# EDGAR Filing Document

**Accession Number:** 0000711377
**File Stem:** 0000950170-23-010746
**Filing Date:** 2023-3
**Character Count:** 21696
**Document Hash:** 02befcc28b3e1ffef262013c323f865d
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-010746.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0000950170-23-010746

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230330

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NEOGEN CORP
- **CENTRAL INDEX KEY:** 0000711377
- **STANDARD INDUSTRIAL CLASSIFICATION:** IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835]
- **IRS NUMBER:** 382367843
- **STATE OF INCORPORATION:** MI
- **FISCAL YEAR END:** 0531

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-17988
- **FILM NUMBER:** 23777120

**BUSINESS ADDRESS:**
- **STREET 1:** 620 LESHER PLACE
- **CITY:** LANSING
- **STATE:** MI
- **ZIP:** 48912
- **BUSINESS PHONE:** 5173729200

**MAIL ADDRESS:**
- **STREET 1:** 620 LESHER PLACE
- **CITY:** LANSING
- **STATE:** MI
- **ZIP:** 48912

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM** 8-K

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**CURRENT REPORT** 

**Pursuant to Section 13 OR 15(d)** 

**of The Securities Exchange Act of 1934** 

**Date of Report (Date of earliest event reported)** **March 30, 2023**

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NEOGEN CORPORATION

**(Exact name of registrant as specified in its charter)** 

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| | | |
|:---|:---|:---|
| Michigan | 0-17988 | 38-2367843 |
| **(State or other jurisdiction<br>of incorporation)** | **(Commission**<br>**File Number)** | **(IRS Employer**<br>**Identification No.)** |

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| | |
|:---|:---|
| 620 Lesher Place Lansing**,** Michigan | 48912 |
| **(Address of principal executive offices)** | **(Zip Code)** |

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**Registrant's telephone number, including area code** 517**-**372-9200

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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| | | |
|:---|:---|:---|
| **Title of each Class**<br>| &nbsp;&nbsp;&nbsp;**Trading<br>Symbol(s)**<br>| &nbsp;&nbsp;&nbsp;**Name of each exchange<br>on which registered**<br>|
| Common Stock, $0.16 par value per share | NEOG | NASDAQ Global Select Market |

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**N/A** 

**(Former name or former address, if changed since last report.)** 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02 Results of Operations and Financial Condition** 

On March 30, 2023, Neogen Corporation issued a press release announcing results of operations for its fiscal 2023 third quarter and nine months ended February 28, 2023. A copy of the press release is attached as Exhibit 99.1 to this report. This Form 8-K and the attached exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not incorporated by reference into any filing of the Registrant, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

**Item 9.01 Financial Statements and Exhibits** 

(d)Exhibits

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| | |
|:---|:---|
| &nbsp;&nbsp;99.1 | [<u>Press Release dated March 30, 2023</u>](neog-ex99_1.htm) |
| &nbsp;&nbsp;104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

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**SIGNATURES** 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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| | |
|:---|:---|
|  | NEOGEN CORPORATION<br>|
|  | (Registrant) |
| Date: March 30, 2023 | /s/ David H. Naemura<br>|
|  | David H. Naemura |
|  | Chief Financial Officer |

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## Ex-99

**Exhibit 99.1** 

**Neogen Announces Third-Quarter 2023 Results**

• Revenue of $218.3 million, an increase of 70% over the prior-year quarter.

• Net income of $8.2 million; $0.04 per diluted share.

• Adjusted Net Income of $26.5 million; $0.12 per diluted share.

• Adjusted EBITDA of $51.3 million, a margin of 23.5%.

LANSING, Mich., March 30, 2023 – Neogen Corporation (NASDAQ: NEOG) announced today the results of the third quarter ended February 28, 2023.

"The breadth of our product portfolio contributed to both legacy Neogen segments delivering quarterly core growth in a weaker end market environment," said John Adent, Neogen's President and Chief Executive Officer. "The performance of the former 3M Food Safety Division was mixed, with market demand offset by the production backlog situation at our transition manufacturing partner, where we believe significant engagement from senior levels of their organization and a modified reporting structure provide a path to successful resolution. Despite navigating what we expect to be a transitory issue, market reception to the merger has been positive and we are focused on positioning the combined business for long-term success. We have a growing pipeline of targeted synergy opportunities and recently opened our new distribution center in Mount Sterling, Kentucky, which will be a single, more-efficient point of distribution in the U.S. for the entire company. We also continued to add critical personnel, with additions to our back-office and ancillary teams, who will play a key role in supporting our larger enterprise."

Adent continued, "We are excited about the opportunities we have ahead of us as the clear, pure-play leader in the food security market, with a portfolio consisting of over 95% consumable products. While our market is not immune to economic slowdowns, it historically has been resilient and has what we believe are long-term, secular tailwinds – heightened pathogen awareness, the growing prevalence of food allergies and increasingly health-conscious consumers who demand to know what's in their food. There is clearly work that remains ahead of us, but I'm proud of the progress we've made and the efforts of our team members globally as we integrate a high-quality business and lay the groundwork for One Neogen moving forward."

**Financial and Business Highlights** 

Revenues for the third quarter were $218.3 million, an increase of 70.2% compared to $128.2 million in the prior year. Core revenue growth, which excludes the impacts of foreign currency translation and acquisitions completed in the last 12 months, was 4.0%, while acquisitions contributed 68.1%. Foreign currency was a headwind of 1.9%. International sales, which accounted for 49.6% of total company revenue, grew 8.9% on a core basis.

The third quarter marked the 123rd of the past 129 quarters that Neogen reported revenue increases compared to the same quarter in the prior year.

Net income for the third quarter was $8.2 million, or $0.04 per diluted share, compared to $5.4 million, or $0.05 per diluted share, in the prior-year period. The increase in net income was driven primarily by incremental revenues from the former 3M Food Safety Division, which generated margins higher than the legacy company average margin. This increase was partially offset by transaction and integration costs, interest expense and the amortization of acquisition-related intangibles, all related to the recently completed merger with the former 3M Food Safety Division. Adjusted Net Income was $26.5 million, or $0.12 per diluted share, compared to $16.2 million, or $0.15 per diluted share, in the prior-year period. Higher Adjusted EBITDA drove the increase in Adjusted Net Income, more than offsetting the increase in interest expense. On a per-share basis, Adjusted Net Income was lower by $0.03 in the third quarter compared to the prior-year period, a result of the increase in shares outstanding related to the 3M Food Safety transaction.

Gross margin, expressed as a percentage of sales, was 49.5% in the third quarter of fiscal 2023. This compares to a gross margin of 44.8% in the same quarter a year ago, with the increase primarily due to the higher gross margins generated by the incremental revenues from the former 3M Food Safety Division.

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Third-quarter Adjusted EBITDA was $51.3 million, representing an Adjusted EBITDA Margin of 23.5%, compared to $24.9 million and a margin of 19.4% in the prior year. The margin expansion was primarily driven by the increase in gross margin, which more than offset expenses added during the quarter to accommodate the expanded scale of the business.

Food Safety Segment

Revenues for the Food Safety segment were $151.5 million in the third quarter, an increase of 141.5% compared to $62.8 million in the prior year, consisting of 5.8% core growth, 139.1% from acquisitions, and a foreign currency headwind of 3.4%. The core growth was led by the Culture Media & Other category, which benefited from a large order from a vaccine manufacturer. In the Bacterial & General Sanitation product category, a solid increase in sales of Soleris<sup>®</sup> spoilage detection products was partially offset by a decline in sales of AccuPoint<sup>®</sup> general sanitation products, due in part to supply challenges, resulting in modest core growth. The Natural Toxins, Allergens, & Drug Residues category experienced a slight core revenue decline, with increases in sales of aflatoxin test kits offset by a decline in sales of allergen test kits, due in part to supply challenges, and the discontinuation of a drug residue product line consisting of test kits for international dairy markets.

Animal Safety Segment

Revenues for the Animal Safety segment were $66.7 million in the third quarter, an increase of 1.9%, compared to $65.5 million in the prior year's third quarter, consisting of 2.2% core growth and a foreign currency headwind of 0.3%. The core growth was led by the Company's portfolio of biosecurity products, driven largely by insect control share gains in the animal protein market. The core growth in biosecurity products was partially offset by core revenue declines in Veterinary Instruments & Disposables, due to a difficult comparison to new business won in the prior year, and in Animal Care & Other, due to lower sales of antibiotics and vitamin injectables.

The Company's worldwide genomics business performed well in the quarter, with core growth of 7.7%, led by volume increases in the global beef markets, partially offset by declines in testing in China caused by a continuation of COVID-related lab closures.

**Liquidity and Capital Resources** 

As of February 28, 2023, the Company had total cash and investments of $183.2 million and total outstanding debt of $900.0 million, which reflects a repayment of $40.0 million in the quarter, as well as committed borrowing headroom of $150.0 million.

**Conference Call and Webcast** 

Neogen Corporation will host a conference call today at 8:00 a.m. Eastern Time to discuss the Company's financial results. The live webcast of the conference call and accompanying presentation materials can be accessed through Neogen's website at neogen.com/investor-relations. For those unable to access the webcast, the conference call can be accessed by dialing 1.844.757.5681 (U.S.) or 1.412.317.5297 (International) and requesting the Neogen Corporation Third Quarter FY23 Earnings Call (Conference ID: 10176510). A replay of the conference call and webcast will be available shortly following the conclusion of the call, and can be accessed domestically or internationally by dialing 1.877.344.7529 or 1.412.317.0088, respectively, and providing the entry code 6598643, or through Neogen's Investor Relations website at <u>neogen.com/investor-relations</u>.

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**About Neogen** 

Neogen Corporation develops and markets comprehensive solutions dedicated to food and animal safety, operating with the intention to "Every day, protect the people and animals we care about." The Company's Food Safety segment markets dehydrated culture media and diagnostic test kits to detect foodborne bacteria, natural toxins, food allergens, drug residues, plant diseases, and sanitation concerns. Neogen's Animal Safety segment is a leader in the development of genomic solutions along with the manufacturing and distribution of a variety of animal healthcare products, including diagnostics, pharmaceuticals, veterinary instruments, wound care, and disinfectants, as well as rodent and insect control solutions.

Certain portions of this news release that do not relate to historical financial information constitute forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties. Actual future results and trends may differ materially from historical results or those expected depending on a variety of factors listed in Management's Discussion and Analysis of Financial Condition and Results of Operations in the company's most recently filed Form 10-K.

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**NEOGEN CORPORATION** 

**UNAUDITED CONSOLIDATED STATEMENT OF INCOME (LOSS)** 

(In thousands, except for per share)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended February 28,** | **Three Months Ended February 28,** | **Nine Months Ended February 28,** | **Nine Months Ended February 28,** |
|  | **2023** | **2022** | **2023** | **2022** |
| Revenue |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Food Safety | $151542 | $62756 | $377528 | $192610 |
| &nbsp;&nbsp;&nbsp;Animal Safety | 66713 | 65488 | 203109 | 194456 |
| **Total revenue** | **218255** | **128244** | **580637** | **387066** |
| Cost of revenues | 110291 | 70832 | 297864 | 209052 |
| Gross margin | 107964 | 57412 | 282773 | 178014 |
| Operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales & marketing | 38598 | 21477 | 98329 | 63220 |
| &nbsp;&nbsp;&nbsp;Administrative | 46424 | 24997 | 151369 | 60985 |
| &nbsp;&nbsp;&nbsp;Research & development | 7258 | 4561 | 18985 | 13218 |
| Total operating expenses | 92280 | 51035 | 268683 | 137423 |
| Operating income | 15684 | 6377 | 14090 | 40591 |
| Other (expense) income | (17944) | 266 | (43782) | 707 |
| (Loss) income before tax | (2260) | 6643 | (29692) | 41298 |
| Income tax | (10450) | 1200 | (1250) | 7950 |
| **Net income (loss)** | $8190 | $5443 | $(28442) | $33348 |
| **Net income (loss) per diluted share** | $**0.04** | $**0.05** | $**(0.16)** | $**0.31** |
| Shares to calculate per share amount | 216399 | 108133 | 179666 | 108130 |

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**NEOGEN CORPORATION** 

**UNAUDITED SUMMARIZED CONSOLIDATED BALANCE SHEET DATA** 

(In thousands)

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| | | |
|:---|:---|:---|
|  | **February 28, 2023** | **May 31, 2022** |
| <u>Assets</u> |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash & investments | $183214 | $381051 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 146393 | 99674 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 143863 | 122313 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 81901 | 23760 |
| Total current assets | 555371 | 626798 |
| Property & equipment, net | 164888 | 110584 |
| Goodwill & other assets | 3788505 | 255547 |
| Total assets | $4508764 | $992929 |
| <u>Liabilities & Equity</u> |  |  |
| Current liabilities | $107155 | $77844 |
| Non-current liabilities | 1276054 | 27711 |
| Equity: Shares outstanding, 216,221 at February 28, 2023 & 107,801 at May 31, 2022 | 3125555 | 887374 |
| Total liabilities & equity | $4508764 | $992929 |

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**Non-GAAP Financial Measures** 

This press release includes certain non-GAAP financial measures, which management believes are useful to investors, securities analysts and other interested parties. Management uses Adjusted EBITDA as a key profitability measure. This is a non-GAAP measure that represents EBITDA before certain items that impact comparison of the performance of our business either period-over-period or with other businesses. Adjusted EBITDA Margin is Adjusted EBITDA for a particular period expressed as a percentage of revenues for that period.

Management uses Adjusted Net Income as an additional measure of profitability. Adjusted Net Income is a non-GAAP measure that represents net income before certain items that impact comparison of the performance of our business, either period-over-period or with other businesses.

Core revenue growth is a non-GAAP measure that represents net sales for the period excluding the impacts of foreign currency translation rates and the first-year impacts of acquisitions and disposals, where applicable. We present core revenue growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses, or the incomparability that would be caused by the impact of an acquisition or disposal.

These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Please see below for a reconciliation of historical non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP.

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**NEOGEN CORPORATION** 

**RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA** 

(In thousands, except for percentages)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended February 28,** | **Three Months Ended February 28,** | **Nine Months Ended February 28,** | **Nine Months Ended February 28,** |
|  | **2023** | **2022** | **2023** | **2022** |
| **Net income (loss)** | $**8190** | $**5443** | $**(28442)** | $**33348** |
| Provision for income taxes | (10450) | 1200 | (1250) | 7950 |
| Depreciation and amortization | 27471 | 6322 | 59938 | 17833 |
| Interest expense (income), net | 16820 | (314) | 35844 | (741) |
| **EBITDA** | $**42031** | $**12651** | $**66090** | $**58390** |
| Share-based compensation | 2812 | 1607 | 7311 | 5045 |
| FX transaction loss (gain) on loan revaluation(1) | (697) |  | 5092 |  |
| Certain transaction fees and integration costs | 2890 | 10595 | 55754 | 19908 |
| Contingent consideration adjustments | (300) |  | (300) |  |
| Loss on sale of minority interest | 1516 |  | 1516 |  |
| Impairment and scrap of discontinued product line(2) | 3633 |  | 3633 |  |
| Inventory step-up charge | (614) |  | 3245 |  |
| **Adjusted EBITDA** | $**51271** | $**24853** | $**142341** | $**83343** |
| Adjusted EBITDA margin (% of sales) | 23.5% | 19.4% | 24.5% | 21.5% |
| Adjusted EBITDA increase | 106.3% |  | 70.8% |  |

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(1)Net foreign currency transaction (gain) loss associated with the revaluation of non-functional currency intercompany loans established in connection with 3M Food Safety transaction

(2)Expenses associated with goodwill and intangible impairments and inventory scrap amounts related to certain discontinued product lines

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**NEOGEN CORPORATION** 

**RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME** 

(In thousands, except for per share)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended February 28,** | **Three Months Ended February 28,** | **Nine Months Ended February 28,** | **Nine Months Ended February 28,** |
|  | **2023** | **2022** | **2023** | **2022** |
| **Net income (loss)** | $**8190** | $**5443** | $**(28442)** | $**33348** |
| Amort of acquisition-related intangibles | 22680 | 1977 | 46637 | 5432 |
| Share-based compensation | 2812 | 1607 | 7311 | 5045 |
| FX transaction loss (gain) on loan revaluation(1) | (697) |  | 5092 |  |
| Certain transaction fees and integration costs | 2890 | 10595 | 55754 | 19908 |
| Contingent consideration adjustments | (300) |  | (300) |  |
| Loss on sale of minority interest | 1516 |  | 1516 |  |
| Impairment and scrap of discontinued product line(2) | 3633 |  | 3633 |  |
| Inventory step-up charge | (614) |  | 3245 |  |
| Other adjustments(3) | 1514 |  | 5864 |  |
| Estimated tax effect of above adjustments(4) | (15095) | (3385) | (24864) | (6873) |
| **Adjusted Net Income** | $**26529** | $**16237** | $**75446** | $**56860** |
| **Adjusted Earnings per Share** | $**0.12** | $**0.15** | $**0.42** | $**0.53** |

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(1)Net foreign currency transaction (gain) loss associated with the revaluation of non-functional currency intercompany loans established in connection with 3M Food Safety transaction

(2)Expenses associated with goodwill and intangible impairments and inventory scrap amounts related to certain discontinued product lines

(3)Income tax benefit associated with non-deductible transaction costs that were recognized as expenses in prior periods

(4)Tax effect of adjustments is calculated using projected effective tax rates for each applicable item

Source: Neogen Corporation

**Contact** 

Bill Waelke

(517) 372-9200

ir@neogen.com

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