10:15 AM EDT, 04/09/2024 (MT Newswires) -- Neogen (NEOG) shares dropped in Tuesday trading after the maker of food safety test kits and rodent control products cut its full-year revenue outlook, on the back of mixed fiscal third-quarter results.

The company now anticipates revenue to come in between $910 million and $920 million for fiscal 2024, down from its previous projections of $935 million to $955 million. The stock fell 8.5% in early trading.

Neogen continues to manage through the operational inefficiencies created by the integration of the food-safety business it acquired from 3M (MMM) in 2022, Chief Executive John Adent said in a statement. The inefficiencies relate to the exit of the transition distribution agreement and the resulting volume increases in the firm's primary distribution facility, he said.

"We believe these inefficiencies are temporary, but they are currently affecting our order fulfilment rates and preventing us from meeting the end-market demand on a consistent basis, and we are updating our full-year outlook to reflect the lower revenue we now expect to generate," the CEO said.

For the three-month period ended Feb. 29, the company's adjusted earnings were flat on a yearly basis at $0.12 per share. Revenue rose 4.8% to $228.8 million, compared with two analysts' estimate of $230 million.

Revenue in the food safety segment gained 4.1% to $157.8 million, despite a negative foreign-currency impact of 1.9%. Core growth in the division was 5.8%.

The animal safety division logged a revenue increase of 6.5% to $71.1 million. Core growth of 7% was driven by the company's biosecurity product portfolio, aided by new business wins and higher demand for cleaners and disinfectants and insect control products.

"In food safety, sequential improvement in unit production volumes has generally continued across the industry, while channel inventories in animal safety have normalized after several quarters of destocking," Adent said. "Our primary focus now is improving our order fulfillment rates to meet the needs of our customers in this improving end-market environment."

Price: 13.23, Change: -1.15, Percent Change: -8.00