Post Earnings Coverage as Neogen Reports Record Q1 Earnings and Revenue

LONDON, UK / ACCESSWIRE / September 30, 2016 / Active Wall St. announces its post-earnings coverage on Neogen Corp. (NASDAQ: NEOG). The company reported its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 27th, 2016. The maker of medical testing kits announced that the reported quarter was the 98th of the past 103 quarters that Neogen posted revenue increases compared with the previous year, including all consecutive quarters in the last 11 years. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the three months period ended on 31st, August, 2016, Neogen reported revenues of $83.65 million, a 12% increase compared to revenues of $74.86 million in the year ago quarter; below analysts’ expectations of $86 million. During the reported quarter, the company’s net income increased 6% to $9.88 million, or $0.26 per share, compared to net income of $9.32 million, or $0.25 per share, in Q1 FY16. The company’s results surpassed Wall Street’s expectations of $0.25 per share. The revenues and net income represent first quarter records for Neogen.

“The first quarter was a good start for our 2017 fiscal year. We are where we want to be, and are continuing to establish our presence throughout our worldwide markets,” said James Herbert, Neogen’s chief executive officer and chairman.

Segment Results

During Q1 FY17, revenues for Neogen’s Food Safety segment increased 13% to $39.00 million on y-o-y basis, aided in part by the acquisitions of Lab M, acquired in August 2015, and Deoxi, purchased in April 2016. Sales of the Michigan-based company’s rapid tests for food allergens, such as gluten and peanuts, increased 17% in Q1 FY17, compared to the prior year. Overall organic growth for the Food Safety segment was 9% for Q1 FY17. In addition to the 55% improvement in sales of the company’s BioLumix and Soleris test systems, the company’s sales of its environmental sanitation testing products, which includes its AccuPoint® Advanced ATP Sanitation Monitoring System, increased 9% on y-o-y basis in Q1 FY17.

Neogen’s international operations continued to grow despite the impact of adverse currency translations. Revenues from Neogen’s Scotland-based subsidiary increased 24%, Mexico-based Neogen Latinoamerica’s sales increased 28%, Neogen do Brasil’s revenues increased 43%, and Neogen China’s sales increased 21%, all in U.S. dollars.

Neogen’s Animal Safety segment reported a revenue increase of 10% to $44.664 million, driven by acquisitions done within the past year. Sales of the company’s rodenticides increased approximately 17% in the reported quarter compared to Q1 FY16, and the company’s sales of rapid tests to detect drug residues in forensic samples increased 38% on y-o-y, attributed to new business in Brazil.

Operating Metrics

For Q1 FY17, Neogen’s gross margin was 48.4% of sales, compared to the 50.5% recorded in Q1 FY16. Factors contributing to the decline in gross margin included adverse currency translations, incremental revenue from acquisitions that have gross margins lower than the company’s historical average, and the loss of significant sales of a small animal supplement with a high margin that was removed from the market. Operating expenses increased 12% compared with Q1 FY16; operating income for Q1 FY17 was $14.74 million, or 17.6% of sales, compared to $14.90 million, or 19.9%, a year ago.

Balance Sheet

During Q1 FY17, Neogen generated $20.3 million in cash from operations aided by a 12% decrease in accounts receivable and an increase in accounts payable. The company invested $3.4 million in property and equipment during the reported quarter. Inventory balances increased $5.4 million from year-end levels as Neogen continue to work on minimizing back orders while also improving its inventory turnover. As of August 31st, 2016, Neogen had cash & investments worth $129.23 million compared to $107.80 million of cash & investments as of May 31st, 2016.

Stock Performance

On Thursday, September 29, 2016, Neogen’s shares were down 1.71%, finishing the day at $53.95 with volume of 179.17 thousand shares exchanging hands by the close of the trading session. The stock has advanced 10.10% and 19.92% in the last t six months and past twelve months, respectively. Shares of the company have a PE ratio of 55.91.

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