UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 21, 2016
NEOGEN CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
MICHIGAN | 0-17988 | 38-2367843 | ||
620 Lesher Place Lansing, Michigan | 48912 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code 517-372-9200
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On December 21, 2016, Neogen Corporation issued a press release announcing results of operations for its fiscal 2017 second quarter and six month periods ended November 30, 2016. A copy of the press release is attached as Exhibit 99.1 to this report. This Form 8-K and the attached exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not incorporated by reference into any filing of the Registrant, whether made before or after the date of this report, regardless of any general incorporation language in the filing.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits |
99.1 Press Release dated December 21, 2016
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NEOGEN CORPORATION | ||||||
(Registrant) | ||||||
Date: December 22, 2016 | ||||||
/s/ Steven J. Quinlan | ||||||
Steven J. Quinlan | ||||||
Vice President & CFO |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: | Steve Quinlan, Vice President & CFO | |
Neogen Corporation, 517/372-9200 |
Neogen reports 23% increase in net income
LANSING, Mich., Dec. 21, 2016 Neogen Corporation (NASDAQ: NEOG) announced today that net income for the second quarter of its 2017 fiscal year, which ended Nov. 30, increased 23% to $11,151,000, or $0.29 per fully diluted share, from $9,073,000, or $0.24 per share, in fiscal 2016. Current year-to-date net income was $21,032,000, or $0.55 per share, compared to $18,396,000, or $0.49 per share, for the same period a year ago.
Revenues for the second quarter of fiscal 2017 increased 14% to $90,717,000, from the previous years second quarter revenues of $79,610,000. This increase was aided in part by recent acquisitions. The quarterly revenue and net income results represent records for the 34-year-old company. Year to date, fiscal 2017 revenues increased 13% to $174,362,000 from fiscal 2016s $154,471,000.
Our second quarter shows Neogens growth strategies continue to provide solid results, as we expanded our core business and efficiently integrated acquisitions, said James Herbert, Neogens chief executive officer and chairman. We view these strong results as another snapshot of Neogens growth capabilities. We take pride in our outstanding sustained profitability, which allows us to capitalize on growth opportunities.
The second quarter was the 99th of the past 104 quarters that Neogen reported revenue increases as compared with the previous year including all consecutive quarters in the last 11 years.
We are pleased to report that a significant portion of our second quarter growth was due to increases in sales of key products, including natural toxin and food allergen diagnostics in our Food Safety segment, and genomic and drug testing in our Animal Safety segment, said Richard Calk, Neogens president and chief operating officer. DON outbreaks in the U.S., Canadian and European grain harvests created significant opportunities for existing product lines, and we were able to quickly ramp up production to meet the demand. We believe our quick response to the outbreaks is a good example of the organizational strength that sets us apart from our competitors.
Expressed as a percentage of sales, operating income was 18.6% for the second quarter, compared to 18.4% in the same quarter a year ago. Neogens gross margin was 48.1% of sales in its second quarter of the current year, compared to 48.0% recorded in the same quarter of the prior fiscal year.
Although Neogen continues to experience adverse currency translations, especially relating to devaluations of the British pound and Mexican peso, we continue to generate the cash necessary to invest in products and personnel to achieve our goals for continued growth, said Steve Quinlan, Neogens chief financial officer. Our balance sheet, with no debt and a strong cash position, will also allow us to pursue our growth strategies moving forward.
Neogens Animal Safety segment reported a revenue increase of 18%, due in part to the acquisitions of Preserve International in May 2016 and Virbacs rodenticides in December 2015. Sales of the companys small animal supplements decreased substantially in the quarter of the current year when compared to the same period last year, due to the current market withdrawal of its canine thyroid replacement product. Sales of Neogens rodenticides increased approximately 16% in the current quarter compared to the prior year, and the companys sales of rapid tests to detect drug residues in forensic samples rose 59% compared to the prior year quarter.
Revenues for the companys Food Safety segment increased 9% during the quarter compared to the prior years second quarter, aided in part by the acquisition of Deoxi. Sales of Neogens rapid tests for food allergens, such as milk and peanuts, continued their strong performance in the second quarter, growing 20% compared to the prior year. Growth in this product line continues to be aided by increasing global regulatory efforts and consumer demand for products free of food allergens.
Sales of Neogens rapid tests to detect natural toxins, which consist primarily of tests to detect mycotoxins produced by mold growth on corn and wheat, increased 27% in the second quarter compared to the prior year. This increase was largely due to the increased sales of tests to detect deoxynivalenol (a.k.a., DON) and zearalenone in grain grown in the U.S., Canada and Europe. A bumper crop of corn, which necessitated the storage of harvested corn in temporary, non-enclosed conditions, is thought to have contributed to the increased mold growth, and creation of increased toxins.
Revenues from Neogens worldwide animal genomics business increased 31% in the second quarter of fiscal 2017 compared to the prior year. This growth was primarily the result of share gains in the cattle and poultry markets, and projects on goats and sheep. The increased testing capability gained through expansion of the companys testing facilities in Scotland also aided the growth, as did the acquisition of Brazil-based Deoxi in April 2016.
Revenues from Neogens Scotland-based subsidiary increased 10% in U.S. dollars, but rose 33% in local currency, for the second quarter of the 2017 fiscal year. The increase was due to higher sales of mycotoxin test kits in response to a DON outbreak in Europe, and a substantial increase in genomics revenues, when compared to the prior year. All processes, procedures and equipment in Neogen Europes new laboratory are now a carbon copy of Neogens flagship GeneSeek laboratory in Lincoln, Nebraska which is the largest animal genomics laboratory in the world. Revenues from Neogens Mexican subsidiary declined 11% in dollars for the second quarter of fiscal 2017 compared to the prior year as the peso devalued against the dollar, while revenues from the companys Brazilian subsidiary increased 93%, due to significant sales increases of forensic test kits and Acumedia® dehydrated culture media, and, to a lesser extent, the reals recovery against the dollar.
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, food allergens, drug residues, plant diseases and sanitation concerns. Neogens Animal Safety Division is a leader in the development of animal genomics along with the manufacturing and distribution of a variety of animal healthcare products, including diagnostics, pharmaceuticals, veterinary instruments, wound care and disinfectants.
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.
NEOGEN CORPORATION UNAUDITED SUMMARIZED CONSOLIDATED OPERATING DATA
(In thousands, except for per share and percentages)
Quarter ended Nov. 30 | Six months ended Nov. 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue |
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Food Safety |
$ | 40,761 | $ | 37,254 | $ | 79,764 | $ | 71,714 | ||||||||
Animal Safety |
49,956 | 42,356 | 94,598 | 82,757 | ||||||||||||
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Total revenue |
90,717 | 79,610 | 174,362 | 154,471 | ||||||||||||
Cost of sales |
47,126 | 41,386 | 90,292 | 78,455 | ||||||||||||
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Gross margin |
43,591 | 38,224 | 84,070 | 76,016 | ||||||||||||
Operating expenses |
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Sales & marketing |
15,687 | 14,203 | 30,484 | 27,774 | ||||||||||||
Administrative |
8,284 | 6,791 | 16,546 | 13,543 | ||||||||||||
Research & development |
2,768 | 2,618 | 5,446 | 5,192 | ||||||||||||
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Total operating expenses |
26,739 | 23,612 | 52,476 | 46,509 | ||||||||||||
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Operating income |
16,852 | 14,612 | 31,594 | 29,507 | ||||||||||||
Other income (expense) |
(81 | ) | (420 | ) | 411 | (876 | ) | |||||||||
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Income before tax |
16,771 | 14,192 | 32,005 | 28,631 | ||||||||||||
Income tax |
5,600 | 5,050 | 10,900 | 10,200 | ||||||||||||
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Net income |
$ | 11,171 | $ | 9,142 | $ | 21,105 | $ | 18,431 | ||||||||
Net loss (income) attributable to non-controlling interest |
(20 | ) | (69 | ) | (73 | ) | (35 | ) | ||||||||
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Net income attributable to Neogen Corp |
$ | 11,151 | $ | 9,073 | $ | 21,032 | $ | 18,396 | ||||||||
Net income attributable to Neogen Corp per diluted share |
$ | 0.29 | $ | 0.24 | $ | 0.55 | $ | 0.49 | ||||||||
Other information: |
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Shares to calculate per share |
38,262 | 37,868 | 38,183 | 37,810 | ||||||||||||
Depreciation & amortization |
$ | 3,560 | $ | 2,960 | $ | 7,038 | $ | 5,680 | ||||||||
Interest income |
296 | 51 | 419 | 119 | ||||||||||||
Gross margin (% of sales) |
48.1 | % | 48.0 | % | 48.2 | % | 49.2 | % | ||||||||
Operating income (% of sales) |
18.6 | % | 18.4 | % | 18.1 | % | 19.1 | % | ||||||||
Revenue increase vs. FY 2016 |
14.0 | % | 12.9 | % | ||||||||||||
Net income vs. FY 2016 |
22.9 | % | 14.3 | % |
NEOGEN CORPORATION SUMMARIZED CONSOLIDATED
BALANCE SHEET DATA
(In thousands)
Nov. 30 | May 31 | |||||||
2016 | 2016 | |||||||
(Unaudited) | (Audited) | |||||||
Assets |
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Current assets |
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Cash & investments |
$ | 142,106 | $ | 107,796 | ||||
Accounts receivable |
64,902 | 67,652 | ||||||
Inventory |
71,683 | 64,371 | ||||||
Other current assets |
9,710 | 10,182 | ||||||
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Total current assets |
288,401 | 250,001 | ||||||
Property & equipment, net |
55,533 | 54,683 | ||||||
Goodwill & other assets |
143,377 | 147,031 | ||||||
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Total assets |
$ | 487,311 | $ | 451,715 | ||||
Liabilities & Equity |
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Current liabilities |
$ | 33,869 | $ | 28,598 | ||||
Long-term liabilities |
18,669 | 18,956 | ||||||
Equity: Shares outstanding 37,971 in Nov. & 37,568 in May |
434,773 | 404,161 | ||||||
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Total liabilities & equity |
$ | 487,311 | $ | 451,715 |
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