Neogen Corporation Reports 13% Increase In Net Income

LANSING, Mich., March 26, 2015 /PRNewswire/ -- Neogen Corporation (NASDAQ: NEOG) announced today that its net income for the third quarter of fiscal 2015, which ended Feb. 28, increased 13% to $7,454,000, when compared to the prior year’s $6,575,000. Earnings per share in the current quarter were $0.20, compared to $0.18 a year ago. Current year-to-date net income increased 17% over prior year to $24,142,000, or $0.65 per share, compared to $20,621,000, or $0.56 per share, for the same period a year ago.

Revenues for the third quarter of fiscal 2015 increased 10% to $68,409,000, from the previous year’s third quarter revenues of $61,996,000. This increase was aided by recent acquisitions completed by the company, and was achieved despite top line currency adjustments of approximately $1.5 million resulting from currency weakness in Neogen’s international markets. Overall organic growth for the company was 7% for the quarter. The quarterly revenue and net income results represent third quarter records for the 32-year-old company. Year to date, fiscal 2015 revenues increased 14% to $204,463,000 from fiscal 2014’s $180,143,000.

“We are pleased to report strong third quarter results despite the negative currency headwinds we were up against. We seized existing opportunities by responding to expanding market testing needs for spice blends and toxin in wheat, and made advancements in a number of key market segments,” said James Herbert, Neogen’s chief executive officer and chairman. “We continue to believe that a large part of our growth potential is outside of the United States. We will continue to expand Neogen’s footprint into areas where significant growth potential exists, and refine our currency strategies in an attempt to mitigate adverse effects.”

The third quarter was the 92nd of the past 97 quarters that Neogen reported revenue increases as compared with the previous year including all consecutive quarters in the last nine years.

Neogen’s gross margin was 49.3% in the third quarter, essentially flat compared to 49.5% for fiscal 2014’s third quarter. Operating income increased 18% in the quarter compared to the prior year, primarily driven by the increased revenues. Operating income as a percentage of sales was 17.8% in the current quarter, as compared to 16.6% in the third quarter of the company’s 2014 fiscal year.

“The adverse effects of the currency fluctuations we faced in the current quarter were evident in the sales of our Scotland-based Neogen Europe operations, which recorded a solid 12% increase in revenue in local currency. However, after converting the revenues from pound sterling to dollars, that increase was reduced to 4%,” said Steve Quinlan, Neogen’s chief financial officer. “That impact was felt not only on the top line for the quarter, but down to our bottom line. Despite these challenges, Neogen experienced another strong quarter of cash generation, and our increase in operating income exceeded our rate of growth in revenues which provides evidence of general operational strength throughout Neogen.”

Revenues for the company’s Food Safety segment increased 14% during the third quarter, compared to the prior year, aided by the Oct. 1, 2014 BioLumix acquisition. Sales of Neogen’s rapid tests for food allergens continued their strong performance, improving approximately 15% in the current quarter compared to the prior year’s third quarter. The growth was aided by Neogen’s effective response to the discovery of large-scale contamination of cumin and other spices with peanut and other known food allergens.

Third quarter revenue also included a 6% increase in sales of natural toxin test kits. This included a 27% increase in sales of tests to detect the mold toxin deoxynivalenol (DON), as Neogen responded to an outbreak of the toxin in the North American and European wheat crops, and its products continue to increase their market penetration. The increase in DON kit sales more than offset a slight decrease in sales of kits to detect aflatoxin in the quarter, as last year’s clean corn crop resulted in less downstream testing for the toxin in the current quarter compared to the prior year quarter.

Sales of Neogen’s general microbiology products increased 47% in fiscal 2015’s third quarter compared to the prior year, in part due to the BioLumix acquisition. The company believes there is a strong synergistic relationship between the similar BioLumix and Soleris test systems. Sales of Soleris disposable vials increased 11% in the current quarter, and sales of BioLumix products have exceeded budget expectations in Neogen’s first year of ownership.

Current year third quarter revenue increases of 7% for the company’s Animal Safety segment were aided by last year’s acquisition of Chem-Tech (agricultural insecticides). Sales of the Chem-Tech product line continue to exceed expectations, as the products have benefitted from Neogen’s sales and marketing organization. Sales of the company’s rodenticides increased nearly 40% in the current quarter compared to prior year, as Neogen responded to a rodent outbreak in orchard crops, and its products have gained increased acceptance in the important agricultural rodenticide market.

Revenues from GeneSeek, the company’s Nebraska-based genomics service laboratory, increased approximately 29% in the current quarter compared to fiscal 2014’s third quarter. This increase resulted from growing acceptance of its proprietary genomic products, and by the increased operational capacity gained from the move into larger and upgraded facilities in May 2014. Neogen recently introduced new cattle genomic tests that screen DNA for about 150,000 gene-marker variations linked to important traits in breeding stock.

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, food allergens, drug residues, plant diseases and sanitation concerns. Neogen’s Animal Safety Division is a leader in the development of animal genomics along with the manufacturing and distribution of a variety of animal healthcare products, including diagnostics, pharmaceuticals, veterinary instruments, wound care and disinfectants.

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.

NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED OPERATING DATA

(In thousands, except for per share and percentages)



Quarter ended Feb. 28


Nine months ended Feb. 28


2015

2014


2015

2014

Revenue

Food Safety

$ 31,965

$ 28,020


$ 95,883

$ 86,417

Animal Safety

36,444

33,976


108,580

93,726

Total revenue

68,409

61,996


204,463

180,143

Cost of sales

34,706

31,291


102,476

89,583

Gross margin

33,703

30,705


101,987

90,560

Operating expenses

Sales & marketing

12,655

11,986


37,617

33,529

Administrative

6,522

6,320


18,629

18,135

Research & development

2,366

2,106


7,245

6,496

Total operating expenses

21,543

20,412


63,491

58,160

Operating income

12,160

10,293


38,496

32,400

Other income (expense)

(526)

(40)


(728)

(522)

Income before tax

11,634

10,253


37,768

31,878

Income tax

4,225

3,700


13,625

11,400

Net income

$ 7,409

$ 6,553


$ 24,143

$ 20,478

Net loss (income) attributable
to non-controlling interest

$ 45

$ 22


$ (1)

$ 143

Net income attributable to Neogen Corp

$ 7,454

$ 6,575


$ 24,142

$ 20,621

Net income attributable to Neogen Corp






per diluted share

$ 0.20

$ 0.18


$ 0.65

$ 0.56


Other information:

Shares to calculate per share

37,536

37,233


37,399

37,149

Depreciation & amortization

$ 2,681

$ 2,427


$ 7,852

$ 6,641

Interest income

66

28


158

88

Gross margin (% of sales)

49.3%

49.5%


49.9%

50.3%

Operating income (% of sales)

17.8%

16.6%


18.8%

18.0%

Revenue increase vs. FY 2014

10.3%



13.5%


Net income vs. FY 2014

13.4%



17.1%


NEOGEN CORPORATION SUMMARIZED CONSOLIDATED

BALANCE SHEET DATA

(In thousands)


Feb. 28

May 31


2015

2014


(Unaudited)

(Audited)

Assets



Current assets



Cash & investments

$ 102,148

$ 76,496

Accounts receivable

52,887

51,901

Inventory

55,096

51,178

Other current assets

7,215

9,171

Total current assets

217,346

188,746

Property & equipment, net

43,543

41,949

Goodwill & other assets

117,546

114,606

Total assets

$ 378,435

$ 345,301

Liabilities & Equity



Current liabilities

$ 26,551

$ 24,967

Long-term debt

0

0

Other long-term liabilities

15,171

14,034

Equity: Shares outstanding

37,042 in Feb. & 36,732 in May

336,713

306,300

Total liabilities & equity

$ 378,435

$ 345,301

CONTACT: Steven J. Quinlan, Vice President and CFO
517/372-9200

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/neogen-reports-13-increase-in-net-income-300056442.html

SOURCE Neogen Corporation

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