healthmedicinet

Neogen Corporation (NASDAQ: NEOG) announced today that its revenues for the third quarter of FY 2014, which ended Feb. 28, increased 21% to $61,996,000, from the previous year’s third quarter revenues of $51,055,000. Year to date, FY 2014 revenues increased 19% to $180,143,000 from FY 2013?s $151,522,000.  

Third quarter net income was $6,575,000, compared to the prior year’s $6,652,000. Adjusted for a 3-for-2 stock split effective Oct. 31, 2013, earnings per share in the current quarter were $0.18, compared to $0.18 a year ago. Current year-to-date net income was $20,621,000, or $0.56 per share, compared to $20,158,000, or $0.55 per share, for the same period a year ago.

The third quarter was the 88th of the past 93 quarters that Neogen reported revenue increases as compared with the previous year — including all consecutive quarters in the last eight years.

“We are pleased to report our solid third quarter revenue results,” said James Herbert, Neogen’s chief executive officer and chairman. “Our third quarter acquisition of the Chem-Tech insecticide business, and other recent strategic moves, have increased the depth and breadth of Neogen’s food security product portfolio. This continued strong top line growth has penalized bottom line results, due in part to changing product mix and integration costs.”

“Similar to our second quarter, the current year’s third quarter faced an extremely tough comparison against the previous year quarter when our gross margins were driven sharply higher because of very profitable sales of mycotoxin test kits to defend against toxins in grain caused by weather conditions,” said Steve Snyder, Neogen’s president and chief operating officer. “However, our organic growth of food safety products was 11%, with attractive margins.”

Neogen’s gross margin was 49.5% of sales in its third quarter, compared to 53.5% of sales for FY 2013?s third quarter. This decrease was due almost entirely to the change in the company’s overall product mix. The company believes that the current product mix will remain fairly constant for the near term.

Sales and marketing expenses rose by 14% during the period due to increases in personnel related costs, higher marketing and advertising activity, and shipping cost increases resulting from increased volume. General and administrative costs rose by 23%, with the largest components of the increase being personnel related expenses, amortization of intangible assets related to business acquisitions, higher stock option expense and legal fees.  Research and development rose by 6% for the quarter. Operating income rose to $10.3 million, an increase of 6% compared to the same period a year ago.

“As the company absorbs our recent acquisitions, we will continue to manage the product lines and related inventories, and expect to gain operating efficiencies as we more fully integrate the businesses,” said Steve Quinlan, Neogen’s chief financial officer. “Our cash flow generation has allowed us to continue to invest in the business, and also gives us flexibility as additional investment opportunities arise.”