Neogen Corp (NEOG) 2024 Q1 法說會逐字稿

Welcome to the Neogen Corporation First Quarter 2024 Earnings Call.

歡迎參加 Neogen Corporation 2024 年第一季財報電話會議。

(Operator Instructions)

（操作員說明）

Please note, today's event is being recorded. I would now turn the conference over to Bill Waelke, Vice President of Investor Relations. Please go ahead, sir.

請注意，今天的活動正在錄製中。我現在將會議交給投資者關係副總裁 Bill Waelke。請繼續，先生。

Thank you for joining us this morning for the discussion of the first quarter of our 2024 fiscal year. I'll briefly cover the non-GAAP and forward-looking language before passing the call over to our CEO, John Adent, who will be followed by our CFO, Dave Naemura.

感謝您今天早上加入我們討論 2024 財年第一季。在將電話轉給我們的執行長 John Adent 之前，我將簡要介紹非 GAAP 和前瞻性語言，隨後我們的財務長 Dave Naemura 將接聽電話。

Before the market opened today, we published our first quarter results as well as the presentation with both documents available in the Investor Relations section of our website. On our call this morning, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliations of historical non-GAAP financial measures are included in our earnings release and the presentation, Slide 2 of which provides a reminder that our remarks will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

在今天開盤前，我們發布了第一季業績以及演示文稿，這兩份文件均可在我們網站的投資者關係部分取得。在今天早上的電話會議上，我們將提及某些我們認為有助於評估我們績效的非公認會計準則財務指標。我們的收益發布和簡報中包含了歷史非公認會計準則財務指標的調節，其中投影片 2 提醒我們，我們的言論將包括《私人證券訴訟改革法案》含義內的前瞻性陳述。

These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed in or implied by such forward-looking statements. These risks include, among others, matters that we have described in our most recent annual report on Form 10-K and in other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements.

這些前瞻性陳述存在風險，可能導致實際結果與此類前瞻性陳述中明示或暗示的結果有重大差異。這些風險包括我們在最新的 10-K 表格年度報告以及我們向 SEC 提交的其他文件中所述的事項等。我們不承擔更新這些前瞻性陳述的義務。

With that, I'll turn things over to John.

這樣，我就把事情交給約翰了。

Thanks, Bill. Good morning, everyone, and welcome to our earnings call covering the first quarter of our 2024 fiscal year. We made significant progress across a number of fronts on the integration of the former 3M Food Safety business while continuing to navigate soft market conditions. Our results for the quarter were largely as anticipated with 2 primary exceptions: greater-than-expected weakness in Asia and in genomics along with a couple of unanticipated cost items.

謝謝，比爾。大家早安，歡迎參加我們 2024 財年第一季的財報電話會議。我們在整合前 3M 食品安全業務的多個方面取得了重大進展，同時繼續應對疲軟的市場狀況。我們本季的業績基本上符合預期，但有兩個主要例外：亞洲和基因組學的疲軟程度超出預期，以及一些意外的成本項目。

For Neogen in total, we saw core revenue growth decline by 0.4% in the quarter on a pro forma basis, which includes a negative impact from China of approximately 1%. In our Legacy Food Safety business, core revenue growth was in the mid-single-digit range, including positive volume growth in an end market where food production volumes continue to be down on a year-over-year basis for many producers.

就 Neogen 而言，預計本季核心收入成長下降了 0.4%，其中包括來自中國約 1% 的負面影響。在我們的傳統食品安全業務中，核心收入成長處於中等個位數範圍，包括終端市場的銷售量正成長，其中許多生產商的食品產量持續較去年同期下降。

Additionally, certain producers have taken capacity offline in order to rightsize output from higher levels last year to the current environment. In our Animal Safety segment, we continue to see the impact of destocking in the distribution channel. Sales out of the channel to our end customers remain positive compared to the prior year.

此外，某些生產商已關閉產能，以便將產量從去年的較高水平調整到當前的環境。在我們的動物安全部門，我們繼續看到分銷渠道庫存減少的影響。與前一年相比，我們向最終客戶的通路銷售仍保持樂觀。

The large veterinary distributors continue to reduce their purchases. Based on the data we have from the larger distributors in North America, channel inventories are at a 3- to 4-year low. In the former 3M Food Safety Division, the progress made with production levels at our transition manufacturing partner in Q4 of last year was maintained. For the former 3M division in total, core revenue grew by approximately 1% in the first quarter on a proforma basis.

大型獸藥經銷商持續減少採購。根據我們從北美較大經銷商獲得的數據，通路庫存處於 3 至 4 年來的最低水準。在原 3M 食品安全部門，我們的轉型製造合作夥伴去年第四季的生產水準取得了進展。按預計，原 3M 部門第一季的核心收入成長了約 1%。

Backlog remains at reasonable levels following the progress in the prior quarter, catching up on past 2 orders, which helped drive a strong fourth quarter. We continue to work on rebuilding demand through targeted initiatives as we demonstrate reliable supply of Petrifilm and progress has been notable.

繼上一季的進展之後，積壓訂單仍保持在合理水平，趕上了過去兩個訂單，這有助於推動第四季度的強勁增長。我們將繼續透過有針對性的舉措來重建需求，因為我們展示了 Petrifilm 的可靠供應，並且進展顯著。

Although proforma growth was lower in Q1 impacted by weakness in Asia, a tough comparison against some elevated activity last year and a strong Q4 where we caught up on fulfilling orders, we have seen good progress so far in Q2 and remain very optimistic about the opportunities ahead of us. As we operate through a rather dynamic market environment, we're encouraged by our performance.

儘管受亞洲疲軟的影響，第一季的預期成長較低，但與去年的一些活動增加以及第四季度的強勁表現（我們趕上了履行訂單的情況）相比，我們在第二季度已經看到了良好的進展，並對機會仍然非常樂觀在我們前面。由於我們在一個相當動態的市場環境中運營，我們的業績令我們感到鼓舞。

The destocking and animal safety will ease as inventories rightsized and end-user sales out of the distribution channels continue to grow. On the Food Safety side, we are dealing with a few challenges unique to us in Asia Pacific and macro weakness in China, specifically that is common to most companies. However, outside of Asia Pacific, our Food Safety core revenue grew over 4% with positive volume despite the lower production volumes we see across much of the food production landscape, demonstrating the resiliency of our business.

隨著庫存規模的合理化和分銷管道中終端用戶銷售的持續增長，去庫存和動物安全問題將會得到緩解。在食品安全方面，我們正在應對亞太地區特有的一些挑戰以及中國的宏觀疲軟，特別是大多數公司所面臨的共同挑戰。然而，在亞太地區之外，儘管我們看到大部分食品生產領域的產量較低，但我們的食品安全核心收入仍增長了 4% 以上，銷量呈正增長，這證明了我們業務的彈性。

On the integration front, the relocation of the former 3M Pathogen and Sample Handling product lines in the Neogen facilities remain on track for completion in the third quarter. Hiring and training of new employees and inventory builds are underway as our initial equipment transfers with site preparation expected to wrap up later this month.

在整合方面，Neogen 工廠內前 3M Pathogen 和樣品處理產品線的搬遷仍有望在第三季完成。新員工的招募和培訓以及庫存建設正在進行中，我們的初步設備轉移和現場準備工作預計將於本月稍後完成。

These 2 product lines account for nearly 30% of the revenue of the former 3M business and our strong complement to the management product portfolio that we're looking forward to have fully embedded within our operations. After these moves, we will have nearly 50% of the former 3M product lines fully integrated, all but Petrifilm.

這兩條產品線佔前 3M 業務收入的近 30%，也是我們對管理產品組合的有力補充，我們希望將其完全嵌入到我們的營運中。在這些舉措之後，我們將完全整合前 3M 近 50% 的產品線，除了 Petrifilm 之外的所有產品線。

The planned exits of the 2 transition services agreements, those covering back office functions and distribution are also on track to be completed in the third quarter. A key step that enables the exit of these agreements is the implementation of our new ERP system, which will allow us to take over order fulfillment services currently provided for the former 3M products.

兩項涉及後台職能和分銷的過渡服務協議的計劃退出也預計在第三季度完成。退出這些協議的關鍵一步是實施我們新的 ERP 系統，這將使我們能夠接管目前為前 3M 產品提供的訂單履行服務。

Last month, we had the initial go-live with our Food Safety business in the U.S. and Canada as well as corporate, making the cut over to the new ERP, on which we are now up and running. Implementation has generally gone well in that we are fully operational on the new system, processing orders and shipping products. But as is typical, we are not as efficient yet on the new system as we were on the old.

上個月，我們在美國和加拿大以及企業的食品安全業務首次上線，並切換到新的 ERP，我們現在正在其上啟動和運行。實施總體進展順利，我們已在新系統上全面運作、處理訂單和運輸產品。但正如典型情況一樣，我們在新系統上的效率不如在舊系統上的效率。

As a result, we have exited the month of September with an elevated level of open orders in our legacy Food Safety business that we expect will mostly ship in October and November. But as we continue to work our way up the efficiency curve, it is possible that some level of revenue will shift from Q2 into Q3. What will be most important, however, is continuing to see end-user demand in line with our expectations and working diligently to satisfy it.

因此，當我們在 9 月結束時，我們傳統的食品安全業務的未結訂單水準有所提高，我們預計這些訂單大部分將在 10 月和 11 月發貨。但隨著我們繼續提高效率曲線，一定程度的收入可能會從第二季轉移到第三季。然而，最重要的是繼續看到最終用戶的需求符合我們的期望，並努力滿足它。

The final phase of integration activities involved the construction of our new facility in Lansing, which will house the production of Petrifilm and other products from the Legacy Neogen portfolio. The new facility continues to progress on track with construction of the exterior expected to be completed during Q3, at which point the focus will shift to the completion of the interior work and the installation of the custom manufacturing equipment.

整合活動的最後階段涉及在蘭辛建造新工廠，該工廠將用於生產 Petrifilm 和 Legacy Neogen 產品組合中的其他產品。新工廠繼續按計劃推進，外部施工預計將在第三季完成，屆時重點將轉向完成內部工程和安裝客製化製造設備。

We're pleased with the progress we've made on the integration to date and are focused on the execution of the upcoming key transition activities in the second and third quarters that will bring the former 3M business closer to full autonomy within the one Neogen were building.

我們對迄今為止在整合方面取得的進展感到滿意，並專注於執行第二季度和第三季度即將進行的關鍵過渡活動，這將使前 3M 業務在 Neogen 的領導下更接近完全自主。建築。

Now I'll turn the call over to Dave for some more insights into our results for the quarter.

現在我將把電話轉給戴夫，以獲取有關我們本季業績的更多見解。

Thank you, John, and welcome to everyone on the call. Jumping into the results, our first quarter revenues were $229 million, an increase of 73% compared to the same quarter a year ago. Core revenue, which excludes the impact of foreign currency, acquisitions and discontinued product lines declined just over 1% for the quarter.

謝謝約翰，歡迎大家參加電話會議。從業績來看，我們第一季的營收為 2.29 億美元，比去年同期成長了 73%。排除外匯、收購和停產產品線影響的核心收入，本季下降略高於 1%。

Acquisitions and discontinued product lines added a net 73%, while foreign currency was a 1% tailwind compared to the prior year. On a proforma basis for the 3M transaction, core revenues declined modestly, down 40 basis points compared to the prior year quarter or approximately $4 million to $5 million below our expectations, driven primarily by lower sales in Asia.

與前一年相比，收購和停產的產品線淨增加了 73%，而外匯則增加了 1%。根據 3M 交易的預估數據，核心收入小幅下降，與去年同期相比下降 40 個基點，即比我們的預期低約 400 萬至 500 萬美元，這主要是由於亞洲銷售額下降。

In Asia Pacific, customers were more impacted by the Petrifilm supply constraints we experienced last fiscal year, leading to what we believe will be a slightly longer path to demand recovery. Our China exposure is small, representing less than 3% of total company revenue, but worsening macro conditions there contributed to significantly lower sales in the quarter.

在亞太地區，客戶受到我們上一財年經歷的 Petrifilm 供應限制的影響更大，導致我們認為需求恢復的路徑將稍長一些。我們在中國的業務規模較小，占公司總收入的比例不到 3%，但宏觀經濟狀況惡化導致本季銷售額大幅下降。

Moving now to the segment level. Revenues in our Food Safety segment were $166 million in the quarter, an increase of 157% compared to the prior year, including core growth of 4.5%. The core growth was led by the bacterial and general sanitation product category, which benefited from new microbiological testing business in the U.S. and U.K.

現在轉到細分級別。本季食品安全部門的營收為 1.66 億美元，較上年成長 157%，其中核心成長 4.5%。核心成長由細菌和一般衛生產品類別引領，該類別受益於美國和英國的新微生物檢測業務。

Natural toxins and allergens also had solid core growth, with a notable increase in sales of milk and gluten allergen test kits. Within the indicator testing, Culture Media and Other category, modest core growth in Culture Media was offset by a decline in food quality and nutritional analysis sales due in part to international distributor ordering patterns.

天然毒素和過敏原也有強勁的核心成長，牛奶和麩質過敏原檢測試劑盒的銷售量顯著增加。在指標測試、文化媒體和其他類別中，文化媒體的核心核心成長小幅被食品品質和營養分析銷售額的下降所抵消，部分原因是國際分銷商的訂購模式。

Quarterly revenues in the Animal Safety segment was $63 million, a core decline of just under 7% compared to the prior year quarter, albeit generally in line with our expectations, Animal Safety revenue was a bit lighter than anticipated, driven primarily by continued destocking the large veterinary distributors. This destocking was the primary reason for the core revenue decline in vet instruments and disposables while supply constraints played a role in the lower sales of small animal supplements and vitamin injectables in the Animal Care and Other category.

動物安全部門的季度收入為 6,300 萬美元，與去年同期相比核心下降了不到 7%，儘管總體符合我們的預期，但動物安全部門的收入略低於預期，主要是由於持續去庫存大型獸藥經銷商。庫存減少是獸醫器械和一次性用品核心收入下降的主要原因，而供應限制也是動物護理和其他類別中小動物補充劑和維生素注射銷售量下降的原因之一。

These declines were partially offset by solid growth in our biosecurity products with higher volumes in insect control products and cleaners and disinfectants. Worldwide genomics revenue was down modestly on a core basis, with growth in international beef markets, offset by declines in poultry and porcine driven primarily by the attrition of a couple of large customers in the U.S.

這些下降被我們的生物安全產品的穩健增長所部分抵消，其中昆蟲控制產品以及清潔劑和消毒劑的銷售增加。隨著國際牛肉市場的成長，全球基因組學收入在核心基礎上小幅下降，但被主要由美國幾家大客戶流失導致的家禽和豬的下降所抵消。

In the former 3M Food Safety Division, core revenue grew modestly on a proforma basis, as John mentioned, which includes a compare headwind of a few points and also follows a very strong Q4. The bacterial and general sanitation product category saw the highest growth this quarter with particularly strong sales of Clean-Trace Hygiene Monitoring products.

正如約翰所提到的，在前 3M 食品安全部門，核心收入在預計基礎上小幅增長，其中包括一些點的比較逆風，並且也遵循非常強勁的第四季度。細菌和一般衛生產品類別本季成長最快，其中 Clean-Trace 衛生監測產品的銷售尤其強勁。

This growth was partially offset by a modest core revenue decline in Petrifilm with the largest driver being the aforementioned weakness in Asia and China, in particular. Importantly, we were pleased to see that the improvements made in transition manufacturing during Q4 were sustained into Q1, providing stability of supply and allowing us to focus on demand-generating activities.

這一成長被 Petrifilm 核心營收小幅下降所部分抵消，其中最大的推動因素是上述亞洲和中國的疲軟。重要的是，我們很高興看到第四季度轉型製造的進步持續到第一季度，提供了供應的穩定性，並使我們能夠專注於產生需求的活動。

From a geographical perspective, results were mixed. Growth was led by EMEA, which grew in the high single digits and LatAm in the mid-single digits. USAC was down low single digits due mainly to the destocking the large Animal Safety distributors as well as the lower sales in Genomics, while the Food Safety business grew in the low single digits.

從地理角度來看，結果好壞參半。歐洲、中東和非洲地區的成長處於領先地位，其成長幅度為高個位數，而拉丁美洲則為中個位數成長。 USAC 出現低個位數下降，主要是由於大型動物安全經銷商的庫存減少以及 Genomics 銷售額的下降，而食品安全業務則以低個位數增長。

Finally, APAC declined mid-single digits as a result of a slower-than-anticipated recovery in 3M demand following the Petrifilm supply constraints and also across the board softness in China. Recall that China represents less than 3% of our global revenues, but we experienced a decline in the high 20s, so the impact was measurable, particularly at the region level.

最後，由於 Petrifilm 供應限制以及中國全面疲軟導致 3M 需求復甦慢於預期，亞太地區下跌了中個位數。回想一下，中國收入占我們全球收入的比例不到 3%，但我們經歷了 20 多歲的下降，因此影響是可衡量的，特別是在地區層面。

Gross margin in the first quarter was 51%, representing an increase of 400 basis points from 47% in the same quarter a year ago, with the increase primarily driven by the addition of higher-margin business from the 3M Food Safety transaction as well as positive price cost. On a proforma basis, gross margin expansion was 180 basis points.

第一季毛利率為 51%，較去年同期的 47% 成長 400 個基點，成長主要是由於 3M 食品安全交易增加了利潤率較高的業務以及積極的價格成本。按預計，毛利率增加了 180 個基點。

Adjusted EBITDA was $52 million, representing growth of 94% from the prior year quarter driven by the merger with the former 3M Food Safety Division. Adjusted EBITDA margin was 22.9%, a year-over-year increase of 250 basis points, including approximately 100 basis points of negative impact from a nonrecurring billing adjustment from our transition manufacturing partner and transaction FX.

調整後 EBITDA 為 5,200 萬美元，由於與前 3M 食品安全部門合併，較上年同期成長 94%。調整後的 EBITDA 利潤率為 22.9%，較去年同期成長 250 個基點，其中包括我們轉型製造合作夥伴和交易外匯的非經常性帳單調整帶來的約 100 個基點的負面影響。

On a proforma basis, adjusted EBITDA margin expansion was 10 basis points lower than we had anticipated due to the nonrecurring items I mentioned and volume being a bit lighter than expected. Adjusted net income was $24 million for the quarter with adjusted earnings per share of $0.11 compared to $18 million and $0.16, respectively, in the prior year period.

從形式上看，由於我提到的非經常性項目以及交易量略低於預期，調整後的 EBITDA 利潤率擴張比我們的預期低 10 個基點。該季度調整後淨利潤為 2,400 萬美元，調整後每股收益為 0.11 美元，而去年同期分別為 1,800 萬美元和 0.16 美元。

The increase in adjusted net income was driven by higher adjusted EBITDA, which more than offset the increase in interest expense, while adjusted earnings per share was negatively impacted by the increase in weighted average shares outstanding from the Food Safety transaction. We ended the fourth quarter with gross debt of $900 million, 67% of which remains at a fixed rate and a total cash position roughly unchanged from Q4 at $239 million, resulting in proforma net leverage of 2.9x and total liquidity of over $375 million.

調整後淨利潤的成長是由調整後 EBITDA 的提高所推動的，這遠遠抵消了利息支出的增加，而調整後每股收益則受到食品安全交易中流通在外加權平均股增加的負面影響。截至第四季末，我們的總負債為9 億美元，其中67% 維持固定利率，總現金部位與第四季基本持平，為2.39 億美元，預期淨槓桿率為2.9 倍，總流動性超過3.75億美元。

Although the first quarter is typically our lowest quarter seasonally, this year was a bit lower than we had anticipated, but generally aligned with how we anticipated the year developing. From what we have seen through the first month of Q2, the demand environment continues to appear consistent with what we had expected. As John noted, though, we are fully immersed in our ERP implementation, which will enable us to extract ourselves from the transition service arrangements we have with 3M.

儘管第一季通常是我們季節性最低的季度，但今年的情況略低於我們的預期，但總體上與我們對今年發展的預期一致。從我們第二季第一個月的情況來看，需求環境仍然與我們的預期一致。不過，正如 John 指出的那樣，我們完全沉浸在 ERP 實施中，這將使我們能夠擺脫與 3M 的過渡服務安排​​。

The inefficiencies he mentioned will make shipments more challenging in Q2, and we will likely have carryover some Food Safety open orders into the initial weeks of Q3 as a result. Based on this dynamic, we could see a broader range of outcomes for the second quarter depending on how the backlog of open orders develops. Our current base case view is that we should see a modest sequential increase in revenue, which assumes we exit the quarter with an elevated level of open orders as well as a modest sequential increase in adjusted EBITDA margin.

他提到的效率低下將使第二季的出貨更具挑戰性，因此我們可能會將一些食品安全未結訂單結轉到第三季的最初幾週。基於這種動態，我們可以看到第二季更廣泛的結果，具體取決於未結訂單積壓的發展。我們目前的基本情況觀點是，我們應該看到收入小幅環比增長，假設我們以較高的未平倉訂單水平退出本季度，並且調整後的 EBITDA 利潤率小幅環比增長。

If we do see some amount of revenue shift from Q2 to Q3, this would correspondingly affect the normal seasonality of our business, in which the second half of the year typically accounts for 52% of the year's revenue. Based on our first quarter results and the normal seasonality of the business as well as the expectation of an improved end-market environment in the second half, we are maintaining our full year outlook.

如果我們確實看到一些收入從第二季度轉移到第三季度，這將相應地影響我們業務的正常季節性，下半年通常佔全年收入的 52%。基於我們第一季的業績和業務的正常季節性以及下半年終端市場環境改善的預期，我們維持全年展望。

I'll now hand the call back to John for some closing thoughts.

現在我將把電話轉回給約翰，以徵求一些結束語。

Thanks, Dave. As you've heard today, we believe we're making solid progress on the integration of the former 3M business and are on track to be completely independent from 3M in the third quarter outside of Petrifilm manufacturing where we feel that arrangement is in a stable place. A new ERP system is up and running after the Phase I launch, which is a significant step to have behind us. And we will work diligently through the backlog of open orders as we continue to become more efficient than our new ERP system.

謝謝，戴夫。正如您今天所聽到的，我們相信我們在整合前 3M 業務方面正在取得紮實進展，並且預計在第三季度完全獨立於 3M（Petrifilm 製造除外），我們認為安排處於穩定狀態。第一期啟動後，新的 ERP 系統已啟動並運行，這是我們邁出的重要一步。隨著我們繼續變得比新的 ERP 系統更有效率，我們將努力解決積壓的未結訂單。

We still have significant work ahead of us with key activities taking place in the second and third quarters as we implement the final steps needed to relocate production and exit the transition services agreements. In addition to the important step of gaining full operational control of this part of the business, there are the associated savings we expect to see from exiting the agreements, and we fully anticipate ultimately achieving greater efficiency and utilization in our footprint.

我們仍有大量工作要做，關鍵活動將在第二季和第三季進行，因為我們將實施搬遷生產和退出過渡服務協議所需的最後步驟。除了獲得這部分業務的全面營運控制權這一重要步驟之外，我們預計退出協議還會帶來相關的節省，並且我們完全預計最終會在我們的足跡中實現更高的效率和利用率。

Having now crossed the 1-year anniversary of the 3M transaction, we are excited about the opportunities we have to leverage our leading position in the Food Safety markets. Our sales and R&D teams are now approaching 1 year of working together on the combined product portfolio, building momentum that will result in new commercial opportunities, particularly as the market conditions improve.

現在已經過了 3M 交易一周年了，我們對有機會利用我們在食品安全市場的領先地位感到興奮。我們的銷售和研發團隊目前在組合產品組合上的合作已接近一年，累積的勢頭將帶來新的商業機會，特別是隨著市場狀況的改善。

Our team members around the world have worked tirelessly on advancing the integration process, and I want to wrap up here today by thanking them for their hard work. We have a shared goal that we are ever mindful of to remain the global leader in Food Safety and help protect the world's food supply.

我們世界各地的團隊成員為推進整合進程不懈努力，我想在今天結束時感謝他們的辛勤工作。我們始終牢記一個共同目標：保持食品安全領域的全球領導者地位並幫助保護世界食品供應。

I'll now turn things over to the operator to begin the Q&A.

我現在將把事情交給操作員開始問答。

(Operator Instructions)

（操作員說明）

And the first question comes from Brandon Vazquez with William Blair.

第一個問題來自布蘭登·巴斯克斯和威廉·布萊爾。

I guess, first, just to start on guidance at kind of a high level. I think some of the weakness in the quarter was coming from worsening macro, especially like in China, given updates seem to be kind of negative out of there -- just curious what gives you guys kind of confidence around reiterating the guidance range?

我想，首先，只是從高層開始提供指導。我認為本季的一些疲軟來自宏觀經濟惡化，尤其是在中國，因為那裡的更新似乎有點負面——只是好奇是什麼讓你們對重申指導範圍有信心？

Obviously, that was encouraging to see maybe an indication of the underlying momentum you guys are seeing. But again, in kind of a worsening backdrop in macro that seems to be out of your control a little bit. What are you guys seeing that's giving you guidance or comfort in that guidance range?

顯然，看到你們所看到的潛在動力的跡像是令人鼓舞的。但同樣，在宏觀情勢惡化的背景下，這似乎有點超出你的控制範圍。你們看到了什麼在這個指導範圍內帶給你們指導或安慰？

I think specifically to China, what we're seeing is that it's a relatively small piece of the business. It's only 3% of revenue. So while China was a challenge as we look forward, it was a particularly tough quarter that had a tough comp, but I don't think it's going to repeat, so we don't see that big of a drag. For the overall markets, it's pretty similar to what we've been seeing.

我認為，具體到中國，我們看到的是，它只佔業務的一小部分。僅佔收入的3%。因此，雖然我們展望未來，中國是一個挑戰，但這是一個特別艱難的季度，而且競爭也很艱難，但我認為這種情況不會重演，所以我們不會看到那麼大的拖累。對於整體市場而言，這與我們所看到的非常相似。

Food production volumes are slow, the distributor channels destocking. That's kind of what we thought was going to happen for the year. And so while this quarter was about a $4 million miss on what we expected it to be, we feel pretty comfortable about where we are on end-user demand. I think like we talked about kind of the wild card is making sure that we're getting the product out the door with the SAP conversion.

食品產量緩慢，經銷商通路去庫存。這就是我們認為今年會發生的情況。因此，雖然本季比我們的預期少了約 400 萬美元，但我們對最終用戶需求的現狀感到非常滿意。我認為就像我們談到的那種通配符是確保我們透過 SAP 轉換將產品推出市場。

I'm really proud of the team and what we've been able to do into the SAP conversion. You hear all the horror stories, but you don't hear the good stories. This is one of the good stories, right? We're 40 days in, we're immediately able to do order to cash, build customers, pick, pack and ship, manufacture, but we're just not as efficient and it's going to take us a little while to get that efficiency up. So we're caught a little bit behind. We think we can catch up in October, November. But as Dave talked about, there may be a little bit of carryover going into the third quarter.

我為我們的團隊以及我們在 SAP 轉換方面所做的努力感到非常自豪。你聽過所有恐怖故事，但你聽不到好故事。這是好故事之一，對吧？我們已經 40 天了，我們可以立即從訂單到現金、建立客戶、挑選、包裝和運輸、製造，但我們的效率不夠高，而且需要一段時間才能達到這種效率。所以我們有點落後了。我們認為我們可以在十月、十一月趕上。但正如戴夫所說，第三季可能會有一些結轉。

So I'll let Dave talk a little bit more about guidance. Dave, is there anything to add?

所以我會讓戴夫多談談指導。戴夫，還有什麼要補充的嗎？

No, I think that -- Brandon, I think John summarized it pretty well. I guess I'd just highlight, we talked about the first half being softer and that's what we're seeing. But outside of Asia Pacific, where I think we have some challenges that we noted in the prepared remarks, we saw particularly the Food Safety business growing pretty good outside on a global basis outside of Asia Pac. So there's some strength there, but I think the environment is not too different than we'd anticipated.

不，我認為——布蘭登，我認為約翰總結得很好。我想我只是強調一下，我們談到上半場變得更加柔和，這就是我們所看到的。但在亞太地區之外，我認為我們在準備好的發言中指出了一些挑戰，我們特別看到食品安全業務在亞太地區以外的全球範圍內增長得相當不錯。所以那裡有一些力量，但我認為環境與我們預期的沒有太大不同。

Okay. And Dave, maybe as a follow-up to that, you just hit on -- you guys mentioned in the prepared remarks a little bit that there are some -- I think the phrase John had used, was the unique challenges to Neogen and APAC. Can you guys maybe talk about some of those challenges that are unique to you guys, what you're doing to try to maybe fix some of those efforts?

好的。戴夫，也許作為後續行動，你們只是偶然發現——你們在準備好的評論中提到了一些——我認為約翰使用的短語是 Neogen 和亞太地區面臨的獨特挑戰。你們能否談談你們特有的一些挑戰，你們正在做什麼來嘗試解決其中的一些問題？

Yes. What we mean by that was when 3M was struggling with their production of Petrifilm, APAC was asymmetrically hurt regarding supply. And so we had almost 24 months of supply disruption which really challenged customers because they just -- they had to do other solutions and they had to find ways to continue to run their business without the Petrifilm product. And so the unique challenge to us is we have to earn back the trust, Brandon.

是的。我們的意思是，當 3M 的 Petrifilm 生產陷入困境時，亞太地區的供應受到了不對稱的傷害。因此，我們經歷了近 24 個月的供應中斷，這確實給客戶帶來了挑戰，因為他們必須採取其他解決方案，並且必須找到在沒有 Petrifilm 產品的情況下繼續經營業務的方法。因此，我們面臨的獨特挑戰是我們必須贏回信任，布蘭登。

We've got a strong -- we have supply. One quarter, they're like great, but show me another quarter. So now we're 2 quarters in where supply is where it needs to be. But it's going back to those customers and winning back their trust that now under our regime, we fixed the supply issues that weren't able to be fixed for 2 years and earn their trust back and get that business back.

我們有強大的供應。一個季度，他們看起來很棒，但給我看另一個季度。所以現在我們已經有兩個季度的供應達到了需要的水平。但現在，在我們的製度下，我們解決了兩年來無法解決的供應問題，並重新贏得了他們的信任並重新獲得了業務，這將回到那些客戶並贏得他們的信任。

Okay. And maybe I'll throw one last follow-up to that, and then I'll let someone else get in queue here. But as you look at APAC and you're talking about winning trust back, do you guys have a sense of where those customers are going? I think often when we talk to experts, they fall on kind of like backup plans? Are they moving to competitors? Do you think this is kind of temporary? Any thoughts around that?

好的。也許我會對此進行最後一次跟進，然後我會讓其他人在這裡排隊。但當你看看亞太地區並談論重新贏得信任時，你們知道這些客戶要去哪裡嗎？我想，當我們與專家交談時，他們經常會想到備份計劃？他們是否會轉向競爭對手？你認為這只是暫時的嗎？對此有什麼想法嗎？

Yes. It's a little bit of both. It's not so much traditional methods there. We did see some move to competitors, but we're seeing those customers come back. That's why I said I'm prepared. I was encouraged because we're starting to see that move back. But it's -- it takes you 2 years to lose them, and it's going to take us a little while to get them back. But I think we're really confident that our solution and our -- the things that we provide around our product portfolio solutions and people are just head and shoulders above our competitors. So we're going to get that business back.

是的。兩者都有一點。那裡沒有那麼多傳統方法。我們確實看到一些客戶轉向競爭對手，但我們看到這些客戶又回來了。這就是為什麼我說我已經準備好了。我很受鼓舞，因為我們開始看到這種趨勢的回歸。但你需要兩年的時間才能失去它們，而我們也需要一些時間才能把它們找回來。但我認為我們非常有信心，我們的解決方案以及我們圍繞產品組合解決方案和人員提供的東西都遠遠領先於我們的競爭對手。所以我們要拿回這項業務。

And the next question comes from Tim Daley with Wells Fargo.

下一個問題來自富國銀行的蒂姆戴利。

Great. So John, just could you give us a bit more details on the genomics? I think the term of attrition of 2 U.S. customers, please? And did that impact the kind of like below expectations revenue in the quarter?

偉大的。約翰，您能給我們更多有關基因組學的詳細資訊嗎？我想知道 2 個美國客戶的自然減員期限是多少？這是否會影響該季度的營收低於預期？

So yes, thanks, Tim. So we had 2 large customers that are in very challenging markets right now in poultry and swine. And we're putting extreme pressure on pricing and other solutions for us. And for years, these have been good-volume customers but relatively low-margin customers. You've seen that we've been moving to transition the genomics business to different species that are higher-value, higher-margin. And when the pressure came and they wanted a significant price decrease, we declined. So we made the decision that even though it was going to hurt us on volume, it wasn't as significant from a profitability standpoint. So that's really what drove that decision.

所以是的，謝謝蒂姆。因此，我們有兩個大客戶，目前在家禽和生豬市場上面臨著非常具有挑戰性的挑戰。我們對定價和其他解決方案施加了極大的壓力。多年來，這些客戶都是大批量客戶，但利潤率相對較低。您已經看到，我們一直在將基因組學業務轉向更高價值、更高利潤的不同物種。當壓力來臨時，他們希望大幅降價，我們拒絕了。因此我們做出決定，儘管這會對我們的銷售量造成影響，但從獲利能力的角度來看，這並不那麼重要。所以這確實是推動這個決定的原因。

All right. No, I appreciate that detail. And just thinking about those 2 customers, is there something that we could take out of the rent model here in terms of '23 revenues? Any color around percent of revenues, maybe those 2 customers accounted for or would have accounted for going forward?

好的。不，我很欣賞這個細節。想想這兩位客戶，就 23 年的收入而言，我們是否可以從租賃模式中剔除一些東西？收入百分比周圍的任何顏色，也許這兩個客戶佔或將佔未來？

Tim, it's Dave. I think it's in the guide. I would say, the new news for us a little bit in the quarter wasn't these folks. I would say, things came in generally a little bit lighter, I think, some -- because of some of the end-market pressures. But I think this more describes the kind of the absolute growth rate. And I would say, it's contemplated in the guidance.

提姆，我是戴夫。我認為它在指南中。我想說，本季我們的新消息不是這些人。我想說，我認為，由於終端市場的一些壓力，情況總體上稍微輕鬆一些。但我認為這更描述了那種絕對成長率。我想說，指南中已經考慮到了這一點。

All right. Got it. Perfect. And then thinking about the destocking, just I know new commentary around, I think the channel is at low -- pretty low levels here. Just when should we think this rebound? Or how long should these low levels sustain inventory before going back normal? Or are we at new normal at low levels, just additional thought here and timing?

好的。知道了。完美的。然後考慮去庫存，據我所知，周圍有新的評論，我認為渠道處於低位——這裡的水平相當低。我們什麼時候該考慮這種反彈？或者說，在恢復正常之前，這些低水準的庫存應該維持多久？或者我們處於低層次的新常態，只是需要額外的思考和時機？

Tim, I don't think we're at new normal. I think this is abnormally low. And based on what we're seeing on end-user demand, so we see what goes in and what goes out on end-user demand. Like I told you, I've always been bad at calling the bottoms. But to me, this is not a sustainable model.

提姆，我認為我們還沒有進入新常態。我認為這個數值低得不正常。根據我們對最終用戶需求的了解，我們可以了解最終用戶需求的流入和流出。就像我告訴過你的，我一直不擅長跟底。但對我來說，這不是一個可持續的模式。

So I feel pretty comfortable like we talked about second half of the year where we think that you can't drive inventories down that low and still provide the type of service levels that I know the distributors want to provide to their customers. So I think this is -- it's something that we contemplated and we think probably in the back half of the year is going to improve.

因此，我感覺很舒服，就像我們談論今年下半年一樣，我們認為你無法將庫存降低到那麼低，但仍能提供我知道分銷商希望向其客戶提供的服務水平。所以我認為這是我們考慮過的事情，我們認為今年下半年可能會有所改善。

All right. Got it. Then Dave, final one for me and I'll pass along. So could you just walk us through the transition agreement here in terms of the Pathogen and Sample Handling lines as a percent of like you called it out 30% of revenues, how much of the, I guess, transition manufacturing agreement costs, are those product lines? And how should we think of like the day 1 margin impact as those fuel costs roll off, if you will?

好的。知道了。然後是戴夫，這是我的最後一篇，我會繼續講下去。那麼，您能否向我們介紹病原體和樣品處理線方面的過渡協議，就像您所說的那樣，佔收入的 30%，我猜這些產品佔過渡製造協議成本的比例是多少？線？如果您願意的話，我們應該如何看待隨著燃料成本下降對第一天利潤率的影響？

Yes, Tim, look, we're obviously standing up a reasonable amount. There's costs from kind of move and kind of onetime in nature, but we're standing up recurring costs to accept those product lines in. And when those happen, to your point, we won't be paying the manufacturing transition fee. I think net-net, that's accretive to us. Tough to quantify too sharply and some of the costs are overlapping. But we -- you had seen us put forward a schedule in the spring about where we expected to be from an integration standpoint at the end of our third quarter.

是的，提姆，你看，我們的立場顯然是合理的。本質上存在某種遷移和一次性的成本，但我們正在承受經常性成本來接受這些產品線。當這些發生時，就你的觀點而言，我們將不會支付製造過渡費。我認為網路對我們來說是有好處的。很難過於精確地量化，而且有些成本是重疊的。但我們——你們已經看到我們在春季提出了一個時間表，從整合的角度來看，我們預計在第三季末達到什麼目標。

Hopefully, you took away from the call that we feel at least here after the first, we continue to track to that. I think the other thing I'd add is that on the OpEx line, we have some duplicate costs as well that we'll see come out for the fourth when we're able to get to that point of integration that we previously noted. So at just under 23% adjusted EBITDA margin for the first, I talked about 100 basis points of some kind of unanticipated headwinds. But there's probably another 100 basis points of duplicate cost in there. So we got to manage it well, but I think the fourth quarter and really the exit rate for the year is how I think about it is where we should see us down to just manufacturing transition fees related to manufacturing on Petrifilm and then, of course, that becomes an issue in the coming years. So maybe not as precise an answer as you're looking for, but hopefully, that contextualizes it.

希望您能從我們在第一次通話後感受到的電話中帶走，我們將繼續追蹤這一點。我想我要補充的另一件事是，在營運支出線上，我們也有一些重複的成本，當我們能夠達到我們之前提到的整合點時，我們將看到第四個成本出現。因此，在調整後的 EBITDA 利潤率首次低於 23% 的情況下，我談到了 100 個基點的某種意外阻力。但其中可能還有 100 個基點的重複成本。所以我們必須好好管理它，但我認為第四季度和今年的退出率就是我的想法，我們應該看到我們只需要減少與 Petrifilm 製造相關的製造過渡費，然後，當然，這將成為未來幾年的一個問題。因此，也許答案不像您正在尋找的那麼精確，但希望能夠將其結合起來。

And the next question comes from David Westenberg with Piper Sandler.

下一個問題來自 David Westenberg 和 Piper Sandler。

This is Jon on for Dave. So can you give any additional details on the ERP implementation? There was some revenue that was shifting from -- between the different quarters from the second quarter. So can you just walk us through what the implementation issues were, what the degree of the shift was and what the areas where that shift was mostly around?

這是喬恩替戴夫發言。您能否提供有關 ERP 實施的更多詳細資訊？從第二季開始，一些收入在不同季度之間發生了轉移。那麼您能否向我們介紹一下實施問題是什麼、轉變的程度是什麼以及轉變主要圍繞哪些領域？

Yes. Thanks, Jon. Like we talked about in the prepared remarks, when you go to a new ERP system, you will not be as efficient day 1 as you are on the old system because you've spent 20 years on the old system and you knew it backwards and forwards. So like I said, the good news was the business was up and running. We were able to do all the functions, nothing stopped. It's just we're not as fast in really around warehousing that we are and everything else than we were before.

是的。謝謝，喬恩。就像我們在準備好的演講中談到的那樣，當您使用新的ERP 系統時，您的第一天效率不會像使用舊系統時那樣高效，因為您已經在舊系統上花費了20 年的時間，並且您知道這一點前鋒。就像我說的，好消息是業務已經啟動並運行。我們能夠完成所有功能，沒有任何停止。只是我們在倉儲和其他方面的速度不如以前那麼快。

So we're finding a way to continue to train the teams. We're seeing sequentially daily that, that is improving day by day. But we had a period of time where that wasn't at our average, and so we have to overperform to get to the average. And I know Dave's got a couple of comments on this.

所以我們正在尋找一種方法來繼續訓練團隊。我們每天都看到，情況正在日益改善。但我們有一段時間沒有達到平均水平，所以我們必須表現出色才能達到平均水平。我知道戴夫對此有一些評論。

Just to make sure we're clear. So this didn't affect the end of the first quarter. So we went live for the first day of the second quarter. So what we're looking at is the first month of our second quarter here and how shipments are out the door, and we carry over open orders from September into October. And that was low double-digit millions, whereas it usually be much, much lower than that as we ship at a slower rate, you got to make that up, right? So the question is, do we carry over some of that out of the second.

只是為了確保我們清楚。所以這並沒有影響第一季的結束。所以我們在第二季的第一天上線了。因此，我們關注的是第二季的第一個月，以及出貨情況，我們將未結訂單從 9 月結轉到 10 月。這是低兩位數的數百萬美元，而通常比我們的發貨速度慢得多，所以你必須彌補這一點，對嗎？所以問題是，我們是否會在第二次繼承其中的一些內容。

So our goal here was just to share, I think, first and foremost, that the implementation went well. I think that's the headline. And as anticipated, maybe we're shipping a little bit slower than we otherwise may have and that we got our -- we're kind of calling it out as potentially a shipment timing risk for the second. Some of that might push to the third. But what we really got our eye on is the demand backdrop. And I would say through the first month, hopefully, you heard from us, that feels supportive.

因此，我認為，我們在這裡的目標首先是分享實施進展順利。我想這就是標題。正如預期的那樣，也許我們的發貨速度比其他情況要慢一些，並且我們將其稱為第二個潛在的發貨時間風險。其中一些可能會推到第三個。但我們真正關注的是需求背景。我想說，在第一個月裡，希望您聽到我們的消息，並感到被支持。

Got it. So also, we heard that Walmart had suggested the consumers are reducing their buying because of GLP-1. Are you actually hearing food producers saying anything similar?

知道了。同樣，我們聽說沃爾瑪建議消費者因 GLP-1 而減少購買。您真的聽過食品生產商說過類似的話嗎？

We're hearing the same things that you heard. And most of them are watching. They're understanding that it may have an impact, and we're looking at the same thing, Jon. I think if you look at it in the relative scale and size of our business, GLP-1 will be a headwind, but it is going to be a relatively small headwind compared to the big tailwinds we have around this business, around increased regulatory environment, increased customer usage, expanding into new geographies, developing new products. So while it may be a headwind going forward, it's going to be, I think, a de minimis headwind.

我們聽到的事情和你聽到的一樣。他們中的大多數人都在觀看。他們知道這可能會產生影響，我們也在考慮同樣的事情，喬恩。我認為，如果你從我們業務的相對規模和規模來看，GLP-1 將是一個逆風，但與我們圍繞該業務、圍繞加強的監管環境所帶來的巨大順風相比，這將是一個相對較小的逆風，增加客戶使用量，擴展到新的地區，開發新產品。因此，雖然這可能是未來的逆風，但我認為這將是微乎其微的逆風。

Got it. And just one last one, sorry if I missed it, but have you -- do you think that any customers stocked Petrifilm earlier in the year during supply-constrained environment?

知道了。最後一個，抱歉，如果我錯過了，但是您認為有客戶在今年早些時候在供應緊張的環境下庫存了 Petrifilm 嗎？

Sorry, I didn't get the question...

抱歉，我沒聽清楚問題...

Yes, can you state it again, Jon?

是的，你能再說一次嗎，喬恩？

Yes. Sorry if I missed it. But is it your understanding that any customers destocked Petrifilm earlier in the year during more supply-constrained environments?

是的。抱歉，如果我錯過了。但您是否理解，在供應更緊張的環境下，有客戶在今年稍早就減少了 Petrifilm 的庫存？

No, I don't think we've seen that. I mean, as you know.

不，我認為我們還沒有看到這一點。我的意思是，正如你所知。

And this concludes the question-and-answer session. I would like to turn the floor to management for any closing comments.

問答環節到此結束。我想請管理層提出任何結束意見。

Thank you. Yes. As we stated earlier, while the quarter was a little softer than anticipated, I think what we wanted to talk about was the success really of the integration and moving of our 2 transition services agreements and standing up ERP. And for those of you that have been involved in a lot of different companies, those were significant risk factors that could derail organizations.

謝謝。是的。正如我們之前所說，雖然本季的情況比預期的要軟一些，但我認為我們想要談論的是我們的 2 個過渡服務協議的整合和遷移以及 ERP 的真正成功。對於曾參與過許多不同公司的人來說，這些都是可能使組織脫軌的重大風險因素。

And I'm really proud of the team and the work they've done and the ability to plan and execute kind of seamlessly to continue to move to the new Neogen and the one Neogen environment. So we're really excited about the future. We look forward to talking to you at the end of the second quarter. Thank you.

我對團隊和他們所做的工作以及無縫規劃和執行以繼續遷移到新的 Neogen 和單一 Neogen 環境的能力感到非常自豪。所以我們對未來感到非常興奮。我們期待在第二季末與您交談。謝謝。

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

謝謝。會議現已結束。感謝您參加今天的演講。現在您可以斷開線路。