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• Revenue: $231 million for the second quarter.

• Core Revenue Growth: 3.5% for the quarter, excluding foreign currency, acquisitions, and discontinued product lines.

• Food Safety Segment Revenue: $164 million, flat compared to the prior year due to FX impact.

• Animal Safety Segment Revenue: $67 million, with core revenue growth of 3.2%.

• Gross Margin: 49%, a decrease of 190 basis points from the previous year.

• Adjusted EBITDA: $51 million, representing a margin of 22.2%.

• Adjusted Net Income: $24 million.

• Adjusted Earnings Per Share: $0.11.

• Cash Position: $140 million at the end of the quarter.

• Gross Debt: $900 million, with approximately 60% at a fixed rate.

• Free Cash Flow: Improved by approximately $80 million compared to Q1.

• Warning! GuruFocus has detected 4 Warning Signs with NEOG.

Release Date: January 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Neogen Corp (NASDAQ:NEOG) reported core revenue growth of 3.5% for the second quarter, driven by improvements in both food safety and animal safety segments.

• The company saw significant progress in its food safety segment, with core revenue growth of nearly 4%, led by biosecurity products and bacterial sanitation products.

• Neogen Corp (NASDAQ:NEOG) is leveraging its broad product portfolio to address increasing regulatory focus on food safety, particularly in response to recent food contamination incidents.

• The company is making strides in its restructuring efforts, particularly in its genomics business, to drive higher profitability and focus on large animal offerings.

• Neogen Corp (NASDAQ:NEOG) is on track to reach prior production levels for its relocated sample collection production by the end of the third quarter, which should help in recapturing market share.

Negative Points

• Neogen Corp (NASDAQ:NEOG) faced a decline in its global genomics revenue, driven by ongoing weakness in the companion animal side of the business.

• The company experienced a negative impact from foreign exchange, which was a headwind of 250 basis points, affecting overall revenue growth.

• Gross margin decreased by 190 basis points year-over-year, primarily due to higher shipping and distribution costs and elevated inventory impairments.

• The ramp-up of sample collection production has taken longer than anticipated, impacting revenue as the company has been unable to fully meet demand.

• Neogen Corp (NASDAQ:NEOG) reported a significant non-cash goodwill impairment charge related to the acquisition of the former 3M Food Safety Division, affecting GAAP net income.