IDEXX Laboratories Announces Second Quarter 2021 Results

WESTBROOK, Maine, July 30, 2021 /PRNewswire/ --

  • Achieves reported revenue growth of 30% and organic revenue growth of 25%, driven by CAG Diagnostics recurring revenue growth of 30% as reported and 26% organic
  • Delivers EPS of $2.34, representing 36% growth as reported and 33% on a comparable basis
  • Increases 2021 revenue guidance to $3,170 million - $3,205 million, reflecting higher expectations for reported growth of 17% - 18.5% and organic growth of 14.5% - 16%, supported by projected CAG Diagnostics recurring revenue growth of 18% - 19.5% as reported and 16% - 17.5% organic
  • Raises 2021 EPS outlook to $8.20 - $8.36, reflecting an increase of 1% - 1.5% in the organic revenue growth outlook and expectations for higher operating margins of 28.6% - 29.1%

IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, today announced second quarter results, as well as an update on U.S. companion animal diagnostics sector trends.

Second Quarter Results

The Company reports revenues of $826 million for the second quarter of 2021, an increase of 30% as reported and 25% organically. Second quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 30% reported and 26% organic, reflecting continued high gains in the U.S. and internationally, as well as 86% reported and 78% organic growth in CAG Diagnostics capital instrument revenue. Overall revenue growth was also supported by 32% reported and 27% organic revenue growth in the Water business.

Earnings per diluted share ("EPS") of $2.34 for the second quarter was supported by solid operating margin gains despite comparisons to highly controlled cost levels in the prior year. Overall operating margins expanded 110 basis points on an as reported and comparable basis. EPS results also benefited from a higher than expected $0.07 per share in tax benefits from share-based compensation.

"The IDEXX team delivered another quarter of outstanding performance, reflected in continued high growth in CAG Diagnostics recurring revenues and accelerated gains in instrument placements, as the global animal healthcare sector sustained strong growth momentum globally," said Jay Mazelsky, the Company's President and Chief Executive Officer. "We doubled prior year CAG premium instrument placements, as our customers look ahead to supporting continued strong global demand for companion animal diagnostics in their practices. We look forward to building on this momentum with the ongoing successful rollout of ProCyte OneTM, our next-generation hematology point-of-care instrument. We continue to drive exceptional performance across our major regions driven by strong commercial execution and adoption of IDEXX innovation. We also continue to build on our capabilities, including expansion of our cloud-based software solutions that support veterinary clinic productivity. We were excited to announce the acquisition of the ezyVet practice management software platform in the quarter and to welcome the talented ezyVet team to IDEXX. Our best-in-class in-clinic platforms and unparalleled global lab services capabilities, integrated with our cloud-based information management solutions, position us to drive accelerated advancement of the global standard of healthcare for companion animals."

Companion Animal Diagnostics Trends Update

Favorable global trends in companion animal healthcare continue to support high growth for CAG diagnostic products and services across regions. U.S. same-store clinical visit growth at veterinary practices was 13% in the second quarter, reflecting year-over-year growth of 11% in non-wellness visits and 14% in wellness visits. These gains include benefits from comparisons to prior year impacts on demand related to the COVID-19 pandemic. Average same-store revenue growth at U.S. veterinary practices was 16% in the second quarter, driven by high growth in healthcare services, including increased utilization of diagnostics. Additional U.S. companion animal practice key metrics are available in the Q2 2021 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Second Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated 32% reported and 27% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 30% on a reported basis and 26% on an organic basis. High growth across IDEXX's major modalities in the second quarter reflected continued high growth in clinical visits, which benefited in part from lapping of prior year COVID-19 impacts in April and May. Overall CAG revenue growth included 86% reported growth and 78% organic growth in CAG Diagnostics capital instrument revenues, compared to constrained prior year levels.

  • IDEXX VetLab® consumables generated 31% reported and 26% organic revenue growth, supported by increased testing utilization across regions, high customer retention levels, ongoing expansion of our global premium instrument installed base, and moderate net price gains.
  • Reference laboratory diagnostic and consulting services generated 28% reported and 25% organic revenue growth, with high organic growth across regions reflecting strong volume gains across testing categories and benefits from moderate net price gains.
  • Rapid assay products revenues grew 30% as reported and 28% on an organic basis, with continued worldwide growth in SNAP® 4Dx Plus Test volumes, benefiting from strong overall sector conditions, including high growth in wellness testing, high customer retention levels, and moderate net price gains.

Veterinary software, services and diagnostic imaging systems revenues grew 33% reported and 26% on an organic basis, driven by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements and recurring software services. Reported growth includes initial benefits from the recent acquisition of ezyVet which closed in June.

Water

Water revenues grew 32% on a reported basis and 27% on an organic basis for the quarter, compared to prior year results, which reflected a 16% organic revenue decline driven by early pandemic-related impacts. Solid revenue growth reflects increased demand for water testing as economies re-open, including continued recovery in non-compliance related testing volumes.

Livestock, Poultry and Dairy ("LPD")

LPD revenues grew 4% reported and declined 2% on an organic basis, as strong results were constrained by the lapping of high prior year demand in key areas such as African Swine Fever testing and relatively lower herd health screening levels due to reduced export levels.

Gross Profit and Operating Profit

Gross profits increased 29% as reported and 25% on a comparable basis. Gross margin of 59.2% decreased 30 basis points compared to prior year period results as reported and 20 basis points on a comparable basis. Gross margin results were impacted by mix impacts from high instrument revenue growth and the lapping of tightly controlled prior year cost levels in key areas including lab operations, which moderated reference lab gross margin gains. These effects were partially offset by a mix benefit from strong CAG Diagnostics recurring revenue growth and moderate net price gains.

Operating margin was 31.4% in the quarter, 110 basis points higher than the prior year period results on both as reported and comparable bases, supported by operating expense leverage on strong revenue growth. Operating expenses increased 24% as reported and 20% on a comparable basis, reflecting comparisons to lower prior year levels impacted by early pandemic-related cost controls, as well as the advancement of investments in our global commercial and innovation capabilities. The Company is planning for constrained gross margin gains and higher levels of operating expense growth over the balance of the year as we continue to lap tightly controlled prior year spending levels, with increases in specific cost areas as pandemic restrictions are eased and advancement of investments aligned with our goals for sustained high revenue growth.

2021 Growth and Financial Performance Outlook

The following table provides the Company's outlook for annual key financial metrics in 2021:

Amounts in millions except per share data and percentages

Growth and Financial Performance Outlook

 

2021

 
           

Revenue

 

$3,170

-

$3,205

 

Reported growth

 

17%

-

18.5%

 

Organic growth

 

14.5%

-

16%

 

CAG Diagnostics Recurring Revenue Growth

         

Reported growth

 

18%

-

19.5%

 

Organic growth

 

16%

-

17.5%

 

Operating Margin

 

28.6%

-

29.1%

 

Operating margin expansion

 

290

-

340 bps

 

Comparable margin expansion

 

175

-

225 bps

 

EPS

 

$8.20

-

$8.36

 

Reported growth

 

22%

-

25%

 

Comparable growth

 

25%

-

27%

 

Other Key Metrics

         

Net interest expense

 

~ $30.5

 

Share-based compensation tax benefit

 

~ $22

 

Share-based compensation tax rate benefit

 

~ 2.5%

 

Effective tax rate

 

18.5%

-

19.5%

 

Share-based compensation EPS impact

 

~ $0.25

 

Reduction in average shares outstanding

 

0%

-

0.5%

 

Operating Cash Flow

 

100% - 110% of net income

 

Free Cash Flow

 

~80% of net income

 

Capital Expenditures

 

$150 - $160

 

The following table outlines estimates of foreign currency exchange rate impacts, net of foreign currency hedging transactions, and foreign currency exchange rate assumptions reflected in the above financial performance outlook for 2021.

Estimated Foreign Currency Exchange Rates and Impacts

 

2021

 
           

Revenue growth rate impact

 

~ 2%

 

CAG Diagnostics recurring revenue growth rate impact

 

~ 2%

 

Operating margin growth impact

 

~ 10 bps

 

EPS impact

 

~ $0.17

 

EPS growth impact

 

~ 3.0%

 
           

Foreign Currency Exchange Rate Assumptions

         

In U.S. dollars

         

euro

 

$1.17

 

British pound

 

$1.37

 

Canadian dollar

 

$0.79

 

Australian dollar

 

$0.73

 

Relative to the U.S. dollar

         

Japanese yen

 

¥112.00

 

Chinese renminbi

 

¥6.56

 

Brazilian real

 

R$5.33

 

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its second quarter 2021 results and management's outlook. To participate in the conference call, dial 1-888-771-4371 or 1-847-585-4405 and reference confirmation number 50183464. 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. (EDT) on that day via the same link and will remain available for one year.

2021 Virtual Investor Day

IDEXX Laboratories, Inc. will host its 2021 Virtual Investor Day on Thursday, August 12, 2021 from 10:00 am to approximately 1:00 pm (EDT). A live audio webcast and accompanying slide presentations will be available at www.idexx.com/investors. An archived webcast replay of the event will be available approximately one hour following the event at www.idexx.com/investors.

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, offering diagnostic and software products and services that deliver solutions and insights to practicing veterinarians around the world. 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 and point-of-care and laboratory diagnostics for human medicine. Headquartered in Maine, IDEXX employs approximately 9,800 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 "Second Quarter Results", "Gross Profit and Operating Profit", "2021 Growth and Financial Performance Outlook", 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 a product roll-out; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates; projected operating margins and expenses and capital expenditures; projected tax, tax rate and EPS benefits from share-based compensation arrangements; projected effective tax rates, reduction of average shares outstanding and net interest expense; projected gross margin growth; and anticipated cost area increases. 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, 2020 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, 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 second quarter 2021 results as follows: increased gross profit growth by 3.8%, decreased gross margin growth by 10 basis points, increased operating expense growth by 3.5%, increased operating profit growth by 4.2%, had an immaterial impact on operating profit margin growth, and increased EPS growth by 4.1%. 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 six months ended June 30, 2021 and refer to the 2021 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2021 projections and estimates.

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, certain business acquisitions, and divestitures. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Two-year average organic growth rates are provided to facilitate easier comparisons between periods impacted by the COVID-19 pandemic with prior and future periods, calculated as the average of the growth rates over the two referenced periods. Organic revenue growth should be considered in addition to, and not as a replacement of or a superior measure to, revenue growth reported in accordance with GAAP. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and six months ended June 30, 2021. Please refer to the 2021 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2021 organic revenue growth for the Company and CAG Diagnostics recurring revenue. 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. Revenue from acquisitions is expected to increase projected full year 2021 revenue growth by 50 basis points and increase CAG Diagnostics recurring revenue growth by 20 basis points.

The reconciliation of the two-year average annual organic growth of CAG Diagnostics recurring revenue is as follows:

   

Reported
Revenue Growth1

 

Percentage
Change from

Currency

 

Percentage
Change from Acquisitions

 

Organic
Revenue Growth1

         

CAG Diagnostics recurring revenue growth rates for the quarter ended June 30, 2021

 

29.6

%

 

3.7

%

 

0.3

%

 

25.6

%

CAG Diagnostics recurring revenue growth rates for the quarter ended June 30, 2020

 

6.9

%

 

(1.1)

%

 

0.8

%

 

7.2

%

                 

2-year average annual growth rates

 

18.3

%

 

1.3

%

 

0.6

%

 

16.4

%

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

 

Comparable growth metrics - Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates and non-recurring or unusual items (if any). Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Management believes that reporting comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) provides useful information to investors 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 key metrics used by management. Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) should be considered in addition to, and not as replacements of or superior measures to, gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain reported in accordance with GAAP.

The reconciliation of these non-GAAP financial measures is as follows:

   

Three Months Ended

Year-over-Year

 

Six Months Ended

Year-over-Year

   

June 30

 

June 30,

Change

 

June 30

 

June 30,

Change

Dollar amounts in thousands

 

2021

 

2020

   

2021

 

2020

 

Gross Profit (as reported)

 

$

489,308

   

$

379,342

 

29

%

 

$

960,090

   

$

738,932

 

30

%

Gross margin

 

59.2

%

 

59.5

%

(30)

bps

 

59.9

%

 

58.5

%

140

bps

Less: comparability adjustments

                   

Change from currency

 

14,578

   

     

26,017

   

   

Comparable gross profit growth

 

$

474,730

   

$

379,342

 

25

%

 

$

934,073

   

$

738,932

 

26

%

Comparable gross margin and gross margin gain (or growth)

 

59.3

%

 

59.5

%

(20)

bps

 

59.9

%

 

58.5

%

140

bps

                     

Operating expenses (as reported)

 

$

230,055

   

$

186,094

 

24

%

 

$

453,215

   

$

401,359

 

13

%

Less: comparability adjustments

                   

Change from currency

 

6,590

   

     

8,201

   

   

Comparable operating expense growth

 

$

223,465

   

$

186,094

 

20

%

 

$

445,014

   

$

401,359

 

11

%

                     

Income from operations (as reported)

 

$

259,253

   

$

193,248

 

34

%

 

$

506,875

   

$

337,573

 

50

%

Operating margin

 

31.4

%

 

30.3

%

110

bps

 

31.6

%

 

26.7

%

490

bps

Less: comparability adjustments

                   

Change from currency

 

7,988

   

     

17,816

   

   

Comparable operating profit growth

 

$

251,265

   

$

193,248

 

30

%

 

$

489,059

   

$

337,573

 

45

%

Comparable operating margin and operating margin gain (or growth)

 

31.4

%

 

30.3

%

110

bps

 

31.4

%

 

26.7

%

470

bps

Amounts presented may not recalculate due to rounding.

         

Projected 2021 comparable operating margin expansion outlined in the 2021 Growth and Financial Performance Outlook section of this earnings release reflects the following adjustments: (i) full year 2020 reported operating margin adjusted for impacts of the expired royalty litigation matter charges in the third quarter of 2020, which reduced full year 2020 operating margin growth by approximately 100 basis points; and (ii) projected full year 2021 reported operating margin adjusted for estimated positive year-over-year foreign currency exchange rate change impact of approximately 20 basis points.

These impacts and those described in the constant currency note above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2021 operating margin expansion) to comparable gross profit growth, comparable gross margin gain, comparable operating expense growth, comparable operating profit growth and comparable operating margin gain for the Company.

Comparable EPS growth - Comparable EPS growth is a non-GAAP financial measure that represents the percentage change in earnings per share (diluted) ("EPS") for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exchange rates from the prior base period and excluding the tax benefits of share-based compensation activity under ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, and non-recurring or unusual items (if any). Management believes comparable 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. Comparable EPS growth should be considered in addition to, and not as a replacement of or a superior measure to, EPS growth reported in accordance with GAAP. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts.

The reconciliation of this non-GAAP financial measure is as follows:

   

Three Months Ended

 

Year-over-Year

 

Six Months Ended

 

Year-over-Year

   

June 30,

 

June 30,

 

Growth

 

June 30,

 

June 30,

 

Growth

   

2021

 

2020

     

2021

 

2020

   

Earnings per share (diluted)

 

$

2.34

   

$

1.72

   

36

%

 

$

4.69

   

$

3.01

   

56

%

Less: comparability adjustments

                       

Share-based compensation activity

 

0.07

   

0.06

       

0.24

   

0.13

     

Change from currency

 

0.07

   

       

0.16

   

     

Comparable EPS growth

 

$

2.20

   

$

1.66

   

33

%

 

$

4.29

   

$

2.88

   

49

%

Amounts presented may not recalculate due to rounding.

Projected 2021 comparable EPS growth outlined in the 2021 Growth and Financial Performance Outlook section of this earnings release reflects the following adjustments: (i) full year 2020 reported EPS adjusted for positive share-based compensation activity of $0.45 for full year 2020, negative expired royalty litigation matter impact of $0.24 in the third quarter of 2020, and positive Swiss tax reform impact of $0.25 in the fourth quarter of 2020; and (ii) projected full year 2021 reported EPS adjusted for estimated positive share-based compensation activity of $0.25 and estimated positive year-over-year foreign currency exchange rate change impact of $0.17.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2021 reported EPS growth) to comparable 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. Free cash flow should be considered in addition to, and not as a replacement of or a superior measure to, net cash provided by operating activities. See the supplementary analysis of results below for our calculation of free cash flow for the six months ended June 30, 2021 and 2020. To estimate projected 2021 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $150 - $160 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, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges. Management believes that reporting Adjusted EBITDA, gross debt and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. Adjusted EBITDA, gross debt, and net debt should be considered in addition to, and not as replacements of or superior measures to, net income or total debt reported in accordance with GAAP. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA Ratios are calculated, see the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

Notes and Definitions

Swiss tax reform impact - A one-time positive income tax impact related to the enactment of tax reform in Switzerland reflected in the fourth quarter of 2020, when the Company recorded an approximately $22 million deferred tax asset related to transitional benefits.

Expired royalty litigation matter - The Company established an accrual of $27.5 million in the third quarter of 2020 related to an ongoing matter involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. The accrual amount represents the amount of a possible loss that we have determined to be probable and estimable, and the actual cost of resolving this matter may be higher or lower than the amount accrued.

IDEXX Laboratories, Inc. and Subsidiaries

             

Condensed Consolidated Statement of Operations

             

Amounts in thousands except per share data (Unaudited)

             
       

Three Months Ended

 

Six Months Ended

       

June 30,

 

June 30,

 

June 30,

 

June 30,

       

2021

 

2020

 

2021

 

2020

Revenue:

 

Revenue

 

$826,142

   

$637,592

   

$1,603,849

   

$1,263,928

 

Expenses and Income:

 

Cost of revenue

 

336,834

   

258,250

   

643,759

   

524,996

 
   

Gross profit

 

489,308

   

379,342

   

960,090

   

738,932

 
   

Sales and marketing

 

119,032

   

94,181

   

233,843

   

210,324

 
   

General and administrative

 

73,326

   

60,268

   

144,096

   

126,080

 
   

Research and development

 

37,697

   

31,645

   

75,276

   

64,955

 
   

Income from operations

 

259,253

   

193,248

   

506,875

   

337,573

 
   

Interest expense, net

 

(7,522)

   

(9,426)

   

(15,054)

   

(16,978)

 
   

Income before provision for income taxes

 

251,731

   

183,822

   

491,821

   

320,595

 
   

Provision for income taxes

 

49,125

   

34,826

   

84,926

   

59,743

 

Net Income:

 

Net income

 

202,606

   

148,996

   

406,895

   

260,852

 
   

Less: Noncontrolling interest in subsidiary's earnings

 

24

   

56

   

56

   

85

 
   

Net income attributable to stockholders

 

$202,582

   

$148,940

   

$406,839

   

$260,767

 
   

Earnings per share: Basic

 

$2.37

   

$1.75

   

$4.76

   

$3.06

 
   

Earnings per share: Diluted

 

$2.34

   

$1.72

   

$4.69

   

$3.01

 
   

Shares outstanding: Basic

 

85,325

   

85,134

   

85,427

   

85,282

 
   

Shares outstanding: Diluted

 

86,654

   

86,402

   

86,794

   

86,568

 

IDEXX Laboratories, Inc. and Subsidiaries

             

Selected Operating Information (Unaudited)

             
       

Three Months Ended

 

Six Months Ended

       

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

           

Operating Ratios

 

Gross profit

 

59.2

%

 

59.5

%

 

59.9

%

 

58.5

%

(as a percentage of revenue):

 

Sales, marketing, general and administrative expense

 

23.3

%

 

24.2

%

 

23.6

%

 

26.6

%

   

Research and development expense

 

4.6

%

 

5.0

%

 

4.7

%

 

5.1

%

   

Income from operations1

 

31.4

%

 

30.3

%

 

31.6

%

 

26.7

%

                     

1Amounts presented may not recalculate due to rounding.

     

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

                 
       

Three Months Ended

       

June 30,
2021

 

Percent of
Revenue

 

June 30,
2020

 

Percent of
Revenue

             

Revenue:

 

CAG

 

$745,595

       

$566,100

     
   

Water

 

37,191

       

28,116

     
   

LPD

 

33,524

       

32,244

     
   

Other

 

9,832

       

11,132

     
   

Total

 

$826,142

       

$637,592

     
                     

Gross Profit:

 

CAG

 

$440,786

   

59.1

%

 

$334,467

   

59.1

%

   

Water

 

25,747

   

69.2

%

 

19,678

   

70.0

%

   

LPD

 

19,526

   

58.2

%

 

18,839

   

58.4

%

   

Other

 

3,249

   

33.0

%

 

6,358

   

57.1

%

   

Total

 

$489,308

   

59.2

%

 

$379,342

   

59.5

%

                     

Income from Operations:

 

CAG

 

$234,735

   

31.5

%

 

$167,969

   

29.7

%

   

Water

 

17,228

   

46.3

%

 

12,258

   

43.6

%

   

LPD

 

6,868

   

20.5

%

 

8,249

   

25.6

%

   

Other

 

422

   

4.3

%

 

4,772

   

42.9

%

   

Total

 

$259,253

   

31.4

%

 

$193,248

   

30.3

%

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

                 
       

Six Months Ended

       

June 30,
2021

 

Percent of
Revenue

 

June 30,
2020

 

Percent of
Revenue

             

Revenue:

 

CAG

 

$1,438,362

       

$1,118,096

     
   

Water

 

71,231

       

62,265

     
   

LPD

 

72,794

       

66,398

     
   

Other

 

21,462

       

17,169

     
   

Total

 

$1,603,849

       

$1,263,928

     
                     

Gross Profit:

 

CAG

 

$853,660

   

59.3

%

 

$643,810

   

57.6

%

   

Water

 

49,212

   

69.1

%

 

44,427

   

71.4

%

   

LPD

 

46,407

   

63.8

%

 

41,151

   

62.0

%

   

Other

 

10,811

   

50.4

%

 

9,544

   

55.6

%

   

Total

 

$960,090

   

59.9

%

 

$738,932

   

58.5

%

                     

Income from Operations:

 

CAG

 

$447,945

   

31.1

%

 

$286,628

   

25.6

%

   

Water

 

32,000

   

44.9

%

 

28,140

   

45.2

%

   

LPD

 

20,676

   

28.4

%

 

17,912

   

27.0

%

   

Other

 

6,254

   

29.1

%

 

4,893

   

28.5

%

   

Total

 

$506,875

   

31.6

%

 

$337,573

   

26.7

%

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

                   
                             
   

June 30, 2021

 

June 30, 2020

 

Dollar Change

 

Reported Revenue Growth1

 

Percentage Change from
Currency

 

Percentage Change from Acquisitions

 

Organic Revenue Growth1

Net Revenue

             

CAG

 

$745,595

   

$566,100

   

$179,495

   

31.7

%

 

3.7

%

 

0.6

%

 

27.4

%

United States

 

486,252

   

387,113

   

99,139

   

25.6

%

 

   

0.6

%

 

25.0

%

International

 

259,343

   

178,987

   

80,356

   

44.9

%

 

12.0

%

 

0.6

%

 

32.3

%

Water

 

37,191

   

28,116

   

9,075

   

32.3

%

 

5.7

%

 

   

26.6

%

United States

 

17,747

   

13,935

   

3,812

   

27.4

%

 

   

   

27.4

%

International

 

19,444

   

14,181

   

5,263

   

37.1

%

 

11.2

%

 

   

25.9

%

LPD

 

33,524

   

32,244

   

1,280

   

4.0

%

 

5.9

%

 

   

(2.0)

%

United States

 

3,516

   

3,242

   

274

   

8.4

%

 

   

   

8.4

%

International

 

30,008

   

29,002

   

1,006

   

3.5

%

 

6.5

%

 

   

(3.1)

%

Other

 

9,832

   

11,132

   

(1,300)

   

(11.7)

%

 

4.5

%

 

   

(16.2)

%

Total Company

 

$826,142

   

$637,592

   

$188,550

   

29.6

%

 

3.9

%

 

0.5

%

 

25.1

%

United States

 

515,238

   

405,998

   

109,240

   

26.9

%

 

   

0.6

%

 

26.3

%

International

 

310,904

   

231,594

   

79,310

   

34.2

%

 

10.7

%

 

0.5

%

 

23.1

%

                             
   

Three Months Ended

                   
                             
   

June 30, 2021

 

June 30, 2021

 

Dollar Change

 

Reported Revenue Growth1

 

Percentage Change from

Currency

 

Percentage Change from Acquisitions

 

Organic Revenue Growth1

Net CAG Revenue

             

CAG Diagnostics recurring revenue:

 

$661,300

   

$510,254

   

$151,046

   

29.6

%

 

3.7

%

 

0.3

%

 

25.6

%

IDEXX VetLab consumables

 

256,352

   

196,061

   

60,291

   

30.8

%

 

4.8

%

 

   

26.0

%

Rapid assay products

 

83,887

   

64,658

   

19,229

   

29.7

%

 

1.8

%

 

   

28.0

%

Reference laboratory diagnostic and consulting services

 

293,675

   

228,816

   

64,859

   

28.3

%

 

3.2

%

 

0.6

%

 

24.5

%

CAG Diagnostics services and accessories

 

27,386

   

20,719

   

6,667

   

32.2

%

 

4.7

%

 

   

27.5

%

CAG Diagnostics capital – instruments

 

35,054

   

18,871

   

16,183

   

85.8

%

 

7.5

%

 

   

78.3

%

Veterinary software, services and diagnostic imaging systems

 

49,241

   

36,975

   

12,266

   

33.2

%

 

1.5

%

 

5.8

%

 

25.9

%

Net CAG revenue

 

$745,595

   

$566,100

   

$179,495

   

31.7

%

 

3.7

%

 

0.6

%

 

27.4

%

                             

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)

 
   

Six Months Ended

                   
                             
   

June 30, 2021

 

June 30, 2020

 

Dollar Change

 

Reported Revenue Growth1

 

Percentage Change from
Currency

 

Percentage Change from Acquisitions

 

Organic Revenue Growth1

Net Revenue

             

CAG

 

$1,438,362

   

$1,118,096

   

$320,266

   

28.6

%

 

3.3

%

 

0.4

%

 

25.0

%

United States

 

930,662

   

760,388

   

170,274

   

22.4

%

 

   

0.4

%

 

22.0

%

International

 

507,700

   

357,708

   

149,992

   

41.9

%

 

10.8

%

 

0.4

%

 

30.7

%

Water

 

71,231

   

62,265

   

8,966

   

14.4

%

 

3.7

%

 

   

10.7

%

United States

 

34,315

   

30,876

   

3,439

   

11.1

%

 

   

   

11.1

%

International

 

36,916

   

31,389

   

5,527

   

17.6

%

 

7.3

%

 

   

10.3

%

LPD

 

72,794

   

66,398

   

6,396

   

9.6

%

 

5.8

%

 

   

3.8

%

United States

 

7,264

   

7,019

   

245

   

3.5

%

 

   

   

3.5

%

International

 

65,530

   

59,379

   

6,151

   

10.4

%

 

6.5

%

 

   

3.8

%

Other

 

21,462

   

17,169

   

4,293

   

25.0

%

 

4.2

%

 

   

20.8

%

Total Company

 

$1,603,849

   

$1,263,928

   

$339,921

   

26.9

%

 

3.5

%

 

0.3

%

 

23.1

%

United States

 

987,876

   

802,781

   

185,095

   

23.1

%

 

   

0.3

%

 

22.7

%

International

 

615,973

   

461,147

   

154,826

   

33.6

%

 

9.6

%

 

0.3

%

 

23.6

%

                             
   

Six Months Ended

                   
                             
   

June 30, 2021

 

June 30, 2020

 

Dollar Change

 

Reported Revenue Growth1

 

Percentage Change from

Currency

 

Percentage Change from Acquisitions

 

Organic Revenue Growth1

Net CAG Revenue

             

CAG Diagnostics recurring revenue:

 

$1,278,580

   

$998,179

   

$280,401

   

28.1

%

 

3.4

%

 

0.2

%

 

24.5

%

IDEXX VetLab consumables

 

502,444

   

384,774

   

117,670

   

30.6

%

 

4.4

%

 

   

26.2

%

Rapid assay products

 

153,498

   

122,088

   

31,410

   

25.7

%

 

1.5

%

 

   

24.2

%

Reference laboratory diagnostic and consulting services

 

569,456

   

449,077

   

120,379

   

26.8

%

 

3.0

%

 

0.4

%

 

23.4

%

CAG Diagnostics services and accessories

 

53,182

   

42,240

   

10,942

   

25.9

%

 

4.2

%

 

   

21.7

%

CAG Diagnostics capital – instruments

 

66,244

   

42,704

   

23,540

   

55.1

%

 

5.4

%

 

   

49.8

%

Veterinary software, services and diagnostic imaging systems

 

93,538

   

77,213

   

16,325

   

21.1

%

 

1.1

%

 

2.8

%

 

17.2

%

Net CAG revenue

 

$1,438,362

   

$1,118,096

   

$320,266

   

28.6

%

 

3.3

%

 

0.4

%

 

25.0

%

                             

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)

       

June 30, 2021

 

December 31, 2020

         

Assets:

 

Current Assets:

       
   

Cash and cash equivalents

 

$232,134

   

$383,928

 
   

Accounts receivable, net

 

382,308

   

331,429

 
   

Inventories

 

241,392

   

209,873

 
   

Other current assets

 

145,392

   

137,508

 
   

Total current assets

 

1,001,226

   

1,062,738

 
   

Property and equipment, net

 

550,255

   

555,167

 
   

Other long-term assets, net

 

860,668

   

676,656

 
   

Total assets

 

$2,412,149

   

$2,294,561

 

Liabilities and Stockholders'

           

Equity:

 

Current Liabilities:

       
   

Accounts payable

 

$93,016

   

$74,558

 
   

Accrued liabilities

 

392,681

   

415,648

 
   

Current portion of long-term debt

 

124,982

   

49,988

 
   

Deferred revenue

 

41,130

   

42,567

 
   

Total current liabilities

 

651,809

   

582,761

 
   

Long-term debt, net of current portion

 

780,079

   

858,492

 
   

Other long-term liabilities, net

 

232,038

   

220,513

 
   

Total long-term liabilities

 

1,012,117

   

1,079,005

 
   

Total stockholders' equity

 

747,460

   

632,088

 
   

Noncontrolling interest

 

763

   

707

 
   

Total stockholders' equity

 

748,223

   

632,795

 
   

Total liabilities and stockholders' equity

 

$2,412,149

   

$2,294,561

 

IDEXX Laboratories, Inc. and Subsidiaries

Select Balance Sheet Information (Unaudited)

 
       

June 30,
2021

 

March 31,
2021

 

December 31, 2020

 

September 30, 2020

 

June 30,

2020

Selected Balance Sheet Information:

 

Days sales outstanding1

 

42.2

   

41.8

   

42.2

   

41.5

   

44.4

 
   

Inventory turns2

 

2.1

   

2.0

   

2.1

   

1.9

   

1.6

 
                         

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)

       

Six Months Ended

       

June 30, 2021

 

June 30, 2020

         

Operating:

 

Cash Flows from Operating Activities:

       
   

Net income

 

$406,895

   

$260,852

 
   

Non-cash adjustments to net income

 

79,002

   

70,576

 
   

Changes in assets and liabilities

 

(127,520)

   

(95,415)

 
   

Net cash provided by operating activities

 

358,377

   

236,013

 

Investing:

 

Cash Flows from Investing Activities:

       
   

Purchases of property and equipment

 

(42,744)

   

(73,558)

 
   

Acquisition of intangible assets and businesses

 

(156,506)

   

(668)

 
   

Net cash used by investing activities

 

(199,250)

   

(74,226)

 

Financing:

 

Cash Flows from Financing Activities:

       
   

Repayments on revolving credit facilities, net

 

   

(167,692)

 
   

Issuance of senior debt

 

   

200,000

 
   

Debt issuance costs

 

   

(4,988)

 
   

Payments of acquisition-related contingent considerations

 

(1,500)

   

(1,080)

 
   

Repurchases of common stock

 

(320,787)

   

(182,815)

 
   

Proceeds from exercises of stock options and employee stock purchase plans

 

27,371

   

20,613

 
   

Shares withheld for statutory tax withholding on restricted stock

 

(14,952)

   

(8,668)

 
   

Net cash used by financing activities

 

(309,868)

   

(144,630)

 
   

Net effect of changes in exchange rates on cash

 

(1,053)

   

(2,190)

 
   

Net (decrease) increase in cash and cash equivalents

 

(151,794)

   

14,967

 
   

Cash and cash equivalents, beginning of period

 

383,928

   

90,326

 
   

Cash and cash equivalents, end of period

 

$232,134

   

$105,293

 

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands except per share data (Unaudited)

       

Six Months Ended

       

June 30, 2021

 

June 30, 2020

         

Free Cash Flow:

 

Net cash provided by operating activities

 

$358,377

   

$236,013

 
   

Investing cash flows attributable to purchases of property and equipment

 

(42,744)

   

(73,558)

 
   

Free cash flow1

 

$315,633

   

$162,455

 
             

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

 

Six Months Ended

   

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

         

Shares repurchased in the open market

 

341

   

   

618

   

721

 

Shares acquired through employee surrender for statutory tax withholding

 

   

   

28

   

30

 

Total shares repurchased

 

341

   

   

646

   

751

 
                 

Cost of shares repurchased in the open market

 

$188,409

   

$—

   

$327,622

   

$179,623

 

Cost of shares for employee surrenders

 

3

   

65

   

14,986

   

8,669

 

Total cost of shares

 

$188,412

   

$65

   

$342,608

   

$188,292

 
                 

Average cost per share – open market repurchases

 

$552.08

   

$—

   

$529.45

   

$249.20

 

Average cost per share – employee surrenders

 

$550.59

   

$312.19

   

$544.08

   

$288.94

 

Average cost per share – total

 

$552.08

   

$312.19

   

$530.07

   

$250.79

 

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

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/idexx-laboratories-announces-second-quarter-results-301344835.html

SOURCE IDEXX Laboratories, Inc.


Company Codes: NASDAQ-NMS:IDXX

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