LANSING — Neogen Corp. (Nasdaq: NEOG) announced that its net income for the third quarter of fiscal year 2013, which ended Feb. 28, increased 27 percent to $6.7 million or 27 cents a share, up from $5.2 million or 22 cents a share in the same quarter a year earlier.
For the nine months, net income was $20.2 million or 83 cents a share, up 22 percent from $16.5 million or 69 cents a share in the same nine months of the prior fiscal year.
Third quarter revenue was $51.1 million, up 14 percent from the prior year’s $44.9 million. Year to date, nine-month revenues increased 12 percent in the current fiscal year to $151.5 million from last year’s $135.5 million.
Said James Herbert, Neogen’s CEO and chairman: “The growth and improved earnings are the result of increased market share, new products, and revenues from recent acquisitions. The quarter also saw the opening of several new market opportunities that should help fuel future growth.”
Neogen’s gross margin increased to 53.5 percent of sales in its third quarter, compared to 51 percent of sales in the prior year’s third quarter, reflective of a shift in product mix toward higher margin products, including food safety diagnostics, rodenticides, new products acquired in the Macleod acquisition, and manufacturing efficiencies. Operating expenses increased during the quarter, primarily as a result of investments made in the company’s sales and marketing infrastructure, and personnel and related expenses absorbed through acquisition.
“Cost reductions in raw material and productivity improvements, in addition to the favorable product mix, have pushed up gross margins,” said Lon Bohannon, Neogen’s president and COO. “We are also pleased to report third quarter sales that were not only substantially above last year, but also higher than our traditionally strong second quarter. Growth in revenues from new products launched in the last 18 months along with solid growth in many of our existing market segments contributed to the strong third quarter sales performance.”
The third quarter was the 84th quarter of the past 89 quarters that Neogen reported revenue increases as compared with the previous year — including all consecutive quarters in the last eight years.
“As our balance sheet shows, we have been able to continue to grow our available cash balance even with three cash acquisitions within the past 12 months,” said Steve Quinlan, Neogen’s CFO. “This positions us well to pursue all available avenues of growth, including further synergistic acquisitions.”
Sales of Neogen’s extensive line of food allergen tests increased in the third quarter from the prior year, as food processors continued implementing programs to comply with components of the United States’ Food Safety Modernization Act of 2011. The allergen testing by food processors helps prevent the contamination of non-allergenic products with known food allergens.
Sales of Neogen’s test kits for meat speciation, and complementary Scotland-based laboratory services, more than tripled on a quarter-to-quarter comparison as the company responded to the horse meat scandal in Europe, where product represented as ground beef was found to contain horse and pig meat. This response helped the company’s Neogen Europe subsidiary achieve an 18 percent increase in revenues for the third quarter when compared to the prior year quarter.
The third quarter also saw a significant increase in the sales of Neogen’s line of dairy antibiotic tests. This increase, when compared to last year’s third quarter, was due to timing of international shipments to a distributor as well as increases in sales of the product line in Brazil. The increase was also due to continued market acceptance of Neogen’s BetaStar Combo product, which simply and accurately detects both beta-lactam and tetracycline antibiotics. Sales of tests to detect histamine also increased significantly in the third quarter when compared to the same quarter a year ago. Histamine is a toxin produced post harvest in certain types of fish, especially tuna, if they are improperly handled.
Revenues from the company’s genomics testing service business increased approximately 20 percent in the third quarter, compared to the prior year quarter. This increase was due to the increased sample volumes from the existing customer bases, including the beef cattle business. The improvement was also due to increased sales efforts for these services in both Brazil and Europe.
Sales of Neogen’s rodenticides continued their strong rebound, increasing significantly from the prior year’s comparable third quarter, as sales returned to their historical norms after regulatory changes caused a decline in Neogen’s rodenticide sales in its 2012 fiscal year.
Sales of Uniprim, a veterinary antibiotic, continued to be strong since its acquisition from Macleod Pharmaceuticals in October 2012. Uniprim is a prescription-only combination of trimethoprim and sulfadiazine that provides effective antibacterial activity against a wide range of infections in animals. The current quarter also included a significant increase from a year ago in sales of its veterinary detectable D3 Needles. Neogen’s D3 Needles are exceptionally strong to lessen the chance they may break off when treating an animal, and also easily detectable in standard meat processing metal detectors in the unlikely event they ever break.
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 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.
More at www.neogen.com.