Neogen(US:NEOG)2020-12-22 19:12Financial Data and Key Metrics Changes - Revenues for Q2 FY 2021 were $115 million, up 7% from $107.8 million in the same quarter last year [11] - Year-to-date revenues were $224.3 million, a 7% increase over $209.2 million reported last year [12] - Net income for the first six months of FY 2021 was $31.7 million, or $0.60 per share, compared to $30.9 million, or $0.59 per share, a year ago [12] - Gross margins were 46.3% for the quarter, down from 47.3% in the previous year [27] - Operating income for Q2 was $19.2 million, compared to $18.3 million in the same quarter last year [28] Business Line Data and Key Metrics Changes - Food Safety segment revenues were $57.5 million, a 1% increase from $56.9 million last year [16] - Animal Safety segment revenues were $57.5 million, up 13% from $50.9 million in the previous year [23] - Sales of rodenticides increased by 24% due to ongoing rodent pressure [24] - Revenues from genomic testing and bioinformatics grew by 11% [25] Market Data and Key Metrics Changes - Revenues in China increased by 51% in local currency, driven by strong sales in genomic services [22] - Neogen Latino America saw a 23% growth in local currency, primarily from rodenticides and disinfectants [21] - European operations reported a 9% increase in revenues in U.S. dollars [19] - Brazilian operations rose 4% in local currency but declined by 22% after adjusting for currency translation [20] Company Strategy and Development Direction - The company is focused on an aggressive corporate development pipeline, having looked at over 90 companies for potential acquisitions [35] - Neogen is expanding its e-commerce capabilities, which saw a 29% increase in online orders after launching a new platform [37] - The company aims to leverage increased spending on pets during the COVID era to drive growth [36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but expressed optimism about future growth [32] - The company is actively managing supply chain disruptions and back order issues due to the pandemic [62] - Management believes that the food safety market will improve as the pandemic situation stabilizes [59] Other Important Information - The company incurred nearly $1 million in expenses for acquisitions that did not materialize [34] - Interest income for the quarter was $555,000, down from $1.3 million in the previous year [29] - The effective tax rate for the quarter was 17.8%, up from 15.3% in the previous year [29] Q&A Session Summary Question: Acquisition discipline in a high-asset-price environment - Management acknowledged the competitive nature of acquisitions and expressed confidence in their ability to pursue both large and small acquisitions [44] Question: Regional sales mix and COVID-19 impact - Management noted that the pandemic is affecting all regions, making it difficult to predict specific impacts [50] Question: Backorder issues and order fulfillment - Management confirmed some backorder challenges due to supply chain issues but emphasized efforts to fulfill orders [62] Question: Long-term growth in food safety testing - Management remains optimistic about growth in the food safety segment despite current challenges [59] Question: Impact of acquisitions on revenue - Recent acquisitions contributed approximately $2 million to revenues for the quarter [64] Question: Breakdown of international versus domestic sales - International sales accounted for about 39.3% of total sales for the quarter [66]