Neogen(US:NEOG)2026-01-08 14:02Financial Data and Key Metrics Changes - Total Q2 revenues were $224.7 million, increasing 2.9% on a core basis, with foreign currency contributing 0.9% and divestitures and discontinued products being a headwind of 6.6% [12][19] - Adjusted EBITDA was $48.7 million, representing a margin of 21.7%, an improvement of 470 basis points from Q1 [19] - Gross margin in Q2 was 47.5%, a sequential improvement of 210 basis points from Q1, primarily due to volume and lower tariff costs [18] Business Line Data and Key Metrics Changes - Food safety segment revenues were $165.6 million, with core revenue growth of 4.1%, driven by strong growth in indicator testing and culture media product categories [13] - Animal safety segment revenues were $59.1 million, with core revenue growth approximately flat compared to the prior year, although biosecurity products saw solid growth [15] - The global genomics business had core revenue growth accelerate to 6%, with solid growth in the bovine market [16] Market Data and Key Metrics Changes - Core revenue growth in Q2 was led by the LATAM region, up high single digits, while the U.S. and Canada region had mid-single-digit growth [17] - The APAC region saw low single-digit core growth, while the EMEA region experienced a low single-digit decline [17] Company Strategy and Development Direction - The company is focused on stabilizing and strengthening its core business, with a clear emphasis on improved top-line growth and profitability [4] - A rigorous process-oriented approach to commercial excellence is being implemented, emphasizing strong operational planning and data-driven decisions [5] - The leadership team has been strengthened with experienced operators to drive transformation and operational efficiency [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming recent macroeconomic and execution-related headwinds, with a belief that challenges are solvable or transitory [4][10] - The company raised its full-year guidance for fiscal 2026, expecting revenue in the range of $845 million to $855 million and adjusted EBITDA of approximately $175 million [20] Other Important Information - The company is in the process of divesting its global genomics business, which is expected to simplify operations and enhance margins [22][23] - The integration of Petrifilm is on track for the Q2 of fiscal 2027, with positive progress in production testing and product validation [9][56] Q&A Session Summary Question: Can you discuss the new management team and how long it will take for them to gel? - Management highlighted the recruitment of top-tier talent and emphasized the importance of experienced leaders in diagnostics and life sciences to drive operational excellence [30][32] Question: What was the headwind to margins from sample handling? - Management acknowledged challenges in sample collection but indicated improvements are expected in the second half of the year, with a focus on profitability [34][36] Question: Why hasn't the implied H2 growth or margin been higher? - Management stated that a conservative approach is being taken due to lingering macroeconomic weaknesses and the need for the new team to settle in [41][42] Question: Were there any one-time revenue tailwinds in the quarter? - Management noted a $2 million insecticide tailwind in Q2 but indicated that it was the only significant one-time factor [45] Question: What changes in the commercial organization have contributed to the strong quarter? - Management emphasized a focus on the basics, driving simplicity, and implementing a weekly forecasting process to enhance predictability [52][54] Question: How is the Petrifilm manufacturing process progressing? - Management expressed confidence in the Petrifilm project, stating that production testing is going well and the timeline remains on track [56]