Jim Herbert - CEO Steve Quinlan - CFO.

Paul Knight - Janney Capitals Tony Brenner - ROTH Capital Partners Matt -William Blair and Company Charles Haff - Craig-Hallum Capital Jason Rogers - Great Lakes Review.

Welcome to the Neogen's Fourth Quarter and Fiscal Year 2014 Earnings Result Conference Call. My name is Daniel and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Jim Herbert. Jim, you may begin..

Thanks, Danny. Good morning and welcome to our regular quarterly conference call. Today, we'll be reporting to you the results of that fourth quarter as well as of course our fiscal yearend that ended on May 31.

I'll remind you that some of the statements made here today could be termed as forward-looking statements, and these forward-looking statements, of course, are subject to certain risks and uncertainties, the actual results may differ from those that we discuss today.

And those risks that are associated with our business are covered in part in the Company's Form 10-K that's filed with the Securities and Exchange Commission. In addition, to those of you who are joining us today by live telephone conference, I would also welcome those who may be joined by way of the simulcast on the World Wide Web.

Following comments this morning, we'll entertain questions from those who you are participating in this live conference. And I'm joined today by Steve Quinlan, our Chief Financial Officer. Earlier today, Neogen issued a press release announcing results of our fourth quarter ended the yearend 2014 fiscal year.

Looking first to that fourth quarter, revenues were $67.3 million or 20% increase over revenues for the same period last year. Income for the fourth quarter was approximately $7.5 million as compared to approximate $7 million in the fiscal year 2013.

This equates to $0.20 a share compared to $0.19 a share year ago when all adjustments were made for the stock split and the increase in average number of shares outstanding. For 2014 fiscal year for the whole year, revenues increased by 19% from the previous year to approximate $247.4 million.

Net income for the year was $28.2 million and that was compared to the prior year $27.2 million. Again, adjusting for changes ensures outstanding earnings per share for the current year were $0.76 as compared to $0.75 a year ago.

And both the revenues and the net income for the 2014 year were of course established new all time highest for our 32 year old company. On that same note, this fourth quarter was 89th quarter in the past 94 that Neogen reported revenue increases compared to the prior year.

This now stands 23.5 years, it's kind of like there are now 930 employees are saying to us the record won't get spoiled on their watch and they continue to do a great job.

This quarter, we have new firm with a strong analysts they are trying to research on the company and I was putting again my comments, remember that somehow I just continue to forget to talk about firms that are following our company and have done a good job over a long period of time, informing our shareholders and prospective shareholders.

And I think I would like to make sure I mentioned those today. I'll start with Steve O'Neil, Hilliard Lyons; I believe has the longest unbroken chain of research on the company.

And Tony Brenner at ROTH Capital for years has told me when he thought we were doing good but he also note they had to tell me on those few occasions when I might have disappointing.

The other four in close succession would include the Stephens Group from Little Rock and Craig Hallum and Janney Montgomery Scott from Great Lake Review and we have been joined this quarter by William Blair and Company and we welcome Brian Weinstein as a new analyst to join this group.

Steven, I would like to spend some time with you this morning reviewing the highlights of the year that we just finished. And then talk about the New Year's prospects. First should be a follow up on the press release that was issued last week announcing Steve Snyder's resignation as chief operating officer of the company.

It was back in September that we announced Steve taking that position and this is a disappointing result, but Steve is doing this strictly for personal reasons. We are already off and running and recruiting for someone to fill his position. And in the meantime, senior management is not really concerned for the short term.

We all just care little bigger load and may be sleep few less hours. But looking back over the past several years, this year was just one in a succession some pretty good years. Our compound annual growth rate and revenue for the past five years has been 15%.

That revenue growth is traditionally brought us strong increase in asset and increase in net income commensurate with the top line growth. And of course this year we didn't see that bottom line growth. The big difference was of course the phenomenal year that we had in 2013. That year we had a 21% increase in net income on a 30% increase in revenues.

Those who of you that followed the company were remembering everything just land up and we took advantage of it. That was bad grain crop in the U.S. that calls for more testing and similar problems occurred in Brazil and Europe. Currency conversions didn't hurt us.

Some guys in Ireland decided to make horse meat with ground beef and the industry started testing for the presence of horse meat with our product it had almost no competition.

Start dividend, declared back in October it had a significant number stock -- stock option were exercised which gave us almost 2 million share increase in total diluted shares at the end of our current year compared to where it was at the beginning of the year.

There was 2% decline in net income percent and net -- and operating income percent, its real story is that dropped from 19.6% to 17.5% for the year. As most of you know, we've always used operating income as the major metric in our management strategy.

We just try to hold that at 20%, loosening up a little with little more expenses when it topped over that and pulling back on expenses as they would drop below. And once again the answer goes back to the mix of products. Some asked if acquisitions could have been a problem and the answer that's no.

They all three have been good contributors and Steve will talk some more about that in a few minutes. Others wondered it we have been seeing a price deterioration and that was hurting our margins and the answer to that one is also no. So even though it's a tough year for comparison, Neogen's 2014 year was great in many respects.

We brought in three acquisitions this year that had great strategic fit and they were things that we have been looking for. During three acquisitions and we have to manage in six months is a little more aggressive than we normally tackle but they are integrating well and they accretive at top and bottom range.

Our acquisition of SyrVet and later in the year Prima Tech strengthened our worldwide positions in the veterinary instrument field. The January acquisition of Chem-Tech put us in a position that we wanted to be as part of our five year plan for biosecurity and the Animal Safety business.

In many ways biosecurity for animal protein production is just really kind of food safety back inside the farm gate.

Biosecurity products include both cleansers and disinfectants and rodenticides where we are already strong but until Chem-Tech acquisition, we didn't have strong product offering for insect control which is the third important piece in a biosecurity program.

Looking a bit around the company in some other places as far as performance is concerned, our animal genomics business group at GeneSeek continued its strong growth. I believe that our 18% increase there last year surely given us some market share increase. For the first time ever we analyzed one million samples in our laboratory this past year.

All these of course has led to the need for more people and more space and the space had to come first. I am very proud of the new animal genomics lab that we dedicated in Lincoln, Nebraska this month. On an international front, our Scotland based subsidiary continued its growth being up 24% for the year.

In addition to genomic services that helped to increase our revenues there, our sales throughout the European Union countries and allergen test kits and meat speciation testing has continued to be strong. Even our Food Safety group of earnings gained strong comparable for the prior year.

They got their revenue growth up to 10% that was totally on organic sales. And that maybe that's a good place for me to stop and ask Steve Quinlan to cover some of those food safety highlights and some of the other true color behind my comments this morning.

Steve?.

Well, thanks, Jim. And welcome to everyone listening on the conference call as well as those joining us via the internet. Jim is giving you the overall sales and profit performance for the 2014 fourth quarter and full fiscal year. I would like to add echo his comments that overall we were pleased but not satisfied with the result.

We were able to integrate three acquisitions during the year and achieved 19% revenue growth. We fell short of our double digit bottom line increase goal. In the next few minutes I'll address some of the significant highlights for the quarter and the year.

As Jim mentioned the Food Safety segment delivered a solid year with overall revenue growth of $10 million or 10% and all of that growth was organic. Food Safety struggle all year with comparison to unusually strong 2013 when there was significant mycotoxin outbreak in the U.S.

corn crop and European commodity grain crops which resulted in sales of our aflatoxin test kits increasing 43% over 2014. In last year's harvest which was our 2014 fiscal year, the U.S. crops were relatively clean, and this resulted in 29% decline in sales of our aflatoxin test kits in the U.S.

In spite of this decline, our Lansing based diagnostics group was able to grow overall revenues for the year. And did so across almost of all our market segments and product lines excluding the natural toxins.

Revenues for our industry leading product lines to detect inadvertent allergen contaminations such as milk process, soy, peanuts and gluten were up 24% in the U.S. and 18% worldwide for the year.

This product line continues to grow rapidly due to increasing regulations regarding product labeling, loss in brand equity resulting from product recalls and heightened awareness of the adverse effects of allergenic contaminants in food.

Our AccuPoint product line which test environmental surface cleanliness rose by 12% in the fourth quarter and 18% for the year due to market share gains particularly in the beverage industry. The company invested more than a $1 million in new manufacturing equipment in the past year to accommodate the expected future growth of this product line.

The Soleris line of optical microbial test systems used in the detection of spoilage organism like yeast and mold has solid gains for the year with new marketing programs driving placement of instruments up 40%. And the related disposable bio sales increased by 10%.

Revenues from other products such as ampoules media and filters to use to test and monitor water quality at beverage manufactures rose 25% in the quarter and 32% for the year reflecting continued market share growth for this product.

Our international operations which are primarily focused in the food safety area were strong in 2014 led by Neogen Europe business unit where sales up 24% for the year. This increase was driven by strong sales of genomic services up 47% as we continue to grow our market share in Europe and allergen which rose 14%.

For most of the year increased speciation testing in Europe resulting from the horse meat scandal in 2013 was a nice tailwind for Neogen Europe growth. Although speciation testing sell off in the fourth quarter, the new baseline level of testing is higher than the old.

And we believe that increased levels of speciation testing will continue into the future.

Neogen do Brazil continue to make inroads and penetrating the growing Brazilian market with sales up 19% in the fourth quarter and 39% for the year, was strong growth in sales of test kits to detect drug residues in milk and increases in mycotoxin and allergen test kits.

And revenues at Neogen Latinoamerica Mexican subsidiary were up 18% overall for the year.

Our Animal Safety group recorded overall revenue increases of 37% in the quarter and 29% for the full year, added significantly by the three acquisitions the company completed during the year which provided the company with $21.9 million in revenue in fiscal 2014. Each of these acquisitions is essentially bolt-on.

Although their gross margins are at the mid 30% lower than the overall animal safety average, they added minimal incremental operating expenses and resulting operating earnings which were in line with the Animal Safety segment.

As an example Chem-Tech operating earnings were 20% in the five months that we owned them expressed as a percentage of revenue.

Organic growth for the segment for the year was 6%, strengthening our existing Lexington based business came from our line of patented detectable needles which were up 11%, biologics were up 10% and increased in our line of animal care products. These gains more than offset a 14% decline in our line of small animal supplements.

Our line of rodenticides and cleaners and disinfectants had mixed results. Rodenticides which have been weak most of the year due to poor weather and credit risks in a couple of our key international markets, had 10% growth in the fourth quarter, but for the year revenues were 4% lower than the prior year.

Sales of cleaners and disinfectants were strong all year, added by outbreaks of avian flu and the porcine virus which is raised awareness of the need for these products. And sales were up 22% for the year.

GeneSeek, our agro genomic testing business recorded revenue increases of 18% worldwide for the year as we were able to successfully commercialize a number of new proprietary product offerings for cattle. Additionally, canine genotyping rose significantly as a result of our relationships with the largest canine breed associations.

For the quarter, gross margins were 47.6% compared to 50.7% in the same period last year. And for the full year gross margins were 49.6% representing 320 basis point decrease compared to last year. The change for each comparative period is a result of shift in overall revenue towards animal safety products, and product mix shifts within each segment.

There was minimal deterioration caused by pricing or cost pressure on our existing products. The overall decline was almost entirely due to product mix.

In the Food Safety segment, the lower mycotoxin sales I discussed earlier were replaced with the increase sales of product such as AcuMedia and AccuPoint which have margins 30% to 40% lower that resulted in gross margin declining from 63.7% in 2013 to 62.5% in 2014. In the Animal Safety segment, gross margins were 38.1% compared to 41.3% last year.

The result of the three acquisitions, product mix shifts within the segment and lower gross margins at GeneSeek due to the completion of a number of large, lower margin projects, and inefficiencies resulting from the 36% increase in the number of samples processed during the year.

The company purchased and renovated a 26,000 square foot building in Lincoln, Nebraska, beginning in the summer of 2013, spending a total of $2 million, creating a world class agro genomic testing facility which the business moved into May, 2014.

The new building and the installation of additional automation equipment to reduce the manual handling of samples should improve efficiency and accommodate future growth. Operating expenses were up 16% in the quarter and 15% for the full year, less than a rate of growth and revenues.

Sales and marketing expenses were up 22% in the quarter, 14% for the full year. The largest component of this increase are personnel related expenditures reflecting our increased headcount this year as well as the full year impact of hires made in the prior year.

As we have grown, we've continued to make additional investments in our sales and marketing infrastructure to better serve our customers' current and future needs. These expenditures don't always immediately benefit the current period, but we believe that they will pay dividends in the very near future.

Other increased expenditures such as shipping, royalties and distributor support directly result from the increases in revenues. Our general and administrative expenses rose 11% for the quarter and 21% for the year reflecting increased salary and fringe costs for increased personnel.

Depreciation for investments made in the company infrastructure and operating system in the past couple of years. Higher amortization expenses relating to businesses acquired. And increases in stock option and legal expenses from a year ago levels. Research and development expenses were 7% over the prior year.

And this group is working on a number of promising new products and some improvements of existing products. For the quarter, revenue growth was 20.1% and operating income was 7.4% over last year. For the full year, revenue growth was 19.2% and operating income increased by 6.6%.

And expressed as a percentage of sales, our operating income for the year was 17.5% compared to 19.6% last year. The decrease was primarily due to the lower gross margins discussed earlier. Currency losses included in other income and expense were $700,000 in 2014 versus $170,000 in 2013. Moving over to the balance sheet.

Our inventory grew by $12.9 million during the year; $8.7 million of that increase came with the businesses we acquired. We will continue to rationalize our product lines during 2015 and we have programs in place at each operation to improve our inventory returns. Our receivable balance grew faster than the increase revenues during 2014.

And some of that increase is due to sales to international customers in the last half of the year and these sales do take longer to collect. We were able to fund the $39 million for the acquisitions that we did this year.

And $11 million investment in property and equipment from available cash balances, and finished the year with $76 million in cash and investments. At this point, I would like to recognize and thank the 930 Neogen employees worldwide whose effort makes these results possible.

The integration this year of the SyrVet, Prima Tech and Chem-Tech businesses into Neogen have gone extremely well. And required a tremendous amount of effort and coordination throughout the company. Special mention goes to the Lexington operations group which was responsible for the integration of the acquisitions.

And GeneSeek which absorbed significant incremental sample volume and did not miss a bit while moving towards new building in May. They left their old building on Friday and were open for business the following Tuesday. I think these are great examples of what makes this company special.

So summarizing conclusion, there were significant investments made in the business this year, which I believe position the company well to resume double digit organic growth in fiscal 2015. We have the right products and people, and our markets are continued to grow. Thanks for your continued support and attention.

At this point, I'll get it back to Jim..

Thanks, Steve. Let's take remainder of the time to look about -- to look at where that future growth opportunities might be and I think I would like to sort of divide those growth opportunities into three segments.

I would like talk a little bit about the trends that are occurring, talks about some of our products that fit into that growth area and then take a quick look at geography. Maybe first take a look at the trends that are occurring. I think as we look out things are happening in the market out there is going to be advantageous to us.

I think for one we will be looking at the detection of genetically modified plant material more in next couple of years than we have been. So at this time they won't be whether genetic modification the plant is going to be permitted. But instead to identify on a labels if approved product has GMO content.

I think there will be more concern about if animal protein production can satisfy demand. There is no doubt that as this middle place develops worldwide, there is going to be a bigger demand for animal proteins. However, some may begin to question where that is going to be produced. The U.S. now has the smallest beef cattle herd it has since the 1940s.

And in many places we are seeing almost doubling in the price of hamburger. There is some pressure worldwide to improve dairy production numbers where it's going to be a growing demand for per capita consumption of milk in places like China. At the same time, there is some downward pressure on whole milk consumption in the U.S.

as soy and almond based milk is beginning to pick away cow's milk market. Both of these trends are play right into our strength since we have products at both places. As the world ocean water, they are becoming warmer; food safety concerns are present in geographic areas where they were never concern before.

This includes the issues like shellfish toxin due to ocean algal growth. Recently developed test for paralytic shellfish poisoning and the other two prevalent toxins in shellfish to make an early boost as a result to some of these. Shifting over from trends and talk about products. Several of our products are focused in just the right market position.

Our new generation of AccuPoint product, they choose to detect overall cleanliness and sanitation levels is coming just at the right time.

As Steve mentioned I think in his comments, sales of that product for the last fiscal year were 18% ahead of the prior year and our production equipments was running 24x7, that's about objective, that's about all you can get. And now they were increasingly facing downtime due to wear and tear of that automated system.

So it's good to have the new product and new system up and running this coming month. Our Soleries product line which enjoyed a 17% growth this past year is destined to continue in its popularity.

This almost fully automated system to detect spoilage organism and predict shelf life, allows product to be monitored before they were released and manufactured warehouse. We've just begun to uncall all of the product opportunities for our agriculture insecticide business as a result of the Chem-Tech purchase.

Well, shifting from products talk just a bit about geographical opportunities for the next year. This will continue to be strong.

Our Neogen Europe operations, they are going over tough comparable to stand up too but they are going to be in good shape we think going forward along with both Brazil and Mexican operations since they all be operating from a stronger base.

The opportunities in China will be even bigger as we look over for the next year as to what we might be doing there. It will be a challenge for us to keep up with that growth. I think as we expand our China operations, both the market share increases as well as some possibilities some acquisitions there.

So I don't think the financial results from the establishment of an India base will be I think right home about this year. I do believe that is, I said once before it is time for us to get positioned in India to have satisfy the needs of that growing middle class population.

Our resources in all of these areas, for all these areas I think are adequate to capitalize on the New Year opportunities. We continue to expand our staff in most all the critical area; Steve mentioned our balance sheet is strong with cash now over $76 million and no borrowing.

There are several interesting acquisitions opportunities that are in the radar. So we don't currently have any letters of intent to place. I think we've learned that even though we've done 26 well positioned acquisitions since the year 2000, we still don't take it for granted that every acquisition would be a fit for our mission.

Now that we are operating from a higher base, we should be able to push that operating income number back closer to our 20% goal which of course increases income on an after tax basis. I think I'll stop there and Danny opens the line up to invite any questions that you might have for either Steve or myself. .

(Operator Instructions) All right. And our very first question comes from Paul Knight from Janney Capitals. Paul, please go ahead. .

No hearing anything, Danny..

Can you hear me?.

I can hear you, we don't hear the caller. .

Can you hear me now?.

Yes. .

Okay.

The question I have is what was organic growth in food safety in Q4 organic and the animal side on Q4 as well?.

Organic for food safety was 4.4% in the quarter and food safety was basically flat in the quarter -- I am sorry animal safety was flat in the quarter. .

And then food 4.4%.

Yes. Food was 4.4, animal flat.

And were you saying the demand for same testing in the quarter and could you talk to the fewer growth in animal or I guess goes back to the horse contamination a year ago, right?.

Yes. That affected the horse -- our friends in Scotland call it horse gate that affected the first big quarter that was the fourth quarter previous year. So they were up against pretty tough comparable and the fourth quarter which that those numbers get forwarded into food safety, so that was a part of that reason.

Animal safety -- there was two three things. And one of the -- probably one of the big one was the prior year, three manufactures of T4 tablets for thyroid treatments in dogs and we one of those -- we've been substantially own this part all the time with a new player in that market place.

And from time-to-time, vulnerable to the other players have been moved -- been pushed out of the market by FDA under some compliance problems they might have. So I think we had unusually strong fourth quarter last year on the animal safety side as a result of some of that.

We are also in the fourth quarter, last year had bigger sales of our vaccine for equine and botulism that number was considerably ahead of where it did finished up this year.

We are the only player in that market to -- for equine and botulism so win them, it was just matter what might have been some based inventories or what might have been or it wouldn't, certainly wasn't that the market is dissipated any or that the competition had taken any of the -- brought away from us. .

And then horsing testing, you were saying some of that in the 4Q. .

That's still I think maybe you think about --we do support these testing for a couple of different porcine disease as a part of our GeneSeek operations. That would have been for [purse] and short tradition I think that was there. I think you may be thinking about may be pig virus, may be pig diarrhea problem.

That -- we are not a major player there as far as testing is concerned. It is a difficult thing to send samples around to test for and it is pretty easily found at the production operation. There is not much guessing is what's your problem is when it shows up.

Where we have been a bigger player there is that we got two products that are approved is disinfectants to control that. And all of these populations typically when they clean them out, as they have enough break like this, they are going and clean and disinfect. And fortunately we've got two -- I am not sure how many products are approved.

But not very many that are approved as been able to take care of killing that virus. So that said, it will continue to help us going forward on maybe pig virus. The report out this month I read last night, it continues to be there.

I think there is fewer outbreaks in number of cases but population of pigs involved is everybody have, we thought that we could immunize by self immunization that once the SAA has contracted the disease is passed from the south as a baby big. Once the SAA has contracted the disease she develops her own immunity.

And so there have been programs out there -- once these things broke out, I think we have 29 states now where there is problem. And once it broke out they have been immunizing SAA so they can -- has develop her immunity. But now there is some question as to whether that immunity is holding so there is still some uncertainty.

We should be in a good place to be a player in health industry though regardless of what that outcome is..

Our next question comes from Tony Brenner from ROTH Capital Partners. Tony, please go ahead. .

Thank you, good morning. You breakout for the fourth quarter the change for natural toxins and allergens. .

Would you repeat that Tony? I am not sure I got you..

Yes. The fourth quarter change in natural toxin sales and allergen sales.

I know you gave allergen for the full year but not for the quarter, could you say with natural toxins?.

Steve is going through his numbers. The mycotoxin is going to be down obviously compared to the prior year. And allergens are going to be up. Now, Steve, all you got to do is fill in the blanks. .

Okay. Natural toxins for the year are down 3%.

And for the quarter? He won't know the quarter I think so he is looking for it.

Right, Tony?.

Yes..

He don't know about fourth quarter.

Okay.

Okay. Natural toxins for the fourth quarter were down 3%. And Allergens for the four quarter were up 3%. .

Okay. Mycotoxin scaled off sharply I think to get into second quarter.

If that's right, any read on the crop conditions for the New Year and what that turn might look like, Jim?.

In fact, I am not reading this week I think but I think we were seeing some DON vomitoxin available in the wheat crop in the northern grain built, that's still true, spotty coming in and probably sitting with his table and own this everyday and we are seeing some pretty high levels and some places coming so I am going to guess it's our sales of that mycotoxin test kits, there is a couple of that problem will be up in this first quarter and probably up at this point.

So that would pick up I don't know probably Southern Illinois going Central Illinois may be going away all up to the Canadian border, there is going to be some spotted problems there. Weather was cool and wet at a time that crop is flowering which is where the offset and onset of the fungal infection takes place.

That said, the crop is obviously good, the current crop it's in the ground now.

We got late, there was late plannings, there is all kinds of reasons to be concerned early in the season but as I rode around some across part of the country in the last week or two, it is come out pretty strong in central northern corn belt, is got the corn now that's already begun to tassel which is-- we are not yet end of July, some of that I am sure is probably has to do with the plant projects that are planned.

I think we are going to have plenty of moisture in most of the major producing corn belts. So there is not likely -- of course it is early to make prediction. It could get hot and dry in August and we could have a problem. The western side was fortunately there is not a lot grain produced there but the western part of the U.S.

is still hit pretty hard with drought and that crop is going to be concerned, I think right now I have to say we color the normal year. .

Okay.

Steve, you said allergens were up 24% of a year why only 3% in the fourth quarter?.

That was -- Tony, there are meat speciation test kits are in allergens. So the fall of at Neogen Europe really impacted that number..

Got it. One other question. DNA testing which I think includes GeneSeek, up double digit to the year down 11.5% in the fourth quarter. It looks like was -- I think it was earlier mentioned that there was special large products at GeneSeek in the fourth quarter last year.

Was that the reason for that metric or something else?.

Yes. That was true, Tony. Last year if you remember our fourth quarter GeneSeek was an absolute -- that was blowout and so the fact that they moved in May of this year as well as the comparison to last year's fourth quarter really are reflective of that decline in revenue. Business there is very, very strong. .

Yes, that's not just U.S., Tony but probably I would say dozen at least 10 countries feeding that supply. Our growth in genomic testing where animals coming out of the Europe is good, that stuff goes through Neogen European and funnels its way into Lincoln to those labs, most of it does.

Same thing is true in Brazil where we have major program down there with [reboot type novaric] cattle.

These are the guys for sure Brazil is gone, you want those -- go and help produce beef meat protein for the middle class going forward so and we are getting some samples out of China, where the Chinese are concerned about -- they have replacement programs which ample to say is a feel there opportunity there so GeneSeek, we tend to think about sometime as U.S.

and think about it has been located in Nebraska. It is really worldwide. .

When you are saying you are looking for acquisitions in China or you might make some acquisitions in China, would these be distributors or testing companies or something --.

Improved distribution, Tony. .

Our following question comes from Brian Weinstein from William Blair. Brian, please go ahead. .

Hi, guys. Thanks for taking our question. This is actually Matt, asking the question for Brian. Just want to quickly follow up on the previous question about the GeneSeek opportunity. I see you have been very positive about it and with the new addition facility in Lincoln certainly can be positive moving forward.

When might we see the actual revenue start escalating, start ramping sort of see some return on these investments you've made?.

I am not sure I answer the question. Let me answer the first part of it. We are already -- beginning next quarter we will see an improvement. Our depreciation on the facility is less than our cost-- our cost of occupancy in our building is less than what our least cost would have been in the facility we moved out of. So we've reduced our cost.

And we've certainly streamlined operations as part of that new facility. I am still excited about it. It's one that we built for something to be twice or three time that size. So we got lot of capacity, lot of straight flow through.

Nobody really ever had the opportunity to build on animal genomics laboratory before because this is such new technology but our guys did the engineering on it, worked our way through and just did a super job. So we are going to reduce cost as a result of being in new facility.

If so -- if you are wondering about what the payout is going to be, when do we are going to see return. We are already seeing good return there. This is just going to enhance it. So maybe there is something Matt I missed part of that question, Steve..

Matt, were you looking for revenue growth? Is that--?.

Yes. So that's specific what I was looking for, when we might start seeing ramp on the revenue side? Sorry, I was supposed to not play there..

18% I think it is pretty good ramp. We were up 18% this year compared to last year. Our sample numbers were up. Steve, what was in your figures, 37%? We ran 37% more samples through that facility. So I am not sure that -- I think 20% growth-- I am kind of thing it might be all right. I am not sure we can handle a lot more that from year-to-year. .

Okay, thanks. And then just a follow up thinking about operating margin share. I would say Jim you barb again that 20% and sort of that watermark where you have targeted over the years, opposite bit below that now. When do we start seeing that? I think you said pretty quickly here but what is that ramps look like back up to 20%.

Is that four quarter, is that eight quarter? How should we think about things kind of get back up to that level? Thanks for taking my questions, guys. I'll jump back in. .

We are in the final flows of budget right now. I can't exactly remember where -- when we see that breaking out. It begins to breakout certainly this quarter.

There was some cost related to those acquisitions that --where acquisitions cost related -- we expense them now and used to we could -- and drive them over time, so I am sure some of those things impacted us in the prior year that we won't feel that impact coming on this year.

We still got some customer based intangible to get figured in and those are cost of - that are non cash cost or that be related it's--we got to try figure out how that can mistakes of getting good wheel off the balance sheet and knows we have to begin to deal with. We will see in the year that we are in now, in the current fiscal year.

I don't remember exactly what the increase goes from quarter-to-quarter since I am just now beginning to-- not deliver this new budget so.

Steve, you got better memory?.

We are going to see operating margins move up probably a percent each quarter or so next year. So we will be back knocking on the 20% door by the end of the year, Matt. .

Our following question comes from Charles Haff from Craig-Hallum. Charles, please go ahead..

Hi, thanks for taking my question.

I have a question about your ContraPest and SenesTech press release that you put out June 16, I am wondering if you could give us some idea of market sizes for ContraPest? Maybe if you could share any estimated royalty rate and if there are any manufacturing capacity issues at your facilities for producing ContraPest? Thank you. .

You are pretty perceptive, Charles. I got the call yesterday, he wanted to know who is this guy from -- wanted to know about Neogen and the ContraPest. And I said Ryan he is okay, you can talk to him.

So as I know you have been nosing around and found our partner and they are alone down there, she said that you have been asking a lot of probing questions. I think it's a little bit premature to do all those. And we felt like we needed to analysis, it's a technology that's been getting a good bit of attention over the course of past year.

There were number of people who wanted to do something with the technology. He wanted to license it from the SenesTech people, they own it now. We have been working with them all along. And we felt like it was time to announce that it was out there and we want to do something.

It is a product that will control population as a contraception device to be fed through as a bait to essentially sterilize males and put females into menopause, premature menopause.

If you can think about female rats and menopause, they don't live but a couple of years anyway, that's not getting the wrong fight but we think it's going to be a good contributor to help hold down populous, it won't replace our current rodenticides but it will take care of that portion of the population that becomes big shot.

We think it's going to be helpfully -- it is -- and only -- it's only technology like it is available today. It is all patented and we've been working with that group all along for at least past year. It is I think final application to go into EPA for approval and sometime probably in next 60 days.

I think it will be on the fast track when it gets to EPA. You never know, I think we can see that part approved and ready for sale, sometime -- probably sometime early next calendar year before it gets on the street.

In the meantime, we are doing a lot of work with bedside; we got some going right now in some of the strongest rat production areas in -- around East Coast, Southeast Coast. I talked to the guys yesterdays, they said, they thought that there was lot of rats in New York subways but they were nothing to compared to what they saw in out farm.

So we think it's going to be helpful. We will manufacture the product. We are in the process of putting together the additional materials that we are going to need for manufacturing. We do have facilities space at our end up; we got some plan to do that. So we are gearing up to be ready to go. It's just a little premature to predict exactly when..

Okay.

And when you guys were doing the work on this, did you or Greg Hastings kind of estimate the market size?.

Yes, we estimated the market size. But I am not sure I want to talk about that. .

Okay, fair enough.

And how about Australia? Can you talk just for a second about your operations in Australia that you currently have? What do you have on the food and safety, food and animal side in Australia?.

Really I am not sure where the question came from. We've got a couple of good distributors down there that are handling product for us. But I would say we are not real strong in Australia, I mean we are there, we are player, but we don't have any of own feet on the ground down there. .

(Operator Instructions) And our following question comes from Jason Rogers from Great Lakes Review. Jason, please go ahead. .

Jason Rogers - Great Lakes Review:.

Hello, good morning.

Would you provide the year-over-year growth in the quarter for the international operations in total as well as Europe, Latin America, and Brazil?.

You want year-over-year revenues, that's what you are looking for Jason?.

Correct. .

I now Steve got it. .

I do have it because I was just handed it. So international growth year-over-year is about 16%. And so that put aside a total about 38.8% of our overall sales-- our international. Then you had asked about Europe. .

Right. Europe, Latin America and Brazil.

Did you want that in terms of the company? You know what I'll give you the -- Europe is about $46 million with all of our --.

I think he want to know what the percent were, we got the percent in there. Europe was up 24% I think, I got year and quarter mixed up but you got those --.

Europe was 24% increase, Brazil 38% and Latin America is up 18%. .

Yes, thank you.

And what are your projections for the CapEx for fiscal 2015 as well as the tax rate?.

We are still putting a budget together but I think CapEx is going to be somewhere in the $9 million and $9.5 million range. And I think our effective tax rate is going to be somewhere around 35.5%. .

And we have no further questions at this time. Mr. Herbert, please go ahead. .

Yes, well, thank you for joining us this morning. I want to make sure and mention to you if you haven't already got the word that our invitation for our Investors summer picnic takes place this week on Thursday afternoon. If you haven't already made arrangements, well please contact immediately to our shareholder relations manager.

Here is the company are in fact Steve or I any one of us would -- it's our time for big fun under the tent and dark while we were doing and get chance to busy with everybody, we will have number of scientists and sales people and so -- as well as number of customers and so we would certainly make sure to invite you to be there.

And thank you for your continued support throughout Neogen's 2014 fiscal year and we look forward to continue to share the good news with you as we finish up of course now the first quarter of 2015. So we don't have any other comments from here. Have a good day..

Thank you, everyone. And thank you ladies and gentlemen. That's concludes today's conference. Thank you for participating. You may now disconnect..