Neogen (NEOG) Q2 Earnings Top Estimates, Gross Margin Up
Neogen Corporation NEOG reported second-quarter fiscal 2023 earnings per share of $1.15, down 21.1% year over year. However, the figure topped the Zacks Consensus Estimate by a stupendous 287.5%.
Revenues for the fiscal second quarter increased 76.2% on a year-over-year basis to $230 million and topped the Zacks Consensus Estimate by 0.9%. The second quarter was the 122nd quarter out of the past 128 quarters for which Neogen reported a year-over-year revenue increase.
Segments in Detail
Neogen registered Food Safety revenues of $161.3 million in the second quarter, reflecting 140.3% year-over-year growth, consisting of 6.3% core growth and 140.5% from acquisitions. Core growth was led by the Culture Media & Other category, where the company’s Petrifilm product line performed well.
Animal Safety revenues in the fiscal second quarter were $68.7 million, up 8.4% year over year, consisting of 6.9% core growth and 2.4% from acquisitions. Core growth was led by NEOG’s portfolio of biosecurity products, driven largely by share gains in the animal protein market, sales of dairy hygiene products and new insect control products.
Revenues from Neogen’s animal genomics business increased 7.9% on a year-over-year basis in the fiscal second quarter. International revenues increased 5.5% year over year or on a core basis, representing 50.3% of the overall sales of Neogen in the reported quarter.
Margin Details
Neogen’s fiscal second-quarter gross profit increased 85.7% year over year to $112.5 million. The gross margin expanded 250 basis points to 48.9%.
Sales and marketing expenses rose 71.5% to $36.3 million, whereas administrative expenses rose 240.6% from the prior-year quarter to $77.0 million. Research & development expenses were $6.8 million, up 58% from the year-ago quarter. Operating costs totaled $120.2 million, up 149.8% year over year.
Neogen Corporation Price, Consensus and EPS Surprise
Neogen Corporation price-consensus-eps-surprise-chart | Neogen Corporation Quote
The company reported an operating loss of $7.7 million for the quarter under review compared to $12.5 million of operating profit in the year-ago period.
Cash Position
Neogen exited the fiscal second quarter with cash and investments of $276.3 million, down from $374.7 million at the end of the fiscal first quarter. The company had no debt on the balance sheet at the quarter-end.
Our Take
Neogen exited the second quarter of fiscal 2023 with better-than-expected earnings and revenues. The company recorded sales growth across the Food Safety and Animal Safety segments. Sales in the rodent control, insect control and disinfectant category came in strong. This was driven by share gains in the animal protein market and sales of dairy hygiene products, as well as new insect control product introductions.
Revenues in the vet instrument and disposable category were up in the mid-single digits on a core basis. The upside was led by strong market demand and additional sales to a large retail customer.
Moreover, worldwide core genomics revenues rose in the upper single digits on strong demand in the U.S., European and Australian beef markets. The expansion of the gross margin is an added advantage.
However, a decline in the operating profit on mounting operating costs does not bode well. The ongoing supply-chain disruptions and inflationary pressure continue to pose challenges for the company.
Upcoming Releases
Here are some medical stocks that are scheduled to report soon.
AMN Healthcare Services, Inc. AMN will release third-quarter 2022 results on Feb 16.
It has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
Boston Scientific Corporation BSX will release fourth-quarter 2022 results on Feb 1.
It has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Medical Systems, Inc. MMSI will release fourth-quarter 2022 results on Feb 23.
It has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Boston Scientific Corporation (BSX) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
Neogen Corporation (NEOG) : Free Stock Analysis Report
