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8-K - FORM 8-K - NEOGEN CORP | d8k.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: | Steven J. Quinlan, Vice President and CFO | |
517/372-9200 |
Neogen reports 27% increase in quarterly net income
LANSING, Mich., March 22, 2011 Neogen Corporation (NASDAQ: NEOG) announced today that its net income for the third quarter of FY 2011, which ended Feb. 28, increased 27% from the previous year to $4,943,000 or to $0.21 per share, compared to the prior years $0.17 per share.
Third quarter revenues increased 25% to $42,235,000, a record third quarter for the 28-year-old company, compared to the prior years $33,833,000. Year to date, nine-month revenues increased 27% in the current fiscal year to $129,088,000 from FY 2010s $101,431,000. Current year-to-date net income for the same nine-month period increased 31% to $16,878,000 from $12,887,000 in FY 2010, or to $0.71 per share compared to the prior years $0.56 per share.
We are very pleased to report our solid third quarter results, especially when considering the comparison to our outstanding third quarter performance last fiscal year, said James Herbert, Neogens chief executive officer and chairman. The fact that we are reporting a significant revenue increase this quarter is a testimony to the diversified nature of Neogens products, our synergistic acquisition strategy, and our international expansion.
The third quarter was the 72nd consecutive profitable quarter from operations for the company, and the 76th quarter of the past 81 quarters to show increased revenues as compared with the previous yearincluding the last 24 consecutive quarters.
Our strong third quarter growth was a mix of the accretive GeneSeek acquisition and solid same-store sales increases, said Lon Bohannon, Neogens president and chief operating officer. On the animal safety side, our comprehensive biosecurity marketing effort continues to gain traction as we achieved significant increases in sales of rodenticides, cleaners and disinfectants. We see these products as natural complements to our diagnostics, and as integral components in our overall mission to provide the best available food and animal safety solutions. On the food safety side, our recent internally developed or enhanced diagnostics for dairy antibiotics, foodborne pathogens, and sanitation monitoring all experienced substantial increases in the third quarter.
For the quarter, operating income increased 40% to $8,065,000, and for the first nine months of the companys 2011 fiscal year, Neogens operating income improved 37% to $27,290,000. Expressed as a percentage of revenues, year-to-date operating income for the current fiscal year improved to 21.1% compared to 19.6% in the prior year.
As our consolidated balance sheet shows, Neogen continues to generate positive cash flow, and we now have more than $47 million in cash and investments to continue to pursue a wide variety of growth strategies, said Steve Quinlan, Neogens vice president and chief financial officer. The quarters results provide further evidence of Neogens improving operational efficiencies, as our continuing cost control efforts resulted in a decline in operating expenses as a percentage of revenues during the comparative quarter from 34.6% in 2010 to 29.7% in 2011.
Neogens Animal Safety Division led the companys third quarter revenue increase, with sales up 53% from $14,115,000 in FY 2010 to $21,601,000 in the current year. For the current quarter, the division recorded organic sales growth of 17%. For the first nine months of FY 2011, the divisions sales increased 42% over the prior year to $64,862,000. The April 2010 acquisition of GeneSeek contributed to the divisions FY 2011 revenue increase, as the commercial agricultural genetics laboratory continued to exceed internal revenue expectations in its first year under Neogens ownership. Year to date, the overall Animal Safety Division has recorded organic growth of 10% compared to the prior year.
Sales of Neogens extensive line of agricultural cleaners and disinfectants substantially increased in the quarter, led by improving sales into livestock production markets in Central and South America, Asia, and Canada. Neogens line of BioSentry® biosecurity products and the line of DuPont products distributed by Neogen experienced significant sales increases. A successful sales program helped spur Neogens rodenticide sales to levels well in excess of prior year quarterly figures. The companys Animal Safety Division also had large increases in its sales of life science diagnostics and veterinary instruments.
Despite a difficult comparison with the exceptional performance of the prior years third quarter, the Lansing, Mich.-based Food Safety Divisions third quarter revenues increased from $19,718,000 in FY 2010 to $20,634,000 in the current year. In the third quarter of the previous fiscal year, sales of Neogens food safety diagnostics spiked as the company helped corn producers and processors address a widespread vomitoxin outbreak in the United States. In the third quarter of FY 2011, Neogens sales of vomitoxin kits returned to pre-outbreak levels as the corn crop has returned to its more normal, relatively clean condition. For the first nine months of FY 2011, the divisions sales increased 15% over the prior year to $64,226,000.
The growth for the Food Safety Division was broad-based across multiple market segments and product lines for the quarter and on a year-to-date basis. Sales of capital equipment and disposable vials associated with Neogens Soleris® general microbial detection system exhibited strong growth in the quarter. The Soleris system allows for the accurate detection of spoilage organisms, such as yeast and mold, in much less time than traditional methods.
Scotland-based Neogen Europe continued to experience strong growth, up 16% in the quarter, as Neogens food safety products furthered market share gains throughout the European Union. The companys Mexican subsidiary recorded an 87% sales increase compared to the prior year quarter, and Neogens new subsidiary in Brazil also experienced strong revenue growth in the quarter.
Neogens enhanced Reveal® line of tests for foodborne pathogens, including Salmonella, Listeria, and E. coli O157:H7, continued its sales growth, with each test recording sizable sales increases in the quarter. Sales of Neogens enhanced BetaStar® test to detect antibiotic residues in milk continued their rapid increase.
Neogen Corporation develops and markets products dedicated to food and animal safety. The companys Food Safety Division markets dehydrated culture media, and diagnostic test kits to detect foodborne bacteria, natural toxins, genetic modifications, food allergens, drug residues, plant diseases and sanitation concerns. Neogens Animal Safety Division markets a complete line of diagnostics, veterinary instruments, veterinary pharmaceuticals, nutritional supplements, disinfectants, and rodenticides.
NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED OPERATING DATA
(In thousands, except for per share and percentages)
Quarter ended Feb. 28 | Nine months ended Feb. 28 |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
||||||||||||||||
Food Safety |
$ | 20,634 | $ | 19,718 | $ | 64,226 | $ | 55,639 | ||||||||
Animal Safety |
21,601 | 14,115 | 64,862 | 45,791 | ||||||||||||
Total revenue |
42,235 | 33,833 | 129,088 | 101,430 | ||||||||||||
Cost of sales |
21,647 | 16,372 | 63,245 | 48,177 | ||||||||||||
Gross margin |
20,588 | 17,461 | 65,843 | 53,253 | ||||||||||||
Other expenses |
||||||||||||||||
Sales & marketing |
7,044 | 6,795 | 22,060 | 19,172 | ||||||||||||
Administrative |
3,677 | 3,391 | 11,253 | 9,473 | ||||||||||||
Research & development |
1,802 | 1,526 | 5,240 | 4,687 | ||||||||||||
Total other expenses |
12,523 | 11,712 | 38,553 | 33,332 | ||||||||||||
Operating income |
8,065 | 5,749 | 27,290 | 19,921 | ||||||||||||
Other income (expense) |
(222 | ) | 32 | (712 | ) | 66 | ||||||||||
Income before tax |
7,843 | 5,781 | 26,578 | 19,987 | ||||||||||||
Income tax |
2,900 | 1,900 | 9,700 | 7,100 | ||||||||||||
Net income |
$ | 4,943 | $ | 3,881 | $ | 16,878 | $ | 12,887 | ||||||||
Net income per diluted share |
$ | 0.21 | $ | 0.17 | $ | 0.71 | $ | 0.56 | ||||||||
Other information: |
||||||||||||||||
Shares to calculate per share |
23,934 | 23,188 | 23,720 | 23,013 | ||||||||||||
Depreciation & amortization |
$ | 1,357 | $ | 1,120 | $ | 3,941 | $ | 3,147 | ||||||||
Interest income |
13 | 34 | 70 | 68 | ||||||||||||
Gross margin (% of sales) |
48.7 | % | 51.6 | % | 51.0 | % | 52.5 | % | ||||||||
Operating income (% of sales) |
19.1 | % | 17.0 | % | 21.1 | % | 19.6 | % | ||||||||
Revenue increase vs. FY 2010 |
24.8 | % | | 27.3 | % | | ||||||||||
Net income increase vs. FY 2010 |
27.4 | % | | 31.0 | % | |
NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
Feb. 28 2011 |
May 31 2010 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash & investments |
$ | 47,627 | $ | 22,806 | ||||
Accounts receivable |
29,459 | 27,433 | ||||||
Inventory |
31,397 | 31,316 | ||||||
Other current assets |
4,248 | 4,465 | ||||||
Total current assets |
112,731 | 86,020 | ||||||
Property & equipment |
21,209 | 19,180 | ||||||
Goodwill & other assets |
75,217 | 75,033 | ||||||
Total assets |
$ | 209,157 | $ | 180,233 | ||||
Liabilities & Stockholders Equity |
||||||||
Current liabilities |
$ | 20,223 | $ | 17,033 | ||||
Long-term debt |
| | ||||||
Other long-term liabilities |
10,576 | 10,147 | ||||||
Stockholders equity-shares outstanding |
||||||||
23,190 in Feb. & 22,625 in May |
178,358 | 153,053 | ||||||
Total liabilities & stockholders equity |
$ | 209,157 | $ | 180,233 |
Certain portions of this news release that do not relate to historical financial information constitute forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. Actual future results and trends may differ materially from historical results or those expected depending on a variety of factors listed in Managements Discussion and Analysis of Financial Condition and Results of Operations in the Companys most recently filed Form 10-K.
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