Neogen Net Income Jumps 33 Percent
The Lansing food safety and animal health technologies provider Neogen Corp. (Nasdaq: NEOG) Tuesday reported a 33 percent increase in net income for the second quarter of its fiscal year, which ended Nov. 30.
Net income was $6.1 million or 26 cents a share, up from 20 cents a share a year earlier.
Second quarter revenue rose 25 percent to $43.9 million from $35.3 million a year earlier.
For the six months, net income was $11.9 million or 51 cents a share, up 33 percent from $9 million or 39 cents a share a year earlier. Revenue was up 28 percent to $86.9 million from $67.6 million a year earlier.
The second quarter revenues and net income represent quarterly records for the 28-year-old company.
"While we are very pleased to report yet another solid quarter of revenue and earnings growth, an analysis of the growth is even more encouraging," said James Herbert, Neogen's chairman and CEO. "The growth was the result of broad-based advancements throughout our market segments. It was a combination of a continual flow of new products from R&D and immediately accretive acquired product lines. The quarter showed indications that some customers are now more willing to make capital expenditures that had earlier been delayed."
Operating income as a percentage of sales increased to 21.9 percent in the current quarter from the previous year's comparable quarter of 20.5 percent. On a six-month basis, operating income was 22.1 percent of sales compared to 21 percent in the prior year.
Added Lon Bohannon, Neogen's president and CEO: "Another good indicator of our positive operational performance is that the increase in our profits from operations grew 33 percent quarter over quarter, a faster rate than our strong 25 percent increase in revenues for the quarter."
The second quarter was the 71st consecutive profitable quarter from operations for the company, and the 75th quarter of the past 80 quarters when Neogen reported revenue increases as compared with the previous year -- including the last 23 consecutive quarters.
"Even considering the effect of a negative currency exchange, we had another excellent quarter in generating cash. We have now produced $19.6 million in cash from operations for the first six months of the current fiscal year, compared to $28 million for all of last year," said Richard Current, Neogen CFO. "Given that our overall growth strategy continues to stress cash acquisitions as well as organic sales growth, cash on hand balances around $40 million are not excessive by any reasonable measure."
Neogen's Food Safety Division second quarter revenues increased 16 percent to $21.3 million from $18.4 million a yea rearlier. Year-to-date, the division's revenues were up 21 percent to $43.6 million. Sales growth in Food Safety was broad-based across multiple market segments and product lines for the quarter and on a year-to-date basis. Despite being negatively affected by currency translation, Neogen's Scotland-based Neogen Europe subsidiary recorded a sales increase of 41 percent in the current quarter compared to the prior year, including sharp increases in sales of Acumedia dehydrated culture media and food safety diagnostics.
Quarterly sales of Neogen's BetaStar Combo dairy antibiotic test, launched in April 2009, tripled when compared to the prior year quarter. Developed to comply with the European Union's maximum residue levels, BetaStar Combo is the fastest single test for beta-lactam and tetracycline dairy antibiotics. Current fiscal year to date sales of the company's test for histamine, a natural toxin of special concern to the tuna industry, increased nearly 40 percent.
Second quarter sales of Neogen's Soleris microbial detection system increased significantly led by a 33 percent increase in revenues for reader instruments. The Soleris system measures microbial growth by monitoring pH and other biochemical reactions that generate a color change as microorganisms grow and metabolize. The Food Safety division also saw a continuation in the quarter of strong increases in sales of the Acumedia dehydrated culture media that it offers to the cell culture market.
Neogen's second quarter also saw strong double-digit percentage increases in sales of its foodborne pathogen tests for Salmonella and Listeria. The company's recently introduced Reveal 2.0 rapid pathogen detection tests were designed for accurate results, while simplifying testing protocols and enrichment procedures.
Led by performance of the April 2010 acquisition of the GeneSeek genetics service business, Neogen's Animal Safety Division second quarter revenues increased 34 percent to $22.6 million, compared to $16.8 million in the previous fiscal year. For the first six months, the Animal Safety Division's sales increased 37 percent over the comparable period last year to $43.3. million.
GeneSeek, a leading commercial agricultural genetics laboratory, continued to exceed expectations in the second quarter with the sale of higher density DNA testing products, which are primarily used as discovery tools for breeding traits and disease susceptibility or resistance in cattle, pigs, and other species. GeneSeek also had an increase in sample volume for the lower density DNA testing products that are used more for breeding value predictions. Much of the increase came from growth with international customers in Canada, Australia, New Zealand, Brazil, and Europe.
Neogen's sales of forensic diagnostics to detect drugs of abuse increased 30 percent as the company's top accounts have increased the volume and breadth of their testing. Sales of rodenticides, cleaners and disinfectants in the quarter increased 13 percent over the prior year as Neogen strengthened its presence in the important agronomic and animal protein market segments. The quarter also saw sales of the company's veterinary instruments grow 28 percent when compared to the prior year's second quarter, spurred by increased sales of Neogen's needle and syringe business.
More at www.neogen.com.
