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) March 21, 2017
NEOGEN CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | 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 March 21, 2017, Neogen Corporation issued a press release announcing results of operations for its fiscal 2017 third quarter and nine month periods ended February 28, 2017. 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 March 21, 2017 |
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: March 21, 2017 | ||||||
/s/ Steven J. Quinlan | ||||||
Steven J. Quinlan | ||||||
Vice President & CFO |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: | Steven J. Quinlan, Vice President and CFO | |
517/372-9200 |
Neogen reports 24% increase in net income
LANSING, Mich., March 21, 2017 Neogen Corporation (NASDAQ: NEOG) announced today that its net income for the third quarter of fiscal 2017, which ended Feb. 28, increased 24% to $10,287,000, when compared to the prior years $8,311,000. Earnings per share in the current quarter were $0.27, compared to $0.22 a year ago. Current year-to-date net income increased 17% over prior year to $31,320,000, or $0.82 per share, compared to $26,707,000, or $0.71 per share, for the same period a year ago.
Revenues for the third quarter of fiscal 2017 increased 15% to $88,385,000, from the previous years third quarter revenues of $76,725,000. The quarterly revenue and net income results represent third quarter records for the 34-year-old company. Year to date fiscal 2017 revenues increased 14% to $262,747,000 from fiscal 2016s $231,196,000.
We are pleased to report another record third quarter for our 34-year-old company, said James Herbert, Neogens chief executive officer and chairman. This is especially noteworthy since international currency translations reduced both revenues and net income. However, we continue to grow in our mission-critical countries, regardless of the current currency environment, as they will be even more important to Neogens strategic plan in the years ahead.
The third quarter was the 100th of the past 105 quarters that Neogen reported revenue increases as compared with the previous year including all consecutive quarters in the last 11 years.
Our third quarter was yet another example of Neogen being there to meet the increased product needs of our customers, said Richard Calk, Neogens president and chief operating officer. In the quarter we continued to see increased sales of our diagnostic test kits as we responded to an outbreak of the mycotoxin DON in corn and wheat crops, and increased demand of allergen test kits due to continued food recalls regarding the detection of unlabeled food allergens. On the Animal Safety side, weve expanded our cleaner and disinfectant product offerings, and recorded a strong increase in sales of recently developed genomic products for the dairy industry.
Gross margins were 46.3% in the third quarter, compared to 45.9% for fiscal 2016s third quarter. Factors contributing to the change in gross margin included a favorable shift in product mix, partially offset by adverse currency translations. Operating income was $14.4 million, or 16.2% of sales, in the current quarter, compared to $11.3 million, or 14.7%, in the third quarter of the companys 2016 fiscal year.
We continue to solidify our balance sheet through our strong operating performance, said Steve Quinlan, Neogens chief financial officer. We are using cash generated internally to pursue our varied growth strategies, which include acquisitions and in-house development of new products and services.
Overall organic growth for the company was 5% for the quarter.
In the current year third quarter, revenues for the companys Food Safety segment increased 24% compared to the prior year, due to strength in a number of existing product lines, and to a lesser extent, recent acquisitions. Overall organic growth for the Food Safety segment was 12% for the quarter. The current third quarter Food Safety sales performance was
led by a 29% increase in sales of Neogens rapid tests for natural toxins. Increased testing for the toxins continues to be driven by the 2016 bumper crop of corn in the U.S., Canada and Europe, which necessitated the storage of harvested corn in temporary, non-enclosed conditions conducive to the creation of the molds that create the toxins.
Sales of Neogens test kits to detect food allergens, such as gluten, milk and peanuts, increased 14% in the current third quarter. This increase was aided by increasing global food allergen regulatory efforts, and strong sales of Neogens product to simultaneously detect six tree nuts with one test. Sales of the companys automated spoilage microorganism (e.g., yeast and mold) equipment and vials increased 12% in the current quarter compared to the prior year. These systems use disposable proprietary vials to detect microorganisms of particular importance to the food and nutraceutical industries in a fraction of time of traditional microbiological methods.
Revenues for the companys Animal Safety segment increased 8% during the third quarter compared to the prior year, aided by the May 2016 Preserve acquisition. The companys sales of rapid tests to detect drug residues in forensic samples rose 39% compared to the prior year quarter, due to a significant increase in sales of drug detection kits to commercial labs. Sales of small animal supplements decreased substantially in the current quarter, due to the market withdrawal of a canine product. Sales of Neogens rodenticides also decreased in the quarter, as a rodent outbreak in the Northwest U.S. in the prior year has subsided.
Revenues from Neogens worldwide animal genomics business increased 20% in the third quarter of fiscal 2017 compared to the prior year. This growth was primarily the result of increased testing capability gained through expansion of the companys testing facilities in Scotland, development of popular new genomic testing products, and the acquisition of Brazil-based Deoxi in April 2016. The new products include genomic tests that offer commercial dairy producers essential information on the genetic potential of replacement dairy heifers.
Revenues from Neogens Scotland-based subsidiary increased 31% in British pounds for the third quarter of the 2017 fiscal year; the increase was reduced to 12% when translated to dollars. This growth was due to a substantial comparative increase in genomics revenues, and higher sales of mycotoxin test kits. Revenues from Neogen do Brasil increased 81% in the current quarter, primarily due to significant sales increases of forensic and diagnostic test kits and the reals recovery against the dollar. Neogens subsidiary in China recorded a 68% quarter-over-quarter sales increase, and sales from the companys operations in India and Canada increased significantly compared to the prior year quarter albeit from small bases. Revenues from Neogens Mexican subsidiary declined 2% in U.S. dollars for the quarter compared to the prior year as the peso continued to devalue against the dollar. However, revenues rose 15% in pesos.
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 Feb. 28/29 |
Nine months ended Feb. 28/29 |
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2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue |
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Food Safety |
$ | 42,949 | $ | 34,710 | $ | 123,067 | $ | 106,706 | ||||||||
Animal Safety |
45,436 | 42,015 | 139,680 | 124,490 | ||||||||||||
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Total revenue |
88,385 | 76,725 | 262,747 | 231,196 | ||||||||||||
Cost of sales |
47,505 | 41,529 | 137,797 | 119,985 | ||||||||||||
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Gross margin |
40,880 | 35,196 | 124,950 | 111,211 | ||||||||||||
Operating expenses |
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Sales & marketing |
15,340 | 13,953 | 45,824 | 41,727 | ||||||||||||
Administrative |
8,548 | 7,538 | 25,094 | 21,081 | ||||||||||||
Research & development |
2,641 | 2,451 | 8,087 | 7,642 | ||||||||||||
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Total operating expenses |
26,529 | 23,942 | 79,005 | 70,450 | ||||||||||||
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Operating income |
14,351 | 11,254 | 45,945 | 40,761 | ||||||||||||
Other income (expense) |
1,376 | 385 | 1,788 | (492 | ) | |||||||||||
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Income before tax |
15,727 | 11,639 | 47,733 | 40,269 | ||||||||||||
Income tax |
5,350 | 3,350 | 16,250 | 13,550 | ||||||||||||
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Net income |
$ | 10,377 | $ | 8,289 | $ | 31,483 | $ | 26,719 | ||||||||
Net loss (income) attributable to non-controlling interest |
$ | (90 | ) | $ | 22 | $ | (163 | ) | $ | (12 | ) | |||||
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Net income attributable to Neogen Corp |
$ | 10,287 | $ | 8,311 | $ | 31,320 | $ | 26,707 | ||||||||
Net income attributable to Neogen Corp per diluted share |
$ | 0.27 | $ | 0.22 | $ | 0.82 | $ | 0.71 | ||||||||
Other information: |
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Shares to calculate per share |
38,534 | 37,958 | 38,371 | 37,858 | ||||||||||||
Depreciation & amortization |
$ | 3,653 | $ | 3,149 | $ | 10,691 | $ | 8,829 | ||||||||
Interest income |
271 | 120 | 690 | 238 | ||||||||||||
Gross margin (% of sales) |
46.3 | % | 45.9 | % | 47.6 | % | 48.1 | % | ||||||||
Operating income (% of sales) |
16.2 | % | 14.7 | % | 17.5 | % | 17.6 | % | ||||||||
Revenue increase vs. FY 2016 |
15.2 | % | 13.6 | % | ||||||||||||
Net income vs. FY 2016 |
23.8 | % | 17.3 | % |
NEOGEN CORPORATION SUMMARIZED CONSOLIDATED
BALANCE SHEET DATA
(In thousands)
Feb. 28 | May 31 | |||||||
2017 | 2016 | |||||||
(Unaudited) | (Audited) | |||||||
Assets |
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Current assets |
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Cash & investments |
$ | 124,582 | $ | 107,796 | ||||
Accounts receivable |
67,367 | 67,652 | ||||||
Inventory |
75,396 | 64,371 | ||||||
Other current assets |
9,425 | 10,182 | ||||||
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Total current assets |
276,770 | 250,001 | ||||||
Property & equipment, net |
60,975 | 54,683 | ||||||
Goodwill & other assets |
169,553 | 147,031 | ||||||
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Total assets |
$ | 507,298 | $ | 451,715 | ||||
Liabilities & Equity |
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Current liabilities |
$ | 34,723 | $ | 28,598 | ||||
Other long-term liabilities |
20,919 | 18,956 | ||||||
Equity: Shares outstanding 38,119 in Feb. & 37,568 in May |
451,656 | 404,161 | ||||||
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Total liabilities & equity |
$ | 507,298 | $ | 451,715 |
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