First-quarter revenue topped forecasts by $14.6 million, but the full-year range rose by only $5 million. Management attributed about 3 points of its 8.1% core growth to an easy comparison and order timing.
Neogen's first-quarter report drew an enthusiastic first response. Once regular trading began, investors appeared to look harder at the guidance.
For its fiscal first quarter, which ended , the food-safety company reported revenue of $222.8 million, up 6.5% from a year earlier and $14.6 million, or about 7%, above the roughly $208.2 million analysts expected. Core growth, a company measure, was 8.1%. Adjusted earnings were 8 cents a share, against about 5 cents expected. Under generally accepted accounting principles it lost $11.9 million, or 5 cents a share.
Its new fiscal 2027 revenue range is $885 million to $890 million, $5 million higher at each end than before. The adjusted Ebitda range moved up $1 million, to $181 million to $183 million.
Shares rose about 12% in extended trading early Wednesday. By about 2:10 p.m. Eastern they were down about 3.4%.
The guidance arithmetic
Analysts had expected about $883.2 million of revenue for the year. The new midpoint, $887.5 million, is about 0.5% above that.
Breaking the year into pieces shows what changed. Before the report, analysts' numbers implied about $675.0 million of revenue in the last three quarters, the full-year estimate minus the first-quarter estimate. Subtracting the actual first quarter from the new guidance midpoint leaves about $664.7 million for those same three quarters. The company's outlook for the rest of the year is about $10.3 million below what analysts had been assuming, even after the raise.
The quality of growth
By management's own accounting, roughly three of the 8.1 points of core growth were not repeatable: a year ago distributors were working down their stocks, which flattered this year's comparison, and some customer orders landed earlier than usual. Without those, core growth would have been closer to 5%.
Adjusted Ebitda was $41.6 million, a margin of 18.7%, up 1.7 points from a year earlier. Free cash flow was $4.7 million.
What is coming
The company said it is on track to make saleable Petrifilm product and to begin moving its manufacturing in November, a transition expected to last several quarters. It expects regulatory reviews of the sale of its Genomics business to Zoetis to conclude by the end of December. Neogen ended the quarter with about $774 million of debt and $172 million of cash.
"Our first-quarter results reflect encouraging progress as the changes underway across the organization continue to take hold," said Chief Executive Mike Nassif.
The case for and against
One reading is that Neogen is guiding conservatively into a manufacturing transition, and that a beat of this size with margins expanding sets up further raises as the year goes on.
Another reading is that part of the beat was borrowed from later quarters through order timing, and the company's own forecast for the rest of the year sits below where analysts had it.
The checkpoints
Second-quarter core growth without the comparison benefit will show the underlying pace. The start of the Petrifilm move in November, and its effect on costs, and the Genomics sale closing by December are the other markers.