Neogen Corp. (NEOG, Financial) filed Quarterly Report for the period ended 2010-08-31.
Neogen Corp. has a market cap of $762.9 million; its shares were traded at around $33.63 with a P/E ratio of 41 and P/S ratio of 5.4. 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 Ron Baron of Baron Funds, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.
During the first quarter of FY-11, Animal Safety revenue increased by 39% overall in comparison with FY-10. Revenue growth was broad based and benefited by the acquisition of GeneSeek in the fourth quarter of FY-10. Organic Animal Safety revenues increased by 7% in comparison with the prior year and included contributions from most every product line. Life science and other revenues increased by 11% in comparison with FY-10. Components of the life science and other diagnostic test kits used to detect drugs of abuse in forensic applications were 45% higher than the prior year while sales of research diagnostic test kits were up 28% with increased orders from existing customers and the addition of some new distributors. Vaccine revenues increased by 2% in FY-11 in comparison with the first three months of FY-10.
Rodenticide and disinfectant revenues increased by 1% in comparison with FY-10. Rodenticide revenues increased by 5% due to increased market penetration. The added DuPont products lines have proven to be a strong synergistic fit within the Animal Safety product segment but did not experience gains in the first quarter of FY-11. Veterinary instrument and other revenues increased by 12% in comparison with the prior year quarter and included an approximately 35% increase in sales of Ideal veterinary instruments and a 10% increase in sales of the Kane line of disposable OB gloves, supplies and apparel products. Sales of products through over-the-counter distributor channels were led by strong increases in products to treat animal wound, leg and foot conditions.
Gross margins decreased from 53.4% in the first quarter of FY-10 to 53.0% in FY-11. This resulted from a change in product mix. Operating margins in the first quarter increased from 21.5% of revenues in FY-10 to 22.4% in FY-11 as a result of gains achieved in revenues without corresponding increases in operating expenses. Sales and marketing expenses as a percentage of revenues decreased from 18.5% to 17.5%. 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. General and administrative expenses increased slightly from 8.9% of revenues to 9.0%. An absolute dollar increase of $972,000 in the quarter in general and administrative expense is due to the cost of acquiring businesses, increased amortization expense and increased stock option expense. Research expense, growing $333,000 in absolute dollars, decreased as a percent of revenues from 4.5% to 4.2%. Management believes that research and development efforts are needed to support the existing products, to increase the supply of future products in key markets and support the Companys goal to achieve $200 million in revenues by fiscal year 2014. The decrease in percent of revenues resulted directly from the increase in sales in the quarter.
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Neogen Corp. has a market cap of $762.9 million; its shares were traded at around $33.63 with a P/E ratio of 41 and P/S ratio of 5.4. 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 Ron Baron of Baron Funds, Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors.
Highlight of Business Operations:
Neogen Corporation revenues increased by 33% in the first quarter of FY-11 to $42.9 million as compared to $32.3 million in the first quarter of FY-10. Food Safety revenues increased by 27% and Animal Safety revenues increased by 39%, in comparison with the first quarter of the prior year. Food Safety revenues included the BioKits acquisition made in December 2009 and Animal Safety revenues were aided by the revenues that resulted from the GeneSeek acquisition, in April of 2010. The Food Safety Segment reported a 21% increase in organic revenue, while the Animal Safety Segment reported a 7% increase in organic revenues. Sales to international markets were 40% of total revenues. Gross margins were unchanged at 53% in both quarters and operating margins increased from 21% to 22%. The increase in operating margins were a result of leveraging fixed costs and controlling expenses.During the first quarter of FY-11, Animal Safety revenue increased by 39% overall in comparison with FY-10. Revenue growth was broad based and benefited by the acquisition of GeneSeek in the fourth quarter of FY-10. Organic Animal Safety revenues increased by 7% in comparison with the prior year and included contributions from most every product line. Life science and other revenues increased by 11% in comparison with FY-10. Components of the life science and other diagnostic test kits used to detect drugs of abuse in forensic applications were 45% higher than the prior year while sales of research diagnostic test kits were up 28% with increased orders from existing customers and the addition of some new distributors. Vaccine revenues increased by 2% in FY-11 in comparison with the first three months of FY-10.
Rodenticide and disinfectant revenues increased by 1% in comparison with FY-10. Rodenticide revenues increased by 5% due to increased market penetration. The added DuPont products lines have proven to be a strong synergistic fit within the Animal Safety product segment but did not experience gains in the first quarter of FY-11. Veterinary instrument and other revenues increased by 12% in comparison with the prior year quarter and included an approximately 35% increase in sales of Ideal veterinary instruments and a 10% increase in sales of the Kane line of disposable OB gloves, supplies and apparel products. Sales of products through over-the-counter distributor channels were led by strong increases in products to treat animal wound, leg and foot conditions.
Gross margins decreased from 53.4% in the first quarter of FY-10 to 53.0% in FY-11. This resulted from a change in product mix. Operating margins in the first quarter increased from 21.5% of revenues in FY-10 to 22.4% in FY-11 as a result of gains achieved in revenues without corresponding increases in operating expenses. Sales and marketing expenses as a percentage of revenues decreased from 18.5% to 17.5%. 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. General and administrative expenses increased slightly from 8.9% of revenues to 9.0%. An absolute dollar increase of $972,000 in the quarter in general and administrative expense is due to the cost of acquiring businesses, increased amortization expense and increased stock option expense. Research expense, growing $333,000 in absolute dollars, decreased as a percent of revenues from 4.5% to 4.2%. Management believes that research and development efforts are needed to support the existing products, to increase the supply of future products in key markets and support the Companys goal to achieve $200 million in revenues by fiscal year 2014. The decrease in percent of revenues resulted directly from the increase in sales in the quarter.
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