December 23, 2009

Neogen posts healthy growth in Q2 net income

Neogen Corporation announced its net income for the second quarter of fiscal year 2010, which ended November 30, increased 18% to US$4.61 million from the previous year's second quarter.

Second quarter revenues increased 13% to US$35.25 million compared to the prior year's US$31.187 million. Year-to-date revenues for the first half of fiscal year 2010 rose 13% to US$67.6 million from fiscal year 2009's US$$59.9 million. Current year-to-date net income for the same six-month period increased 18% to US$$9 million from US$7.634 million in fiscal year 2009.

Operating income increased to 20.5% in the current quarter from the previous year's comparable quarter of 18.8%. On a six-month basis, operating income is 21% of sales compared to 19.2% in the prior year. Gross margins in the quarter improved to 52.5% of sales in fiscal year 2010, compared to 51.7% in the prior year's second quarter. 

Neogen's Food Safety Division led the company's second quarter revenue increase, with sales up 20% from US$15.4 million in fiscal year 2009 to US$18.446 million in fiscal year 2010. Year-to-date, the Food Safety Division's revenues were up 16% to US$35.9 million.

Neogen's line of drug residue tests, led by sales of tests for dairy antibiotic residues increased significantly due to increased sales of higher value test kits, overall unit volume growth, and a relatively positive currency exchange rate for test kits sold in Euros. Cool, wet weather conditions experienced throughout parts of the US corn belt during the summer and fall also led to sharp increases in demand for test kits to detect the presence of mycotoxins, especially vomitoxin.

Neogen's Animal Safety Division second quarter revenues increased 6% to US$16.8 million compared to US$15.81 million in the previous fiscal year. For fiscal year 2010's first half, the Animal Safety Division's sales increased 9% over the comparable period last year to US$31.677 million. Sales of Neogen's rodenticides, cleaners and disinfectants in the quarter increased 22% over the prior year.

The internal development and release of four new products in the second quarter, and the May 2009 acquisition of International Diagnostic Systems, led to a 26% quarter-over-quarter increase in sales of Animal Safety's diagnostic products. Sales of test kits used to detect drugs of abuse in the forensics market and sales derived from contract research and supply agreements both achieved significant growth.

Neogen's acquisition of the BioKits food safety business of Gen-Probe Incorporated was completed on the first day of Neogen's third quarter, December 1. The acquisition includes more than 50 test kits for food allergens, meat and fish speciation, and plant genetics. The UK-based business is now a part of Neogen Europe Ltd., which is headquartered in Ayr, Scotland.

Neogen Corporation develops and markets products dedicated to food and animal safety. The company's Animal Safety Division markets a complete line of diagnostics, veterinary instruments, veterinary pharmaceuticals, nutritional supplements, disinfectants, and rodenticides.