Neogen Reports 30% Profit Jump, Revenue Up 23%
Lansing-based Neogen Corp. (Nasdaq: NEOG) Tuesday announced a 30 percent increase in net income for its fiscal year ended May 31, to $22.8 million or 96 cents a share, up from $17.5 million or 76 cents a share.
Revenue for the fiscal year was up 23 percent to $172.7 million from $140.5 million in the prior fiscal year.
Both revenues and net income for the 2011 fiscal year established new all-time highs for the 29-year-old company.
Neogen's fourth quarter revenue increased 12 percent to $43.6 million from $39.1 million a year earlier. Net income rose 29 percent to $6 million or 26 cents a share from $4.6 million or 20 cents a share a year earlier.
"The results we are reporting today clearly indicate Neogen is capturing a piece of the growing global demand for food and animal safety products," said James Herbert, Neogen's chairman and CEO. "Neogen is uniquely positioned to continue to seize food and animal safety opportunities wherever in the world they may exist -- from farms, ranches and aquaculture operations, through food processing and food service."
For the first time, Neogen's percentage of sales from international markets exceeded 42 percent of total revenues. Neogen's operating income increased 33 percent compared to the prior year to $35.8 million, or to 20.8 percent of revenues, compared with $26.9 million or 19.1 percent of revenue in the prior fiscal year.
"Our 2011 fiscal year marked the first time we have been able to record an operating margin in excess of 20 percent for a full year -- a long-standing benchmark goal of ours," said Lon Bohannon, Neogen's president and COO. "The achievement is a strong indication that as revenues increase, our ongoing cost-saving measures are also contributing to the positive operating results. We're also pleased to report that our revenue increase was the result of broad-based sales growth in both the animal safety and food safety divisions. As planned, immediately accretive acquisitions did significantly bolster revenues and earnings, but we were also able to achieve organic sales growth in excess of 10 percent."
The fourth quarter was the 73rd consecutive profitable quarter from operations for the company, and the 77th quarter of the past 82 quarters to show increased revenues as compared with the previous year -- including the last 25 quarters.
"As our consolidated balance sheet data shows, Neogen is now very well positioned to pursue a wide variety of growth strategies," said Steve Quinlan, Neogen's vice president and CFO. "Our cash generation for the year was excellent. We also improved accounts receivable days outstanding and decreased our inventory as a percentage of sales."
Revenue from the company's Animal Safety segment grew 36 percent in the fiscal year to $87.2 million. While the successful integration of the GeneSeek agricultural genetics business contributed to Animal Safety's revenue growth for the year, sales of existing product lines achieved solid organic growth of 12 percent when compared to the prior year.
Sales of Neogen's line of veterinary instruments again showed exceptional growth, increasing 21 percent for the year, and were led by large increases in sales of needles and syringes. The line also benefitted from the continuing success of retail sales of the products in farm and ranch stores. Neogen's line of BioSentry agricultural cleaners and disinfectants and its line of rodenticides also experienced significant sales increases, evidence that the company's efforts to market its disinfectants and rodenticides as synergistic biosecurity solutions are gaining increasing traction.
GeneSeek exceeded internal revenue expectations in its first year, expanding the use of its DNA genotyping technology for animal applications under Neogen ownership. GeneSeek's technology allows the acceleration of natural selection through selective breeding for traits, such as disease resistance and meat quality. Neogen recently announced its new NeoSeek pathogen DNA detection method for E. coli strains -- the first food safety laboratory technology developed through the close collaboration of Neogen's food safety research group and GeneSeek research team.
Despite a difficult comparison with the exceptional performance of the prior fiscal year, when the division recorded a revenue increase of 25 percent, sales of Neogen's Lansing-based Food Safety Division increased 12 percent to $85.5 million. While the acquisition of Gen-Probe's BioKits food safety business contributed to the division's fiscal year revenue gain, organic sales growth in Food Safety was broad-based across multiple market segments and product lines. Diagnostic products used in the detection of specific pathogens, general spoilage organisms, food allergens and for general sanitation all achieved solid double-digit sales growth for the year.
Neogen also recorded sharp increases in sales of its test kits to detect dairy antibiotic residues. In March, Neogen received the regulatory approvals necessary to allow milk producers and processors in the U.S. to use Neogen's new BetaStar Plus to comply with FDA regulations that require the mandatory testing of raw milk tankers for dairy antibiotic residues.
Neogen's Scotland-based Neogen Europe subsidiary recorded a revenue increase of 27 percent in the current year compared to the prior year. Neogen Europe's revenue increase was broad-based, including increases in sales of Neogen's food safety diagnostics and Acumedia dehydrated culture media. The company's Mexican subsidiary recorded a 38 percent sales increase compared to the prior year, and Neogen is beginning to see significant revenue growth from its new subsidiary in Brazil.
Neogen 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 markets a complete line of diagnostics, veterinary instruments, veterinary pharmaceuticals, nutritional supplements, disinfectants, and rodenticides.
More at www.neogen.com.
