IDEXX LABORATORIES, INC. WESTBROOK, Maine, Jan. 30, 2015 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX) today reported revenues for the fourth quarter of 2014 of $352 million. Continued strong normalized organic revenue growth(1,2) was offset in the quarter by a one-time $25 million reduction in US channel inventory related to the Company's transition to a fully-direct CAG Diagnostics sales strategy in the US and foreign exchange impacts from a stronger US dollar, resulting in a 1% reported revenue decline. Adjusting for one-time channel inventory reductions, the effect of foreign exchange rate changes, and revenue attributable to acquisitions, normalized organic revenue growth for the quarter was 9%, and 10% for the full year, supported by 11.5% normalized organic growth in CAG Diagnostics recurring revenues in Q4 and 11.4% for the full year.
Earnings per diluted share ("EPS") was $0.54 for the fourth quarter and $3.58 for the year. Reported EPS includes impacts related to the transition to the all-direct CAG Diagnostics sales approach in the US of $0.41 per share for the fourth quarter and $0.45 for the full year 2014, consistent with expectations. Adjusted EPS(3), which excludes these impacts, was $3.99 for the full year including a $0.065 per share benefit from the 2014 extension of the federal research and development ("R&D") tax credit. Adjusted EPS grew 15% for the year despite a negative 3% growth impact related to changes in net foreign exchange rates.
"We are very pleased with the market and financial performance we achieved in the quarter, in particular the record levels of premium instrument placements that we reported earlier in the month and the continued strength in our CAG Diagnostics recurring revenue in both the US and international operations. CAG Diagnostics recurring revenue grew in total over 11% on a normalized organic basis," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer. "These results cap a year where we successfully accelerated our normalized organic revenue growth 3 points to 10%, while completing the transformation of our US Companion Animal Group to a fully-direct model."
"Our continued innovation includes the announcement of our new reference lab SDMA test for chronic kidney disease, as well as an advanced reference lab fecal panel for intestinal parasites. These introductions, along with Catalyst One(TM) and SNAP Pro(TM), will combine with a stronger presence with customers resulting from our US all-direct sales strategy and continued development of our international operations to drive continued advancement in the standard of care practiced by veterinary practices globally and our Company's profitable organic revenue growth. These significant accomplishments give us confidence that the enduring growth annuity of our CAG Diagnostics recurring revenue, which makes up over 70% of the Company's total annual revenue, will continue to exhibit strong growth in 2015 and years beyond. Reflecting our strong momentum, we are raising our guidance for 2015 normalized organic revenue growth to 13.5% to 14.5%," added Ayers.
Fourth Quarter Financial Performance Highlights
Fourth quarter revenue was $352 million, net of $25 million of impact related to reductions in US channel inventories. This one-time impact and foreign exchange rate changes which lowered reported revenue growth by 3%, resulted in a 1% reduction in reported revenues.
Underlying operating trends remained strong, reflected in fourth quarter normalized organic revenue growth of 9%. These results were supported by continued solid normalized organic revenue growth across regions and business segments.
-- Companion Animal Group ("CAG") normalized organic revenue growth was 9%
for the fourth quarter. Normalized CAG Diagnostics recurring organic
revenue growth of 11.5% benefited less than 1% from incremental margin
on sales through our US direct sales channel and was driven by 15% gains
in IDEXX VetLab(®) consumables and 13% growth in reference lab and
consulting services.
-- Catalyst placements increased 19% and premium hematology instrument
placements 23% in the fourth quarter compared to the prior-year period.
Instrument revenues in the fourth quarter of 2014 declined 9%
organically, reflecting the lower price point for Catalyst One, greater
instrument placements with a deferred revenue component including
placements associated with the Catalyst One introductory offer, and
lower average prices for certain instruments internationally.
-- Livestock, Poultry and Dairy ("LPD") organic revenue growth(2) was 10%
for the fourth quarter, primarily as a result of strong worldwide bovine
product volume.
-- Water's organic revenue growth was also 10% in the fourth quarter,
supported by worldwide customer acquisitions.
Gross margins for the fourth quarter decreased to 51.8% from 53.3% in the prior-year period, primarily due to transitional expenses associated with expanding US distribution and the impact of US channel inventory reductions on product mix, both associated with the transition to the US all-direct sales model. Adjusting for these impacts, comparable gross margins increased moderately benefitting from lower product costs and modest net price increases.
Operating expenses for the fourth quarter increased 16%, or 8% excluding $10 million of expenses associated with the transition to an all-direct sales strategy for US CAG Diagnostics, reflecting planned increases in global commercial resources.
Operating margin decreased from 17.3% in the prior-year period to 9.9% for the fourth quarter. This reduction entirely reflects the transitional impacts related to the all-direct CAG Diagnostics sales strategy implementation in the US. The following table adjusts fourth quarter and full-year operating margin results to normalize for these effects:
Amounts in millions
Fourth Quarter, 2014 Total Year, 2014
-------------------- ----------------
Operating Revenue Operating
Profit Profit
Revenue
-------
Reported $352.0 $34.8 $1,485.8 $260.3
Impact of distributor inventory drawdown 25.1 20.8 25.1 20.8
Non-recurring transition costs 5.2 9.5
Expense ramp-up in advance of transition to new sales strategy 4.6 5.0
--- ---
Adjusted $377.1 $65.4 $1,510.9 $295.6
Operating margin (normalized)4 17.3% 19.6%
The accompanying financial tables provide more information concerning our revenue and other operating results for the three months and twelve months ended December 31, 2014.
Financial Outlook for 2015
The Company is updating its financial guidance, in part to reflect the significant strengthening of the US dollar relative to foreign currencies. At current foreign exchange rates, we estimate that the effect of the stronger US dollar will adversely impact 2015 reported revenue growth by approximately 5% and EPS by an estimated $0.22 per share compared to rates in effect in 2014. Compared to assumptions used in our prior guidance for 2015 provided during our third quarter earnings call on October 24, 2014, the continued strengthening of the US dollar has the effect of lowering projected revenue by approximately $55 million and EPS by $0.13 per share. These effects are mitigated by the Company's raised expectation for normalized organic revenue growth and assumptions for a 30% effective tax rate, resulting in a net $0.05 per share reduction in our 2015 EPS guidance range compared to our prior guidance provided in October of 2014.
The Company provides the following updated guidance for 2015:
Amounts in millions except per share data and percentages
Guidance Range Growth Definition Year-over-Year
Growth
------
Revenue $1,640 - $1,660 Normalized Organic Revenue
Growth(2) 13.5% to 14.5%
Normalized Organic Revenue
Growth,
Excluding Margin Capture5 10% to 11%
Reported 10% to 12%
EPS $4.33 - $4.43 Adjusted 9% to 11%(3)
Reported 21% to 24%
Free Cash Flow6 90% - 100% of net income
Capital Expenditures ~$85
The guidance above reflects the assumptions that the value of the US dollar relative to other currencies will remain at our current assumptions of the euro at $1.12, the British pound at $1.50, the Canadian dollar at $0.80, the Australian dollar at $0.81 and the Japanese yen at ¥120 to the US dollar for the full year of 2015.
The favorable deferred revenue impact of our Catalyst One introductory offer is expected to increase revenue growth for the full year 2015 by approximately 0.5%. Changes in net foreign exchange rates are projected to reduce Adjusted EPS growth by 6% in 2015.
We expect an effective tax rate of 30%. This outlook has not assumed that the federal R&D tax credit, which benefited EPS by $0.065 per share in 2014, will be renewed in 2015. The comparison of 2015 guidance excluding the federal R&D tax credit, to 2014 results including this tax credit, reduces projected Adjusted EPS growth by 2%.
We are projecting a reduction in weighted average shares outstanding of approximately 6.5% to 7.0%, and interest expense, net of interest income, of approximately $27 to $28 million reflecting current and projected borrowings.
Statement Regarding Non-GAAP Financial Measures
The following provides information regarding certain measures used in this earnings release that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to herein 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 are useful for period-over-period comparisons of the performance of the Company's business. 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. See the notes to this earnings release for information regarding these non-GAAP financial measures and the reconciliations included in the notes and elsewhere in this earnings release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its fourth quarter results and management's outlook. To participate in the conference call, dial 1-800-230-1092 or 1-612-332-0530 and reference confirmation code 351513. An audio replay will be available through Friday, February 6, 2015 by dialing 1-320-365-3844 and referencing replay code 351513.
The call will also be available via live or archived webcast on the IDEXX Laboratories' website at http://www.idexx.com and will be available for one year.
http://photos.prnewswire.com/prnvar/20110602/NE13041LOGO
About IDEXX Laboratories, Inc.
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 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 6,000 people and offers products to customers in over 175 countries.
(1) All references to growth and organic growth refer to growth compared to the equivalent period in 2013.
(2) Normalized organic revenue growth and organic revenue growth are non-GAAP financial measures Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Organic revenue growth for the fourth quarter of 2014 excludes the impact of changes in foreign currency exchange rates, which had a 3% unfavorable impact on revenue growth, and revenue from business acquisitions, which contributed 0.5% to revenue growth. Organic revenue growth for the full year of 2014 excludes the impact of changes in foreign currency exchange rates, which had a 0.7% unfavorable impact on revenue growth, and revenue from business acquisitions, which contributed 0.6% to revenue growth. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and twelve months ended December 31, 2014. Management also believes that reporting normalized organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue growth performance with prior and future periods. Our rapid assay products and VetLab instrument consumables are currently sold by third party distributors, who purchase products from us and sell them to end users, such as veterinary practices. As a result, distributor inventory levels have an impact on our reported sales, and distributor inventory levels may be affected by many factors, which may not be directly related to underlying end-user demand for our products. Notably, the estimated impact of a one-time reduction in projected revenue in the fourth quarter of 2014 associated with the drawdown of inventory held by distributors related to our transition to an all-direct CAG Diagnostics sales strategy in the US (heretofore referred to as the all-direct transition) has been added back to 2014 estimated reported revenue to calculate estimated 2015 normalized organic revenue growth. Normalized organic revenue growth excludes the impact of changes in our significant distributors' inventory levels on organic revenue growth for the relevant period. We are unable to obtain data for sales to end users from certain less significant third party distributors internationally. We do not believe the impact of changes in these international distributors' inventories would have a material impact on our growth rates. Reconciliation of organic revenue growth to normalized organic revenue growth for the fourth quarter of 2014 includes the following negative impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 7.3%, US 12.2%, International 0.5%, CAG Diagnostics Recurring 10.8%; VetLab consumables 18.2%, and Rapid Assay 28.5%. Reconciliation of organic revenue growth to normalized organic revenue growth for the full year of 2014 includes the following negative impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 2.0%, US 3.2%, International 0.3%, CAG Diagnostics Recurring 2.8%; VetLab consumables 4.6%, and Rapid Assay 7.4%.
(3) Adjusted EPS and Adjusted EPS growth are non-GAAP financial measures. Management believes that reporting Adjusted EPS provides useful information to investors by facilitating easier comparisons of our EPS performance with prior and future periods. For the fourth quarter 2014 comparison to the prior-year period, Adjusted EPS and Adjusted EPS growth exclude impacts related to the all-direct transition. For the total year 2014 comparison to the prior year, Adjusted EPS and Adjusted EPS growth exclude impacts in the second half of 2014 related to the all-direct transition, a non-recurring income tax benefit related to the deferral of intercompany profits recorded in the third quarter of 2014, a charge resulting from a third-party service provider bankruptcy in 2013, and the full year impact of the federal R&D tax credit associated with the 2012 tax year that was recorded in the first quarter of 2013. For the total year projected 2015 comparison to 2014, 2014 excludes impacts in the second half of 2014 related to the all-direct transition and a non-recurring income tax benefit related to the deferral of intercompany profits recorded in the third quarter of 2014. See the supplementary analysis of results in financial tables for a reconciliation of EPS to Adjusted EPS for the three and twelve months ended December 31, 2014.
(4) Operating margin (normalized) is a non-GAAP financial measure. Management believes that reporting operating margin after normalizing for all-direct transition impacts provides useful information to investors by facilitating easier comparisons of our operating margin performance with prior and future periods.
(5) Normalized organic revenue growth excluding margin capture is a non-GAAP financial measure. Management believes that reporting normalized organic revenue growth excluding margin capture provides useful information to investors by facilitating easier comparisons of our normalized organic revenue growth performance with prior and future periods. Normalized organic revenue growth excluding margin capture is normalized organic revenue growth as described in the footnote 2 above, adjusted to exclude the impact of margin gained in 2014 and 2015 from selling our products directly to our US based customers as opposed to through third party distributors.
(6) 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, excluding tax benefits attributable to share-based compensation arrangements, reduced by the Company's investments in fixed assets. 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 fixed assets that are required to operate the business. See the supplementary analysis of results below for our calculation of free cash flow for the twelve months ended December 31, 2014 and 2013. With respect to this particular forward-looking projected non-GAAP financial measure, the Company is unable to provide a quantitative reconciliation as the inputs to the measurement are difficult to predict and estimate and are primarily dependent on future events.
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 can be identified by the use of words such as "expects," "may," "anticipates," "intends," "would," "will," "plans," "believes," "estimates," "should," and similar words and expressions. These statements are based on management's expectation of future events as of the date of this earnings 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 successfully execute its strategy, including supporting its all-direct sales strategy in the US; the Company's ability to develop, manufacture, introduce and market new products and enhancements to existing products; the Company's ability to achieve cost improvements in its worldwide network of laboratories and in the manufacture and service of in-clinic instruments;the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the effectiveness of the Company's sales and marketing activities; the Company's ability to manufacture complex biologic products; the impact of a change to our relationship with the Company's distributors;the impact of distributor purchasing decisions on sales of the Company's products that are sold through distribution; the Company's ability to manage the risks associated with the use of distributors to sell the Company's products; the impact of increased competition and technological advances by our competitors; the promotion and sale of our competitors' products by our former US distribution partners; 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 veterinary hospital consolidation, and the prevalence of buying consortiums on the markets for the Company's products; 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; changes in testing patterns or practices in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; a failure or perceived failure to comply with regulations and our policies regarding the privacy and protection of user data; the effect of any strengthening of the rate of exchange for the US dollar; the impact of a weak economy on demand for the Company's products and services or increased customer credit risk; the effects of operations outside the US, including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions and local business and cultural factors; the impact of the Company's limited experience and small scale in the human point-of-care market; the effects of interruptions to the Company's operations due to natural or man-made disasters, system failures or disruptions or security breaches; the effect on the Company's stock price if quarterly or annual operating results do not meet expectations of market analysts or investors in future periods; potential exposures related to our worldwide provision for income taxes and the potential loss of tax incentives; and the Company's ability to obtain financing on favorable terms. 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, 2013 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014,in the sections captioned "Risk Factors," as well as the Company's other periodic reports filed or to be filed with the Securities and Exchange Commission.
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Revenue: Revenue $351,959 $354,073 $1,485,807 $1,377,058
Expenses and
Income: Cost of revenue 169,794 165,408 669,691 620,940
--------------- ------- ------- ------- -------
Gross profit 182,165 188,665 816,116 756,118
Sales and marketing 77,238 66,694 283,708 243,492
General and administrative 45,257 38,147 173,890 157,861
Research and development 24,869 22,496 98,263 88,003
------------------------ ------ ------ ------ ------
Income from operations 34,801 61,328 260,255 266,762
Interest expense, net (4,939) (1,369) (13,700) (3,501)
--------------------- ------ ------ ------- ------
Income before provision for income taxes 29,862 59,959 246,555 263,261
Provision for income taxes 3,911 16,722 64,604 75,467
-------------------------- ----- ------ ------ ------
Net Income: Net income 25,951 43,237 181,951 187,794
Less: Noncontrolling interest in subsidiary's
earnings (10) (21) 45 (6)
-------- --- --- --- ---
Net income attributable to stockholders $25,961 $43,258 $181,906 $187,800
Earnings per share: Basic $0.54 $0.83 $3.63 $3.53
------------------------- ----- ----- ----- -----
Earnings per share: Diluted $0.54 $0.82 $3.58 $3.48
--------------------------- ----- ----- ----- -----
Shares outstanding: Basic 47,750 51,961 50,047 53,159
------------------------- ------ ------ ------ ------
Shares outstanding: Diluted 48,430 52,737 50,751 53,985
--------------------------- ------ ------ ------ ------
IDEXX Laboratories, Inc. and Subsidiaries
Adjusted Earnings per Share: Diluted (Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Adjusted Earnings per share: Diluted (as Reported) $0.54 $0.82 $3.58 $3.48
Earnings Incremental expenses associated with plan
per Share to transition to an all-direct sales strategy:
Non-recurring transition costs 0.07 - 0.12 -
Expense ramp-up in advance of
transition to new sales strategy 0.06 - 0.06 -
Impact of distributor inventory drawdown 0.28 - 0.27 -
Non-recurring income tax benefit related to
the deferral of intercompany profits - - (0.04) -
Third-party service provider bankruptcy - - - 0.05
Federal R&D tax credit related to 2012 - - - (0.05)
Adjusted earnings per share: Diluted(1) $0.95 $0.82 $3.99 $3.48
-------------------------------------- ----- ----- ----- -----
(1)Amounts presented may not recalculate due to rounding.
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Operating Gross profit 51.8% 53.3% 54.9% 54.9%
Ratios (as a Sales, marketing, general and
percentage of administrative expense 34.8% 29.6% 30.8% 29.1%
revenue): Research and development expense 7.1% 6.4% 6.6% 6.4%
Income from operations(1) 9.9% 17.3% 17.5% 19.4%
------------------------ --- ---- ---- ----
(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
------------------ ------------------
December 31, Percent of December 31, Percent of
2014 Revenue 2013 Revenue
---- ------- ---- -------
Revenue: CAG $287,846 $293,552
Water 23,070 21,662
LPD 33,650 32,363
Other 7,393 6,496
Total $351,959 $354,073
----- -------- --------
Gross Profit: CAG $142,569 49.5% $152,034 51.8%
Water 15,545 67.4% 14,082 65.0%
LPD 20,627 61.3% 18,264 56.4%
Other 4,106 55.5% 3,415 52.6%
Unallocated Amounts (682) N/A 870 N/A
------------------- ---- --- --- ---
Total $182,165 51.8% $188,665 53.3%
----- -------- ---- -------- ----
Income from
Operations: CAG $24,289 8.4% $51,268 17.5%
Water 9,715 42.1% 8,639 39.9%
LPD 6,546 19.5% 4,983 15.4%
Other 1,345 18.2% 517 8.0%
Unallocated Amounts (7,094) N/A (4,079) N/A
------------------- ------ --- ------ ---
Total $34,801 9.9% $61,328 17.3%
----- ------- --- ------- ----
Year Ended Year Ended
---------- ----------
December 31, Percent of December 31, Percent of
2014 Revenue 2013 Revenue
---- ------- ---- -------
Revenue: CAG $1,236,855 $1,150,169
Water 94,725 87,959
LPD 127,388 113,811
Other 26,839 25,119
Total $1,485,807 $1,377,058
----- ---------- ----------
Gross Profit: CAG $665,477 53.8% $616,335 53.6%
Water 62,924 66.4% 58,218 66.2%
LPD 79,239 62.2% 62,534 54.9%
Other 14,236 53.0% 12,650 50.4%
Unallocated Amounts (5,760) N/A 6,381 N/A
------------------- ------ --- ----- ---
Total $816,116 54.9% $756,118 54.9%
----- -------- ---- -------- ----
Income from
Operations: CAG $213,109 17.2% $218,645 19.0%
Water 39,262 41.4% 37,321 42.4%
LPD 24,215 19.0% 14,159 12.4%
Other 2,479 9.2% 2,405 9.6%
Unallocated Amounts (18,810) N/A (5,768) N/A
------------------- ------- --- ------ ---
Total $260,255 17.5% $266,762 19.4%
----- -------- ---- -------- ----
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
------------------
Net Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
2014 2013 Growth(3)
Change Change Change from Change from
Currency(1) Acquisitions(2)
---
CAG $287,846 $293,552 $(5,706) (1.9%) (2.7%) 0.6% 0.2%
Water 23,070 21,662 1,408 6.5% (3.1%) - 9.6%
LPD 33,650 32,363 1,287 4.0% (5.8%) - 9.8%
Other 7,393 6,496 897 13.8% (0.6%) - 14.4%
----- ----- ----- --- ---- ----- --- ----
Total $351,959 $354,073 $(2,114) (0.6%) (3.0%) 0.5% 1.9%
----- -------- -------- ------- ----- ----- --- ---
Three Months Ended
------------------
Net Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
Growth(3)
2014 2013
Change Change Change from Change from
Currency(1) Acquisitions(2)
---
United States $190,685 $200,014 $(9,329) (4.7%) - 0.2% (4.9%)
International 161,274 154,059 7,215 4.7% (7.5%) 0.9% 11.3%
Total $351,959 $354,073 $(2,114) (0.6%) (3.0%) 0.5% 1.9%
----- -------- -------- ------- ----- ----- --- ---
Three Months Ended
------------------
Net CAG Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
Growth(3)
2014 2013
Change Change Change from Change from
Currency(1) Acquisitions(2)
---
CAG Diagnostics recurring revenue: $235,084 $238,897 $(3,813) (1.6%) (2.7%) 0.4% 0.7%
VetLab consumables 76,992 81,820 (4,828) (5.9%) (2.8%) - (3.1%)
VetLab service and accessories 13,051 13,363 (312) (2.3%) (2.8%) - 0.5%
Rapid assay products 26,319 36,365 (10,046) (27.6%) (1.1%) - (26.5%)
Reference laboratory diagnostic 118,722 107,349 11,373 10.6% (3.3%) 1.0% 12.9%
and consulting services
CAG Diagnostics capital - instruments 24,117 27,790 (3,673) (13.2%) (4.3%) - (8.9%)
Customer information management and digital imaging systems 28,645 26,865 1,780 6.6% (0.6%) 2.0% 5.2%
Net CAG revenue $287,846 $293,552 $(5,706) (1.9%) (2.7%) 0.6% 0.2%
--------------- -------- -------- ------- ----- ----- --- ---
(1) The percentage change from currency is a non-GAAP financial measure. Effective January 1, 2014, this measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the three months ended December 31, 2014 and the same period of the prior year applied to foreign currency-denominated revenues for the three months ended December 31, 2013. Under the Company's methodology used prior to January 1, 2014,
the Company calculated the percentage change in revenue resulting from the difference between the average exchange rates during the most recently completed three-month period and the same period of the prior year applied to foreign currency-denominated revenues for the most recently completed three-month period. This change in methodology, which was implemented to achieve operational efficiencies, is not deemed material.
(2) The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the three months ended December 31, 2014 compared to the three months ended December 31, 2013 attributed to acquisitions subsequent to September 30, 2013.
3 Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three months ended December 31, 2014 compared to the three months ended December 31, 2013 net of acquisitions and the effect of changes in foreign currency exchange rates.
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)
Years Ended
-----------
Net Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
2014 2013
Change Change Change from Change from Growth(3)
Currency(1) Acquisitions(2)
--- ---
CAG $1,236,855 $1,150,169 $86,686 7.5% (0.8%) 0.3% 8.0%
Water 94,725 87,959 6,766 7.7% (0.4%) 1.0% 7.1%
LPD 127,388 113,811 13,577 11.9% (0.7%) 4.0% 8.6%
Other 26,839 25,119 1,720 6.8% - - 6.8%
----- ------ ------ ----- --- --- --- ---
Total $1,485,807 $1,377,058 $108,749 7.9% (0.7%) 0.6% 8.0%
----- ---------- ---------- -------- --- ----- --- ---
Years Ended
-----------
Net Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
2014 2013
Change Change Change from Change from Growth(3)
Currency(1) Acquisitions(2)
--- ---
United States $848,925 $802,346 $46,579 5.8% - 0.1% 5.7%
International 636,882 574,712 62,170 10.8% (1.7%) 1.3% 11.2%
Total $1,485,807 $1,377,058 $108,749 7.9% (0.7%) 0.6% 8.0%
----- ---------- ---------- -------- --- ----- --- ---
Years Ended
-----------
Net CAG Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
2014 2013
Change Change Change from Change from Growth(3)
Currency(1) Acquisitions(2)
--- ---
CAG Diagnostics recurring revenue: $1,053,410 $973,886 $79,524 8.2% (0.7%) 0.3% 8.6%
VetLab consumables 341,397 312,457 28,940 9.3% (0.6%) - 9.9%
VetLab service and accessories 53,383 50,675 2,708 5.3% (0.8%) - 6.1%
Rapid assay products 165,647 169,547 (3,900) (2.3%) (0.4%) - (1.9%)
Reference laboratory diagnostic 492,983 441,207 51,776 11.7% (0.9%) 0.5% 12.1%
and consulting services
CAG Diagnostics capital - instruments 79,626 83,492 (3,866) (4.6%) (1.2%) - (3.4%)
Customer information management and digital imaging systems 103,819 92,791 11,028 11.9% (0.5%) 0.5% 11.9%
Net CAG revenue $1,236,855 $1,150,169 $86,686 7.5% (0.8%) 0.3% 8.0%
--------------- ---------- ---------- ------- --- ----- --- ---
(1) The percentage change from currency is a non-GAAP financial measure. Effective January 1, 2014, this measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the year ended December 31, 2014 and the prior year applied to foreign currency-denominated revenues for the year ended December 31, 2013. Under the Company's methodology used prior to
January 1, 2014, the Company calculated the percentage change in revenue resulting from the difference between the average exchange rates during the most recently completed year end and the prior year applied to foreign currency-denominated revenues for the most recently completed year end. This change in methodology, which was implemented to achieve operational efficiencies, is not deemed material.
(2) The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the year ended December 31, 2014 compared to the year ended December 31, 2013 attributed to acquisitions subsequent to December 31, 2012.
3 Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the year ended December 31, 2014 compared to the year ended December 31, 2013 net of acquisitions and the effect of changes in foreign currency exchange rates.
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)
December 31, December 31,
2014 2013
---- ----
Assets: Current Assets:
Cash and cash equivalents $322,536 $279,058
Accounts receivable, net 152,380 158,038
Inventories 160,342 133,427
Other current assets 124,140 82,183
-------------------- ------- ------
Total current assets 759,398 652,706
-------------------- ------- -------
Property and equipment, net 303,587 281,214
--------------------------- ------- -------
Other long-term assets, net 321,226 296,596
--------------------------- ------- -------
Total assets $1,384,211 $1,230,516
------------ ---------- ----------
Liabilities and
Stockholders'
Equity: Current Liabilities:
Accounts payable $44,743 $29,941
Accrued liabilities 195,351 148,919
Debt 549,000 278,035
Deferred revenue 31,812 21,458
---------------- ------ ------
Total current liabilities 820,906 478,353
------------------------- ------- -------
Long-term debt, net of current portion 350,000 150,359
Other long-term liabilities 95,716 83,590
--------------------------- ------ ------
Total long-term liabilities 445,716 233,949
--------------------------- ------- -------
Total stockholders' equity 117,516 518,186
Noncontrolling interest 73 28
----------------------- --- ---
Total equity 117,589 518,214
------------ ------- -------
Total liabilities and stockholders'
equity $1,384,211 $1,230,516
------------------------------------ ---------- ----------
IDEXX Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information (Unaudited)
December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013
---- ---- ---- ---- ----
Selected
Balance Sheet Days sales outstanding(1) 40.6 39.2 40.8 42.8 39.9
Information: Inventory turns(2) 1.7 1.8 1.8 1.8 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
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
Years Ended
-----------
December 31, December 31,
2014 2013
---- ----
Operating: Cash Flows from Operating Activities:
Net income $181,951 $187,794
Non-cash charges 79,691 75,423
Changes in assets and liabilities (9,718) (3,063)
Tax benefit from share-based compensation arrangements (16,078) (14,158)
------------------------------------------------------
Net cash provided by operating activities 235,846 245,996
----------------------------------------- ------- -------
Investing: Cash Flows from Investing Activities:
Purchases of property and equipment (60,523) (77,612)
Proceeds from disposition of pharmaceutical product lines - 3,500
Acquisitions of intangible assets (175) (1,024)
Proceeds from sale of equity investment 5,400 -
Acquisitions of a business, net of cash acquired (25,115) (10,923)
Net cash used by investing activities (80,413) (86,059)
------------------------------------- ------- -------
Financing: Cash Flows from Financing Activities:
Borrowings on revolving credit facilities, net 272,000 65,000
Issuance of long-term debt 200,000 150,000
Payment of notes payable (1,394) (1,107)
Repurchases of common stock (618,158) (367,761)
Debt issue costs (1,406) (976)
Proceeds from the exercise of stock options and employee stock purchase plans 29,442 38,235
Tax benefit from share-based compensation arrangements 16,078 14,158
------
Net cash used by financing activities (103,438) (102,451)
------------------------------------- -------- --------
Net effect of changes in exchange rates on cash (8,517) (2,414)
----------------------------------------------- ------ ------
Net increase in cash and cash equivalents 43,478 55,072
----------------------------------------- ------ ------
Cash and cash equivalents, beginning of period 279,058 223,986
---------------------------------------------- ------- -------
Cash and cash equivalents, end of period $322,536 $279,058
---------------------------------------- -------- --------
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow(1)
Amounts in thousands (Unaudited)
Years Ended
-----------
December 31, December 31,
2014 2013
---- ----
Free Cash
Flow: Net cash provided by operating activities $235,846 $245,996
Financing cash flows attributable to tax benefits from share-based
compensation arrangements 16,078 14,158
Purchases of property and equipment (60,523) (77,612)
----------------------------------- ------- -------
Free cash flow $191,401 $182,542
-------------- -------- --------
(1) Free cash flow is a non-GAAP
financial measure and is
calculated from cash generated
from operations, excluding tax
benefits attributable to share-
based compensation arrangements,
reduced by the Company's
investments in fixed assets.
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 fixed
assets that are required to
operate the business. Management
also believes this is a common
financial measure useful to
further evaluate the results of
operations.
IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases
Amounts in thousands except per share data (Unaudited)
Three Months Ended Years Ended
------------------ -----------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
---- ---- ---- ----
Share repurchases during the period 1,138 814 4,925 4,001
Average price paid per share $131.57 $104.44 $126.69 $93.05
Shares remaining under repurchase authorization as of December 31, 2014 totaled 3,081,303.
Share repurchases include shares surrendered by employees in payment for the minimum required
withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock
units.
Contact: Ed Garber, Director, Investor Relations, 1-207-556-8155
Logo - http://photos.prnewswire.com/prnh/20110602/NE13041LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/idexx-laboratories-announces-fourth-quarter-results-300028323.html
SOURCE IDEXX Laboratories, Inc.
