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NEOGEN CORP (NEOG)·Q1 2026 Earnings Summary

Executive Summary

  • Revenue $209.2M and Adjusted EPS $0.04 both modestly beat S&P Global consensus; revenue beat by ~$5.0M (+2.5%) and EPS by ~0.003, while GAAP EPS was $0.17 driven by a $76.4M non-cash gain on the Cleaners & Disinfectants sale *.
  • Gross margin 45.4% improved sequentially from Q4’s 41.2%, though down YoY; Adjusted EBITDA margin 17.0% also declined YoY and was pressured by tariffs and sample collection inefficiencies .
  • Management reaffirmed FY26 guidance: revenue $820–$840M, Adjusted EBITDA $165–$175M, capex ~$50M; cost actions include ~10% headcount reduction targeting ~$20M annualized savings .
  • New CEO Mike Nassif outlined a back-to-basics plan focused on commercial execution, innovation prioritization, deleveraging, and resolving production challenges (PetriFilm transfer and sample collection), which are key stock reaction catalysts alongside guidance stability .

What Went Well and What Went Wrong

What Went Well

  • Revenue and Adjusted EPS beats versus consensus with core revenue up +0.3%, aided by pathogens, allergens, and general sanitation product growth; LATAM saw mid-single-digit core growth *.
  • Sequential margin improvement: gross margin rose to 45.4% from 41.2% in Q4 as inventory write-offs moderated; free cash flow improved YoY with lower capex and better working capital .
  • Genomics returned to positive core revenue growth (mid-single-digit), with strength in bovine; company repaid $100M debt and ended Q1 with $138.9M cash and $800.0M gross debt .

Management quote: “We… are tackling [execution challenges] head-on with a sharpened emphasis on commercial excellence, renewed innovation and a leaner cost structure.” — CEO Mike Nassif .

What Went Wrong

  • YoY margin pressure: gross margin down 300 bps YoY (45.4% vs 48.4%); Adjusted EBITDA fell to $35.5M and margin to 17.0% from 20.1% YoY, driven by tariffs, integration costs, and higher OpEx .
  • PetriFilm core revenue declined due to distributor changes and inventory normalization; APAC was down high-single digits on core, with headwinds in China and ASEAN .
  • Sample collection production inefficiencies persisted; management disclosed ~$6M costs in Q1 and selling the product at a loss currently as scrap and labor costs remain elevated .

Financial Results

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD Millions)$220.98 $225.46 $209.19
GAAP EPS ($USD)$(0.05) $(2.82) $0.17
Adjusted EPS ($USD)$0.10 $0.05 $0.04
Gross Margin %49.9% 41.2% 45.4%
Adjusted EBITDA ($USD Millions)$48.51 $40.62 $35.47
Adjusted EBITDA Margin %22.0% 18.0% 17.0%

Segment revenues:

Segment Revenue ($USD Millions)Q3 FY25Q4 FY25Q1 FY26
Food Safety$152.73 $161.83 $152.05
Animal Safety$68.25 $63.63 $57.14

Selected KPIs:

KPIQ3 FY25Q4 FY25Q1 FY26
Core Revenue Growth (%)+0.2% −2.9% +0.3%
Cash and Cash Equivalents ($USD Millions)$127.71 $129.00 $138.88
Total Outstanding Debt ($USD Millions)$900.0 (non-current narrative) $900.0 $800.0

Consensus vs actual (S&P Global):

MetricQ1 FY26 ConsensusQ1 FY26 ActualSurprise
Revenue ($USD Millions)$204.15*$209.19 +$5.04 (+2.5%)*
Primary EPS ($USD)$0.0367*$0.04 +$0.0033 (+9%)*

Values retrieved from S&P Global*.

Non-GAAP notes: Adjusted EPS excludes items including amortization, share-based comp, ERP, integration, restructuring, transformation costs, and the $76.4M gain on sale .

Guidance Changes

MetricPeriodPrevious Guidance (Jul 29, 2025)Current Guidance (Oct 9, 2025)Change
RevenueFY26$820M–$840M $820M–$840M Maintained
Adjusted EBITDAFY26$165M–$175M $165M–$175M Maintained
Capital ExpendituresFY26~$50M ~$50M Maintained

Context: FY26 EBITDA reflects expected tailwind from lower inventory write-offs and headwinds from sample collection inefficiencies and tariffs; seasonality implies higher H2 margins .

Earnings Call Themes & Trends

TopicQ3 FY25 (Prev-2)Q4 FY25 (Prev-1)Q1 FY26 (Current)Trend
Commercial executionFocus on pathogen detection, distributor caution amid macro uncertainty Soft food production; distributors cautious; blueprint for near-term improvement CEO prioritizes SNOP, pricing, targeted commercial adds; recruiting CCO Improving execution focus
PetriFilm production transferInstallation progress; test production planned for fall Testing to begin in months; margins expected slightly better vs partner once fully running Initial product testing underway; completing transfer targeted for Q2 next fiscal year Advancing toward validation
Sample collection inefficienciesLower revenue; throughput recovered late Q3 Sequential revenue improvement but inefficient; manual work, scrap; plan in place ~$6M costs; selling at loss; backorders normalized; multi-quarter process improvements Gradual improvement targeted
Tariffs/macroFX headwinds; macro uncertainty (trade policies) pressured distributors Annualized tariff headwind increased to ~$10M; inventory write-offs peaked Tariffs impacted gross margin; mitigation via pricing/resourcing Headwinds persisting, mitigation ongoing
Genomics portfolioMid-single-digit core decline; refocus on cattle Low single-digit decline; divestiture process underway Returned to positive core growth mid-single digit; divestiture progressing Improving core; portfolio action pending
Regional performanceBroad development of uncertainty; Food Safety core +7% ex sample collection Europe up MSD; APAC down MSD; LATAM down MSD; US/Canada food safety low-single-digit LATAM up MSD; US/Canada low-single-digit; APAC down HSD (China/ASEAN headwinds) Mixed; US/LATAM stronger than APAC
R&D/InnovationListeria Right Now and salmonella assays pipeline emphasis Continued pathogen detection investment Reinvigorating innovation with fewer high-impact projects Refocus and prioritize high-impact

Management Commentary

  • Strategic focus: “Driving top-line growth, right-sizing our cost base, reinvigorating innovation, and deleveraging” — CEO Mike Nassif .
  • PetriFilm progress: “Early results have been promising… expect production testing to be completed within the next couple of months” .
  • Cost actions: “Reduction… impacted about 10% of headcount… annualized impact about $20M; expect ~$12M benefit this fiscal year” — CFO Dave Naemura .
  • Outlook stance: “With Q1 behind us… confident in reaffirming our full-year guidance” — CEO Mike Nassif .
  • Leadership: CFO transition plan announced; search underway for successor .

Q&A Highlights

  • Margin trajectory: Management expects EBITDA margins to progress through the year; benefits from cost reduction and improvement in sample collection; H2 run-rate benefit from restructuring .
  • Sample collection costs: ~$6M in Q1 from scrap and excess production costs; currently selling at a loss; plan to reduce temp labor and scrap as backorders normalize .
  • PetriFilm duplicate cost guide: Management reiterated confidence in ~$15M FY cash impact from duplicate/startup costs, with updates as plant stand-up proceeds .
  • Revenue guide unchanged despite beat: No material one-timers; early year uncertainty (sample collection volumes) argued for reaffirmation rather than raise .
  • Portfolio focus: Ongoing genomics sale process; continued portfolio optimization toward food safety and higher-margin lines .

Estimates Context

  • Q1 FY26 revenue of $209.19M beat consensus $204.15M by $5.04M (+2.5%); Adjusted/Primary EPS $0.04 beat consensus $0.0367 by ~$0.0033 (+9%)*.
  • Given reaffirmed FY26 guide and planned H2 margin improvement, Street models may need to reflect seasonality, OpEx savings timing (~$12M FY benefit), and tariff/sample collection headwinds embedded in guidance *.

Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Beat-and-reaffirm quarter: modest top-line and EPS beats with guidance held steady; sequential margin recovery underway but headwinds (tariffs, sample collection) linger *.
  • Execution plan under new CEO: near-term catalyst hinges on delivering PetriFilm validation and sample collection productivity; watch for SNOP-driven inventory normalization .
  • Margin path: H2 skew expected as restructuring savings flow through and operational inefficiencies decline; track Adjusted EBITDA margin progression quarter by quarter .
  • Segment dynamics: Food Safety core slightly down on PetriFilm channel dynamics; pathogens and sanitation offset; Animal Safety core +5.8% in Q1—monitor normalization of APAC and distributor transitions .
  • Balance sheet de-risking: $100M debt paydown; cash $138.9M; gross debt $800.0M; continued deleveraging tied to FCF and potential genomics sale .
  • Watch disclosures: CFO transition and early-2026 strategic update may reset expectations on innovation focus and commercial organization changes .
  • Trading setup: Stability of FY26 guide despite beat, plus tangible cost actions and operational milestones (PetriFilm testing, sample collection KPIs), are near-term stock drivers; risk remains if APAC/China weakness or tariff environment worsens *.