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IDEXX Laboratories, Inc. (IDXX) Announces First Quarter Results


10/19/2005 5:10:45 PM

WESTBROOK, Maine, April 29 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. , today reported that revenue for the first quarter of 2005 increased 14% to $152.4 million from $133.4 million for the first quarter of 2004.

Net income was $17.7 million for the quarter ended March 31, 2005, compared to $17.8 million for the same period in the prior year. Net income, as expected, was flat relative to the first quarter of 2004 primarily as a result of anticipated increases in sales and marketing expense related to the expansion of the Companion Animal Group sales and support personnel in 2004 and integration costs associated with the acquisitions of Vet Med Lab and Dr. Bommeli AG in the fourth quarter 2004.

Earnings per diluted share for the quarter were $0.51, a 4% increase over earnings per diluted share of $0.49 for the quarter ended March 31, 2004. During the quarter ended March 31, 2005 the Company incurred acquisition integration costs of $0.02 per diluted share associated with the acquisitions of Vet Med Lab and Dr. Bommeli AG. Excluding the effects of these discrete costs in the first quarter of 2005, earnings per diluted share grew 8%.

Companion Animal Group (CAG) revenue for the first quarter of 2005 increased 14% to $124.9 million from $109.8 million for the first quarter of 2004. This increase resulted primarily from increased sales of laboratory and consulting services, instruments and consumables and, to a lesser degree, pharmaceutical products and rapid assay products. The increase in laboratory and consulting services revenue was due, in part, to the inclusion of sales from laboratories acquired during 2004, which contributed approximately 7% to CAG revenue growth during the quarter. The favorable impact of foreign currency contributed 1% to CAG revenue growth.

Water segment revenue for the first quarter increased 8% to $12.8 million from $11.9 million for the first quarter of 2004 primarily due to higher worldwide sales volume. The favorable impact of foreign currency contributed 2% to Water revenue growth.

Food Diagnostics Group (FDG) revenue for the first quarter increased 26% to $14.7 million from $11.7 million for the first quarter of 2004 primarily due to higher production animal diagnostics sales in Europe. Approximately 11% of FDG growth resulted from sales from businesses acquired in 2004. The impact of foreign currency contributed 3% to FDG revenue growth.

"Our first quarter revenues were in line with our expectations and earnings per share slightly exceeded expectations primarily as a result of higher than anticipated gross margin," said Jonathan Ayers, Chairman and CEO. "Our results reflect our first full quarter of operations of Vet Med Lab and Dr. Bommeli AG, which we acquired in the fourth quarter of 2004. To date we are very pleased with the performance of these businesses and we are excited about the possibilities for market expansion that these Europe-based companies bring to IDEXX."

"Overall we continue to view 2005 as a year in which we integrate our recently acquired businesses and continue to invest in new product and operating initiatives that will position us to achieve our long-term growth objectives."

  Outlook
  The Company offers the following guidance for the second quarter of 2005:
   * Revenue is expected to be approximately $160 to $162 million.
   * Diluted earnings per share are expected to be approximately $0.56 to
     $0.58, which includes approximately $0.01 of anticipated acquisition
     integration costs.

  The Company offers the following guidance for the full year of 2005:
   * Revenue is expected to be approximately $630 to $640 million.
   * Diluted earnings per share are expected to be approximately $2.25 to
     $2.28, which includes approximately $0.05 of anticipated acquisition
     integration costs.

  Annual Meeting to be Broadcast Live on Internet

IDEXX Laboratories, Inc. today announced that it will host a simultaneous Webcast of its Annual Meeting of Stockholders, to be held on Wednesday, May 18, 2005, at 10:00 a.m. (eastern) at the Eastland Park Hotel in Portland, Maine.

Chairman and CEO Jonathan Ayers will chair the meeting. Investors may listen to the Annual Meeting and view a simultaneous presentation live via a link on the Company's Web site, idexx.com. An archived edition of the Meeting will be available after 1:00 p.m. (eastern) on that day via the same link.

About IDEXX Laboratories

IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice-management systems and therapeutics. Our products enhance the ability of veterinarians to provide advanced medical care and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Westbrook, Maine, IDEXX Laboratories employs more than 3,000 people and offers products to customers in over 100 countries.

Note Regarding Forward-Looking Statements

This press 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. These statements are based on management's expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. Factors that could cause or contribute to such differences include the following: the Company's ability to develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company's sales and marketing activities; the Company's ability to develop, license or obtain rights to new technologies; the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company's products; the effect of government regulation on the Company's business, including government decisions about whether and when to approve the Company's products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of our products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; the Company's ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company's inventories; the Company's ability to manufacture complex biologic products; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2004, in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations."

IDEXX Laboratories, Inc. and Subsidiaries Consolidated Statement of Operations Amounts in thousands except per share data (Unaudited) Three Months Ended March 31 March 31 2005 2004 Revenue: Revenue $152,426 $133,417 Expenses and Income: Cost of revenue 76,346 66,371 Gross profit 76,080 67,046 Sales and marketing 25,070 20,983 General and administrative 15,098 12,242 Research and development 9,774 8,520 Income from operations 26,138 25,301 Interest income, net 503 729 Income before provision for income taxes and partner's interest 26,641 26,030 Partner's share of consolidated loss 101 133 Provision for income taxes 9,052 8,372 Net Income: Net income $17,690 $17,791 Earnings per share: Basic $0.54 $0.51 Earnings per share: Diluted $0.51 $0.49 Shares outstanding: Basic 32,955 34,775 Shares outstanding: Diluted 34,439 36,437 IDEXX Laboratories, Inc. and Subsidiaries Key Operating Ratios (Unaudited) Three Months Ended March 31 March 31 2005 2004 Key Operating Ratios (as a percentage of revenue): Gross profit 49.9% 50.3% Sales, marketing, general and administrative expense 26.4% 24.9% Research and development expense 6.4% 6.4% Income from operations 17.1% 19.0% International Revenue: International revenue 35.1% 31.3% IDEXX Laboratories, Inc. and Subsidiaries Segment Information Amounts in thousands (Unaudited) Three Months Ended March 31 March 31 2005 2004 Revenue: Companion Animal Group $124,880 $109,830 Water 12,806 11,854 Food Diagnostics Group 14,740 11,733 Total $152,426 $133,417 Gross Profit: Companion Animal Group $59,263 $52,076 Water 8,477 7,993 Food Diagnostics Group 8,340 6,977 Total $76,080 $67,046 Income from Operations: Companion Animal Group $18,888 $18,248 Water 5,504 5,055 Food Diagnostics Group 2,578 2,923 Other (832) (925) Total $26,138 $25,301 Gross Profit (as a percentage of revenue): Companion Animal Group 47.5% 47.4% Water 66.2% 67.4% Food Diagnostics Group 56.6% 59.5% Operating Profit (as a percentage of revenue): Companion Animal Group 15.1% 16.6% Water 43.0% 42.6% Food Diagnostics Group 17.5% 24.9% IDEXX Laboratories, Inc. and Subsidiaries Revenues by Product and Service Categories Amounts in thousands (Unaudited) Three Months Ended March 31 March 31 2005 2004 Net CAG Revenue: Instruments and consumables $52,873 $48,811 Rapid assay products 24,752 24,245 Laboratory and consulting services 36,544 27,105 Information products and services and digital radiography 7,461 7,328 Pharmaceutical products 3,250 2,341 Net CAG revenue 124,880 109,830 Net Water Revenue: 12,806 11,854 Net FDG Revenue: Production animal products 10,862 7,898 Dairy-testing products 3,878 3,835 Net FDG revenue 14,740 11,733 Net Revenue: $152,426 $133,417 IDEXX Laboratories, Inc. and Subsidiaries Consolidated Balance Sheet Amounts in thousands (Unaudited) March 31 December 31 2005 2004 Assets: Current Assets: Cash and cash equivalents $44,579 $47,156 Short-term investments 65,622 90,116 Accounts receivable, net 75,617 65,639 Inventories 78,481 76,424 Other current assets 22,045 22,257 Total current assets 286,344 301,592 Long-term investments 12,037 19,687 Property and equipment - cost 140,714 137,851 Less - Accumulated depreciation 77,970 75,221 Property and equipment, net 62,744 62,630 Other long-term assets, net 126,793 130,328 Total assets $487,918 $514,237 Liabilities and Stockholders' Equity: Current Liabilities: Accounts payable $12,957 $14,723 Accrued expenses 62,951 73,785 Notes payable 526 1,291 Deferred revenue 8,617 10,153 Total current liabilities 85,051 99,952 Total long-term liabilities 15,080 16,233 Partner's interest in subsidiary 342 392 Stockholders' Equity: Common stock 4,533 4,522 Additional paid-in capital 414,397 410,817 Deferred equity-based compensation 1,174 665 Retained earnings 336,372 318,682 Treasury stock, at cost (377,867) (348,327) Accumulated other comprehensive income 8,836 11,301 Total stockholders' equity 387,445 397,660 Total liabilities and stockholders' equity $487,918 $514,237 IDEXX Laboratories, Inc. and Subsidiaries Key Balance Sheet Statistics (Unaudited) March 31 December 31 2005 2004 Key Balance Sheet Statistics: Days sales outstanding 42 39 Inventory turns 1.8 1.9 IDEXX Laboratories, Inc. and Subsidiaries Consolidated Statement of Cash Flows Amounts in thousands (Unaudited) Three Months Ended March 31 March 31 2005 2004 Operating: Cash Flows from Operating Activities: Net income $17,690 $17,791 Non-cash charges 6,390 11,663 Changes in current assets and liabilities, net of acquisitions and disposals (23,798) (18,786) Net cash provided by operating activities $282 $10,668 Investing: Cash Flows from Investing Activities: Decrease in investments, net 32,112 443 Purchase of property and equipment (4,536) (6,003) Acquisition of businesses and intangible assets (659) (5,342) Acquisition of equipment leased to customers (696) (466) Net cash provided by (used by) investing activities $26,221 $(11,368) Financing: Cash Flows from Financing Activities: Repayments of notes payable (1,271) (254) Purchase of treasury stock (29,540) (22,417) Proceeds from the exercise of stock options 2,603 11,005 Net cash used by financing activities $(28,208) $(11,666) Net effect of exchange rate changes (872) 184 Net decrease in cash and cash equivalents (2,577) (12,182) Cash and cash equivalents, beginning of period 47,156 96,942 Cash and cash equivalents, end of period $44,579 $84,760 IDEXX Laboratories, Inc. and Subsidiaries Free Cash Flow (Unaudited) Three Months Ended March 31 March 31 2005 2004 Free Cash Flow: Net cash provided by operating activities $282 $10,668 Purchase of property and equipment (4,536) (6,003) Acquisition of equipment leased to customers (696) (466) Free cash flow $(4,950) $4,199 Free cash flow indicates the cash generated from operations reduced by investments in capital and other long-term assets. Free cash flow excludes financing activities, investments in monetary securities, and business acquisitions and divestitures. We feel 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 fixed assets that are required to operate the business. We believe this is a common financial measure useful to further evaluate the results of operations.

CONTACT: Merilee Raines, Chief Financial Officer of IDEXX, +1-207-856-8155

Photo: http://www.newscom.com/cgi-bin/prnh/20030305/IDEXXLOGOAP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.comIDEXX Laboratories, Inc.

CONTACT: Merilee Raines, Chief Financial Officer of IDEXX,+1-207-856-8155



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