Annual Meeting Notes.....
Before the meeting I overheard Ted Doan talking about campybacter and the navy. He said something about a
ship during the gulf war being contaminated. (I'll have to do some research on this one)
Annual meeting notes.
Review of financials and a bunch of stuff we all already know.
Highlights of the year:
A bunch of stuff we already know from my previous conference call notes (go back and read them on a previous
post).
Last month neogen acquired all of the inventory, the technology, and the USDA license to produce type B
botulism vaccine, from the State of Michigan. This is the only approved test for this animal health hazard. This
production will be merged into the Tampa lab. This will substantially improve profits on this product. (this is
apparently a result of what was reported in the NYTimes article).
The fruit and vegetable market is just starting to get attention. We expect the FDA will set down guidelines. They are already stepping up their testing program. We have identified about 9000 potential customers in that market;
today we are serving about 10% of those customers.
Reviewed peanuts test said similar test for milk and something else is to come.
We entered into the food service and retail markets with our food safety products. This include wholesale
grocerys, airline caterers, as well as tradition food service business. There are over 750,000 establishments in the
U.S., we will likely be only focusing on about 5% of this market.
Pet food manufacturers are stepping up their testing programs.
HACCP Programs are mandatory for the seafood industry, but only a handful have ever seen an FDA inspector.
We expect this market to increase as the industry is moved into compliance.
The meat, poultry and egg industry we believe has the best opportunity for rapid growth. Another 3000 plants
will be required to implement HACCP plans in January of 1999.
There are 192 countries that could be using our products however only 22% of sales come from this source. As we expand our efforts we expect international sales to grow.
neog has the largest collection of immunoassay tests to detect drugs in animals than anyone in the world. These
tests are used to test for drugs in food animals and drugs of abuse in racing animals. Any horse or dog involved in
any sporting event is likely to be tested by a battery of up to 15 of our tests.
Ethicals sales (sales to veterinary practices or vet clinics) by direct sales and distributors. We have over 100
products that are sold into these markets.
We also have over 100 well established distributors in the over the counter market. Direct to farmers and
ranchers.
International opportunities for animal safety products. Emphasis on South and Central America.
We are the primary supplier to the ?? company of speciality needles that allow chicks to be vaccinated while they are still in the shell. This new drug delivery system has reduced trauma and decreased the possibility of what might become food borne pathagens. Approximately 85% of all broiler chickens in the U.S. will be vaccinated by this method.
We have just begun to scratch the market potentials of most of the markets we serve.
We are going to continue to introduce new products that we can market to the same customer base. R&D 8 to
10% of gross revenues.
Continue efforts in the international markets.
Continue to try and grow through acquisition. We have in buying power of up to $19 million. We are committed
to only buying other businesses that are complimentary to our existing business, have the same growth potential,
that we know how to manage and we can buy for the right price.
We will continue to buy back stock as the opportunity presents itself.
Questions:
1. Purchase of the State of Michigan lab facility? - we got the entire rights and technology for the botulism vaccine out of the deal. It significantly increases our profit on this test which we already had exclusive rights to remarket. In regards to the company that bought this lab for the sole source for anthrax vaccine for the military, "our involvement there to support them strategically going forward as they might, this young company might need some help, and we might be able to exercise use of some of their, we also do some things for the military from a diagnostic standpoint not form a vaccine standpoint". <<<He stumbled a bit on this one....I wonder why? hmmm?>>>
2. Accounting question about keeping a handle on manufacturing costs.
3. Taxes? The answer was that the company will be fully taxable going forward from this point. (although the controller told me after the meeting that there might be up to a million dollars of credits left, although with limitations of how much can be used at one time or another).
4. Efforts to increase investor awareness? We have about ten market makers, but a number of those are the wholesalers; six are full reporting companies. We appear on regular basis at a number of symposiums. At this point in time we have gone through some shifts because are major market makers have changed ownership, and our shifting people. We are continuing to look for new market makers that will do research on the company. Value line told us they thought we were still too small.
5. Internet? How about updating your web sight? ...we are trying to get a new web sight up by the middle of November.
6. Yahoo page? Do you ever pay attention to it? We read those on occasion. Here is where he said that there are some good comments but went on to make fun of NogoodGordon's posts (I'm sure its your name! It's too memorable! I doubt he sees many posts but just remembered the few negative posts and the name NGG; though the staff does regularly read yhoo and www.techstocks.com)
7. Expanding the Lansing facility? The have acquired a new building adjacent to their property in Lansing.
8. Research spending for the next year? We need to keep trying to shorten our tests. So long as we can find good suitable places to spend the research we will continue to spend 10% on R&D.
9. Sales and Marketing? Domestically food safety is handled directly by us. Animal safety products, there are alot more farmers and ranchers then there are MacDonalds; whereas we can reach the MacDonalds with food safety products on our own, with animals safety products we have over a 100 distributors in the the OTC side that we sell product to, that in turn put product in the Farm & Fleets of the world. Internationally we work with distributors. Giving a choice we would have more direct sales. Our product still requires a fair amount of education and our technically trained sales organization is equipped.
10. Acquisitions? Has neog been approached? No one has approached us. There are number of companies we are looking at and we were real close last July but the deal fell through. No letters of intent have been signed.
That's all I have.
Regards,
Kevin |
