PAHC
#Thank you, <UNK>.
So first of all, congratulations on a win on Sunday.
I'm surprised you're on the phone.
I imagine that's why Brett's out on the road.
He's still in Boston, right.
Anyway.
Brazil has had a ---+ getting back to the business, Brazil has had as we all know and gone through a lot of political and economic crisis in the last year, particularly in the ag industry.
Due to weather challenges, they lost a corn crop.
Now Brazil, unlike the US, has two corn crops a year which gives them a unique ability to have cheap input costs.
They didn't get a lot of rain last year.
They did get it this year.
So last year the price of corn in Brazil was 2x to 3x higher than the rest of the world.
And they can't easily make up for it by importing corn because of port congestion, infrastructure, et cetera, et cetera.
So they had a difficult year in terms of input costs as well as currency and the local economy.
So domestic consumption in Brazil was down.
Export markets were harder to do, because of their high input costs.
That's getting better now.
Again, they had the second crop, so we think it will return.
But that's basically been the driver and if you see it's true for everybody selling for the ag market in Brazil.
This is across the board.
This is a problem we've all faced this year, last year.
We continue to be very bullish on the Brazil market.
It's an ag powerhouse in many ways, but we're being cautious as to when the protein producers will start to see their demand pick up and therefore drive our demand.
The cattle business in the US is not a huge segment for us.
It's an important segment, and more on the minerals side.
I think we're seeing more animals on feedlots.
I think they're think they're staying on feedlots longer.
And just what we're hearing in the tradable arena, I think they expect to have a decent year in business.
And I can't get really ---+ we are not that close to that industry to give you much more in depth.
I think the swine market remains strong.
Exports remain very, very strong.
China, which is overall the largest importer around the world of swine, have kept their numbers down.
So they continue to import.
They do shift that around whether to import from the US or from other markets.
But China remains a very, very strong market and overall our hog industry is growing and people are putting on more packages in the United States.
So we expect that business to continue growing positively.
Yes, I think the comps are going to be negative on the domestic side and the comps are going to be negative, certainly through June and possibly through September, but somewhere in that range.
We'll see negative year-over-year comps.
So on the guidance piece, we've had very cash flow than we expected this year.
So we're seeing interest running below guidance.
So I think what we're running net interest year-to-date is probably what we're going to run the rest of the year.
So we'll be favorable on that line of the P&L.
On the competitive landscape, I'll let <UNK> comment.
So I think the consolidation we've seen have been a lot more on the companion animal side.
I think that's been the driver.
There's been some shift and when you consolidate and you do change ownership of the production animal side, but it hasn't really done a lot to sort of get rid of competition.
So I think competition remains, as always, fierce.
But again, we're an industry that's driven by population, wealth, and production growth, and we continue to see that.
We continue to see that in the US.
We continue to see that around the world.
So the unknown out there I'd say in the poultry side is the avian Influenza which moves product prodduction around but ultimately the consumption around the world of all these proteins continues to grow.
I think the global dairy industry has seen pricing recover recently.
Pricing in the US for fluid milk was as low as in the $13 and change range.
It's now up to between $16 and $17.
So at $13, dairymen were losing money.
At the current rate, they're making some money.
They're back, they're certainly back on the black.
It's not the bonanza they had when milk was up into the low $20 range a year or two, a couple of years ago.
So we are seeing improved demand for our products in the dairy industry and in the markets we serve, which are primarily the US and there's some select international markets where we're expanding.
So I think the dairy industry is, it's not out of the woods yet completely but better than it has been in the recent past.
I think we continue to see double-digit sales growth.
It won't be the 45% of ---+ I can tell you it won't be the 45% of the December quarter but it will ---+ we'll continue to have double digit top line growth in vaccines.
Yes, it's both those species.
Our vaccine portfolio is fundamentally to those two species, poultry and swine.
And we've got a good portfolio of products and we're out there selling more volume both in the US and in a number of international markets.
I think that's exactly right.
I think we also and this is something that we've worked on for years and sort of thought about in terms of product development as well as production.
When you remove antibiotics ---+ the general use of antibiotics from whether it's the chicken house or from the swine barns, there were also diseases people are seeing.
So there is an increased demand and there's a preference on the consumer side to see vaccines.
So we think we're well placed to sort of satisfy some of this demand both with our US vaccine business and with our overseas vaccine business.
Sorry, and the last little point is that remember we had stopped production in our Israel Beit Shemesh plant in order to upgrade our manufacturing (inaudible).
So we were shut down for a while, so that overlap we're seeing will continue as we go ahead over the next ---+ well definitely for this year and into next year as well.
Yes, we had somewhat depressed sales because of supply constraints in the second half of last year, of our last year, our last fiscal.
All right, everyone, thank you for joining us this morning.
And we'll talk again in another 90 days.
Take care.
Bye now.
