Neogen Corp. (NEOG, Financial) filed Quarterly Report for the period ended 2009-02-28.
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 $310.9 million; its shares were traded at around $21.11 with a P/E ratio of 23.2 and P/S ratio of 3. 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.
Exclusive of the revenues from the Kane Enterprises, Rivard and DuPont acquisitions (see note 9 to Interim Consolidated Financial Statements in this filing), overall revenues decreased 1% in the quarter and increased 5% in nine-month period. Revenues were affected by the strengthening of the dollar versus western European currencies, inventory adjustments by distributors, and other factors. Excluding the impact of currency translation, sales growth for the third quarter and on a year-to-date basis would have been 15% and 19% respectively. Gross margins decreased from 50.3% in the February 2008 quarter to 46.8% in the February 2009 quarter and decreased from 52.0% to 50.0% on a year-to-date basis. Changes in product mix, including the effect of acquisitions, and changing currency translation rates were the biggest factors in the decreased gross margins. Operating margins decreased in the quarter from 15.8% to 12.8% and in the nine-month period from 17.7% to 17.2%. Operating margin changes were primarily the result of changes at the gross margin level.
taken by an international distributor customer in December of 2008. January and February sales to this customer returned to historical patterns. The 13% quarterly and 15% year to date growth in the Bacteria & General Sanitation category was paced by impressive customer acceptance of the Soleris rapid microbial test system for spoilage organisms that grew 16% in the quarter and year-to-date periods and the AccuPoint test system that grew by 34% for the quarter and 15% year-to-date. Constant dollar sales increases were broad based with effective selling programs in place for the markets Neogen serves. In addition, Neogens wide product offerings continue to be well accepted in the marketplace and the Company is benefitting from accelerating worldwide concerns about safety of food.
In the Animal Safety Segment, Life Sciences & Equine Vaccine product sales decreased 17% in the third quarter and increased 3% for the year-to-date periods. Rodenticide & Disinfectant sales increased by 168% in the quarter and by 92% on a year-to-date basis. Veterinary Instrument & Other product sales decreased by 5% in the quarter and increased by 10% in the first nine months of the fiscal year. Exclusive of the sales acquired in the Kane, Rivard and DuPont acquisitions, sales of Animal Safety products decreased 5% over the prior year in the third quarter and increased 3% in the nine-month period.
Gross margins decreased from 50.3% in the third quarter of the prior year to 46.8% in the third quarter of the current year and declined from 52.0% to 50.0% for the year-to-date period. The changes principally resulted from changes in product mix including the affect of the Kane, Rivard and DuPont acquisitions. Products from these acquisitions generally have initial margins that are less than average margins of existing Company products. Management expects that recovery of margins will be in part realized as the disinfectant products acquired from DuPont transition from buy-sell to internally produced products.
General and Administrative expense as a percentage of revenues declined in the third fiscal quarter from 10.8% to 9.9% and from 10.5% to 9.5% on a year-to-date basis. Changes in administrative expense as a percentage of revenue represent increased sales without a commensurate increase in expense.
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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 $310.9 million; its shares were traded at around $21.11 with a P/E ratio of 23.2 and P/S ratio of 3. 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:
When compared to the prior year Neogen Corporation revenues increased by 11% to $27.8 million and by 17% to $87.8 million for the quarter and nine-month periods ended February 28, 2009. Food Safety sales increased by 2% and 7% and Animal Safety sales increased by 20% and 29% in the quarter and in the nine-month periods.Exclusive of the revenues from the Kane Enterprises, Rivard and DuPont acquisitions (see note 9 to Interim Consolidated Financial Statements in this filing), overall revenues decreased 1% in the quarter and increased 5% in nine-month period. Revenues were affected by the strengthening of the dollar versus western European currencies, inventory adjustments by distributors, and other factors. Excluding the impact of currency translation, sales growth for the third quarter and on a year-to-date basis would have been 15% and 19% respectively. Gross margins decreased from 50.3% in the February 2008 quarter to 46.8% in the February 2009 quarter and decreased from 52.0% to 50.0% on a year-to-date basis. Changes in product mix, including the effect of acquisitions, and changing currency translation rates were the biggest factors in the decreased gross margins. Operating margins decreased in the quarter from 15.8% to 12.8% and in the nine-month period from 17.7% to 17.2%. Operating margin changes were primarily the result of changes at the gross margin level.
taken by an international distributor customer in December of 2008. January and February sales to this customer returned to historical patterns. The 13% quarterly and 15% year to date growth in the Bacteria & General Sanitation category was paced by impressive customer acceptance of the Soleris rapid microbial test system for spoilage organisms that grew 16% in the quarter and year-to-date periods and the AccuPoint test system that grew by 34% for the quarter and 15% year-to-date. Constant dollar sales increases were broad based with effective selling programs in place for the markets Neogen serves. In addition, Neogens wide product offerings continue to be well accepted in the marketplace and the Company is benefitting from accelerating worldwide concerns about safety of food.
In the Animal Safety Segment, Life Sciences & Equine Vaccine product sales decreased 17% in the third quarter and increased 3% for the year-to-date periods. Rodenticide & Disinfectant sales increased by 168% in the quarter and by 92% on a year-to-date basis. Veterinary Instrument & Other product sales decreased by 5% in the quarter and increased by 10% in the first nine months of the fiscal year. Exclusive of the sales acquired in the Kane, Rivard and DuPont acquisitions, sales of Animal Safety products decreased 5% over the prior year in the third quarter and increased 3% in the nine-month period.
Gross margins decreased from 50.3% in the third quarter of the prior year to 46.8% in the third quarter of the current year and declined from 52.0% to 50.0% for the year-to-date period. The changes principally resulted from changes in product mix including the affect of the Kane, Rivard and DuPont acquisitions. Products from these acquisitions generally have initial margins that are less than average margins of existing Company products. Management expects that recovery of margins will be in part realized as the disinfectant products acquired from DuPont transition from buy-sell to internally produced products.
General and Administrative expense as a percentage of revenues declined in the third fiscal quarter from 10.8% to 9.9% and from 10.5% to 9.5% on a year-to-date basis. Changes in administrative expense as a percentage of revenue represent increased sales without a commensurate increase in expense.
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