IDEXX Laboratories Announces Third Quarter Results
WESTBROOK, Maine, Nov. 1, 2018 /PRNewswire/ --
-- Reports revenue growth of 11% on a reported basis and 12% on an organic
basis, driven by CAG Diagnostics recurring revenue growth of 12%
reported and 13% organic
-- Delivers EPS of $1.05, a 33% increase year-over-year on a reported basis
or 39% on a comparable constant currency basis
-- Refines 2018 reported revenue guidance to $2,205 billion - $2,215
billion, reflecting revenue growth of 12% - 12.5% on a reported basis
and 11.5% - 12% on an organic basis
-- Increases 2018 EPS guidance range to $4.16 - $4.21, $0.04 above the
midpoint of prior guidance, reflecting higher expectations for 2018
share-based compensation tax benefits and an improved operational
outlook
-- Provides preliminary 2019 financial guidance for revenue growth of 8% -
9.5% on a reported basis, 9.5% - 11% on an organic basis, and EPS of
$4.61 - $4.75, an increase of 10% - 14% on a reported basis and 15% -
18% on a comparable constant currency basis
IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reports revenues for the third quarter of 2018 of $545 million, an increase of 11% compared to the prior year period on a reported basis and 12% on an organic basis. Third quarter results were driven by 13% global organic growth in Companion Animal Group ("CAG") Diagnostics recurring revenue, supported by high-teens IDEXX VetLab(®) consumables revenue growth, double-digit reference laboratory diagnostic and consulting services gains, and continued solid growth in rapid assay sales. Continued mid-teen gains in U.S. reference laboratory diagnostic and consulting services revenues were mitigated by moderate growth in international laboratory revenues in the quarter, impacted in part by weather conditions. Third quarter revenue results also reflected mid-teens gains in veterinary software, services and diagnostic imaging systems and high single-digit organic growth in the Water and Livestock, Poultry and Dairy ("LPD") businesses.
The Company is adjusting its full-year 2018 revenue guidance to a tighter range relative to previous guidance, reflecting overall organic revenue growth expectations of 11.5% - 12%, and CAG Diagnostics recurring revenue organic growth consistent with year-to-date trends, which include approximately 1% of growth benefit attributable to the adoption of ASU 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard").
The Company is updating 2018 guidance for earnings per diluted share ("EPS") to $4.16 - $4.21, raising it by approximately $0.04 per share at the midpoint relative to guidance previously provided on the second quarter call, and reflecting an outlook for 41% - 43% in reported EPS growth, or 33% - 35% in comparable constant currency EPS growth. This outlook incorporates refined expectations for 110 - 130 basis points in full-year operating margin improvement on a constant currency basis, at the higher end of earlier estimates. The Company is also providing preliminary 2019 guidance for organic revenue growth of 9.5% - 11%, driven by projected continued strong growth in CAG Diagnostics recurring revenues, and EPS of $4.61 - $4.75, supported by expectations of 50 to 100 basis points of constant currency operating margin expansion. The 2019 EPS guidance reflects projected year-over-year EPS growth of 15% - 18% on a comparable constant currency basis, excluding the estimated 2019 impact of share-based compensation tax benefits of approximately $0.10 - $0.13 per share, which is $0.10 - $0.13 per share below higher than expected 2018 levels.
"We continue to see strong demand for higher-quality pet health care and our ongoing business momentum reflected in our sustained 13% organic growth in CAG Diagnostics recurring revenues," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer. "We are also seeing continued positive global market reception for our point-of-care offering that reflects our best-in-class technology, expanding menu including Catalyst(® )SDMA, and the implementation of our economic value index (EVI) incentive model around the world. Catalyst chemistry analyzer placements were strong in the third quarter, expanding our global installed base by 22% year-over-year, supported by 26% growth in placements at competitive or greenfield accounts. These global instrument placements drove accelerated 19% organic growth in instrument consumable revenues in the quarter."
"We are on track to deliver strong revenue and EPS gains this year. Our sustained momentum and continued investments in expanded customer-facing professionals provide a foundation for us to deliver continued strong financial performance in 2019, driven by sustained high CAG Diagnostics recurring revenue growth, consistent with our long-term revenue and earnings goals."
Third Quarter Performance Highlights
Companion Animal Group
The Companion Animal Group generated 12% reported and 13% organic revenue growth for the quarter. CAG Diagnostics recurring revenue growth remained strong at 12% reported and 13% organic, including a $5 million, or approximately 1% in growth rate benefit attributable to the New Revenue Standard accounting changes, primarily related to the modified retrospective restatement. Veterinary software services and diagnostic imaging systems revenues grew 15% on a reported basis and 13% on an organic basis.
-- IDEXX VetLab consumables generated reported revenue growth of 18% and
organic revenue growth of 19% in the quarter. Quarterly growth was
supported by continued expansion of our premium instrument base in
international regions and in North America, as well as continued strong
customer retention, ongoing increases in testing utilization and
moderate price gains. IDEXX VetLab premium diagnostic instrument
placements grew 10% to 3,026, including 1,611 Catalysts, 821 premium
hematology instruments and 594 IDEXX SediVue Dx(®) analyzers. 922 of
the Catalyst instrument placements were to competitive or greenfield
practices, a 26% increase compared to the prior year period.
-- Reference laboratory diagnostic and consulting services revenue grew 10%
on a reported basis and 11% on an organic basis, with continued momentum
in the U.S. with mid-teen, volume-driven reference lab revenue growth.
Global reference lab revenue growth was moderated by low to
mid-single-digit gains in international regions, related in part to the
particularly hot weather in Europe over the summer, which constrained
patient visits.
-- Rapid assay products had revenue growth of 6% on both a reported and an
organic basis. Rapid assay revenue growth was supported by continued
growth in SNAP(®) 4Dx(®) Plus Tests, specialty and first generation
rapid test volumes.
Water
Water reported revenue growth was 7% and organic revenue growth was 9% in the quarter, supported by solid growth across all major regions, including strong gains in Brazil.
Livestock, Poultry and Dairy
LPD revenue grew 4% on a reported basis and 7% on an organic basis for the quarter, benefiting from favorable comparisons to prior year period revenue growth related to herd health screening in the Asia-Pacific region, and overall growth in poultry testing. These increases were partially offset by the impact of an African swine fever outbreak in China, which reduced demand for diagnostic testing in the region. LPD recurring revenue remains constrained by soft end-market conditions, including impacts from lower milk prices globally, reducing producer demand for antibiotic residue testing.
Gross Profit and Operating Profit
Gross profits increased 12% and gross margin increased to 56.0% from 55.7% on a reported basis in the prior year. On a constant currency basis, gross margin was 40 basis points higher than third quarter 2017, net of a 25 basis point negative impact from reclassification of selected operating expenses to cost of revenue in the reference laboratory diagnostic and consulting services business. The increase in the Company's gross margin benefited from lower product costs and business mix effects in our LPD business, as well as solid net price realization and productivity gains in our CAG business. These impacts were partially offset by incremental investments in reference laboratory capacity and employee benefits, as well as unfavorable impacts from instrument program mix under the New Revenue Standard.
Operating margin was 21.5% in the quarter, compared to 20.4% on a reported basis in the prior year period. On a constant currency basis, operating margin improved 140 basis points, compared to the prior year period, supported by operating expense leverage.
2018 and 2019 Financial Outlook
The following guidance for 2018 and 2019 reflects the assumptions that for the remainder of 2018 and the full year 2019, the value of foreign currencies will remain at the following rates in U.S. dollars:
-- the euro at $1.13;
-- the British pound at $1.29;
-- the Canadian dollar at $0.76; and
-- the Australian dollar at $0.70;
and relative to the U.S. dollar:
-- the Japanese yen at ¥115;
-- the Chinese renminbi at RMB 7.00; and
-- the Brazilian real at R$3.79.
Outlook for 2018
We are refining our 2018 revenue outlook to $2,205 million - $2,215 million, narrowing the previous guidance range for organic revenue growth by decreasing the higher end of the range by 50 basis points to 11.5% - 12%. The Company expects full-year CAG Diagnostics recurring revenue growth to be consistent with year-to-date trends, including approximately 1% of growth rate attributable to New Revenue Standard accounting changes. The Company now expects that the additional growth acceleration targeted for the second half of 2018 will be constrained by lower LPD revenues, reflecting end-market factors, and relatively moderated growth in our international laboratory business. We are updating our 2018 EPS outlook to $4.16 - $4.21 per share, reflecting an increase of $0.04 per share at the midpoint of the earlier guidance range, including approximately $0.03 in higher expected share-based compensation tax benefits, and approximately $0.01 per share in operational benefit supported by expectations for constant currency operating margin expansion of 110 - 130 basis points, at the high end of earlier projections. For the full year, we expect foreign exchange benefit of $0.01 per share, in line with previous estimates. The updated outlook represents EPS growth of 41% - 43% on a reported basis, and 33% - 35% on a comparable constant currency growth basis.
We now project $0.23 per share of EPS impact in 2018 from share-based compensation tax benefits, which reflects an estimated $21 million reduction in our tax provision. These impacts may vary significantly annually based on the timing of stock compensation settlement activity and changes in IDEXX's stock price. We estimate that $0.10 - $0.13 of the projected full-year 2018 benefit of $0.23 per share reflects higher actual and projected stock option exercises in 2018, compared to preliminary projections for 2019.
At assumed foreign exchange rates, we estimate that the effect of the slightly stronger U.S. dollar will positively impact 2018 revenue by approximately 0.5% and 2018 EPS by $0.01, including the net effect of projected hedge losses of approximately $1 million in 2018 compared to the neutral hedge impact in 2017.
The Company provides the following updated guidance for 2018:
Amounts in millions except per share data and percentages
Guidance Range Growth Definition Y/Y Growth
Revenue
$2,205 - $2,215
Reported 12.0% - 12.5%
Organic Revenue Growth 11.5% - 12.0%
EPS
$4.16 - $4.21
Reported 41% - 43%
Comparable Constant Currency 33% - 35%
Operating ~110% - 115% of net
Cash income
Flow
Free ~70% -75% of net
Cash income
Flow
Capital
Expenditures
~$140 million
We expect an effective tax rate of approximately 18% - 18.5%, incorporating expectations for a benefit from share-based compensation accounting of approximately $21 million or 500 basis points. We are projecting a reduction in weighted average shares outstanding of approximately 1%, and interest expense, net of interest income, of approximately $34 million - $35 million reflecting current and projected borrowings.
Preliminary Outlook for 2019
The Company provides the following preliminary guidance for 2019:
Amounts in millions except per share data and percentage
Guidance Range Growth Definition Y/Y Growth
Revenue
$2,385 - $2,425
Reported 8.0% - 9.5%
Organic Revenue Growth 9.5% - 11%
EPS
$4.61 - $4.75
Reported 10% - 14%
Comparable Constant Currency 15% - 18%
Our 2019 revenue growth outlook reflects expectations for sustained strong organic growth for CAG Diagnostics recurring revenues of 11.5% - 12.5%, in line with our 2018 organic growth outlook for these revenues adjusted for approximately 1% in estimated non-recurring growth rate benefit in 2018 from New Revenue Standard accounting changes. Our EPS outlook includes approximately $0.10 - $0.13 per share of projected benefit from share-based compensation tax benefits. Our preliminary outlook for our effective tax rate is 20% - 21% and for a reduction in weighted average shares outstanding from continued stock repurchases of approximately 1%. We are projecting interest expense, net of interest income, of approximately $38 million, reflecting current and projected borrowings and relatively higher floating interest rate costs. At the foreign exchange rates assumed in this earnings release, we estimate that foreign exchange impacts will decrease 2019 reported revenue growth by approximately 1.5%, and EPS by approximately $0.03 per share.
The preliminary outlook represents EPS growth of 10% - 14% on a reported basis and 15% - 18% on a comparable constant currency basis, supported by an increase of 50 to 100 basis points in operating margin on a constant currency basis.
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its third quarter results and management's outlook. To participate in the conference call, dial 1-800-230-1766 or 1-612-332-0345 and reference confirmation code 454798. Replay of the conference call will be available through Thursday, November 8, 2018 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 454798. 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 and 2019 Financial Outlook," "Outlook for 2018," "Preliminary Outlook for 2019" 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 and the U.S. field organization; projected impact of foreign currency exchange rates; and projected operating margins and expenses, capital expenditures, gains or losses from foreign currency hedging transactions, 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 specifically disclaims any 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 filed with the U.S. Securities and Exchange Commission (SEC) on August 1, 2018 and the Company's other filings with the SEC 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 third-quarter 2018 results as follows: decreased revenue growth by 1%, decreased gross profit growth by 1%, had an immaterial impact on gross profit margin growth, decreased operating profit growth by 3%, decreased operating expense growth by 1%, decreased operating profit margin growth by 30 basis points, and decreased EPS growth by 4%. Estimated currency changes are expected to increase projected full-year 2018 revenue growth by approximately 0.5%, increase projected full-year 2018 CAG Diagnostics recurring revenue growth by approximately 0.5%, decrease projected fourth-quarter 2018 revenue growth by approximately 2%, decrease full-year 2018 operating profit margin growth by 10 bps, and have an immaterial impact on projected full-year 2018 EPS growth. Estimated currency changes are expected to decrease projected full-year 2019 revenue growth and full-year 2019 CAG Diagnostics recurring revenue by approximately 1.5%, decrease full-year 2019 operating profit margin growth by 20 bps and decrease full-year 2019 EPS growth by 1%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three and nine months ended September 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 nine months ended September 30, 2018. See the constant currency note above for the impacts of estimated currency changes to the projected full-year and fourth-quarter 2018 and full-year 2019 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 September 30, 2018. For the calculation of projected full-year and fourth-quarter 2018 organic revenue growth, projected full-year 2018 CAG Diagnostics recurring organic revenue growth, projected full-year 2019 organic revenue growth, and projected full-year 2019 CAG Diagnostics recurring organic revenue growth the impacts of revenue from acquisitions is immaterial.
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 third quarter 2018 EPS by $0.08 compared to $0.04 in the third quarter of 2017, is expected to increase projected EPS by $0.10 to $0.13 for the full-year 2019, increase projected EPS by $0.23 for the full-year 2018, and increased EPS by $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 third quarter 2017 EPS by $0.03 and 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 nine months ended September 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 September 30, 2018.
Contact: Kerry Bennett, Investor Relations, 1-207-556-8155
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2018 2017 2018 2017
Revenue:
Revenue $545,448 $491,976 $1,663,856 $1,462,937
Expenses and Income:
Cost of revenue 239,805 217,974 722,675 638,029
Gross profit 305,643 274,002 941,181 824,908
Sales and marketing 95,146 88,818 291,502 263,755
General and administrative 63,955 57,186 185,966 165,560
Research and development 29,192 27,585 87,725 80,373
Income from operations 117,350 100,413 375,988 315,220
Interest expense, net (8,311) (8,364) (25,291) (23,849)
Income before provision for income taxes 109,039 92,049 350,697 291,371
Provision for income taxes 15,825 21,535 59,327 66,392
Net Income:
Net income 93,214 70,514 291,370 224,979
Less: Noncontrolling interest in subsidiary's (37) 3 (23) 92
earnings
Net income attributable to stockholders $93,251 $70,511 $291,393 $224,887
Earnings per share: Basic $1.07 $0.81 $3.35 $2.56
Earnings per share: Diluted $1.05 $0.79 $3.29 $2.51
Shares outstanding: Basic 86,756 87,537 87,029 87,884
Shares outstanding: Diluted 88,453 89,256 88,687 89,735
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2018 2017 2018 2017
Operating Ratios
Gross profit 56.0% 55.7% 56.6% 56.4%
(as a percentage of revenue):
Sales, marketing, general and administrative 29.2% 29.7% 28.7% 29.3%
expense
Research and development expense 5.4% 5.6% 5.3% 5.5%
Income from operations(1) 21.5% 20.4% 22.6% 21.5%
(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
September 30, Percent of September 30, Percent of
2018 Revenue 2017 Revenue
Revenue:
CAG $478,097 $426,686
Water 33,108 31,030
LPD 29,420 28,396
Other 4,823 5,864
Total $545,448 $491,976
Gross Profit:
CAG $261,862 54.8% $234,766 55.0%
Water 23,423 70.7% 21,629 69.7%
LPD 17,233 58.6% 14,656 51.6%
Other 2,652 55.0% 3,612 61.6%
Unallocated Amounts 473 N/A (661) N/A
Total $305,643 56.0% $274,002 55.7%
Income from Operations:
CAG $102,241 21.4% $89,271 20.9%
Water 15,874 47.9% 14,505 46.7%
LPD 4,007 13.6% 902 3.2%
Other 443 9.2% 2,114 36.1%
Unallocated Amounts (5,215) N/A (6,379) N/A
Total $117,350 21.5% $100,413 20.4%
Nine Months Ended Nine Months Ended
September 30, Percent of September 30, Percent of
2018 Revenue 2017 Revenue
Revenue:
CAG $1,456,417 $1,269,861
Water 94,909 85,531
LPD 96,658 91,266
Other 15,872 16,279
Total $1,663,856 $1,462,937
Gross Profit:
CAG $809,705 55.6% $705,922 55.6%
Water 66,864 70.5% 59,756 69.9%
LPD 55,567 57.5% 51,183 56.1%
Other 7,339 46.2% 8,226 50.5%
Unallocated Amounts 1,706 N/A (179) N/A
Total $941,181 56.6% $824,908 56.4%
Income from Operations:
CAG $332,435 22.8% $277,857 21.9%
Water 43,458 45.8% 38,421 44.9%
LPD 13,439 13.9% 9,880 10.8%
Other 2,071 13.0% 3,275 20.1%
Unallocated Amounts (15,415) N/A (14,213) N/A
Total $375,988 22.6% $315,220 21.5%
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Three Months Ended
Reported Percentage Percentage Organic
September 30, September 30, Dollar Revenue Change from Change from Revenue
Net Revenue 2018 2017 Change Growth(1) Currency Acquisitions Growth(1)
---
CAG $478,097 $426,686 $51,411 12.0% (1.0%) 0.1% 12.9%
United States 319,561 280,651 38,910 13.9% 0.1% 13.7%
International 158,536 146,035 12,501 8.6% (2.9%) 0.1% 11.4%
Water 33,108 31,030 2,078 6.7% (2.2%) 8.9%
United States 15,878 14,972 906 6.0% 6.0%
International 17,230 16,058 1,172 7.3% (4.4%) 11.8%
LPD 29,420 28,396 1,024 3.6% (3.4%) 7.0%
United States 3,502 3,576 (74) (2.1%) (2.1%)
International 25,918 24,820 1,098 4.4% (4.0%) 8.4%
Other 4,823 5,864 (1,041) (17.7%) (17.7%)
---
Total Company $545,448 $491,976 $53,472 10.9% (1.2%) 0.1% 12.0%
United States 340,692 301,457 39,235 13.0% 0.1% 12.9%
International 204,756 190,519 14,237 7.5% (3.1%) 10.5%
---
Three Months Ended
Reported Percentage Percentage Organic
September 30, September 30, Dollar Revenue Change from Change from Revenue
Net CAG Revenue 2018 2017 Change Growth(1) Currency Acquisitions Growth(1)
---
CAG Diagnostics recurring revenue: $409,162 $364,937 $44,225 12.1% (1.0%) 13.1%
IDEXX VetLab consumables 152,509 129,434 23,075 17.8% (1.3%) 19.1%
Rapid assay products 53,821 50,924 2,897 5.7% (0.6%) 6.3%
Reference laboratory diagnostic and consulting services 184,103 167,851 16,252 9.7% (0.8%) 10.5%
CAG Diagnostics services and accessories 18,729 16,728 2,001 12.0% (1.2%) 13.2%
CAG Diagnostics capital - instruments 31,561 29,119 2,442 8.4% (2.1%) 10.4%
Veterinary software, services and diagnostic imaging systems 37,374 32,630 4,744 14.5% (0.4%) 1.4% 13.5%
---
Net CAG revenue $478,097 $426,686 $51,411 12.0% (1.0%) 0.1% 12.9%
---
(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 Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Nine Months Ended
Reported Percentage Percentage Organic
September 30, September 30, Dollar Revenue Change from Change from Revenue
Net Revenue 2018 2017 Change Growth(1) Currency Acquisitions Growth(1)
---
CAG $1,456,417 $1,269,861 $186,556 14.7% 1.5% 0.1% 13.1%
United States 962,712 846,968 115,744 13.7% 0.1% 13.6%
International 493,705 422,893 70,812 16.7% 4.3% 12.4%
Water 94,909 85,531 9,378 11.0% 1.1% 9.8%
United States 45,539 42,357 3,182 7.5% 7.5%
International 49,370 43,174 6,196 14.4% 2.3% 12.1%
LPD 96,658 91,266 5,392 5.9% 3.1% 2.8%
United States 10,496 10,493 3
International 86,162 80,773 5,389 6.7% 3.5% 3.2%
Other 15,872 16,279 (407) (2.5%) 0.5% (3.0%)
---
Total Company $1,663,856 $1,462,937 $200,919 13.7% 1.5% 0.1% 12.1%
United States 1,024,889 905,765 119,124 13.2% 0.1% 13.0%
International 638,967 557,172 81,795 14.7% 4.0% 10.7%
---
Nine Months Ended
Reported Percentage Percentage Organic
September 30, September 30, Dollar Revenue Change from Change from Revenue
Net CAG Revenue 2018 2017 Change Growth(1) Currency Acquisitions Growth(1)
---
CAG Diagnostics recurring revenue: $1,252,876 $1,091,936 $160,940 14.7% 1.5% 13.2%
IDEXX VetLab consumables 460,642 385,081 75,561 19.6% 1.7% 17.9%
Rapid assay products 169,200 159,085 10,115 6.4% 0.7% 5.7%
Reference laboratory diagnostic and consulting services 568,308 498,218 70,090 14.1% 1.6% 12.5%
CAG Diagnostics services and accessories 54,726 49,552 5,174 10.4% 1.6% 8.8%
CAG Diagnostics capital - instruments 97,000 83,018 13,982 16.8% 2.1% 14.7%
Veterinary software, services and diagnostic imaging systems 106,541 94,907 11,634 12.3% 0.3% 1.1% 10.8%
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Net CAG revenue $1,456,417 $1,269,861 $186,556 14.7% 1.5% 0.1% 13.1%
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(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)
September 30, December 31,
2018 2017
Assets: Current Assets:
Cash and cash equivalents $146,877 $187,675
Marketable securities 284,255
Accounts receivable, net 264,563 234,597
Inventories 179,684 164,318
Other current assets 113,073 101,140
Total current assets 704,197 971,985
Property and equipment, net 409,980 379,096
Other long-term assets, net 430,353 362,335
Total assets $1,544,530 $1,713,416
Liabilities and Stockholders'
Equity (Deficit): Current Liabilities:
Accounts payable $65,457 $66,968
Accrued liabilities 238,431 253,418
Line of credit 414,500 655,000
Deferred revenue 41,149 29,181
Total current liabilities 759,537 1,004,567
Long-term debt 602,416 606,075
Other long-term liabilities, net 183,940 156,616
Total long-term liabilities 786,356 762,691
Total stockholders' deficit (1,604) (54,106)
Noncontrolling interest 241 264
Total stockholders' deficit (1,363) (53,842)
Total liabilities and stockholders'
deficit $1,544,530 $1,713,416
IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information
(Unaudited)
September 30, June 30, March 31, December 31, September 30,
2018 2018 2018 2017 2017
Selected Balance Sheet Information:
Days sales outstanding(1) 44.3 41.2 42.0 41.7 43.4
Inventory turns(2) 2.1 2.2 2.0 2.2 1.9
(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)
Nine Months Ended
September 30, September 30,
2018 2017
Operating: Cash Flows from Operating
Activities:
Net income $291,370 $224,979
Non-cash charges 99,386 80,856
Changes in assets and liabilities (126,320) (53,685)
Net cash provided by operating
activities 264,436 252,150
Investing: Cash Flows from Investing
Activities:
Purchases of property and equipment (82,642) (54,370)
Purchase of marketable securities (87) (269,798)
Proceeds from the sale and
maturities of marketable securities 284,125 224,816
Acquisitions of intangible assets (450) (320)
Acquisitions of businesses, net of
cash acquired (22,500) (14,529)
Net cash provided (used) by
investing activities 178,446 (114,201)
Financing: Cash Flows from Financing
Activities:
(Repayments) borrowings on revolving
credit facilities, net (240,500) 75,250
Payment of acquisition-related
contingent considerations (1,266)
Repurchases of common stock (263,712) (228,693)
Proceeds from exercises of stock
options and employee stock purchase
plans 34,595 31,314
Shares withheld for statutory tax
withholding on restricted stock (9,110) (7,829)
Net cash used by financing
activities (479,993) (129,958)
Net effect of changes in exchange
rates on cash (3,687) 6,127
Net (decrease) increase in cash and
cash equivalents (40,798) 14,118
Cash and cash equivalents, beginning
of period 187,675 154,901
Cash and cash equivalents, end of
period $146,877 $169,019
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
Nine Months Ended
September 30, September 30,
2018 2017
Free Cash Flow:
Net cash provided by operating activities $264,436 $252,150
Investing cash flows attributable to purchases of property and equipment (82,642) (54,370)
Free cash flow(1) $181,794 $197,780
(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 Nine Months Ended
September 30, September 30, September 30, September 30,
2018 2017 2018 2017
Shares repurchased in the open market 302 312 1,284 1,398
Shares acquired through employee surrender for statutory tax withholding 1 2 50 55
Total shares repurchased 303 314 1,334 1,453
Cost of shares repurchased in the open market $73,247 $50,413 $265,209 $215,320
Cost of shares for employee surrenders 390 370 9,110 7,829
Total cost of shares $73,637 $50,783 $274,319 $223,149
Average cost per share - open market repurchases $242.78 $161.57 $206.59 $153.99
Average cost per share - employee surrenders $253.34 $155.14 $181.68 $142.15
Average cost per share - total $242.83 $161.52 $205.65 $153.54
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SOURCE IDEXX Laboratories, Inc.
