Neogen reports record revenues and earnings

LANSING — Neogen Corp. (NASDAQ: NEOG) announced that its revenues for the second quarter of its 2018 fiscal year, which ended Nov. 30, rose 12 percent to $101.8 million, from $90.7 million a year earlier.

For the first six months, revenue was $197.1 million, up 13 percent from $174.4 million in the same period a year ago.

Net income in the second quarter was $17.1 million, up 53 percent from $11.2 million a year earlier. Adjusted for a 4-for-3 stock split effective Dec. 29, earnings per share in the current quarter were 33 cents, up from 22 cents a year earlier.In the current quarter, the company said it benefited $3.4 million, 7 cents a share, due to the adoption of Accounting Standard Update 2016-09 on June 1, 2017, which changes how companies report the excess tax benefits of employee stock option exercises. Current year-to-date net income was $29 million, or 56 cents per share after being adjusted for the split, compared to $21 million, or an adjusted 41 cents a share, for the same period a year ago.

The quarterly revenue and net income results represent records for the 35-year-old company. However, the revenue increase fell short of Wall Street expectations.

The second quarter was the 103rd of the past 108 quarters that Neogen reported revenue increases as compared with the previous year — a record spanning 27 years. The current quarter marked the first time Neogen has exceeded $100 million in quarterly revenues.

“We are particularly pleased with the strong organic growth of a number of our existing core product lines in the current quarter,” said John Adent, Neogen’s president and CEO. “Within our food safety segment, we had substantial organic sales increases in our line of dehydrated culture media, and test kits to detect sanitation concerns, dairy antibiotics, and foodborne pathogens, especially Listeria. In our animal safety segment, we also recorded increases in sales of veterinary instruments, rodent control products, and continued our strong growth in our agricultural genomic services.”

Revenues for the company’s Food Safety segment increased 21 percent during the second quarter compared to the prior year quarter, aided by acquisitions within the past year, which report through Neogen’s operations in Scotland and Brazil. Sales of Neogen’s line of general sanitation products increased 23 percent in the current quarter compared to the prior year quarter. The line includes AccuPoint, a system that allows users to instantly verify that surfaces and equipment have been effectively sanitized. The segment’s comparative results also included a 20 percent increase in sales of culture media products.

Also of note in the Food Safety segment’s current second quarter results was an 18 percent increase in sales of test kits to detect drug residues in milk, and a 14 percent increase in foodborne pathogen detection tests — including a 43 percent increase in sales of tests to detect Listeria. In June, Neogen launched Listeria Right Now, a test that detects Listeria in environmental samples in under 60 minutes — without the need to enrich samples.

In the current quarter, revenue from international sources increased to 38 percent of total revenue from 34 percent in the prior year quarter. Overall, international sales increased 24 percent over the prior year, aided by acquisitions. Revenues from Neogen do Brasil increased 22 percent in U.S. dollars in the current quarter, Mexico-based Neogen Latinoamerica’s sales increased 36 percent, Neogen Europe’s revenues rose 15 percent in the quarter, Neogen China’s revenues increased 23 percent, and Neogen India’s revenues increased 48 percent.

Neogen’s Animal Safety segment reported a revenue increase for the second quarter of 5 percent, led by growth in its genomics business, a 10 percent increase in sales of its animal care line of products, a 14 percent increase in its rodent control product line, and a 19 percent increase in sales of veterinary instruments, which included a 17 percent increase in sales of its detectable needles. Revenues from Neogen’s worldwide animal genomics business increased 19 percent in the second quarter of fiscal 2018 compared to the prior year.

Neogen Corporation 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 biosecurity products, animal genomics testing, and the manufacturing and distribution of a variety of animal healthcare products, including diagnostics, pharmaceuticals and veterinary instruments.

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