IDEXX LABORATORIES, INC. WESTBROOK, Maine, Oct. 31, 2017 /PRNewswire/ --
-- Reports revenue growth of 10% on a reported basis and 9% on an organic
basis, driven by CAG Diagnostics recurring revenue growth of 12%
reported and 11% organic. Quarterly revenue growth was reduced by
approximately 2% by the combined impact of fewer equivalent days,
international distributor inventory changes and natural disaster impacts
-- Delivers EPS of $0.79, a 27% increase year over year on both a reported
and constant currency basis, including a $0.04 per share benefit from
accounting guidance related to share-based compensation and a $0.03
discrete tax benefit
-- Refines 2017 reported revenue guidance with a consistent midpoint
relative to prior outlook and updates 2017 revenue growth guidance to
10% - 10.5% on a reported basis and 9.5% - 10% on an organic basis
-- Increases EPS outlook range to $3.22 - $3.26, $0.07 above the midpoint
of prior guidance, reflecting $0.05 in discrete tax benefits and
expectations for higher 2017 operating margin improvement
-- Provides preliminary 2018 financial guidance for revenue growth of 9.5%
- 11.5% on a reported basis, 9% - 11% on an organic basis, and EPS of
$3.50 - $3.62
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 2017 of $492 million, an increase of 10% compared to the prior year period on a reported basis and 9% on an organic basis. Third quarter results were driven by 11% global organic growth in Companion Animal Group ("CAG") Diagnostics recurring revenue, despite more than 2% in estimated growth headwind from the combined impact of fewer equivalent days, international distributor inventory changes and natural disaster impacts.
Strong CAG Diagnostics recurring revenue growth reflects robust gains across modalities, including continued double-digit organic growth in global reference laboratory and IDEXX VetLab(®) consumables revenues. Third quarter revenue results were also supported by double-digit gains in both veterinary software, services and diagnostic imaging systems and the Water business. Overall organic revenue growth in the quarter was constrained by lower revenues in the Company's Livestock, Poultry and Dairy ("LPD") business related to end market demand dynamics, and growth in certain instrument placement programs that result in deferred instrument revenue recognition.
The Company is refining its full-year 2017 revenue guidance to a tighter range with the same midpoint as previous guidance, reflecting expectations for 12.5% - 13% organic growth in CAG Diagnostics recurring revenues. The Company is updating its full-year 2017 overall organic revenue growth outlook to 9.5% - 10%, incorporating projections for full-year natural disaster impacts, continued moderate near-term revenue declines in its LPD business and refinements to expectations for instrument revenues, based on higher expectations for deferred instrument revenues this year under current accounting standards. These impacts are offset by favorable foreign exchange rate changes.
The Company is increasing 2017 guidance for earnings per diluted share ("EPS") to $3.22 - $3.26, supported by updated expectations for 130 to 150 basis points in full-year constant currency operating margin improvement and $0.05 per share in projected discrete tax benefits. The Company is also providing preliminary 2018 guidance for organic revenue growth of 9% - 11%, driven by continued strong growth in CAG Diagnostics recurring revenues, and reported EPS of $3.50 - $3.62, supported by 75 to 125 basis points of reported and constant currency operating margin expansion. This 2018 EPS guidance reflects projected year over year EPS growth of 8% - 12%, or 15% - 19% on a comparable constant currency growth basis, which excludes the impact of the Company's adoption of share-based compensation accounting change (ASU 2016-09) and a discrete 2017 tax benefit related to a foreign tax credit.
"We are pleased with the continued strong momentum in our CAG Diagnostics recurring revenue growth around the world, as we partner with the veterinary profession to increase the standard of care. Our premium instrument placements were strong as well, including a 14% year over year increase in Catalyst® placements in the third quarter driven by a 19% increase in placements at competitive and new accounts, reflecting the demand for best-in-class technology and diagnostic insight," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer.
"We are on track toward delivery of strong EPS gains this year of 32% - 34% on a reported basis, or 18% - 20% on a comparable constant currency basis, supported by continued strong growth in CAG Diagnostics recurring revenue. This momentum, supported by a 20% year over year expansion of our premium instrument base, positions us to deliver continued strong financial performance in 2018, consistent with our long-term goals.
"We're looking forward to the launch of what we believe will be the next two significant IDEXX innovations, IDEXX SDMA(®) on a slide for use on our Catalyst in-house chemistry platform - expected to launch in the next few months - and SNAP Fecal Dx(TM) - expected to launch in mid-year 2018. These additions to in-house testing will complement our reference laboratory offering, further building awareness of these important and unique technologies, while advancing veterinary care and diagnostic utilization."
Third Quarter Performance Highlights
Third quarter revenue increased 10% to $492 million, supported by a 1% year over year benefit attributable to foreign exchange impact. EPS for the quarter was $0.79, an increase of 27% compared to third quarter 2016, on a reported and constant currency basis. These results include a $0.04 EPS benefit in the quarter from the adoption of the accounting guidance related to share-based compensation (ASU 2016-09) and a $0.03 EPS benefit from discrete tax benefits related to foreign tax credits.
Companion Animal Group
The Companion Animal Group generated 11% reported and 10% organic revenue growth for the quarter. CAG Diagnostics recurring revenue growth remained strong at 12% reported and 11% organic, despite an estimated aggregate headwind of more than 2% from fewer equivalent days in the quarter, distributor inventory changes in international markets and natural disaster impacts. Veterinary software services and diagnostic imaging systems revenues grew 11% on a reported basis and 10% on an organic basis.
-- IDEXX VetLab consumables generated reported revenue growth of 14% and
organic revenue growth of 13% in the quarter, despite an estimated 3%
aggregate headwind related to fewer equivalent days, international
distributor inventory changes and natural disaster impacts. Quarterly
growth was supported by continued expansion of our premium instrument
base in U.S. and international markets, as well as ongoing increases in
testing utilization and moderate price gains. IDEXX VetLab premium
diagnostic instrument placements grew 6% to 2,738, including 1,385
Catalysts, 848 premium hematology instruments and 505 IDEXX SediVue Dx®
analyzers. Prior-year instrument placement results included fulfillment
of approximately 160 SediVue Dx backlog orders following the Company's
second quarter launch. Excluding this fulfillment, premium instrument
placements grew approximately 13%, compared to third quarter 2016.
-- Reference laboratory diagnostic and consulting services revenue grew 14%
on a reported basis and 13% on an organic basis, despite an estimated 1%
aggregate headwind related to fewer equivalent days and natural disaster
impacts. Reference laboratory revenue growth reflected continued strong
gains globally, with higher gains in the U.S. supported by double-digit
growth in organic revenue per customer, net customer additions and
moderate pricing gains.
-- Rapid assay products had reported revenue growth of 5% and organic
revenue growth of 4%, despite an estimated 4% aggregate headwind related
to fewer equivalent days, international distributor inventory changes
and natural disaster impacts. Rapid assay revenue growth was supported
by continued growth in SNAP 4Dx(®) Plus Test revenues, driven by the
market's appreciation for the clinical superiority of IDEXX's
differentiated rapid assay portfolio.
Water
Reported revenue growth was 11% and organic revenue growth was 10% in the quarter, supported by continued solid volume growth in our core Colilert® products, solid net price realization and benefits from our go-direct initiatives.
Livestock, Poultry and Dairy ("LPD")
LPD revenue declined 5% on a reported basis and 7% on an organic basis for the quarter, due to lower milk prices around the world that have reduced producer demand for antibiotic residue testing, pregnancy testing and herd health screening for dairy cattle.
Gross Profit and Operating Profit
Gross profits increased 11%, and gross margin increased to 55.7% from 55.0% in the prior year period. The increase in gross margin was driven by strong CAG Diagnostics recurring revenue gains, supported by moderate net price realization and productivity improvements, aided by volume leverage. Constant currency gross margin was 55.9% for the quarter, 90 basis points higher than third quarter 2016.
Operating margin was 20.4% in the quarter, compared to 19.7% in the prior year period. On a constant currency basis, operating margin improved 80 basis points, compared to the prior year period, driven by gross margin gains, partially offset by accelerated growth in our sales and marketing investment, including our U.S. commercial expansion.
2017 and 2018 Financial Outlook
The following guidance for 2017 and 2018 reflects the assumptions that the value of the U.S. dollar relative to other currencies will remain at the following rates for the balance of 2017 and the full year of 2018: the euro at $1.16, the British pound at $1.30, the Canadian dollar at $0.78, the Australian dollar at $0.77, the Japanese yen at ¥114, the Chinese renminbi at RMB 6.71 and Brazilian real at R$3.20 to the U.S. dollar.
Outlook for 2017
We are refining our 2017 revenue outlook to $1,950 million - $1,960 million, narrowing our earlier guidance range. The refined revenue outlook reflects favorable adjustments to foreign exchange rate assumptions and incorporation of expectations for full-year unfavorable natural disaster impacts of $2 million, continued moderate near-term declines in LPD revenues and updated projections for instrument revenues, including estimates for placement program mix which will result in relatively higher levels of deferred instrument revenue in 2017 than projected in earlier guidance. These factors are incorporated in the updated full-year organic growth estimate of 9.5% - 10%. We are raising our 2017 EPS outlook to $3.22 - $3.26 per share, reflecting an incremental increase of $0.07 per share at the midpoint of our earlier guidance range from $0.05 in projected discrete tax benefits and $0.02 in operational improvement supported by expectations for relatively higher margin improvement. We are now projecting 2017 benefits from share-based compensation accounting changes of approximately $0.30 per share, or $0.02 per share below the midpoint of earlier estimates. These impacts are offset by $0.02 of improvement in our outlook for foreign exchange impacts at updated rate assumptions. The updated outlook represents EPS growth of 32% - 34% on both a reported and a constant currency basis, and 18% - 20% on a comparable constant currency growth basis.
The estimated $0.30 per share of EPS benefit in 2017 from adoption of accounting guidance related to share-based compensation, reflects an estimated $27 million reduction in our tax provision. These impacts may vary significantly by quarter based on the timing of actual settlement activity, and we estimate that $0.12 - $0.15 of the projected full-year 2017 benefit reflects higher than normal stock option exercising in 2017, a level of activity that is not expected to continue in future periods. For 2018 and future years, we estimate the annual benefit from share-based compensation will be approximately $13 million - $16 million assuming the current share price and no change in U.S. tax policy. Combined with the $0.05 in expected benefits related to discrete tax items recognized in 2017, we estimate that $0.17 - $0.20 of 2017 EPS benefit will not flow through to future years.
At assumed foreign exchange rates, we estimate that the effect of the stronger U.S. dollar will positively impact 2017 revenue by approximately 0.5%. We estimate that these foreign exchange rate changes will reduce reported 2017 EPS by $0.01, including the net impact from the lapping of approximately $4 million in 2016 hedge gains compared to projected hedge gains of approximately $1 million in 2017.
The Company provides the following updated guidance for 2017:
Amounts in millions except per share data and percentages
Guidance Range Growth Definition Y/Y Growth
-------------- ----------------- ----------
Revenue $1,950 - $1,960 Reported 10.0% - 10.5%
Organic Revenue Growth 9.5% - 10.0%
EPS $3.22 - $3.26 Reported 32% - 34%
Constant Currency 32% - 34%
Comparable Constant Currency 18% - 20%
Operating Cash Flow ~130% of net income
Free Cash Flow ~95% of net income
Capital Expenditures ~$90 million
We expect an effective tax rate of approximately 23.5%, incorporating expectations for a benefit from share-based compensation accounting of approximately 700 basis points and discrete benefit from foreign tax credits of approximately 100 basis points. We are projecting a reduction in weighted average shares outstanding of approximately 1.5%, net of a 0.5% accounting impact, and interest expense, net of interest income, of approximately $32 million - $33 million reflecting current and projected borrowings.
Outlook for 2018
The Company provides the following preliminary guidance for 2018:
Amounts in millions except per share data and percentage
Guidance Range Growth Definition Y/Y Growth
-------------- ----------------- ----------
Revenue $2,140 - $2,180 Reported 9.5% - 11.5%
Organic Revenue Growth 9% - 11%
EPS $3.50 - $3.62 Reported 8% - 12%
Constant Currency 7% - 11%
Comparable Constant Currency 15% - 19%
Our EPS outlook includes approximately $0.15 - $0.18 per share of projected benefit from the implementation of ASU 2016-09, related to accounting for the tax benefit of employee share-based compensation. Our preliminary outlook for our effective tax rate is 28.5% - 29% and for a reduction in weighted average shares outstanding from continued stock repurchases of approximately 1.0%. We are projecting interest expense, net of interest income, of $35 million - $36 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 increase 2018 reported revenue growth by approximately 0.5%, and EPS by approximately $0.02 per share.
The preliminary outlook represents EPS growth of 8% - 12% on a reported basis and 7% - 11% on a constant currency basis. Excluding the accounting change benefit and foreign currency impacts, our 2018 outlook reflects expectations for 15% - 19% comparable constant currency EPS growth, supported by an increase of 75 to 125 basis points in operating margins on a reported and 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 1-800-230-1092 or 1-612-288-0340 and reference confirmation code 431383. Replay of the conference call will be available through Tuesday, November 7, 2017 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 431383. 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 7,000 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 "2017 and 2018 Financial Outlook," "Outlook for 2017," "Outlook for 2018" 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 our product launches; revenue growth and EPS outlooks; operating and free cash flow forecast; projected natural disaster-related impacts; projected impact of foreign currency exchange rates and instrument placement program mix; and projected operating margins and expenses, capital expenditures, gains from foreign currency hedging transactions, tax and EPS benefits from share-based compensation arrangements, discrete tax benefits related to foreign tax credits, 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 2016 Annual Report on Form 10-K 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 provides information 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.
The following section defines terms and conventions used in this earnings release and/or the accompanying earnings conference call, including non-GAAP financial measures, and includes applicable information regarding reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as appropriate:
Accounting Standards Update 2016-09 (ASU 2016-09): Effective January 1, 2017, we adopted the FASB issued amendments which simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, recognition of share compensation award forfeitures, classification of awards as either equity or liabilities, the calculation of diluted shares outstanding and classification on the statement of cash flows.
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 increased third quarter 2017 revenue growth by 1%, reduced gross profit growth by 1%, reduced gross profit margin growth by 20 basis points, reduced operating profit margin growth by 10 basis points, and had an immaterial impact on EPS growth; are expected to increase projected full-year 2017 revenue growth by approximately 0.5%, reduce projected operating profit margin growth by 10 basis points, and reduce projected 2017 EPS growth by approximately 0.5%; are expected to increase projected full-year 2018 revenue growth by approximately 0.5% and projected 2018 EPS growth by approximately 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, 2017.
Growth and organic 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, 2017. See the constant currency note above for the impacts of estimated currency changes to the projected 2017 and 2018 organic revenue growth for the Company. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to acquisitions that have occurred since the beginning of the prior year period. For the calculation of projected 2017 and 2018 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 impact of the Company's adoption of share-based compensation accounting change (ASU 2016-09) for the periods after its adoption on January 1, 2017, as well as a discrete tax benefit described below. The adoption of ASU 2016-09 increased third quarter 2017 EPS growth by 6%, is expected to increase projected full-year 2017 EPS growth by 12%, and is expected to decrease projected full-year 2018 EPS growth by 6%. A discrete tax benefit related to the expected utilization of foreign tax credits increased third quarter 2017 EPS growth by 5%, is expected to increase projected full-year 2017 EPS growth by 2%, and is expected to decrease projected full-year 2018 EPS growth by 2%. 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, including tax benefits attributable to share-based compensation, 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, 2017 and 2016. Since adoption of ASU 2016-09 in 2017, the tax benefit from share-based compensation is included in cash generated from operations and will no longer be an adjustment in our free cash flow calculation. To estimate projected 2017 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of $90 million.
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,
2017 2016 2017 2016
---- ---- ---- ----
Revenue: Revenue $491,976 $448,308 $1,462,937 $1,332,427
Expenses and Income: Cost of revenue 217,974 201,578 638,029 597,617
--------------- ------- ------- ------- -------
Gross profit 274,002 246,730 824,908 734,810
Sales and marketing 88,818 79,972 263,755 236,453
General and administrative 57,186 52,627 165,560 156,239
Research and development 27,585 25,672 80,373 75,704
Income from operations 100,413 88,459 315,220 266,414
Interest expense, net (8,364) (6,935) (23,849) (21,695)
--------------------- ------ ------ ------- -------
Income before provision for income taxes 92,049 81,524 291,371 244,719
Provision for income taxes 21,535 25,072 66,392 75,036
-------------------------- ------ ------ ------ ------
Net Income: Net income 70,514 56,452 224,979 169,683
Less: Noncontrolling interest in subsidiary's earnings 3 (3) 92 7
------------------------------------------------------ --- --- --- ---
Net income attributable to stockholders $70,511 $56,455 $224,887 $169,676
Earnings per share: Basic $0.81 $0.63 $2.56 $1.89
------------------------- ----- ----- ----- -----
Earnings per share: Diluted $0.79 $0.62 $2.51 $1.87
--------------------------- ----- ----- ----- -----
Shares outstanding: Basic 87,537 89,894 87,884 89,881
------------------------- ------ ------ ------ ------
Shares outstanding: Diluted 89,256 91,138 89,735 90,960
--------------------------- ------ ------ ------ ------
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30, September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Operating Ratios Gross profit 55.7% 55.0% 56.4% 55.1%
(as a percentage of revenue): Sales, marketing, general and administrative expense 29.7% 29.6% 29.3% 29.5%
Research and development expense 5.6% 5.7% 5.5% 5.7%
-------------------------------- --- --- --- ---
Income from operations (1) 20.4% 19.7% 21.5% 20.0%
------------------------- ---- ---- ---- ----
(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
2017 Revenue 2016 Revenue
---- ------- ---- -------
Revenue: CAG $426,686 $385,288
Water 31,030 27,862
LPD 28,396 29,799
Other 5,864 5,359
----- ----- -----
Total $491,976 $448,308
----- -------- --------
Gross Profit: CAG $234,766 55.0% $208,205 54.0%
Water 21,629 69.7% 19,211 69.0%
LPD 14,656 51.6% 16,828 56.5%
Other 3,612 61.6% 2,785 52.0%
Unallocated Amounts (661) N/A (299) N/A
------------------- ---- --- ---- ---
Total $274,002 55.7% $246,730 55.0%
----- -------- ---- -------- ----
Income from Operations: CAG $89,271 20.9% $77,493 20.1%
Water 14,505 46.7% 12,442 44.7%
LPD 902 3.2% 3,026 10.2%
Other 2,114 36.1% 1,008 18.8%
Unallocated Amounts (6,379) N/A (5,510) N/A
------------------- ------ --- ------ ---
Total $100,413 20.4% $88,459 19.7%
----- -------- ---- ------- ----
Nine Months Ended Nine Months Ended
----------------- -----------------
September 30, Percent of September 30, Percent of
2017 Revenue 2016 Revenue
---- ------- ---- -------
Revenue: CAG $1,269,861 $1,143,150
Water 85,531 79,243
LPD 91,266 93,511
Other 16,279 16,523
----- ------ ------
Total $1,462,937 $1,332,427
----- ---------- ----------
Gross Profit: CAG $705,922 55.6% $618,968 54.1%
Water 59,756 69.9% 54,697 69.0%
LPD 51,183 56.1% 53,983 57.7%
Other 8,226 50.5% 7,999 48.4%
Unallocated Amounts (179) N/A (837) N/A
------------------- ---- --- ---- ---
Total $824,908 56.4% $734,810 55.1%
----- -------- ---- -------- ----
Income from Operations: CAG $277,857 21.9% $229,858 20.1%
Water 38,421 44.9% 34,864 44.0%
LPD 9,880 10.8% 12,665 13.5%
Other 3,275 20.1% (749) (4.5%)
Unallocated Amounts (14,213) N/A (10,224) N/A
------------------- ------- --- ------- ---
Total $315,220 21.5% $266,414 20.0%
----- -------- ---- -------- ----
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
------------------
Percentage Percentage Organic
September 30, September 30, Dollar Percentage Change from Change from Revenue
Net Revenue 2017 2016 Change Change Currency Acquisitions Growth (1)
----------- ---- ---- ------ ------ -------- ------------ ---------
CAG $426,686 $385,288 $41,398 10.7% 0.9% 0.3% 9.6%
United States 280,651 258,208 22,443 8.7% - 0.2% 8.5%
International 146,035 127,080 18,955 14.9% 2.8% 0.4% 11.8%
Water 31,030 27,862 3,168 11.4% 1.1% - 10.3%
United States 14,972 13,980 992 7.1% - - 7.1%
International 16,058 13,882 2,176 15.7% 2.3% - 13.4%
LPD 28,396 29,799 (1,403) (4.7%) 1.8% - (6.5%)
United States 3,576 3,463 113 3.3% - - 3.3%
International 24,820 26,336 (1,516) (5.8%) 2.0% - (7.8%)
Other 5,864 5,359 505 9.4% 0.4% - 9.1%
----- ----- ----- ---
Total Company $491,976 $448,308 $43,668 9.7% 1.0% 0.2% 8.5%
United States 301,457 277,240 24,217 8.7% - 0.2% 8.6%
International 190,519 171,068 19,451 11.4% 2.5% 0.3% 8.5%
------------- ------- ------- ------ ---- --- --- ---
Three Months Ended
------------------
Percentage Percentage Organic
September 30, September 30, Dollar Percentage Change from Change from Revenue
Net CAG Revenue 2017 2016 Change Change Currency Acquisitions Growth 1
--------------- ---- ---- ------ ------ -------- ------------ --------
CAG Diagnostics recurring revenue: $364,937 $324,603 $40,334 12.4% 0.9% 0.2% 11.3%
IDEXX VetLab consumables 129,434 113,964 15,470 13.6% 1.1% - 12.5%
Rapid assay products 50,924 48,720 2,204 4.5% 0.2% - 4.3%
Reference laboratory diagnostic and 167,851 146,672 21,179 14.4% 1.1% 0.5% 12.8%
consulting services
CAG Diagnostics services and accessories 16,728 15,247 1,481 9.7% 0.9% - 8.8%
CAG Diagnostics capital - instruments 29,119 31,255 (2,136) (6.8%) 0.9% - (7.7%)
Veterinary software, services and diagnostic imaging 32,630 29,430 3,200 10.9% 0.4% 0.9% 9.6%
systems
-------
Net CAG revenue $426,686 $385,288 $41,398 10.7% 0.9% 0.3% 9.6%
--------------- -------- -------- ------- ---- --- --- ---
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
-----------------
Percentage Percentage Organic
September 30, September 30, Dollar Percentage Change from Change from Revenue
Net Revenue 2017 2016 Change Change Currency Acquisitions Growth (1)
----------- ---- ---- ------ ------ -------- ------------ ---------
CAG $1,269,861 $1,143,150 $126,711 11.1% (0.3%) 0.2% 11.2%
United States 846,968 766,625 80,343 10.5% - 0.1% 10.4%
International 422,893 376,525 46,368 12.3% (1.1%) 0.4% 13.0%
Water 85,531 79,243 6,288 7.9% (0.4%) - 8.3%
United States 42,357 40,359 1,998 5.0% - - 5.0%
International 43,174 38,884 4,290 11.0% (0.8%) - 11.8%
LPD 91,266 93,511 (2,245) (2.4%) - - (2.4%)
United States 10,493 9,965 528 5.3% - - 5.3%
International 80,773 83,546 (2,773) (3.3%) - - (3.3%)
Other 16,279 16,523 (244) (1.5%) - - (1.5%)
----- ------ ------ ----
Total Company $1,462,937 $1,332,427 $130,510 9.8% (0.3%) 0.2% 9.9%
United States 905,765 821,937 83,828 10.2% - 0.1% 10.1%
International 557,172 510,490 46,682 9.1% (0.8%) 0.3% 9.7%
------------- ------- ------- ------ --- ----- --- ---
Nine Months Ended
-----------------
Percentage Percentage Organic
September 30, September 30, Dollar Percentage Change from Change from Revenue
Net CAG Revenue 2017 2016 Change Change Currency Acquisitions Growth (1)
--------------- ---- ---- ------ ------ -------- ------------ ---------
CAG Diagnostics recurring revenue: $1,091,936 $969,097 $122,839 12.7% (0.4%) 0.2% 12.8%
IDEXX VetLab consumables 385,081 336,493 48,588 14.4% (0.4%) - 14.8%
Rapid assay products 159,085 147,583 11,502 7.8% (0.2%) - 8.0%
Reference laboratory diagnostic and 498,218 440,514 57,704 13.1% (0.4%) 0.5% 13.0%
consulting services
CAG Diagnostics services and accessories 49,552 44,507 5,045 11.3% (0.5%) - 11.8%
CAG Diagnostics capital - instruments 83,018 86,063 (3,045) (3.5%) (0.5%) - (3.1%)
Veterinary software, services and diagnostic imaging 94,907 87,990 6,917 7.9% - 0.3% 7.5%
systems
-------
Net CAG revenue $1,269,861 $1,143,150 $126,711 11.1% (0.3%) 0.2% 11.2%
--------------- ---------- ---------- -------- ---- ----- --- ----
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,
2017 2016
---- ----
Assets: Current Assets:
Cash and cash equivalents $169,019 $154,901
Marketable securities 285,085 236,949
Accounts receivable, net 228,159 204,494
Inventories 176,749 158,034
Other current assets 83,710 91,206
-------------------- ------ ------
Total current assets 942,722 845,584
-------------------- ------- -------
Property and equipment, net 367,513 357,422
Other long-term assets, net 359,099 327,698
--------------------------- ------- -------
Total assets $1,669,334 $1,530,704
------------ ---------- ----------
Liabilities and Stockholders'
Equity (Deficit): Current Liabilities:
Accounts payable $60,583 $60,057
Accrued liabilities 220,507 236,131
Line of credit 686,250 611,000
Deferred revenue 29,203 27,380
---------------- ------ ------
Total current liabilities 996,543 934,568
------------------------- ------- -------
Long-term debt 604,149 593,110
Other long-term liabilities, net 117,033 111,239
-------------------------------- ------- -------
Total long-term liabilities 721,182 704,349
--------------------------- ------- -------
Total stockholders' equity (deficit) (48,622) (108,352)
Noncontrolling interest 231 139
----------------------- --- ---
Total stockholders' equity (deficit) (48,391) (108,213)
----------------------------------- ------- --------
Total liabilities and stockholders' equity (deficit) $1,669,334 $1,530,704
--------------------------------------------------- ---------- ----------
IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
September 30, June 30, March 31, December 31, September 30,
2017 2017 2017 2016 2016
---- ---- ---- ---- ----
Selected Balance Sheet Information:
Days sales outstanding (1) 43.4 41.7 42.4 42.1 42.4
Inventory turns (2) 1.9 2.0 1.9 2.0 1.8
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,
2017 2016
---- ----
Operating: Cash Flows from Operating Activities:
Net income $224,979 $169,683
Non-cash charges 80,856 84,198
Changes in assets and liabilities (53,685) (5,468)
Tax benefit from share-based compensation arrangements - (10,225)
------------------------------------------------------ --- -------
Net cash provided by operating activities 252,150 238,188
----------------------------------------- ------- -------
Investing: Cash Flows from Investing Activities:
Purchases of property and equipment (54,370) (49,956)
Purchase of marketable securities (269,798) (178,829)
Proceeds from the sale and maturities of marketable securities 224,816 152,277
Acquisitions of intangible assets (320) -
Acquisitions of businesses, net of cash acquired (14,529) -
------------------------------------------------ ------- ---
Net cash used by investing activities (114,201) (76,508)
------------------------------------- -------- -------
Financing: Cash Flows from Financing Activities:
Borrowings (repayments) on revolving credit facilities, net 75,250 (85,000)
Repurchases of common stock (228,693) (91,562)
Debt issue costs - (57)
Proceeds from exercises of stock options and employee stock purchase plans 31,314 28,815
Shares withheld for statutory tax withholding on restricted stock (7,829) (3,732)
Payment of acquisition-related contingent consideration - (3,633)
Tax benefit from share-based compensation arrangements - 10,225
------------------------------------------------------ --- ------
Net cash used by financing activities (129,958) (144,944)
------------------------------------- -------- --------
Net effect of changes in exchange rates on cash 6,127 4,342
----------------------------------------------- ----- -----
Net increase in cash and cash equivalents 14,118 21,078
----------------------------------------- ------ ------
Cash and cash equivalents, beginning of period 154,901 128,994
---------------------------------------------- ------- -------
Cash and cash equivalents, end of period $169,019 $150,072
---------------------------------------- -------- --------
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
Nine Months Ended
-----------------
September 30, September 30,
2017 2016
---- ----
Free Cash Flow: Net cash provided by operating activities $252,150 $238,188
Financing cash flows attributable to tax benefits from share-based compensation arrangements - 10,225
Investing cash flows attributable to purchases of property and equipment (54,370) (49,956)
------------------------------------------------------------------------ ------- -------
Free cash flow (1) $197,780 $198,457
----------------- -------- --------
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,
2017 2016 2017 2016
---- ---- ---- ----
Shares repurchased in the open market 312 142 1,398 1,119
Shares acquired through employee surrender for statutory tax withholding 2 2 55 56
Total shares repurchased 314 144 1,453 1,175
=== === ===== =====
Cost of shares repurchased in the open market 50,413 15,260 215,320 88,235
Cost of shares for employee surrenders 370 218 7,829 3,950
--- --- ----- -----
Total cost of shares 50,783 15,478 223,149 92,185
====== ====== ======= ======
Average cost per share - open market repurchases $161.57 $107.38 $153.99 $78.84
Average cost per share - employee surrenders $155.14 $112.91 $142.15 $70.33
Average cost per share - total $161.52 $107.46 $153.54 $78.43
Contact: Kerry Bennett, Investor Relations, 1-207-556-8155
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SOURCE IDEXX Laboratories, Inc.
