Neogen Reports Third Quarter Revenue, Net Income Rise
LANSING -- The Lansing biotech developer Neogen Corp. (Nasdaq: NEOG) Tuesday announced revenue of $44.9 million in the third quarter of its fiscal year, which ended Feb. 29, up 6.3 percent from $42.2 million a year earlier.
The current year's third quarter revenues are almost entirely comprised of products available in the prior year's comparable quarter, and also represent record third quarter revenues for the 30-year-old company.
Net income for the quarter was $5.2 million, or 22 cents a share, up 6.1 percent from $4.9 million or 21 cents a share a year earlier.
For the nine months, revenue was $135.5 million, up from $129.1 million a year earlier.
Nine-month net income was $16.5 million or 69 cents a share, down from $16.9 million or 71 cents a share a year earlier. Sales and marketing and administrative expenses all rose at a rate greater than the sales increase for the nine months.
"We are pleased to report third quarter results that reflect higher growth across a number of our product lines and market segments," said James Herbert, Neogen chairman and CEO. "With our recent staffing increase throughout all levels of our organization, Neogen is now better positioned to help address both global food safety and food security needs wherever they may exist."
The third quarter was the 76th consecutive profitable quarter from operations for the company, and the 80th quarter of the past 85 quarters to show increased revenues as compared with the previous year -- including the last 28 consecutive quarters.
"Our third quarter results reflect progress in our efforts to get back to 10 percent organic quarterly growth," said Lon Bohannon, Neogen's president and COO. "In the quarter, we had strong sales for our new quantitative mycotoxin tests developed by our research and development group. We also sold more of our existing products to existing market segments, and achieved sales growth in new markets, partially as a result of our increased investment in sales and marketing."
Neogen's gross margin increased to 51 percent of sales in its third quarter of the current year, compared to 48.7 percent of sales for the prior year's third quarter. This increase largely was the result of favorable product mix across multiple market segments, and efficiencies gained through increased sales volume in its animal safety operations.
"As can be seen from our financial statements, Neogen has maintained a strong balance sheet, with sufficient cash and investments and borrowing capacity to pursue a full spectrum of growth strategies," said Steve Quinlan, Neogen's vice president and CFO. "We will continue to look to take advantage of our liquidity through execution of synergistic acquisitions of businesses and technologies, while exercising our historical discipline in this area."
Sales of Neogen's extensive line of food allergen tests increased in the third quarter when compared to the prior year, as food processors began implementing programs to comply with components of the United States' Food Safety Modernization Act of 2011. For the first time, FSMA defines unlabeled food allergens as adulterants, along with bacterial pathogens and other substances known to cause human illness. FSMA requires food manufacturers to have programs in place to reduce the occurrence of accidental contamination of nonallergenic foods with known food allergens. These safety programs may require the use of testing products, such as Neogen's rapid and accurate food allergen testing products.
Sales of Neogen's natural toxin testing kits returned to double-digit growth in the third quarter when compared to the same quarter a year earlier. The product line's revenue increase was bolstered by the launch of Neogen's innovative Reveal Q+ test kits for aflatoxin, DON and zearalenone. The new tests are extremely easy test strips that return precise, fully quantitative results in only minutes. The USDA also recently verified the performance of Reveal Q+ for Aflatoxin, enabling the test to be used for official testing in the national grain inspection system.
The current year's third quarter also saw a 30 percent increase in sales of veterinary products, compared to the prior year quarter, as strong promotional distributor programs positively impacted the sales across multiple product lines. Sales of the company's detectable veterinary needles increased more than 20 percent, as meat processors have attempted to further protect consumers from the hazards of broken veterinary needles in meat at the retail level. Sales of veterinary biologics, including the only available vaccine to prevent equine type B botulism, increased more than 40 percent when compared to the prior year's third quarter.
Sales of Neogen's animal care products also grew significantly in the quarter, up more than 40 percent when compared to the prior year's third quarter. The products include veterinary supplements for dogs and cats, vitamin injectables for large animals, woundcare products, and equine supplements.
Although Neogen continues to experience revenue shortfalls in many countries of the European Union, sales to the United Kingdom and Germany showed strength in the third quarter. On a year-to-date basis, Neogen's subsidiaries in Mexico and Brazil continued their forward sales momentum, albeit from a small base.
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, genetic modifications, 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
