Post Earnings Coverage as Neogen's Q2 Net Income Rose 23 Percent
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Upcoming AWS Coverage on Surmodics Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 30, 2016 / Active Wall St. announces its post-earnings coverage on Neogen Corp. (NASDAQ: NEOG). The Company released its financial results for the second quarter fiscal 2017 (Q2 FY17) on December 21, 2016. The Lansing, Michigan-based Company reported a 23% y-o-y growth in its net income as its revenue rose 14% y-o-y during the reported quarter; both net income and revenue outperformed market forecasts. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Neogen's competitors within the Diagnostic Substances space, Surmodics, Inc. (NASDAQ: SRDX), reported on November 16, 2016, its results for its fiscal 2016 fourth quarter, ended September 30, 2016. AWS will be initiating a research report on Surmodics in the coming days.
Today, AWS is promoting its earnings coverage on NEOG; touching on SRDX. Get our free coverage by signing up to:
Neogen reported total revenues of $90.72 million in Q2 FY17 which came in higher than $79.61 million recorded in Q2 FY16. Total revenues outperformed market forecasts of $89.2 million. The Company attributed this quarterly growth partly to recent acquisitions. Furthermore, the reported quarterly revenue growth was the 99th year-over-year growth in the past 104 quarters, including all consecutive quarters in the last 11 years.
The maker of medical testing kits reported net income attributed to Neogen of $11.15 million, or $0.29 per diluted share in Q2 FY17, compared to $9.14 million, or $0.24 per diluted share, in Q2 FY16. Furthermore, diluted net income outperformed market expectations of $0.28 per diluted share.
Richard Calk, President and CEO of Neogen Corp., stated in the earning release:
"We are pleased to report that a significant portion of our second quarter growth was due to increases in sales of key products, including natural toxin and food allergen diagnostics in our Food Safety segment, and genomic and drug testing in our Animal Safety segment."
Operating Metrics
During the reported quarter, the Company's gross margin was $43.59 million, or 48.1% of sales, compared to $38.22 million, or 48.0% of sales, in the prior year comparable quarter. In Q2 FY17, R&D expenses rose 6% to $2.77 million from $2.62 million in the last year's same quarter, as the Company continued its active investment in new product development, primarily in the Food Safety segment. The Company's total operating expenses increased to $26.74 million in Q2 FY17 from $23.61 million in Q2 FY16. Furthermore, the Company's operating income came in at $16.85 million, or 18.6% of sales in Q2 FY17, compared to $14.61 million, or 18.4% of sales in the year ago corresponding period.
Segment-wise
Neogen's Animal Safety segment reported a revenue increase of 18% to $49.96 million in Q2 FY17 from $42.36 million in Q2 FY16. The Company stated that the segment revenue growth was partly due to the acquisitions of Preserve International in May 2016 and Virbac's rodenticides in December 2015.
Aided in part by the acquisition of Deoxi, revenues for Neogen's Food Safety segment increased 9% during Q2 FY17 to $40.76 million from $37.25 million in the year ago comparable period.
Cash Flow and Liquidity
The Company has generated about $9.3 million in cash from operations in Q2 FY17 and invested about $2.8 million of the same in property and equipment. Neogen had cash and investment balance of $142.11 million at the close of its books on November 30, 2016, versus cash and investment balance worth $107.80 million as on May 31, 2016. Additionally, the Company's long-term liabilities stood at $18.67 million as on November 30, 2016, compared to $18.96 million as on May 31, 2016.
Acquisition Spree
The Company has made more than 35 acquisitions since year 2000 and all of these are still a part of revenue production. Some of the recent acquisitions are as follows:
On December 27, 2016, Neogen announced that it had acquired Brazil-based Rogama Indústria e Comércio Ltda., a private company that develops and manufactures rodenticides and insecticides, and which has annual revenues of approximately $8 million.
The Company announced on December 01, 2016, that it had acquired UK-based Quat-Chem Ltd, a chemical company specializing in the development, manufacture, and sale of agricultural, industrial, and food processing biocidal hygiene products, including cleaners and disinfectants. The acquired company has annual revenues of approximately $12 million.
Stock Performance
On Thursday, the stock closed the trading session at $66.46, marginally declining 0.11% from its previous closing price of $66.53. A total volume of 78.37 thousand shares have exchanged hands. Neogen's stock price advanced 23.19% in the past three months, 18.15% in the last six months, and 14.72% in the previous twelve months. Moreover, the stock surged 17.59% since the start of the year. The stock currently has a market cap of $2.46 billion.
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