Neogen Corporation (NASDAQ: NEOG) announced today the results of its fourth quarter and full 2022 fiscal year, which ended May 31. Revenues for the fourth quarter increased 10% to $140,093,000, compared to $127,425,000 in the prior year, and revenues for the full fiscal year were $527,159,000, compared to the prior year’s $468,459,000, an increase of 13%.
The fourth quarter marked the 120th of the past 126 quarters that Neogen has reported revenue increases compared to the same quarter in the prior year.
“Neogen’s fourth quarter was a strong conclusion to our fiscal year,” said John Adent, Neogen’s President and Chief Executive Officer. “Our team has done an outstanding job in remaining flexible when faced with hurdles, while consistently looking for new ways to reach our customers in markets around the world.
“The outstanding results for this quarter and fiscal year give us momentum as we move into our 2023 fiscal year, with the close of the 3M transaction on the horizon. Our integration efforts have us well prepared, and we look forward to welcoming the 3M Food Safety team members to the Neogen family. Our future is bright as we begin to build the next chapter of Neogen together post-close. We have a lot to look forward to as we celebrate our 40th year of operations.”
Financial and Business Highlights
Net income for the fourth quarter was $14,959,000, or $0.14 per share, adversely impacted by $5.7 million in professional fees incurred in connection with Neogen’s plan to combine 3M’s Food Safety business with the company’s existing operations, which was announced on December 14, 2021. Excluding the 3M Food Safety deal-related costs, net income for the quarter would have been $19,131,000, or $0.18 per share, an increase of 21% compared to the prior year’s $15,760,000, or $0.15 per share.
Net income for the fiscal year was $48,307,000 or $0.45 per share; excluding $25.6 million in 3M deal-related costs, net income would have been $67,938,000, or $0.63, for the fiscal year, compared to the prior year’s $60,882,000, or $0.57, an overall increase of 12%.
For each comparative period, earnings per share amounts have been adjusted to reflect the company’s 2-for-1 stock split on June 4, 2021.
Gross margins were 46.4% of sales in the fourth quarter of the fiscal year, compared to 45.3% in the prior year. The gross margin improvement was the result of pricing actions taken to mitigate the impact of raw material cost increases; a product mix shift toward higher margin products in both segments also positively impacted the overall gross margin. Full-year gross margins were 46.1%, compared to 45.9% in fiscal 2021.
Excluding the 3M Food Safety deal-related costs, operating expenses rose by 10% in the fourth quarter, primarily due to increased compensation and personnel-related costs, and higher spending on customer-facing activities. Adjusted operating income for the fourth quarter was $23,699,000, or 16.9% of sales, compared to $20,255,000, or 15.9% of sales in the fourth quarter of the company’s 2021 fiscal year. Adjusted EBITDA for the fourth quarter was $32.0 million, compared to $27.7 million in the prior year, an increase of 16%.
Adjusting for $25.6 million in 3M deal-related costs, full fiscal year operating income was $84,199,000, or 16.0% of sales, compared to $74,169,000, or 15.8% of sales in fiscal 2021. Adjusted EBITDA for the 2022 fiscal year was $115.4 million, compared to $104.2 million in the prior year, an increase of 11%.
“I am very pleased with our strong results for the quarter and fiscal year. We showed improvement in gross margin and operating income, after excluding deal costs, in the fourth quarter compared to the prior year. This was despite ongoing supply chain issues and the current inflationary environment,” said Steve Quinlan, Neogen’s Vice President and Chief Financial Officer. “While delivering these results, we are also pleased that we were able to put our $1 billion financing plan in place for the 3M Food Safety transaction, which is expected to close in the third quarter of the 2022 calendar year.”