Investing.com
Published Oct 10, 2023 17:16
Neogen (NASDAQ:NEOG) Corporation, in its first quarter 2024 fiscal year earnings call, reported a slight decline in core revenue growth and highlighted challenges in the Asian and genomics markets. Despite the difficulties, the company maintained its full-year outlook, citing increased gross margins and a significant rise in adjusted EBITDA, primarily due to the merger with the former 3M (NYSE:MMM) Food Safety division. This is in line with InvestingPro data, which shows a significant 73.61% EBITDA growth for the last twelve months ending in Q4 2023.
Key takeaways from the call:
Neogen's integration of the former 3M Food Safety division, which saw a core revenue growth of approximately 1% on a pro forma basis, is on track. The company expects to complete the relocation of product lines and exit transition services agreements in the third quarter.
The company's new ERP system, although operational, is still experiencing some inefficiencies. These inefficiencies are expected to affect shipments in the second quarter. The company, however, expects a modest sequential increase in revenue and adjusted EBITDA margin in the second quarter, consistent with InvestingPro Tips that suggest revenue growth has been accelerating.
Neogen also reported a decline in the genomics business due to pricing pressure from two large customers in challenging markets. The company expects a rebound in inventory levels in the second half of the year.
Despite the challenges, the company remains optimistic about future opportunities. Neogen's adjusted net income was $24 million, driven by higher adjusted EBITDA. The transition manufacturing agreement costs will roll off, resulting in a positive margin impact. This aligns with an InvestingPro Tip which indicates that net income is expected to grow this year.
The company also addressed challenges in the poultry and swine markets during the earnings call. Despite pressure from two large customers for a price decrease, Neogen decided to decline their request, citing that it would not significantly affect profitability.
Neogen is also working on winning back customer trust in the Asia-Pacific region, where it has faced some difficulties. Despite these challenges, the company maintained its full-year outlook, citing increased gross margins and a significant rise in adjusted EBITDA, primarily due to the merger with the former 3M Food Safety division. For more in-depth analysis and tips, consider subscribing to InvestingPro, which offers 11 additional tips for Neogen.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.