Neogen Net Income Jumps 26%

The Lansing life sciences company Neogen Corp. (Nasdaq: NEOG) announced Tuesday that its net income for its 2010 fiscal year, which ended May 31, increased 26 percent from the previous year to $17.5 million.

Net income in the fiscal year increased to 76 cents a per share, compared to the prior year's 61 cents, adjusted for a 3-for-2 stock split that was effective Dec. 15, 2009.

Neogen's revenues for its fiscal year rose 18 percent to $140.5 million from $118.7 million a year before.

Both revenues and net income for the 2010 fiscal year established new all-time highs for the 28-year-old company.

Neogen's fourth quarter revenues increased 27 percent on a year-to-year comparison to $39.1 million. Net income in the fourth quarter jumped 36 percent to $4.6 million or 20 cents a share, up from $3.4 million or 15 cents a share the year before.

"While our results clearly indicate Neogen's performance has never been better, we are never satisfied," said Neogen chairman and CEO James Herbert. "We view the exceptional results we are reporting today as simply another snapshot of the company's growth. While we take pride in Neogen's outstanding record of sustained profitability, we are mindful of the available opportunities to continue providing more, and better, food and animal safety solutions."

The fourth quarter was the 69th consecutive profitable quarter from operations for the company, and the 73rd quarter of the past 78 quarters to show increased revenues as compared with the previous year -- including the last 21 consecutive quarters.

"While the performances of both of our operating divisions benefitted in the year from immediately accretive acquisitions, both groups also achieved solid organic growth," said Lon Bohannon, Neogen's president and COO. "Same-store sales increased 13 percent in the current year even though many customers continued to face challenges in some of the markets we serve, including the animal protein market. I also believe that the year's exceptional 31 percent increase in operating profit compared to our 18 percent increase in revenues shows that ongoing cost-saving initiatives are continuing to yield positive results."

Neogen's fiscal year operating income increased to 19.1 percent of sales, compared with 17.3 percent in the prior year, and the company's gross margin advanced to 51.9 percent of sales in the current year, compared to 50.1 percent the prior year.

"Neogen's financial performance for the year matched our exceptional revenue and operating performances," said Richard Current, Neogen's CFO. "Our cash flow from operations was an excellent $28 million, and we improved accounts receivable days outstanding and decreased our inventory as a percentage of sales. Our ... revenues from our European operations were basically not affected by conversion to dollars from either the Pound Sterling or Euro."

Neogen's Lansing-based Food Safety Division recorded a fiscal year revenue increase of 25 percent to $76.5 million. An exceptional 22 percent increase in same-store sales and the December 2009 acquisition of Gen-Probe's BioKits food safety business contributed to the division's fiscal year revenue gain. Organic sales growth in Food Safety was broad-based across multiple market segments and product lines. Cool, wet weather experienced in the U.S. corn belt in 2009 led to sharp increases in demand for tests to detect mycotoxins.

Strong increases in organic sales and the BioKits acquisition pushed Neogen's food allergen product line to another outstanding year of growth, with sales increasing by more than 50 percent over the prior year. Dramatic increases in sales of each of Neogen's allergen tests are attributable to food producers increasing efforts to ensure that inadvertent allergenic ingredients do not contaminate non-allergenic foods.

Neogen's Scotland-based Neogen Europe subsidiary recorded a revenue increase of 24 percent in the current year compared to the prior year. Like its Lansing-based Food Safety counterpart, Neogen Europe's revenue increase was broad-based, including sharp increases in sales of Neogen's food safety diagnostics and Acumedia dehydrated culture media. Neogen's fiscal year Food Safety performance was also aided by the October 2009 release of an improved version of its popular AccuPoint ATP Sanitation Monitoring System, and a subsequent increase in sales of associated disposable AccuPoint samplers for use with the system.

Revenues from the company's Animal Safety segment grew 11 percent in 2010 compared to the prior year to $64.1 million. While the successful integrations of the acquired IDS drug residue diagnostics business and GeneSeek agricultural genetics laboratory service business contributed to Animal Safety's revenue growth for the year, sales of existing product lines achieved solid organic growth.

Even though a number of Neogen's Animal Safety customers continue to feel the effects of a depressed animal protein market, this division did experience strong increases in sales for a number of products. Sales of rodenticides into domestic markets increased 27 percent on a year-to-year comparison, and sales of rodenticides into international markets increased 25 percent, as Neogen continues to grow its market share, and new products gain market acceptance. Sales of Neogen's line of cleaners and disinfectants also grew 10 percent in the year. The company's efforts to market its disinfectants and rodenticides as synergistic biosecurity solutions are gaining more traction.

Sales of Neogen's veterinary biologics, which include an equine vaccine against botulism and immune stimulant products, were up 18 percent in the fourth quarter compared to the prior year quarter contributing to a 6 percent increase for the year. Sales of vitamin injectables into the livestock market were up 13 percent over the prior year. Evidence of the synergistic nature of the acquired IDS diagnostic tests to pre-existing Neogen products was shown by an 18 percent increase in FY 2010 in same-store sales of tests to detect drug residues for the forensic market.

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

More at www.neogen.com.

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