in Asia. Now people are still buying chicken. The pressure is on the producer side. Based on reports from several large protein companies over the last couple of weeks, US chicken supply was up a little over 2% which outpaced demand and pushed prices down, and producer margins have come off last year's unusually strong levels. In Brazil, exports have been strong, but the domestic market was soft. The number of birds being raised is a healthy number, and that's ultimately what matters most for us. When margins tighten, customers look harder at every input cost and purchase. A producer accounts cost per pound could see what our products return, but some customers trim spending and cut inventory, and we saw a bit of that in our poultry sales this quarter. particularly in nutritional specialties and vaccines. The underlying demand for chicken is there, and we do well when it is. We see this pullback as temporary, and we expect it to normalize over the course of this fiscal year. Our forecast still has both of these product lines growing in the mid to high single digits for the year. Animal Health's adjusted EBITDA on the quarter was down 1% from last year, so better than we had planned. Part of that reflects costs that moved from the first quarter into the second. On Virginia mice in Brazil, the transition period ended in October. Our conversations with regulators about therapeutic claims are ongoing, and now that the Brazilian election has passed, we're hopeful we'll see some movement. We haven't built any further Virginia mice in Brazil into this year's numbers. If an approval comes, it's upside. On the full year, we expect protein demand to continue growing, but producer profitability is likely to stay soft in the near term. and recent trade and disease disruptions in protein markets fadded to the pressure. That's reflected in our outlook, so we're keeping our fiscal 2027 guidance where it was. Net sales of $1.5 billion to $1.6 billion, adjusted EBITDA of $258 million to $258 million, and adjusted diluted EPS of $3.41 to $3.59. Two other updates. First, the closure of our Chicago Heights plant remains on schedule. Production should wind down in the summer and early fall of 2027, with those products moving to our other fibro plants and to contract manufacturers. Second, cash. We were cash positive in the quarter, but I am not satisfied. We're carrying more inventory than we need, and bringing it down this year is a priority for me and for our whole team. Better cash conversion gives us more flexibility on debt, on investment, and on returns to shareholders. So, a good quarter with plenty of work still ahead. With that, let me turn the call over to Glenn.

Thanks, Donnie. I'm starting with our Q1 performance on slide four. Consolidated net sales for the quarter ended September 30th, 2026, with $386.8 million, reflecting an increase of $22.9 million, or a 6% increase over the same quarter one year ago. The animal health segment grew 3%, while minimum nutrition grew at 17%, and performance products grew at 16%. Turning to the bottom line, net income for the first quarter was $29.5 million. That's an increase of $3 million, or about 11%, compared to $26.5 million in the same quarter last year. Let me walk you through the key drivers. Operating income was down $1.6 million, as higher SG&A more than offset the improvement we delivered in gross profit. Below the operating line, we saw several favorable items. First, net interest expense declined $0.8 million, reflecting lower interest rates and higher interest income, including interest received on our IEPA tariff recoveries. Second, foreign currency was a $0.4 million gain this quarter compared to a $2.1 million loss a year ago, a favorable swing of $3.3 million. And third, Income tax expense was $0.5 million lower. Taken together, these items more than offset the lower operating income and drove the $3 million improvement in net income for the quarter. 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 $2.4 million, or 4%, versus prior year. Adjusted net income of $32.4 million increased $2.5 million, primarily due to higher gross profit, lower interest expense, and a lower adjusted effective income tax rate, partially offset by higher adjusted SG&A due to higher employee-related costs. Moving to segment level financial performance on slide five. The animal health segment posted $293 million net sales for the quarter. An increase of $9.6 million, or 3%, versus the same quarter prior year. Within the animal health segment, we reported MFAs and other net sales increase of $11.3 million, or an increase of 6%, due to increased demand for certain of our MFAs in North America and Asia and higher sales of ethanol processing aids, partially offset by a decrease of $5.2 million in Virginia myosin sales in Brazil. attributable to regulatory developments in the country. Nutritional specialty net sales decreased $1.1 million, or 2%, due to lower poultry demand in North America and decreased aquaculture demand in South America, partially offset by higher overall demand in China and higher companion animal sales. Vaccine net sales decreased by $0.6 million, or 2%, due to lower demand for poultry products in Brazil and Lower Sales in Asia, partly due to timing, offset by higher swine demand in North America and higher sales of adjuvant products. Animal Health adjusted EBITDA decreased $1 million due to higher SG&A offsetting higher gross profit from increased sales. Moving on to first quarter financial performance for our other business segments on slide six. Starting with mineral nutrition, net sales for the quarter were $73.6 million An increase of $10.6 million, or 17%, due to an increase in demand and average selling prices for zinc oxide, copper, and trace minerals. Looking at our performance product segments, net sales of $20.2 million reflects an increase of $2.7 million, or 16%, as a result of an increase in demand for copper-based and fluoride products. Mineral nutrition and performance products adjusted EBITDA increased $1.6 million and $1.2 million respectively. Corporate expenses decreased $.6 million driven by lower consulting and business development costs. Starting to key capitalization related metrics on slide seven. We generated $22 million of positive free cash flow for the 12 months ending September 30th, 2026. generated $86 million of operating cash flow and invested $64 million in capital expenditures. Cash and cash equivalents and short-term investments were $83 million at the end of the quarter. Our gross leverage ratio was 2.9 times at the end of the first quarter based on $740 million of total debt and $257 million of trailing 12-month adjusted EBITDA. Our net leverage ratio was 2.6 times at the end of the first quarter based on $656 million of net debt and $257 million of trailing 12-month adjusted EBITDA. On interest rates, there are no changes to our current swap arrangement. Turning to dividends, consistent with our history, we paid a quarterly dividend of 12 cents per share or $4.9 million in aggregate. Now let's turn to slide eight which lays our guidance for fiscal year 2027. We are maintaining our previous guidance for fiscal year 2027 as follows. Net sales at $1,550,000,000 to $1,600,000,000. This represents a growth range of two to 5% and a midpoint of approximately 4%. Total adjusted EBITDA of 258 to $268,000,000 This represents a growth range of 1 to 5% and a midpoint of approximately 3%. Our adjusted effective income tax rate for fiscal year 2027 is estimated at approximately 20% and includes the benefit of the resolution of the foreign tax audit expected in the future quarter. We do expect our adjusted effective income tax rate to be higher in fiscal year 2028. Adjusted net income of $140 to $147 million. This represents growth of 6% to 11%, with a midpoint of approximately 9%. Gap net income, NAPS, assumes constant currency and no additional gains or losses from FX movements. As we look ahead to the second quarter, we want to highlight a comparability item. In the second quarter, fiscal year 2026, net sales were reduced, by approximately $13 million of product returns related to the transition of certain tier three markets, including Canada and Europe, from Zoetis back to Fibro. Because this product was originally transferred at cost, the returns had no impact on gross profit. However, they lowered the prior unit sales base. As a result, reported second quarter net sales growth will benefit from an easier comparison. In addition, As Donnie mentioned, certain costs have shifted from Q1 to Q2. Based on these two dynamics, we expect revenue growth to be higher than EBITDA growth in Q2. In closing, we are pleased with the performance in our first quarter and the momentum we are carrying into the rest of fiscal year 2027. With that, Kendra, can you please open the lines for questions?

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Ekaterina Genescova. Ekaterina, from JP Morgan, your line is open. Please go ahead.

Thank you so much. So first, just on Virginia Morrison in Brazil, you kind of mentioned this in the prepared remarks, but just maybe you can give a little bit more color on your thinking, you know, post elections. Have there been any recent communications from regulators or just anything else that kind of gives you more or less confidence as you kind of think about, you know, the timing of that potential label? And then the next question I wanted to ask is just on your MFA portfolio, you know, can you just provide a little bit of, you know, some color in terms of like how much of the growth was coming from your legacy kind of portfolio versus the Zoetis portfolio? I know you're no longer kind of breaking those out, but just the flavor of, you know, how much of the growth was coming kind of from both pieces. And then last question is just on livestock trends kind of more broadly and how you're thinking about the durability of growth for the industry. and the trends that you're kind of seeing, you know, both on the producer side and then also on the protein demand side of things. You've mentioned, you know, some of the stuff that's happening on the poultry side, but maybe you can also talk about, you know, cattle and swine. Thanks.

Thanks for the question, Katarina. I'll start with the MFA portfolio and growth and then turn it to Larry and Donnie for the genomic and some of the livestock trends. In terms of the overall growth, as we mentioned, we're not really breaking out between Zoetis and our legacy portfolio going forward. But just to give some context, obviously we said that we expected the Zoetis portfolio to be one of our higher growth contributors for the year. And we definitely saw that in the quarter. Zoetis was a major contributor to the overall NFA growth in the quarter. On the legacy side, you know, we called out that our ethanol performance group had a very strong performance in the quarter as well. That helped offset the negative $5.2 million that we commented on virginia myosin. So overall, you know legacy called relatively flat because of the impact of vaginomycin offset by EPG and then strong growth in our zoetis portfolio. And then I'll turn it to Donnie to talk about vaginomycin in Brazil.

Yeah so post-election we have not had any renewed contact yet with the regulators. We're not expecting to have you know in the week or two afterwards any contact. We remain obviously overall bullish that you know eventually we will get the VM approval as has happened basically in the rest of the world. But recognizing that things sometimes don't move as quickly as we'd like it to move, we still, as we've talked about, maintained our guidance that we have no VM sales in Brazil for the year. And obviously, if that changes, we will let you know. All right.

OK, I'll talk a little bit about some of the protein profitability So, as Donnie mentioned, we do see squeezed producer margins in both our poultry segments as well as the swine industry. This is a factor of higher supply versus the demand, which has reduced wholesale prices for both chicken meat as well as pork prices. Our customers have also experienced higher input costs, certainly with grain, primarily corn. but also in fuel and some of the other inflationary increases that they've seen and this has caused the pricing pressure there. In the dairy segment, milk prices are hovering at farm gate around $20 per 100 weight. This is about a break even for many dairy producers. One of the areas that producers have seen as far as profitability of their farm is the sale of day old calves, which is still Over $1,000 per calf, anywhere from $1,000 to maybe up to $1,500 per calf. So that's giving them some relief and some margin and profit opportunity. In the beef feedlot sector, the industry is seeing right now some closeouts that happen between October and probably February. They'll see negative margins on those. And that's a factor. The corn price was very high, and I'll talk about that in a minute. And so that combination with the fat cattle price is going to have some negative closeouts for feedlots in the next few months. We believe that that's going to reverse as we get into 2027. One of the things that's really changed, as you know, 75% of producer production cost is in feed, and corn is the main source of feed. If you look back over the last five weeks, corn was trading at that time, cash corn was trading at about $5.50 per bushel. That has now decreased to under four and a half. So we've taken a dollar of feed cost per bushel out of that. In USDA's forecast in October their corn report. Basically, they reported a little higher inventory. So pre-harvest inventory of corn stocks were a little bit higher, but also the yields as we're well into the harvest season now and we'll finish in the next few weeks, yields are higher than what they projected. So it looks like the profitability of the pressure for profitability from corn, which is the main input cost, will be lower than what it has been and should be affordable for livestock production as we get into, you know, finish 2026, but particularly as we get into 2027. Thanks.

I appreciate all the color.

Your next question from the line of Curtis Moyles with BNP Paribas. Curtis, your line is open. Please go ahead.

Good morning. Thank you for taking my questions. I just have a couple here. So first, I wanted to start on the adjusted EBITDA. It looks like that's kind of progressed ahead of expectations in the first quarter. So I wanted to get a sense of why you decided not to raise guidance on that metric. Is it just because expenses were pushed a bit? Or are you also kind of baking in a little bit of conservatism on that front? And then secondly, I wanted to see if you could share any color on the impact seen today from the USDA's phased reopening of the southern ports for livestock. has that trended as expected? And maybe any color on what you're thinking for 2027 on that. Thank you.

Thanks, Curtis, for the question. Regarding EBITDA, we did perform a little better in the quarter than expected, having EBITDA growth of 4%. As Donnie mentioned in his remarks, some of that was driven by performance products and mineral addition, but a good part was also driven by the fact that we did have some of the expenses shift from Q1 to future quarters. Also, we're only one quarter in to the year. You know, we just gave guidance about two months ago and the forecast still shows us within the guidance range. So those factors are what's contributing to us holding the guidance at this point. Larry, you want to talk about the USDA and the border?

Sure. So the border, the importation of live Mexican cattle coming across the border. There are currently three ports that are open now. three stations, two in New Mexico and one in Arizona. They are bringing across the average about 700 animals per day. They're projecting that in 2026, they will have imported 200,000 head of cattle. And the projection for 2027 is just over a million head of cattle that will be brought across the border for finishing in the United States. So it is helping the supply into feed yards. Again, a million head if that happens next year. Over 27 million head that are fed for slaughter and feedlots is a little under 4%. So it is making some impact. The other area that we're seeing that is helping feedlot supply and beef supply is the amount of animals that are coming off the beef on dairy, coming off dairy, as I mentioned earlier. It is about five and a half million head that are being purpose bred, if you will, and supplied into the beef chain. So that's about 20% of, again, the 27 million head that we feed per year. So that's a little bit of outlook what we see currently and also into 2027 for incoming feeder cattle supply.

Great. Thank you.

There are no further questions at this time. I will now turn the call back to Glenn David for closing remarks.

Thank you, Kendra, and thank you everyone for listening in on today's call. We appreciate your time, attention, interest, and support of Fibro Animal Health Corporation and hope you have a great day. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.