WESTBROOK, Maine, Oct. 23 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. , today reported that revenues for the third quarter of 2009 were $259.1 million compared to $251.1 million for the third quarter of 2008. Organic revenue growth, as defined below, was 5%. Earnings per diluted share (“EPS”) for the quarter ended September 30, 2009 grew 24% to $0.52 from $0.42 for the same period in the prior year.
Organic revenue growth excludes the impact of changes in currency exchange rates, which reduced revenue growth by approximately 2%, and revenue from businesses acquired or divested subsequent to the beginning of the prior year period, which had minimal impact on revenue growth.
“In the third quarter IDEXX continued to execute against our strategy of technological innovation and international expansion, while addressing an economy that remains challenging,” said Jonathan W. Ayers, Chief Executive Officer. “Our overall performance varied by line of business and geography, but our core companion animal businesses achieved solid organic growth worldwide. Growth of instrument and consumable sales, our largest business, continued to be led by sales of Catalyst Dx(R), our next generation chemistry analyzer. Third quarter placements of 469 units put us on track for around 1,900 placements for the year. We continue to feel good about the progress in the Catalyst performance in the field and the energy and alignment in our sales channels, and thus, we expect a strong finish in the fourth quarter in both North America and Europe.”
“Our international performance was a highlight of the quarter, particularly in Asia where we have experienced organic growth of 17% year-to-date, driven by more than 20% organic growth in the last two quarters. All of our major lines of business are present in the region, and we believe that some of our most attractive growth opportunities are found in Asia as well as other international markets. The relative strength of certain markets outside the U.S. is helping us continue to achieve growth despite the difficult economy.”
“Strong bottom line performance during the quarter was driven to a large extent by our ongoing close management of operating expenses, where we have achieved some meaningful efficiencies. We also continue to see bottom line impact from careful management of the tax rate, finance leverage and share count.”
“While we are cautious about the near-term economy, we remain confident in our long-term outlook based on the fundamental attractiveness of our markets, our unique and innovative product and service offerings, our international footprint, and our ability to achieve increasing operating efficiencies based on our growing experience and the scale of our businesses.”
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 third quarter of 2009 were $214.5 million compared to $204.8 million for the third quarter of 2008. Changes in foreign currency exchange rates reduced revenue growth by approximately 2%. Organic growth of 7% was the result of increased sales volume across all product lines and higher average unit sales prices. In the IDEXX VetLab(R) product line, higher sales volume was driven by sales of our Catalyst Dx(R) chemistry analyzer and related consumables. These favorable impacts were partly offset by lower sales volume and lower average unit sales prices for LaserCyte(R) hematology analyzers.
Water. Water segment revenues for the third quarter of 2009 were $19.7 million compared to $20.3 million for the third quarter of 2008. The decrease in Water revenue was due to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenue by 3%. The favorable impact of higher sales volumes was offset by lower unit sales prices.
Production Animal Segment. Production Animal Segment (“PAS”) revenues for the third quarter of 2009 were $15.9 million compared to $17.8 million for the third quarter of 2008. Changes in foreign currency exchange rates unfavorably impacted revenue by approximately 3%. Organically, PAS revenue declined due primarily to lower sales volumes.
Year-to-Date Results
Year-to-date revenues were $761.3 million compared to $780.7 million for the nine months ended September 30, 2008. Organic growth for the nine months ended September 30, 2009 was 4%.
Year-to-date diluted EPS were $1.50 compared to $1.48 for the nine months ended September 30, 2008. As shown in the reconciliation of non-GAAP diluted EPS to earnings per share in the supplementary table provided below, diluted EPS of $1.50 grew 3% compared to 2008 non-GAAP diluted EPS of $1.46.
Additional Operating Results for the Third Quarter
Gross profit for the third quarter of 2009 increased $2.3 million, or 2%, to $130.5 million from $128.1 million for the third quarter of 2008. As a percentage of total revenue, gross profit decreased to 50% from 51%. The decrease in gross profit percentage was due primarily to higher overall manufacturing costs and higher relative sales of lower margin IDEXX VetLab(R) instruments and digital radiography systems, partly offset by lower depreciation expense related to IDEXX VetLab(R) instruments placed at customer sites and the impact of higher selling prices.
Research and development (“R&D”) expense for the third quarter of 2009 was $16.6 million, or 6% of revenue, compared to $17.9 million, or 7% of revenue for the third quarter of 2008. The decrease in R&D expense was due primarily to the absence of pharmaceutical business R&D spending in the third quarter of 2009, resulting from the disposition of substantially all of our pharmaceutical business and assets in the fourth quarter of 2008.
Selling, general and administrative (“SG&A”) expense for the third quarter of 2009 was $69.7 million, or 27% of revenue, compared to $71.2 million, or 28% of revenue, for the third quarter of 2008. The decrease in SG&A expense resulted primarily from the favorable impact of exchange rate changes on foreign currency denominated expenses, the absence of pharmaceutical business SG&A spending in the third quarter of 2009 and lower bad debt expense. These impacts were partly offset by higher personnel costs due, in part, to an increase in customer support resources.
Supplementary Analysis of Results
The accompanying financial tables provide more information concerning our revenue and other operating results for the three and nine months ended September 30, 2009, as well as a reconciliation of earnings per share to non-GAAP diluted EPS.
Outlook for 2009 and 2010
The Company provides the following updated guidance for the full year of 2009 and preliminary guidance for 2010. 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 and 2010. Fluctuations in foreign currency exchange rates from current levels could have a significant positive or negative impact on our actual results of operations in both years.
2009
2010
Conference Call and Webcast Information
IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its third quarter results. To participate in the conference call, dial 1-612-288-0340 or 1-877-209-9923 and reference confirmation code 119780. An audio replay will be available through Friday, October 30, 2009 by dialing 1-320-365-3844 and referencing replay code 119780.
The call will also be available via live or archived Webcast on the IDEXX Laboratories’ web site at www.idexx.com.
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; the effects of interruptions to the Company’s operations due to natural disasters or system failures; 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, and quarterly report on Form 10-Q for the quarter ended June 30, 2009, in the section captioned “Risk Factors.”
Contact: Merilee Raines, Chief Financial Officer, 1-207-556-8155
SOURCE IDEXX Laboratories, Inc.
CONTACT: Merilee Raines, Chief Financial Officer, IDEXX Laboratories,
Inc., +1-207-556-8155
Web site: http://www.idexx.com/
