Neogen Corporation Q4 FY2025 earnings call

• End market conditions in Food Safety worsened with consumers under inflation pressure, but Food Safety still expected to grow though not at historical mid-to-high single-digit levels. - USDA/FDA regulatory actions: FSIS increased Listeria testing by over 200% using Neogen's MDS, increased in-person food safety assessments by over 50%, and is developing a new strategy for Salmonella. - Animal Safety segment in cyclical trough, net farm incomes expected to improve but cattle herd at 70-year low. - Genomics business has a divestiture process underway, cleaners and disinfectants divested. - Tariff impact revised to ~$10M annualized. - Petrifilm facility progressing, initial testing production in a few months, expected gross margins slightly better once fully running. - Targeted improvement plan in place to manage transition and build a more profitable Neogen.

Food Safety segment: Q4 revenues were $162 million, down 3% y/y including a core revenue decline of 1.3%. Biosecurity products and pathogen detection products grew, while indicated testing, culture media, and Petrifilm were impacted. Animal Safety segment: Revenues were $64 million, down 6.7% y/y core, with small animal supplements and rodenticides growing but other major products declining. Genomics core revenue declined low single digits in Q4, with bovine business showing sequential improvement but overall decline due to other markets. Revenue contribution: Food Safety segment was $162M out of $225M total, Animal Safety $64M, others as per details.

• Revenue expected between $820M and $840M for FY2026, excluding cleaners and disinfectants. - Adjusted EBITDA expected in range of $165M to $175M, excluding cleaners and disinfectants impact. - Higher adjusted EBITDA margins expected in H2 2026 due to improvements in sample collection and tariffs, and normal seasonality. - Free cash flow expected to be positive in FY2026 due to significant CapEx reduction to ~$50M. - Successfully remediated 2 Sarbanes-Oxley material weaknesses.

• End market weakness in Food Safety and cyclical trough in Animal Safety. - Global trade uncertainty with ongoing tariff discussions and impact. - Sample collection production inefficiencies leading to high costs. - Elevated inventory write-offs impacting margins. - Tariff headwinds due to purchases in route and implementation lag of offsetting actions.

Q: At this time, with Mike as a new CEO appointment, why is this the right time to put out guidance? And why are these the right numbers? How much prudence is built in?

A: David Naemura said it's business as usual, trying to give color on the year and operating as usual.

Q: Along those lines, how much of a headwind is built for next year regarding the tariff impact cited to $10 million annualized?

A: David Naemura said $10 million is the headwind for fiscal '26.

Q: How do you work around the consumer backdrop headwind this year and grow above market?

A: David Naemura mentioned sample collection as an opportunity, and John Adent spoke about regulatory tailwinds like USDA's focus on pathogens and alignment with their product portfolio.

Q: What are you pointing investors to in terms of clear KPIs in regards to Petrifilm?

A: David Naemura mentioned test production as a milestone, certifying SKUs for saleable product over 4-5 quarters.

Q: Could you give commentary on key differences in management styles between Mike and John?

A: David Naemura said Mike is a back-to-basics guy, but he hasn't started yet so details will come.

Q: Do you see the genomics business overall stabilizing for FY2026?

A: David Naemura said top line for genomics will be less in FY2026 compared to FY2025, predominantly focused on cattle end markets.

Q: On the Food Safety segment, would you say there's market share gain or addressing unmet need?

A: John Adent said investments in pathogen products like MDS quant Salmonella and Listeria Right Now are meeting unmet needs.

Q: For 2026 CapEx, is part of the divestiture helping?

A: David Naemura said a combination of divestiture and CapEx pull forward from '25 to '26 led to the ~$50M CapEx for 2026.