LANSING, Mich., Dec. 21, 2021 /PRNewswire/ -- Neogen
Corporation (NASDAQ: NEOG) announced today the results of the
second quarter of its 2022 fiscal year, which ended November 30. Revenues were $130,517,000, a 13% increase compared to the
previous year's second quarter revenues of $115,000,000. The company's Food Safety and
Animal Safety segments each recorded double-digit increases in
organic sales in the second quarter, representing the fourth
straight quarter of double-digit organic growth for each
segment.
This quarter marked the 118th of the past 124 quarters that
Neogen has reported revenue increases compared to the same period
in the prior year.
"Our second quarter and the past few weeks, in particular, have
been an exciting time for Neogen as we enhance our leadership
position in the industry and usher in a new era in food security,"
said John Adent, Neogen's President
and Chief Executive Officer. "Not only have we seen the business
continue to rebound from the impacts of the COVID-19 pandemic, but
our team has also completed a number of transactions that will help
to expand, strengthen and diversify our product and geographic
portfolio; just last week we announced an agreement to combine 3M's
Food Safety business with our existing operations, a transformative
transaction that will nearly double the size of our business and
significantly enhance our financial profile when it closes next
year. I am also looking forward to seeing the results of our recent
acquisitions as the fiscal year continues and we capitalize on
tailwinds and global growth trends in sustainability, food safety
and supply chain integrity."
Financial and Business Highlights
Net income for the second quarter was $10,828,000, or $0.10 per share, compared to $15,885,000, or $0.15 per share, in the previous year's second
quarter. Current year-to-date net income was $27,905,000, or $0.26 per share, compared to $31,745,000, or $0.30 per share, for the same period a year ago.
For each comparative period, earnings per share amounts have been
adjusted to reflect the company's 2-for-1 stock split on
June 4 of this year.
Net income for both the second quarter and year-to-date period
was adversely impacted by significant fees in connection with the
recently announced plan to combine 3M's Food Safety business with
Neogen's existing operations. The company incurred $9.3 million in the second quarter for
professional fees tied to due diligence, consulting and legal
services related to the 3M deal.
These fees contributed to an overall increase of 42% in operating
expenses compared to the prior year's second quarter.
Gross margins were 46.4% of sales in the second quarter of the
fiscal year, compared to 46.3% recorded in the same period a year
ago, as a favorable product mix toward higher margin Food Safety
products was offset by higher raw material and freight costs, due
to ongoing supply chain issues. Excluding the deal costs previously
mentioned, operating expenses rose by 14% during the second
quarter, primarily due to increased compensation costs, the result
of additional headcount and improved performance, higher travel,
customer facing activities, shipping and amortization expense from
recent acquisitions.
"This was a strong quarter for Neogen despite operating costs
being significantly impacted by expenses related to our announced
deal with 3M," said Steve Quinlan, Neogen's Chief Financial Officer.
"Excluding these deal costs, operating income for the quarter was
$21.8 million, a 13% increase over
the prior year, while net income would have been $18.1 million, or $0.17 per share. Looking ahead, we will continue
to drive operating performance while concurrently planning to
ensure the successful integration of the 3M business with our existing operations. We will
incur ongoing legal, consulting and other professional fees during
the remainder of the fiscal year as we navigate the sign-to-close
period."
Results by Segment
Food Safety
Revenues for the company's Food Safety segment were $67,132,000 in the current quarter, an increase
of 17% compared to $57,534,000 in the
prior year's second quarter. On an organic basis, the segment's
revenue increased 11%, with the remaining contribution from the
company's December 2020 acquisition
of Megazyme, a food quality and nutritional analysis business. A
number of Neogen's recently launched products continued to gain
market share during the second quarter, as the Soleris® rapid
general microbial testing product line recorded a 22% increase, on
strong growth in equipment sales. Sales of the new AccuPoint®
Advanced NG handheld sanitation monitoring system drove a reader
sales increase of 19%, and the company's innovative Listeria
Right Now™ 60-minute test system recorded an increase of 35% over
the prior year.
Additional growth in this segment was from the company's
diagnostics portfolio, with increases across the culture media
(11%), natural toxins (10%), allergens (6%) and general sanitation
(8%) product lines. Partially offsetting this growth was a 39%
decline in sales of drug residue test kits, as competitive pressure
in Europe negatively impacted the
product line.
Animal Safety
Revenues for the company's Animal Safety segment were
$63,385,000 in the second quarter of
the fiscal year, an increase of 10%, compared to $57,466,000 in the previous year; organic growth
was also 10%. The growth was driven by a 30% increase in sales of
veterinary instruments, including needles and syringes, resulting
in large part from recently won private label business. Animal care
products increased by 18% as the equine and companion animal
markets returned to pre-pandemic demand levels and the ThyroKare™
supplement line, which relaunched in February 2021, continued to regain market share.
The company has also begun to integrate CAPInnoVet, a companion
animal health company specializing in parasiticides acquired in
September 2021, into the
business.
Biosecurity products sold through the Animal Safety segment were
driven by a 46% increase in insect control products, led by the
StandGuard® product line, acquired in July
2020, as it continued to gain market share. This growth was
offset by a 14% decline in rodent control products, which were
negatively impacted by supply constraints and a non-outbreak year.
Cleaners and disinfectants also declined 2%, as the prior year's
second-quarter results included a large non-recurring order.
Neogen's worldwide genomics business recorded an increase of 8%
in the second quarter of the fiscal year, compared to the prior
year's second quarter. The company saw growth across beef and dairy
cattle, sheep and poultry markets, partially offset by lower sales
of services into the companion animal market, the result of
difficult comparisons due to strong growth in the prior year's
second quarter.
International Highlights
International revenues rose by 20% for the quarter; organic
growth was 14%. Revenues at Neogen's U.K. operations increased by
16% (11% in British pounds), driven by sales of the company's One
Broth, One Plate culture media
solution to commercial labs in the U.K. and increased sales of
cleaners and disinfectants to Asia. In China, revenues increased by 28% (22% in
Chinese yuan), driven by new sales of Megazyme products into that
market and continued strength in genomic services.
Revenues at Neogen's Brazilian operations decreased by 5% (6% in
Brazilian real) over the second quarter last year, as drought
conditions significantly reduced the corn crop size at harvest and
cleaner crops reduced demand for aflatoxin test kits.
Sales in the Latin American region rose 13% (10% in Mexican
pesos) with new business in natural toxin test kits, environmental
sanitation, culture media and biosecurity products. Revenues at
Neogen's Australasia operations increased by 29% (27% in Australian
dollars), driven by growth of genomic services in the beef and
sheep markets and increases in sales of diagnostic products.
About Neogen
Neogen Corporation develops and markets comprehensive solutions
dedicated to food and animal safety. The company's Food Safety
segment 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 segment is a leader in the development of genomic solutions
along with the manufacturing and distribution of a variety of
animal healthcare products, including diagnostics, pharmaceuticals,
veterinary instruments, wound care, and disinfectants, as well as
rodent and insect control solutions.
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 Nov.
30
|
|
6 Months ended
Nov. 30
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
2020
|
|
|
Revenue
|
Food Safety
|
$
|
67,132
|
|
$
|
57,534
|
|
$
|
129,854
|
$
|
111,719
|
|
|
Animal
Safety
|
|
63,385
|
|
|
57,466
|
|
|
128,968
|
|
112,606
|
|
|
Total
revenue
|
|
130,517
|
|
|
115,000
|
|
|
258,822
|
|
224,325
|
|
|
Cost of
sales
|
|
69,923
|
|
|
61,786
|
|
|
138,220
|
|
120,809
|
|
|
Gross
margin
|
|
60,594
|
|
|
53,214
|
|
|
120,602
|
|
103,516
|
|
|
Operating
expenses
|
Sales &
marketing
|
|
21,188
|
|
|
17,729
|
|
|
41,743
|
|
34,245
|
|
|
Administrative
|
|
22,605
|
|
|
12,184
|
|
|
35,988
|
|
23,197
|
|
|
Research &
development
|
|
4,332
|
|
|
4,056
|
|
|
8,657
|
|
7,934
|
|
|
Total operating
expenses
|
|
48,125
|
|
|
33,969
|
|
|
86,388
|
|
65,376
|
|
|
Operating
income
|
|
12,469
|
|
|
19,245
|
|
|
34,214
|
|
38,140
|
|
|
Other
income
|
|
459
|
|
|
90
|
|
|
441
|
|
1,005
|
|
|
Income before
tax
|
|
12,928
|
|
|
19,335
|
|
|
34,655
|
|
39,145
|
|
|
Income tax
|
|
2,100
|
|
|
3,450
|
|
|
6,750
|
|
7,400
|
|
|
Net
income
|
$
|
10,828
|
|
$
|
15,885
|
|
$
|
27,905
|
$
|
31,745
|
|
|
Net income per
diluted share
|
$
|
0.10
|
|
$
|
0.15
|
|
$
|
0.26
|
$
|
0.30
|
|
|
|
Other
information:
|
Shares to calculate
per share
|
|
108,122
|
|
|
106,808
|
|
|
108,099
|
|
106,600
|
|
|
Depreciation &
amortization
|
$
|
5,829
|
|
$
|
4,803
|
|
$
|
11,511
|
$
|
9,523
|
|
|
Interest
income
|
|
224
|
|
|
555
|
|
|
427
|
|
1,277
|
|
|
Gross margin (% of
sales)
|
|
46.4%
|
|
|
46.3%
|
|
|
46.6%
|
|
46.1%
|
|
|
Operating income (% of
sales)
|
|
9.6%
|
|
|
16.7%
|
|
|
13.2%
|
|
17.0%
|
|
|
Revenue increase vs.
FY 2021
|
|
13.5%
|
|
|
|
|
|
15.4%
|
|
|
|
|
Net income vs. FY
2021
|
|
-31.8%
|
|
|
|
|
|
-12.1%
|
|
|
|
|
NEOGEN CORPORATION
UNAUDITED SUMMARIZED
CONSOLIDATED
BALANCE SHEET DATA
(In
thousands)
|
|
|
Nov.
30
|
|
|
May
31
|
|
|
2021
|
|
|
2021
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash &
investments
|
$
|
389,249
|
|
$
|
381,087
|
Accounts
receivable
|
|
92,498
|
|
|
91,823
|
Inventory
|
|
107,086
|
|
|
100,701
|
Other current
assets
|
|
21,117
|
|
|
17,840
|
Total current
assets
|
|
609,950
|
|
|
591,451
|
Property &
equipment, net
|
|
100,863
|
|
|
100,453
|
Goodwill & other
assets
|
|
255,867
|
|
|
228,288
|
Total
assets
|
$
|
966,680
|
|
$
|
920,192
|
|
|
|
|
|
|
Liabilities &
Equity
|
|
|
|
|
|
Current
liabilities
|
$
|
61,419
|
|
$
|
53,599
|
Non-current
liabilities
|
|
39,785
|
|
|
26,216
|
Equity: Shares
outstanding
107,768 at Nov. 30,
& 107,468 at May 31
|
|
865,476
|
|
|
840,377
|
Total liabilities
& equity
|
$
|
966,680
|
|
$
|
920,192
|
CONTACT: Steve Quinlan, Chief
Financial Officer
517.372.9200,
squinlan@neogen.com
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content:https://www.prnewswire.com/news-releases/neogen-announces-second-quarter-results-301448995.html
SOURCE NEOGEN Corporation