All right, good afternoon. Welcome to the Wells Fargo Healthcare Conference. I'm Brandon Couillard, cover life science, tools, and diagnostics here at the firm. Thrilled to have Neogen back at the conference with us, again this year. Here to give us an update on the story, CFO, David Naemura. David, thanks for being here. Yeah, appreciate it. Really, really great to be here at this great conference. I'd like to start with the 8-K you put out this morning with some initial thoughts on your first quarter. Any additional color you'd like to provide from that update? Yeah, thanks, Brandon. I-- That's a great place to start. So, you know, our fiscal year is such that it's always a little awkward timing when it seems most of the conference season happens. But we just ended our first quarter last Saturday. And I guess the message we were putting out is, first and foremost, that, you know, maybe three messages in there. One, it kinda came in as predicted, as we had- we're in line with our expectations, as outlined, when we took people through our Q4 earnings in July. I think second, secondly, you know, we had some well-documented challenges with our shipment operations, and that was throughout the course of 2024. In our fourth quarter, we talked about getting over the hump on that in Q4, and I'm just happy to report that, you know, that progress has been sustained through Q1, and we feel that those challenges that plagued us in 2024 are behind us here in 2025, and then finally, you know, we noted that in our fiscal 2025, we anticipate some demand headwind as a kind of a hangover for some of the execution challenges that we had in our fiscal 2024, and you know, that's going about as expected. We were encouraged by some of the feedback that we've gotten from the sales organizations and some of the customer feedback, so I think progressing well there as well, so I think, you know, here we sit, end of the quarter, a lot of work to do. We've got to go close some books and, you know, figure out, figure out all the numbers, but things seem to be coming together as we had previously anticipated. What is your level of confidence in being able to recover the lost sales due to those shipping inefficiencies last year? Yeah. That's a good question. Look, we don't take any customer for granted, but we do believe that people like doing business with us. We have products that we know that people know work. We have the broadest range of offering, and we have great service, and we go direct, typically at a greater level than others, and we have good technical support. But we got to be a trusted supplier, and I think we have some trust to earn back, and we recognize that, and that seems to be most of the conversations that we have. But the feedback that we've gotten from a lot of customer interaction, and one of the reasons we were encouraged was, you know, we've seen, in some cases, a number of customers coming back to us, and in other cases, the right conversations happening. So we feel encouraged by what we're seeing, but we recognize it's gonna take some time as we demonstrate that we're back to business as usual, which we believe we are. It seems like you've made a lot of progress integrating the 3M business in the second half of last year- Yeah - but it resulted in some operational issues. Yeah. Do you think you're past the most significant integration challenges at this point? Yeah. Look, it can't be underestimated what was accomplished in the second half of fiscal 2024, and, you know, our teams worked tirelessly to get this done. But we fundamentally brought not only we stood up a new distribution facility that brought in all the 3M business into it. So we extracted ourselves from the 3M logistics and distribution network and came off the order-to-cash cycle back office support from 3M, all into a new implementation of SAP, while at the same time, we brought in, you know, fundamentally three or two more additional product lines on the manufacturing. So as we exited fiscal 2024, the only material thing left is the implementation or the integration of Petrifilm manufacturing, where we're building the new plant and putting in new equipment because we're not taking it out of 3M. Rather, we're standing up that capability internally, and that was always gonna have a longer tail on it. So I think we successfully got it down to just that. It wasn't easy. It wasn't without some disruption, but we think we're through those issues, so it was tough, but a lot got accomplished. I know John is here, and I will say for myself, we're just super proud of the people that had the fortitude to get us over the line. In addition to all the integration work, you've been managing through some softer conditions in both of your main end markets for, you know, some extended period of time. What sort of trajectory do you see from where you stand today? You know, it's interesting. I think people underappreciate that from an end market perspective, it's been a bit of a perfect storm. I mean, we saw the more cyclical Animal Safety side of our business cycle down and inventory come out of the distribution channels through the second half of our fiscal 2023 and the first half of our fiscal 2024. Now that's right-sized, but that was disruptive, and now we think we're operating at the lower, kind of the low end of the Animal Safety cycle, which will eventually turn up, but we continue to operate through the low end. And then we think the macroeconomy is read through food production levels, and we've seen food production volumes negative now for, you know, six plus quarters running. Although that doesn't mean our revenues or our end market backdrop is negative. Rather, we will continue to grow the market mid-single digits, but it puts us at probably the lower end of the growth range that we've experienced historically in food safety. Another headwind out there has just been genomics in general, which has been a headwind for us. You've seen us strategically cycle out of some end markets that we see as a little more commoditized, but ultimately, that's moving away from some of that business has been a headwind, and all of that has conspired. Generally speaking, you know, we think food safety will recover more gradually, and I think it'll be somewhat dependent on the macro. Our customers, who we monitor closely, you know, seem to see this happening, you know, kind of first half of twenty-five. I think that's a generic read on what we see people saying. The animal health side, the Animal Safety business, you know, those products are a little more cyclical, and so this isn't an unseen circumstance for us either. But we think there's good upward opportunity from here, the timing of which is, of course, a little more uncertain. What we've been focused on is execution, and that had some challenges last year, but we think we're much better poised coming into this fiscal year. Assuming a more normal end market environment, what do you think about the growth potential of the business, and what are the team's key priorities to drive growth? Yeah, that's great. Look, this business has demonstrated the ability to grow high single digits and double digits at times, historically. That means probably a little bit healthier of a market backdrop. But despite what the market does, there's significant opportunity, particularly outside of the U.S. There's good regulatory drivers for our business. There's awareness drivers, as people are more concerned with having food that is safe. There's significant international markets that remain unpenetrated for us, even in some developed countries in Europe and Asia, so in many cases, we need to focus on taking share, and now, as post 3M, you know, we are the broadest, largest food safety-specific business out there, and that's given us the opportunity to kind of be at scale globally. So we've been able to build bigger and better commercial organizations internationally, including Latin America, where we've always had a really great team and have seen great growth. But we've further penetrated Asia-Pacific, and we've made more investment into Europe, and so we see international as a real opportunity. And of course, our presence in the U.S. is pretty significant. And we think, again, the regulatory drivers, the opportunities that we have with the broad portfolio and these incredible platforms, some of which we got from 3M, but the Petrifilm platform is great. And you know, we're very bullish on what we can do with that platform as well as the pathogens platform. So we're really excited about those opportunities. So we think there's a good spectrum of opportunity before us. You set out, a longer-term EBITDA margin target, but what do you think about margin expansion over the nearer term and the key drivers to that? The biggest driver, and it sounds... You know, it's easy to say, of course, but the biggest driver is gonna be growth. The design of this business is, particularly with the acquired businesses, but the legacy businesses as well, the product lines have really great incremental margins, so growth will help us significantly. I also think now that we're through a lot of the integration with 3M, we've gotten to a cost profile that we'll see two things happen with. One, we'll see ourselves get leverage out of the investment, be it if that's commercial or some of the competency we've built into teams like procurement and demand planning and things like that, that'll help us with, and manufacturing. We should see benefits from those investments come through both operating expenses, help drive the top line, but also gross margin expansion. We're jumping off a bit of a low point coming out of fiscal year 2024. I think it was a little bit artificially low because some of the inefficiencies we had, but I think we should be building towards that post-integration profile, which we see as 30%. Now, it's not next year, but we believe that that's the prize we're playing for here, and we see no reason, given the structural nature of this business, that, you know, once we get back to growth and the markets are a little more supportive, that we wouldn't be able to, you know, be there and frankly, beyond. Free cash flow has been negative for the past couple of years as you've funded the integration, but it looks like that's expected to change this year. How should we think about free cash flow moving forward, and what will your capital allocation priorities be? Yeah, great. So fiscal 2024 was gonna be the height of capital outlay for integration spend. Right now, our capital allocation priority has been funding the integration of 3M, and that's been a couple things. First and foremost, building the Petrifilm manufacturing site in Lansing, Michigan. It's not just a building, it's also, you know, the equipment, which is specially designed and, you know, being built and will be coming over from Asia. And then we also had to, as we extracted ourselves from the 3M logistics network, we had to load in the working capital and mostly finished goods inventory from 3M into our logistics network. And last year was the height of integration spend. It was probably $50 million roughly of inventory that we brought in, and it was probably the single highest year of spend on the new building, or integration spend otherwise of capital, which was probably in the mid to high eighties. And so we'll see the building step down. The $50 million won't repeat this year, and so that takes us from a cash burn last year of mid-seventies to what we see as positive free cash this year. And then we should see, again, the capital. We'll still have some spend in 2026, but we'll see the capital for integration spend reduce over time here as we get the new facility completed. And I continue to think we still have a good opportunity from working capital, particularly from the legacy side of the business, where we tend to run a very high working capital level. So this isn't structurally necessary, but we have to make some process enhancements that'll then read through benefits on that side. I think those things conspire to see us get to, you know, a better free cash conversion, increasing each year over time here. And then as we move through capital allocated to integration, you'll see us focus on deleveraging and ultimately getting back to M&A. You know, we could delever to a point that, you know, might even feel low, but, you know, once we've delevered to a point, we've demonstrated we can do that, then we, you know, we would look at the opportunity to get back on the front foot of M&A, either in terms of, rounding out our, our strategic roadmap from a technology standpoint, looking at earlier stage deals, or doing fewer, maybe larger deals of existing businesses to round out our portfolio, that would, you know, ultimately, that's where we want to spend our capital. So think about return to maintenance level of CapEx in 2027? And what's the leverage ratio that you'd like to be at before turning on M&A again? Yeah. So I think, you know, for us, capital tends to run 3%-3.5% of sales, maybe 3.5% of sales, of which that's a mix of maintenance and growth, and that's more of a, the, what I'll call recurring CapEx. I think, yeah, 2027 is when we'd be seeing ourselves getting back to those levels. From a leverage standpoint, you know, it's always hard to put anything too hard and fast around, so it's more conceptual because you don't know what deal would be coming and what that looks like. But to me, if we deliver down close to 2, that's what we'd like to see in the near term. But fundamentally, from that point, I think if we were there, we'd be looking to lever back up again to get the right deal done, and that could be the three and a half times, as long as we had line of sight to, you know, to deleveraging post-acquisition. But the free cash flow profile of this business, when operating right, should provide us ample M&A firepower, and as we delevered, we'd look for opportunities to lever back up for the right deals. Granted, probably fewer, more impactful deals. You obviously joined the company, I think it was two years ago- Yep. After the 3M transaction had already been consummated. I mean, if you just look back, like, remind us the big picture of the strategic rationale for that transaction. Clearly, you've gone through some challenges. What's gone better? What's gone worse, in your view? Yeah. -looking back? Great, great question. You know, I wasn't here for the decision to do this deal, but looking back, you know, we were able to acquire, you know, one of the most impactful franchises in Food Safety and one of the larger standalone Food Safety testing businesses from the Food Safety division that we were able to acquire. And by doing that, make ourselves the at-scale, dedicated Food Safety testing folks with the broadest portfolio. I think what clearly has gone better is the acquired businesses are as high or higher quality than we thought we had acquired, than we had hoped. And we believe that Petrifilm is a platform that has just terrific potential, not just within Food Safety, but potentially into attractive adjacencies as well over time. So we're, you know... The pathogen platform as well, the MDS product line is, you know, a great platform upon which we can build. Look, I think we knew integrating these businesses would be hard. You know, we weren't naive, if you will. I think some things did clearly turn out to be a little bigger challenges than we thought. I think as we got into it, we identified some gaps internally that we weren't counting on, and then we, you know, kind of rapidly closed those gaps. So it's a little rougher than I would have anticipated, and I think that the broader team would say that as well. But, we're also pretty proud of what we did in 2024, and we like the place we exited 2024 and kind of where we're looking to 2025 now. In terms of the integration, beyond some of the specific integration work streams that you mentioned, how have the two organizations come together culturally? Do you have the right people on the field, in the right roles? Are there any additional changes that you'd like to make? And let's talk about the kind of culture. Yeah, you know, the nature of this carve-out was such that day one, principally, the people that conveyed from 3M were the kind of the commercial and product folks, as well as then, R&D, right? So that's kind of who came over. In the carve-out, you don't get a lot of the back office. You know, it's different than taking two standalone companies and putting them together 'cause you're doing a carve-out. You know, day one, you end up speaking somewhat different dialects of the same language. But we saw the commercial organizations come together very early. We had territories recut, we had people cross-trained and up and running. And I think you know, you, I think folks have heard John talk about this. I think it was refreshing for those folks to be associated with a broader company that really understood what they did. You know, they were a one and a half or two percent of the overall corporation they were part of previously, and with us, they're, you know, 40% or, you know, probably, arguably one of the most important parts of the business. And I think that was appreciated. And I would say on the R&D side, you know, we got some incredible capabilities in the Petrifilm microbiological capabilities that we can build around and some of the other capabilities. And then, of course, we, you know, we brought over some manufacturing, some of that, you know, we got one site, day one, and those guys are impressive. We've been pretty impressed with what we've seen there and some of the other stuff bringing to our facilities. But, you know, John, John had a bit of a best idea wins mindset. It wasn't an us and a them. And of course, there's always, you know, a challenge here and a challenge there, but, I think the organization's now two years post came together pretty darn well. You mentioned in a couple of areas that you're excited about in terms of innovation, but just in terms of how you allocate R&D across the portfolio, and do you feel like you're spending enough- Yeah -on R&D? Yeah, look, great question. I think we spend more as a percentage than people think, because they tend to look at an R&D spend and take it against the headline number. But we're spending more R&D in food safety than we would, say, in our Animal Safety business as a percent of sales. And then within that, you know, the areas that we're really focused on around the Petrifilm platform and some of our core legacy businesses, and including also the acquired pathogens platform, you know, get or receive a disproportionately higher dollar value of R&D funding. And you're seeing some new and interesting things come out of the R&D pipeline. One of the interesting things we announced in Q1 was the High-Speed Feeder, which allows us to more effectively address higher volume testing facilities or labs with our Petrifilm platform. I think this is a product that had been conceived but not necessarily developed previously, and now within Neogen, you know, this quickly became a priority from a capital allocation standpoint, and we were able to get it done and pretty pleased to launch that product. From what I've been able to tell, the market reception's been pretty favorable. Questions in the audience? Maybe just to wrap up, David, your stock's had a tough year. What do you think is most underappreciated, or what do you think folks are most overlooking? Understanding the story's gone through a lot of, you know, volatility, let's say. You worked through a lot. What are people not appreciating about Neogen right now? You know, I think the opportunity is still resident in Neogen, not just from doing a carve-out, which we think the food safety division is a classic carve-out. Great business, run by, you know, part of a good company, but by having it be, you know, a focal point, we can get kind of that classic carve-out dynamic from it, where it's, you know, flies closer to the sun, it gets more attention, and it's maybe more loved. I think that's a real opportunity. Even with the legacy business, now that we're at scale, we have an opportunity to do to penetrate attractive global markets where we weren't playing as robustly before as we could have. Now, at scale, we have an opportunity to, you know, I would say, grow that side of the business as well. Look, it's been fiscal 2024 was disruptive. Fiscal 2023 had some hangover challenges, some supply disruptions from our integration, our main contract manufacturing partner. We had some issues that could have gone smoother in 2024, and I think the question is, you know, what can we demonstrate when we put these challenges behind us and hopefully have a year that doesn't have, you know, a hiccup in it? It's upon us to demonstrate that, and that's clearly our focus. But, you know, this has been a quality franchise for a long time, and I think now, with the benefit of adding, you know, this great acquisition to it, you know, we're gonna be positioned to demonstrate some really great performance over the coming few years, and we intend on doing that. I'm sure it'll feel good to have a somewhat more normal year- It really will. in front of you. Great. Well, we'll leave it there. Thanks, David, for being here. Thanks everyone in the audience. Y'all have a great day. Yeah. Thanks for your time. Thanks, everybody.