Lansing-based Neogen Corp. (NASDAQ: NEOG) Wednesday reported a 24 percent increase in net income on a 26 percent increase in revenue for its first fiscal quarter ended Aug. 31.
Net income was $3.7 million or 25 cents a share, up from $3 million or 21 cents a share a year earlier. Revenue was $28.8 million. Both figures this year are records for the 26-year-old company.
The quarter also marked the 62nd consecutive profitable quarter from operations for the company, and was the 66th of the past 71 quarters when Neogen reported revenue increases as compared with the previous year.
"Our first quarter again demonstrated our consistent delivery of the exceptional performance investors have come to expect from us," said James Herbert, Neogen's chairman and CEO. "Our outstanding first quarter results are further evidence of the operational strength throughout Neogen. The strong growth we are reporting today is the result of the efficient assimilation of acquisitions made within the previous year, and significant growth in our core product lines."
In spite of incremental costs associated with integrating three acquisitions during its last 12 months, Neogen's operating income increased 24 percent in the first quarter of the fiscal year to nearly $5.7 million, 20 percent of revenue.
"We continue to make strides in leveraging sales obtained through acquisitions that have enabled us to drive down our sales and marketing, and general and administrative expenses as percentages of our total revenues," said Lon Bohannon, Neogen's president and COO. "A more significant highlight from our first quarter was the resurgence of same-store sales growth in our Animal Safety group and especially within our Hacco subsidiary. Organic sales growth for Animal Safety was over 13 percent for the quarter led by a 14 percent increase in domestic sales of Hacco's existing rodenticide products."
Bolstered by the acquisitions of Kane veterinary products in August 2007, Rivard detectable veterinary needles in December 2007 and DuPont disinfectants in June 2008, Neogen's Animal Safety Division led the company's first quarter revenue growth, with a sales increase of 45 percent from $9.2 million last year to $13.3 million this year. The sales increase included growth in products sold to veterinarians and large food-animal producers and processors, and a continued increase in sales of diagnostic products.
Neogen's Food Safety Division's first quarter revenues increased 13 percent on a quarter-to-quarter comparison, from $13,8 million in the previous fiscal year to $15.5 million. The 13 percent increase in revenues was significant because the Food Safety group faced a difficult comparison with an exceptional first quarter of the prior year. All of the Food Safety Division's increase was organic sales growth.
The current quarter's Food Safety Division revenue increase was led by sales of Neogen's 10-year-old line of diagnostic tests for food allergens, which recorded an exceptionally strong 48 percent increase, with large increases in sales of diagnostic kits for milk, peanut, and egg allergens. The sales spike was driven by new customers, and a number of high-profile food recalls related to food allergens.
Neogen's sales of products used to detect dangerous foodborne pathogens, including E. coli O157:H7, salmonella and listeria, continued their upward trend seen in recent quarters, and were up 14 percent compared to last year. Sales of the company's tests for natural toxins increased by 12 percent in the quarter, led by increases in sales of test kits for histamine, aflatoxin, and deoxynivalenol. Going forward, sales of one of Neogen's key product lines, its rapid diagnostics for the detection of DON in grains, should be bolstered by the release of the new Veratox for DON 2/3. The new USDA-approved test combines the ease and accuracy of previous versions of the venerable Veratox product line, but returns results in about half the time of its predecessor.
Sales of disposable samplers used with Neogen's AccuPoint ATP sanitation monitoring system increased 25 percent in the current quarter compared to the same period last year. A recent independent market survey indicated more AccuPoint systems have been placed in the last three years around the world than all of the competitors' systems -- combined.
International sales accounted for 42 percent of total first quarter revenues and were helped by the June formation of Neogen's new subsidiary in Mexico to enhance distribution of products in that country, and Central America. In addition, the company's Scotland-based Neogen Europe subsidiary continued its strong performance of recent quarters, recording organic growth of 20 percent, which included significant increases in sales of dehydrated culture media, and Neogen's diagnostic products for mycotoxins and histamine. Neogen's popular histamine diagnostic is used by the seafood industry to ensure the safety of their products, particularly tuna.
More at www.neogen.com.
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