10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2021.

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

0-17988

Neogen Corporation

(Exact name of registrant as specified in its charter)


Michigan		38-2367843
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

620 Lesher Place

Lansing, Michigan 48912

(Address of principal executive offices, including zip code)

(517)

372-9200

(Registrant’s telephone number, including area code)

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


Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.16 par value per share	NEOG	NASDAQ Global Select Market

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act): YES ☐ NO ☒

As of November 30, 2021 there were 107,768,342 shares of Common Stock outstanding.

NEOGEN CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Interim Consolidated Financial Statements (unaudited)		2

	Consolidated Balance Sheets – November 30, 2021 and May 31, 2021		2

	Consolidated Statements of Income – Three and six months ended November 30, 2021 and 2020		3

	Consolidated Statements of Comprehensive Income – Three and six months ended November 30, 2021 and 2020		4

	Consolidated Statements of Equity – Three and six months ended November 30, 2021 and 2020		5

	Consolidated Statements of Cash Flows – Six months ended November 30, 2021 and 2020		6

	Notes to Interim Consolidated Financial Statements – November 30, 2021		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27

Item 4.	Controls and Procedures		27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		28

Item 6.	Exhibits		28

SIGNATURES			29

	CEO Certification

	CFO Certification

	Section 906 Certification

PART I – FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements

Neogen Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands, except share and

per share amounts)


	November 30,			May 31,
	2021			2021
Assets
Current Assets
Cash and cash equivalents	$	51,119		$	75,602
Marketable securities		338,130			305,485
Accounts receivable, less allowance of $1,500 and $1,400 at November 30, 2021 and May 31, 2021, respectively		92,498			91,823
Inventories		107,086			100,701
Prepaid expenses and other current assets		22,371			17,840

Total Current Assets		611,204			591,451
Net Property and Equipment		100,863			100,453
Other assets
Right of use assets		2,171			2,477
Goodwill		142,613			131,476
Other non-amortizable intangible assets		15,359			15,545
Amortizable intangible and other assets, net of accumulated amortization of $51,012 and $53,462 at November 30, 2021 and May 31, 2021, respectively		93,706			76,771
Other non-current assets		2,018			2,019

Total Assets	$	967,934		$	920,192

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	34,222		$	23,900
Accrued compensation		9,636			11,251
Income taxes		—			1,848
Other accruals		18,815			16,600

Total Current Liabilities		62,673			53,599
Deferred Income Taxes		21,829			21,917
Other Non-Current Liabilities		17,956			4,299

Total Liabilities		101,204			79,815
Commitments and Contingencies (note 10)
Equity
Preferred stock, $1.00 par value, 100,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.16 par value, 120,000,000 shares authorized, 107,768,342 and 107,468,304 shares issued and outstanding at November 30, 2021 and May 31, 2021, respectively		17,243			17,195
Additional paid-in capital		304,959			294,953
Accumulated other comprehensive loss		(24,235	)		(11,375	)
Retained earnings		567,509			539,604

Total Stockholders’ Equity		865,476			840,377

Total Liabilities and Stockholders’ Equity	$	967,934		$	920,192

See notes to interim consolidated financial statements.

Neogen Corporation and Subsidiaries

Consolidated Statements of Income (unaudited)

(in thousands, except per share amounts)


	Three Months Ended					Six Months Ended
	November 30,					November 30,
	2021		2020			2021		2020
Revenues
Product revenues	$	106,111	$	92,537		$	210,124	$	180,472
Service revenues		24,406		22,463			48,698		43,853

Total Revenues		130,517		115,000			258,822		224,325
Cost of Revenues
Cost of product revenues		56,374		49,275			111,100		95,870
Cost of service revenues		13,549		12,511			27,120		24,939

Total Cost of Revenues		69,923		61,786			138,220		120,809

Gross Margin		60,594		53,214			120,602		103,516
Operating Expenses
Sales and marketing		21,188		17,729			41,743		34,245
General and administrative		22,605		12,184			35,988		23,197
Research and development		4,332		4,056			8,657		7,934

Total Operating Expenses		48,125		33,969			86,388		65,376

Operating Income		12,469		19,245			34,214		38,140
Other Income (Expense)
Interest income		224		555			427		1,277
Other income (expense)		235		(465	)		14		(272	)

Total Other Income		459		90			441		1,005

Income Before Taxes		12,928		19,335			34,655		39,145
Provision for Income Taxes		2,100		3,450			6,750		7,400

Net Income	$	10,828	$	15,885		$	27,905	$	31,745

Net Income Per Share
Basic	$	0.10	$	0.15		$	0.26	$	0.30

Diluted	$	0.10	$	0.15		$	0.26	$	0.30

Weighted Average Shares Outstanding
Basic		107,641		106,258			107,565		106,044
Diluted		108,122		106,808			108,099		106,600

See notes to interim consolidated financial statements.

Neogen Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (unaudited)

(in thousands)


	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2021			2020			2021			2020
Net income	$	10,828		$	15,885		$	27,905		$	31,745
Other comprehensive income (loss), net of tax:
foreign currency translations		(7,649	)		938			(12,272	)		5,059
Other comprehensive loss, net of tax:
unrealized loss on marketable securities		(382	)		(317	)		(588	)		(436	)

Total comprehensive income	$	2,797		$	16,506		$	15,045		$	36,368

See notes to interim consolidated financial statements.

Neogen Corporation and Subsidiaries

Consolidated Statements of

Equity (unaudited)

(in thousands)


							Accumulated
					Additional		Other
	Common Stock				Paid-in		Comprehensive			Retained
	Shares		Amount		Capital		Income (Loss)			Earnings		Total
Balance, June 1, 2021		107,468	$	17,195	$	294,953	$	(11,375	)	$	539,604	$	840,377
Exercise of options and share-based compensation expense		6		1		1,838		—			—		1,839
Issuance of shares under employee stock purchase plan		19		3		896		—			—		899
Net income for the three months ended August 31, 2021		—		—		—		—			17,077		17,077
Other comprehensive loss for the three months ended August 31, 2021		—		—		—		(4,829	)		—		(4,829	)

Balance, August 31, 2021		107,493	$	17,199	$	297,687	$	(16,204	)	$	556,681	$	855,363
Exercise of options and share-based compensation expense		275		44		7,272		—			—		7,316
Net income for the three months ended November 30, 2021		—		—		—		—			10,828		10,828
Other comprehensive loss for the three months ended November 30, 2021		—		—		—		(8,031	)		—		(8,031	)

Balance, November 30, 2021		107,768		17,243		304,959	$	(24,235	)	$	567,509	$	865,476




Balance, June 1, 2020		105,892	$	16,943	$	249,221	$	(19,709	)	$	478,722	$	725,177
Exercise of options and share-based compensation expense		172		28		5,811		—			—		5,839
Issuance of shares under employee stock purchase plan		18		3		665		—			—		668
Net income for the three months ended August 31, 2020		—		—		—		—			15,860		15,860
Other comprehensive income for the three months ended August 31, 2020		—		—		—		4,002			—		4,002

SEC Form 10-Q filed by Neogen Corporation