Phibro Animal Health Corp (PAHC) 2023 Q3 法說會逐字稿

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 Phibro Animal Health Corporation Third Quarter 2023 Conference Call. (Operator Instructions). I would now like to turn the conference over to Damian Finio, Chief Financial Officer. Please go ahead.

你好，謝謝你的支持。我叫 Regina，今天我將擔任你們的會議接線員。此時，我想歡迎大家參加 Phibro Animal Health Corporation 2023 年第三季度電話會議。 （操作員說明）。我現在想將會議轉交給首席財務官 Damian Finio。請繼續。

Thank you, Regina. Good morning, and welcome to the Phibro Animal Health Corporation Earnings Call for our Fiscal Year 2023 Third Quarter ended March 31, 2023. My name is Damian Finio, and I am the Chief Financial Officer of Phibro Animal Health Corporation. I'm joined on today's call by Jack Bendheim, Phibro's Chairman, President and Chief Executive Officer; and Daniel Bendheim, Director and Executive Vice President of Corporate Strategy. Today, we will cover our third quarter and fiscal year-to-date financial results before opening the lines for your questions.

謝謝你，里賈納。早上好，歡迎來到 Phibro Animal Health Corporation 截至 2023 年 3 月 31 日的 2023 財年第三季度財報電話會議。我叫 Damian Finio，是 Phibro Animal Health Corporation 的首席財務官。 Phibro 的董事長、總裁兼首席執行官 Jack Bendheim 和我一起參加了今天的電話會議；和企業戰略總監兼執行副總裁 Daniel Bendheim。今天，在開始提問之前，我們將介紹我們的第三季度和本財年迄今的財務業績。

I'd like to remind you that we are providing a simultaneous webcast of this call on our website, www.pahc.com. Also on the Investors section of our website, you will find copies of the earnings press release and third quarter Form 10-Q filed with the SEC yesterday as well as the transcript and slides discussed and presented on this morning's 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 to you the forward-looking statements section in our earnings press release.

我想提醒您，我們將在我們的網站 www.pahc.com 上同時提供此次電話會議的網絡直播。在我們網站的“投資者”部分，您還可以找到昨天向美國證券交易委員會提交的收益新聞稿和第三季度 10-Q 表格的副本，以及今天上午電話會議上討論和展示的文字記錄和幻燈片。我們今天的評論將包括前瞻性陳述，實際結果可能與這些預測存在重大差異。有關可能導致結果不同的某些因素的列表和描述，請參閱我們的收益新聞稿中的前瞻性陳述部分。

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 to you 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.

我們的評論包括對某些財務指標的引用，這些指標不是根據公認會計原則或美國公認會計原則編制的。我指的是我們收益新聞稿中的非 GAAP 財務信息部分，以討論這些措施。這些非 GAAP 財務指標與最直接可比的美國 GAAP 指標的對賬包含在收益新聞稿隨附的財務表格中。

We present our results on a GAAP basis and on an adjusted basis. Our adjusted results exclude acquisition-related items, unusual, nonoperational or nonrecurring items, other income and expense as separately reported in the consolidated statements of operations, including foreign currency gains and losses net and lastly, income tax effects related to pretax adjustments and unusual or nonrecurring income tax items.

我們在 GAAP 基礎上和調整後的基礎上展示我們的結果。我們調整後的結果不包括與收購相關的項目、異常、非經營性或非經常性項目、其他收入和費用，這些收入和費用在合併運營報表中單獨報告，包括外幣損益淨額，最後是與稅前調整和異常或異常或異常相關的所得稅影響非經常性所得稅項目。

Now let me introduce our Chairman, President and Chief Executive Officer, Jack Bendheim, to share his perspective on Phibro's third quarter and fiscal year-to-date financial performance. Jack?

現在讓我介紹我們的董事長、總裁兼首席執行官 Jack Bendheim，分享他對 Phibro 第三季度和本財年迄今財務業績的看法。傑克？

Thank you, Damian, and good morning, everyone. We posted strong fiscal year-to-date sales growth. Our third quarter net sales were $246 million, which reflects 3% growth over the same quarter last year. Despite the challenging market and economic conditions, our consolidated sales growth has been driven primarily by our Animal Health segment and with well-balanced improvements across our three product categories.

謝謝你，達米安，大家早上好。我們公佈了本財年迄今強勁的銷售增長。我們第三季度的淨銷售額為 2.46 億美元，比去年同期增長 3%。儘管市場和經濟條件充滿挑戰，但我們的綜合銷售額增長主要是由我們的動物保健部門推動的，並且我們三個產品類別的均衡改進。

Our Animal Health segment has achieved a remarkable 10% year-to-date increase in net sales compared to the same period of the previous year. We are unfortunately seeing some signs of recessionary pressure in our Mineral Nutrition segment as our customers are seeking to reduce purchases and lower inventory. We will take steps over the next few months to ensure our inventory is better balanced for our customers' needs.

與去年同期相比，我們的動物保健部門年初至今的淨銷售額實現了 10% 的顯著增長。不幸的是，由於我們的客戶正在尋求減少採購和降低庫存，我們在礦物質營養部門看到了一些經濟衰退壓力的跡象。我們將在未來幾個月採取措施，確保我們的庫存更好地平衡以滿足客戶的需求。

Overall, we have posted strong fiscal year-to-date sales growth despite the challenging conditions. We see continued opportunities for growth in our Animal Health segment. As I mentioned, on a year-to-date basis, our Animal Health segment has achieved a 10% increase in net sales compared to last year, and this segment continues to present us with multiple growth opportunities.

總體而言，儘管條件充滿挑戰，但我們在本財年迄今的銷售額仍實現了強勁增長。我們看到了動物保健部門持續增長的機會。正如我所提到的，從年初至今，我們的動物保健部門的淨銷售額與去年相比增長了 10%，並且該部門繼續為我們提供多種增長機會。

We have posted eight consecutive quarters of year-over-year sales growth in each of our three major product categories. From a year-to-date comparative perspective, the product categories of MFAs and other is up 9%, while nutritional specialties are up 12% and vaccines, up 9%. I'm especially pleased with our vaccine growth in Latin America. We recently opened a new autogenous vaccine facility in Brazil and launched commercial poultry vaccines in the region. And regarding the Seasonal Specialties, we continue to find ways to leverage our product and technologies we acquired with the 2019 acquisition of Osprey Biotechnics. I'm also happy to report that our companion animal's development pipeline continues to progress.

我們已經連續八個季度在我們的三個主要產品類別中實現銷售額同比增長。從年初至今的比較來看，MFA 和其他產品類別增長了 9%，而營養專業增長了 12%，疫苗增長了 9%。我對我們在拉丁美洲的疫苗增長感到特別高興。我們最近在巴西開設了一個新的自體疫苗設施，並在該地區推出了商業家禽疫苗。關於季節性特色食品，我們繼續尋找方法來利用我們在 2019 年收購 Osprey Biotechnics 時獲得的產品和技術。我也很高興地報告，我們的伴侶動物的開發管道繼續取得進展。

We see Companion Animal as a medium-term growth driver for the company, and we will provide updates as the pipeline progresses. In terms of profitability, on today's portfolio over time, margins should improve as input costs return to historical levels. The Animal Health segment adjusted EBITDA margin was 20.8% for the third quarter, which is a 110 basis point improvement over last year. Although the year-to-date EBITDA margin is still 30 basis points shy versus last year, we see signs that input costs are returning to normal levels. For margin improvements to continue, input costs will each continue to decline, and we will need to work through a higher price inventory on hand. We are taking other actions to manage working capital more closely, which we anticipate will help to improve our free cash flow.

我們將 Companion Animal 視為公司的中期增長動力，我們將隨著管道的進展提供更新。就盈利能力而言，隨著時間的推移，今天的投資組合的利潤率應該會隨著投入成本恢復到歷史水平而提高。第三季度動物保健業務調整後的 EBITDA 利潤率為 20.8%，比去年同期提高 110 個基點。儘管年初至今的 EBITDA 利潤率與去年相比仍低 30 個基點，但我們看到投入成本正在恢復正常水平的跡象。為了繼續提高利潤率，投入成本將繼續下降，我們將需要處理手頭價格更高的庫存。我們正在採取其他行動來更緊密地管理營運資金，我們預計這將有助於改善我們的自由現金流。

We continue to focus on raising prices when market conditions allow, and we remain bullish on our business and our ability to grow sales given the strong demand for our current portfolio of products and the projected demand for the pipeline of future nutritional specialty vaccine and Companion Animal products we have in development. Lastly, Phibro had a strong third quarter. And as we approach our fiscal year-end, we remain confident in our full year guidance. I will now ask Damian to review our third quarter financial performance and fiscal year 2023 guidance in more detail before opening the line for questions. Daniel?

我們將繼續專注於在市場條件允許的情況下提高價格，並且鑑於對我們當前產品組合的強勁需求以及對未來營養特種疫苗和伴侶動物管道的預期需求，我們仍然看好我們的業務和我們增加銷售的能力我們正在開發的產品。最後，Phibro 第三季度表現強勁。隨著我們接近財政年度結束，我們對我們的全年指導仍然充滿信心。在開始提問之前，我現在將請達米安更詳細地回顧我們第三季度的財務業績和 2023 財年的指導方針。丹尼爾？

Thank you, Jack. I will start with consolidated financial performance on Slide 4, then cover segment-level performance, capitalization metrics and conclude with a review of our financial guidance for the full fiscal year 2023. Consolidated net sales for the quarter ended March 31, 2023, were $245.7 million, reflecting a $6.1 million or 3% increase over the same quarter 1 year ago. This increase was driven by improvement in our largest segment, Animal Health, partially offset by declines in Mineral Nutrition and Performance Products. GAAP-based net income and diluted earnings per share decreased 43%, driven by higher SDA, SG&A and interest expense, offset partially by gross profit improvements and lower income tax expense.

謝謝你，傑克。我將從幻燈片 4 的綜合財務業績開始，然後介紹細分市場的業績、資本指標，最後回顧我們 2023 財年的財務指南。截至 2023 年 3 月 31 日的季度綜合淨銷售額為 245.7 美元萬美元，比一年前的同一季度增加了 610 萬美元或 3%。這一增長是由我們最大的部門動物健康的改善推動的，部分被礦物質營養和性能產品的下降所抵消。基於 GAAP 的淨收入和攤薄後每股收益下降 43%，受 SDA、SG&A 和利息費用增加的推動，部分被毛利改善和所得稅費用減少所抵消。

After adjusting GAAP results for one-offs and nonrecurring and/or nonoperational costs such as environmental remediation, acquisition-related items and foreign currency movements, consolidated adjusted EBITDA decreased $0.6 million or 2% in comparison to the prior year's quarter, driven by lower adjusted EBITDA in our Mineral Nutrition and Performance Products segments, coupled with an increase in corporate expenses, offset by higher adjusted EBITDA in the Animal Health segment.

在針對環境修復、收購相關項目和外匯變動等一次性成本和非經常性和/或非運營成本調整 GAAP 結果後，合併調整後 EBITDA 與去年同期相比減少 60 萬美元或 2%，這是由於調整後較低我們的礦物營養和性能產品部門的 EBITDA，加上公司費用的增加，被動物保健部門更高的調整後 EBITDA 所抵消。

Adjusted net income and adjusted diluted earnings per share decreased 13%, respectively, driven by higher SG&A expenses and taxes, offset by higher gross profit. Moving to Slide 5, segment level financial performance. I'll start with third quarter financial performance for our largest segment, Animal Health, which includes three product lines, namely MFAs and other nutritional specialties and vaccines.

調整後的淨收入和調整後的攤薄每股收益分別下降 13%，這是由於更高的 SG&A 費用和稅收，但被更高的毛利所抵消。轉到幻燈片 5，分部級財務業績。我將從我們最大的部門動物保健的第三季度財務業績開始，該部門包括三個產品線，即 MFA 和其他營養專業和疫苗。

The Animal Health segment posted $164.4 million of net sales for the quarter, which represents an increase of $15.8 million or 11% versus the same quarter of the previous year. Within the Animal Health segment, we reported an $8.9 million or 11% increase in MFAs and other versus the same quarter prior year, driven by increased demand for MFAs domestically and in the region of Latin America and Canada as well as increased demand for processing aids used in the ethanol fermentation industry. $3.6 million or 9% growth in nutritional specialties, driven by higher domestic demand and selling prices for dairy products, along with growth in our companion animal product, Rejensa, and lastly, a $3.3 million or very strong 15% improvement in vaccine net sales driven by increased demand and new product launches in Latin America.

動物保健部門本季度的淨銷售額為 1.644 億美元，比去年同期增加 1580 萬美元或 11%。在動物保健領域，我們報告 MFA 和其他與去年同期相比增加了 890 萬美元或 11%，這是由於國內以及拉丁美洲和加拿大地區對 MFA 的需求增加以及對加工助劑的需求增加用於乙醇發酵工業。受乳製品國內需求和銷售價格上漲以及我們的伴侶動物產品 Rejensa 增長的推動，營養專業產品增長 360 萬美元或 9%，最後是疫苗淨銷售額增長 330 萬美元或 15% 的強勁增長拉丁美洲的需求增加和新產品發布。

In terms of profitability for the segment, Animal Health adjusted EBITDA was $34.2 million, a $5 million or 17% improvement over the same quarter of the prior year due to higher gross profit on higher sales, partially offset by an increase in SG&A, and the adjusted EBITDA margin for the segment improved 110 basis points to 20.8%. Moving on to third quarter financial performance for our other business segments on Slide 6, starting with Mineral Nutrition. Net sales for the third quarter were $62.9 million, a $6.1 million or 9% decline versus the same quarter prior year driven by a decrease in demand for trace minerals. The consequence of customers lowering inventory levels in the face of economic challenges, partially offset by higher average selling prices, which are correlated with the movement of the underlying raw material costs.

就該部門的盈利能力而言，動物保健調整後的 EBITDA 為 3420 萬美元，比上年同期增長 500 萬美元或 17%該部門調整後的 EBITDA 利潤率提高了 110 個基點，達到 20.8%。轉到幻燈片 6 上我們其他業務部門的第三季度財務業績，從礦物質營養開始。第三季度的淨銷售額為 6290 萬美元，與去年同期相比下降 610 萬美元或 9%，原因是對微量礦物質的需求下降。客戶在面對經濟挑戰時降低庫存水平的結果，部分被較高的平均售價所抵消，這與潛在原材料成本的變動相關。

Mineral Nutrition adjusted EBITDA was $3.9 million, reflecting a decline of $3.4 million, driven by lower gross profit. The adjusted EBITDA margin for the segment was 6.1%, a decline from the prior comparative period. Looking at our Performance Products segment. Net sales of $18.3 million reflects a $3.7 million decline driven primarily by decreased demand for copper-based products and personal care products, partially offset by higher average selling prices, correlated with the movement of the underlying raw material costs.

礦物質營養調整後的 EBITDA 為 390 萬美元，反映出在毛利潤下降的推動下下降了 340 萬美元。該部門調整後的 EBITDA 利潤率為 6.1%，較上一比較期有所下降。看看我們的性能產品部分。 1,830 萬美元的淨銷售額反映了 370 萬美元的下降，這主要是由於對銅基產品和個人護理產品的需求下降，部分被較高的平均售價所抵消，這與基本原材料成本的變動相關。

Adjusted EBITDA was $2.4 million, down in terms of dollars versus the comparative period, but reflective of a 20 basis point improvement in adjusted EBITDA margin. Lastly, corporate adjusted EBITDA declined 15% or said differently, corporate expenses increased $1.7 million or 15%, driven by the intentional increased spend on strategic investments.

調整後的 EBITDA 為 240 萬美元，與比較期間相比有所下降，但反映出調整後的 EBITDA 利潤率提高了 20 個基點。最後，公司調整後的 EBITDA 下降了 15% 或者換句話說，公司支出增加了 170 萬美元或 15%，這是由於有意增加戰略投資支出。

Turning to key capitalization-related metrics on Slide 7. Free cash flow for the 12-month period ending March 31, 2023, was a negative $43 million, reflecting a slight improvement versus what we reported last quarter and was comprised of trailing 12 months of negative operating cash flow of $5 million, less $38 million of capital expenditures. The negative $43 million of free cash flow for the 12 months ended March 31, 2023, is driven primarily by a $43 million increase in inventory over that same period, representing slightly less than one month of additional inventory.

轉向幻燈片 7 上與資本化相關的關鍵指標。截至 2023 年 3 月 31 日的 12 個月期間，自由現金流為負 4300 萬美元，反映出與我們上季度報告的情況相比略有改善，包括過去 12 個月的負運營現金流為 500 萬美元，減去 3800 萬美元的資本支出。截至 2023 年 3 月 31 日止的 12 個月，自由現金流為負 4,300 萬美元，這主要是由於同期庫存增加了 4,300 萬美元，即略低於一個月的額外庫存。

As Jack mentioned in his opening remarks, we will be taking steps over the next few months to make sure our inventory is better balanced to the needs of our customers, particularly in our Mineral Nutrition segment. We are taking other actions to more closely manage working capital, which should also help to improve free cash flow moving forward. Consistent with the projections we communicated on our last call, free cash flow for the third quarter reflected a $10 million improvement over the second quarter. We are encouraged by the improving trend of operating cash flow. And as we continue to focus on cost control, lowering inventories and keeping our accounts receivable current, we project this trend to continue in the fourth quarter.

正如傑克在開場白中提到的那樣，我們將在接下來的幾個月內採取措施，以確保我們的庫存更好地滿足客戶的需求，尤其是在我們的礦物質營養領域。我們正在採取其他行動來更密切地管理營運資金，這也應該有助於改善未來的自由現金流。與我們在上次電話會議上傳達的預測一致，第三季度的自由現金流比第二季度增加了 1000 萬美元。我們對經營現金流的改善趨勢感到鼓舞。隨著我們繼續專注於成本控制、降低庫存和保持應收賬款流動，我們預計這一趨勢將在第四季度繼續。

Note, the $38 million of capital expenditure excludes the first quarter $15 million purchase of property, -- although for GAAP reporting, this purchase is categorized as a capital expenditure on the consolidated balance sheet and statement of cash flows, it was financed with the 2022 term loan referred to in the other long-term debt footnote included in our Form 10-Q. Moving on to liquidity. We had $192 million of liquidity available at quarter end. This includes cash and short-term investments of $77 million plus (inaudible) of unused and available revolving credit subject to the leverage ratio limitations defined in the 2021 loan agreement. In terms of our dividend, consistent with the past several quarters, we paid a quarterly dividend of $0.12 per share or $4.9 million in aggregate.

請注意，3800 萬美元的資本支出不包括第一季度 1500 萬美元的房產購買，儘管根據 GAAP 報告，該購買在合併資產負債表和現金流量表中被歸類為資本支出，其資金來自 2022 年我們的 10-Q 表格中包含的其他長期債務腳註中提到的定期貸款。繼續流動性。截至季度末，我們有 1.92 億美元的可用流動資金。這包括 7700 萬美元的現金和短期投資，外加（聽不清）未使用和可用的循環信貸，但須遵守 2021 年貸款協議中定義的槓桿率限制。就我們的股息而言，與過去幾個季度一致，我們支付了每股 0.12 美元的季度股息或總計 490 萬美元。

Turning to leverage. Our gross leverage ratio at quarter end was 4.3x. This is calculated by dividing total debt of $482 million by trailing 12-month adjusted EBITDA of $112 million. It's important to highlight that this is not the leverage ratio used to determine covenant compliance. For covenant compliance, we calculate a net leverage ratio as defined in the applicable loan agreement.

轉向槓桿。我們在季度末的總槓桿率為 4.3 倍。這是通過將 4.82 億美元的總債務除以 1.12 億美元的過去 12 個月調整後 EBITDA 計算得出的。重要的是要強調這不是用於確定契約合規性的槓桿比率。為了遵守契約，我們計算適用貸款協議中定義的淨槓桿率。

And lastly, $300 million of our $482 million of gross debt is not exposed to current market interest rates. We have an interest rate swap in place at a fixed SOFA rate of 0.61%. The variable interest expense paid on the remaining $182 million of total debt is subject to rising interest rates, but it's partially offset by interest income earned on our short-term investments.

最後，我們 4.82 億美元的總債務中有 3 億美元不受當前市場利率的影響。我們有固定 SOFA 利率為 0.61% 的利率互換。為剩餘的 1.82 億美元總債務支付的可變利息費用受利率上升的影響，但它被我們的短期投資賺取的利息收入部分抵消了。

Now let's turn to Slide 8 to discuss guidance for the remainder of our fiscal year, which, as a reminder, ends in less than 2 months on June 30, 2023. We are reiterating the fiscal year 2023 financial guidance communicated on our last earnings call in February. To confirm, our full year guidance is as follows: net sales of $960 million to $1 billion, net income of $34 million to $38 million; diluted earnings per share of $0.84 to $0.94. -- adjusted EBITDA of $113 million to $118 million, adjusted net income of $49 million to $53 million, adjusted diluted earnings per share of $1.21 to $1.31 and lastly, an estimated adjusted effective tax rate of 33%.

現在讓我們轉到幻燈片 8 來討論我們財政年度剩餘時間的指導，作為提醒，該年度將在 2023 年 6 月 30 日結束不到 2 個月。我們重申在上次財報電話會議上傳達的 2023 財政年度財務指導二月裡。確認一下，我們的全年指導如下：淨銷售額為 9.6 億至 10 億美元，淨收入為 3400 萬至 3800 萬美元；每股攤薄收益為 0.84 美元至 0.94 美元。 -- 調整後的 EBITDA 為 1.13 億美元至 1.18 億美元，調整後的淨收入為 4900 萬美元至 5300 萬美元，調整後的稀釋每股收益為 1.21 美元至 1.31 美元，最後，估計調整後的有效稅率為 33%。

Guidance for the full year GAAP metrics assumes actual foreign exchange losses for the 9 months ending March 31, 2023, and the company's projected currency exchange rates for the fourth quarter ending June 30, 2023.

全年 GAAP 指標的指導假設截至 2023 年 3 月 31 日的 9 個月的實際外匯損失，以及公司截至 2023 年 6 月 30 日的第四季度的預計貨幣匯率。

Lastly, on Slide 9, the momentum behind our ESG effort continues to build, thanks in large part to the enthusiasm and engagement of our employees. Next week, we intend to publish our second ESG report titled Health at the heart, which reflects the progress made in calendar year 2022. We will issue a press release when the report is made available. In closing, we are pleased with our third quarter and year-to-date financial performance. Our Animal Health segment growth, despite the challenging market dynamics continues to outperform the market, and we are excited by the variety of opportunities for growth that we see for this, our largest business segment.

最後，在幻燈片 9 中，我們 ESG 工作背後的勢頭繼續增強，這在很大程度上要歸功於我們員工的熱情和參與。下週，我們打算發布我們的第二份 ESG 報告，題為“以健康為核心”，反映 2022 日曆年取得的進展。我們將在報告發布後發布新聞稿。最後，我們對第三季度和年初至今的財務業績感到滿意。儘管市場動態充滿挑戰，但我們的動物保健部門的增長繼續跑贏市場，我們對我們最大的業務部門看到的各種增長機會感到興奮。

With that, Regina, could you please open the lines for questions?

有了這個，里賈納，你能打開問題的熱線嗎？

(Operator Instructions). Our first question will come from the line of Michael Ryskin with Bank of America.

（操作員說明）。我們的第一個問題將來自美國銀行的 Michael Ryskin。

This is Wolf Chanoff on for Mike. Congrats on the quarter. So I appreciate you guys flagging the recession and kind of macro impacts that you're seeing in Mineral Nutrition. I'm just wondering how would you describe the possibility that these impacts spread beyond Mineral Nutrition to your broader Animal Health segment, just kind of a range of outcomes around this recessionary impact? And then I have a semi-related follow-up.

這是 Mike 的 Wolf Chanoff。祝賀這個季度。因此，我感謝你們指出經濟衰退和你們在礦物質營養中看到的宏觀影響。我只是想知道您如何描述這些影響從礦物質營養傳播到更廣泛的動物健康領域的可能性，只是圍繞這種衰退影響的一系列結果？然後我有一個半相關的後續行動。

Thanks for the question, Will. I mean we view our business as recession resistant. We've been in the business a long time. We've been through recessions. And effectively, people eating protein is really among the very, very last things to go. I mean -- and we see changes. I mean people might give a stake and go to chicken or some combination. But overall, our business is more tied to population growth and to general wealth, which the recession sort of again, it's sort of recession resistant.

謝謝你的問題，威爾。我的意思是我們認為我們的業務是抗衰退的。我們從事這項業務已有很長時間了。我們經歷過經濟衰退。實際上，吃蛋白質的人真的是最不應該吃的東西之一。我的意思是——我們看到了變化。我的意思是，人們可能會投入股份並選擇雞肉或某種組合。但總的來說，我們的業務更多地與人口增長和一般財富聯繫在一起，經濟衰退又是這樣，它有點抗衰退。

Got it. I appreciate that. And then -- so sticking with Mineral Nutrition. Last quarter, you called out some kind of choppiness in the U.S. beef cattle feed lots. And I realize that it's only with a small part of your portfolio, but I was wondering if you have any updates on what you're seeing in terms of feedlot dynamics.

知道了。我很感激。然後——堅持使用礦物質營養。上個季度，你指出美國肉牛飼料場出現了某種波動。我意識到這只佔你們投資組合的一小部分，但我想知道你們是否有關於你們在飼養場動態方面看到的任何更新。

So for this last quarter, it still remains a very small part of our business. But what we're seeing is demand sort of is more driven by the fact that I spoke about in my opening remarks, that over last year when shipping was so difficult and people were very concerned about supply chain. There was more of an increase in inventories, both at our customers and ourselves. And the worst thing to do is to be is to run out. So prices were better, volumes are better. And I think as the shipping lines have straight down and shipping has become less of a problem, less of a concern, there is this big adjustment. And I think that's a bigger part of this than anything else.

因此，在最後一個季度，它仍然只占我們業務的一小部分。但我們看到的是，需求更多地是由我在開場白中談到的事實驅動的，即去年航運如此困難，人們非常關注供應鏈。我們的客戶和我們自己的庫存都有更多的增加。最糟糕的事情就是跑出去。所以價格更好，銷量更好。而且我認為，隨著航運公司直線下降，航運不再是問題，不再那麼令人擔憂，因此進行了重大調整。我認為這比其他任何事情都重要。

Your next question comes from the line of Balaji Prasad with Barclays.

你的下一個問題來自 Balaji Prasad 與巴克萊銀行的合作。

This is (inaudible) on for Balaji. Just a quick one on your Latin American business. China has recently lifted the embargo on the Brazilian beef imports. Do you see this change as a potential tailwind for your Latin America Animal Health business, which had been performed well recently?

這是 Balaji 的（聽不清）。簡單介紹一下您的拉丁美洲業務。中國近期解除了對巴西牛肉的進口禁運。您是否認為這種變化對您最近表現良好的拉丁美洲動物保健業務有潛在的推動作用？

So I think that is among the other tailwinds of Brazil being a phenomenal PDUs and a very big exporter of protein. So China removing any barriers to commerce is definitely helpful. And the state and the health of the GILTI business as well as the other businesses as we see is continuing to help Latin America, but specifically Brazil in its production and export protein.

因此，我認為這是巴西的其他有利因素之一，它是一個非凡的 PDU 和一個非常大的蛋白質出口國。因此，中國消除任何商業壁壘肯定是有幫助的。正如我們所見，GILTI 業務以及其他業務的狀況和健康狀況正在繼續幫助拉丁美洲，尤其是巴西的蛋白質生產和出口。

(Operator Instructions). Your next question comes from the line of Brian Wright with Roth MKM.

（操作員說明）。您的下一個問題來自 Brian Wright 與 Roth MKM 的對話。

I was in you could remind us on the capacity of the Brazilian vaccine facility and what that could mean to grow?

我在你可以提醒我們巴西疫苗設施的能力以及這對增長意味著什麼？

So the facility -- thanks for the question. The facility that we built is a small facility. It's involved with the otogenous vaccine business. Tasos vaccine business means it's a custom vaccine. We go on farms, we pick up -- we try to isolate the viruses and we make a custom vaccine for that. So it's literally it's a farm-by-farm business. The prices you get is a higher price I would say it's more effective because we're dealing with farm-by-farm variances, but it's not a huge volume business. But beyond that, we recently received approval for some of our vaccines that we produce poultry vaccines that we produced in Israel, and we just started x4 to Brazil. So that's a new start to our business, and that obviously is a much larger business.

所以設施 - 感謝您提出問題。我們建造的設施是一個小型設施。它涉及耳源性疫苗業務。 Tasos 疫苗業務意味著它是一種定制疫苗。我們去農場，我們撿拾——我們試圖分離病毒，並為此定制疫苗。所以它實際上是一個農場一個農場的生意。你得到的價格是更高的價格我會說它更有效，因為我們正在處理農場之間的差異，但這不是一個巨大的業務量。但除此之外，我們最近獲得了一些疫苗的批准，我們生產的家禽疫苗是在以色列生產的，我們剛剛開始 x4 到巴西。所以這是我們業務的新開始，而且這顯然是一個更大的業務。

Great. And then I just was hoping maybe we could kind of get some visibility on just the underlying like U.S. broiler volumes kind of how they progress from January to now. Are they kind of higher now than they kind of began the third quarter?

偉大的。然後我只是希望也許我們可以從某種程度上了解美國肉雞數量的基本情況，了解它們從 1 月到現在的進展情況。他們現在比第三季度開始時高嗎？

The U.S. broiler volumes, I would say, are maybe down to flat and holding steady. Yes, that's it.

我想說，美國的肉雞銷量可能會持平並保持穩定。對，就是那樣。

Okay. And then just same question for maybe Brazilian cattle.

好的。然後同樣的問題可能是巴西牛。

It's -- cattle is not overlaying our focus, even though it's a bigger part of our business in Brazil, I would say Brazil cattle business just remains flat to slightly up.

這是 - 牛並沒有覆蓋我們的重點，即使它是我們在巴西業務的較大部分，我想說巴西的牛業務仍然持平或略有上升。

We have no further questions at this time. I'll turn the conference back over to Damian Finio, for any closing remarks.

目前我們沒有其他問題。我會將會議轉回 Damian Finio，聽取任何閉幕詞。

Okay. Thank you, Regina, and thank you, everyone, for participating in today's call. We appreciate your time, attention and interest in Phibro Animal Health Corporation. Have a great rest of your day, and please be sure to check out our second ESG report when it's published next week. Thank you.

好的。謝謝你，Regina，也謝謝大家參加今天的電話會議。感謝您對 Phibro Animal Health Corporation 的時間、關注和興趣。祝您今天休息愉快，請務必在下週發佈時查看我們的第二份 ESG 報告。謝謝。

Ladies and gentlemen, that will conclude today's call. Thank you all for joining.

女士們，先生們，今天的電話會議到此結束。謝謝大家的加入。