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David Naemura

Thank you, John, and welcome to everyone on the call today. Jumping into the results. Our third quarter revenues were $221 million. Core revenue growth, which excludes the impact of foreign currency, acquisitions and discontinued product lines came in at 20 basis points for the quarter while foreign currency was a headwind of 310 basis points compared to the prior year.
At the segment level, revenues in our Food Safety segment were $153 million in the quarter, down 3.2% compared to the prior year with core revenue growth of 1.5%, offset by the negative impact of FX. The core growth was led by our biosecurity products in the bacterial and general sanitation product category, which benefited from strong growth in pathogen detection products.
In the indicator testing, culture media and other product category, solid growth in our food quality and Petrifilm product lines was partially offset by a decline in sample collection as we continue the process of ramping up the relocated production in our facility. Excluding the headwinds in sample collection, core revenue in the Food Safety segment grew 7%, which we believe reflects a solid underlying business.
Quarterly revenues in the Animal Safety segment were $68 million, which includes a core revenue decline of 2.6% compared to the prior year quarter. Within our Animal Care and other product category, solid growth was driven primarily by small animal supplements with an increase in private label business. This growth was offset mainly by lower sales of vet instruments and disposables.
Our Global Genomics revenue was down mid-single digits on a core basis. Core revenue growth at our differentiated bovine business was offset by declines in other areas and consistent with the focused restructuring we executed in Q2 of this year. From a regional perspective, core revenue growth in the third quarter was mixed.
Growth was again led by Latin America, which saw double-digit growth and a strong performance across most key product categories. Asia Pacific core revenue was up mid-single digits on a year-over-year basis with solid growth in Petrifilm and pathogen detection, partially offset by a decline in sample collection.
Our business in Europe was down mid-single digits on a core basis with growth in cleaners and disinfectants and food quality and nutritional analysis offset by declines in genomics, general sanitation and sample collection as well as Petrifilm, which came down after strong growth in Q2.
In our US and Canada region, which has experienced the largest carryover impact from last year's shipping delays, core revenue was also down mid-single digits compared to the prior year period. Solid growth in food quality and nutritional analysis was offset by declines in most other food safety product categories, including a larger impact in sample collection.
In the Animal Safety segment, solid growth in the biosecurity and animal care products categories was offset by declines in genomics and bed instruments. Gross margin in the third quarter was 49.9%, representing a decrease of 120 basis points from 51.1% in the same quarter a year ago. Excluding integration and restructuring costs as well as the reclassification of certain expenses in the prior year period gross margin, Q3 was down 30 basis points year-over-year, primarily due to lower revenues.
Adjusted EBITDA was $49 million in the third quarter, representing a margin of 22%, roughly flat from Q2 on lower revenue. On a year-over-year basis, the decline in adjusted EBITDA margin was driven primarily by the lower revenue level.
Third quarter adjusted net income and adjusted earnings per share were $21 million and $0.10 respectively, compared to $26 million and $0.12 in the prior year quarter due primarily to the lower adjusted EBITDA and a nominally higher effective tax rate. We ended the quarter with gross debt of $900 million, 61% of which is at a fixed rate and a total cash position of $128 million. Free cash flow in Q3 was an outflow of approximately $14 million representing an improvement of $49 million compared to Q3 of fiscal year 2024.
Net working capital was a $10 million source of cash in the quarter, reflecting some progress on our multiyear improvement journey. Capital expenditures in the quarter were elevated driven in part by some acceleration of spending related to our new Petrifilm plant and production equipment. As John mentioned earlier, last week, we completed the refinancing of the $550 million remaining on our Term Loan A.
We issued a new $450 million Term Loan A with an upsized $250 million revolving facility on which we've drawn $100 million and obviously utilized those funds as part of the payoff of the previous $550 million term loan.
Further, this draw on the facility, which allows us to currently maintain the same $150 million of available liquidity should be taken as indicative of a portion of our near-term expectations for the portfolio actions we've discussed. In addition to extending the maturity of our term loan by over 2.5 years, we were able to realize 60 basis points of interest rate savings.
Moving to our outlook. The market environment softened as the third quarter progressed, and we believe the macroeconomic uncertainty has led to somewhat of a pause taken by many customers and channel partners.
In addition to the uncertain trade environment, grocery inflation, in particular, has persisted and continues to affect the consumer, contributing to the move backwards that we saw in our proxy for global food production.
In Animal Safety, we see healthy channel inventory levels and positive sales out of the channel, but saw a slowdown of sales into some of our larger distributors. We expect these impacts that we saw in Q3 will continue through Q4, when we will also begin to see the impact of tariffs.
We are, therefore, updating our revenue outlook for the year to approximately $895 million. We are accordingly also updating our outlook for adjusted EBITDA to approximately $195 million. With a lower adjusted EBITDA and some acceleration of CapEx, which we now expect to be approximately $100 million, our current view of free cash flow for the year is an outflow of approximately $20 million. We would emphasize that the end market conditions are about as dynamic as we have seen, but we will focus on what is within our control, which includes the near-term actions John has highlighted.
I'll now hand the call back to John for some final thoughts.

John Adent

Thanks, Dave. We view this as a critical period in Neogen's transformation and are focused entirely on improved execution. During this environment of rising macro uncertainty, this means taking decisive action to influence those things that we are within our control.
In addition to FX, there have been two primary things weighing on our results over the last few quarters, genomics and sample collection. And there are clear plans in place to address both.
In the third quarter specifically, these areas were a headwind of over 400 basis points to our consolidated core revenue growth. Through strategic alignment and substantial cost reductions, we are addressing our Genomics business, which has been a meaningful headwind for the better part of two years.
For sample collection, we expect it will take a couple of quarters for the revenue to return to its prior run rate, but production has been restored to prior levels and is now undergoing intense operational scrutiny to ensure the efficiencies improve as quickly as possible.
As we've discussed, this leaves Petrifilm as the final integration work stream, which continues to progress well. The establishment of our own Petrifilm production will be a more gradual transition than the other key integration work streams were, which have either been a lift and shift of production or a cutover from the 3M systems to our own. Once test production and the performance of the equipment have been validated, a process we still expect will begin in the fall of this year. We will start to ramp up our own production on a SKU-by-SKU basis.
The Petrifilm product line consists of a total of 17 SKUs. Once we have a SKU fully validated and running on our own equipment, we will turn off production of that SKU at our transition manufacturing partner. We plan to move through the entire product line that way very gradually one SKU at a time. This will result in some temporary duplicate manufacturing costs to begin to increase in fiscal 2026, which we will dimensionalize to provide for an orderly transition of Petrifilm production.
Key members of the Petrifilm manufacturing engineering team who have done this before are part of the Neogen team, and we currently have employees undergoing advanced training and manufacturing testing in a current Petrifilm facility. We feel good about where things stand today, and we will continue to take all actions available to us to make this as seamless a transition as possible.
We also have taken and will continue to take actions to maintain balance sheet flexibility. The refinancing of our term loan extended the maturity by close to three years and net proceeds we may realize from the portfolio actions we discussed will be prioritized for debt pay down.
Along with the reduced integration CapEx and the resulting improvement in free cash flow, we expect our balance sheet to continue to improve moving forward. Following the completion of the 3M Food Safety transaction, we added a substantial amount of cost to the business to both catch up legacy Neogen capabilities and accommodate the increased size of the business.
For a number of reasons, including FX and market weakness and integration challenges, revenue is currently below the levels that were contemplated when these costs are being added. We took actions in the second quarter to address a portion of these costs mainly in Genomics business.
As mentioned, we will be taking additional actions in this area in Q4. We have continued to make enhancements to the team to address key areas of the business that we believe put us in the best position to generate demand and capitalize on the opportunities we have in front of us.
Two of these enhancements are in the customer-facing leadership roles in our largest region in North America, where we placed a particular emphasis on demand generation through targeted commercial initiatives. We expect these changes in combination with the Chief Commercial Officer role that should be filled in Q1 and to provide us with momentum in the market as we leverage our full portfolio of solutions.
It's too early to determine of customer conservatism for macro headwinds will be temporary or more sustained. We're staying attuned to the market and will provide additional perspective in the future on the expected duration as the trade landscape continues to change.
However, we have a leading franchise in critical diagnostic solutions for food safety, which while not immune to macro uncertainty is an end market where we would expect to generally be resilient as it has been in the past during periods of turbulence. We remain optimistic about the future trajectory of the business and believe the changes we are making will allow us not only to manage through the current uncertainty, but also position us to deliver on the long-term growth opportunity in front of us.
I'll now turn things over to the operator to begin the Q&A.

Question and Answer Session

Operator

Thank you, ladies and gentlemen, we will now begin the question and answer session. (Operator instructions)
Brandon Vasquez, William Blair.

Brandon Vasquez

Hey. Good morning, everyone. Thanks for taking the question. First, I just wanted to talk a little bit about the guide and talk a little bit about macro and moving pieces there. So can we just start by talking a little bit about how much of the lowered guide is coming from macro specifically at this point. It sounds like, and correct me if I'm wrong, it's less of execution on maybe sample handling or any of those other integration. This is primarily a macro headwind. So talk to us, one, about how much of it is macro and two, a little bit more of like what volumes are you seeing in food safety even as macro worsens?
I think in the past, we've always talked about this market as being kind of resilient, but not immune. So are there any numbers you can put on that to help us understand, is this a market that even if things get bad can stay positive growth? Or is it something that should start to decline with food safety -- sorry, a couple (inaudible) there just all around macro guidance and what you guys are seeing?

David Naemura

Thanks, Brandon. Let me go first. This is Dave, and then I'll pass it to John. What we saw during the quarter, as we noted, was some broader softening as the quarter progressed. Hesitancy, I think, driven by some of the macro uncertainty, and we're assuming that, that condition continues through the second half into the fourth quarter.
So if we look at Q3, we probably came in about $6 million below where we thought at the time. I'd say a good $4 million of that was clearly just uncertainty, $2 million of that alone was China. And million of genomics, which is timing of ramp down from some of the business we're getting away from. And then maybe roughly $1 million lighter in sample handling, although we exited at the rates we had anticipated, I think the shape of the ramp through the quarter ended up being a little light, but predominantly macro.
Look, then as the global trade situation has developed, that will have -- that dramatically heightens the uncertainty in my opinion, particularly on the Animal Safety side for us, and that's where we have the most exposure to some of the existing tariff activity that we will obviously have some commercial efforts to offset, but the ability to do that. There'll be some level of uncertainty given the magnitude of the actions. As far as the environment, let me turn it over to John to talk a little bit about what we saw more specifically.

John Adent

Thanks, Dave. So Brandon, like we had talked about in the past, we follow a basket of companies, and we had seen six quarters of kind of sequential improvement. And that really for the ones that are closer to our reporting cycle that reversed, where instead of seeing a sequential improvement, we saw a 300 to 400 basis point decline on a quarterly basis for their reports.
So we did see the softening in the market. But like we talked about, even with that, excluding the sample handling, the food safety business in the US grew 7% for the quarter. I will tell you, that disappointed me like my expectation was double-digit growth. But when the market started to soften at the end of the quarter, I think that's what we really pulled it down.
So while you think about the underlying firmness of the business, I think there is (inaudible). I still think the market is growing, right? And I think there's -- it just isn't as growing as robustly as it did traditionally.
Dave, do you have anything else you want to add on that?

David Naemura

Yes. Just specifically, Brandon, we've talked to you before about our production proxy that we track that had been coming -- it was frankly coming towards even after the six quarters of improvement, eight quarters of decline -- of negative numbers, it was approaching kind of par and it moved backwards 70 to 80 basis points in total across the 15 companies that we track.
We have a couple of folks that we watch, that share year-end with us, and that's where we saw more recent reporting that would show that getting worse and kind of (inaudible) basis point-type moves to the negative. So we think it's consistent with what we saw in the marketplace.
And again, I think it's worth emphasizing. Sample collection side, 7% as a core growth for our food safety business felt pretty good, albeit on an easier compare. So still growing, consistent with what you said, a rather durable end market, but not growing at the rates we've seen historically.

Brandon Vasquez

Okay. And following up -- switching a little bit to tariff headwinds, one kind of a clarification and two, just the operational question. But when you guys talk about tariff headwinds, just to be clear, are we talking mostly here that the tariff headwinds is going to be from margins because, obviously, your COGS will go up. Or is part of the tariff headwind here that you guys are expecting you're going to lose some sales because your products are going to become more expensive than you could potentially lose some share through that.
And then the follow-up kind of the operational side of tariffs is what can you do? I think in the past, it's been a while since we've discussed this. But in the past, we discussed that this is actually a very sticky business and that you probably have some ability to push price. You maybe also have some operational efficiencies. You can do to offset some tariff headwinds. So what can you do over the coming months if the tariffs -- tariffs actually stay a little sticky to kind of offset some of these headwinds?

John Adent

Yes. Brandon, I'll start and then I'll turn it over to Dave. I mean the analysis we're doing is a market-by-market analysis, right? And it really depends. For example, China is a different dynamic, right? Then kind of the rest of the world and some of the other markets. And so when we look at it, yes, China, for example, in the products we sell to China, 40% in the Animal Safety side come from the US. The rest is not.
So we look at how do we mitigate those because we have manufacturing in Europe. So our European product is going in there, and it's not affected. So it's really market by market. And it is extremely dynamic. I mean since yesterday, it's gone up, what, 100%, 50%, I mean it's things we're moving very quickly on.
So understanding that and then anything coming out of China on the buy-sell nature is having an impact. We have to recognize China is about 2.5% of the total business. So while yes, that is a very dynamic, it's a smaller piece, it is not the kind of this tariff market overall. And I know Dave's got better specifics. But I just want -- I think the key is that it is a market-by-market analysis.

David Naemura

I think that's right. And Brandon, just to frame it up for you a little bit. I think thinking about this in two buckets. So tariff impacts around US imports based on what we know today as current as with what was enacted yesterday just on the analysis without any mitigating actions and you just took kind of the last 12 months run rate and straight up applying tariffs to that based on country of origin, you'd probably be around $30 million, close to it, $29 million. And of that, two-thirds of it roughly would be China. We import a lot from China, and this is predominantly Animal Safety. And so we have to look at that by resell business and how that will be impacted.
You asked a very specific question, how much of it will be just impacted the bottom line versus impact to volume, and I think there'll be some of each. And so again, it's very dynamic. But we'll see what happens in the coming weeks, but that's what we're preparing for.
And to John's point, China is about 2.5 points, roughly $24 million, $25 million of sales in, about 40% of that comes from the US, roughly $10 million. And again, we have to look at that dynamic and our ability to compete locally.
And so we did see more headwind there in the third quarter. So we think net-net, it's a headwind, some impact to the top line. And it's the uncertainty that we called out. I mean we've updated the guide. We've got seven weeks left. We've seen March. March has been consistent with, I think, what we saw coming through the third, but uncertainty continues to creep up. So we're monitoring it closely.
And just to point out, again, the tariff impact would be before we're able to mitigate anything with price. And obviously, there will be some of that. And we've had some products that -- this is the incremental amount because we've had some products in the needles and syringes space, again, Animal Safety that has been tariff since last September, and we were able to pass a decent amount of that through.
And then we also have to look at the competition and we're looking at that and some people aren't that disadvantaged where in some of our larger markets where we're advantaged. But some people -- it is a headwind for some others. So we'll look to play offense where it's applicable as well. I hope that helps.

Brandon Vasquez

Yes, okay, thanks, guys. I'll let someone else hop in.

John Adent

Thanks, Brandon.

Operator

Subbu Nambi, Guggenheim.

Subbu Nambi

Hey guys, thank you for taking my question. I kind of want to ask a similar question to Brandon, and I'm now more confused by all the answers that you gave. Maybe I'm missing something, but it seems like you're largely insulated on tariffs, maybe a little bit on China, but otherwise largely insulated, even insulated on policy, sample production is done, Petrifilm is on track. So that leaves us with all the guide cuts related to either less-than-expected growth for food safety, and softer animal business. Is that the right conclusion?

John Adent

Yes. Subbu, I think you're really close, right? Like we talked about. So while we had 7% growth -- core growth in the quarter, our expectation was to be better than that. And what happened is we saw the Food Safety market soften a bit at the end of the quarter, like we had just talked about, right?
The other thing that we saw was, we are in the trough for the Animal Safety. So the Animal Safety is in the trough. With that, it has not been a growing market. So I think you're right on with that is that those are the two things that impacted. This was not -- we improved our -- we hit the goal we wanted on sample handling with production of reaching the 3M rates.
Now again, we have to exceed that. We're working hard to drive those volumes up because we have to -- being at those rates does not help us knock out the back order. So we have to execute in the fourth to continue to grow to start chewing into some of the back order piece.
But I think the big takeaway was kind of with this uncertainty, too, is the softening that we see within the baskets of our customers that were coming in really later in the quarter. And while, well, I'm happy with the 7% growth, I wanted better.

Subbu Nambi

Okay. I just wanted to make sure that I was understanding it right. Thank you for that, The distributors who are less willing to commit to inventory? Were they largely concentrated in the US? Or was it all over global?

John Adent

Yes. So our distribution is -- we use multichannel distribution around the world. So when we talk about distributors unwilling, it really is thinking about it across the worldwide basis, right? And with uncertainty especially around tariffs, nobody wants to get hung with high tariff inventory or other things. So we just saw that it was an environment where inventories weren't reduced, but it wasn't an aggressive or anybody was going to really step up and we saw -- we didn't see a lot of movement from the distributors normally at this time of the year heading into spring, you expect to see a little bit better uptake on distributor inventories.

Subbu Nambi

Okay. Because some of your colleagues have called out pull forward because of all the tariff dynamics, but maybe you didn't see that. My last question is halfway through the year, we are looking at for a couple of different catalysts, which would fall in place for (inaudible) the corner with one quarter left, what is the mission-critical objective here that will deem the year of success for you guys?

John Adent

Yes. I think it's -- I don't know if it's one. I mean, we talked about this. We have plans on the specific things we need to do around the business, and it's driving to those critical areas. Petrifilm manufacturing, right? We continue to talk about derisking the Petrifilm manufacturing, the things we're doing around that. We continue to execute on that plan.
We are on track to begin test production in the fall of this year, which puts us -- it gives us two years to move away from our contract manufacturing business. We know we're going to do it significantly faster than that two-year period. So being on track with that, sample handling.
We have to -- that was a $25 million headwind for the year. We have to be able to continue to grow the manufacturing output to eat into the back order to allow us to continue to make that a growth driver for the company, and that will tremendously improve the growth rates for the organization as we're going forward.
The other thing is, we contemplated being at a certain revenue level and with us not being at a certain revenue level, then we are looking at -- how are we going to make sure that the cost structure fits the new revenue level. And we are being very active and aggressive looking at what is the exit run rate for the quarters to make sure that we're aligning the business from a cost perspective that fits that revenue drive. I don't know Dave's got a couple of thoughts on this, too.

David Naemura

What I would add, John, is around portfolio as well. I think we've talked to the year about some advanced efforts there that we anticipate on certain environment aside assuming things happen as we anticipate being able to come back. And I think that's an important demarcation for the year. Those are things we were looking to make solid progress on, Subbu.

Subbu Nambi

Thank you for that, guys.

John Adent

Thank you.

Operator

Thomas DeBourcy, Nephron Research.

Thomas DeBourcy

Hi guys, Just a couple -- so just one question, I guess, maybe first on Animal Safety. So I know you don't break out US versus OUS Animal Safety, but I guess, USDA estimates, I guess, have protein -- same as last year, I guess, expecting roughly 1% growth. And so I guess a little confused on how that in terms of, I guess, the weakness in sort of being in line with the market where it seems like you're growing below market in Animal Safety?

John Adent

Well, Tom, one point, as we look at particularly in the US, our large distributors, I think our sales out of those channels remains positive in the low single digits. So I think we continue to kind of bounce along the trough. The timing at which large distributors take inventory varies dramatically, you may or may not recall, 1.5 years ago, we were talking about the rebalancing of the inventories into those distributors. And today, now we've been operating in a situation where I think inventories have come into balance. So I think it jives okay.

Thomas DeBourcy

Okay. And then I guess just one other question on the, I guess, global genomics business. So we're kind of in the finishing the second year of a reset of the genomics business. So -- is there a kind of annual run rate that we should think about in, maybe the $80 million, $85 million range that, I guess, sort of would represent I guess, the go-forward business, given that, I guess, we've had kind of incremental decline?

David Naemura

Yes. Tom, I don't have the exact numbers in front of me, but let me try to dimensionalize that for you. I'd say we globally entered the year with roughly a $90-ish million global genomics business that includes serving a lot of end markets. Within that, our more differentiated bovine business that's call it in the 50s. That's really the business that we're trying to restructuring is aimed at focusing around.
And I would say that even though genomics was down mid-single digits this last quarter. And for this year, we've seen growth in bovine. Bovine grew low single digits here in this last quarter and is a pretty strong global business for us.
So as we work through some of the back-office companion work and some of the other kind of protein categories and specialty categories that we're kind of moving away from over time, we would get down to that bovine business in that kind of 50s range, if that helps.

Thomas DeBourcy

Yes. Great, thank you. That was it for me. I appreciate it.

John Adent

Thanks, Tom.

Operator

David Westenberg, Piper Sandler.

David Westenberg

Hi, thank you for taking the question. So on the destocking commentary, can you just maybe talk about the size, timing and kind of quantification of that if you possibly can. I know you said it's global. And the reason why I'm getting -- trying to get a hold of that is essentially that should see a bounce back. I mean, when people have like an understanding of the tariffs, maybe even wanting to like by ahead of new tariffs that kind of thing. So the quantification of that would probably help us understand if there is going to be potentially a snapback that we could see in the future?

David Naemura

David, I don't think we characterize it as destocking. I think what we saw was people hesitancy to take inventory. So a little bit of a pause, which I think is different than a longer-term destocking cycle. I think in the quarter, I said we probably came in about $6 million below where we thought we would. $1 million of genomics, $1 million is the timing of the ramp of sample collection and about $4 million other.
I think in total, the $6 million was included both Food Safety and Animal Safety maybe a little biased towards animal safety. But of the $4 million that was kind of broader, [2] of that was China. And I think that is just a unique dynamic.
When you spread the rest around the world, I think it felt more like just not seeing the uptake and kind of the uncertainty reading through. So I don't -- and we'll see how the fourth develops. But I think it feels to us uncertainty potentially increasing here with the additional tariff actions from when we ended the quarter to where we're at today. So does that help?

David Westenberg

Yes. No problem. Just in terms of like the tariff impacts, I mean, obviously, this is probably something going on in April and May. And when you contemplated the guidance for the year. I mean, how do you -- how did you quantify the unquantifiable, which, I know that it's a really -- it's a really challenging question, but just -- anyway, I'll stop there.

David Naemura

Yeah. Look, I think we weren't -- our timing here today is rough because the events of the last 24 or 48 hours have been pretty dramatic. But I think that's why you heard us emphasize the uncertainty. We can't give you a range we kind of said about because I think we recognize that there's a level of uncertainty that we can't quantify. Having said that, we've got March under our belts. That felt a lot like how we how we kind of felt coming through February.
So what we tried -- what we've assumed is an environment reasonably consistent with probably some incremental headwind to EBITDA at a minimum from tariffs, and maybe that's kind of roughly 5 in there, which if you take kind of that 30 exposure that I talked about and kind of broke it down by weeks, that probably comes pretty close.
But I think you're making a very good point, which is the level of uncertainty heightened. Look, even with that, we felt it was important to update our guide even given that, as opposed to not with seven weeks left, but I think your point is a good one, and we would like to -- we agree with it. It's very difficult at this stage.

David Westenberg

Yes. I guess -- and again, I'm sorry to hammer on to this point, but like right now, I mean, it's like -- and you're right, you have unfortunate timing. I mean this is really having in April and you have about eight days of visibility since Liberation Day to kind of understand what the impacts are in the business. I mean, I don't really know if I guess I'm belaboring the point here, but the different buckets, the USDA, the FDA, the increase -- decreases in spend, you're expected to see, but you have not necessarily seen yet.
I don't know if you'd quantify that. And then I don't know if you could quantify some of the -- like what you're saying in terms of deregulation. And I guess you've already kind of said the tariff impacts was $5 million. But again, I know like you can't -- I know the timing is hard, but for us, like we want to understand this guidance and kind of like what's happening until that August close, like what all went in it and I know it's extremely hard for you. So I'm sorry to ask that question, but we're trying to get to it.

John Adent

David look, total understood, it makes sense. Look, -- what we were pointing out on the FDA and the USDA was while they are leaning out those agencies, if everyone remembers, they're not all manufacturing facilities have NPA inspectors in, actually most do not. And so we feel this will continue to push food safety testing to the plant or it should be done, right, because that's where food safety is.
So while the inspection services may have less inspectors, what I was trying to portray was that it is not the inspectors that are doing the tests, it is the companies that are doing the test. So I was trying to portray that there is an overall firmness there, even though there may be a leaning out of those (inaudible).
The other thing regarding the -- some of the things we're doing on cost is as Dave talked about, we did already in the genomics business, execute in the second and third quarter, a pretty significant restructuring of realigning that business and doing it also on the cost side, right? So we have that under our belt.
And then we continue to look at where we are overall as a company to say, are the costs aligned. And I think, look, I think that's where if you go and you look at the quarter, the EBITDA percentage hung in there at a much lower volume level, which if you look traditionally at Neogen would be very, very challenging for us pre, kind of where we are at this stage of the company.

David Westenberg

Got you. I'll take the rest offline. I mean, I feel like I'm hitting the same like guidance and like for the next like five months kind of comments. And anyway, you've been great.

John Adent

Thanks, David.

Operator

Brandon Vasquez, William Blair.

Brandon Vasquez

Hey, thanks for the follow-up question. Just one real quick now that we're in a public setting. I think Dave, as we start to look towards fiscal '26, I'll be the guy to ask it. I appreciate we're not going to get any numbers here. But just in a public setting here, anything that we should be keeping in mind, puts and takes for the model as we start to update our forward year numbers as well? Thanks, guys.

David Naemura

Yes. Look, I think the actions that we laid out that John highlighted will all have implications to that. I think we're looking at some cost actions here that we hope to impact the exit rate with. We've added costs over a period of time, and I think we're operating at a level that we recognize is below what was anticipated even a year ago.
And as a result, we need to readdress some of those costs portfolio, obviously, will have an impact, both the kind of incrementals moving forward as we begin to refine our end market exposures as a result of those actions.
And then we talked earlier about how hard it is to call the next seven weeks. So with that caveat brand and progress on key integration items and seeing the focus areas around sample handling and those things come back, it will be kind of the big levers.
As you know, the financial model here and the model -- your guys' model is significantly revenue driven, and that would be a big part of our focus. So more to come, and we look forward to providing some guidance there.
The other thing that John noted in his comments was, we'll dimensionalize some costs that will be duplicative costs as we stand up the new Petrifilm facility, and those will be driven by the time line as we get into that. So more to come on that, but look forward to having a broader conversation around that in summer.

Operator

(Operator instructions) There are no further questions at this time. I will now turn the call over to John for closing remarks.

John Adent

All right. Thank you, everybody, for being here with us today, and we look forward to talking to you again in July.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.