Core Viewpoint - Neogen (NEOG) is expected to report quarterly earnings of $0.13 per share, an increase of 8.3% year-over-year, while revenues are forecasted to decline by 2.5% to $223.03 million [1] Revenue Estimates - Analysts project 'Revenues- Animal Safety' to be $68.77 million, reflecting a decrease of 3.2% from the previous year [4] - The consensus for 'Revenues- Food Safety' is $154.26 million, indicating a year-over-year decline of 2.2% [4] - 'Revenues- Food Safety- Indicator Testing, Culture Media & Other' is estimated at $78.53 million, down 3.3% from the prior year [5] - 'Revenues- Animal Safety- Veterinary Instruments & Disposables' is expected to reach $17.93 million, a slight decrease of 0.3% year-over-year [5] - 'Revenues- Animal Safety- Animal Care & Other' is projected at $10.15 million, showing a year-over-year increase of 0.8% [6] - 'Revenues- Food Safety- Natural Toxins & Allergens' is estimated at $19.62 million, down 0.6% from the previous year [6] - 'Revenues- Food Safety- Rodent Control, Insect Control & Disinfectants' is forecasted to be $10.72 million, reflecting a year-over-year increase of 5.7% [7] - 'Revenues- Food Safety- Bacterial & General Sanitation' is expected to reach $39.60 million, indicating a decline of 2% year-over-year [7] - The consensus for 'Revenues- Animal Safety- Rodent Control, Insect Control & Disinfectants' stands at $21.16 million, down 8.2% from the previous year [8] Stock Performance - Over the past month, Neogen's shares have decreased by 18.5%, compared to a decline of 7.7% in the Zacks S&P 500 composite [8] - Neogen currently holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [8]

Group 1 - Neogen Corporation will release its third-quarter earnings on April 9, 2025, before market opening [1] - A conference call and webcast will be held on the same day at 8:00 a.m. Eastern time to discuss the financial results [1] - The conference call can be accessed via specific toll-free numbers for North America and international callers [1] Group 2 - A replay of the conference call and webcast will be available shortly after the call concludes [2] - The replay can be accessed through designated toll-free numbers and on Neogen's Investor Relations website [2] Group 3 - Neogen Corporation focuses on enhancing global food security through advancements in human and animal well-being [3] - The company offers comprehensive solutions in Food Safety, Livestock, and Pet Health & Wellness markets [3] - Neogen operates in over 140 countries with a dedicated network of scientists and technical experts [3]

Core Points - Neogen Corporation announced that the National Labor Relations Board (NLRB) has withdrawn its unfair labor practices claim against the company following a mutual agreement, with no admission of wrongdoing by Neogen [1] - In the upcoming weeks, employees at the Lansing warehouse will have the opportunity to vote on whether to unionize [2] - Neogen emphasizes its commitment to fostering a supportive and equitable workplace, respecting employees' rights, and complying with legal obligations related to the election process [3] Company Overview - Neogen Corporation is dedicated to enhancing global food security through advancements in human and animal well-being, offering comprehensive solutions in Food Safety, Livestock, and Pet Health & Wellness markets [3] - The company operates in over 140 countries and has a dedicated network of scientists and technical experts focused on delivering optimized products and technology [3]

Core Insights - Neogen Corporation has launched Igenity BCHF, a genomic test aimed at improving bovine heart health standards [1][3] - Bovine Congestive Heart Failure (BCHF) poses a significant threat to cattle health and productivity, and the new test offers a method for better selection based on genetic predisposition [2][3] Industry Impact - Igenity BCHF assesses an animal's genetic risk for BCHF on a scale of 1 to 10, where each decrease in score correlates with an approximately 3.5% lower expected incidence rate for the disease [2] - The test allows producers to manage BCHF risk more effectively, potentially reducing mortality rates in feedlot settings and minimizing economic losses associated with the disease [3][4] Technological Advancement - Igenity BCHF is the first genomic test of its kind, providing insights into the genetic factors contributing to BCHF in cattle [4] - The test results can indicate the likelihood of disease development and the risk that animals may pass on to their offspring [3] Company Overview - Neogen Corporation is dedicated to enhancing global food security through advancements in human and animal well-being, with a presence in over 140 countries [5] - The company focuses on delivering optimized products and technology across various markets, including Food Safety, Livestock, and Pet Health & Wellness [5]

Company Developments - Neogen Corporation (NEOG) launched its new Neogen Molecular Detection Assay 2 – Quantitative Salmonella (MDA2QSAL96), which improves sensitivity and accuracy while providing an easy-to-use workflow [1] - The MDA2QSAL96 kit is part of Neogen's Molecular Detection System pathogen testing platform, which includes various next-generation assays for detecting pathogens [6][7] - The new assay allows poultry producers to verify the effectiveness of their interventions through a quantitative method that delivers excellent consistency and sensitivity [5] Market Performance - Following the announcement of the new assay, NEOG shares increased by 2.1% to $11.60 [2] - Neogen has a current market capitalization of $2.52 billion, with a Zacks Consensus Estimate for fiscal 2025 revenues at $935.1 million, indicating a 1.2% growth from fiscal 2024 [4] Industry Insights - The microbiology testing market, which Neogen operates in, was valued at $5.65 billion in 2024 and is projected to reach $8.78 billion by 2029, growing at a compound annual growth rate of 9.2% [9] - Technological advancements in microbiology testing and the rising incidence of fungal infections are driving market growth [9] Recent Innovations - Earlier in fiscal 2024, Neogen launched the Molecular Detection Assay 2 – Salmonella Enteritidis/Salmonella Typhimurium (MDA2SEST) and CelluSmart technology, further enhancing its offerings in the food safety segment [3] - In December 2024, Neogen introduced the Petrifilm Bacillus cereus Count Plate, adding to its Petrifilm product line for food safety testing [10]

Core Insights - Neogen Corporation has launched the Neogen Molecular Detection Assay 2 – Quantitative Salmonella (MDA2QSAL96), enhancing food safety solutions for the poultry industry [1][2]. Product Features - The MDA2QSAL96 kit combines qualitative pathogen testing with Quantitative Rapid Enrichment Dehydrated (QRED) media, allowing for controlled growth rates and effective quantitation [2]. - This method provides high consistency and sensitivity for poultry rinses and ground poultry meat, streamlining the workflow to save time and resources [2][3]. Technological Advancements - The new assay improves upon existing solutions by offering enhanced sensitivity and accuracy, along with an easy-to-use workflow [3]. - The product is part of a broader Neogen Molecular Detection System that includes various next-generation assays for pathogens such as Salmonella, E. coli O157, and Listeria spp. [3][4]. Market Presence - The Neogen Molecular Detection System is utilized by food processors, universities, governments, and contract testing laboratories across more than 40 countries [4]. - The system employs advanced technologies like isothermal DNA amplification and bioluminescence detection, making it a fast, accurate, and affordable pathogen testing solution [4]. Regulatory Recognition - The U.S. Department of Agriculture Food Safety and Inspection Service (USDA FSIS) has recognized the Neogen Molecular Detection System as the primary method for detecting Salmonella and Listeria species [5]. Company Overview - Neogen Corporation is dedicated to enhancing global food security through scientific and technological advancements, with a presence in over 140 countries [6].

Financial Performance - Total revenues for the three months ended November 30, 2024, were $231.258 million, a slight increase from $229.629 million in the same period of 2023, representing a growth of 0.7%[12] - Product revenues for the six months ended November 30, 2024, were $400.067 million, down 2.9% from $408.270 million in the prior year[12] - The net loss for the three months ended November 30, 2024, was $456.282 million, compared to a net loss of $3.487 million for the same period in 2023, indicating a significant increase in losses[12] - The company reported a gross profit of $113.330 million for the three months ended November 30, 2024, down from $116.774 million in the same period of 2023, a decrease of 3.5%[12] - For the six months ended November 30, 2024, Neogen Corporation reported a net loss of $468,891 thousand, compared to a net loss of $1,984 thousand for the same period in 2023[21] - The company reported a total comprehensive loss of $456,282 thousand for the six months ended November 30, 2024[21] - The company reported a net loss attributable to Neogen of $456.282 million for the three months ended November 30, 2024, compared to a net loss of $3.487 million in the same period of 2023[36] - Basic net loss per share for the three months ended November 30, 2024, was $(2.10), significantly higher than $(0.02) in 2023[36] Assets and Liabilities - Total assets decreased to $4.054 billion as of November 30, 2024, down from $4.549 billion as of May 31, 2024, reflecting a decline of approximately 10.9%[9] - Cash and cash equivalents decreased to $140.231 million from $170.611 million, a decline of 17.8%[9] - Total liabilities as of November 30, 2024, were $1.385 billion, slightly down from $1.405 billion as of May 31, 2024[9] - The ending balance of cash and cash equivalents as of November 30, 2024, was $140,231 thousand, a decrease from $205,765 thousand at the end of the same period in 2023[21] - Neogen's total assets as of November 30, 2024, were $2,669,070 thousand, reflecting a decrease from previous periods[18] Revenue Segments - The Food Safety segment generated $164.238 million in revenue for the three months ended November 30, 2024, compared to $164.403 million in 2023, reflecting a decrease of 0.1%[39] - The Animal Safety segment reported revenues of $67.020 million for the three months ended November 30, 2024, up from $65.226 million in 2023, representing an increase of 2.8%[39] - Domestic revenue for the three months ended November 30, 2024, was $113.761 million, slightly up from $113.554 million in 2023[42] - International revenue for the three months ended November 30, 2024, was $117.497 million, compared to $116.075 million in 2023, indicating a growth of 1.2%[42] - Food Safety segment revenue decreased by $7.1 million for the six months ended November 30, 2024, primarily due to a $14.9 million currency headwind, partially offset by $7.8 million growth in the business[97] - Animal Safety segment revenue increased by $1.8 million for the three months ended November 30, 2024, driven by $2.1 million growth in the business and a $0.2 million favorable currency impact[98] Expenses - Research and development expenses for the six months ended November 30, 2024, were $10.307 million, down from $12.478 million in the prior year, a decrease of 17.4%[12] - The company experienced a depreciation and amortization expense of $59,849 thousand for the six months ended November 30, 2024, slightly up from $58,203 thousand in 2023[21] - General and administrative expenses increased to $57.8 million for the three months ended November 30, 2024, compared to $51.7 million in the same period of 2023, largely due to restructuring charges[86] - Research and development expenses were $5.1 million for the three months ended November 30, 2024, a decrease from $5.8 million in the same period of 2023[90] - The company incurred $7.1 million in restructuring charges impacting the Animal Safety segment's operating income for the three months ended November 30, 2024[103] Goodwill and Impairments - Goodwill impairment of $461.390 million was recorded in the three months ended November 30, 2024, contributing to the overall net loss[12] - The company recorded a goodwill impairment charge of $461.175 million for the Food Safety segment as of November 30, 2024[43] - The company recorded a goodwill impairment charge of $461.4 million in the Food Safety reporting unit during the second quarter of fiscal year 2025[74] Cash Flow and Investments - Cash provided by operating activities for the six months ended November 30, 2024, was $22,339 thousand, down from $38,723 thousand in 2023[21] - Neogen's cash flows used for investing activities totaled $(50,819) thousand for the six months ended November 30, 2024, compared to $2,852 thousand in 2023[21] - Cash used for investing activities increased by $53.7 million during the six months ended November 30, 2024, primarily due to lower proceeds from marketable securities[123] Future Outlook and Risks - The Company anticipates reaching historical production levels in the second half of fiscal year 2025 after resolving delays in production[69] - The Company expects economic headwinds from softening consumer demand and higher interest rates to continue affecting operations throughout fiscal year 2025[65] - The company may need to issue additional equity securities or enter into financing arrangements to meet future capital needs[116] Internal Controls and Compliance - As of November 30, 2024, the company identified material weaknesses in internal control over financial reporting, indicating a reasonable possibility of material misstatements not being prevented or detected[134] - Management is implementing remediation efforts to address identified control deficiencies, including enhancing control activities and documentation, and developing a training program for control owners[139] - The company concluded that its consolidated financial statements fairly present its financial position and results of operations in accordance with US GAAP, despite the identified material weaknesses[135] - Management did not maintain effective controls over period-end invoice accruals, impacting the completeness and accuracy of accrued expenses and capital assets[133] - The company is in the process of hiring qualified personnel to support enhanced control ownership and internal communications[139] - No changes in internal control over financial reporting were identified during the quarter that materially affected the reporting[136] - The company continues to evaluate its risk factors, with no material changes reported since the last annual report[138]

Core Insights - Neogen Corporation (NEOG) reported preliminary second-quarter fiscal 2025 adjusted earnings per share (EPS) of 11 cents, matching the Zacks Consensus Estimate and the previous year's figures [1][2] - The company's stock fell 5.4% to $12.36 following the earnings announcement [2] Revenue Performance - Preliminary revenues for Q2 increased by 0.7% year-over-year to $231.3 million, with core revenues rising by 3.5% [3] - The revenue growth was negatively impacted by acquisitions and discontinued product lines by 0.3% and foreign currency fluctuations by 2.5% [3] Segment Analysis - The Food Safety segment reported revenues of $164.2 million, a slight decrease of 0.1% year-over-year, with core growth of 3.6% [4] - The Animal Safety segment saw revenues of $67.0 million, up 2.8% year-over-year, driven by core growth of 3.2% [5] Margin and Expense Details - Gross profit for Q2 declined by 2.9% year-over-year to $113.3 million, with gross margin contracting by 185 basis points to 49% due to a 4.5% increase in the cost of revenues [6] - Sales and marketing expenses rose by 3.8% to $46.5 million, while administrative expenses increased by 11.7% to $57.8 million [7] Cash Position and Liabilities - Neogen's cash and cash equivalents stood at $140.2 million at the end of Q2, up from $120.5 million at the end of Q1 [8] - The company has total outstanding debt of $900 million and a committed borrowing headroom of $150 million [8] Financial Outlook - Neogen updated its full-year revenue guidance for fiscal 2025 to a range of $905 million to $925 million, down from the previous estimate of $925 million to $955 million [9] - The current Zacks Consensus Estimate for full-year revenues is $935.06 million [9] Operational Challenges - The Food Safety segment faced challenges in sample collection and natural toxins, impacting sales despite efforts to reallocate the 3M sample collection product line [12] - Margin contractions and foreign currency fluctuations were noted as significant headwinds for the company [13]

Financial Data and Key Metrics Changes - The second quarter revenues were $231 million, with core revenue growth of 3.5% excluding foreign currency impacts, acquisitions, and discontinued product lines [27] - Adjusted EBITDA was $51 million, representing a margin of 22.2%, with a sequential improvement of 210 basis points [35] - Gross margin decreased to 49%, down 190 basis points from 50.9% in the same quarter a year ago [35] Business Line Data and Key Metrics Changes - In the food safety segment, revenues were $164 million, flat compared to the prior year, with core growth of nearly 4% led by biosecurity products [28] - The animal safety segment reported revenues of $67 million, with core revenue growth of 3.2% compared to the prior year [30] - Genomics business saw a mid-single-digit decline in core growth year-over-year, primarily due to weakness in the companion animal side [18] Market Data and Key Metrics Changes - Core revenue growth was led by Latin America with double-digit growth, while Europe saw high single-digit growth [32] - The U.S. and Canada region experienced flat core revenue compared to the prior year, impacted by shipping delays [34] Company Strategy and Development Direction - The company is focusing on restructuring its genomics business to enhance profitability and streamline operations [21] - There is an ongoing portfolio review to explore strategic alternatives for parts of the animal safety segment [22] - The company aims to leverage its broad product portfolio to address increasing consumer and regulatory focus on food safety [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted gradual improvement in core revenue growth and free cash flow, despite challenges in the food safety market due to inflation and lower food production [7][8] - The company updated its full-year outlook, citing foreign exchange headwinds and lower genomics revenue as significant factors [24][40] - Management expressed confidence in the long-term prospects of the business despite current challenges, emphasizing the importance of food safety [50] Other Important Information - The company is in the process of ramping up production in its relocated sample collection facility, expecting to reach prior production levels by the end of Q3 [20] - A goodwill impairment charge was recorded due to the acquisition of the former 3M food safety division, reflecting integration complexities [37][43] Q&A Session Summary Question: Implications of lower revenue base on margins - Management acknowledged that while revenue may decrease, focusing on higher quality revenue can support desired margin profiles [56][60] Question: Trends in sample handling and customer retention - Management confirmed that losing product availability has led to customer shifts, but they are regaining market share as production ramps up [64][66] Question: Impact of food regulation changes on business - Management highlighted potential long-term benefits from increased regulatory focus on food safety, positioning the company as a trusted partner [69][72] Question: Magnitude of currency impacts and genomic attrition - Management indicated that foreign exchange and genomics revenue reductions were significant contributors to the guidance reduction [75][76] Question: Customer sentiment regarding sample handling - Management reported improving customer sentiment as supply issues are resolved, leading to regained customer trust [86] Question: Future of animal safety segment - Management expressed confidence in the animal safety segment's recovery, noting positive trends in distributor sales [90]

Group 1 - Neogen reported quarterly earnings of $0.11 per share, matching the Zacks Consensus Estimate, and the same as the previous year [1] - The company posted revenues of $231.26 million for the quarter ended November 2024, exceeding the Zacks Consensus Estimate by 2.16% and showing a slight increase from $229.63 million a year ago [2] - Neogen shares have increased approximately 7.7% since the beginning of the year, outperforming the S&P 500's gain of 0.6% [3] Group 2 - The earnings outlook for Neogen is uncertain, with current consensus EPS estimates at $0.15 for the coming quarter and $0.51 for the current fiscal year [7] - The estimate revisions trend for Neogen is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] - The Medical - Products industry, to which Neogen belongs, is ranked in the bottom 44% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]