Q2 2013 Earnings Call
December 20, 2012 11:00 am ET
James L. Herbert - Chairman and Chief Executive Officer
Steven J. Quinlan - Chief Financial Officer, Principal Accounting Officer, Vice President and Secretary
Paul R. Knight - Credit Agricole Securities (USA) Inc., Research Division
Steven F. Crowley - Craig-Hallum Capital Group LLC, Research Division
Scott Gleason - Stephens Inc., Research Division
Anton Brenner - Roth Capital Partners, LLC, Research Division
Gregory W. Halter - LJR Great Lakes Review
Previous Statements by NEOG
» Neogen Management Discusses Q1 2013 Results - Earnings Call Transcript
» Neogen Management Discusses Q4 2012 Results - Earnings Call Transcript
» Neogen's CEO Discusses Q3 2012 Results - Earnings Call Transcript
I would now like to turn the call over to Jim Herbert. Please go ahead.
James L. Herbert
Thanks, Trish, and good morning and welcome to our regular quarterly conference call for investors and analysts. Today we'll be reporting to you on the results of our second quarter that ended on November 30. I'll remind you that some of the statements that are made here today could be termed as forward-looking statements, and these forward-looking statements, of course, are subject to certain risk and uncertainties and the actual results may differ from those that we discuss today. These risks that are associated with our business are covered in part in the company's Form 10-K as filed with the Securities and Exchange Commission.
In addition to those of you who are joining us today via live telephone conference, I'd also welcome those who may be joined by way of simulcast on the world wide web. These comments, along with some exhibits, will be available on the web for approximately 90 days. And following our comments this morning, we'll entertain questions from participants who are joined by this live call.
I'm joined today by Steve Quinlan, our Chief Financial Officer; and Lon Bohannon, who's normally on this call, is in Brazil today working with our management team there. So he won't be with us on the call.
Earlier today, Neogen issued a press release announcing results of the second quarter of our 2013 fiscal year. Once again, we reported record numbers. Revenues for the company's second quarter were approximately $50.7 million, and that's 13% ahead of the second quarter of last year. Net income for the second quarter was slightly under $6.8 million or roughly 30% ahead of last year's net income of $5.2 million. This translates to $0.28 a share for this year's second quarter as compared to $0.22 a share for the same period last year.
We can now also tally up the first half of the year. Our total revenues for the first 6 months were approximately $100.5 million or roughly 11% ahead of the first half of last year. Net income for the first 6 months was approximately $13.5 million or roughly 20% ahead of our 2012 fiscal year. This all translates to $0.56 a share for the first half of this year compared to $0.47 a share 1 year ago.
We continue to be proud of the consistent growth that the company has enjoyed and always love adding an extra quarter to the tally sheet. This quarter marks the 83rd quarter in the past 88 when Neogen reported revenue increases as compared to the prior year. That's a span now of 22 years. And that you also might be interested to know this, it's been almost 8 years now since the last time we failed to better our year-earlier record.
Five years ago, Neogen revenues inched over $100 million for the year. We promptly set our goal to double the revenue to $200 million in the next 5 years. The 2013 fiscal year is that fifth year, and now it's the 6-month mark, we're a little bit over halfway to the $200 million goal.
Those of you who have followed our management strategy over the past several years know that an important part of our management metrics is focused on profit from operations. Due to the very nature of our business, our gross margins can move 2% to 3% in any given quarter due to product mix. In fact, gross margins for this second quarter were 53.8% as compared to 50.5% last year. We set a goal to keep our profits from operations at 20% of revenues and we monitor that on a regular monthly basis. When profit from operations get much over 20%, we use that as a signal to invest more back into the business to keep growth fueled.
Obviously, when the number drops below 20%, we immediately begin to look for those reasons that need to be corrected.
Profit from operations in the second quarter came in at 20.7%, bringing total profit from operations to $20.8 million in the first half of this year. And that, by the way, is 20.7% for the 6 months also. So our operations were the same for the quarter and for the first 6 months.
I think it's probably good to have me to stop my introductory comments and call on Steve Quinlan, our CFO, to give you a bit more of the color on the second quarter operations and the impact that he sees as we now start to enter the third quarter. Of course you've heard Steve in these quarterly conference calls before, but I'd say from the very beginning of Steve's career here at Neogen, he's been involved in every monthly meeting of our 10 various operations and has really gotten to understand our really complex business pretty well. In addition, some of you have seen Steve along with Terry Maynard at the investor conferences and roadshows and know that he has a good grasp of not just what's happening within the company, but a good feel of what's happening in our industry.