WESTBROOK - IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced fourth quarter and full year results.
Fourth Quarter and Full Year Results
The Company reports revenues of $902 million for the fourth quarter of 2023, an increase of 9% compared to the prior year period on a reported basis and 8% on an organic basis driven by Companion Animal Group ('CAG') growth of 10% reported and 9% organic. CAG Diagnostics recurring revenue gains of 11% reported and 10% organic in the quarter were supported by continued benefits from IDEXX execution drivers including high quality placements of CAG Diagnostics capital instruments across regions, high customer retention, new business gains, and net price realization. CAG revenue gains also reflect double-digit veterinary software, services and diagnostic imaging systems recurring revenue growth as reported and organically, supported by strong software solution placement growth and a continued shift to cloud-based products.
Earnings per diluted share ('EPS') were $2.32 for the fourth quarter, an increase of 13% as reported and 17% on a comparable basis. Results reflect operating margin contraction of 10 basis points as reported and expansion of 60 basis points on a comparable basis. Fourth quarter EPS included $0.04 per share negative impact from currency changes and $0.02 per share in tax benefits from share-based compensation. Fourth quarter EPS also benefit by $0.10 per share from the release of tax valuation allowances in certain jurisdictions which lowered the full year effective tax rate by approximately 100 basis points.
Revenue for the full year of $3,661 million increased 9% as reported and organically, driven by 10% reported and 10.5% organic growth in CAG Diagnostics recurring revenue.
'Outstanding execution by IDEXX's commercial and operations teams supported delivery of strong organic revenue growth and financial results for the Company in 2023. We're excited about our sustained business momentum, supported by partnerships with our customers, that will be further enabled by key innovations we are advancing across our instrument platforms, test menu and software offerings. This includes the launch of our new revolutionary slide-free cellular analyzer, IDEXX inVue Dx targeted for late 2024,' said Jay Mazelsky, President and Chief Executive Officer. 'Our performance and progress demonstrate that customers of all types appreciate the purpose-built solutions that we provide and utilize these tools and services to deliver increased standards of care while realizing critical efficiency gains.'
For the full year 2023, EPS of $10.06 increased 25% on a reported basis and 29% on a comparable basis, including a 12% EPS growth benefit related to $80 million of discrete in-license of technology in 2022 and a $16 million customer contract resolution in 2023. EPS results reflect operating margin expansion of 330 basis points as reported and 390 basis points on a comparable basis, including a 280 basis point benefit from the discrete in-license of technology and customer contract resolution. EPS results include a $0.24 negative impact from currency changes and $0.16 in tax benefits from share-based compensation.
The Company's 2024 revenue guidance range reflects full year growth of 7.5% - 10.5% as reported and 7% - 10% on an organic basis, supported by 7.5% - 10.5% reported and organic CAG Diagnostics recurring revenue growth. The guidance range for global CAG Diagnostics recurring revenue growth reflects goals for sustained benefits from execution drivers, supporting continued solid volume gains, and an estimated 5% full year benefit from net price improvement. 2024 EPS guidance of $10.84 - $11.33 reflects expectations for solid organic revenue gains and a targeted 20 - 70 basis points of reported operating margin improvement net of a 40 basis point negative impact from lapping the 2023 customer contract resolution.
Fourth Quarter Performance Highlights
Companion Animal Group
The Companion Animal Group generated 10% reported revenue growth for the fourth quarter. CAG Diagnostics organic recurring revenue growth of 10% reflects solid gains across IDEXX's major modalities globally, supported by growth in clinical service demand and expanded utilization of diagnostic products and services.
Strong global growth was achieved across IDEXX's testing modalities.
IDEXX VetLab consumables generated 14% reported and 13% organic revenue growth reflecting double-digit gains across U.S. and International regions, supported by global premium instrument installed base growth, high customer retention levels and net price gains.
Reference laboratory diagnostic and consulting services generated 8% reported and 7% organic revenue growth, reflecting high single-digit growth in the U.S. and sustained solid organic revenue growth in International regions.
Rapid assay products generated 9% revenue growth as reported and organically, reflecting continued solid volume gains in the U.S. and benefits from net price increases.
Veterinary software, services and diagnostic imaging systems revenue growth increased 6% as reported and organically compared to strong prior year performance levels, supported by double-digit growth in recurring revenues and strong interest in cloud-based veterinary software solutions.
Water
Water achieved revenue growth of 6% on a reported basis and 5% on an organic basis, reflecting benefits from net price improvement and solid gains in the U.S. and Europe, moderated by lower revenues in China and year-end order timing.
Livestock, Poultry and Dairy ('LPD')
LPD revenue declined 2% on a reported basis and 4% on an organic basis as solid core product growth in the U.S. and Europe was offset by declines in herd health screening and China revenues.
Gross Profit and Operating Profit
Gross profits increased 9%. Gross margins of 58.4% contracted 20 basis points compared to prior year on a reported basis and expanded 50 basis points on a comparable basis. Gross margin results reflect benefits from net price improvement which offset inflationary cost impacts, favorable business mix benefits from strong consumable growth, and higher software service gross margins.
Operating margin was 27.2% in the quarter, 10 basis points lower than the prior year period results on a reported basis and 60 basis points higher on a comparable basis. Operating expenses grew 9% as reported and 7% on a comparable basis. Operating expense growth reflects increased investments in commercial resources and R&D project spend.
About IDEXX Laboratories, Inc.
IDEXX is a global leader in pet healthcare innovation. Our diagnostic and software products and services create clarity in the complex, constantly evolving world of veterinary medicine. We support longer, fuller lives for pets by delivering insights and solutions that help the veterinary community around the world make confident decisions-to advance medical care, improve efficiency, and build thriving practices. Our innovations also help ensure the safety of milk and water across the world and maintain the health and well-being of people and livestock. IDEXX Laboratories, Inc. is a member of the S&P 500 Index. Headquartered in Maine, IDEXX employs nearly 11,000 people and offers solutions and products to customers in more than 175 countries and territories.
Note Regarding Forward-Looking Statements
This earnings release and the statements to be made in the accompanying earnings conference call contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including forward-looking statements about the Company's business prospects and estimates of the Company's financial results for future periods. Forward-looking statements are included under '2024 Growth and Financial Performance Outlook' and elsewhere in this earnings release 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 expectations regarding financial and business performance; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates and interest rates; projected operating margins and expenses and capital expenditures; projected tax, tax rate and EPS benefits from share-based compensation arrangements; projected effective tax rates, reduction of average shares outstanding and net interest expense and expectations for net price improvement. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release and are not guarantees of future performance. 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. These risks and uncertainties include, among other things, the matters described under the headings 'Business,' 'Risk Factors,' 'Legal Proceedings,' 'Management's Discussion and Analysis of Financial Condition and Results of Operations' and 'Quantitative and Qualitative Disclosures About Market Risk' in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023, and September 30, 2023, as well as those described from time to time in the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact:
Tel: 1-207-556-0300
Fax: 1-207-556-4346
IDEXX LABORATORIES, INC. 
