WESTBROOK, Maine, Aug. 1, 2017 /PRNewswire/ -- IDEXX Laboratories,
Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics,
veterinary practice software and water microbiology testing,
reports revenues for the second quarter of 2017 of $509 million, an increase of 9% compared to the
prior year period on a reported basis and 10% on an organic basis.
Second quarter results were driven by robust global gains in
Companion Animal Group ("CAG") Diagnostics recurring revenue,
including double-digit organic revenue growth in consumables and
reference lab services, and solid growth in both rapid assay and
veterinary software, services and diagnostic imaging systems.
Earnings per diluted share ("EPS") was $0.95 for the second quarter, representing 28%
growth year over year on a reported basis and 30% on a constant
currency basis. These results include an $0.08, or 11%, EPS benefit in the quarter from
the adoption of the new accounting guidance related to share-based
compensation (ASU 2016-09), on both a reported and constant
currency basis.
"Our business continued to thrive in the second quarter as we
focused on delivering best-in-class diagnostic and software
solutions, while supporting the profession in increasing the
companion animal standard of care," said Jonathan Ayers, the Company's Chairman and Chief
Executive Officer.
"We are very pleased with the strong momentum we are driving in
the U.S. market, reflected in this quarter's accelerated
double-digit U.S. organic CAG Diagnostics recurring revenue growth
– the highest over the past two years, after implementing our fully
direct sales approach. We intend to build on this momentum with
increased investment in our U.S. commercial presence, while
delivering 2017 profit performance consistent with our long-term
goals."
"Consistent with our plan for strong long-term shareholder value
creation, we're pleased to be raising our 2017 guidance for revenue
and earnings per share, partly as a result of our strong
operational performance in the first half of the year and continued
positive outlook."
Second Quarter Performance Highlights
Companion Animal Group
CAG generated 10% reported and 11% organic revenue growth for
the second quarter, supported by CAG Diagnostics recurring revenue
growth of 12% reported and 13% organic. Veterinary software
services and diagnostic imaging systems revenues grew 9% on a
reported and organic basis.
- IDEXX VetLab® consumables generated reported
revenue growth of 15% and organic revenue growth of 17% in the
second quarter, driven by an expanding premium instrument base in
U.S. and international markets, increasing test utilization,
moderate price gains and continued strong customer retention. IDEXX
VetLab premium diagnostic instrument placements were 2,680,
including 1,191 Catalyst® instruments, 861 premium
hematology instruments and 628 IDEXX SediVue® Dx
analyzers. Placement levels were slightly below strong prior year
levels, which included the benefit of higher levels of
LaserCyte® to ProCyte Dx® upgrades and second
Catalyst placements in North
America, as part of successful customer retention programs.
Growth in high economic value placements continued, as evidenced by
the placement of 341 Catalysts in North
America in competitive or greenfield accounts, an increase
of 14% over prior year levels. On a worldwide basis, our Catalyst
instrument installed base increased 21% in the second quarter year
over year, reflecting 11% year over year growth in North America and 37% year over year gains in
international markets.
- Reference laboratory diagnostic and consulting services
grew 12% on a reported and 13% on an organic basis, reflecting
accelerated growth in the U.S. which offset moderated international
gains, impacted by the later timing of the Easter holiday in
Europe. Globally, lab growth
continues to be bolstered by the increasing appreciation for IDEXX
SDMA®, our novel kidney function test, and the strength
of our expanded direct commercial organizations.
- Rapid assay products had reported revenue growth of 8%
and organic growth of 9%, supported by strong gains in the U.S.,
reflecting continued growth in SNAP 4Dx® Plus Test
revenues and specialty tests, as well as solid momentum in first
generation product revenues.
Livestock, Poultry and Dairy ("LPD")
Reported revenue increased 2% on a reported basis and 4% on an
organic basis for the second quarter, supported by growth in swine
testing, herd health screening and pregnancy testing revenues,
which offset lower revenues related to successful European disease
eradication programs and lower Dairy revenues, reflecting market
demand impacts from reductions in milk pricing.
Water
Reported Water revenue growth was 6% and organic revenue growth
was 7% in the second quarter, driven by higher sales volumes of
Colilert® test products and related accessories in
Europe and Latin America, supported by our go-direct
initiatives.
Gross Profit and Operating Profit
Gross profits increased 12%, and gross margin increased to 57.5%
from 55.8% in the prior year period. On a constant currency basis,
gross margin was 180 basis points higher than in the prior year
period, driven by high consumable growth and mix impact, moderate
price gains, volume leverage in reference labs, and operational
productivity gains.
Operating margin was 24.1% in the second quarter compared to
22.3% operating margin in the prior year period. On a constant
currency basis, operating margin improved 180 basis points, driven
by gross margin gains. Operating expenses increased 9% in the
second quarter compared to the prior year period, driven by
accelerated growth in sales and marketing investments aligned with
our U.S. commercial expansion.
2017 Financial Outlook
We are raising our 2017 revenue outlook by $17.5 million at the midpoint of prior guidance
to $1,945 million - $1,965 million,
reflecting an expectation for organic revenue growth of 10% - 11%
and approximately a $13 million
revenue benefit from updated assumptions related to foreign
exchange rates, as noted below. At these rates compared to rates in
effect in 2016, we estimate that the stronger U.S. dollar will
adversely impact 2017 reported revenue growth by approximately
0.5%, EPS growth by 1%, and reduce EPS by an estimated $0.03 per share, including the net impact from
projected hedge gains of approximately $3
million in 2017 compared to $4
million in 2016.
We are also increasing our 2017 EPS outlook to $3.12 - $3.22 per share, reflecting an
incremental increase of $0.14 per
share at the midpoint of our earlier guidance range. This higher
outlook is supported by a projected $0.04 incremental operating profit flow-through
from strong revenue trends and higher expectations for annual
operating margin improvement, while covering incremental
investments in the U.S. CAG business, enabling information
technology, R&D and acquisition integration. We now
expect full-year operating margin to improve 100 - 125 basis points
on a reported basis and 110 - 135 basis points on a constant
currency basis, compared to the prior year period. The raised
EPS guidance also reflects a $0.02
benefit due to reduced headwind from updated foreign exchange rate
assumptions, and an additional $0.08
per share related to raised projections for 2017 benefits from
share-based compensation accounting changes.
The updated outlook represents EPS growth of 28% - 32% on a
reported basis and 29% - 33% constant currency EPS growth. This
outlook includes the impact of the new accounting guidance related
to share-based compensation, which we estimate will result in
$0.30 - $0.34 of EPS benefit in 2017
reflecting an estimated $27 million to $30
million reduction in our tax provision. While these impacts
may vary significantly by quarter based on the timing of actual
settlement activity, an estimated $0.15 of the projected full-year 2017 benefit
reflects higher than normal stock option exercising in 2017, a
level of activity that is not expected to continue in future
periods. For 2018 and future years, we estimate the annual benefit
from share-based compensation will be approximately $14 million to $17 million assuming the current
share price and no change in U.S. tax policy.
The guidance for 2017 reflects the assumptions that the value of
the U.S. dollar relative to other currencies will remain at the
following rates: euro at $1.12,
British pound at $1.28, Canadian
dollar at $0.76, Australian dollar at
$0.75, Japanese yen at ¥114, Chinese
renminbi at RMB 6.80 and Brazilian
real at R$3.40 to the U.S. dollar for
the remainder of 2017.
We are providing the following updated guidance for 2017:
Amounts in millions except per share data and
percentages
|
Guidance
Range
|
Growth
Definition
|
Year Over Year
Growth
|
|
|
|
|
Revenue
|
$1,945 -
$1,965
|
Reported
|
10% - 11%
|
|
|
Organic Revenue
Growth
|
10% - 11%
|
|
|
|
|
EPS
|
$3.12 -
$3.22
|
Reported
|
28% - 32%
|
|
|
Constant
Currency
|
29% - 33%
|
|
|
|
|
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 24.0% - 25.0%, after a
projected reduction of 700 - 800 basis points related to the new
share-based compensation accounting guidance. We are projecting a
reduction in weighted average shares outstanding of approximately
1.5%, net of 0.5% related to the new share-based compensation
accounting guidance, and interest expense, net of interest income,
of approximately $33 million
reflecting current and projected borrowings.
For a quick-reference snapshot of our quarterly 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
second quarter results and management's outlook. To participate in
the conference call, please dial 1-877-777-1968 or 1-612-332-0802
and reference confirmation code 426796. Replay of the conference
call will be available through Tuesday,
August 8, 2017 by dialing 1-800-475-6701 or 1-320-365-3844
and referencing replay code 426796. Individuals can access a live
webcast of the conference call through a link on the IDEXX website,
www.idexx.com/investors. An archived edition of the webcast will be
available after 1:00 p.m. (Eastern)
on that day via the same link and will remain available for one
year.
About IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. is a member of the S&P
500® Index and is a leader in pet healthcare innovation,
serving practicing veterinarians around the world with a broad
range of diagnostic and information technology-based products and
services. IDEXX products enhance the ability of veterinarians to
provide advanced medical care, improve staff efficiency and build
more economically successful practices. IDEXX is also a worldwide
leader in providing diagnostic tests and information for livestock
and poultry and tests for the quality and safety of water and milk.
Headquartered in Maine, IDEXX
Laboratories employs more than 7,000 people and offers products to
customers in over 175 countries. For more information about IDEXX,
visit: www.idexx.com.
Statement Regarding Non-GAAP Financial Measures
The following provides information regarding certain measures
used in this earnings release and/or the accompanying earnings
conference call that are not required by, or presented in
accordance with, generally accepted accounting principles in
the United States of America
("GAAP"), otherwise referred to as non-GAAP financial measures. To
supplement the Company's consolidated results presented in
accordance with GAAP, the Company has disclosed non-GAAP financial
measures that exclude or adjust certain items. Management believes
these non-GAAP financial measures provide useful supplemental
information for its and investors' evaluation of the Company's
business performance and liquidity and are useful for
period-over-period comparisons of the performance of the Company's
business and its liquidity and to the performance and liquidity of
our peers. While management believes that these non-GAAP financial
measures are useful in evaluating the Company's business, this
information should be considered as supplemental in nature and
should not be considered in isolation or as a substitute for the
related financial information prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures reported by other companies.
The following section defines terms and conventions used in this
earnings release and/or the accompanying earnings conference call,
including non-GAAP financial measures, and includes applicable
information regarding reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP financial measures,
as appropriate:
Accounting Standards Update 2016-09 (ASU 2016-09): Effective
January 1, 2017, we adopted the FASB
issued amendments which simplify several aspects of the accounting
for share-based payment transactions, including income tax
consequences, recognition of share compensation award forfeitures,
classification of awards as either equity or liabilities, the
calculation of diluted shares outstanding and classification on the
statement of cash flows.
Constant currency - Constant currency references are non-GAAP
financial measures which exclude the impact of changes in foreign
currency exchange rates and are consistent with how management
evaluates our performance and comparisons with prior and future
periods. We estimated the net impacts of currency on our revenue,
gross profit, operating profit, and EPS results by restating
results to the average exchange rates or exchange rate assumptions
for the comparative period, which includes adjusting for the
estimated impacts of foreign currency hedging transactions and
certain impacts on our effective tax rates. These estimated
currency changes reduced second quarter 2017 revenue growth by 1%,
gross profit margin growth by 10 basis points, had an immaterial
impact on operating profit margin growth, and reduced EPS growth by
2%; reduced projected full-year 2017 revenue growth by
approximately 0.5%, projected operating profit margin growth by 10
basis points, and projected 2017 EPS growth by approximately 1%.
Constant currency revenue growth represents the percentage change
in revenue during the applicable period, as compared to the prior
year period, excluding the impact of changes in foreign currency
exchange rates. See the supplementary analysis of results below for
revenue percentage change from currency for the three and six
months ended June 30, 2017.
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 six months ended June 30, 2017
and 2016. Since adoption of ASU 2016-09 in 2017, the tax
benefit from share-based compensation is included in cash generated
from operations and will no longer be an adjustment in our free
cash flow calculation. To estimate projected 2017 free cash
flow, we have deducted projected purchases of property and
equipment (also referred to as capital expenditures) of
$90 million.
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 that excludes the impact of changes in foreign
currency exchange rates and revenue from business acquisitions. See
the supplementary analysis of results below for a reconciliation of
reported revenue growth to organic revenue growth for the three and
six months ended June 30, 2017.
See the constant currency note above for the impacts of estimated
currency changes to the projected 2017 organic revenue growth for
the Company. For the calculation of projected 2017 organic
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," "projected", "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 and
expenses, capital expenditures, gains from foreign currency hedging
transactions, tax and EPS benefits from share-based compensation
arrangements, effective tax rates, weighted average shares
outstanding and interest expense. These statements are based on
management's expectation of future events as of the date of this
earnings release, 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 U.S.; 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 U.S. 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 U.S. 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 U.S.,
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, 2016 and the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017, 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
Condensed Consolidated Statement of Operations Amounts in
thousands except per share data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
June
30,
|
June
30,
|
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Revenue:
|
Revenue
|
|
$508,940
|
$466,569
|
|
$970,961
|
$884,119
|
|
|
|
|
|
|
|
|
Expenses and
Income:
|
Cost of
revenue
|
|
216,225
|
206,026
|
|
420,055
|
396,039
|
|
Gross
profit
|
|
292,715
|
260,543
|
|
550,906
|
488,080
|
|
Sales and
marketing
|
|
87,693
|
76,652
|
|
174,937
|
156,481
|
|
General and
administrative
|
|
55,460
|
54,317
|
|
108,374
|
103,612
|
|
Research and
development
|
|
26,998
|
25,412
|
|
52,788
|
50,032
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
122,564
|
104,162
|
|
214,807
|
177,955
|
|
Interest expense,
net
|
|
(7,979)
|
(7,276)
|
|
(15,485)
|
(14,760)
|
|
Income before
provision for income taxes
|
|
114,585
|
96,886
|
|
199,322
|
163,195
|
|
Provision for income
taxes
|
|
29,178
|
29,680
|
|
44,857
|
49,964
|
Net
Income:
|
Net income
|
|
85,407
|
67,206
|
|
154,465
|
113,231
|
|
Less: Noncontrolling
interest in subsidiary's earnings
|
|
50
|
4
|
|
89
|
10
|
|
Net income
attributable to stockholders
|
|
$85,357
|
$67,202
|
|
$154,376
|
$113,221
|
|
Earnings per share:
Basic
|
|
$0.97
|
$0.75
|
|
$1.75
|
$1.26
|
|
Earnings per share:
Diluted
|
|
$0.95
|
$0.74
|
|
$1.72
|
$1.25
|
|
Shares outstanding:
Basic
|
|
88,004
|
89,824
|
|
88,060
|
89,874
|
|
Shares outstanding:
Diluted
|
|
89,878
|
90,817
|
|
89,962
|
90,858
|
IDEXX
Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
June
30,
|
June
30,
|
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Operating
Ratios
|
Gross
profit
|
|
57.5%
|
55.8%
|
|
56.7%
|
55.2%
|
(as a percentage
of revenue):
|
Sales, marketing,
general and administrative expense
|
|
28.1%
|
28.1%
|
|
29.2%
|
29.4%
|
|
Research and
development expense
|
|
5.3%
|
5.4%
|
|
5.4%
|
5.7%
|
|
Income from
operations1
|
|
24.1%
|
22.3%
|
|
22.1%
|
20.1%
|
|
1Amounts presented may not
recalculate due to rounding.
|
IDEXX
Laboratories, Inc. and Subsidiaries
Segment Information Amounts in thousands
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
June
30,
|
Percent
of
|
|
June
30,
|
Percent
of
|
|
|
|
2017
|
Revenue
|
|
2016
|
Revenue
|
Revenue:
|
CAG
|
|
$439,948
|
|
|
$400,223
|
|
|
Water
|
|
29,424
|
|
|
27,829
|
|
|
LPD
|
|
33,553
|
|
|
32,856
|
|
|
Other
|
|
6,015
|
|
|
5,661
|
|
|
Total
|
|
$508,940
|
|
|
$466,569
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
CAG
|
|
$250,086
|
56.8%
|
|
$220,003
|
55.0%
|
|
Water
|
|
20,652
|
70.2%
|
|
19,380
|
69.6%
|
|
LPD
|
|
19,682
|
58.7%
|
|
19,178
|
58.4%
|
|
Other
|
|
2,503
|
41.6%
|
|
2,291
|
40.5%
|
|
Unallocated
Amounts
|
|
(208)
|
N/A
|
|
(309)
|
N/A
|
|
Total
|
|
$292,715
|
57.5%
|
|
$260,543
|
55.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations:
|
CAG
|
|
$108,731
|
24.7%
|
|
$91,019
|
22.7%
|
|
Water
|
|
13,653
|
46.4%
|
|
12,743
|
45.8%
|
|
LPD
|
|
5,176
|
15.4%
|
|
5,069
|
15.4%
|
|
Other
|
|
768
|
12.8%
|
|
(920)
|
(16.3%)
|
|
Unallocated
Amounts
|
|
(5,764)
|
N/A
|
|
(3,749)
|
N/A
|
|
Total
|
|
$122,564
|
24.1%
|
|
$104,162
|
22.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
Percent
of
|
|
June
30,
|
Percent
of
|
|
|
|
2017
|
Revenue
|
|
2016
|
Revenue
|
Revenue:
|
CAG
|
|
$843,175
|
|
|
$757,862
|
|
|
Water
|
|
54,501
|
|
|
51,381
|
|
|
LPD
|
|
62,870
|
|
|
63,712
|
|
|
Other
|
|
10,415
|
|
|
11,164
|
|
|
Total
|
|
$970,961
|
|
|
$884,119
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
CAG
|
|
$471,156
|
55.9%
|
|
$410,795
|
54.2%
|
|
Water
|
|
38,127
|
70.0%
|
|
35,486
|
69.1%
|
|
LPD
|
|
36,527
|
58.1%
|
|
37,155
|
58.3%
|
|
Other
|
|
4,614
|
44.3%
|
|
5,214
|
46.7%
|
|
Unallocated
Amounts
|
|
482
|
N/A
|
|
(570)
|
N/A
|
|
Total
|
|
$550,906
|
56.7%
|
|
$488,080
|
55.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations:
|
CAG
|
|
$188,586
|
22.4%
|
|
$152,397
|
20.1%
|
|
Water
|
|
23,916
|
43.9%
|
|
22,422
|
43.6%
|
|
LPD
|
|
8,978
|
14.3%
|
|
9,639
|
15.1%
|
|
Other
|
|
1,161
|
11.1%
|
|
(1,757)
|
(15.7%)
|
|
Unallocated
Amounts
|
|
(7,834)
|
N/A
|
|
(4,746)
|
N/A
|
|
Total
|
|
$214,807
|
22.1%
|
|
$177,955
|
20.1%
|
IDEXX
Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service
Categories and by Domestic and International
Markets Amounts in thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Percentage
|
|
Organic
|
|
June
30,
|
|
June
30,
|
|
Dollar
|
|
Percentage
|
|
Change
from
|
|
Change
from
|
|
Revenue
|
Net
Revenue
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|
Currency
1
|
|
Acquisitions
2
|
|
Growth3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG
|
$439,948
|
|
$400,223
|
|
$39,725
|
|
9.9%
|
|
(1.2%)
|
|
0.2%
|
|
10.9%
|
United
States
|
295,829
|
|
266,607
|
|
29,222
|
|
11.0%
|
|
-
|
|
0.1%
|
|
10.9%
|
International
|
144,119
|
|
133,616
|
|
10,503
|
|
7.9%
|
|
(3.5%)
|
|
0.3%
|
|
11.0%
|
Water
|
29,424
|
|
27,829
|
|
1,595
|
|
5.7%
|
|
(1.4%)
|
|
-
|
|
7.2%
|
United
States
|
14,366
|
|
14,056
|
|
310
|
|
2.2%
|
|
-
|
|
-
|
|
2.2%
|
International
|
15,058
|
|
13,773
|
|
1,285
|
|
9.3%
|
|
(3.0%)
|
|
-
|
|
12.3%
|
LPD
|
33,553
|
|
32,856
|
|
697
|
|
2.1%
|
|
(1.4%)
|
|
-
|
|
3.5%
|
United
States
|
3,433
|
|
3,333
|
|
100
|
|
3.0%
|
|
-
|
|
-
|
|
3.0%
|
International
|
30,120
|
|
29,523
|
|
597
|
|
2.0%
|
|
(1.6%)
|
|
-
|
|
3.6%
|
Other
|
6,015
|
|
5,661
|
|
354
|
|
6.3%
|
|
(0.2%)
|
|
-
|
|
6.4%
|
Total
Company
|
$508,940
|
|
$466,569
|
|
$42,371
|
|
9.1%
|
|
(1.2%)
|
|
0.1%
|
|
10.1%
|
United
States
|
$315,695
|
|
$285,758
|
|
$29,937
|
|
10.5%
|
|
-
|
|
0.1%
|
|
10.4%
|
International
|
$193,245
|
|
$180,811
|
|
$12,434
|
|
6.9%
|
|
(3.1%)
|
|
0.2%
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Percentage
|
|
Organic
|
|
June
30,
|
|
June
30,
|
|
Dollar
|
|
Percentage
|
|
Change
from
|
|
Change
from
|
|
Revenue
|
Net CAG
Revenue
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|
Currency
1
|
|
Acquisitions
2
|
|
Growth3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG Diagnostics
recurring revenue:
|
$380,319
|
|
$338,653
|
|
$41,666
|
|
12.3%
|
|
(1.2%)
|
|
0.2%
|
|
13.4%
|
IDEXX VetLab
consumables
|
132,094
|
|
114,560
|
|
17,534
|
|
15.3%
|
|
(1.4%)
|
|
-
|
|
16.7%
|
Rapid assay
products
|
60,266
|
|
55,777
|
|
4,489
|
|
8.0%
|
|
(0.5%)
|
|
-
|
|
8.5%
|
Reference
laboratory diagnostic and consulting services
|
171,298
|
|
153,134
|
|
18,164
|
|
11.9%
|
|
(1.4%)
|
|
0.4%
|
|
12.9%
|
CAG Diagnostics
services and accessories
|
16,661
|
|
15,182
|
|
1,479
|
|
9.7%
|
|
(1.4%)
|
|
-
|
|
11.1%
|
CAG Diagnostics
capital – instruments
|
27,716
|
|
32,165
|
|
(4,449)
|
|
(13.8%)
|
|
(1.0%)
|
|
-
|
|
(12.8%)
|
Veterinary software,
services and diagnostic imaging systems
|
31,913
|
|
29,405
|
|
2,508
|
|
8.5%
|
|
(0.4%)
|
|
0.1%
|
|
8.8%
|
Net CAG
revenue
|
$439,948
|
|
$400,223
|
|
$39,725
|
|
9.9%
|
|
(1.2%)
|
|
0.2%
|
|
10.9%
|
|
1The
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 June 30, 2017 and the same period of the prior
year applied to foreign currency-denominated revenues for the three
months ended June 30, 2016.
|
|
2The
percentage change from acquisitions is a non-GAAP financial
measure. This measure represents the percentage change in revenue
during the three months ended June 30, 2017 compared to the three
months ended June 30, 2016 attributed to acquisitions subsequent to
December 31, 2015.
|
|
3Organic revenue growth is a
non-GAAP financial measure and represents the percentage change in
revenue during the three months ended June 30, 2017 compared to the
three months ended June 30, 2016 net of acquisitions and the effect
of changes in foreign currency exchange rates. Amounts presented
may not recalculate due to rounding.
|
IDEXX
Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service
Categories and by Domestic and International
Markets Amounts in thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Percentage
|
|
Organic
|
|
June
30,
|
|
June
30,
|
|
Dollar
|
|
Percentage
|
|
Change
from
|
|
Change
from
|
|
Revenue
|
Net
Revenue
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|
Currency
1
|
|
Acquisitions
2
|
|
Growth3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG
|
$843,175
|
|
$757,862
|
|
$85,313
|
|
11.3%
|
|
(1.0%)
|
|
0.2%
|
|
12.1%
|
United
States
|
566,317
|
|
508,417
|
|
57,900
|
|
11.4%
|
|
-
|
|
0.1%
|
|
11.3%
|
International
|
276,858
|
|
249,445
|
|
27,413
|
|
11.0%
|
|
(3.0%)
|
|
0.3%
|
|
13.7%
|
Water
|
54,501
|
|
51,381
|
|
3,120
|
|
6.1%
|
|
(1.2%)
|
|
-
|
|
7.2%
|
United
States
|
27,385
|
|
26,379
|
|
1,006
|
|
3.8%
|
|
-
|
|
-
|
|
3.8%
|
International
|
27,116
|
|
25,002
|
|
2,114
|
|
8.5%
|
|
(2.5%)
|
|
-
|
|
10.9%
|
LPD
|
62,870
|
|
63,712
|
|
(842)
|
|
(1.3%)
|
|
(0.9%)
|
|
-
|
|
(0.4%)
|
United
States
|
6,917
|
|
6,502
|
|
415
|
|
6.4%
|
|
-
|
|
-
|
|
6.4%
|
International
|
55,953
|
|
57,210
|
|
(1,257)
|
|
(2.2%)
|
|
(1.0%)
|
|
-
|
|
(1.2%)
|
Other
|
10,415
|
|
11,164
|
|
(749)
|
|
(6.7%)
|
|
(0.2%)
|
|
-
|
|
(6.5%)
|
Total
Company
|
$970,961
|
|
$884,119
|
|
$86,842
|
|
9.8%
|
|
(1.0%)
|
|
0.1%
|
|
10.7%
|
United
States
|
$604,308
|
|
$544,697
|
|
$59,611
|
|
10.9%
|
|
-
|
|
0.1%
|
|
10.9%
|
International
|
$366,653
|
|
$339,422
|
|
$27,231
|
|
8.0%
|
|
(2.5%)
|
|
0.3%
|
|
10.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Percentage
|
|
Organic
|
|
June
30,
|
|
June
30,
|
|
Dollar
|
|
Percentage
|
|
Change
from
|
|
Change
from
|
|
Revenue
|
Net CAG
Revenue
|
2017
|
|
2016
|
|
Change
|
|
Change
|
|
Currency
1
|
|
Acquisitions
2
|
|
Growth3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG Diagnostics
recurring revenue:
|
$726,999
|
|
$644,494
|
|
$82,505
|
|
12.8%
|
|
(1.0%)
|
|
0.2%
|
|
13.6%
|
IDEXX VetLab
consumables
|
255,647
|
|
222,529
|
|
33,118
|
|
14.9%
|
|
(1.1%)
|
|
-
|
|
16.0%
|
Rapid assay
products
|
108,161
|
|
98,863
|
|
9,298
|
|
9.4%
|
|
(0.4%)
|
|
-
|
|
9.8%
|
Reference
laboratory diagnostic and consulting services
|
330,367
|
|
293,842
|
|
36,525
|
|
12.4%
|
|
(1.2%)
|
|
0.4%
|
|
13.2%
|
CAG Diagnostics
services and accessories
|
32,824
|
|
29,260
|
|
3,564
|
|
12.2%
|
|
(1.2%)
|
|
-
|
|
13.4%
|
CAG Diagnostics
capital – instruments
|
53,899
|
|
54,808
|
|
(909)
|
|
(1.7%)
|
|
(1.3%)
|
|
-
|
|
(0.4%)
|
Veterinary software,
services and diagnostic imaging systems
|
62,277
|
|
58,560
|
|
3,717
|
|
6.3%
|
|
(0.1%)
|
|
-
|
|
6.5%
|
Net CAG
revenue
|
$843,175
|
|
$757,862
|
|
$85,313
|
|
11.3%
|
|
(1.0%)
|
|
0.2%
|
|
12.1%
|
|
1The
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
six months ended June 30, 2017 and the same period of the prior
year applied to foreign currency-denominated revenues for the six
months ended June 30, 2016.
|
|
2The
percentage change from acquisitions is a non-GAAP financial
measure. This measure represents the percentage change in revenue
during the six months ended June 30, 2017 compared to the six
months ended June 30, 2016 attributed to acquisitions subsequent to
December 31, 2015.
|
|
3Organic revenue growth is a
non-GAAP financial measure and represents the percentage change in
revenue during the six months ended June 30, 2017 compared to the
six months ended June 30, 2016 net of acquisitions and the effect
of changes in foreign currency exchange rates. Amounts presented
may not recalculate due to rounding.
|
IDEXX
Laboratories, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Amounts in thousands
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
|
2017
|
2016
|
Assets:
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$165,975
|
$154,901
|
|
Marketable
securities
|
|
256,923
|
236,949
|
|
Accounts receivable,
net
|
|
240,262
|
204,494
|
|
Inventories
|
|
169,693
|
158,034
|
|
Other current
assets
|
|
85,805
|
91,206
|
|
Total current
assets
|
|
918,658
|
845,584
|
|
Property and
equipment, net
|
|
364,779
|
357,422
|
|
Other long-term
assets, net
|
|
353,700
|
327,698
|
|
Total
assets
|
|
$1,637,137
|
$1,530,704
|
|
|
|
|
|
Liabilities and
Stockholders'
|
|
|
|
|
Equity
(Deficit):
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$58,606
|
$60,057
|
|
Accrued
liabilities
|
|
210,181
|
236,131
|
|
Line of
credit
|
|
704,000
|
611,000
|
|
Deferred
revenue
|
|
28,706
|
27,380
|
|
Total current
liabilities
|
|
1,001,493
|
934,568
|
|
Long-term
debt
|
|
600,891
|
593,110
|
|
Other long-term
liabilities, net
|
|
120,860
|
111,239
|
|
Total long-term
liabilities
|
|
721,751
|
704,349
|
|
|
|
|
|
|
Total stockholders'
equity (deficit)
|
|
(86,335)
|
(108,352)
|
|
Noncontrolling
interest
|
|
228
|
139
|
|
Total
stockholders' equity (deficit)
|
|
(86,107)
|
(108,213)
|
|
Total liabilities
and stockholders' equity (deficit)
|
|
$1,637,137
|
$1,530,704
|
IDEXX
Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
March
31,
|
December
31,
|
September
30,
|
June
30,
|
|
|
2017
|
2017
|
2016
|
2016
|
2016
|
Selected Balance
Sheet
Information:
|
|
|
|
|
|
|
|
Days sales
outstanding1
|
41.7
|
42.4
|
42.1
|
42.4
|
41.5
|
|
Inventory
turns2
|
2.0
|
1.9
|
2.0
|
1.8
|
1.7
|
|
1Days
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.
|
|
2Inventory
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)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
|
|
2017
|
2016
|
Operating:
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net income
|
|
$154,465
|
$113,231
|
|
Non-cash
charges
|
|
56,357
|
53,673
|
|
Changes in assets and
liabilities
|
|
(69,356)
|
(24,240)
|
|
Tax benefit from
share-based compensation arrangements
|
|
-
|
(4,791)
|
|
Net cash provided by
operating activities
|
|
141,466
|
137,873
|
Investing:
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(38,566)
|
(37,868)
|
|
Purchase of
marketable securities
|
|
(175,522)
|
(123,809)
|
|
Proceeds from the
sale and maturities of marketable securities
|
|
155,903
|
108,115
|
|
Acquisitions of
businesses, net of cash acquired
|
|
(14,529)
|
-
|
|
Net cash used by
investing activities
|
|
(72,714)
|
(53,562)
|
Financing:
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Borrowings on
revolving credit facilities, net
|
|
93,000
|
(15,000)
|
|
Repurchases of common
stock
|
|
(170,798)
|
(76,536)
|
|
Debt issue
costs
|
|
-
|
(57)
|
|
Proceeds from the
exercise of stock options and employee stock purchase
plans
|
|
23,170
|
17,554
|
|
Shares withheld for
statutory tax withholding on restricted stock
|
|
(7,459)
|
(3,732)
|
|
Payment of
acquisition-related contingent consideration
|
|
-
|
(2,717)
|
|
Tax benefit from
share-based compensation arrangements
|
|
-
|
4,791
|
|
Net cash provided
(used) by financing activities
|
|
(62,087)
|
(75,697)
|
|
Net effect of changes
in exchange rates on cash
|
|
4,409
|
3,531
|
|
Net increase in cash
and cash equivalents
|
|
11,074
|
12,145
|
|
Cash and cash
equivalents, beginning of period
|
|
154,901
|
128,994
|
|
Cash and cash
equivalents, end of period
|
|
$165,975
|
$141,139
|
IDEXX
Laboratories, Inc. and Subsidiaries
Free Cash Flow1 Amounts in thousands except
per share data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
|
|
2017
|
2016
|
Free Cash
Flow:
|
Net cash provided by
operating activities
|
|
$141,466
|
$137,873
|
|
Financing cash flows
attributable to tax benefits from share-based compensation
arrangements
|
|
-
|
4,791
|
|
Investing cash flows
attributable to purchases of property and equipment
|
|
(38,566)
|
(37,868)
|
|
Free cash
flow
|
|
$102,900
|
$104,796
|
|
1Free cash
flow is a non-GAAP financial measure and is calculated from cash
generated from operations, including tax benefits attributable to
share-based compensation arrangements, 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. Upon adopting ASU 2016-09 in 2017, the tax
benefit from share-based compensation is included in cash generated
from operations and is no longer an adjustment in our free cash
flow calculation.
|
IDEXX
Laboratories, Inc. and Subsidiaries
Common Stock Repurchases Amounts in thousands except per
share data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
June
30,
|
|
June
30,
|
June
30,
|
|
|
2017
|
2016
|
|
2017
|
2016
|
Shares repurchased in
the open market
|
|
696
|
269
|
|
1,086
|
977
|
Shares acquired
through employee surrender for statutory tax withholding
|
|
1
|
2
|
|
53
|
54
|
Total shares
repurchased
|
|
697
|
271
|
|
1,139
|
1,031
|
|
|
|
|
|
|
|
Cost of shares
repurchased in the open market
|
|
$114,163
|
$23,260
|
|
$164,907
|
$72,975
|
Cost of shares for
employee surrenders
|
|
156
|
203
|
|
7,459
|
3,732
|
Total cost of
shares
|
|
$114,319
|
$23,463
|
|
$172,366
|
$76,707
|
|
|
|
|
|
|
|
Average cost per
share – open market repurchases
|
|
$163.96
|
$86.45
|
|
$151.81
|
$74.68
|
Average cost per
share – employee surrenders
|
|
$168.25
|
$88.18
|
|
$141.56
|
$68.82
|
Average cost per
share – total
|
|
$163.97
|
$86.46
|
|
$151.34
|
$74.38
|
|
Shares remaining
under repurchase authorization as of June 30, 2017 totaled
5,649,249.
|
Contact: Kerry Bennett,
Investor Relations, 1-207-556-8155
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SOURCE IDEXX Laboratories, Inc.