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IDEXX Laboratories Announces Third Quarter Results


WESTBROOK, Maine, Oct. 31, 2019 /PRNewswire/ --

  • Reports revenue growth of 11% on a reported basis and 12% on an organic basis, driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 13% reported and 14% organic
  • Delivers EPS of $1.24, representing 18% growth on a reported basis and 21% on a comparable constant currency basis
  • Updates 2019 revenue guidance to $2,395 million - $2,405 million, reflecting expectations for reported revenue growth of 8% - 8.5% and organic revenue growth of 10% - 10.5%, supported by CAG Diagnostics recurring reported revenue growth of 9.5% - 10% and organic revenue growth of 11.5% - 12%
  • Adjusts 2019 EPS outlook range to $4.72 - $4.78, $0.12 below the mid-point of prior guidance, as positive revisions to the full year operating outlook are offset by a projected $0.18 negative impact from charges associated with CEO transition in the fourth quarter
  • Provides preliminary 2020 financial guidance for revenue growth of 9% - 10.5% on a reported and organic basis, and EPS of $5.30 - $5.46, an increase of 12% - 15% on a reported basis and 17% - 20% on a comparable constant currency basis

IDEXX Laboratories, Inc. (IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reports revenues of $605 million for the third quarter of 2019, an increase of 11% on a reported basis, and 12% on an organic basis, including over 1% in growth benefit related to equivalent business day effects.

Third quarter results were driven by CAG Diagnostics recurring revenue growth of 13% reported and 14% organic, including a nearly 2% growth benefit related to equivalent business day effects. CAG Diagnostics recurring revenue results reflected strong 13% reported and organic revenue growth in the U.S. and international revenue growth of 12% reported and 16% organic. Global results reflected strong double-digit growth in IDEXX VetLab® consumables, reference laboratory diagnostic and consulting services revenues, and high single-digit growth in rapid assay products revenues. IDEXX VetLab consumables revenue growth was supported by an 18% year-over-year increase in the Catalyst® chemistry analyzer installed base, benefiting from 1,270 placements at new and competitive accounts globally, a 23% year-over-year increase.  Overall organic revenue growth results in the third quarter were also supported by high single-digit organic growth in Water and livestock, poultry and dairy ("LPD") revenues.

Earnings per diluted share ("EPS") was $1.24 for the third quarter, representing reported EPS growth of 18% and comparable constant currency EPS growth of 21%. These results reflected benefits from strong CAG Diagnostics recurring revenue gains, which supported a higher than projected 160 basis point improvement in operating margins on a reported basis and 130 basis points on a constant currency basis.

The Company is updating its full year 2019 revenue growth outlook to 8% - 8.5% on a reported basis and 10% - 10.5% on an organic basis. This results in an increase of $5 million at midpoint, reflecting expectations for overall organic growth and CAG Diagnostics recurring organic revenue growth at the high end of previous estimates, incorporating strong third quarter results. This outlook is supported by expectations for CAG Diagnostics recurring reported revenue growth of 9.5% - 10% and organic revenue growth of 11.5% - 12%, consistent with strong year-to-date trends. The Company is lowering its 2019 EPS guidance range by $0.12 per share at mid-point to $4.72 - $4.78, as benefits from strong operating performance are offset by a projected $0.18 negative impact from CEO transition charges in the fourth quarter of 2019.  Our updated 2019 EPS guidance is for 11% - 12% in reported EPS growth, or 15% - 16% on a comparable constant currency basis. Our EPS outlook reflects expectations for full year operating margin improvement of 55 - 70 basis points on a constant currency basis, including 55 basis points of unfavorable impact related to CEO transition charges in the fourth quarter of 2019.

The Company is providing preliminary 2020 guidance for reported and organic revenue growth of 9% - 10.5%, supported by sustained high growth CAG Diagnostics recurring revenues, and EPS of $5.30 - $5.46, supported by expectations of 100 - 150 basis points of constant currency operating margin expansion, including 50 basis points of benefit related to favorable comparisons to 2019 CEO transition charges. Reported 2020 EPS growth of 12% - 15% incorporates $0.11 of negative projected year-over-year impact from foreign exchange effects and a $0.12 year-over-year reduction in projected benefits from share-based compensation tax benefits. Adjusting for these impacts, the 2020 EPS guidance reflects projected year-over-year EPS growth of 17% - 20% on a comparable constant currency basis.

"IDEXX delivered outstanding operating results in the third quarter, supported by continued strong growth in CAG Diagnostics recurring revenues. Our high-return investments in our global commercial capability are driving the global adoption of our innovative products and services, including the rapid expansion of our Catalyst installed base and increased utilization of IDEXX's proprietary Fecal Dx® Antigen Panel and IDEXX SDMA® test," said Jay Mazelsky, the Company's President and Chief Executive Officer. Mazelsky continued," It is clear that our customers are benefiting from increased interaction and support from IDEXX engagement as we work together to advance the standard of companion animal healthcare.  We are building on this momentum with an eight percent expansion of our U.S. field commercial capability in the fourth quarter of this year, which will position us well to continue delivering strong financial results aligned with our long-term goals."

Third Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated 12% reported and 13% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 13% reported and 14% organic, which included nearly 2% of growth benefit related to equivalent business day effects.

  • IDEXX VetLab® consumables generated 16% reported and 18% organic revenue growth, including an estimated 3% of growth benefit related to equivalent business day effects. IDEXX VetLab consumables growth was supported by ongoing expansion of our global premium instrument installed base, continued strong customer retention, increases in testing utilization and moderate net price gains.
  • Reference laboratory diagnostic and consulting services generated 11% reported and 12% organic revenue growth. These results were driven by continued strong double-digit organic growth in the U.S., reflecting volume gains with existing customers, moderate net price realization and benefits from net customer additions. Global organic revenue growth rates were supported by improved high single-digit revenue gains in international markets.
  • Rapid assay products generated 9% reported and 10% organic revenue growth, including an estimated 3% of growth benefit related to equivalent business day effects. Rapid assay revenue growth was supported by volume gains across our SNAP® portfolio of products, including 4Dx® Plus, high customer retention rates and moderate net price gains.

Veterinary software, services and diagnostic imaging systems revenue grew 6% on a reported and organic basis, driven by growth in subscription-based service revenues, including continued expansion of our practice management platforms.  Overall segment growth was constrained by comparisons to very strong prior year digital imaging system placement levels.

Water

Water achieved revenue growth of 5% on a reported basis and 7% on an organic basis in the third quarter, supported by solid volume growth across all regions.

Livestock, Poultry and Dairy ("LPD")

LPD generated revenue growth of 7% on a reported basis and 10% on an organic basis for the third quarter. These results reflected revenue gains across the product portfolio including increases in diagnostic testing in Asia from new testing programs and from testing associated with alternative food sources, such as poultry. Third quarter results also benefited from favorable comparisons to soft prior year revenue levels in the Asia region. These gains were partially offset by moderate declines in herd health screening, compared to strong prior year levels, and continued impacts on swine testing from the prolonged outbreak of African swine fever in China.

Gross Profit and Operating Profit

Gross profits increased 13% year-over-year, and gross margin was 57%, an increase of 100 basis points compared to prior year period results on a reported basis and 60 basis points on a constant currency basis. Gross margin improvement was supported by mix benefits from strong growth in IDEXX VetLab consumables revenue, reference laboratory productivity gains and continued moderate CAG Diagnostics recurring revenue net price gains.

Operating margin was 23.1% in the quarter, 160 basis points higher than the prior year period results on a reported basis and 130 basis points on a constant currency basis, supported by gross margin gains and operating expense leverage on high revenue growth.  Operating expenses increased 9% on a reported basis and 10% on a constant currency basis, driven by increases in our CAG segment's sales and marketing costs and research and development spending.

2019 and 2020 Financial Outlook

The following guidance for 2019 and 2020 reflects the assumptions that for the remainder of 2019 and the full year 2020, the value of foreign currencies will remain at the following rates in U.S. dollars:

  • the euro at $1.09;
  • the British pound at $1.26;
  • the Canadian dollar at $0.75; and
  • the Australian dollar at $0.67;

and relative to the U.S. dollar:

  • the Japanese yen at ¥110.00;
  • the Chinese renminbi at RMB 7.22; and
  • the Brazilian real at R$4.21.

Outlook for 2019

We are updating our 2019 revenue outlook to $2,395 million - $2,405 million, reflecting expectations for reported revenue growth of 8% - 8.5% and organic revenue growth of 10% - 10.5%. At mid-point, the updated revenue outlook is $5 million above our previous guidance reflecting projected organic revenue growth at the higher end of our previous guidance range. Our outlook now reflects expectations for CAG Diagnostics recurring reported revenue growth of 9.5% - 10% and organic revenue growth of 11.5% - 12%. Modest benefits from a recently completed acquisition are offset by refinements to our foreign exchange rate assumptions. At the foreign exchange rate assumptions in 2019 noted above, we estimate that the effect of the stronger U.S. dollar will reduce full year 2019 reported revenue growth by approximately 2%.

We are updating our 2019 EPS outlook to $4.72 - $4.78 per share, reflecting a decrease of $0.12 per share at mid-point, incorporating a projected $0.18 negative impact from CEO transition charges in the fourth quarter of 2019 and a negative $0.02 per share impact related to updated foreign exchange assumptions. These impacts are partially offset by $0.06 in operational improvement related to strong third quarter performance and lower projections for net interest costs, as well as $0.02 per share of improvement related to updated estimates for share-based compensation tax benefits. For the full year, we now expect a foreign exchange headwind of $0.06 per share, net of projected hedge gains of approximately $11.5 million in 2019. The updated outlook represents EPS growth of 11% - 12% on a reported basis, and 15% - 16% on a comparable constant currency growth basis.

The Company continues to project free cash flow at approximately 60% - 65% of net income in 2019 and capital spending of approximately $160 million - $175 million, including an estimated $70 million of capital spending related to the completion of our Westbrook, Maine headquarters expansion and the relocation and expansion of our core laboratory in Germany.

The Company provides the following updated guidance for 2019:

Amounts in millions except per share data and percentages



Guidance Range

Growth Definition

Year-over-year Growth










Revenue


$2,395

-

$2,405

Reported

8%

-

8.5 %






Organic Revenue Growth

10%

-

10.5 %










EPS


$4.72

-

$4.78

Reported

11%

-

12 %






Comparable Constant Currency

15%

-

16 %










Operating Cash Flow

~

100% - 105% of net income













Free Cash Flow

~

60% - 65% of net income













Capital Expenditures

~

$160 million - $175 million




We now expect an effective tax rate of approximately 20%, including approximately 1% of impact related to CEO transition charges.  The effective tax rate outlook incorporates expectations for share-based compensation tax benefits of $15 million or approximately 300 basis points, resulting in EPS benefits of $0.17 per share. We continue to project a reduction in weighted average shares outstanding of approximately 1%, and now expect interest expense, net of interest income, of approximately $31.5 million reflecting current and projected borrowings.

Preliminary Outlook for 2020

The Company provides the following preliminary guidance for 2020:

Amounts in millions except per share data and percentage



Guidance Range

Growth Definition

Year-over-year Growth










Revenue


$2,610

-

$2,650

Reported

9%

-

10.5 %






Organic Revenue Growth

9%

-

10.5 %










EPS


$5.30

-

$5.46

Reported

12%

-

15 %






Comparable Constant Currency

17%

-

20 %

The Company's 2020 outlook is for continued strong overall organic revenue growth, supported by sustained high growth in CAG Diagnostics recurring revenues.

At the foreign exchange rates assumed in this earnings release, we estimate that foreign exchange impacts will decrease 2020 reported revenue growth by approximately 0.5%, and EPS by approximately $0.11 per share, including impacts from comparisons to approximately $11.5 million of projected foreign exchange hedge gains in 2019.

Our 2020 EPS outlook includes approximately $0.04 - $0.06 per share of projected benefit from share-based compensation tax benefits, $0.12 per share below higher than expected 2019 levels at midpoint. Our preliminary outlook for our effective tax rate is 21% - 22% and for a reduction in weighted average shares outstanding from continued stock repurchases of approximately 1%. We are projecting interest expense, net of interest income, of approximately $36 million, reflecting current and projected borrowings and the assumed continuation of current floating interest rate costs.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its third quarter 2019 results and management's outlook. To participate in the conference call, dial 1-800-230-1096 or 1-612-332-0335 and reference confirmation code 472946. Replay of the conference call will be available through Thursday, November 7, 2019 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 472946. Individuals can access a live webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An archived edition of the webcast will be available after 1:00 p.m. (Eastern) on that day via the same link and will remain available for one year.

IDEXX Laboratories, Inc. logo. (PRNewsFoto/IDEXX Laboratories, Inc.)

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency and build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for livestock and poultry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX employs more than 8,000 people and offers products to customers in over 175 countries. For more information about IDEXX, visit: www.idexx.com.

Note Regarding Forward-Looking Statements

This earnings release contains statements about the Company's business prospects and estimates of the Company's financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are included above under "2019 and 2020 Financial Outlook", "Outlook for 2019", "Preliminary Outlook for 2020", and elsewhere and can be identified by the use of words such as "expects", "may", "anticipates", "intends", "would", "will", "plans", "believes", "estimates", "projected", "should", and similar words and expressions. Our forward-looking statements include statements relating to revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates; projected CEO transition charges and their impact; and projected operating margins and expenses, capital expenditures, commercial infrastructure expansion, gains from foreign currency hedging transactions, tax and EPS benefits from share-based compensation arrangements, effective tax rates, weighted average shares outstanding and interest expense. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release; and are not guarantees of future performance. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things, the matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and in the corresponding sections of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, as well as those described from time to time in the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Regarding Non-GAAP Financial Measures

The following defines terms and conventions and provides reconciliations regarding certain measures used in this earnings release and/or the accompanying earnings conference call that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to as non-GAAP financial measures. To supplement the Company's consolidated results presented in accordance with GAAP, the Company has disclosed non-GAAP financial measures that exclude or adjust certain items. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and liquidity and are useful for period-over-period comparisons of the performance of the Company's business and its liquidity and to the performance and liquidity of our peers. While management believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Constant currency - Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, gross profit, operating profit, and EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. These estimated currency changes impacted third quarter 2019 results as follows: decreased revenue growth by 1%, did not impact U.S. CAG Diagnostics recurring revenue growth, decreased international CAG Diagnostics recurring revenue growth by approximately 4%, decreased gross profit growth by approximately 1%, increased gross profit margin growth by 40 basis points, decreased operating expense growth by 1%, had an immaterial impact on operating profit growth, increased operating profit margin growth by 30 basis points, and had an immaterial impact on EPS growth. Estimated currency changes are also expected to decrease projected full year 2019 revenue growth by approximately 2%, decrease projected full year 2019 CAG Diagnostics recurring revenue growth by approximately 2%, increase projected 2019 operating profit margin growth by approximately 20 basis points, and decrease projected 2019 EPS growth by approximately 1%. Estimated currency changes are expected to decrease projected 2020 revenue growth by approximately 0.5%, decrease projected 2020 operating profit margin growth by 30 basis points and decrease projected 2020 EPS growth by 2%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three and nine months ended September 30, 2019.

Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and revenue from certain business acquisitions. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and nine months ended September 30, 2019.  See the constant currency note above for the impacts of estimated currency changes to the projected full year 2019 CAG Diagnostics recurring revenue growth and total revenue growth and projected full year 2020 revenue growth for the Company. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to business acquisitions that have occurred since the beginning of the prior year period. We exclude only acquisitions that are considered to be a business from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management's Discussion and Analysis of Financial Conditions and Results of Operations, Non-GAAP Financial Measures, contained in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019. For the calculation of projected full year 2019 organic revenue growth and projected full year 2019 CAG Diagnostics recurring organic revenue growth, the impacts of revenue from acquisitions is immaterial. Revenue from acquisitions is expected to increase projected full year 2020 revenue growth by approximately 0.5%.

Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the tax benefits of share-based compensation activity under ASU 2016-09. Management believes comparable constant currency EPS growth is a more useful way to measure the Company's business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Share-based compensation tax benefits are expected to increase projected EPS by $0.17 per share for the full year 2019 compared to $0.24 per share for the full year 2018, and increased third quarter 2019 EPS by $0.05 per share compared to $0.07 per share in the third quarter of 2018.  Share-based compensation tax benefits are expected to increase projected EPS by $0.05 per share for 2020. These impacts and those described in the constant currency note above reconcile reported EPS growth to comparable constant currency EPS growth for the Company.

Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, reduced by the Company's investments in property and equipment.  Management believes free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in property and equipment that are required to operate the business. See the supplementary analysis of results below for our calculation of free cash flow for the nine months ended September 30, 2019 and 2018. To estimate projected 2019 free cash flow, we have deducted projected purchases of property and equipment, also referred to as capital expenditures, of $160 million - $175 million.

Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures.  Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization and certain other non-cash charges.  Management believes that using Adjusted EBITDA, gross debt and net debt in the Adjusted EBITDA ratio is a useful and recognized measure for evaluating financial leverage.  For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA Ratio are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.

Notes and Definitions

CEO Transition Charges - Effective November 1, 2019, Jonathan W. Ayers, our Chairman and former President and Chief Executive Officer, who has been on a medical leave of absence since June 28, 2019, will step down as Chairman of our Board, cease to be an employee of the Company and transition to the role of external Senior Advisor to the Company.  Mr. Ayers will continue to serve as a member of our Board. In connection with a mutual separation agreement between the Company and Mr. Ayers, we expect to recognize charges to operating income of approximately $13.4 million in the fourth quarter of 2019, representing the cost of severance payments and an acceleration of the cost of his equity awards. In addition, we expect to increase our provision for income taxes by approximately $2.1 million, including a reduction of deferred tax assets related to previously recognized stock option tax benefits, resulting in a total charge to net income of approximately $15.5 million, net of tax impacts.

 

 

IDEXX Laboratories, Inc. and Subsidiaries





Condensed Consolidated Statement of Operations





Amounts in thousands except per share data (Unaudited)









Three Months Ended


Nine Months Ended





September 30,


September 30,


September 30,


September 30,





2019


2018


2019


2018

Revenue:


Revenue


$605,303



$545,448



$1,801,462



$1,663,856


Expenses and Income:


Cost of revenue


260,353



239,805



767,062



722,675




Gross profit


344,950



305,643



1,034,400



941,181




Sales and marketing


104,551



95,146



312,499



291,502




General and administrative


66,337



63,955



186,653



185,966




Research and development


34,260



29,192



98,033



87,725




Income from operations


139,802



117,350



437,215



375,988




Interest expense, net


(7,004)



(8,311)



(23,503)



(25,291)




Income before provision for income taxes


132,798



109,039



413,712



350,697




Provision for income taxes


23,960



15,825



76,464



59,327


Net Income:


Net income


108,838



93,214



337,248



291,370




Less: Noncontrolling interest in subsidiary's
earnings


1



(37)



24



(23)




Net income attributable to stockholders


$108,837



$93,251



$337,224



$291,393




Earnings per share: Basic


$1.26



$1.07



$3.91



$3.35




Earnings per share: Diluted


$1.24



$1.05



$3.85



$3.29




Shares outstanding: Basic


86,198



86,756



86,206



87,029




Shares outstanding: Diluted


87,667



88,453



87,633



88,687


 

 

IDEXX Laboratories, Inc. and Subsidiaries





Selected Operating Information (Unaudited)









Three Months Ended


Nine Months Ended





September 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018








Operating Ratios


Gross profit


57.0

%


56.0

%


57.4

%


56.6

%

(as a percentage of
revenue):


Sales, marketing, general and administrative
expense


28.2

%


29.2

%


27.7

%


28.7

%



Research and development expense


5.7

%


5.4

%


5.4

%


5.3

%



Income from operations1


23.1

%


21.5

%


24.3

%


22.6

%












1Amounts presented may not recalculate due to rounding.







 

 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)












Three Months Ended


Three Months Ended





September 30,
2019


Percent of
Revenue


September 30,

2018


Percent of
Revenue








Revenue:


CAG


$533,130





$478,097






Water


34,906





33,108






LPD


31,370





29,420






Other


5,897





4,823






Total


$605,303





$545,448















Gross Profit:


CAG


$298,089



55.9

%


$261,862



54.8

%



Water


25,370



72.7

%


23,423



70.7

%



LPD


18,145



57.8

%


17,233



58.6

%



Other


2,865



48.6

%


2,652



55.0

%



Unallocated Amounts


481



N/A



473



N/A




Total


$344,950



57.0

%


$305,643



56.0

%












Income from Operations:


CAG


$124,490



23.4

%


$102,241



21.4

%



Water


17,045



48.8

%


15,874



47.9

%



LPD


4,994



15.9

%


4,007



13.6

%



Other


1,379



23.4

%


443



9.2

%



Unallocated Amounts


(8,106)



N/A



(5,215)



N/A




Total


$139,802



23.1

%


$117,350



21.5

%

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)












Nine Months Ended


Nine Months Ended





September 30,
2019


Percent of
Revenue


September 30,
2018


Percent of
Revenue








Revenue:


CAG


$1,589,397





$1,456,417






Water


99,980





94,909






LPD


95,980





96,658






Other


16,105





15,872






Total


$1,801,462





$1,663,856

















Gross Profit:


CAG


$897,216



56.5

%


$809,705



55.6

%



Water


72,385



72.4

%


66,864



70.5

%



LPD


56,882



59.3

%


55,567



57.5

%



Other


7,618



47.3

%


7,339



46.2

%



Unallocated Amounts


299



N/A



1,706



N/A




Total


$1,034,400



57.4

%


$941,181



56.6

%















Income from Operations:


CAG


$384,095



24.2

%


$332,435



22.8

%



Water


47,394



47.4

%


43,458



45.8

%



LPD


17,637



18.4

%


13,439



13.9

%



Other


3,657



22.7

%


2,071



13.0

%



Unallocated Amounts


(15,568)



N/A



(15,415)



N/A




Total


$437,215



24.3

%


$375,988



22.6

%

 

 


IDEXX Laboratories, Inc. and Subsidiaries

Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets

Amounts in thousands (Unaudited)




Three Months Ended


















 

Net Revenue


September 30,
2019


September 30,
2018


Dollar
Change


Reported
Revenue
Growth1


Percentage
Change
from
Currency


Percentage
Change
from
Acquisitions


Organic
Revenue
Growth1

CAG


$533,130



$478,097



$55,033



11.5

%


(1.2)

%




12.7

%

United States


357,810



319,561



38,249



12.0

%






12.0

%

International


175,320



158,536



16,784



10.6

%


(3.6)

%




14.2

%

Water


34,906



33,108



1,798



5.4

%


(1.7)

%




7.1

%

United States


16,794



15,878



916



5.8

%






5.8

%

International


18,112



17,230



882



5.1

%


(3.3)

%




8.4

%

LPD


31,370



29,420



1,950



6.6

%


(2.9)

%




9.5

%

United States


3,649



3,502



147



4.2

%






4.2

%

International


27,721



25,918



1,803



7.0

%


(3.3)

%




10.3

%

Other


5,897



4,823



1,074



22.2

%






22.2

%

Total Company


$605,303



$545,448



$59,855



11.0

%


(1.3)

%




12.3

%

United States


380,184



340,692



39,492



11.6

%






11.6

%

International


225,119



204,756



20,363



9.9

%


(3.5)

%




13.4

%





Three Months Ended


























 

Net CAG Revenue


September 30,
2019


September 30,
2018


Dollar
Change


Reported
Revenue
Growth1


Percentage
Change
from
Currency


Percentage
Change
from
Acquisitions


Organic

Revenue
Growth1

CAG Diagnostics recurring revenue:


$460,974



$409,162



$51,812



12.7

%


(1.2)

%




13.9

%

IDEXX VetLab consumables


177,276



152,509



24,767



16.2

%


(1.6)

%




17.8

%

Rapid assay products


58,930



53,821



5,109



9.5

%


(0.5)

%




10.0

%

Reference laboratory diagnostic
and consulting services


204,919



184,103



20,816



11.3

%


(1.2)

%




12.5

%

CAG Diagnostics services and
accessories


19,849



18,729



1,120



6.0

%


(1.3)

%




7.3

%

CAG Diagnostics capital –
instruments


32,608



31,561



1,047



3.3

%


(1.6)

%




4.9

%

Veterinary software, services and
diagnostic imaging systems


39,548



37,374



2,174



5.8

%


(0.3)

%




6.1

%

Net CAG revenue


$533,130



$478,097



$55,033



11.5

%


(1.2)

%




12.7

%
















1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets

Amounts in thousands (Unaudited)




Nine Months Ended


























 

Net Revenue


September 30,
2019


September 30,
2018


Dollar
Change


Reported
Revenue
Growth1


Percentage
Change
from

Currency


Percentage
Change
from
Acquisitions


Organic
Revenue
Growth1

CAG


$1,589,397



$1,456,417



$132,980



9.1

%


(1.8)

%


0.1

%


10.9

%

United States


1,062,715



962,712



100,003



10.4

%




0.1

%


10.3

%

International


526,682



493,705



32,977



6.7

%


(5.5)

%


0.1

%


12.1

%

Water


99,980



94,909



5,071



5.3

%


(2.9)

%




8.3

%

United States


48,157



45,539



2,618



5.8

%






5.8

%

International


51,823



49,370



2,453



5.0

%


(5.7)

%




10.7

%

LPD


95,980



96,658



(678)



(0.7)

%


(4.8)

%




4.1

%

United States


10,221



10,496



(275)



(2.6)

%






(2.6)

%

International


85,759



86,162



(403)



(0.5)

%


(5.4)

%




5.0

%

Other


16,105



15,872



233



1.5

%






1.5

%

Total Company


$1,801,462



$1,663,856



$137,606



8.3

%


(2.1)

%


0.1

%


10.3

%

United States


1,127,347



1,024,889



102,458



10.0

%




0.1

%


9.9

%

International


674,115



638,967



35,148



5.5

%


(5.4)

%


0.1

%


10.9

%





Nine Months Ended


























 

Net CAG Revenue


September 30,
2019


September 30,
2018


Dollar
Change


Reported
Revenue
Growth1


Percentage
Change
from

Currency


Percentage
Change
from
Acquisitions


Organic
Revenue
Growth1

CAG Diagnostics recurring revenue:


$1,382,196



$1,252,876



$129,320



10.3

%


(1.9)

%




12.2

%

IDEXX VetLab consumables


519,646



460,642



59,004



12.8

%


(2.4)

%




15.2

%

Rapid assay products


181,966



169,200



12,766



7.5

%


(1.0)

%




8.5

%

Reference laboratory diagnostic
and consulting services


621,469



568,308



53,161



9.4

%


(1.8)

%




11.1

%

CAG Diagnostics services and
accessories


59,115



54,726



4,389



8.0

%


(2.3)

%




10.3

%

CAG Diagnostics capital –
instruments


92,883



97,000



(4,117)



(4.2)

%


(2.5)

%




(1.8)

%

Veterinary software, services and
diagnostic imaging systems


114,318



106,541



7,777



7.3

%


(0.4)

%


1.3

%


6.4

%

Net CAG revenue


$1,589,397



$1,456,417



$132,980



9.1

%


(1.8)

%


0.1

%


10.9

%
















1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

Amounts in thousands (Unaudited)





September 30,
2019


December 31,
2018

Assets:


Current Assets:







Cash and cash equivalents


$103,996



$123,794




Accounts receivable, net


268,319



248,855




Inventories


204,893



173,303




Other current assets


126,174



108,220




Total current assets


703,382



654,172




Property and equipment, net


496,584



437,270




Other long-term assets, net


551,515



445,907




Total assets


$1,751,481



$1,537,349


Liabilities and Stockholders'







Equity (Deficit):


Current Liabilities:







Accounts payable


$75,515



$69,534




Accrued liabilities


278,626



260,683




Line of credit


229,500



398,937




Deferred revenue


42,986



41,290




Total current liabilities


626,627



770,444




Long-term debt


696,634



601,348




Other long-term liabilities, net


225,498



174,790




Total long-term liabilities


922,132



776,138




Total stockholders' equity (deficit)


202,418



(9,513)




Noncontrolling interest


304



280




Total stockholders' equity (deficit)


202,722



(9,233)




Total liabilities and stockholders' equity (deficit)


$1,751,481



$1,537,349


 

 

IDEXX Laboratories, Inc. and Subsidiaries

Select Balance Sheet Information (Unaudited)





September 30,
 2019


June 30,
2019


March 31,
2019


December 31,
 2018


September 30,
 2018

Selected Balance Sheet Information:


Days sales
outstanding1


41.8



41.7



42.0



42.6



44.3




Inventory turns2


2.0



2.1



2.0



2.3



2.1















1Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.

2Inventory turns represent inventory-related cost of product revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

Amounts in thousands (Unaudited)





Nine Months Ended





September 30,
2019


September 30,
2018

Operating:


Cash Flows from Operating Activities:







Net income


$337,248



$291,370




Non-cash charges


91,945



99,386




Changes in assets and liabilities


(125,448)



(126,320)




Net cash provided by operating activities


303,745



264,436


Investing:


Cash Flows from Investing Activities:







Purchases of property and equipment


(109,058)



(82,642)




Purchase of marketable securities




(87)




Proceeds from the sale and maturities of marketable securities




284,125




Acquisition of intangible assets


(255)



(450)




Acquisition of a business


(304)



(22,500)




Net cash (used) provided by investing activities


(109,617)



178,446


Financing:


Cash Flows from Financing Activities:







Repayments on revolving credit facilities, net


(169,532)



(240,500)




Issuance of senior notes


100,000






Debt issuance costs


(154)






Payment of acquisition-related contingent consideration


(2,255)



(1,266)




Repurchases of common stock


(160,969)



(263,712)




Proceeds from exercises of stock options and employee stock purchase plans


28,739



34,595




Shares withheld for statutory tax withholding on restricted stock


(7,849)



(9,110)




Net cash used by financing activities


(212,020)



(479,993)




Net effect of changes in exchange rates on cash


(1,906)



(3,687)




Net decrease in cash and cash equivalents


(19,798)



(40,798)




Cash and cash equivalents, beginning of period


123,794



187,675




Cash and cash equivalents, end of period


$103,996



$146,877


 

 

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands except per share data (Unaudited)





Nine Months Ended





September 30,
2019


September 30,
2018

Free Cash Flow:


Net cash provided by operating activities


$303,745



$264,436




Investing cash flows attributable to purchases of property and equipment


(109,058)



(82,642)




Free cash flow1


$194,687



$181,794









1See Statements Regarding Non-GAAP Financial Measures, above.

 

 

 

IDEXX Laboratories, Inc. and Subsidiaries





Common Stock Repurchases





Amounts in thousands except per share data (Unaudited)







Three Months Ended


Nine Months Ended



September 30,
2019


September 30,
2018


September 30,
2019


September 30,
2018

Shares repurchased in the open market


330



302



683



1,284


Shares acquired through employee surrender for statutory tax withholding


1



1



38



50


Total shares repurchased


331



303



721



1,334











Cost of shares repurchased in the open market


$91,051



$73,247



$165,198



$265,209


Cost of shares for employee surrenders


277



390



7,849



9,110


Total cost of shares


$91,328



$73,637



$173,047



$274,319











Average cost per share – open market repurchases


$275.50



$242.78



$241.56



$206.59


Average cost per share – employee surrenders


$286.65



$253.34



$209.20



$181.68


Average cost per share – total


$275.53



$242.83



$239.87



$205.65


 

 

Contact: John Ravis, Investor Relations, 1-207-556-8155

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