IDEXX Laboratories Announces 2018 Second Quarter Results

Published: Aug 01, 2018

 

WESTBROOK, Maine, Aug. 1, 2018 /PRNewswire/ --

  • Reports revenue growth of 14% on a reported basis and 12% on an organic basis, driven by CAG Diagnostics recurring revenue growth of 15% reported and 13% organic
  • Achieves 3,241 premium instrument placements, representing 21% year-over-year growth
  • Delivers EPS of $1.23, a 29% increase year-over-year on a reported basis or 33% on a comparable constant currency basis
  • Adjusts 2018 revenue guidance to $2,205 million - $2,230 million, reflecting reported growth of 12% - 13.5%; increases organic revenue growth outlook to 11.5% - 12.5%; offset by impacts related to strengthening of the U.S. dollar
  • Increases 2018 EPS outlook range to $4.10 - $4.20, $0.02 above the midpoint of prior guidance, as benefits from operating performance and from a lower projected effective tax rate are partially offset by negative impact of updated foreign exchange assumptions

IDEXX Laboratories, Inc.. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reports revenues for the second quarter of 2018 of $581 million, an increase of 14% compared to the prior year period on a reported basis and 12% on an organic basis. Second quarter results were driven by robust global gains in Companion Animal Group ("CAG") Diagnostics recurring revenue, including strong, double-digit organic revenue growth in IDEXX VetLab® consumables and reference laboratory diagnostic and consulting services. Supporting the results were 3,241 placements of premium instruments, an unprecedented second quarter number, representing 21% year-over-year growth. Earnings per diluted share ("EPS") was $1.23 for the second quarter, representing 29% growth year-over-year on a reported basis and 33% on a comparable constant currency basis.

"The collaboration between our field-based professionals and the veterinary clinicians and practice managers they serve is driving an increased standard of pet care, and an acceleration in growth of diagnostic products and services in our customer base. Our diagnostic innovations that uncover hidden disease in our pets, and uncover it earlier, are appreciated by veterinary staff and pet owners alike," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer. "Even with the successes we have achieved to date and our double-digit organic revenue growth in the second quarter, we believe we have only set a foundation for strong growth in our unique diagnostic and software technologies worldwide for years to come."

"We intend to build on our growth momentum with augmented investment in our CAG global field direct presence in the second half of the year, with a 13% expansion in our U.S.-based field resources and a 15% increase internationally. The international investments are focused on certain markets with the highest incremental revenue and profit opportunity. We are able to make these incremental growth investments, while delivering 2018 profit performance at the high end of our long-term goals, as a result of the success of investments made in the last eighteen months and their impact on profitable organic revenue growth."

Second Quarter Performance Highlights

Companion Animal Group

CAG generated 15% reported and 13% organic revenue growth for the second quarter, supported by equivalent levels of growth in CAG Diagnostics recurring revenue growth. Veterinary software, services and diagnostic imaging systems revenues grew 11% on a reported basis and 9% on an organic basis.

  • IDEXX VetLab consumables generated reported revenue growth of 20% and organic revenue growth of 18%, driven by an expanding premium instrument base in U.S. and international markets, increasing test utilization, moderate price gains and continued strong customer retention. IDEXX VetLab premium diagnostic instrument placements were 3,241, including 1,651 Catalyst® instruments, 874 premium hematology instruments and 716 IDEXX SediVue® Dx analyzers. Growth in high economic value placements continued, as evidenced by the placement of 784 Catalysts globally in competitive or greenfield accounts, up 14% compared to strong prior year levels, including 346 placements in North America.
  • Reference laboratory diagnostic and consulting services revenue grew 15% on a reported basis and 13% on an organic basis, reflecting very strong growth in the U.S. and record levels of customer retention. Internationally, reference laboratory organic revenue growth was high single-digit, supported by higher gains in Europe.
  • Rapid assay products had reported revenue growth of 5% and organic revenue growth of 4%, supported by solid gains in the U.S. and Europe, driven by continued expansion of SNAP® 4Dx® Plus Tests, specialty and next generation products.

Livestock, Poultry and Dairy ("LPD")

LPD revenue increased 4% on a reported basis and was flat on an organic basis for the second quarter, supported by growth in recurring livestock diagnostic testing revenue in the U.S., Europe and Latin America, offset by lower revenue in Asia related to continuing soft end-market conditions, including the impact of low milk prices.

Water

Water revenue increased 11% on a reported basis and 9% on an organic basis in the second quarter, driven by high single-digit growth in the U.S., augmented by strong gains in Asia and Latin America.

Gross Profit and Operating Profit

Gross profits increased 14%, and gross margin was 57.2%, 30 basis points lower than in the prior year period. On a constant currency basis, gross margin was 35 basis points lower than in the prior year period, driven by reclassification of selected operating expenses to cost of revenue in the reference laboratory diagnostic and consulting services business, higher investments in lab information systems and employee benefits, as well as mix impacts from higher instrument revenue growth, which offset benefits from solid net price gains and ongoing productivity improvements.

Operating margin was 25.1% in the second quarter compared to 24.1% in the prior year period. On a constant currency basis, operating margin improved 110 basis points, supported by operating expense leverage. Operating expenses increased 10% on a reported basis and 7.5% on a constant currency basis in the second quarter compared to the prior year period, driven by growth in sales and marketing and R&D investments, partially offset by the reclassification referred to above.

2018 Financial Outlook

The Company is adjusting its 2018 revenue outlook to $2,205 million - $2,230 million, a reduction of $7.5 million at the midpoint compared to prior guidance, incorporating a negative impact of $20 million - $25 million related to updated foreign exchange assumptions. We expect this impact to be partially offset by operational upside reflected in a raised organic revenue growth outlook of 11.5% - 12.5%. At the foreign exchange rates assumptions noted below compared to rates in effect in 2017, we estimate that the weaker U.S. dollar will benefit full-year 2018 reported revenue growth by approximately 0.5% - 1%, and EPS by an estimated $0.01 per share, including an immaterial impact from projected net hedge gains and losses in 2018.

The Company is increasing its 2018 EPS outlook to $4.10 - $4.20 per share, reflecting an incremental $0.02 per share at the midpoint of the earlier guidance range. This higher outlook is supported by a projected $0.07 of incremental operating benefit reflecting strong revenue trends and higher expectations for annual operating margin improvement, while covering incremental investments in the global CAG business, enabling information technology and R&D. Full-year operating margin is now expected to improve 90 - 130 basis points on a reported and constant currency basis, compared to the prior year period. This operating upside, as well as an additional $0.02 per share related to a lower effective tax rate, including raised projections for 2018 share-based compensation tax benefits, are expected to exceed a projected $0.07 negative impact related to updated foreign exchange rate assumptions.

The guidance for 2018 reflects the assumption that for the remainder of 2018, the value of foreign currencies in U.S. dollars will remain at the following rates:

  • the euro at $1.14;
  • the British pound at $1.28;
  • the Canadian dollar at $0.74; and
  • the Australian dollar at $0.72;

and relative to the U.S. dollar:

  • the Japanese yen at ¥115;
  • the Chinese renminbi at RMB 6.90; and
  • the Brazilian real at R$3.95.

We are providing the following updated guidance for 2018:

Amounts in millions except per share data and percentages

                  Guidance Range            Growth Definition       Year-over-year

                                                                        Growth
                                                                        ------


    Revenue            $2,205 - $2,230           Reported                  12% - 13.5%

                                          Organic Revenue Growth         11.5% - 12.5%


    EPS                  $4.10 - $4.20           Reported                    39% - 43%

                                       Comparable Constant Currency          32% - 36%


    Operating
     Cash Flow                          ~110% - 115% of net income


    Free Cash
     Flow                                ~70% - 75% of net income


    Capital
     Expenditures                             ~$140 million

 

We expect an effective tax rate of 19.0% - 20.0%, after a projected reduction of approximately 400 basis points related to share-based compensation tax benefits. We are projecting a reduction in weighted average shares outstanding of approximately 1.0%, and net interest expense of approximately $35 million reflecting current and projected borrowings.

For a quick-reference snapshot of our quarterly performance, please visit www.idexx.com/investors.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its second quarter results and management's outlook. To participate in the conference call, please dial 1-888-276-0006 or 1-612-332-0107 and reference confirmation code 451461. Replay of the conference call will be available through Wednesday, August 8, 2018 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 451461. 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.

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 Laboratories 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 "2018 Financial 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 revenue growth and EPS outlooks; operating and free cash flow forecast; projected impacts of U.S. Tax Reform; projected operating expense investments, including with respect to global commercial presence, IT and R&D; projected impact of foreign currency exchange rates; and projected operating margins and expenses, capital expenditures, gains or losses from foreign currency hedges, tax and EPS benefits from share-based compensation arrangements, effective tax rates, weighted average shares outstanding and interest expense. These statements are based on management's expectation of future events as of the date of this earnings release. 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. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. A description of the risks and uncertainties that could cause results to differ materially from those described in the forward-looking statements can be found in the Company's 2017 Annual Report on Form 10-K, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov.

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 2018 results as follows: increased revenue growth by 2%, increased gross profit growth by 2%, had an immaterial impact on gross profit margin growth, increased operating profit growth by 2%, increased operating expense growth by 2.5%, had an immaterial impact on operating profit margin growth, and increased EPS growth by 2%. Estimated currency changes are expected to increase projected full-year 2018 revenue growth by approximately 0.5%-1%, increase projected full-year 2018 CAG Diagnostics recurring revenue growth by approximately 0.5%-1%, decrease projected third quarter 2018 revenue growth by approximately 2%, reduce projected third-quarter operating margin growth by approximately 10 bps, and have an immaterial impact on full-year 2018 operating profit margin growth and projected full-year 2018 EPS growth. 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, 2018.

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 business acquisitions. 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, 2018. See the constant currency note above for the impacts of estimated currency changes to the projected full-year and third quarter 2018 organic 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. Effective January 1, 2018, we exclude only acquisitions that are considered to be a business (consistent with ASU 2017-01, "Business Combinations: (Topic 850) Clarifying the Definition of 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 June 30, 2018. For the calculation of projected full-year and third quarter 2018 organic revenue growth and projected full-year 2018 CAG Diagnostics recurring revenue growth, the impacts of revenue from acquisitions is immaterial. Both reported and organic revenue growth include revenue attributable to the adoption of ASU 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard") of $15 million for the second quarter of 2018. For more detail on revenue attributable to the adoption of the New Revenue Standard, please see Management's Discussion and Analysis of Financial Conditions and Results of Operations contained in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.

Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the tax effects of share-based compensation activity under ASU 2016-09, a one-time negative impact related to the 2017 Tax Cuts and Jobs Act ("U.S. Tax Reform"), and a discrete tax benefit related to the expected utilization of foreign tax credits. 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 activity increased second quarter 2018 EPS by $0.05 compared to $0.08 in the second quarter of 2017, and is expected to increase projected EPS by approximately $0.20 for the full-year 2018 compared to $0.30 for full-year 2017. A one-time negative impact related to the enactment of the U.S. Tax Reform for the fourth quarter of 2017, due to the deemed repatriation of the Company's foreign profits, net of the remeasurement of deferred taxes at the lower enacted corporate tax rate, reduced full-year 2017 EPS by $0.34. A discrete tax benefit related to the expected utilization of foreign tax credits in 2017 increased full-year 2017 EPS by $0.04. 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 six months ended June 30, 2018 and 2017. To estimate projected 2018 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $140 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 share-based compensation. 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, gross debt, net debt and the Debt to Adjusted EBITDA Ratio are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.

 

    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,

                                                                                                    2018                     2017                 2018                        2017
                                                                                                    ----                     ----                 ----                        ----

    Revenue:                                               Revenue                              $580,752                          $508,940                             $1,118,408     $970,961

    Expenses and Income:                                   Cost of revenue                       248,313                           216,225                                482,870      420,055
                                                           ---------------                       -------                           -------                                -------      -------

                                                           Gross profit                          332,439                           292,715                                635,538      550,906

                                                           Sales and marketing                    96,255                            87,693                                196,356      174,937

                                                           General and administrative             61,080                            55,460                                122,011      108,374

                                                           Research and development               29,510                            26,998                                 58,533       52,788

                                                           Income from operations                145,594                           122,564                                258,638      214,807

                                                           Interest expense, net                 (8,285)                          (7,979)                              (16,980)    (15,485)
                                                           ---------------------                  ------                            ------                                -------      -------

                                                            Income before provision for income
                                                            taxes                                137,309                           114,585                                241,658      199,322

                                                           Provision for income taxes             28,629                            29,178                                 43,502       44,857
                                                           --------------------------             ------                            ------                                 ------       ------

    Net Income:                                            Net income                            108,680                            85,407                                198,156      154,465

                                                            Less: Noncontrolling interest in
                                                            subsidiary's earnings                   (11)                               50                                     14           89
                                                           ---------------------------------         ---                               ---                                    ---          ---

                                                            Net income attributable to
                                                            stockholders                        $108,691                           $85,357                               $198,142     $154,376

                                                           Earnings per share: Basic               $1.25                             $0.97                                  $2.27        $1.75
                                                           -------------------------               -----                             -----                                  -----        -----

                                                           Earnings per share: Diluted             $1.23                             $0.95                                  $2.23        $1.72
                                                           ---------------------------             -----                             -----                                  -----        -----

                                                           Shares outstanding: Basic              87,004                            88,004                                 87,166       88,060
                                                           -------------------------              ------                            ------                                 ------       ------

                                                           Shares outstanding: Diluted            88,596                            89,878                                 88,786       89,962
                                                           ---------------------------            ------                            ------                                 ------       ------

 

 

    IDEXX Laboratories, Inc. and Subsidiaries

    Selected Operating Information (Unaudited)

                                                                                   Three Months Ended     Six Months Ended

                                                                                        June 30,      June 30,             June 30,    June 30,

                                                                                                 2018       2017                  2018         2017
                                                                                                 ----       ----                  ----         ----

    Operating Ratios                              Gross profit                                  57.2%     57.5%                56.8%       56.7%

    (as a percentage of                            Sales, marketing, general and
     revenue):                                     administrative expense                       27.1%     28.1%                28.5%       29.2%

                                                  Research and development expense               5.1%      5.3%                 5.2%        5.4%
                                                  --------------------------------                ---        ---                   ---          ---

                                                  Income from operations (1)                    25.1%     24.1%                23.1%       22.1%
                                                  -------------------------                      ----       ----                  ----         ----


    (1) Amounts presented may not recalculate due to rounding.

 

    IDEXX Laboratories, Inc. and Subsidiaries

    Segment Information

    Amounts in thousands (Unaudited)


                                                                    Three Months Ended            Three Months Ended

                                                                  June 30,             Percent of            June 30,             Percent of

                                                                       2018               Revenue                  2017               Revenue
                                                                       ----               -------                  ----               -------

    Revenue:                                  CAG                  $507,487                                             $439,948

                                              Water                  32,658                                               29,424

                                              LPD                    34,998                                               33,553

                                              Other                   5,609                                                6,015
                                              -----                   -----                                                -----

                                              Total                $580,752                                             $508,940
                                              -----                --------                                             --------


    Gross Profit:                             CAG                  $285,910                         56.3%               $250,086              56.8%

                                              Water                  23,079                         70.7%                 20,652              70.2%

                                              LPD                    20,687                         59.1%                 19,682              58.7%

                                              Other                   2,613                         46.6%                  2,503              41.6%

                                              Unallocated Amounts       150                           N/A                  (208)               N/A

                                              Total                $332,439                         57.2%               $292,715              57.5%
                                              -----                --------                          ----                --------               ----


    Income from Operations:                   CAG                  $129,796                         25.6%               $108,731              24.7%

                                              Water                  15,122                         46.3%                 13,653              46.4%

                                              LPD                     6,471                         18.5%                  5,176              15.4%

                                              Other                   1,130                         20.1%                    768              12.8%

                                              Unallocated Amounts   (6,925)                          N/A                (5,764)               N/A

                                              Total                $145,594                         25.1%               $122,564              24.1%
                                              -----                --------                          ----                --------               ----

 

 

                                         Six Months Ended            Six Months Ended

                                      June 30,            Percent of           June 30,             Percent of

                                            2018             Revenue                 2017               Revenue
                                            ----             -------                 ----               -------

    Revenue:      CAG                   $978,320                                          $843,175

                  Water                   61,801                                            54,501

                  LPD                     67,238                                            62,870

                  Other                   11,049                                            10,415

                  Total               $1,118,408                                          $970,961
                  -----               ----------                                          --------


    Gross Profit: CAG                   $547,843                      56.0%               $471,156              55.9%

                  Water                   43,441                      70.3%                 38,127              70.0%

                  LPD                     38,334                      57.0%                 36,527              58.1%

                  Other                    4,687                      42.4%                  4,614              44.3%

                  Unallocated Amounts      1,233                        N/A                    482                N/A
                                                                                              ---

                  Total                 $635,538                      56.8%               $550,906              56.7%
                  -----                 --------                       ----                --------               ----


    Income from
     Operations:  CAG                   $230,194                      23.5%               $188,586              22.4%

                  Water                   27,584                      44.6%                 23,916              43.9%

                  LPD                      9,432                      14.0%                  8,978              14.3%

                  Other                    1,628                      14.7%                  1,161              11.1%

                  Unallocated Amounts   (10,200)                       N/A                (7,834)               N/A
                                                                                           ------

                  Total                 $258,638                      23.1%               $214,807              22.1%
                  -----                 --------                       ----                --------               ----

 

 

    IDEXX Laboratories, Inc. and Subsidiaries

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

    Amounts in thousands (Unaudited)

                                                                    Three Months Ended

                                                                                                                             Reported    Percentage          Percentage            Organic

                                                           June 30,                    June 30,                     Dollar    Revenue    Change from         Change from           Revenue

    Net Revenue                                                 2018                         2017                     Change  Growth (1)     Currency          Acquisitions        Growth (1)
    -----------                                                 ----                         ----                     ------  ----------     --------          ------------        ----------

    CAG                                                     $507,487                                   $439,948                  $67,539                15.4%                1.8%             0.1%     13.4%

    United States                                            334,865                                    295,829                   39,036                13.2%                   -             0.1%     13.1%

    International                                            172,622                                    144,119                   28,503                19.8%                5.6%                -     14.1%

    Water                                                     32,658                                     29,424                    3,234                11.0%                2.0%                -      9.0%

    United States                                             15,740                                     14,366                    1,374                 9.6%                   -                -      9.6%

    International                                             16,918                                     15,058                    1,860                12.3%                3.8%                -      8.5%

    LPD                                                       34,998                                     33,553                    1,445                 4.3%                4.0%                -      0.3%

    United States                                              3,681                                      3,433                      248                 7.3%                   -                -      7.3%

    International                                             31,317                                     30,120                    1,197                 4.0%                4.5%                -    (0.5%)

    Other                                                      5,609                                      6,015                    (406)              (6.7%)                0.4%                -    (7.2%)
    -----                                                      -----                                      -----                     ----

    Total Company                                           $580,752                                   $508,940                  $71,812                14.1%                2.0%             0.1%     12.1%

    United States                                            356,736                                    315,695                   41,041                13.0%                   -             0.1%     12.9%

    International                                            224,016                                    193,245                   30,771                15.9%                5.2%                -     10.7%
    -------------                                            -------                                    -------                   ------                 ----                  ---               ---      ----

 

 

                                                                            Three Months Ended

                                                                                                                                    Reported    Percentage        Percentage           Organic

                                                                   June 30,                    June 30,                    Dollar    Revenue    Change from       Change from          Revenue

    Net CAG Revenue                                                     2018                         2017                    Change   Growth 1      Currency        Acquisitions       Growth (1)
    ---------------                                                     ----                         ----                    ------   --------      --------        ------------       ----------

    CAG Diagnostics recurring revenue:                              $437,666                                   $380,319                 $57,347              15.1%               1.9%                -   13.2%

    IDEXX VetLab consumables                                         158,620                                    132,094                  26,526              20.1%               2.2%                -   17.8%

    Rapid assay products                                              63,362                                     60,266                   3,096               5.1%               0.8%                -    4.3%

    Reference laboratory diagnostic and
     consulting services                                             197,268                                    171,298                  25,970              15.2%               2.0%                -   13.1%

    CAG Diagnostics services and accessories                          18,416                                     16,661                   1,755              10.5%               1.9%                -    8.6%

    CAG Diagnostics capital - instruments                             34,544                                     27,716                   6,828              24.6%               2.8%                -   21.8%

    Veterinary software, services and
     diagnostic imaging systems                                       35,277                                     31,913                   3,364              10.5%               0.5%             1.0%    9.0%
    ---------------------------------                                 ------                                     ------                   -----

    Net CAG revenue                                                 $507,487                                   $439,948                 $67,539              15.4%               1.8%             0.1%   13.4%
    ---------------                                                 --------                                   --------                 -------               ----                 ---               ---     ----


    (1)See 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 Domestic and International Markets and by Product and Service Categories

    Amounts in thousands (Unaudited)

                                                                      Six Months Ended

                                                                                                                              Reported    Percentage        Percentage           Organic

                                                            June 30,                     June 30,                    Dollar   Revenue     Change from       Change from          Revenue

    Net Revenue                                                   2018                         2017                    Change Growth (1)      Currency        Acquisitions       Growth (1)
    -----------                                                   ----                         ----                    ------ ----------      --------        ------------       ----------

    CAG                                                       $978,320                                   $843,175                $135,145              16.0%               2.7%             0.1%   13.3%

    United States                                              643,151                                    566,317                  76,834              13.6%                  -             0.1%   13.5%

    International                                              335,169                                    276,858                  58,311              21.1%               8.2%                -   12.9%

    Water                                                       61,801                                     54,501                   7,300              13.4%               3.1%                -   10.3%

    United States                                               29,661                                     27,385                   2,276               8.3%                  -                -    8.3%

    International                                               32,140                                     27,116                   5,024              18.5%               6.3%                -   12.3%

    LPD                                                         67,238                                     62,870                   4,368               6.9%               5.9%                -    1.1%

    United States                                                6,994                                      6,917                      77               1.1%                  -                -    1.1%

    International                                               60,244                                     55,953                   4,291               7.7%               6.6%                -    1.1%

    Other                                                       11,049                                     10,415                     634               6.1%               0.8%                -    5.3%
    -----                                                       ------                                     ------                     ---

    Total Company                                           $1,118,408                                   $970,961                $147,447              15.2%               2.9%             0.1%   12.2%

    United States                                              684,197                                    604,308                  79,889              13.2%                  -             0.1%   13.1%

    International                                              434,211                                    366,653                  67,558              18.4%               7.7%                -   10.8%
    -------------                                              -------                                    -------                  ------               ----                 ---               ---    ----

 

 

                                                                             Six Months Ended

                                                                                                                                    Reported    Percentage        Percentage           Organic

                                                                   June 30,                    June 30,                    Dollar   Revenue     Change from       Change from          Revenue

    Net CAG Revenue                                                     2018                         2017                    Change Growth (1)      Currency        Acquisitions       Growth (1)
    ---------------                                                     ----                         ----                    ------ ----------      --------        ------------       ----------

    CAG Diagnostics recurring revenue:                              $843,714                                   $726,999                $116,715              16.1%               2.8%                -   13.3%

    IDEXX VetLab consumables                                         308,133                                    255,647                  52,486              20.5%               3.2%                -   17.3%

    Rapid assay products                                             115,379                                    108,161                   7,218               6.7%               1.3%                -    5.4%

    Reference laboratory diagnostic and
     consulting services                                             384,205                                    330,367                  53,838              16.3%               2.9%                -   13.4%

    CAG Diagnostics services and accessories                          35,997                                     32,824                   3,173               9.7%               3.0%                -    6.6%

    CAG Diagnostics capital - instruments                             65,439                                     53,899                  11,540              21.4%               4.5%                -   16.9%

    Veterinary software, services and
     diagnostic imaging systems                                       69,167                                     62,277                   6,890              11.1%               0.6%             1.0%    9.5%
    ---------------------------------                                 ------                                     ------                   -----

    Net CAG revenue                                                 $978,320                                   $843,175                $135,145              16.0%               2.7%             0.1%   13.3%
    ---------------                                                 --------                                   --------                --------               ----                 ---               ---     ----


    (1)See 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,   December 31,

                                                                                         2018          2017
                                                                                         ----          ----

    Assets:                                   Current Assets:

                                              Cash and cash equivalents              $174,559                 $187,675

                                              Marketable securities                         -                 284,255

                                              Accounts receivable, net                265,012                  234,597

                                              Inventories                             176,487                  164,318

                                              Other current assets                    123,774                  101,140
                                              --------------------                    -------                  -------

                                              Total current assets                    739,832                  971,985
                                              --------------------                    -------                  -------

                                              Property and equipment, net             394,021                  379,096

                                              Other long-term assets, net             386,832                  362,335
                                              ---------------------------             -------                  -------

                                              Total assets                         $1,520,685               $1,713,416

    Liabilities and Stockholders'

    Equity (Deficit):                         Current Liabilities:

                                              Accounts payable                        $68,015                  $66,968

                                              Accrued liabilities                     228,380                  253,418

                                              Line of credit                          437,000                  655,000

                                              Deferred revenue                         40,921                   29,181
                                              ----------------                         ------                   ------

                                              Total current liabilities               774,316                1,004,567
                                              -------------------------               -------                ---------

                                              Long-term debt                          603,130                  606,075

                                              Other long-term liabilities, net        184,088                  156,616
                                              --------------------------------        -------                  -------

                                              Total long-term liabilities             787,218                  762,691
                                              ---------------------------             -------                  -------

                                              Total stockholders' deficit            (41,127)                (54,106)

                                              Noncontrolling interest                     278                      264
                                              -----------------------                     ---                      ---

                                              Total stockholders' deficit            (40,849)                (53,842)
                                              ---------------------------             -------                  -------

                                               Total liabilities and stockholders'
                                               deficit                             $1,520,685               $1,713,416
                                               ----------------------------------- ----------               ----------

 

 

    IDEXX Laboratories, Inc. and Subsidiaries

    Select Balance Sheet Information (Unaudited)

                                                                                                                                                   June 30,              March 31,             December 31,             September 30,    June 30,

                                                                                                                                                       2018                    2018                      2017                       2017         2017
                                                                                                                                                       ----                    ----                      ----                       ----         ----

    Selected Balance Sheet Information:                                                               Days sales outstanding(1)                        41.2                              42.0                                      41.7               43.4 41.7

                                                                                                      Inventory turns(2)                                2.2                               2.0                                       2.2                1.9  2.0


    (1)Days 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.

    (2)Inventory turns represent inventory-related cost of product sales for the twelve months preceding each quarter-end divided by the inventory balance at the end of the quarter.

 

 

    IDEXX Laboratories, Inc. and Subsidiaries

    Condensed Consolidated Statement of Cash Flows

    Amounts in thousands (Unaudited)

                                                                                             Six Months Ended

                                                                                     June 30,                June 30,

                                                                                          2018                     2017
                                                                                          ----                     ----

    Operating:                                  Cash Flows from Operating
                                                Activities:

                                               Net income                             $198,156                            $154,465

                                               Non-cash charges                         64,299                              56,357

                                               Changes in assets and liabilities     (108,727)                           (69,356)

                                                Net cash provided by operating
                                                activities                             153,728                             141,466
                                               -------------------------------         -------                             -------

    Investing:                                  Cash Flows from Investing
                                                Activities:

                                               Purchases of property and equipment    (51,377)                           (38,566)

                                               Purchase of marketable securities          (87)                          (175,522)

                                                Proceeds from the sale and
                                                maturities of marketable securities    284,125                             155,903

                                                Acquisitions of businesses, net of
                                                cash acquired                                          -                           (14,529)

                                                Net cash provided (used) by
                                                investing activities                   232,661                            (72,714)
                                               ----------------------------            -------                             -------

    Financing:                                  Cash Flows from Financing
                                                Activities:

                                                (Repayments) borrowings on revolving
                                                credit facilities, net               (218,000)                             93,000

                                                Payment of acquisition-related
                                                contingent considerations              (1,000)                                              -

                                               Repurchases of common stock           (189,884)                          (170,798)

                                                Proceeds from exercises of stock
                                                options and employee stock purchase
                                                plans                                   21,905                              23,170

                                                Shares withheld for statutory tax
                                                withholding on restricted stock        (8,720)                            (7,459)
                                               ----------------------------------       ------

                                                Net cash used by financing
                                                activities                           (395,699)                           (62,087)
                                               ---------------------------            --------                             -------

                                                Net effect of changes in exchange
                                                rates on cash                          (3,806)                              4,409
                                               ----------------------------------       ------                               -----

                                                Net (decrease) increase in cash and
                                                cash equivalents                      (13,116)                             11,074

                                                Cash and cash equivalents, beginning
                                                of period                              187,675                             154,901
                                               ------------------------------------    -------                             -------

                                                Cash and cash equivalents, end of
                                                period                                $174,559                            $165,975
                                               ----------------------------------     --------                            --------

 

 

    IDEXX Laboratories, Inc. and Subsidiaries

    Free Cash Flow

    Amounts in thousands except per share data (Unaudited)

                                                                            Six Months Ended

                                                                    June 30,                June 30,

                                                                         2018                     2017
                                                                         ----                     ----

    Free Cash                       Net cash provided by
     Flow:                          operating activities             $153,728                           $141,466

                                    Investing cash flows
                                    attributable to purchases of
                                    property and equipment           (51,377)                          (38,566)

                                   Free cash flow(1)                 $102,351                           $102,900
                                   ----------------                  --------                           --------


    (1)See 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,              June 30,           June 30,              June 30,

                                                                2018                  2017                2018                    2017
                                                                ----                  ----                ----                    ----

    Shares repurchased in the
     open market                                                 517                            696                               982     1,086

    Shares acquired through
     employee surrender for
     statutory tax
     withholding                                                   1                              1                                49        53

    Total shares repurchased                                     518                            697                             1,031     1,139
                                                                 ===                            ===                             =====     =====


    Cost of shares
     repurchased in the open
     market                                                 $105,774                       $114,163                          $191,962  $164,907

    Cost of shares for
     employee surrenders                                         165                            156                             8,720     7,459

    Total cost of shares                                    $105,939                       $114,319                          $200,682  $172,366
                                                            ========                       ========                          ========  ========


    Average cost per share -
     open market repurchases                                 $204.69                        $163.96                           $195.47   $151.81

    Average cost per share -
     employee surrenders                                     $215.36                        $168.25                           $179.41   $141.56

    Average cost per share -
     total                                                   $204.71                        $163.97                           $194.71   $151.34

 

Contact: Kerry Bennett, Investor Relations, 1-207-556-8155

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SOURCE IDEXX Laboratories, Inc.

Company Codes: NASDAQ-NMS:IDXX

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