Neogen Corporation (NEOG)

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Neogen (NEOG)

Q4 2011 Earnings Call

July 26, 2011 11:00 am ET


Lon Bohannon - President, Chief Operating Officer and Director

Steven Quinlan - Chief Financial Officer and Vice President

James Herbert - Chairman and Chief Executive Officer


Brad Hoover - Sidoti & Company, LLC

Joseph Hartman

Larry Southam - My Broker LLC

Paul Knight - Credit Agricole Securities (USA) Inc.

Anton Brenner - Roth Capital Partners, LLC

Unknown Analyst -

Steven Crowley - Craig-Hallum Capital Group LLC



Welcome to the fourth quarter and fiscal year 2011 earnings results conference call. My name is Monica, and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I would now turn the call over to Mr. Jim Herbert. Mr. Herbert, you may begin.

James Herbert

Well, good morning, and welcome to our regular quarterly conference call for investors and analysts. As Monica reported, today, we'll be reporting to you the results of our fourth quarter that ended on May 31, as well as the results of this complete 2011 fiscal year.

And I'd remind you that some of the statements that are made here today could be termed as forward-looking statements. These forward-looking statements, of course, is subject to certain risk and uncertainties. The actual results may differ from those that we discuss today. These risks that our associated with our business are covered in part in the company's Form 10-K, as filed with the Securities and Exchange Commission. And in fact, that filing for our fiscal year 2011 is currently scheduled to be made later this week.

In addition, to those of you that are joining us today by live telephone conference, I'd also welcome those who may be joined by way of simulcast on the worldwide Web. Those 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 telephone conference. And I'm joined today by Lon Bohannon, Neogen's President; and Steve Quinlan, our Chief Financial Officer.

Earlier today, Neogen issued a press release announcing the results of our fourth quarter for the 2011 fiscal year. Once again, it was another record-breaking quarter to cap off another record-breaking year. As I look back over the last 12 months, there were a number of rough spots in the road that we had to get over in order to get us to this point today. The credit for this year's accomplishments in making it across those rough spots goes to our team of over 600 employees that are now located in several places around the world. They just continue to remember that the toughest thing about success is that you have to keep on being a success.

As the press release reported this morning, our net income for the 2011 fiscal year increased 30% from the previous year to approximately $22.8 million. This is equal to $0.96 per share, as compared to last year's $0.76 per share. Revenues for the 2011 fiscal year increased 23% to approximately $172.7 million, up from the $140.5 million in the last fiscal year. Of course, both revenues and net income established new all-time highs for our 29-year-old company.

Fourth quarter results were also strong, with net increase -- net income increasing by 29% to almost $6 million or to $0.25 per share, as compared to $0.20 per share in the 2010 fiscal year. Overall, revenues for the fourth quarter showed a 12% increase. This fourth quarter marked the 77th quarter in the past 82, in which we have shown increased revenues as compared to a year earlier. I even marvel at times when I realize that we've only had 5 down quarters in the past 20.5 years.

The great performance of the year was broad-based by each of our operating groups in both Food Safety and Animal Safety, and they both made very significant contributions. Two acquisitions that we made in fiscal 2010 also played a role in setting these new records. However, organic growth, or what we sometimes refer to as same-store sales, was also up for all the groups.

The accomplished months during the year have allowed us to increase our tangible assets by about $39 million, while increasing liabilities by only $3 million. We grew revenues by 23%, but we only added 3% to inventories and accounts receivable. We continue to have good cash balances and no bank borrowing. Adding to this string of good numbers has resulted in an increase of 24% in shareholder equity, as compared to the beginning of the year.

I'm pleased that our performance has not gone unnoticed by the financial markets. Early in the year, Neogen stock was selling for as little as $25 a share, as compared to the current levels in the $40 range. I believe that this is in part based on our performance during the year and the consistency of performance over the last 20 years.

But I think even more, it's based upon our perception of the future of Neogen's markets, the markets in which we operate and Neogen's participation in those markets. I'll talk a bit more about that in my concluding comments. But let me stop at this point and let Lon Bohannon give you some color on both operating divisions for the quarter that we just finished, as well as a summation of the operations for the year. Lon?

Lon Bohannon

Thank you, Jim, and welcome to everyone listening on the conference call, as well as to those joining us via the Internet. I do think that today's press release describing Neogen's record-breaking 2011 fiscal year is a fair indication of the overall condition of Neogen as a company.

And like Jim, I think it's appropriate for me to begin my comments by expressing my appreciation to Neogen's 600-plus employees who delivered the outstanding results we are able to report today. Jim's already described many of the overall highlights for our 2011 fiscal year, so I will focus my comments on more specific details pertaining to the quarter and fiscal year results.

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