See also the top 20 pets in the U. S. and the 10 stocks about to explode.
Operator: [Operator Instructions] The first comes from Brian Wright’s lineage with ROTH MKM. Your line is open.
Brian Wright: I just wanted to dig a little deeper. Could you help us understand vaccine growth and quantify how much of that growth in the year-over-year quarter came from the autogenous vaccine sector in South America?
Jack Bfinishheim: Yes. Thank you. We, in terms of the autogenous factor, we just built it. We had a vacancy a few months ago. Sales are minimal. Hopefully, by the end of the year we will have noticed a smart increase in sales. It takes that cycle for the vaccine to be approved on farms, and then making what’s called a personalized vaccine takes some time. The other expansion in South America is our reaction to disease pressures. And certain diseases are multiplying in the poultry industry, and it’s literally reacting to the market.
Brian Wright: So Super. Il is a bigger expansion than we saw in the fourth quarter. That’s great. Could you tell us about the possible advantages of Tyson in reintroducing some poultry antibiotics?
Jack Bendheim: That’s right. A lot of other people communicate about it. So Tysons, after, I think, maybe more than five years of working with something called NAE, which is never an antibiotic. And let’s go back to what is most popular for the international industry and not to use any antibiotic used on humans. And let’s go back to antibiotics in our industry with the [indistinguishable] that has been on the market for 2 five to 3 five years, more or less in that range. So, overall, we’re seeing very little effect on our health. business, and we’re going to have some effect on other people. But overall, I think the effect will be small.
Brian Wright: And then, if I may raise one last point. I just wanted to think about stock levels, Damian. We saw some improvements in the fourth quarter. I saw a big improvement. Should we see any other improvement in 24?Or do we feel comfortable where we are now?What do you think of this in terms of monetary dynamics?
Damien Finio: Yes. Our goal is to achieve additional improvements in FY24. We ended the year with an average of just over four months of stock on all products worldwide. Our goal remains to reach four million dollars. So hopefully, we’re going to look at it in FY24, and it will help a loose cash flow like it did in the fourth quarter. We will say that we regularly start the year slowly in the first quarter. So, we may not see this change by the end of September 30, 2024, or in 2023, but we expect to see it as the year progresses.
Merchant: Next up is from Michael Ryskin of Bank of America. Your line is open.
Michael Ryskin: I’m going to start with margins and that’s pretty much what the consultant implies in exercise 24. By my calculations, you’re causing a slight year-over-year decline in operating margins, and I announced this. Additional strategic investment of $3 million. Can you add a little more color about the direction this is taking?I suppose this goes towards the other important sector, but is there an additional color?And also, what are your expectations in terms of gross margin?What are your expectations in relation to the prices of the inputs that are ultimately part of the model?
Damian Finio: Let me start with strategic investments. Therefore, as mentioned, a backlog of $3 million in FY24 is assumed. So, $32 million for FY23, $35 million for FY24. I would say there are no significant additions or deletions to this estimate. In reality, it is only the time of spending on several projects, in various categories of projects. We’ll say that most of the spending goes to vaccines, which, as you can see from our FY23 Q4 results, is generating GO. supports, and it is also in our guidance for the coming year that we expect continued growth. This strategic investment in vaccines will also continue to bear fruit in the medium term. And that, I would say that we continue to invest in pets, as we have said in past calls, and not in a return on investment in the short term or in medium-term opportunities.
But overall, I would say the delta is more tied to the timing of spending than anything else, and we continue to invest in vaccines and pets. In terms of gross margin, Jack, you need to communicate a little bit about that as well. We continue to see higher input prices due to adjustments in currency movements, product mix, etc. So I guess there’s a slight change in the assumption, starting with exercise 24. But again, it’s nothing too serious. It’s more a matter of product combination than anything else.
Jack Bfinishheim: Thank you. I think it’s a mix of products. It’s also a regulation that everyone is aware of and we’ve talked about it for the last two years, with very, very important adjustments and freight rates because of what happened with COVID. There are also the prices of inputs in terms of hard work, the availability of hard work here in the United States and we, like other people, simply pay a lot more for other people to come and paint. Array. That’s all, had an effect on gross margins. And it’s largely stabilized. I would say that in terms of freight, disorders are brewing due to the lack of water in the Panama Canal, which forces the price lists to be higher for products sent through the Panama Canal. But rates of hard work have stabilized. And we get that kind of recovery of our margins. So we did a little bit: at the end of last year we planned more for this year. And I think we will recover the margins we had in the afterlife.
Michael Ryskin: And then, just in terms of the sales consultant and the implied volumes, you’re predicting a smart year for the animal fitness industry. He talked about the strength he’s seeing in vaccines and new products, he talked about new launches. Is there anything more notable supporting this 5-11% earnings growth?Perhaps you could just comment a little on the underlying market conditions, underlying demand, geographies or species that stand out?
Jack Bendheim: I think I denounced some of the expansion we’re seeing in South America in terms of vaccines. We are seeing another expansion in the world. We have made investments and some of the investments in terms of plant capacity will be put into operation at the beginning of January 24. And that gives us the ability, for certain nutritional products, to meet the demands of the market that we have created. I think so: between those two things, I can make up the bulk of the expansion.
Operator: The next one comes from Balaji Prasad’s lineage with Barclays. Their lines are open.
Unnamed analyst: Here [Shaun] for Balaji. You pointed to the instability of the U. S. beef farm animal sector. USA: fattening lots for meat in quarters. I wonder if you have any updates on the dynamics of fattening lots.
Jack Bendheim: I think, as we’ve said many times, we do virtually no fattening business in the United States. But overall, to prepare for this call, in [Indiscernible], the scenario has remained tense, and perhaps North America remains a fear. So I think we still won’t see an increase in the number of feedlots. I think we will see a continued decline. But then we will achieve it in achieving a kind of balance and a secure stability.
Operator: No questions at this time. I will now remember Mr Damián Finio.
Damián Finio: Okay. Thank you, Brent. Et, on behalf of Jack and the rest of the Phibro control team, thank you all. We’re excited about the year ahead and appreciate that you’ve taken the time today to sign up for our call to receive more information about exciting things happening here at Phibro. Thanks again and enjoy those last days of summer.
Operator: Ladies and gentlemen, thank you for [technical difficulty]
Damian FinioRevenue Call TranscriptJack BendheimNASDAQ:PAHCQ4 2023Yahoo FinanceShow more. . . Show less
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