Neogen Corp. (NEOG) filed Quarterly Report for the period ended 2009-08-31.
Neogen Corporation develops manufactures and markets a diverse line ofproducts dedicated to food and animal safety. The company's food safety segment consists primarily of diagnostic test kits and related products including dehydrated culture media marketed to food producers and processors to aid in the detection of foodborne bacteria natural toxins food allergens drug residues pesticide residues plant disease infections and levels of general sanitation. Neogen Corp. has a market cap of $466.1 million; its shares were traded at around $31.49 with a P/E ratio of 32.4 and P/S ratio of 3.9. Neogen Corp. had an annual average earning growth of 23.4% over the past 10 years. GuruFocus rated Neogen Corp. the business predictability rank of 3.5-star.
Highlight of Business Operations:
Neogen Corporation revenues increased by 12% in the first quarter of FY-10 to $32.3 million as compared to $28.8 million in the first quarter of FY-09. Food Safety sales increased by 12% and Animal Safety sales increased by 12%, in comparison with the first quarter of the prior year. Overall Animal Safety sales were aided by the revenues that resulted from the disinfectant business acquired from DuPont, in July of 2008 and from the International Diagnostics Systems acquisition in May of 2009. The Food Safety Segment reported a 12% increase in organic revenue while the Animal Safety Segment reported a 4% increase in organic sales. Sales to international markets were 41% of total revenues. Gross margins increased from 51% to 53% and operating margins increased from 20% to 22%. The increase in gross margins was a result of favorable changes in product mix that included an increased percentage of diagnostic product sales.
they are improperly stored. Sales of diagnostic products for bacteria and general sanitation increased 3% in comparison with the prior year. Soleris product lines continued their expansion but with modest growth in comparison with FY-09. Sales of dehydrated culture media and other products increased by 7% over the prior year as the Company gained several new customers in this competitive market.
During the first quarter of FY-10, Animal Safety revenues increased by 12% overall in comparison with FY-09. Life Science and Equine vaccines increased by 33% in comparison with FY-09. This included exceptional growth of 60% in two of the Company’s veterinary biologics: BotVax® B, an equine botulism vaccine, and EqStim®, an immune system stimulant. Rodenticide and disinfectant Sales increased by 15% in comparison with FY-09 following the July 2008 acquisition of the cleaners and disinfectants business. The added DuPont products lines have proven to be a strong synergistic fit within the Animal Safety product segment. Veterinary instrument and other sales increased by 4% in comparison with the prior year and included an approximately 60% increase in Neogen’s vitamin injectibles that are used primarily for prevention and treatment of vitamin deficiencies in cattle and sheep. Sales of products through over-the-counter distributor channels were led by strong increases in products to treat wounds, leg and foot conditions. The Company’s Ideal Instruments brand, including disposable needles and syringes, also had a solid quarter with sales growth of 11% compared to the previous year’s first quarter.
Gross margins increased from 51.4% in the first quarter of FY-09 to 53.4% in FY-10. This resulted from a change in product mix that included a greater percentage of diagnostic products. Operating margins in the first quarter increased from 19.6% of sales in FY-09 to 21.5% in FY-09 as a result of gains achieved in the gross margins. Operating expense controls sales and marketing expenses as a percentage of revenues decreased from 19.5% to 18.5%. General and administrative expenses decreased slightly from 9.0% of revenues to 8.9%. The decrease in sales and marketing as a percentage of revenues is the direct effect of the acquisitions during the year that contributed revenue dollars without commensurate increase in distribution costs. Absolute dollar increase of $310,000 in the quarter in general and administrative expense is due to a number of factors, including the cost of acquiring businesses and increased governmental licensing and regulatory affairs. Research expense, growing $512,000 in absolute dollars, increased as a percent of revenues from 3.3% to 4.5%. This planned increase in research and development efforts is needed to support the existing products, to increase the supply of future products in key markets and support the Company’s goal to achieve $200 million in revenues by 2014.
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