Neogen Reports Best Quarter in Its 26-Year History
Year-to-date net income for the first six months of Neogen's 2009 fiscalyear increased 22% to $7,634,000 from $6,265,000 in FY 2008, or to $0.51 pershare in the current year from the prior year's $0.42. Second quarter revenuesincreased 15% to $31,187,000, also a quarterly record, compared to the prioryear's $27,210,000. Year-to-date revenues rose 20% during the fiscal year'sfirst half to $59,992,000 from FY 2008's $50,118,000.
The second quarter was the 63rd consecutive profitable quarter fromoperations for the company, and the 67th quarter of the past 72 quarters toshow increased revenues as compared with the previous year -- a span of 18years.
"Despite the difficult economic climate, we are once again proud to reportthat the operational strength throughout Neogen delivered yet another strongquarterly performance," said James Herbert, Neogen's chief executive officerand chairman. "The second quarter was a healthy combination of growth in anumber of our core products, and a great start for the product lines that weacquired within the past year. While economic difficulties are impacting everycompany, our strategy continues to provide opportunity for growth."
The second quarter saw a continuation of Neogen's tradition ofsuccessfully integrating acquisitions to provide incremental top line and,more importantly, bottom line growth. Recent acquisitions helped Neogenachieve an increase of 22% in its operating income -- from $4,798,000 in FY2008 to $5,861,000 in the current year.
"We're very pleased with the second quarter results considering uniquechallenges we faced in the quarter-to-quarter comparisons to the prior year,"said Lon Bohannon, Neogen's president and chief operating officer. "Inparticular, the world-wide economic turmoil resulted in some significantcurrency exchange adjustments that negatively impacted reported second quartersales. Our increase in unit volume was substantially better than the reportedincrease in sales for our Food Safety Division."
Neogen's Animal Safety Division led the company's second quarter revenueincrease, with sales up 24% from $12,736,000 in FY 2008 to $15,808,000 in FY2009. Year-to-date, the division's revenues increased 33% from the prior yearto $29,064,000. While the July 2008 acquisition of a line of agricultural andveterinary disinfectants from DuPont Animal Health Solutions contributedsignificantly to the year-over-year revenue gain, same-store sales alsoimproved, and a number of core product lines experienced significant revenueincreases compared to the previous year.
Sales of Neogen's veterinary biologics increased more than 60% in thequarter, as the company responded to suspected equine botulism outbreaks in atleast four U.S. states. Neogen is the exclusive provider of a vaccine againstthe most prevalent type of equine botulism and expanded its domesticdistribution of this proprietary vaccine during the second quarter.
Neogen's Animal Safety division continued to grow sales of the Kaneproducts acquired in August 2007. Sales of the Kane products, includingveterinary obstetrical gloves, bovine hoofcare, and surgical supplies,increased approximately 20% in the FY 2008 quarter compared to the prior year.Continuing market acceptance of Neogen's line of veterinary supplementsprimarily for dogs and cats led to a 26% increase in sales of the company'sKare product line.
Neogen's Food Safety Division second quarter revenues, which wereexclusively same-store sales, increased 6% to $15,379,000 in FY 2009. Year-to-date, the Food Safety Division's revenues were up 10% to $30,928,000 for FY2009 from $28,232,000 in FY 2008. Excluding the impact of currency translationthat significantly reduced reported second quarter dollar-denominated sales ofdairy antibiotic tests and sales for the company's Neogen Europe subsidiary,sales growth for food safety would have been over 12% for the quarter and on ayear-to-date basis.
This division's second quarter revenue increases were led by thecontinuing strong performance of its Lansing, Mich.-based diagnostics group,which reported sales growth of approximately 16%. Sales of Neogen rapid testsfor food allergens increased more than 50% as food processors increase effortsto protect consumers from the consequences of the presence of unintendedallergens in their products. An increased use of test kits to detect dairymilk allergens in soy milk contributed significantly to the overall growth insales of food allergen test kits.
Sales of Neogen's Soleris(TM) general microbial detection system,including single-use disposable vials used in conjunction with Neogen'sproprietary optical reader, also increased by more than 50% on a year-to-yearcomparison for the quarter. The Soleris system allows for the accuratedetection of spoilage organisms, such as yeast and mold, in a fraction of thetime of traditional microbial detection methods. Similarly, sales of thedisposable samplers used with Neogen's innovative AccuPoint(R) ATP sanitationmonitoring system experienced a strong double-digit sales increase in thesecond quarter of FY 2009 compared to the previous year.
Neogen's second quarter also saw Forbes Magazine name Neogen to its annuallist of the 200 Best Small Companies in America for the fourth consecutiveyear and seventh time in the last nine years. The Forbes list is based ongrowth in sales, earnings, and return on equity for the past five years, andthe latest 12 months.
Neogen Corporation develops and markets products dedicated to food andanimal safety. The company's Food Safety Division markets dehydrated culturemedia, and diagnostic test kits to detect foodborne bacteria, natural toxins,genetic modifications, food allergens, drug residues, plant diseases andsanitation concerns. Neogen's Animal Safety Division markets a complete lineof diagnostics, veterinary instruments, veterinary pharmaceuticals,nutritional supplements, disinfectants, and rodenticides.
Certain portions of this news release that do not relate to historicalfinancial information constitute forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. Actualfuture results and trends may differ materially from historical results orthose expected depending on a variety of factors listed in Management'sDiscussion and Analysis of Financial Condition and Results of Operations inthe 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 Six months ended Nov. 30 2008 2007 2008 2007 Revenue Food Safety $15,379 $14,474 $30,928 $28,232 Animal Safety 15,808 12,736 29,064 21,886 Total revenue 31,187 27,210 59,992 50,118 Cost of sales 15,062 13,039 29,063 23,650 Gross margin 16,125 14,171 30,929 26,468 Other expenses Sales & marketing 6,013 5,456 11,632 10,134 Administrative 3,032 2,862 5,612 5,192 Research & development 1,219 1,055 2,171 1,797 Total other expenses 10,264 9,373 19,415 17,123 Operating income 5,861 4,798 11,514 9,345 Other revenue 240 306 445 470 Income before tax 6,101 5,104 11,959 9,815 Income tax 2,200 1,850 4,325 3,550 Net income $3,901 $3,254 $7,634 $6,265 Net income per diluted share $0.26 $0.22 $0.51 $0.42 Other information: Shares to calculate per share 15,122 14,846 15,075 14,816 Depreciation & amortization $994 $821 $1,950 $1,639 Interest expense - - - - Gross margin (% of sales) 51.7% 52.1% 51.6% 52.8% Operating income (% of sales) 18.8% 17.6% 19.2% 18.6% Revenue increase vs. FY 2008 14.6% 19.7% Net income increase vs. FY 2008 19.9% 21.9% NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED BALANCE SHEET DATA (In thousands) Nov. 30 May 31 2008 2008 Assets Current assets Cash & securities $12,721 $14,270 Accounts receivable 21,581 19,384 Inventories 31,262 27,799 Other current assets 3,898 4,178 Total current assets 69,462 65,631 Property & equipment 16,772 16,889 Goodwill & other assets 50,703 43,837 Total assets $136,937 $126,357 Liabilities & Stockholders' Equity Current liabilities $11,937 $11,136 Long-term lines of credit - - Other long-term liabilities 4,148 3,973 Stockholders' equity-shares outstanding 14,726 in Nov. & 14,518 in May 120,852 111,248 Total liabilities & stockholders' equity $136,937 $126,357
SOURCE Neogen Corporation
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