Welcome to the Neogen Q3 fiscal year 2019 Earnings Release Call. My name is Adrienne and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to John Adent. John Adent, you may begin.

Thank you, Adrienne. Good morning, and welcome to our regular quarterly conference call for investors and analysts. Today, we’ll be reporting on the third quarter of our 2019 fiscal year, which ended on February 28. As usual, some of the statements made here today could be termed as forward-looking statements. These statements, of course, are subject to risks and uncertainties. The actual results may differ from those that we discuss today. The risks associated with our business are covered in part in the company’s Form 10-K as filed with the Securities and Exchange Commission. In addition to those of you who are joining us by live telephone conference, I also welcome those of you joining us via the Internet. Following our prepared comments this morning, we will entertain questions from participants who’ve joined this live conference. I’m here this morning with our Chairman, Jim Herbert, who will provide his perspective on our international business; and our Chief Financial Officer, Steve Quinlan, who will provide more detail on Neogen’s financial results in the quarter. Earlier today, Neogen issued a press release announcing the results of our third quarter. As stated in the release, our revenues for the quarter were up 3% to approximately $98 million, and our year-to-date revenues were up 5% to about $304 million. These revenue increases included minor contributions from our recent acquisitions, including Delta Genomics in January. Our net income for the current quarter was just over $13 million, or $0.25 per share, compared to last year’s quarter net income of $16.6 million, or $0.32 per share. Year-to-date, our net income was $44.4 million, or $0.85 per share, compared to last year’s $45.6 million, or $0.88 per share. As a bit of perspective on our net income performance for the quarter, last year at this time, we…

Well, thanks, John. I do want to talk about what’s happening in our various international businesses. But first, I’d like to talk about the quarter. As we were preparing comments for today’s conference call, it was obviously not a whole lot of cheer and jubilation in the room. And – but I told the group the story of March 24, 2005, almost exactly 14 years ago. That day is probably always be etched in my memory is the last quarter that the company reported revenues below the prior year. The revenue that quarter was 2% below that of the year earlier. And people were questioning, is this the end of the road of great performance? Has it come to an end? Well, obviously, that wasn’t true. In the 56 quarters that followed, revenues were up every quarter and most of them up double-digit. So if you’re wondering about today’s revenue increase of only 3%, I will once again tell you that the performance road has not reached a dead end. Let me assure you that Neogen still has huge opportunities. The concern for food safety around the world has never been stronger. The concern about antibiotic residues in food continues to raise more concerns. There’s that continued pressure for renewable resources and that’s just going to get to be greater. Food security is really discussed around the world today as we look at a population of 9 billion people by the year 2050. And more importantly, the big population growth of that middle-class consumer who wants to eat higher-quality food and they want to make sure it’s safe. On the other side of that same equation, our technology tools to meet these demands are growing at an astounding rate. John talked about this drive that’s happening in genomics. What we’re…

All right. Thanks, Jim. As we indicated in the press release, the strength of the U.S. dollar relative to the currencies we do business in continued to negatively impact our comparative revenues in the third quarter. The Brazilian real declined 14% against the dollar and the pound sterling was 6% lower, each compared to the same period a year ago. And in a neutral currency environment, revenues would have been $2.5 million higher in this third quarter than what we reported, and for the year-to-date, that amount is $5.8 million. We do hedge a portion of our balance sheet currency exposure, but do not hedge the revenues. The fourth quarter may bring more currency volatility depending on how Brexit unfolds. Our gross margins were 45.7% for the quarter, compared to last year’s third quarter gross margins of 47%. Margins were adversely impacted by mix changes within the Animal Safety segment, resulting from lower sales of higher margin rodenticides, diagnostics and animal care products and strong revenue growth from our cleaners and disinfectants and our Australian genomics operation, which produced lower gross margins than the segment’s historical average. Margins on the food safety side of the business were also negatively impacted by mix, as strength in culture media and cleaners and disinfectants relatively lower-margin items within the segment and an increase in international sales, which were hurt by the strength of the dollar, resulted in lower-margin percentage in this segment. As I’ve mentioned on previous calls, our lineup of products has a wide range of gross margins, which will cause some fluctuations from quarter-to-quarter depending on mix, and for the year-to-date, our margins were 46.4% versus 47.5% last year. Operating expenses overall increased 5% for both the quarter and year-to-date periods. Sales and marketing expenses were up less than 1% for…

Thanks, Steve. More than anything on this call, I just want you to understand how optimistic I’m about Neogen’s future. We have new products ready to launch, we have acquisitions in our pipeline, and we’ve implemented programs to address some of our short-term concerns. Our new test for coconut that we launched yesterday is another addition to our comprehensive suite of food allergen tests. Food companies can now use our market-leading tests for – to test for 19 allergens. We’re about ready to launch a portable version of our successful Raptor test system to provide even more food companies with a simple, but accurate food safety testing option. Jim talked about the new disinfectant from our plant in the United Kingdom, and we believe that product has tremendous upside for us. As Jim also mentioned, we have a number of acquisition candidates on our radar screen that have the potential to drive future growth. To address the animal protein market weakness that I noted earlier, we’ve instituted new programs to help our distributors drive end user purchases. And we’re focused on getting closer to our distributors’ customers to help them increase product move-out. To summarize, I remain extremely optimistic about our future. I don’t believe our animal safety markets will necessarily – those challenges are going to necessarily be resolved in the short-term, because there’s so much uncertainty in the U.S. trade policies really need to be cleared up before we can see material improvement. Despite the market – that market’s temporary weakness, our end markets, particularly food safety and international are growing. We believe we’re well-positioned in these markets to continue our solid growth trajectory, and we’re really excited about the future. Let me stop at this point and entertain any questions from those of you who have joined the call.

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] And our first question comes from Kevin Ellich with Craig-Hallum. Please go ahead.

Good morning. Thanks for taking the questions. So, John, just wanted to start off with talk about the puts and takes and moving parts this quarter. Clearly, there are some strength in genomics and natural toxins, but rodenticides was down 19% and even your vet business in animal safety was pretty weak across the Board. Just wanted to see if you could provide some color on that front?

Sure, Kevin. Thanks for joining the call today. Really, when I look at the quarter, it’s almost the tale of two businesses. I think, our food safety in the genomics business had a really great quarter. I mean, we were pretty much across the Board and across all markets in those. And what really hurt us was that the U.S. animal safety business and you guys cover a lot of other companies that serve this market. And if you look at their quarters, they don’t look much different than ours. So there’s just a general softness there. I’ve learned my lesson. Last quarter, I think, I said that I thought I was going to firm up and I’ve decided I’m going to stop trying to predict the animal protein markets going forward. So I know it will get better, because it always does, because it’s cyclical, I just – I’m not sure when.

Gotcha. Nope, that’s helpful. And then speaking of the animal protein markets, was this softness across the Board with dairy and African swine flu internationally, or could you give us a bit more detail as to what you saw on that front?

Yes. So, if you’re watching the African swine flu, that’s hurting our customer base, but like – that’s one of the reasons we’re excited about the new products that we just launched out of our Quat-Chem business, because it has a label claim for African swine fever. I read the other day that China has depopulated 20% of its hose because of African swine fever. Now short-term, that’s going to hurt, but long-term, there’s probably some opportunities there. And we’re trying to get that – we’re not trying, we’re getting that product over to China to try to help those producers with that. In the U.S. and internationally, I mean, the U.S. dairy market is still a challenge. But again, you saw in March, swine futures were up almost 8% because of the news in China. So while we had a very challenging quarter, last quarter, I think, the swine guys are actually making the money in March, which is the first time in quite a while. So as you know these markets, they will always move around. And depending on what’s going around the world, we’ll see puts and takes. But long-term, we’re still excited about it.

Got it. And I know you have a very diverse business. While growth has – you still continue to grow your top line, it’s decelerated pretty meaningfully the last few quarters. Just wondering what you can do with inside your control to reaccelerate growth? And how long before we should see that take place?

Yes, I think there’s a couple of things. One is, we are working with our distributor partners today on programs to drive their end product sales. So we’re going after. Even though the market may be soft, we don’t have a 100% share. So we’re going to go after share within that market space, and we’re going to relaunch programs with our distributor partners to do that. On the food safety side, we continue to take share in that market continues to grow. And then, we always look for strategic acquisitions to layer on top, and we’ve got some nice wins in the pipeline, so that’s going to help. And like you saw with coconut, we just launched our new coconut allergen test kits, I think, we’ve gotten new products come in that you’ll see in this quarter, it’s going to help us continue to move.

Sounds good. Thanks, and that’s helps, John.

Thanks, Kevin.

And our next question comes from Drew Jones from Stephens. Please go ahead. Your line is open.

Thanks. Good morning, guys.

Good morning, Drew.

Good morning, Drew.

Steve, maybe I’ll start with you. If you parse out the key factors that drove the margin contraction over here, whether it was mix, FX, option expense sequentially, kind of the key factors there. And then are any of those going to linger into fiscal 2020?

It’s a good question, Drew. I would say that the margin – what appears to be margin deterioration is mostly a mix story. So if margins were 47.5% compared to 47% last year, you’d probably say that the mix between – within animal safety and food safety is probably half of that. And then the currency issue is probably the other half. I think, the currency issue is going to stay with us for a little bit. And as we said, we don’t know what’s going to happen with currencies with Brexit. But we know where the currencies are today versus if we’re talking about fourth quarter, where they were last year in the fourth quarter. So we’ll probably still have some currency headwinds. And then I think the products, as John said, we can’t get into trying to forecast when the animal safety markets will improve. But I’ll tell you that, on to kind of emphasize John’s point, the food safety markets were very strong. I mean, we – if we take our 8% growth in food safety and if we put that currency impact on it, you’re getting closer to 13%. And then if we actually had a government tender in one of our Brazilian businesses that did not repeat this year and that would have been another 3%, let’s say. So, that business is strong. I just want to make sure we understand that. That business is doing very well, but genomics business is strong and we just have to get the animal safety market more robust. And then I think, you’ll see some nice growth there.

Great. And then maybe just for John and Jim a little more color on the acquisition pipeline. Am I misreading the comment? Is everything in the pipeline international? And then the second part of the question, any acquisition you would do within the pipeline? Would it be accretive? Is that a correct assumption?

Let me comment on it. Right now, I mentioned I think in my comments that we had four acquisitions in the pipeline. They were all international. I can’t go much further than that. We don’t have letters of intent on those. But they – to – one of those would be on the genomic side and one of our them or actually two of them would be overall on the biosecurity side, they’re all bolt-ons. And none of them are big, Drew, but they’re very strategic as to where we’re going. I think we’ll – I think, you’ll continue to see, this is John’s plan to continue to see more acquisitions even on the international side as we reach back to strengthen our distribution. We’ve got strong distribution in the country as I talked about and we’ve got some good independent distributors in some other countries that, those countries may have grown to the point now that we need to bring them inside like we were able to do back a few years ago with Dr. Chambers and Holmes when we brought that business in that grew into Neogen Europe. We are out on a major search domestically or I guess, I should say, corporate-wide looking at some big opportunities or looking for some big opportunities might be the most appropriate way to say. I don’t have anything to report to you at this point, but where we’ve got some significant activity going in now. So we do think that – just the acquisition market is a bit crazy. There’s so much equity capital out there, and valuations don’t mean anything to them. Their big job is to get rid of the cash they’ve got every morning. So we haven’t missed any good ones that I think any of us are concerned about. But I believe the test we’re going begin to settle down a little bit and we’re going to see some more acquisition opportunities. So it’s – and John has made some changes in our management part of our international group to strengthen our management force. And I think you – some new faces coming in. All of this is going to be important going forward, because we’ve never had one, Drew, that’s gone south. We bought them and integrated them and most of them are still around. And so it’s pretty important that as we bring in these acquisitions that we can integrate them and that’s probably held us back just a little bit here in the course of the past years, didn’t do anything big, because we want to make sure that we had the mother ship ready to take on some additional load. So that was a long political answer to a simple question, but yes.

And Drew, to add on to Jim’s point, if you guys have been looking at the website, you see that we’re interviewing, we’re strengthening our business development team. So, we’re bringing in more resources to help us do this faster.

Great. Thank you, guys.

Thank you.

Thank you.

And our next question comes from Paul Knight from Janney Montgomery. Your line is open.

Hi, John and Jim. Could you frame up on the portion of your revenues how much is in the animal side, meaning, pork, cattle? And then the second part of my question is, it is as I look at these commodity prices over the last year, there has been tremendous volatility to the downside, in particular, but recently, it looks like things are flat year-over-year. Don’t get any wrong, we had a lot of downside during the year. So with commodity prices now kind of back to prior year-ago levels, what’s the typical leg time that you would expect those better commodity prices to help out? Is that, in your experience, three months, six months, or does that for that matter, I guess? So, can you exposure the cycle where do you think you are in it?

Sure. So on the exposure side, when you think about our products – if we look at the difference between livestock versus companion, the majority of our products are in the livestock product segment. So that’s a big portion, that’s why it’s important for us. Regarding the commodities and what that means for pricing for the protein producers and how that’s going to affect their profitability going forward, like I said, I did a bad job last quarter. So I’m not sure. I mean, I think the things to watch or the things that we watch normally is, for example, in the dairy, it’s not just the inputs, it’s what the output is worth. So you have to look at the milk to feed ratio. So even though the inputs are coming down when you’ve got $14 milk, it may not be coming down fast enough to offset the poor price of the end product. So those are some of the things to look at when you’re thinking about how those markets are going to turn and when they can possibly turn. So it’s comparing their input versus their output.

And then specifically on the genomic side, could you frame up what U.S. did in terms of growth? And then what act U.S. growth was on genomics again for us?

Yes. I’m going to take that to Steve. He’s got it right in front of him.

So, Paul, the U.S. business was up about 6%, and worldwide, we’re up 15%.

And some of the challenge with that, Paul, was as we grow and we add Delta Genomics and we add other things. We try to make sure that we’re being the most efficient for the customer and getting close to the customer. So there’s a lot of things that are moving back and forth. So it – we tend to look at it as our global growth, because it’s not a fair representation to say, well, if you just look at, I said, well, international is really outgrowing the U.S. It’s a little more complicated, because the way we’re moving things around to – with regards to capabilities at the lab and trying to get turnaround time and be close to customers.

And then lastly, on the international growth rate that was high. What are your – are your initiatives gaining momentum? Are you adding distributors? Are you adding people? Is that something and what are you doing there to keep that growth rate moving at that level?

Sure. So it really is, it depends by country. So we have – we continue to grow in Brazil, because we’re adding new products within our dairy testing and we have a very strong growth and we picked up. We took a lot of share from – on the mycotoxin side from competitors, because we’ve strengthened our team there. So there – the Brazilians, it’s a multipronged strategy, same thing in Mexico. We see opportunities within – for growth, not only within the animal safety, but the Food Safety segment and the genomics. We think that what we’re doing in the U.S., around half a replacement we absolutely can do in Mexico. Jim is working with the Europeans. So Jim, you want to tell him some of the things that you’re doing over there with those guys?

That’s the kind of question – I had breakfast this morning with two of key managers from Eastern Europe. There are six of them in town this week, and we’re continuing to finalize just the strong five-year plan, but looking at where we are with budgets as we go into the New Year. The transition over there was also important as Dr. Holmes stepped back and Dr. Chambers stepped up. The whole group was able to step up one rank and we’re just moving forward without a pause. And that’s important to the textbooks. We’re doing some new things in the animal safety business over there, bringing in some new products that we’re just really beginning to build the animal safety business. So there’s some product stuff over there that’s going to continue to grow. I think that as we look at, probably all of our international operations have an opportunity to grow at the same kind of levels we’ve been seeing this quarter. So, there’s less opportunity in India, a lot of opportunity in China. Dr. Lilly, who has been with me on corporate development, is going to be spending more time with India and China and it will grow those operations. So I think, we’re encouraged about – and to what John said, some of our growth is – Brazil was up big time this past quarter. Some of that Brazilian growth was at the mercy of some product that had been recorded in our Lexington operations a year ago. But it made more sense to move it down and make responsibility to go to Brazil. So, we’re a worldwide company and I think we have to continue to look at that, but I’m very encouraged about where we are internationally.

Thank you.

And our next question comes from Jason Rogers from Great Lakes Review. Your line is open.

Yes. You mentioned earlier some initiatives to gain share in animal safety. Thus far, are you, at least, maintaining share in that segment overall, and what product areas might you be losing or gaining share and why?

So some of the things we’re doing are really focused on helping to train and move our programs for our distributor partners in the U.S. We don’t like we’re losing share. There is reporting that we have – it’s – if you take a look kind across the pharma business, I look the other day, you had other big pharma companies and everyone that serves this market, I think four of the five are all down, and one of them was up less than 2%. So it’s not like someone’s gaining share at the expense of others. It’s just, I think this market is where – and on an earlier question, it was talked about how the prices are relatively stable versus a year. But what happens is, when these producers are losing money and losing equity for a year, even though it hasn’t improved, they’re not making money, they’re still losing. So as they lose equity, they just tighten their belts. So they’re not going to stop spending, but they’re saying, listen, at this point, I know I ought to put rabbit in that house every week, but I’m going to do it every 10 days from a cash flow perspective. So we’re focusing on trying to drive end use promotions to pull product through our distributor partners to take share from competition and continue to grow the market.

And John, based on what you’ve see from the cyclical downturns and upturns in the market, when it finally does turn, would you expect there to be some pent-up demand for these products?

It’s not really pent-up demand. What you’ll see is, they will go back to their normalized buying patterns. So they don’t – there’s not a compensatory effect, but what I’m saying, they go back to their normalized buying patterns. So you’ll see times when – and it depends by market. If the number of animals being produced grows, then we tend to grow with it and you get back to the normal buying patterns. So you see over the long-term period mid single-digit growth, but I’ve seen some years that have been double-digit up and other years that have been seven to eight down. But over the long-term, you’ll watch it that it’s mid single-digit growth on the market.

That’s helpful. And if I could squeeze one in – more in for Steve. What tax rate should we be looking at for the fourth quarter? And any early thoughts on fiscal 2020?

I’d probably use – we were at 21% this quarter, Jason. And I’d probably use 21% or so for fourth quarter and probably even into fiscal 2020 if you’re modeling that. We’ve talked before about the – this impact from stock option exercises that could have a small benefit in any given quarter depending on the number of exercises. It was a nominal impact this quarter. And so I think 21% is probably as good a number as any to use.

Thank you.

And our next question comes from Brian Weinstein from William Blair. Your line is open.

Hi, guys, good morning. This is actually Andrew Brackmann on for Brian. John, I just wanted to go back to your comment you made a moment ago about the mid single-digit growth there. Could you just maybe clarify for a minute, was that your expectation for the longer-term growth of the entire animal safety segment, or just once – one portion of that?

No, that’s generally what animal safety has been doing over a long period of time and I’m talking about domestically now.

Got it. But overall, you think that, that business, I guess, longer-term can maybe grow higher single digits to lower double digits when you layer on the international opportunity?

Yes. I mean…

New products…

Really and Jim is right. What got us to the higher single digits is when we add new products. So when you have things like we do with our new disinfectant or some of the things we’re doing with water, that’s when you’re going to get the bump. The market generally doesn’t grow like that. But that doesn’t mean we can’t grow like that.

Got it. Okay. And then maybe just as a follow-up, I know you guys have been touching on M&A a little bit. But with the FDA letter last week calling for that increased investment in some more advanced technologies with next-gen sequencing and blockchain, and I think Mr. Herbert, you were talking about this in some of your comments. But how should we think about Neogen moving more into those areas that were outlined in the FDA? And is this going to be a kind of a focal part of your M&A strategy moving forward? Thanks.

It’s going to be a focal point of our business moving forward. And whether that’s we do it by M&A or whether we do that on our own, those are the types of solutions we have to provide for our customers. And we are actively working on those today to make sure that we can provide the solutions that the customers need. And you think about customer, it’s a wide customer base, whether the customer is a retail restaurant like McDonald’s or the customer is a food processor like Nestle or the customer is a producer that we work with cattle, swine or poultry that need the ability to be able to see where those inputs are all the way through the chain that’s something that we absolutely got the team working. And it’s to Jim’s point, this is not something that we just came along with the FDA proposal last week. This is stuff we’ve been working on for quite a while.

Certainly. Thank you. And then just last one for me. I think, you said inventory rightsizing was one of the drivers of the animal safety number this quarter. Would you say that’s behind you now, or is that – will that be – continue to be a little bit of a headwind moving forward? Thanks.

I think that’s – Andy, that’s the function of the market, right? So if the market is not pulling product through, the distributor normalized run rate, the days on hand go higher. So I don’t think, it’s – they change their buying pattern. I think it’s a function of the market, which is why we’re focusing on helping our partners pull through our products to their warehouse.

Okay. Thanks for the clarification. Thanks, guys.

Yep.

[Operator Instructions] Your next question comes from Kevin Ellich with Craig-Hallum. Your line is open.

Hey, guys, just a couple of quick follow-ups. First off, John, as you guys know, we’ve had a lot of snow in the Midwest this year. Wondering if you have any comments or color as to potential flooding in the Midwest and what sort of impact that could have on your business here in March and April?

Yes. I mean, our thoughts and prayers are with the people in Nebraska. I saw an initial report the other day that they thought the flooding in Nebraska could have an economic impact of up to $700 million on agriculture for that state. Now I don’t know what that was between livestock and crop, but it – Kevin, I think you’ve got to think about it like when we had the flooding in the East Coast last year. What we lost in certain sales to customer bases, we gained in others, whether it was they had to clean more or something other. We didn’t see a significant or I don’t know, Steve, I don’t think we have – we didn’t see a significant impact, positive or negative, it’s kind of a put and take wash for that.

It would be kind of interesting to see what happens to insecticides.

Right.

Yes.

Yes. I mean, because that – to Jim’s point, if it’s weather, you could have a bigger insecticide season. So…

We maybe killed a bunch of them in winter and we did. Yes.

Right. so it’s hard for me, Kevin, to say it’s going to have a direct impact. I just don’t know. I mean, what we’ll do is, whatever the opportunity presents to us, we’ll take advantage of it to help our customers kind of whatever happens to them.

Got it. No, that makes sense, especially with the snowy winter leads to more mosquitoes in the Midwest.

Yes.

As for – just one quick data, wondering if you could remind us. Last fiscal Q4, animal safety organic revenue growth was really strong almost 10%. And can you remind us, what drove that strength and now that FX is going against you, what do you plan to do to kind of help mitigate that tough comp?

The same things we’re doing now, Kevin. It will be a tough comp, but what we’re going to do is, we’re going to drive end user promotions in the U.S. We’re going to continue to launch new products like we’ve done in the UK that we think we can now export to a lot of our countries around the world. We’re going to continue to drive the businesses where we see the opportunity. I think, while it will be a challenging comp, we’ve already got plans in place, and we started in the third quarter to make sure that we’re doing everything we can to continue to push move-out for fourth quarter.

That’s helpful. Thanks, John.

Yep.

And your next question comes from [Leonard Heller] [ph], a private investor. Please go ahead.

Thank you. I just have – I want to drill down a little bit on the animal safety program. Before I do that I want to kind of ask you to review your Facebook thing on sales of products, because I think your February for food safety may not reconcile your total So just check that out.

Okay.

So there are a couple of things here that also need some clarification. We have rodenticide sales and insecticides in both animal and food safety. Differentiate for me what the difference is between the two sales focus there?

They’re the same products. It’s just the international piece is under food safety, and the domestic piece is under animal safety.

Okay. Thank you. Next question I have is, I’ve listened to the discussions and there’s a lot of discussion about mergers and acquisitions. I want to focus on organic growth for a while and specifically in the U.S. My first question is, are we not doing a good job of marketing our products in the U.S., because you say international is growing. U.S. is kind of stable. Why is U.S. stable? Why are we not getting the organic growth that we would expect in this market? I know there’s a lot of factors, but I’d like a simple answer to that question?

Sure. Well, I think the simplest answer and Jim brought it up earlier is, so, for example, in Europe, we’re just starting out in the animal safety market. So your percent growth can look very good on a small base and that’s like India. I mean, in India, we doubled the business from last year to this year. So 100% growth looks fantastic, but it’s really a much smaller base. And our core, our biggest piece of the animal safety market is in the United States. So it is inherently harder to grow that, because even a dollar size, you’ve got to grow it much more to get that percentage increase. I think, that’s the easiest answer.

Okay.

And nearly and thinking about where we are and I’d say, I’m in, because Dr. Heller has been a brand adviser for 30 years or better, was responsible for the starting of what we’ve got in Lexington today. So I don’t want to let that pass by. But those are – we think about two-thirds of our total market opportunity and you can probably remember this, Len. We said about two-thirds of our total potential lies outside the U.S. So we’d never get there probably. But when you look at 42% of revenue, this past quarter came from outside of the U.S. sources. We’ve got a lot of room to grow there. And so we ought to be growing faster there. Yes.

I agree with that totally. I guess, the last question and then I’ll stop is, how is animal safety or the animal side of our company structured? How are we inserting more aggressive marketing activities? Because I know we always have new products, and we have new acquisitions. And some of our old products may be getting a little tired. I don’t know that, because I don’t drill down like I used to. But I’m just trying to understand how are we structured in the animal division? What is our marketing activity in animal division focused on the U.S.?That’s my final question. Thank you.

Sure. Well, that’s a good question. I talked about a little bit in my prepared comments is, we are focusing to get much closer to our distributor customers and really focus on the products and the promotions to drive that change at the customer level. So helping to develop, excuse me, helping to develop products that’s going to pull product through our distributor partners, because if you think about it today, our distribution model and that in the U.S. is 95% of that goes through distribution. So we really – go ahead.

I guess, my question is who inside of Neogen looking at the entire animal division is responsible for the marketing activities for looking at products that are potential and good versus those that are old and we don’t do much about that? Where in the organizational structure is this occurring?

We have a Head of Marketing at the Animal Safety division and then reports into our General Manager of Animal Safety. And then we also have a Animal Safety Advisory Council that allows us to look at new technology and new products to address new market segments and those meet on a quarterly basis.

Yes. That’s always been a good part of Neogen, and I appreciate it.

All right. Thank you.

I’ve always enjoyed that. So I’m just focused on the animals safety side that division, what we’re doing organically, where our marketing efforts are going. I don’t want to talk about – I didn’t want to talk about new products and new acquisitions. I want to talk about just basic activities. And so I think you’ve answered most of those questions.

Great. Well, thank you for your questions today.

Thanks for the continued support, Leon.

I’m always there for you.

Thank you.

And this concludes the question-and-answer session. I’ll now turn the call back over to the speakers for final remarks.

Well, thank you very much. We really appreciate everyone’s support. Again, we’re excited about the future of the business going forward. We see this as an opportunity for us to continue to do what we do well, which is bringing new products, new solutions and new opportunities for our customer base. So thank you very much for your support, and have a great day.

Thank you, ladies and gentlemen. This concludes the question-and-answer session and webinar. Thank you for participating. You may now disconnect.