Neogen Corporation Q1 FY2026 earnings call

• Mike Nassif joined as new CEO, highlighted Neogen's strong reputation in food and animal safety but identified execution challenges. • Took actions to reduce operating expenses by ~$20 million annually through headcount reduction and non-labor cost cuts. • Focused on driving top-line growth, right-sizing cost base, reinvigorating innovation, and deleveraging. • Reexamined strategic initiatives and aligned them with improvement plan. • Q1 revenue was ~$209 million, up 0.3% core YoY. Adjusted EBITDA margin in line with expectations, free cash flow improved compared to prior year.

Food Safety segment: Revenues were $152 million in the quarter, down 4.6% compared to the prior year, including a core decline of 1.7%. Key product lines like pathogens, allergens, etc., showed growth, but PetriFilm core revenue declined. Animal Safety segment: Revenues were $57 million, a decline of 0.8%, with core revenue growth of 5.8%. Growth in animal care, life sciences, and biosecurity product categories was noted.

• Reaffirmed full-year guidance. • Actions to protect EBITDA and cash flow, including cost reduction actions. • PetriFilm production expected to be completed during the second quarter of the next fiscal year. • Anticipated margin improvement in the balance of the year with improvements in sample collection, productivity, and inventory write-down performance.

• Execution challenges holding back growth. • Inventory issues, including elevated sample collection production inefficiencies. • Potential impact of forward-looking statements being different from actual results due to various risks described in SEC filings.

Q: Can you talk about the time period during the interview process and thinking about taking this job?

A: Mike Nassif mentioned being attracted by Neogen's reputation, saw opportunity to unlock growth, and focused on engaging with team, customers, etc.

Q: How do you take share with products like PetriFilm?

A: Mike Nassif said it's about broad portfolio, underpenetrated markets, and execution on commercial excellence.

Q: What is a reasonable and fair timeline for investors to expect you to outline your vision?

A: Mike Nassif said early 2026, focusing on quick wins and critical projects now.

Q: Can you talk about the $6 million in sample collection cost?

A: Dave Naemura explained it's related to scrap, quality flags, excess production costs, and efforts to improve by reducing back orders and labor costs.

Q: How is Neogen's new product pipeline impacted?

A: Mike Nassif said they're addressing execution challenges, reinvigorating innovation, focusing on high-impact opportunities.