Neogen Reports Second Quarter Results

LANSING, Mich., Dec. 22, 2011 /PRNewswire/ -- Neogen Corporation (NASDAQ: NEOG) announced today that its revenues for the second quarter of FY 2012, which ended Nov. 30, increased 2.2% from the previous year's second quarter to $44,891,000. Net income for the quarter was $5,237,000, or $0.22 per share, compared to the prior year's second quarter net earnings of $6,110,000, or $0.26 per share.

Year-to-date revenues for the first six months of fiscal year 2012 increased to $90,588,000 from FY 2011's $86,853,000, an increase of 4.3%. Year-to-date net income for the same six-month period was $11,241,000, or $0.47 per share, compared to $11,935,000, or $0.51 per share, in FY 2011.

"While I am pleased to report that we remain solidly profitable, I am not pleased to report that we did not meet the high expectations we expect from ourselves," said James Herbert, Neogen's chief executive officer and chairman. "Going forward, our higher growth should return. Despite the results we are reporting today, the company made solid progress in several fundamental areas during the quarter that we expect to drive future growth."

The second quarter was the 75th consecutive profitable quarter from operations for the company, and the 79th quarter of the past 84 quarters when Neogen reported revenue increases as compared with the previous year.

"Although we made good progress in our efforts to expand our sales and marketing organizations to spur future growth, we fell short of our revenue and income goals for the quarter," said Lon Bohannon, Neogen's chief operating officer. "Significant future opportunities should be realized in the quarters ahead to return Neogen to the growth levels we have come to expect. From growing global markets to expanding worldwide regulations pertaining to food safety, the fundamentals for our business remain solid."

For the second quarter of its 2012 fiscal year, Neogen's percentage of revenues from international sources represented 42% of its total revenues, compared to 43% in last year's second quarter.

"Our balance sheet remains strong, giving us the ability to seize opportunities as the business climate improves and pursue a wide variety of growth strategies," said Steve Quinlan, Neogen's chief financial officer.

Neogen's Animal Safety Division second quarter FY 2012 revenues increased to $22,849,000 from $22,590,000 in the same period last year. For FY 2012's first six months, the Animal Safety Division's sales increased 4.6% over FY 2011 year-to-date to $45,264,000. Strong quarterly revenue growth in the division's animal care lines were offset by decreases in revenues from the company's rodenticide and disinfectant product lines as well as a decline in GeneSeek agricultural genetic test service business.

Strong divisional performers for the quarter included a double-digit increase in sales of veterinary biologics, including a proprietary equine botulism vaccine, and significant sales increases in companion animal products sold through key veterinary distribution channels. Neogen's forensic test kit revenues were up 12% in the second quarter compared with the prior year quarter and the launch of an improved substrate product led to an increase in sales of test reagents. 

Neogen's Food Safety Division's second quarter revenues increased 3.3% to $22,042,000 in FY 2012 from $21,341,000 in FY 2011. Year-to-date, the Food Safety Division's revenues increased 4.0% to $45,324,000 from $43,593,000 in FY 2011. Second quarter increases in sales of Soleris® test systems used to detect spoilage organisms and Neogen's AccuPoint® general sanitation test systems were partially offset by a decline in sales of dehydrated culture media. For both the quarter and year-to-date period, Neogen also achieved high double-digit increases in sales of both food and animal safety products from its Mexican and Brazilian subsidiaries.

Gross margins were 50.5% in the second quarter of FY 2012 compared to 51.2% in the same period a year ago, and were 50.4% for the year-to-date, from 52.1% for the same period a year ago. The change in gross margins for both periods was due to changes in product mix and increases in manufacturing expenses. Operating expenses increased by $1,655,000, or 12.9%, in the second quarter of FY 2012 compared to FY 2011, due primarily to an increase of $1,127,000 in sales and marketing expenses. Neogen previously announced an investment in sales and marketing personnel in order to increase future organic sales growth. On a year-to-date basis, operating expenses were 8.1% over the same period from last year, principally for the same reason.

Neogen's recently released fully quantitative testing methodology for natural toxins is beginning to build sales momentum. The first test launched in the line, Reveal® Q+ for Aflatoxin, is a fully quantitative lateral flow screening test. Aflatoxin is a by-product of mold growth in a wide range of commodities, including corn, and is considered by many to be the most potent, naturally-occurring carcinogen. Because it is a known severe threat to human and animal health, more than 100 countries have established regulatory limits for aflatoxin in commodities intended as human food or animal feed. Follow-up tests in the new testing methodology for two other important natural toxins, deoxynivalenol (DON) and zearalenone, will be launched in Neogen's third quarter.

Neogen also recently launched an even faster method to rapidly and accurately detect yeast and mold in food products. Neogen's new Soleris test detects yeast and mold in 48 hours or less — conventional methods take up to 5 days. Tests for yeast and mold comprise approximately 15% of all microbiological tests performed worldwide.

In the third quarter, Neogen also plans to debut the next generation of molecular diagnostics for foodborne pathogens. The innovative testing platform, to be marketed under the trade name ANSR, offers many advantages over existing rapid testing methodologies, including polymerase chain reaction (PCR), by utilizing a unique isothermal reaction test system that is fast, simple and inexpensive. The single-temperature reaction requires only 10 minutes after incubation to deliver DNA-RNA definitive results.

Neogen Corporation develops and markets products dedicated to food and animal safety. The company's Food Safety Division markets dehydrated culture media, and diagnostic test kits to detect foodborne bacteria, natural toxins, genetic modifications, food allergens, drug residues, plant diseases and sanitation concerns. Neogen's Animal Safety Division markets a complete line of diagnostics, veterinary instruments, veterinary pharmaceuticals, nutritional supplements, disinfectants, and rodenticides.

 

 

NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED OPERATING DATA
(In thousands, except for per share and percentages)

 

 

 

 

 

 

 

Quarter ended Nov. 30

 

Six months ended Nov. 30

 

 

2011

2010

 

2011

2010

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

Food Safety

$22,042

$21,341

 

$45,324

$43,593

 

Animal Safety

22,849

22,590

 

45,264

43,260

Total revenue

44,891

43,931

 

90,588

86,853

Cost of sales

22,234

21,443

 

44,954

41,598

Gross margin

22,657

22,488

 

45,634

45,255

Other expenses

 

 

 

 

 

 

Sales & marketing

8,631

7,504

 

16,734

15,016

 

Administrative

4,173

3,714

 

8,185

7,576

 

Research & development

1,710

1,641

 

3,221

3,438

Total other expenses

14,514

12,859

 

28,140

26,030

Operating income

8,143

9,629

 

17,494

19,225

Other income (expense)

(6)

(119)

 

(53)

(490)

Income before tax

8,137

9,510

 

17,441

18,735

Income tax

2,900

3,400

 

6,200

6,800

Net income

$5,237

$6,110

 

$11,241

$11,935

Net income per diluted share

$0.22

$0.26

 

$0.47

$0.51

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

Shares to calculate per share

23,974

23,729

 

24,001

23,599

 

Depreciation & amortization

$1,532

$1,325

 

$2,911

$2,584

 

Interest income

26

28

 

48

57

 

Gross margin (% of sales)

50.5%

51.2%

 

50.4%

52.1%

 

Operating income (% of sales)

18.1%

21.9%

 

19.3%

22.1%

 

Revenue increase vs. FY 2011

2.2%

 

 

4.3%

 

 

Net income decrease vs. FY 2011

-14.3%

 

 

-5.8%

 

 

 NEOGEN CORPORATION SUMMARIZED CONSOLIDATED BALANCE SHEET DATA
(In thousands)

 

 

 

 

 

 

Nov. 30

May 31

 

 

2011

2011

 

 

(Unaudited)

(Audited)

 

 

 

 

Assets

 

 

Current assets

 

 

 

Cash & investments

$55,606

$56,083

 

Accounts receivable

31,869

28,634

 

Inventory

36,425

31,994

 

Other current assets

6,518

5,791

Total current assets

130,418

122,502

Property & equipment

28,888

22,340

Goodwill & other assets

75,012

74,820

Total assets

$234,318

$219,662

 

 

 

 

Liabilities & Equity

 

 

Current liabilities

$18,409

$17,797

Long-term debt

 

 

Other long-term liabilities

12,783

12,887

Equity: Shares outstanding

 

 

 

23,527 in Nov. & 23,291 in May

203,126

188,978

Total liabilities & equity

$234,318

$219,662

 

Certain portions of this news release that do not relate to historical financial information constitute forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. Actual future results and trends may differ materially from historical results or those expected depending on a variety of factors listed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's most recently filed Form 10-K.

 

 

SOURCE Neogen Corporation



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