Neogen Corporation (NEOG) F2Q2011 (Qtr End 11/30/2010) Earnings Call January 4, 2011 11:00 am ET Executives James Herbert - Chairman and CEO Lon Bohannon - President Analysts Steve Crowley - Craig-Hallum Capital Scott Gleason - Stephens Tony Brenner - Roth Capital Partners Marco Rodriguez - Stonegate Securities Steve O'Neil - Hilliard Lyons Greg Halter - Great Lakes Review Presentation Operator
In addition to those of you who are joining us today by this live telephone conference, I'd also welcome those who may be joined by way of simulcast on the worldwide web. These comments along with some exhibits will be available on the web for approximately 90 days.Following our comments this morning, we'll entertain questions from participants who are joined by this live conference and I'm joined today by Lon Bohannon, Neogen's President; and unfortunately say to you that Rick Current who usually joins us at this time, our CFO, came down last evening with a stomach virus and we suggested that he stay home this morning. I suspect however that Lon and I can answer many of the questions that you might have for Rick. And those that we can't, well we'll get those responses back to you probably even later today. Earlier today, Neogen issued a press release announcing the results of our second quarter of this 2011 fiscal year. Once again, I am pleased to report another record-breaking quarter and I continue to give the credit to our team now of over 600 employees, they are located in several places around the world who have continued to remember that the toughest thing about success is that you have to keep on being a success. Our second quarter revenues climbed 25% over the same quarter last year. Revenues for the quarter were $43.9 million as compared to $35.2 million last year. There were no surprises in those revenues for the quarter with this actual coming in at about 99.4% of our budget that we had projected, despite the fact that we had some currency translation issues. Once again, these revenues added to the Neogen's stream of quarterly revenue successes, marking the 75th quarter in the past 80, in which we have shown increased revenue compared to a year earlier. Or stated another way, there's only been five quarters in the past 20 years that we've failed to beat previous year revenues.
Our net income growth even surpassed our revenue growth of 33% from last year's second quarter. Net income for the quarter was about $6.1 million or $0.26 a share compared to last year's $0.20. As I said earlier that our revenues for the quarter were almost dead on what we had expected about eight months ago, when we put our budgets together. However, our profit from operations were about to a percent better than what we had budgeted. In a few minutes Lon will talk about a few of the things that we did to make that possible.On our year-to-date basis for the first six months of the fiscal year, our revenues are now up 28% to approximately $86.9 million from last year's $67.6. The year-to-date income for the same six month period increased to 33% to $11.9 million from $9 million in fiscal year 2010. So on a six-month basis, this translates to $0.51 per share for the first six months compared to the previous year's $0.39 a share. The outstanding performance for the quarter was real broad-based between both our Food Safety and our Animal Safety divisions and they were even within the various parts in marketing groups within each of those divisions. Growth in our international revenues for the quarter, I think is not worthy, is approximately 43% of the revenues were derived from international sources. Over the past several quarters we've been holding a constant of about 40% of revenues which, frankly I thought was pretty good because we'd been growing our domestic revenues pretty rapidly. But we were able to achieve the growth this quarter up to the 43%, even though currency translations detracted from the record. And those translations, some of you would like to know that translations accounted for about $434,000 reduction in revenue, it's compared to a year earlier and about $367,000 reduction in operating income.
International sales came from numerous sources, but once again Neogen's subsidiary operations in certain key countries continued to be very promising. Neogen Europe operations showed a 41% increase in revenue, even after an adverse currency translation. Our Neogen Latinoamérica operations are located in Mexico City, showed a 33% increase in revenue for the quarter, and our Neogen do Brazil operations are now up and running strong and contributing to our total.Though there were a lot of great accomplishments from operations during the second quarter, let me save those for Lon's analysis. However, there are some issues that continue to develop in the economy, and with government regulations, both internationally as well as here in the U.S. that do bear us some discussion I think. Though there is a fair amount of uncertainty attached to many of these, they should all be Neogen growth drivers. Likely, the most publicized of these has been the Food Safety Modernization Act which had a tortured, zigzag course through the Congress for over a year, but was finally passed within hours at the time that the Congress headed home for the holidays and I understand it's on the President's desk, scheduled to be signed into law today perhaps. Read the rest of this transcript for free on seekingalpha.com