Neogen sees quarter, annual revenue increases
Fourth quarter 2016 results up 15 percent, fiscal 2016 up 13 percent
Neogen Corp.’s revenue for the fourth quarter of 2016 was up 15 percent to $90.1 million. Fiscal 2016 revenues were up 13 percent to $321.3 million.
The company cites recent acquisitions by the company for its positive results, despite adverse top-line currency adjustments of approximately $7.7 million for the full year resulting from currency weakness in Neogen’s international markets.
“Despite facing the challenges all American companies with significant international revenue sources have recently faced, we are pleased to report that a solid 2016 fiscal year performance keeps us on our strategic plan,” said James Herbert, Neogen’s CEO and chairman. “We met our goal of producing double-digit organic growth for the fiscal year, expanded the company’s product line and broadened our geographic foundation. Although the relative strength of the U.S. dollar created challenges to our short-term financial performance, it also created acquisition opportunities.”
Neogen’s fourth quarter net income was $9.9 million, or $0.26 per fully diluted share, compared with $9.4 million, or $0.25 per share, in fiscal 2015. Net income for the 2016 fiscal year increased 9 percent to $36.6 million, or $0.97 per share, compared with the prior year’s $33.5 million, or $0.90 per share.
Revenues and net income for the fourth quarter, and the 2016 fiscal year, established new all-time highs for the 34-year-old company. The fourth quarter was the 97th of the past 102 quarters that Neogen reported revenue increases as compared with the previous year -- including all consecutive quarters in the last 11 years.
“Neogen is well positioned as the U.S. FDA implements additional elements of the Food Safety Modernization Act, and other regulators worldwide adopt risk-based approaches to prevent foodborne problems -- rather than reacting after something goes wrong,” said Richard Calk, Jr., Neogen’s president and chief operating officer. “Our comprehensive suite of food safety products and services, and expertise gained through our 34 years of working with the food industry, have positioned us to help food companies comply with these expanding global regulations.”
Neogen’s Animal Safety segment achieved a revenue increase of 16 percent in the 2016 fiscal year when compared with 2015. The segment’s organic growth was 14 percent compared to the prior year, and was aided by a new distribution agreement with a large equipment manufacturer in the commercial dairy industry. Sales of the company’s rodent control products increased more than 50 percent in the current year compared to the prior year, as Neogen increased its contract manufacturing of rodenticides, and the company’s own products continued to make gains in the important retail agricultural rodenticide market.
Revenues from Neogen’s animal genomics business increased 22 percent in fiscal 2016 compared with the prior year, led by additional business with a large poultry producer, increased market share with its proprietary DNA chip technology (primarily to cattle and pig producers), and increased canine testing.
Revenues from Neogen’s Scotland-based subsidiary increased 3 percent for the 2016 fiscal year in local currencies, but decreased 3 percent after converting to U.S. dollars. After adverse currency translations, Mexico-based Neogen Latinoamerica’s sales increased 20 percent, while Neogen do Brasil’s revenues increased 7 percent. Neogen recorded an 86 percent increase in sales into China, albeit from a small base.
Revenues for the company’s Food Safety segment increased 11 percent during the current fiscal year compared to the prior year. The Food Safety segment’s revenue performance for fiscal 2016 was disproportionally affected by the negative currency translations, as Neogen’s operations in Scotland, Mexico and Brazil all report through that segment. Organic growth for the Food Safety segment was 6 percent for the year; excluding the adverse currency effect, the increase was 12 percent.