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IDEXX Laboratories Announces Third Quarter Results

  • Achieves third quarter revenue growth of 9% reported and 8% organic, driven by CAG Diagnostics recurring revenue growth of 10% reported and 9% organic
  • Solid revenue growth reflects benefits from IDEXX execution drivers including double-digit year-over-year installed base growth across global premium instrument platforms
  • Delivers EPS of $2.53, representing 18% growth as reported and 16% on a comparable basis, supported by operating margin expansion of 100 basis points as reported and 140 basis points on a comparable basis
  • Adjusts 2023 revenue guidance to $3,635 million - $3,650 million, reflecting 7.9% - 8.4% growth as reported and 8.3% - 8.8% organically, driven by projected CAG Diagnostics recurring revenue growth of 9.4% - 9.9% as reported and 9.8% - 10.3% organically
  • Updates 2023 EPS outlook to $9.74 - $9.90, a year-over-year increase of 21% - 23% as reported and 25% - 27% on a comparable basis, including ~12% combined EPS growth benefit from a customer contract resolution payment in Q1 2023 and lapping of discrete 2022 R&D investments

IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced third quarter results.

Third Quarter Results

The Company reports revenues of $916 million for the third quarter of 2023, an increase of 9% reported and 8% organic, driven by Companion Animal Group ("CAG") growth of 9% reported and 8% organic and Water revenue growth of 9% reported and 7% organic. CAG Diagnostics recurring revenue growth of 10% reported and 9% organic was supported by sustained benefits from IDEXX execution drivers and reflects high single-digit organic growth in the U.S. and double-digit organic growth internationally. Commercial engagement and sustained high interest in adopting IDEXX innovation drove high levels of premium instrument placements, supporting 11% annual growth in IDEXX's global premium instrument installed base. Veterinary software, services and diagnostic imaging systems revenue grew 14% as reported and 13% organically, reflecting high recurring revenue growth and ongoing momentum in cloud-based software placements.

Third quarter earnings per diluted share (“EPS”) were $2.53, an increase of 18% as reported and 16% on a comparable basis, including $0.04 per share in tax benefits from share-based compensation and $0.01 per share negative impact from currency changes.

"Strong execution by IDEXX teams and sustained interest in adopting IDEXX's differentiated multi-modality testing and workflow solutions helped deliver solid organic revenue gains and strong financial results in the third quarter," said Jay Mazelsky, President and Chief Executive Officer. "Busy veterinarians appreciate that they must very often first test before they can determine the most optimal treatment course, which drives the medical services activity in their practice. They also want these testing solutions to seamlessly connect to a modern cloud-based PIMS, and have shown an increased appetite to invest in software that supports higher staff productivity and client communications. IDEXX remains very well positioned to address these needs while driving development of the companion animal diagnostics sector through relevant innovation and commercial engagement."

Third Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated revenue growth of 9% as reported and 8% organic for the quarter. Solid growth was supported by CAG Diagnostics recurring revenue growth of 10% on a reported basis and 9% organically. U.S. CAG Diagnostics recurring revenue organic growth of 8.3% included an ~50 basis point negative impact from fewer equivalent selling days and remained solidly above sector growth levels in the third quarter, reflected in an ~1,100 basis point growth premium to U.S. same store clinical visit growth.

Additional U.S. companion animal practice key metrics are available in the Q3 2023 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Strong global growth was achieved across IDEXX's testing modalities.

  • IDEXX VetLab® consumables generated 13% reported and 11% organic revenue growth, with double-digit gains across U.S. and international regions supported by benefits from higher net price realization and an expanded global premium instrument installed base.
  • Reference laboratory diagnostic and consulting services generated 8% reported and 7% organic revenue growth, driven by high single-digit gains in the U.S. and improved, mid-to-high single-digit growth in international regions.
  • Rapid assay products revenues grew 9% as reported and 8% organically, driven by strong growth in the U.S., supported by benefits from higher net price realization.

Veterinary software, services and diagnostic imaging systems revenues grew 14% as reported and 13% organically, driven by continued high levels of organic gains in recurring software and diagnostic imaging revenues. Strong demand for cloud-based products continues to support momentum in software solution placements and customer gains.

Water

Water revenues grew 9% on a reported basis and 7% on an organic basis for the quarter, reflecting solid gains across regions, including benefits from net price improvement.

Livestock, Poultry and Dairy (“LPD”)

LPD revenues grew 5% on a reported basis and grew 2% organically for the quarter, as solid gains in the U.S. were offset by lower herd health screening levels internationally.

Gross Profit and Operating Profit

Gross profits increased 8% as reported and on a comparable basis. Gross margin of 59.9% decreased 30 basis points as reported and increased 30 basis points on a comparable basis, supported by benefits from net price gains, business mix and improvement in software service gross margins.

Operating margin was 30.1% in the quarter, higher than the prior year by 100 basis points as reported and 140 basis points on a comparable basis. Operating margin expansion reflects gross margin gains benefiting from strong CAG Diagnostics recurring revenue growth and operating expense growth of 4% as reported and on a comparable basis. Reported operating expense growth reflects benefits from cost controls and lapping of prior year R&D and commercial investments.

2023 Growth and Financial Performance Outlook

The Company is updating its full year revenue growth outlook range to 7.9% - 8.4% as reported and 8.3% - 8.8% organically. This updated outlook is centered on the lower end of the Company's most recent full year guidance range and at the midpoint of its original full year organic growth estimates, reflecting third quarter results and continued headwinds to clinical visit growth rates globally. The overall reported revenue range was decreased by $20 million for updated foreign exchange impact estimates compared to earlier guidance estimates, reflecting the recent strengthening of the U.S. dollar.

The Company raised its full year reported operating margin outlook to 29.6% - 29.8%, incorporating strong year-to-date profit performance. Operating margin guidance includes an increased ~70 basis points in year-over-year unfavorable net margin impact from updated foreign currency exchange rate changes, including effects from comparisons to prior year foreign exchange hedge gains.

The Company updated its EPS outlook range to $9.74 - $9.90, increasing midpoint estimates by $0.05 per share and maintaining its high end EPS outlook. The Company is maintaining a similar operational outlook at midpoint, as positive revisions to the Company's operating margin outlook offset adjustments to organic revenue growth estimates. Positive adjustments of ~$0.11 per share to projections for interest expense and effective tax rates, including share-based compensation tax benefits, offset an ~$0.05 negative EPS impact related to updated foreign currency exchange rate estimates — which is now estimated to provide a $0.25 per share headwind to full year EPS results.

The following table provides the Company's updated outlook for annual key financial metrics in 2023:

Amounts in millions except per share data and percentages

Growth and Financial Performance Outlook

 

2023

 

 

 

 

 

Revenue

 

$3,635

-

$3,650

Reported growth

 

7.9%

-

8.4%

Organic growth

 

8.3%

-

8.8%

CAG Diagnostics Recurring Revenue Growth

 

 

 

 

Reported growth

 

9.4%

-

9.9%

Organic growth

 

9.8%

-

10.3%

Operating Margin

 

29.6%

-

29.8%

Operating margin expansion

 

290 bps

-

310 bps

Negative impact of foreign exchange

 

~ 70 bps

Comparable margin expansion

 

360 bps

-

380 bps

Positive impact of discrete in-license of technology and customer contract resolution

 

~ 280 bps

EPS

 

$9.74

-

$9.90

Reported growth

 

21%

-

23%

Comparable growth

 

25%

-

27%

Positive impact of discrete in-license of technology and customer contract resolution

 

~ 12%

Other Key Metrics

 

 

 

 

Net interest expense

 

~ $37

Share-based compensation tax benefit

 

~ $12

Share-based compensation tax rate benefit

 

~ 1%

Effective tax rate

 

21%

-

21.5%

Share-based compensation EPS impact

 

~ $0.14

Reduction in average shares outstanding

 

0.5%

-

1%

Operating Cash Flow

 

100% - 110% of net income

Free Cash Flow

 

85% - 90% of net income

Capital Expenditures

 

$160 - $180

The following table outlines estimates of foreign currency exchange rate impacts, net of foreign currency hedging transactions, and foreign currency exchange rate assumptions reflected in the above financial performance outlook for 2023.

Estimated Foreign Currency Exchange Rate Impacts

 

2023

 

 

 

Revenue growth rate impact

 

(~ 40 bps)

CAG Diagnostics recurring revenue growth rate impact

 

(~ 40 bps)

Operating margin growth impact

 

(~ 70 bps)

EPS impact

 

(~ $0.25)

EPS growth impact

 

(~ 3%)

 

 

 

Go-Forward Foreign Currency Exchange Rate Assumptions

 

2023

In U.S. dollars

 

 

euro

 

$1.05

British pound

 

$1.21

Canadian dollar

 

$0.73

Australian dollar

 

$0.63

Relative to the U.S. dollar

 

 

Japanese yen

 

¥151

Chinese renminbi

 

¥7.40

Brazilian real

 

R$5.14

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its third quarter 2023 results and management’s outlook. To participate in the conference call, dial 1-800-289-0459 or 1-773-377-9037 and reference passcode 917383. 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. (EDT) on that day via the same link and will remain available for one year.

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. For more information about IDEXX, visit www.idexx.com.

Note Regarding Forward-Looking Statements

This earnings release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are included above under "2023 Growth and Financial Performance 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 expectations regarding financial 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; and projected effective tax rates, reduction of average shares outstanding and net interest expense. 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, 2022 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.

Statement Regarding Non-GAAP Financial Measures

The following defines terms and conventions and provides reconciliations 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.

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 impacted third quarter 2023 results as follows: decreased gross profit growth by 0%, decreased gross margin growth by 60 basis points, increased operating expense growth by 0%, decreased operating profit growth by 1%, decreased operating profit margin growth by 40 basis points, and decreased EPS growth by 0%. 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 nine months ended September 30, 2023 and refer to the 2023 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2023 projections and estimates.

Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that represents the percent change in revenue, as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. 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 should be considered in addition to, and not as a replacement of or a superior measure to, revenue growth reported in accordance with GAAP. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three months and nine months ended September 30, 2023. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Please refer to the 2023 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2023 organic revenue growth for the Company and CAG Diagnostics recurring revenue growth. The percentage change in revenue resulting from acquisitions represents revenues during the current year period, limited to the initial 12 months from the date of the acquisition, that are directly attributable to business acquisitions. Revenue from acquisitions is not expected to have an impact on projected full year 2023 revenue growth or CAG Diagnostics recurring revenue growth.

Comparable growth metrics - Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates and non-recurring or unusual items (if any). Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Management believes that reporting comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) provides useful information to investors because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding key metrics used by management. Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) should be considered in addition to, and not as replacements of or superior measures to, gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain reported in accordance with GAAP.

The reconciliation of these non-GAAP financial measures is as follows:

 

 

Three Months Ended

 

Year-over-Year

 

Nine Months Ended

 

Year-over-Year

 

 

September 30,

 

September 30,

 

Change

 

September 30,

 

September 30,

 

Change

Dollar amounts in thousands

 

2023

 

2022

 

 

 

2023

 

2022

 

 

Gross Profit (as reported)

 

$

547,982

 

 

$

506,626

 

 

8

%

 

$

1,663,803

 

 

$

1,519,411

 

 

10

%

Gross margin

 

 

59.9

%

 

 

60.2

%

 

(30

)bps

 

 

60.3

%

 

 

59.8

%

 

40

bps

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

(290

)

 

 

 

 

 

 

 

(24,793

)

 

 

 

 

 

Comparable gross profit growth

 

$

548,272

 

 

$

506,626

 

 

8

%

 

$

1,688,596

 

 

$

1,519,411

 

 

11

%

Comparable gross margin and gross margin gain (or growth)

 

 

60.5

%

 

 

60.2

%

 

30

bps

 

 

60.9

%

 

 

59.8

%

 

100

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (as reported)

 

$

272,699

 

 

$

261,798

 

 

4

%

 

$

811,977

 

 

$

847,173

 

 

(4

)%

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

1,008

 

 

 

 

 

 

 

 

(3,797

)

 

 

 

 

 

Comparable operating expense growth

 

$

271,691

 

 

$

261,798

 

 

4

%

 

$

815,774

 

 

$

847,173

 

 

(4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations (as reported)

 

$

275,283

 

 

$

244,828

 

 

12

%

 

$

851,826

 

 

$

672,238

 

 

27

%

Operating margin

 

 

30.1

%

 

 

29.1

%

 

100

bps

 

 

30.9

%

 

 

26.5

%

 

440

bps

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

(1,298

)

 

 

 

 

 

 

 

(20,996

)

 

 

 

 

 

Comparable operating profit growth

 

$

276,581

 

 

$

244,828

 

 

13

%

 

$

872,822

 

 

$

672,238

 

 

30

%

Comparable operating margin and operating margin gain (or growth)

 

 

30.5

%

 

 

29.1

%

 

140

bps

 

 

31.5

%

 

 

26.5

%

 

500

bps

Amounts presented may not recalculate due to rounding.

Projected 2023 comparable operating margin expansion outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects projected full year 2023 reported operating margin adjusted for estimated negative year-over-year foreign currency exchange rate change impact of approximately 70 basis points.

These impacts described above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2023 operating margin expansion) to comparable gross profit growth, comparable gross margin gain, comparable operating expense growth, comparable operating profit growth and comparable operating margin gain for the Company.

Comparable EPS growth - Comparable EPS growth is a non-GAAP financial measure that represents the percentage change in earnings per share (diluted) ("EPS") for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exchange rates from the prior base period and excluding the tax benefits of share-based compensation activity under ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, and non-recurring or unusual items (if any). Management believes comparable EPS growth is a more useful way to measure the Company’s business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Comparable EPS growth should be considered in addition to, and not as a replacement of or a superior measure to, EPS growth reported in accordance with GAAP. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts.

The reconciliation of this non-GAAP financial measure is as follows:

 

 

Three Months Ended

 

Year-over-Year

 

Nine Months Ended

 

Year-over-Year

 

 

September 30,

 

September 30,

 

Growth

 

September 30,

 

September 30,

 

Growth

 

 

2023

 

2022

 

 

 

2023

 

2022

 

 

Earnings per share (diluted)

 

$

2.53

 

 

$

2.15

 

18

%

 

$

7.75

 

 

$

5.97

 

30

%

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation activity

 

 

0.04

 

 

 

 

 

 

 

0.14

 

 

 

0.10

 

 

Change from currency

 

 

(0.01

)

 

 

 

 

 

 

(0.19

)

 

 

 

 

Comparable EPS growth

 

 

2.50

 

 

 

2.15

 

16

%

 

 

7.80

 

 

 

5.87

 

33

%

Amounts presented may not recalculate due to rounding.

Projected 2023 comparable EPS growth outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects adjustments including estimated positive share-based compensation activity of $0.14 and estimated negative year-over-year foreign currency exchange rate change impact of $0.25.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2023 reported EPS growth) to comparable EPS growth for the Company.

Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, 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. Free cash flow should be considered in addition to, and not as a replacement of or a superior measure to, net cash provided by operating activities. See the supplementary analysis of results below for our calculation of free cash flow for the three and nine months ended September 30, 2023 and 2022. To estimate projected 2023 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $160 - $180 million. Free cash flow conversion, or the net income to free cash flow ratio, is a non-GAAP financial measure that is defined as free cash flow, with respect to a measurement period, divided by net income for the same period. To calculate trailing twelve-month net income to free cash flow ratio for the twelve months ended September 30, 2023, we have deducted purchases of property and equipment of approximately $150 million from net cash provided from operating activities of approximately $830 million, divided by net income of approximately $823 million.

Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges. Management believes that reporting Adjusted EBITDA, gross debt, and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. Adjusted EBITDA, gross debt, and net debt should be considered in addition to, and not as replacements of or superior measures to, net income or total debt reported in accordance with GAAP. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA Ratios are calculated, see the Company's Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations

Amounts in thousands except per share data (Unaudited)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

 

2023

 

2022

 

2023

 

2022

Revenue:

 

Revenue

 

$

915,527

 

 

$

841,661

 

 

$

2,759,352

 

 

$

2,538,756

 

Expenses and Income:

 

Cost of revenue

 

 

367,545

 

 

 

335,035

 

 

 

1,095,549

 

 

 

1,019,345

 

 

 

Gross profit

 

 

547,982

 

 

 

506,626

 

 

 

1,663,803

 

 

 

1,519,411

 

 

 

Sales and marketing

 

 

135,698

 

 

 

130,021

 

 

 

424,034

 

 

 

392,570

 

 

 

General and administrative

 

 

89,034

 

 

 

83,764

 

 

 

248,804

 

 

 

243,201

 

 

 

Research and development

 

 

47,967

 

 

 

48,013

 

 

 

139,139

 

 

 

211,402

 

 

 

Income from operations

 

 

275,283

 

 

 

244,828

 

 

 

851,826

 

 

 

672,238

 

 

 

Interest expense, net

 

 

(7,392

)

 

 

(10,645

)

 

 

(30,318

)

 

 

(25,481

)

 

 

Income before provision for income taxes

 

 

267,891

 

 

 

234,183

 

 

 

821,508

 

 

 

646,757

 

 

 

Provision for income taxes

 

 

55,660

 

 

 

53,245

 

 

 

170,987

 

 

 

139,875

 

Net Income:

 

Net income attributable to stockholders

 

$

212,231

 

 

$

180,938

 

 

$

650,521

 

 

$

506,882

 

 

 

Earnings per share: Basic

 

$

2.55

 

 

$

2.17

 

 

$

7.83

 

 

$

6.04

 

 

 

Earnings per share: Diluted

 

$

2.53

 

 

$

2.15

 

 

$

7.75

 

 

$

5.97

 

 

 

Shares outstanding: Basic

 

 

83,097

 

 

 

83,247

 

 

 

83,058

 

 

 

83,855

 

 

 

Shares outstanding: Diluted

 

 

83,993

 

 

 

84,113

 

 

 

83,990

 

 

 

84,858

 

IDEXX Laboratories, Inc. and Subsidiaries

 

 

 

 

 

 

 

Selected Operating Information (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

 

2023

 

2022

2023

 

2022

Operating Ratios

 

Gross profit

 

59.9

%

 

60.2

%

 

60.3

%

 

59.8

%

(as a percentage of revenue):

 

Sales, marketing, general and administrative expense

 

24.5

%

 

25.4

%

 

24.4

%

 

25.0

%

 

 

Research and development expense

 

5.2

%

 

5.7

%

 

5.0

%

 

8.3

%

 

 

Income from operations1

 

30.1

%

 

29.1

%

 

30.9

%

 

26.5

%

 

 

 

 

 

 

 

 

 

 

 

1Amounts presented may not recalculate due to rounding.

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

2023

 

Percent of

Revenue

 

September 30,

2022

 

Percent of

Revenue

 

 

 

 

 

 

 

Revenue:

 

CAG

 

$

837,160

 

 

 

 

$

764,990

 

 

 

 

 

Water

 

 

44,450

 

 

 

 

 

40,840

 

 

 

 

 

LPD

 

 

29,747

 

 

 

 

 

28,452

 

 

 

 

 

Other

 

 

4,170

 

 

 

 

 

7,379

 

 

 

 

 

Total

 

$

915,527

 

 

 

 

$

841,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

CAG

 

$

499,291

 

 

59.6

%

 

$

456,334

 

 

59.7

%

 

 

Water

 

 

31,034

 

 

69.8

%

 

 

29,406

 

 

72.0

%

 

 

LPD

 

 

15,836

 

 

53.2

%

 

 

17,462

 

 

61.4

%

 

 

Other

 

 

1,821

 

 

43.7

%

 

 

3,424

 

 

46.4

%

 

 

Total

 

$

547,982

 

 

59.9

%

 

$

506,626

 

 

60.2

%

 

 

 

 

 

 

 

 

 

 

 

Income from Operations:

 

CAG

 

$

253,358

 

 

30.3

%

 

$

221,454

 

 

28.9

%

 

 

Water

 

 

20,328

 

 

45.7

%

 

 

19,924

 

 

48.8

%

 

 

LPD

 

 

2,405

 

 

8.1

%

 

 

4,480

 

 

15.7

%

 

 

Other

 

 

(808

)

 

(19.4

)%

 

 

(1,030

)

 

(14.0

)%

 

 

Total

 

$

275,283

 

 

30.1

%

 

$

244,828

 

 

29.1

%

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

2023

 

Percent of

Revenue

 

September 30,

2022

 

Percent of

Revenue

 

 

 

 

 

 

 

Revenue:

 

CAG

 

$

2,531,091

 

 

 

 

$

2,310,261

 

 

 

 

Water

 

 

126,362

 

 

 

 

 

116,406

 

 

 

 

LPD

 

 

88,866

 

 

 

 

 

89,211

 

 

 

 

Other

 

 

13,033

 

 

 

 

 

22,878

 

 

 

 

Total

 

$

2,759,352

 

 

 

 

$

2,538,756

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

CAG

 

$

1,523,757

 

 

60.2

%

 

$

1,371,687

 

59.4

%

 

 

Water

 

 

88,621

 

 

70.1

%

 

 

82,502

 

70.9

%

 

 

LPD

 

 

46,975

 

 

52.9

%

 

 

54,005

 

60.5

%

 

 

Other

 

 

4,450

 

 

34.1

%

 

 

11,217

 

49.0

%

 

 

Total

 

$

1,663,803

 

 

60.3

%

 

$

1,519,411

 

59.8

%

 

 

 

 

 

 

 

 

 

 

 

Income from Operations:

 

CAG

 

$

790,617

 

 

31.2

%

 

$

601,105

 

26.0

%

 

 

Water

 

 

57,119

 

 

45.2

%

 

 

54,498

 

46.8

%

 

 

LPD

 

 

5,664

 

 

6.4

%

 

 

14,447

 

16.2

%

 

 

Other

 

 

(1,574

)

 

(12.1

)%

 

 

2,188

 

9.6

%

 

 

Total

 

$

851,826

 

 

30.9

%

 

$

672,238

 

26.5

%

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

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net Revenue

 

 

 

 

 

 

 

CAG

 

$

837,160

 

$

764,990

 

$

72,170

 

 

9.4

%

 

1.0

%

 

 

 

8.4

%

United States

 

 

573,830

 

 

530,758

 

 

43,072

 

 

8.1

%

 

 

 

 

 

8.1

%

International

 

 

263,330

 

 

234,232

 

 

29,098

 

 

12.4

%

 

3.4

%

 

 

 

9.0

%

Water

 

 

44,450

 

 

40,840

 

 

3,610

 

 

8.8

%

 

1.2

%

 

1.1

%

 

6.6

%

United States

 

 

22,804

 

 

20,940

 

 

1,864

 

 

8.9

%

 

 

 

0.7

%

 

8.2

%

International

 

 

21,646

 

 

19,900

 

 

1,746

 

 

8.8

%

 

2.4

%

 

1.5

%

 

4.9

%

LPD

 

 

29,747

 

 

28,452

 

 

1,295

 

 

4.6

%

 

2.5

%

 

 

 

2.0

%

United States

 

 

5,040

 

 

4,452

 

 

588

 

 

13.2

%

 

 

 

 

 

13.2

%

International

 

 

24,707

 

 

24,000

 

 

707

 

 

2.9

%

 

2.9

%

 

 

 

 

Other

 

 

4,170

 

 

7,379

 

 

(3,209

)

 

(43.5

%)

 

0.1

%

 

 

 

(43.5

%)

Total Company

 

$

915,527

 

$

841,661

 

$

73,866

 

 

8.8

%

 

1.1

%

 

0.1

%

 

7.6

%

United States

 

 

603,046

 

 

560,292

 

 

42,754

 

 

7.6

%

 

 

 

 

 

7.6

%

International

 

 

312,481

 

 

281,369

 

 

31,112

 

 

11.1

%

 

3.3

%

 

0.1

%

 

7.7

%

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net CAG Revenue

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$

733,958

 

$

667,309

 

$

66,649

 

 

10.0

%

 

1.1

%

 

 

8.9

%

IDEXX VetLab consumables

 

 

296,042

 

 

262,820

 

 

33,222

 

 

12.6

%

 

1.2

%

 

 

11.4

%

Rapid assay products

 

 

87,562

 

 

80,542

 

 

7,020

 

 

8.7

%

 

0.5

%

 

 

8.2

%

Reference laboratory diagnostic and consulting services

 

 

320,294

 

 

295,590

 

 

24,704

 

 

8.4

%

 

1.0

%

 

 

7.3

%

CAG Diagnostics services and accessories

 

 

30,060

 

 

28,357

 

 

1,703

 

 

6.0

%

 

1.3

%

 

 

4.7

%

CAG Diagnostics capital – instruments

 

 

32,254

 

 

35,176

 

 

(2,922

)

 

(8.3

%)

 

1.9

%

 

 

(10.2

%)

Veterinary software, services and diagnostic imaging systems

 

 

70,948

 

 

62,505

 

 

8,443

 

 

13.5

%

 

0.2

%

 

 

13.3

%

Net CAG revenue

 

$

837,160

 

$

764,990

 

$

72,170

 

 

9.4

%

 

1.0

%

 

 

8.4

%

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

 

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$

733,958

 

$

667,309

 

$

66,649

 

10.0

%

 

1.1

%

 

 

8.9

%

United States

 

 

497,109

 

 

459,077

 

 

38,032

 

8.3

%

 

 

 

 

8.3

%

International

 

 

236,849

 

 

208,232

 

 

28,617

 

13.7

%

 

3.4

%

 

 

10.3

%

 

1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

IDEXX Laboratories, Inc. and Subsidiaries

Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets

Amounts in thousands (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net Revenue

 

 

 

 

 

 

 

CAG

 

$

2,531,091

 

$

2,310,261

 

$

220,830

 

 

9.6

%

 

(0.5

%)

 

 

 

10.1

%

United States

 

 

1,732,752

 

 

1,563,150

 

 

169,602

 

 

10.8

%

 

 

 

 

 

10.8

%

International

 

 

798,339

 

 

747,111

 

 

51,228

 

 

6.9

%

 

(1.6

%)

 

 

 

8.5

%

Water

 

 

126,362

 

 

116,406

 

 

9,956

 

 

8.6

%

 

(0.9

%)

 

1.5

%

 

8.0

%

United States

 

 

63,932

 

 

58,304

 

 

5,628

 

 

9.7

%

 

 

 

0.7

%

 

8.9

%

International

 

 

62,430

 

 

58,102

 

 

4,328

 

 

7.4

%

 

(1.8

%)

 

2.2

%

 

7.0

%

LPD

 

 

88,866

 

 

89,211

 

 

(345

)

 

(0.4

%)

 

(0.7

%)

 

 

 

0.3

%

United States

 

 

14,005

 

 

12,054

 

 

1,951

 

 

16.2

%

 

 

 

 

 

16.2

%

International

 

 

74,861

 

 

77,157

 

 

(2,296

)

 

(3.0

%)

 

(0.8

%)

 

 

 

(2.2

%)

Other

 

 

13,033

 

 

22,878

 

 

(9,845

)

 

(43.0

%)

 

 

 

 

 

(43.0

%)

Total Company

 

$

2,759,352

 

$

2,538,756

 

$

220,596

 

 

8.7

%

 

(0.6

%)

 

0.1

%

 

9.2

%

United States

 

 

1,815,066

 

 

1,646,023

 

 

169,043

 

 

10.3

%

 

 

 

 

 

10.2

%

International

 

 

944,286

 

 

892,733

 

 

51,553

 

 

5.8

%

 

(1.5

%)

 

0.1

%

 

7.2

%

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net CAG Revenue

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$

2,223,336

 

$

2,017,532

 

$

205,804

 

 

10.2

%

 

(0.6

%)

 

 

10.8

%

IDEXX VetLab consumables

 

 

890,891

 

 

796,072

 

 

94,819

 

 

11.9

%

 

(0.8

%)

 

 

12.7

%

Rapid assay products

 

 

266,934

 

 

242,542

 

 

24,392

 

 

10.1

%

 

(0.4

%)

 

 

10.4

%

Reference laboratory diagnostic and consulting services

 

 

973,580

 

 

894,795

 

 

78,785

 

 

8.8

%

 

(0.4

%)

 

 

9.2

%

CAG Diagnostics services and accessories

 

 

91,931

 

 

84,123

 

 

7,808

 

 

9.3

%

 

(0.8

%)

 

 

10.1

%

CAG Diagnostics capital – instruments

 

 

99,452

 

 

108,400

 

 

(8,948

)

 

(8.3

%)

 

(0.4

%)

 

 

(7.8

%)

Veterinary software, services and diagnostic imaging systems

 

 

208,303

 

 

184,329

 

 

23,974

 

 

13.0

%

 

(0.3

%)

 

 

13.3

%

Net CAG revenue

 

$

2,531,091

 

$

2,310,261

 

$

220,830

 

 

9.6

%

 

(0.5

%)

 

 

10.1

%

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2023

 

September 30,

2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

 

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$

2,223,336

 

$

2,017,532

 

$

205,804

 

10.2

%

 

(0.6

%)

 

 

10.8

%

United States

 

 

1,505,837

 

 

1,351,936

 

 

153,901

 

11.4

%

 

 

 

 

11.4

%

International

 

 

717,499

 

 

665,596

 

 

51,903

 

7.8

%

 

(1.7

%)

 

 

9.5

%

 

1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

Amounts in thousands (Unaudited)

 

 

 

 

September 30,

2023

 

December 31,

2022

 

 

 

 

 

Assets:

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

331,696

 

$

112,546

 

 

Accounts receivable, net

 

 

452,699

 

 

400,619

 

 

Inventories

 

 

393,974

 

 

367,823

 

 

Other current assets

 

 

205,861

 

 

220,489

 

 

Total current assets

 

 

1,384,230

 

 

1,101,477

 

 

Property and equipment, net

 

 

687,101

 

 

649,474

 

 

Other long-term assets, net

 

 

1,015,073

 

 

995,814

 

 

Total assets

 

$

3,086,404

 

$

2,746,765

Liabilities and Stockholders'

 

 

 

 

 

 

Equity:

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

112,609

 

$

110,221

 

 

Accrued liabilities

 

 

420,312

 

 

433,662

 

 

Line of credit

 

 

250,000

 

 

579,000

 

 

Current portion of long-term debt

 

 

149,990

 

 

74,982

 

 

Deferred revenue

 

 

37,282

 

 

37,938

 

 

Total current liabilities

 

 

970,193

 

 

1,235,803

 

 

Long-term debt, net of current portion

 

 

618,813

 

 

694,387

 

 

Other long-term liabilities, net

 

 

199,991

 

 

207,838

 

 

Total long-term liabilities

 

 

818,804

 

 

902,225

 

 

Total stockholders' equity

 

 

1,297,407

 

 

608,737

 

 

Total liabilities and stockholders' equity

 

$

3,086,404

 

$

2,746,765

IDEXX Laboratories, Inc. and Subsidiaries

Selected Balance Sheet Information (Unaudited)

 

 

 

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

Selected Balance Sheet Information:

 

Days sales outstanding1

 

45.6

 

43.9

 

42.9

 

43.4

 

43.4

 

 

Inventory turns2

 

1.3

 

1.3

 

1.3

 

1.3

 

1.3

 

 

 

 

 

 

 

 

 

 

 

 

 

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 revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

Amounts in thousands (Unaudited)

 

 

 

 

Nine Months Ended

 

 

 

 

September 30,

2023

 

September 30,

2022

 

 

 

 

 

Operating:

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$

650,521

 

 

$

506,882

 

 

 

Non-cash adjustments to net income

 

 

120,390

 

 

 

92,271

 

 

 

Changes in assets and liabilities

 

 

(114,252

)

 

 

(229,597

)

 

 

Net cash provided by operating activities

 

 

656,659

 

 

 

369,556

 

Investing:

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(101,075

)

 

 

(99,609

)

 

 

Equity investment

 

 

 

 

 

(25,000

)

 

 

Acquisition of intangible assets

 

 

 

 

 

(10,000

)

 

 

Acquisition of a business, net of cash acquired

 

 

 

 

 

(11,512

)

 

 

Proceeds from net investment hedges

 

 

6,256

 

 

 

 

 

 

Net cash used by investing activities

 

 

(94,819

)

 

 

(146,121

)

Financing:

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

(Repayments) borrowings under credit facility, net

 

 

(329,000

)

 

 

559,500

 

 

 

Payment of senior debt

 

 

 

 

 

(75,000

)

 

 

Payments for the acquisition-related contingent consideration and holdbacks

 

 

(1,879

)

 

 

(5,730

)

 

 

Repurchases of common stock

 

 

(35,070

)

 

 

(745,691

)

 

 

Proceeds from exercises of stock options and employee stock

purchase plans

 

 

35,704

 

 

 

23,257

 

 

 

Shares withheld for statutory tax withholding payments on

restricted stock

 

 

(9,907

)

 

 

(10,552

)

 

 

Net cash used by financing activities

 

 

(340,152

)

 

 

(254,216

)

 

 

Net effect of changes in exchange rates on cash

 

 

(2,538

)

 

 

(14,497

)

 

 

Net increase (decrease) in cash and cash equivalents

 

 

219,150

 

 

 

(45,278

)

 

 

Cash and cash equivalents, beginning of period

 

 

112,546

 

 

 

144,454

 

 

 

Cash and cash equivalents, end of period

 

$

331,696

 

 

$

99,176

 

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands except per share data (Unaudited)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

September 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

 

 

 

 

 

 

 

Free Cash Flow:

 

Net cash provided by operating activities

 

$

272,433

 

 

$

189,000

 

 

$

656,659

 

 

$

369,556

 

 

 

Investing cash flows attributable to purchases of property and equipment

 

 

(34,094

)

 

 

(37,685

)

 

 

(101,075

)

 

 

(99,609

)

 

 

Free cash flow1

 

$

238,339

 

 

$

151,315

 

 

$

555,584

 

 

$

269,947

 

 

 

 

 

 

 

 

 

 

 

 

1See Statements Regarding Non-GAAP Financial Measures, above.

IDEXX Laboratories, Inc. and Subsidiaries

 

 

 

 

 

 

 

Common Stock Repurchases

 

 

 

 

 

 

 

Amounts in thousands except per share data (Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

 

 

 

 

 

Shares repurchased in the open market

 

 

65

 

 

453

 

 

65

 

 

1,764

Shares acquired through employee surrender for statutory tax withholding

 

 

1

 

 

 

 

20

 

 

21

Total shares repurchased

 

 

66

 

 

453

 

 

85

 

 

1,785

 

 

 

 

 

 

 

 

 

Cost of shares repurchased in the open market

 

$

35,070

 

$

166,423

 

$

35,070

 

$

742,661

Cost of shares for employee surrenders

 

 

231

 

 

162

 

 

9,907

 

 

10,552

Total cost of shares

 

$

35,301

 

$

166,585

 

$

44,977

 

$

753,213

 

 

 

 

 

 

 

 

 

Average cost per share – open market repurchases

 

$

536.03

 

$

367.55

 

$

536.03

 

$

421.12

Average cost per share – employee surrenders

 

$

506.74

 

$

387.07

 

$

503.43

 

$

502.26

Average cost per share – total

 

$

535.83

 

$

367.56

 

$

528.49

 

$

422.07

 

Contacts

John Ravis, Investor Relations, 1-207-556-8155

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