Neogen Corporation (NEOG) Profitability Slips This Quarter

Neogen Corporation (NASDAQ: NEOG) has reported its second-quarter 2024 financial results, which revealed a revenue of $229.6 million. The company experienced a net loss of $3.5 million, translating to $(0.02) per diluted share, while the adjusted net income stood at $24.9 million, equivalent to $0.11 per diluted share. The adjusted EBITDA for the quarter was $55.1 million, with a margin of 24.0%.

John Adent, Neogen's president and chief executive officer, commented on the results and the company's outlook, stating, "This is an exciting time on the journey of integrating the former 3M food safety business, as we have made notable recent progress and are approaching several additional milestones. ... Despite the macro environment remaining challenging, we, encouragingly, are seeing our end markets beginning to show signs of improvement. ... With signs that the most significant external headwinds are stabilizing, we are focused on the value-creation opportunity we believe is ahead of us as we make continued progress on the integration and positioning the business for long-term growth."

In terms of financial and business highlights, revenues for the second quarter saw a decrease of 0.2% compared to the prior year, with core revenue declining by 0.9%. The gross margin for the quarter was 50.9%, up from 48.9% in the same quarter a year ago, primarily due to a favorable impact from product mix. The food safety segment experienced a 1.9% increase in revenues, while the animal safety segment saw a 5.0% decrease in revenues.

Looking ahead, the company provided an updated full-year outlook, expecting revenue to be in the range of $935 million to $955 million, with adjusted EBITDA in the range of $230 million to $240 million. Neogen also anticipates capital expenditures to be approximately $130 million, including around $100 million related specifically to the integration of the former 3M food safety division.

Neogen Corporation will host a conference call to discuss the financial results, which can be accessed through the company's website. A replay of the conference call and webcast will also be available shortly following the conclusion of the call.

Neogen Corporation is a global leader in the food safety, livestock, and pet health & wellness markets, operating in over 140 countries.

The company's full 8-K submission is available here.

2018 2019 2020 2021 2022 2023
Revenue (k) $94,903 $97,700 $418,170 $468,459 $527,159 $822,447
Revenue Growth n/a 2.95% 328.01% 12.03% 12.53% 56.01%
Operating Margins 17% 15% 16% 16% 11% 5%
Net Margins 67% 13% 14% 13% 9% 5%
Net Income (k) $63,145 $13,073 $59,475 $60,882 $48,307 $37,515
Net Interest Expense (k) $2,043 $1,335 $5,992 $1,692 $1,339 $4,052
Depreciation & Amort. (k) $17,058 $17,624 $18,396 $21,041 $23,694 $88,377
Earnings Per Share $0.51 $0.14 $0.31 $0.42 $0.17 $0.17
EPS Growth n/a -72.55% 121.43% 35.48% -59.52% 0.0%
Diluted Shares (k) 123,728 93,532 188,933 143,802 287,811 216,846
Free Cash Flow (k) $48,185 $49,181 $61,826 $54,377 $43,609 -$24,729
Capital Expenditures $20,946 $14,661 $24,052 $26,712 $24,429 $65,757
Current Ratio 10.69 12.89 12.97 9.75 4.22 4.23

Neogen has declining EPS growth, irregular cash flows, and a highly leveraged balance sheet. On the other hand, the company has growing revenues and increasing reinvestment in the business working in its favor. Furthermore, Neogen has average net margins with a negative growth trend.

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