Neogen Corp. (NEOG, Financial) filed Quarterly Report for the period ended 2010-11-30.
Neogen Corp. has a market cap of $906.4 million; its shares were traded at around $39.93 with a P/E ratio of 48.7 and P/S ratio of 6.5. Neogen Corp. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Neogen Corp. the business predictability rank of 4.5-star.NEOG is in the portfolios of RS Investment Management, Ron Baron of Baron Funds, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Animal Safety revenues increased by 34% in the second quarter and 37% in the six months ended November 30, 2010 in comparison with the prior year. Excluding the revenues of the GeneSeek acquisition in April 2010, Animal Safety revenues increased 7% in both the quarter and the first six months of FY-2011. Life Sciences and Other
revenue increased by 9% in both the quarter and six months respectively. Revenue increases were broad based with increases from existing customers and new key accounts. Rodenticide and Disinfectant product revenues increased by 13% in the quarter and by 8% on a year-to-date basis. Rodenticide and Disinfectant revenues growth included strong increases in the agronomics segment and a well received fall rodenticide program. Veterinary Instrument and Other product revenues increased by 2% and 7% in the quarter and six months respectively in comparison with prior year. Increases were due to strong OEM and specialty needle revenues, which rebounded from a slow first quarter to achieve 93% growth in the second quarter.
Gross margins decreased from 52.5% to 51.2% in the second quarter of FY-11 and from 52.9% to 52.1% in the first six months of FY-11. This resulted principally from changes in product mix that included a lower percentage of diagnostic products in relation to overall revenues.
Operating margins in the second quarter increased from 20.5% to 21.9% and from 21.0% to 22.1% in the first six months of FY-11 as compared to the first six months of FY-10. These increases resulted from increased operating leverage and continuing cost controls. Sales and marketing expenses as expressed as a percentage of revenues decreased from 18.2% to 17.1% in the second quarter and decreased from 18.3% to 17.3% on a year-to-date basis. 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 cost. General and administrative expenses decreased from 9.1% to 8.5% of revenues in the second quarter, and from 9.0% to 8.7% on a year to date basis principally as a result of operating leverage. The change in general and administrative expense, while an increase in absolute dollars of $523,000 in the quarter and $1,494,000 fiscal year-to-date, is due to the increased cost of compensation, employee stock options expense, amortization from acquired businesses and the cost of acquiring businesses with increased governmental licensing and regulatory affairs. Research expense, decreased $57,000 in absolute dollars in the second quarter and increased by $277,000 for the first six months of FY-11, decreased as a percent of revenues from 4.8% to 3.7% in the second fiscal quarter and from 4.7% to 4.0% in the six-month periods. While these expenses vary on a quarter to quarter basis depending on the timing of new projects and the completion of existing projects, management expects that research and development efforts will range between 4% to 5% in support of existing products and to increase the supply of future products.
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Neogen Corp. has a market cap of $906.4 million; its shares were traded at around $39.93 with a P/E ratio of 48.7 and P/S ratio of 6.5. Neogen Corp. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Neogen Corp. the business predictability rank of 4.5-star.NEOG is in the portfolios of RS Investment Management, Ron Baron of Baron Funds, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Neogen Corporation revenues increased by 25% in the second quarter to $43.9 million and by 28% to $86.9 million for the six-month period ended November 30, 2010 when compared to the prior year. Food Safety revenues increased by 16% and 21% in the quarter and in the six-month period ended November 30, 2010, respectively. Animal Safety revenues increased by 34% and 37% in the quarter and in the six-month period ended November 30, 2010, respectively. Exclusive of the revenues from the BioKits and GeneSeek acquisitions, and foreign currency effects overall revenues increased 10% and 13% in the second quarter and year-to-date periods, respectively. Gross margins decreased from 52.5% in the November 2009 quarter to 51.2% in the November 2010 quarter and decreased from 52.9% to 52.1% on a year-to-date basis. The decrease in gross margins was a principally result of less favorable product mix. Operating margins increased in the quarter and six-month periods from 20.5% to 21.9% and from 21.0% to 22.1% respectively. The gains were the result of growth leverage and acquisitions as well as continuing cost control efforts.Animal Safety revenues increased by 34% in the second quarter and 37% in the six months ended November 30, 2010 in comparison with the prior year. Excluding the revenues of the GeneSeek acquisition in April 2010, Animal Safety revenues increased 7% in both the quarter and the first six months of FY-2011. Life Sciences and Other
revenue increased by 9% in both the quarter and six months respectively. Revenue increases were broad based with increases from existing customers and new key accounts. Rodenticide and Disinfectant product revenues increased by 13% in the quarter and by 8% on a year-to-date basis. Rodenticide and Disinfectant revenues growth included strong increases in the agronomics segment and a well received fall rodenticide program. Veterinary Instrument and Other product revenues increased by 2% and 7% in the quarter and six months respectively in comparison with prior year. Increases were due to strong OEM and specialty needle revenues, which rebounded from a slow first quarter to achieve 93% growth in the second quarter.
Gross margins decreased from 52.5% to 51.2% in the second quarter of FY-11 and from 52.9% to 52.1% in the first six months of FY-11. This resulted principally from changes in product mix that included a lower percentage of diagnostic products in relation to overall revenues.
Operating margins in the second quarter increased from 20.5% to 21.9% and from 21.0% to 22.1% in the first six months of FY-11 as compared to the first six months of FY-10. These increases resulted from increased operating leverage and continuing cost controls. Sales and marketing expenses as expressed as a percentage of revenues decreased from 18.2% to 17.1% in the second quarter and decreased from 18.3% to 17.3% on a year-to-date basis. 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 cost. General and administrative expenses decreased from 9.1% to 8.5% of revenues in the second quarter, and from 9.0% to 8.7% on a year to date basis principally as a result of operating leverage. The change in general and administrative expense, while an increase in absolute dollars of $523,000 in the quarter and $1,494,000 fiscal year-to-date, is due to the increased cost of compensation, employee stock options expense, amortization from acquired businesses and the cost of acquiring businesses with increased governmental licensing and regulatory affairs. Research expense, decreased $57,000 in absolute dollars in the second quarter and increased by $277,000 for the first six months of FY-11, decreased as a percent of revenues from 4.8% to 3.7% in the second fiscal quarter and from 4.7% to 4.0% in the six-month periods. While these expenses vary on a quarter to quarter basis depending on the timing of new projects and the completion of existing projects, management expects that research and development efforts will range between 4% to 5% in support of existing products and to increase the supply of future products.
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