WESTBROOK, Maine, Oct. 26 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. , today reported that revenue for the third quarter of 2007 increased 22% to $229.4 million from $187.4 million for the third quarter of 2006. Earnings per diluted share (“EPS”) for the quarter ended September 30, 2007 were $0.81, compared to $0.76 for the same period in the prior year.
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“In the third quarter we continued our sales momentum with strong revenue growth in the Companion Animal Group,” said Jonathan Ayers, Chairman and CEO. “Instrument sales and total instrument placements achieved record levels, which bodes well for the acceleration of instrument consumables sales in future periods. Our rapid assay and laboratory services lines of business also continued their revenue growth momentum in the third quarter, while digital radiography and computer systems logged double digit revenue growth. In this release we are providing initial revenue and earnings guidance for 2008, a year in which we will benefit from the launch of several new products, including three new instruments that will augment the IDEXX VetLab(R) suite of in-house analyzers.”
Companion Animal Group (“CAG”) revenue for the third quarter of 2007 increased 22% to $187.5 million from $153.1 million for the third quarter of 2006 due primarily to higher sales in all CAG product and service categories, with the largest growth in revenue dollars from laboratory and consulting services and from instruments and consumables products. Incremental sales from acquired businesses contributed 6% to revenue growth.
Water segment revenue for the third quarter of 2007 increased 5% to $17.4 million from $16.6 million for the third quarter of 2006 due primarily to higher worldwide sales volume, partly offset by lower average unit sales prices due to both higher relative sales in geographies where products are sold at lower average unit sales prices and greater price competition in certain geographies.
Production Animal Segment (“PAS”) revenue for the third quarter of 2007 increased 25% to $17.4 million from $13.9 million for the third quarter of 2006 due primarily to higher livestock diagnostics sales volume, including sales attributable to Institut Pourquier, which we acquired in March 2007. The favorable impact of higher sales volume was partly offset by lower average unit sales prices for products that test for transmissible spongiform encephalopathies (“TSE”) due to greater price competition.
The accompanying financial tables provide more information concerning our revenue and other operating results for the three and nine months ended September 30, 2007.
Year-to-Date Results
Year-to-date revenue increased 24% to $677.6 million from $546.9 million for the same period in 2006. Revenue for the nine months ended September 30, 2007, adjusted for the impacts of acquisitions and foreign currency exchange rates, increased 14%.
Year-to-date earnings per diluted share increased 1% to $2.12 from $2.09 for the same period in 2006. Non-GAAP adjusted diluted EPS for the nine months ended September 30, 2007 grew 16% to $2.37 from $2.05 for the same period in 2006. Non-GAAP adjusted diluted EPS for the nine months ended September 30, 2007 excludes the impact of acquisition-related purchase accounting and integration costs and the write-down of certain pharmaceutical assets in the second quarter. Non-GAAP adjusted diluted EPS for the nine months ended September 30, 2006 excludes the income tax benefits from certain discrete tax events. The accompanying financial table provides additional information and reconciles reported earnings per diluted share to these non-GAAP measures. Management believes adjusted diluted EPS is a useful non-GAAP financial measure to evaluate the results of ongoing operations, excluding significant specified items, period over period, and therefore believes that investors may find this information useful in addition to the GAAP results.
Additional Operating Results for the Third Quarter
Gross profit for the third quarter of 2007 increased $20.3 million, or 21%, to $118.5 million from $98.2 million for the third quarter of 2006. As a percentage of total revenue, gross profit was constant at 52%. The gross profit percentage was unfavorably impacted by greater relative sales of lower margin products and services such as laboratory and consulting services. Decreases in the gross margin percentage were offset by higher average selling prices, resulting in part from higher relative sales of combination rapid assay products such as the SNAP(R)4Dx(R), which was launched in the U.S. in September 2006.
Research and development (“R&D”) expense for the third quarter of 2007 was $17.3 million, or 7.5% of revenue, compared to $13.7 million, or 7.3% of revenue, for the third quarter of 2006. R&D expense grew primarily as a result of increased product development spending related to IDEXX VetLab(R) instrumentation and to product development activities across all product and service categories.
Selling, general and administrative (“SG&A”) expense for the third quarter of 2007 was $65.1 million, or 28% of revenue, compared to $50.0 million, or 27% of revenue, for the third quarter of 2006. Increased SG&A expense was due primarily to higher personnel-related costs due, in part, to expanded worldwide sales, marketing and customer service headcount; higher spending on information technology, facilities and other general support functions; and incremental activities associated with recently acquired businesses.
IDEXX Laboratories Announces Two-for-One Stock Split
The Company also announced today that its Board of Directors approved a two-for-one split of its outstanding common stock. The stock split will be effected in the form of a 100% common stock dividend. Stockholders of record as of the close of business on November 5, 2007 will be issued one additional share for each share of common stock held on such date. The additional shares of common stock will be distributed on or about November 26, 2007. It is anticipated that the Company’s common stock will begin trading on a post-split basis on the business day following the distribution date. The stock split will double the number of outstanding common shares to approximately 61 million based on the number of shares outstanding as of October 22, 2007.
Outlook
The Company offers the following revised guidance for the full year of 2007:
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 719-325-4744 or 877-681-3377 and reference confirmation code 2004728. An audio replay will be available through November 2, 2007 by dialing 719-457-0820 and referencing replay code 2004728.
The call will also be available via live or archived Webcast on the IDEXX Laboratories’ web site at http://www.idexx.com.
About IDEXX Laboratories
IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice management systems and pharmaceuticals. IDEXX products enhance the ability of veterinarians to provide advanced medical care and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than 4,500 people and offers products to customers in over 100 countries.
Note Regarding Forward-Looking Statements
This press release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management’s expectations. Factors that could cause or contribute to such differences include the following: the Company’s ability to develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company’s sales and marketing activities; the Company’s ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company’s products; the effect of government regulation on the Company’s business, including government decisions about whether and when to approve the Company’s products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of 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; disruptions, shortages or pricing changes that affect the Company’s purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company’s inventories; the Company’s ability to manufacture complex biologic products; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and quarterly report on Form 10-Q for the quarter ended June 30, 2007, 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/
