Neogen Q2 Earnings Call Highlights

Core Insights - Neogen reported total second-quarter revenue of $224.7 million, reflecting a core growth of 2.9% and a raised full-year guidance of $845–$855 million in revenue and approximately $175 million in adjusted EBITDA [3][16][17] Financial Performance - Animal Safety revenue was $59.1 million with core revenue growth that was "approximately flat," while Food Safety revenue reached $165.6 million with a core growth of 4.1% [1][2] - Gross margin improved to 47.5%, with adjusted EBITDA at $48.7 million, representing a 21.7% margin, and a sequential improvement of 470 basis points [6][7] - Adjusted net income was $22.6 million, with adjusted EPS of $0.10, compared to $9.4 million and $0.04 in the prior quarter [7] Operational Developments - The company is undergoing a transformation aimed at improving growth and profitability, with a focus on achieving approximately $20 million in annualized cost savings and resolving sample-collection backorders [5][8] - Neogen is on track with the Petrifilm integration and manufacturing transfer project, with production testing showing positive results [10] Leadership and Strategy - New CFO Brian Rigsby and other leadership appointments are expected to enhance execution and innovation, with a shift towards a more process-oriented approach in commercial operations [12] - The company is implementing a "latest best estimate" forecasting process to improve customer-centricity and decision-making [12] Cash Flow and Debt Management - Neogen ended the quarter with $800 million in gross debt and $145.3 million in cash, with free cash flow improving to $7.8 million [13][14] - The company is pursuing a divestiture of its global genomics business, with proceeds aimed at debt reduction [15] Market Outlook - Management expressed a cautious tone for the second half of the fiscal year due to lingering end-market weakness, while emphasizing the importance of building predictability and credibility with investors [4][16][17] - The company anticipates a modest increase in fourth-quarter revenue compared to the third quarter, with expectations for continued positive free cash flow [16][17]