WESTBROOK, Maine, April 24 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. , today reported that revenues for the first quarter of 2009 were $236.5 million compared to $249.1 million for the first quarter of 2008. The decrease in revenues was due primarily to the unfavorable impact of changes in foreign currency exchange rates and the absence of pharmaceutical product sales in the first quarter of 2009, due to the divestiture in the fourth quarter of 2008 of our on-market pharmaceutical products. Organic growth, which is reported revenue growth adjusted to eliminate the effect of changes in foreign currency exchange rates and revenues from businesses acquired or divested subsequent to December 31, 2007, was 3% for the quarter. Earnings per diluted share (“EPS”) were $0.43 for the quarters ended March 31, 2009 and 2008. Non-GAAP diluted EPS grew 5% when compared to first quarter 2008 non-GAAP diluted EPS of $0.41. A reconciliation of non-GAAP diluted EPS to earnings per share is included in the supplementary table provided below.
“I am very satisfied with our performance in the quarter, a time defined by economic uncertainty, global recession and a strong dollar that lowers our international and export revenues as reported in U.S. dollars,” said Jonathan Ayers, Chairman and CEO. “Organic revenue growth of 3% for the company was a bit lower than anticipated, as most of our markets were impacted by the recession to a slightly larger degree than we expected in January. However, our successful focus on operating efficiency and cost control helped to more than offset this slower organic revenue growth.”
“Despite our focus on expense control, we have continued to invest significantly in the development and commercialization of the innovative products and services that are central to our strategy. We made very substantial progress in the post-launch improvements of our new chemistry instrument, Catalyst Dx(TM), which has continued to improve the customer experience. We placed more instruments in the quarter than expected, and yet still maintained our expected backlog at the quarter end. We expect to exit our controlled launch of the analyzer in the second quarter and enter a period of more aggressive placements. As a result we continue to estimate 2,000 placements for the year.”
“Since our last earnings call, we have also launched an important new cardiac test in our reference laboratories for both dogs and cats. The test, called Cardiopet(TM) proBNP, is the first blood test that provides the veterinarian with a simple protocol to determine if a pet has a cardiac condition. Cardiopet proBNP is yet another innovative diagnostic tool that we expect will further differentiate our global reference lab offering.”
“Based upon the effects of the economy that we observed in the first quarter and our ability to control expenses during the period, we reduced our revenue outlook somewhat for the year while raising the lower end of our EPS expectations. We believe that our performance demonstrates the fundamental strength of our business model and that we will be well positioned for higher growth when economic conditions improve.”
Revenue Performance
Please refer to the table below entitled “Revenues and Revenue Growth Analysis by Product and Service Categories” in conjunction with the following discussion.
Companion Animal Group. Companion Animal Group (“CAG”) revenues for the first quarter of 2009 were $193.7 million compared to $202.8 million for the first quarter of 2008. The decrease in CAG revenues was due primarily to the unfavorable impact of changes in foreign currency exchange rates and the absence of pharmaceutical product sales in the first quarter of 2009, as noted above. Organic growth, as defined above, of 3% was largely the result of increased sales of laboratory and consulting services, driven by the impact of price increases, and increased IDEXX VetLab(R) sales, driven by sales of our Catalyst Dx(TM) chemistry analyzer and SNAPshot Dx(TM) analyzer, both of which we began shipping to customers at the end of the first quarter of 2008. The impact of higher average unit sales prices for IDEXX VetLab(R) consumables was largely offset by a decrease in sales volumes. These favorable items were partly offset by a decrease in rapid assay sales, resulting from lower average unit sales prices on canine and feline SNAP(R) tests due primarily to sales promotions offered within the quarter. SNAP(R) 3Dx(R) and SNAP(R)4Dx(R) volumes were appreciably higher in the first quarter of 2009 as compared to the first quarter of 2008 as a result of specific sales promotions offered for these products.
Water. Water segment revenues for the first quarter of 2009 were $15.9 million compared to $16.8 million for the first quarter of 2008. The decrease in Water revenues was due primarily to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenue by 8%. Organic growth, as defined above, of 3% was due to the favorable impact of higher relative sales volume in countries where products sell at higher average unit sales prices, partly offset by lower sales volumes. Decreased sales volume was due primarily to lower sales volume of our Colilert(R) products, used to detect total coliforms and E. coli in water, attributable in part to lower sales in certain economically sensitive market segments.
Production Animal Segment. Production Animal Segment (“PAS”) revenues for the first quarter of 2009 were $18.3 million compared to $21.2 million for the first quarter of 2008. The decrease in PAS revenues was due primarily to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenue by 10%. Organically, PAS revenue declined by 4% due to lower sales volumes and lower average unit sales prices. Lower sales volumes were due largely to the completion of a bovine viral diarrhea virus (“BVDV”) eradication program. Lower average unit sales prices were due primarily to increased price competition.
Additional Operating Results for the First Quarter
Gross profit for the first quarter of 2009 decreased $5.4 million, or 4%, to $124.4 million from $129.8 million for the first quarter of 2008. As a percentage of total revenue, gross profit increased slightly to 53% from 52% due primarily to the favorable impact of foreign currency hedge contracts and the favorable currency impact of foreign currency denominated expenses, net of the unfavorable impact that strengthening of the U.S. dollar had on sales denominated in foreign currencies, and to the impact of higher selling prices. These net favorable impacts were partly offset by higher costs of instrument service relating to the larger installed base of IDEXX VetLab(R) instruments.
Research and development (“R&D”) expense for the first quarter of 2009 was $15.9 million, compared to $17.3 million for the first quarter of 2008, representing 7% of revenue in both periods. The decrease in R&D expense was due primarily to the absence of pharmaceutical business R&D spending in the first quarter of 2009.
Selling, general and administrative (“SG&A”) expense for first quarter of 2009 was $70.1 million compared to $73.8 million for the first quarter of 2008, representing 30% of revenue in both periods. The decrease in SG&A expense resulted primarily from the favorable impact of exchange rates on foreign currency denominated expenses, the absence of pharmaceutical business SG&A spending in the first quarter of 2009, and lower spending on sales commissions, partly offset by higher personnel costs due, in part, to the addition of customer service, marketing and sales personnel.
Supplementary Analysis of Results
The accompanying financial tables provide more information concerning our revenue and other operating results for the three months ended March 31, 2009, as well as a reconciliation of non-GAAP diluted EPS to earnings per share.
Outlook for 2009
The Company provides the following updated guidance for the full year of 2009. This guidance reflects an assumption that the value of the U.S. dollar relative to other currencies will remain at its current level for the balance of 2009. Fluctuations in foreign currency exchange rates from current levels could have a significant positive or negative impact on our actual results of operations in 2009.
Conference Call and Webcast Information
IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its first quarter results. To participate in the conference call, dial 800-230-1059 or 612-288-0329 and reference confirmation code 996071. An audio replay will be available through May 1, 2009 by dialing 320-365-3844 and referencing replay code 996071.
The call will also be available via live or archived Webcast on the IDEXX Laboratories’ web site at www.idexx.com.
Annual Meeting
IDEXX Laboratories, Inc. today announced that it will host a simultaneous Webcast of its Annual Meeting of Stockholders, to be held on Wednesday, May 6, 2009, at 10:00 a.m. (eastern) at the Portland Marriott at Sable Oaks in South Portland, Maine.
Chairman and CEO, Jonathan Ayers will chair the meeting. Investors may listen to the Annual Meeting and view a presentation live via a link on the Company’s web site, www.idexx.com. An archived edition of the meeting will be available after 1:00 p.m. (eastern) on that day via the same link.
About IDEXX Laboratories
IDEXX Laboratories, Inc. is a leader in 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 to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than 4,700 people and offers products to customers in over 100 countries.
Note Regarding Forward-Looking Statements
This press release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management’s expectations. Factors that could cause or contribute to such differences include the following: the Company’s ability to develop, manufacture, introduce and market new products and enhancements to existing products; the impact of a weak economy on demand for the Company’s products and services; the impact of changes and disruptions in financial and currency markets; the effectiveness of the Company’s sales and marketing activities; disruptions, shortages or pricing changes that affect the Company’s purchases of products and materials from third parties, including from sole source suppliers; the Company’s ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition, technological change, and veterinary hospital consolidation on the markets for the Company’s products; the Company’s ability to manufacture complex biologic products; the effect of government regulation on the Company’s business, including government decisions about whether and when to approve the Company’s products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of the Company’s products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company’s products and services by veterinarians; the Company’s ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, in the section captioned “Risk Factors.”
CONTACT: Merilee Raines, Chief Financial Officer of IDEXX Laboratories,
Inc., +1-207-556-8155
Web site: http://www.idexx.com/
