Neogen Corporation (Nasdaq: NEOG) announced today that its net income for the second quarter of FY 2010, which ended Nov. 30, increased 18% from the previous year's second quarter. Adjusted for a 3-for-2 stock split effective Dec. 15, net income in the quarter rose to $0.20 per share, compared to the prior year's $0.17. Neogen's second quarter net income of $4,610,000 set another quarterly record for the 27-year-old company.
Second quarter revenues increased 13% to $35,251,000, also a quarterly record, compared to the prior year's $31,187,000. Year-to-date revenues for the first six months of fiscal year 2010 rose 13% to $67,598,000 from FY 2009's $59,992,000. Current year-to-date net income for the same six-month period increased 18% to $9,006,000 from $7,634,000 in FY 2009, or to $0.39 per share on a split-adjusted basis compared to the prior year's restated $0.34.
With its 3-for-2 stock split, Neogen's shareholders of record on Nov. 30 received one additional share of stock for each two shares held. The stock dividend was paid in newly issued common stock on Dec. 15. Neogen had 15,000,000 shares of common stock outstanding prior to the split, and now has 22,500,000 shares of common stock outstanding. All share and per-share numbers in this news release reflect the split as if it had taken place at the beginning of the periods presented.
"Our second quarter results were exceptional considering the economic situation encountered by many of our customers. We can report strong double-digit increases in revenues, same-store sales and profitability, while at the same time making solid progress in several fundamental areas during the quarter that will drive future growth," said James Herbert, Neogen's chief executive officer and chairman. "The broad-based advancement of several of our diagnostic and preventative product lines, both domestically and internationally, indicates that our experienced team continues to perfect the business model that has driven our remarkable 19 years of growth."
The second quarter was the 67th consecutive profitable quarter from operations for the company, and the 71st quarter of the past 76 quarters to show increased revenues as compared with the previous year.
"We're extremely pleased to report a 23% increase in operating income for the second consecutive quarter--that's a remarkable achievement at any time, but especially in this economy," said Lon Bohannon, Neogen's president and chief operating officer. "Strong revenue growth and ongoing efforts to control costs and improve productivity have resulted in a decline for many expense categories as a percentage of sales. R & D expense is a notable exception because we continue to view our increased research spending as a critical investment that will help drive future growth."
Operating income as a percentage of sales increased to 20.5% in the current quarter from the previous year's comparable quarter of 18.8%. On a six-month basis, operating income is 21.0% of sales compared to 19.2% in the prior year. Gross margins in the quarter improved to 52.5% of sales in FY 2010, compared to 51.7% in the prior year's second quarter.
"We're also pleased to note that the currency headwinds we faced in previous quarters have abated," said Richard Current, Neogen's chief financial officer. "We also had another excellent quarter in generating cash, with quarter-end cash in excess of $30,000,000. But, note that the financial results that we are reporting today do not reflect the effect of the cash acquisition of the BioKits food safety business from Gen-Probe Incorporated--that acquisition was completed in our third quarter."