IDEXX LABORATORIES, INC. WESTBROOK, Maine, Feb. 2, 2017 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reports revenues for the fourth quarter of 2016 of $443 million, an increase of 11% compared to the prior year period on a reported basis and 12% on an organic basis. Fourth quarter results were supported by accelerated gains in Companion Animal Group ("CAG") Diagnostics recurring revenue and continued high growth in premium instrument placements. Earnings per diluted share ("EPS") was $0.58 for the fourth quarter, representing 21% growth year-over-year on a reported basis, and 33% on a constant currency basis.
Revenue for the full year of $1,775 million increased 11% on both a reported and organic basis, driven by 12% reported and organic growth in global CAG Diagnostics recurring revenue. For the full year 2016, EPS of $2.44 grew 19% versus 2015 on a reported basis and 25% on an Adjusted constant currency basis, supported by 100 basis points of reported operating margin improvement, or 170 basis points of improvement on an Adjusted constant currency basis. Based on its strong 2016 performance and momentum in executing its innovation and commercial strategies, the Company is reaffirming its full year 2017 organic revenue growth outlook of 9% - 10.5%, and raising its EPS guidance range to $2.85 - $3.01, supported by continued operating margin expansion aligned with its long-term goals. The higher 2017 EPS guidance reflects $0.07 per share in sustained improvement from higher than expected 2016 operating profits, as well as from higher estimated EPS benefits related to the implementation of the new accounting standard for the tax benefit of employee share-based compensation, which offset impacts from updated foreign exchange estimates.
"Our fourth quarter and full year performance demonstrates the power of innovation to improve the standard of care for pets and drive the growth of veterinary services. We are delighted to have delivered such strong results for our shareholders, achieving the high end of our 2016 revenue guidance and beating our earnings expectations," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer. "Through our best-in-class commercial organization, we continue to deepen our partnership with our customers, furthering the growth of the profession and our recurring revenues.
"Our foundation has never been stronger. In 2016, we placed a record number of premium chemistry instruments, premium hematology instruments and 1,575 IDEXX SediVue(®) Dx instruments, the industry's first-and-only in-house urine sediment analyzer. Our expanding global installed base of instruments will support continued attractive growth of our durable, recurring consumable revenue stream.
"IDEXX is positioned to thrive in a positive economic growth environment. We're pleased to reaffirm our revenue guidance and raise our earnings outlook for 2017, based on our strong 2016 performance, consistent with our long-term financial goals."
Fourth Quarter Performance Highlights
Fourth quarter revenue increased 11% to $443 million, after absorbing an approximately 1% headwind attributable to foreign exchange impact. EPS for the quarter was $0.58, an increase of 21% compared to the fourth quarter 2015. EPS growth on a constant currency basis for the quarter was 33%, excluding a $0.06 per share impact related to net unfavorable changes in foreign exchange.
Companion Animal Group
CAG generated 13% reported and 14% organic revenue growth for the quarter, supported by CAG Diagnostics recurring organic revenue growth of 13% and instrument organic revenue growth of 24%.
-- IDEXX VetLab(®) consumables reported revenue grew 17% and organic
revenue grew 18%, propelled by our expanding premium instrument base in
US and international markets. IDEXX VetLab premium diagnostic
instrument placements grew 15% to a record number of 3,167, including
1,493 Catalysts, 1,128 premium hematology instruments and 546 IDEXX
SediVue Dx analyzers.
-- Reference laboratory diagnostic and consulting services revenue grew 12%
on a reported and 13% on an organic basis, with strong contributions
across regions, and continued traction of IDEXX SDMA(TM), our novel
kidney function test, now launched worldwide.
-- Rapid assay products generated solid reported and organic revenue growth
of 6%, supported by continued growth in SNAP 4Dx(®) Plus Test and
Specialty SNAP revenues.
Livestock, Poultry and Dairy ("LPD")
Reported and organic revenue declined 1% for the quarter as declines in bovine disease eradication testing in Europe and in herd health screening were partially offset by strong testing gains in emerging markets.
Water
Reported revenue growth was 1% and organic revenue growth was 3% for the quarter, supported by continued strong volume growth in our core Colilert(®) franchise across major regions, offset by inventory adjustments related to go-direct initiatives and by lapping of strong revenue in fourth quarter 2015 associated with the 2015 launch of the Quanti-Tray(®) Sealer PLUS and increased testing due to a cryptosporidium outbreak in the UK.
Gross Profit and Operating Profit
Gross profits increased 11%, and gross margin decreased slightly to 54.3% from 54.5% in the prior year period. The decrease in gross margin was due to currency impacts, primarily related to the lapping of $6 million in 2015 foreign exchange hedge gains. Constant currency gross margin was 55.4% for the quarter, 90 basis points higher than fourth quarter 2015, driven by solid price gains, volume leverage in consumable costs and reference lab operations, as well as improvements in practice management service offerings.
Operating margins were 18.9% in the quarter, 220 basis points higher than the prior year period operating margin of 16.7%, reflecting benefits from strong revenue gains and operating expense leverage.
2017 Financial Outlook
The Company is maintaining its 2017 revenue outlook of $1,910 million - $1,935 million, reflecting our strong 2016 performance, offset by updated assumptions related to foreign exchange rates, as noted below. At these rates compared to rates in effect in 2016, we estimate that the effect of the stronger US dollar will adversely impact 2017 reported revenue growth by approximately 1.5%, EPS growth by 2 - 3%, and EPS by an estimated $0.06 per share, including the net impact from projected hedge gains of approximately $7 million in 2017 compared to $4 million in 2016 hedge gains.
We are increasing our 2017 EPS outlook to $2.85 - $3.01 per share, reflecting targeted growth of 17% - 23% on a reported basis and 19% - 26% EPS constant currency growth, reflecting the new Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting, which we estimate will result in $0.12 - $0.16 of EPS benefit in 2017 (an increase of $0.04 compared to earlier estimates). The Company is projecting free cash flow at approximately 95% of net income in 2017, reflecting continued discipline in inventory management and capital spending. The implementation of ASU 2016-09, which has the effect of increasing reported net income with no impact on cash flow, is projected to reduce the Company's free cash flow as a percentage of net income by 5%, from what would have been approximately 100% of net income under previous GAAP.
The guidance for 2017 reflects the assumptions that the value of the US dollar relative to other currencies will remain at the following rates: euro at $1.06, British pound at $1.23, Canadian dollar at $0.75, Australian dollar at $0.75 and Japanese yen at ¥117, Chinese yuan at ¥6.93, Brazilian real at R$3.23 to the US dollar for the full year of 2017.
The Company provides the following updated guidance for 2017:
Amounts in millions except per share data and percentages
Guidance Range Growth Definition Year-over-year
Growth
------
Revenue $1,910 - $1,935 Reported 7.5% - 9%
Organic Revenue Growth 9% - 10.5%
EPS $2.85 - $3.01 Reported 17% - 23%
Constant Currency 19% - 26%
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 26% - 27.5%, after a projected reduction of 350 - 450 basis points related to the implementation of the new accounting standard for the tax benefit of employee share-based compensation. We are projecting a reduction in weighted average shares outstanding of approximately 1.5%, net of 0.5% related to the implementation of the new accounting standard for the tax benefit of employee share-based compensation, and interest expense, net of interest income, of approximately $32 million - $33 million reflecting current and projected borrowings.
For a quick-reference snapshot of the Company's quarterly and full year performance, please visit www.idexx.com/investors.
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 1-800-230-1074 or 1-651-291-0278 and reference confirmation code 415457. An audio replay will be available through Thursday, February 9, 2017 by dialing 1-800-475-6701 or 1-320-365-3844 and referencing replay code 415457.
The call will also be available via live or archived webcast on the IDEXX Laboratories' website at www.idexx.com/investors and will be available for one year.
About IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. is a member of Standard & Poor's 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.
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:
Adjusted EPS, Adjusted EPS growth, Adjusted operating profit and Adjusted operating margin - Adjusted EPS, Adjusted EPS growth, Adjusted operating profit and Adjusted operating margin are non-GAAP financial measures. Adjusted EPS, Adjusted operating profit and Adjusted operating margin exclude from the prior year period reported earnings, the third quarter 2015 non-cash software impairment charge of $8.2 million, which represents approximately 50 basis points in operating margin and $0.06 per share in EPS for the full year 2015. The Adjusted EPS growth calculation for the full year 2016 uses Adjusted EPS for the applicable prior year period.
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, EPS and Adjusted 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 reduced fourth quarter 2016 gross profit growth by 3%, gross margin by 1%, operating profit growth by 10%, and Adjusted EPS growth by 11%; reduced full year 2016 revenue growth by 3%, gross margin by less than 1%, operating profit growth by 8%, and Adjusted EPS growth by 6%; reduced projected 2017 revenue growth by approximately 1.5% and projected 2017 constant currency EPS growth by approximately 2-3%. 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 months and year ended December 31, 2016.
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 years ended December 31, 2016 and 2015. Upon our adoption of ASU 2016-09 in 2017, the tax benefit from share-based compensation will be 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.
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 - Organic revenue growth is a non-GAAP financial measure. Organic revenue growth 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 months and year ended December 31, 2016. See commentary above for the impacts of constant currency to the projected 2017 organic revenue growth for the Company. For projected 2017 revenue growth, the impacts of revenue from acquisitions is immaterial.
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 Financial Outlook" and elsewhere and 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. Our forward-looking statements include statements relating to our revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates; and projected operating margins, capital expenditures, gains from foreign currency hedging transactions, tax benefits from share-based compensation arrangements, effective tax rate, 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, 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 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 from existing and new technologies 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, decisions regarding labeling, manufacturing and marketing products and regulations impacting the use of certain substances currently used in our products or processes; the impact of consolidation and reference laboratory vertical integration among our customers, including 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 impact of disruptions, attacks or breaches of information systems, including to our customers' information systems via our products and services that connect to and are part of the "Internet of Things"; the effect of any adverse changes in the financial markets on the value of the Company's investment portfolio; 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, 2015 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016,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.
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 Years Ended
------------------ -----------
December 31, December 31, December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
Revenue: Revenue $442,996 $399,685 $1,775,423 $1,601,892
Expenses and
Income: Cost of revenue 202,370 181,990 799,987 711,622
--------------- ------- ------- ------- -------
Gross profit 240,626 217,695 975,436 890,270
Sales and marketing 80,605 76,495 317,058 299,955
General and administrative 50,778 48,793 207,017 182,510
Research and development 25,418 25,496 101,122 99,681
Impairment charge - - - 8,212
----------------- --- --- --- -----
Income from operations 83,825 66,911 350,239 299,912
Interest expense, net (6,698) (7,126) (28,393) (26,771)
--------------------- ------ ------ ------- -------
Income before provision for income taxes 77,127 59,785 321,846 273,141
Provision for income taxes 24,756 15,395 99,792 81,006
-------------------------- ------ ------ ------ ------
Net Income: Net income 52,371 44,390 222,054 192,135
Less: Noncontrolling interest in subsidiary's
earnings 2 41 9 57
-------- --- --- --- ---
Net income attributable to stockholders $52,369 $44,349 $222,045 $192,078
Earnings per share: Basic $0.59 $0.49 $2.47 $2.07
------------------------- ----- ----- ----- -----
Earnings per share: Diluted $0.58 $0.48 $2.44 $2.05
--------------------------- ----- ----- ----- -----
Shares outstanding: Basic 89,294 90,841 89,732 92,601
------------------------- ------ ------ ------ ------
Shares outstanding: Diluted 90,589 91,788 90,884 93,649
--------------------------- ------ ------ ------ ------
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
Three Months Ended Years Ended
------------------ -----------
December 31, December 31, December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
Operating Gross profit 54.3% 54.5% 54.9% 55.6%
Ratios (as a Sales, marketing, general and
percentage of administrative expense 29.7% 31.3% 29.5% 30.6%
revenue): Research and development expense 5.7% 6.4% 5.7% 6.2%
Income from operations(1) 18.9% 16.7% 19.7% 18.7%
------------------------ ---- ---- ---- ----
(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
2016 Revenue 2015 Revenue
---- ------- ---- -------
Revenue: CAG $379,539 $336,055
Water 24,336 24,178
LPD 32,980 33,366
Other 6,141 6,086
Total $442,996 $399,685
----- -------- --------
Gross Profit(1): CAG $201,354 53.1% $175,690 52.3%
Water 17,181 70.6% 17,292 71.5%
LPD 19,818 60.1% 21,024 63.0%
Other 3,562 58.0% 2,980 49.0%
Unallocated Amounts (1,289) N/A 709 N/A
------------------- ------ --- --- ---
Total $240,626 54.3% $217,695 54.5%
----- -------- ---- -------- ----
Income from
Operations(1): CAG $71,484 18.8% $50,233 14.9%
Water 10,838 44.5% 10,798 44.7%
LPD 6,249 18.9% 7,561 22.7%
Other 1,633 26.6% 549 9.0%
Unallocated Amounts (6,379) N/A (2,230) N/A
------------------- ------ --- ------ ---
Total $83,825 18.9% $66,911 16.7%
----- ------- ---- ------- ----
Year Ended Year Ended
---------- ----------
December 31, Percent of December 31, Percent of
2016 Revenue 2015 Revenue
---- ------- ---- -------
Revenue: CAG $1,522,689 $1,356,287
Water 103,579 96,884
LPD 126,491 127,143
Other 22,664 21,578
Total $1,775,423 $1,601,892
----- ---------- ----------
Gross Profit(1): CAG $820,322 53.9% $729,303 53.8%
Water 71,878 69.4% 68,953 71.2%
LPD 73,801 58.3% 79,987 62.9%
Other 11,561 51.0% 10,281 47.6%
Unallocated Amounts (2,126) N/A 1,746 N/A
------------------- ------ --- ----- ---
Total $975,436 54.9% $890,270 55.6%
----- -------- ---- -------- ----
Income from
Operations(1): CAG $301,342 19.8% $233,319 17.2%
Water 45,702 44.1% 44,752 46.2%
LPD 18,914 15.0% 27,157 21.4%
Other 884 3.9% (137) (0.6%)
Unallocated Amounts (16,603) N/A (5,179) N/A
------------------- ------- --- ------ ---
Total $350,239 19.7% $299,912 18.7%
----- -------- ---- -------- ----
(1)Effective January 1, 2016, we modified our management reporting to provide a more comprehensive view of the performance of our operating segments by including the capitalization of variances between standard and actual manufacturing costs,
which adjust the timing of cost recognition from when the variance is created to the period in which the related inventory is sold. Prior to January 1, 2016, the capitalization and subsequent recognition of these variances were not allocated to
our operating segments and were instead reported under the caption "Unallocated Amounts". The segment gross profit and income (loss) from operations within this report for the three and twelve months ended December 31, 2015 has been
retrospectively revised to reflect this change to our reportable segments.
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Domestic and International Markets and by Product and Service Categories
Amounts in thousands (Unaudited)
Three Months Ended
------------------
Net Revenue December 31,
2016 December 31, Dollar Percentage Percentage Percentage Organic Revenue
Growth(3)
2015 Change Change Change from Change from
Currency(1) Acquisitions(2)
---
CAG $379,539 336,055 $43,484 12.9% (0.8%) - 13.7%
United States 250,395 222,065 28,330 12.8% - - 12.8%
International 129,144 113,990 15,154 13.3% (2.4%) - 15.7%
Water 24,336 24,178 158 0.7% (2.0%) - 2.7%
United States 12,493 11,498 995 8.7% - - 8.7%
International 11,843 12,680 (837) (6.6%) (3.5%) - (3.1%)
LPD 32,980 33,366 (386) (1.2%) (0.4%) - (0.8%)
United States 3,289 3,760 (471) (12.5%) - - (12.5%)
International 29,691 29,606 85 0.3% (0.5%) - 0.8%
Other 6,141 6,086 55 0.9% (0.1%) - 1.0%
Total Company $442,996 $399,685 $43,311 10.8% (0.9%) - 11.7%
United States $267,730 $238,595 $29,135 12.2% - - 12.2%
International $175,266 $161,090 $14,176 8.8% (2.0%) - 10.8%
Three Months Ended
------------------
Net CAG Revenue December 31,
2016 December 31, 2015 Dollar Percentage Percentage Percentage Organic Revenue Growth(3)
Change Change Change from Change from
Currency(1) Acquisitions(2)
---
CAG Diagnostics recurring
revenue5: $312,162 $277,402 $34,760 12.5% (0.9%) - 13.4%
IDEXX VetLab consumables 114,973 98,433 16,540 16.8% (1.1%) - 17.9%
Rapid assay products 41,539 39,317 2,222 5.7% - - 5.7%
Reference laboratory diagnostic 140,553 125,411 15,142 12.1% (1.0%) - 13.1%
and consulting services
CAG Diagnostics service and accessories5 15,097 14,241 856 6.0% (0.6%) - 6.6%
CAG Diagnostics capital - instruments5 35,130 28,547 6,583 23.1% (0.9%) - 24.0%
Veterinary software, services and
diagnostic imaging systems4 32,247 30,106 2,141 7.1% - - 7.1%
Net CAG revenue $379,539 $336,055 $43,484 12.9% (0.8%) - 13.7%
--------------- -------- -------- ------- ---- ----- --- ----
(1)The percentage change from
currency is a non-GAAP
financial measure. This measure
represents the percentage
change in revenue resulting
from the difference between the
average exchange rates during
the three months ended December
31, 2016 and the same period of
the prior year applied to
foreign currency-denominated
revenues for the three months
ended December 31, 2015.
(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,
2016 compared to the three
months ended December 31, 2015
attributed to acquisitions
since the beginning of the
prior year period.
(3)Organic revenue growth is a
non-GAAP financial measure and
represents the percentage
change in revenue during the
three months ended December 31,
2016 compared to the three
months ended December 31, 2015
net of acquisitions and the
effect of changes in foreign
currency exchange rates.
4During the second quarter of
2016, we renamed our customer
information management and
diagnostic imaging systems line
of business in the CAG segment
to veterinary software,
services and diagnostic imaging
systems. Financial results were
not adjusted as a result of
this name change.
5 During the fourth quarter of
2016, we modified our
management reporting to rename
IDEXX VetLab service and
accessories to CAG Diagnostics
service and accessories and
reclassified the location of
SNAP Pro service plans
previously located in CAG
Diagnostics capital -
instruments to CAG Diagnostics
service and accessories. The
amount of revenue reclassified
was $0.3 million during the
fourth quarter of 2015, and
$0.4 million during the fourth
quarter of 2016.
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Domestic and International Markets and by Product and Service Categories
Amounts in thousands (Unaudited)
Years Ended
-----------
Net Revenue December 31, 2016 December 31, Dollar Percentage Percentage Percentage Organic Revenue
Growth(3)
2015 Change Change Change from Change from
Currency(1) Acquisitions(2)
---
CAG 1,522,689 1,356,287 166,402 12.3% (0.6%) 0.3% 12.6%
United States 1,017,065 912,822 104,243 11.4% - 0.2% 11.2%
International 505,624 443,465 62,159 14.0% (2.0%) 0.5% 15.5%
Water 103,579 96,884 6,695 6.9% (1.8%) - 8.7%
United States 52,852 48,677 4,175 8.6% - - 8.6%
International 50,727 48,207 2,520 5.2% (3.7%) - 8.9%
LPD 126,491 127,143 (652) (0.5%) (1.6%) - 1.1%
United States 13,253 14,041 (788) (5.6%) - - (5.6%)
International 113,238 113,102 136 0.1% (1.8%) - 1.9%
Other 22,664 21,578 1,086 5.0% (0.1%) - 5.1%
Total Company 1,775,423 1,601,892 173,531 10.8% (0.8%) 0.2% 11.4%
United States 1,089,595 980,321 109,274 11.1% 0.1% 0.2% 10.9%
International 685,828 621,571 64,257 10.3% (2.1%) 0.4% 12.0%
Years Ended
-----------
Net CAG Revenue December 31, December 31, Dollar Percentage Percentage Percentage Organic Revenue
Growth(3)
2016 2015 Change Change Change from Change from
Currency(1) Acquisitions(2)
--- ---------- ---------------
CAG Diagnostics recurring
revenue5: $1,281,262 $1,147,026 $134,236 11.7% (0.7%) 0.4% 12.0%
IDEXX VetLab consumables 451,456 396,526 54,930 13.9% (0.8%) - 14.7%
Rapid assay products 189,122 182,670 6,452 3.5% - - 3.5%
Reference laboratory
diagnostic 581,067 512,155 68,912 13.5% (0.9%) 0.8% 13.6%
and consulting services
CAG Diagnostics service and 59,617 55,675 3,942 7.1% (0.3%) - 7.4%
accessories5
CAG Diagnostics capital -
instruments5 121,191 98,502 22,689 23.0% (0.7%) - 23.7%
Veterinary software, services
and diagnostic imaging
systems4 120,236 110,759 9,477 8.6% (0.2%) - 8.8%
Net CAG revenue $1,522,689 $1,356,287 $166,402 12.3% (0.6%) 0.3% 12.6%
--------------- ---------- ---------- -------- ---- ----- --- ----
(1)The percentage change from
currency is a non-GAAP
financial measure. This measure
represents the percentage
change in revenue resulting
from the difference between the
average exchange rates during
the year ended December 31,
2016 and the same period of the
prior year applied to foreign
currency-denominated revenues
for the year ended December 31,
2015.
(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, 2016
compared to the year ended
December 31, 2015 attributed to
acquisitions since the
beginning of the prior year
period.
(3)Organic revenue growth is a
non-GAAP financial measure and
represents the percentage
change in revenue during the
year ended December 31, 2016
compared to the year ended
December 31, 2015 net of
acquisitions and the effect of
changes in foreign currency
exchange rates.
4During the second quarter of
2016, we renamed our customer
information management and
diagnostic imaging systems line
of business in the CAG segment
to veterinary software,
services and diagnostic imaging
systems. Financial results were
not adjusted as a result of
this name change.
5 During the fourth quarter of
2016, we modified our
management reporting to rename
IDEXX VetLab service and
accessories to CAG Diagnostics
service and accessories and
reclassified the location of
SNAP Pro service plans
previously located in CAG
Diagnostics capital -
instruments to CAG Diagnostics
service and accessories. The
amount of revenue reclassified
was $0.5 million during the
year ended December 31, 2015,
and $1.4 million during the
year ended December 31, 2016.
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
Amounts in thousands (Unaudited)
December 31, December 31,
2016 2015
---- ----
Assets: Current Assets:
Cash and cash equivalents $154,901 $128,994
Marketable securities 236,949 213,591
Accounts receivable, net 204,494 188,318
Inventories 158,034 188,833
Other current assets 91,206 101,898
-------------------- ------ -------
Total current assets 845,584 821,634
-------------------- ------- -------
Property and equipment, net 357,422 333,026
Other long-term assets, net 327,698 320,333
--------------------------- ------- -------
Total assets $1,530,704 $1,474,993
------------ ---------- ----------
Liabilities and
Stockholders'
Equity (deficit): Current Liabilities:
Accounts payable $60,057 $52,648
Accrued liabilities 236,131 205,530
Line of credit 611,000 573,000
Deferred revenue 27,380 25,583
---------------- ------ ------
Total current liabilities 934,568 856,761
------------------------- ------- -------
Long-term debt 593,110 597,085
Other long-term liabilities, net 111,239 105,142
-------------------------------- ------- -------
Total long-term liabilities 704,349 702,227
--------------------------- ------- -------
Total stockholders' equity (deficit) (108,352) (84,125)
Noncontrolling interest 139 130
----------------------- --- ---
Total stockholders' equity (deficit) (108,213) (83,995)
----------------------------------- -------- -------
Total liabilities and stockholders' equity
(deficit) $1,530,704 $1,474,993
------------------------------------------ ---------- ----------
IDEXX Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information (Unaudited)
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Selected
Balance Sheet Days sales outstanding(1) 42.1 42.4 41.5 43.7 43.3
Information: Inventory turns(2) 2.0 1.8 1.7 1.6 1.5
(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)
Years Ended
-----------
December 31, December 31,
2016 2015
---- ----
Operating: Cash Flows from Operating Activities:
Net income $222,054 $192,135
Non-cash charges 124,217 105,355
Changes in assets and liabilities 3,002 (69,811)
Tax benefit from share-based compensation (14,702) (11,315)
-----------------------------------------
Net cash provided by operating activities 334,571 216,364
----------------------------------------- ------- -------
Investing: Cash Flows from Investing Activities:
Purchases of property and equipment (64,787) (82,921)
Purchase of marketable securities (227,894) (271,958)
Proceeds from the sale and maturities of marketable
securities 203,859 56,775
Acquisitions of businesses, net of cash acquired (1,964) (10,302)
Net cash used by investing activities (90,786) (308,406)
------------------------------------- ------- --------
Financing: Cash Flows from Financing Activities:
Borrowings (repayments) on revolving credit facilities, net 38,000 24,000
Issuance of long-term debt - 250,097
Repurchases of common stock (304,086) (401,981)
Debt issue costs (56) (1,380)
Proceeds from the exercise of stock options and employee stock
purchase plans 38,344 22,397
Payment of acquisition-related contingent consideration (4,728) -
Tax benefit from share-based compensation 14,702 11,315
------
Net cash used by financing activities (217,824) (95,552)
------------------------------------- -------- -------
Net effect of changes in exchange rates on cash (54) (5,948)
----------------------------------------------- --- ------
Net increase (decrease) in cash and cash equivalents 25,907 (193,542)
---------------------------------------------------- ------ --------
Cash and cash equivalents, beginning of period 128,994 322,536
---------------------------------------------- ------- -------
Cash and cash equivalents, end of period $154,901 $128,994
---------------------------------------- -------- --------
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow(1)
Amounts in thousands (Unaudited)
Years Ended
-----------
December 31, December 31,
2016 2015
---- ----
Free Cash
Flow: Net cash provided by operating activities $334,571 $216,364
Financing cash flows attributable to tax benefits from share-based
compensation 14,702 11,315
Investing cash flows attributable to purchases of property and
equipment (64,787) (82,921)
--------------------------------------------------------------- ------- -------
Free cash flow $284,486 $144,758
-------------- -------- --------
(1)Free cash flow is a non-GAAP financial measure and is calculated from cash generated from operations, 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. 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,
2016 2015 2016 2015
---- ---- ---- ----
Share repurchases during the period 1,951 1,313 3,071 5,659
Shares surrendered by employees in payment for minimum
required withholding taxes due on share based compensation 4 4 60 69
--- ---
Total number of shares purchased(1) 1,955 1,317 3,131 5,728
----- -----
Average price paid per share(1) $115.22 $71.08 $101.96 $71.90
Shares remaining under repurchase authorization as of December 31, 2016 totaled 3,735,508.
(1)Shares repurchased and acquired through employee surrender for payment of minimum required withholding taxes on and
before June 15, 2015
and the associated average cost per share have been adjusted to reflect the June 2015 two-for-one stock split.
Actual shares repurchased
were approximately 4,313,000 for the year ended December 31, 2015.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/idexx-laboratories-announces-fourth-quarter-and-full-year-2016-results-300400933.html
SOURCE IDEXX Laboratories, Inc.
