WESTBROOK, Maine, July 25, 2014 /PRNewswire/ -- IDEXX
Laboratories, Inc. (NASDAQ: IDXX) today reported that revenues for
the second quarter of 2014 increased 11% versus the prior year
period to $390 million. Organic
revenue growth1 for the second quarter of 2014 versus
the prior year period was 9%, or 10% normalized for changes in
distributor inventory2. Earnings per diluted share
("EPS") for the quarter ended June 30,
2014 increased 11% from the prior year period to
$1.10.
"In the second quarter, we continued to accelerate our growth
momentum. Companion Animal Group Diagnostics recurring normalized
organic revenues expanded at double-digit rates in both
North America and international
markets. Instrument placements were very strong, supported by
nearly 800 Catalyst placements globally. The Catalyst One™
introductory offer in North
America is resonating with veterinarians, where over 60% of
Catalyst placements are going to competitive customer accounts. We
are seeing clear benefits from our investments in innovation and
enhanced commercial capability globally, including our
transformation of the North American diagnostic sales and marketing
organization in 2013," said Jonathan
Ayers, the Company's Chairman and Chief Executive
Officer.
"Building on this progress, we are announcing today plans to
move from a hybrid to an all-direct product distribution model in
the US for Companion Animal Group diagnostics in 2015. Under this
approach, we intend to take orders, ship product, invoice and
receive payment, and recognize revenue for all rapid assay test
kits and instrument consumables in the US, aligning with our direct
model for instruments, reference lab services, and other CAG
products and services," Ayers commented.
"Moving to an all-direct product distribution in the US is a
natural evolution of our business model. It aligns with both our
strategy to provide an integrated diagnostic solution with world
class in-house and reference lab modalities and our US sales
transformation to a Veterinary Diagnostic Consultant sales role
that serves our customers for our full diagnostic offering. Our new
customer-centric sales model, implemented in 2013, has been highly
effective and is gaining momentum each new quarter. The change to
an all-direct product distribution approach will allow a
significant expansion in our direct sales coverage and capacity,
including an estimated 40% increase in the Veterinary Diagnostic
Consultant field sales role and a 60% increase in customer field
call frequency. With this increase, we will be much better equipped
to support our US veterinary customers' growth in the use of IDEXX
diagnostics to provide the best medical care for their patients and
clients. The change will result in an incremental annual
$50 million to $55 million, or 5%,
increase in our fast growing recurring diagnostic revenue, with
accretive profit benefits that will scale over time, following the
transition to the new model."
Second Quarter Financial Performance Highlights
Second quarter revenues reached $390
million, an 11% increase compared to the prior year period,
reflecting strong performance across regions and business
segments.
- Companion Animal Group ("CAG") organic revenue growth was
nearly 10% for the second quarter of 2014 compared to the prior
year period. Normalized CAG Diagnostics recurring organic revenue
growth was nearly 12%, primarily driven by 13% gains in IDEXX
VetLab® consumables and 11% growth in reference lab services.
- Catalyst and hematology instrument placements increased 34% and
13%, respectively, in the second quarter of 2014, compared to the
prior year period. Instrument revenues in the second quarter of
2014 declined 10% organically, compared to the prior year period,
reflecting approximately $3 million
in deferred revenue from placements associated with the Catalyst
One introductory offer.
- Livestock, Poultry and Dairy ("LPD") organic revenues grew 6%
for the second quarter of 2014, compared to the prior year period,
benefitting mainly from increased sales in China and New
Zealand.
- Organic revenues for Water in the second quarter of 2014 grew
over 7%, compared to the prior year period, supported by strong
gains in North America and
Asia.
Operating margins for the second quarter of 2014 were consistent
with expectations. Gross margins were basically flat compared to
the prior year period, with improvements from price offset in part
by the absence of prior year foreign exchange hedging gains and
higher freight and distribution costs. Operating expenses for the
second quarter of 2014 increased 14%, compared to the prior year
period, reflecting planned increases in global commercial
resources.
The accompanying financial tables provide more information
concerning our revenue and other operating results for the three
months and six months ended June 30,
2014.
Long Term Debt Expansion
On July 21, 2014, the Company
issued and sold to accredited institutional investors through a
private placement an aggregate principal amount of $125 million of its senior notes consisting of
$50 million of seven-year notes at an
interest rate of 3.32% and $75
million of ten-year notes at an interest rate of 3.76%. On
July 22, 2014, the Company also
executed an agreement for a private placement of an additional
$75 million of its twelve-year senior
notes at an interest rate of 3.72% with funding anticipated to
occur in September 2014. The proceeds
from the offerings will be used to reduce outstanding amounts under
our recently expanded $700 million
revolving credit facility.
Increase in Share Repurchase Program
The IDEXX Board of Directors has authorized the repurchase by
the Company of up to an additional five million shares of its
common stock under its ongoing share repurchase program.
Repurchases may be made in the open market (including through Rule
10b5-1 plans) or in negotiated transactions. These shares are in
addition to the 1,412,333 shares remaining under the Company's
share repurchase program as of June 30,
2014, pursuant to previous Board authorization.
Transition to an All-Direct Product Distribution Model in the
US
The Company plans to transition to an all-direct product
distribution model in the US effective January 1, 2015 for rapid assay test kits and
instrument consumables, upon completion and expiration of our
current annual contracts with our US distribution partners.
The Company will significantly enhance its go-to-market
capability as a part of this change through the addition of
Veterinary Diagnostic Consultants and sales specialists, inside
sales and customer support resources, field service
representatives, as well as a new regionally-based Professional
Service Veterinarian capability. The Company will also expand its
US warehouse and distribution capabilities primarily through use of
third-party logistics providers.
Consistent with a direct sales approach, the Company will
recognize revenue at the veterinary practice level on rapid assay
test kits and instrument consumables, instead of at
distribution, capturing an additional $50
million to $55 million in annual revenue beginning in 2015.
The Company estimates that annual operating profit associated with
this growing revenue stream will increase approximately
$5 million to $8 million in 2015,
before transitional impacts, with accretive benefits that will
scale over time.
The Company will incur transition costs in implementing the
all-direct product distribution approach in the US. For 2014, this
will include approximately $8 million
in incremental expense as the Company ramps up sales and operating
resources ahead of the planned January 1,
2015 introduction of the new model. The Company also expects
to incur approximately $10 million to $12
million in non-recurring expenses in the second half of 2014
associated with project management and other one-time costs
required to implement the new model. Combined, the Company
estimates these transition costs will reduce reported EPS by
approximately $0.23-$0.25 in
2014.
In 2015, transitional impacts will be primarily related to the
drawdown of inventory held by distributors at the end of the year.
The Company's financial outlook assumes that distributors will hold
approximately 3.5 weeks of inventory at the end of 2014, consistent
with prior trends. The Company estimates that the drawdown of this
inventory will occur primarily in the first quarter of 2015 and
will result in a one-time reduction in projected revenue and
operating profit of $30 million to $35
million, and $23 million to $27
million, respectively. Additionally, the Company expects to
incur $2 million to $3 million in
remaining project management expenses in early
2015.
Outlook for 2014
GAAP and Non-GAAP Outlook
Management believes that including the following non-GAAP
financial measures of EPS (As Adjusted) in the Company's outlook
for the year ending December 31, 2014
is useful to provide supplemental information regarding the
performance of our business and to facilitate period-over-period
comparisons of the performance of our business.
The following guidance reflects performance before financial
impacts from the transition to an all-direct product distribution
model, which management believes helps investors understand the
Company's fundamental operating performance.
The Company has increased the top end of its organic revenue
growth guidance by 50 basis points reflecting the strong momentum
in the Company's CAG Diagnostics recurring revenues and better than
expected year-to-date performance in LPD. Operating margin is
expected to be in line with the Company's previous guidance of
relatively consistent operating margins for the full year compared
to 2013. The operating profit increase associated with higher
revenue is partially offset by higher interest expense of
approximately $0.02 per share
associated with the expansion of long-term debt. The following
table summarizes this guidance:
Amounts in
millions except per share data
|
|
|
|
Guidance
Range
|
Year-over-
Year Growth
|
Revenue
|
$1,510 -
$1,520
|
9.0% to
9.5%1
|
EPS (As Adjusted)
2
|
$3.79 -
$3.86
|
11% to 14%
|
Free Cash
Flow3
|
95% - 100% of net
income
|
|
Capital
Expenditures
|
~ $80
|
-
|
|
1Organic
revenue growth. The deferred revenue impacts of our Catalyst
One introductory offer reduces organic revenue growth guidance for
2014 by 0.5%. Reported revenue growth for 2014 is
projected at 10.0% to 10.5%.
|
|
2EPS (As
Adjusted) and year-over-year growth of EPS (As Adjusted) are
non-GAAP financial measures and exclude, as applicable, 2014
transitional expenses associated with the new all-direct
product distribution model, a charge resulting from a
third-party service provider bankruptcy in 2013, the impact of the
retroactive extension of the Federal R&D tax credit associated
with the 2012 tax year that was recorded in the first quarter of
2013, the full year impact of the 2013 Federal R&D tax credit,
and the net impacts of changes in foreign currency exchange
rates. Refer to the reconciliation of EPS to EPS (As
Adjusted) in the table below.
|
|
3Free cash
flow is a non-GAAP financial measure and means, with respect to a
measurement period, the cash generated from operations during that
period, excluding tax benefits attributable to share-based
compensation arrangements, reduced by the Company's investments in
fixed assets. Management believes free cash flow is a useful
measure because it indicates the cash the operations of the
business are generating after appropriate reinvestment for
recurring investments in fixed assets that are required to operate
the business. See the Supplementary Analysis of Results below for
our calculation of free cash flow for the six months ended June 30,
2014 and 2013. With respect to this particular
forward-looking projected non-GAAP financial measure, the Company
is unable to provide a quantitative reconciliation as the inputs to
the measurement are difficult to predict and estimate and are
primarily dependent on future events.
|
As noted above, the Company expects to incur transitional costs
in 2014 associated with the change to an all-direct product
distribution model in the US. These expenses are expected to reduce
2014 operating profit and EPS by approximately $18 million to $20 million and $0.23-$0.25, respectively. The following table
reconciles EPS to EPS (As Adjusted) for these transitional items
and other adjustments to the 2013 base year that management
believes facilitate period-over-period comparisons of the
performance of the Company's business:
|
Guidance Range
2014
|
|
2013
|
|
Low
|
High
|
|
|
EPS
|
$3.54
|
$3.63
|
|
$3.48
|
|
|
|
|
|
Incremental expenses
associated with plan to
transition to
all-direct product distribution for
US Companion Animal Group Diagnostics:
|
|
|
|
|
- Non-recurring
transition costs
|
$0.15
|
$0.13
|
|
|
- Expense
ramp-up in advance of January 1,
2015 transition to new model
|
$0.10
|
|
|
Third-party service
provider bankruptcy
|
-
|
-
|
|
$0.05
|
Federal R&D tax
credit related to 2012 and 2013
|
-
|
-
|
|
($0.10)
|
Net changes in
foreign currency exchange rates
|
-
|
-
|
|
($0.03)
|
|
|
|
|
|
EPS (As
Adjusted)
|
$3.79
|
$3.86
|
|
$3.40
|
Year-over-Year Growth
of EPS (As Adjusted)
|
11%
|
14%
|
|
|
The above guidance reflects the assumptions that the value of
the US dollar relative to other currencies will remain at our
current assumptions of the euro at $1.35, the British pound at $1.69, the Canadian dollar at $0.94, the Australian dollar at $0.94 and the Japanese yen at ¥102 to the US
dollar for the balance of 2014, and that the Federal R&D tax
credit is not renewed for 2014.
2015 Preliminary Outlook
The baseline preliminary outlook for 2015, before the impact of
the transition to an all-direct product distribution model, is for
9% to 10% organic revenue growth reflecting our accelerating
momentum in the Company's business. Operating margins, excluding
previously described transitional impacts in both 2014 and 2015,
are expected to be relatively flat next year.
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, dial 1-800-230-1059 or 1-612-332-0107 and
reference confirmation code 331727. An audio replay will be
available through Friday, August 1,
2014 by dialing 1-320-365-3844 and referencing replay code
331727.
The call will also be available via live or archived webcast on
the IDEXX Laboratories' website at http://www.idexx.com and
will be available for one year.
About IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. is a leader in pet healthcare
innovation, serving practicing veterinarians around the world with
a broad range of diagnostic and information technology-based
products and services. IDEXX products enhance the ability of
veterinarians to provide advanced medical care, improve staff
efficiency and build more economically successful practices. IDEXX
is also a worldwide leader in providing diagnostic tests and
information for livestock and poultry and tests for the quality and
safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than
5,900 people and offers products to customers in over 175
countries.
Statement Regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial
measures used in this earnings release: To supplement the Company's
consolidated results presented in accordance with GAAP, the Company
has disclosed non-GAAP financial measures that exclude or adjust
certain items. Management believes these non-GAAP financial
measures provide useful supplemental information for its and
investors' evaluation of the Company's business performance and are
useful for period-over-period comparisons of the performance of the
Company's business. While management believes that these financial
measures are useful in evaluating the Company's business, this
information should be considered as supplemental in nature and
should not be considered in isolation or as a substitute for the
related financial information prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures reported by other companies. See
reconciliations included elsewhere in this earnings release for a
reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP financial measures.
Note Regarding Forward-Looking Statements
This
press release contains statements about the Company's business
prospects and estimates of the Company's financial results for
future periods that are forward-looking statements as defined in
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by the use of words
such as "expects," "may," "anticipates," "intends," "would,"
"will," "plans," "believes," "estimates," "should," and similar
words and expressions. These statements are based on management's
expectation of future events as of the date of this press 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 a newly announced
all-direct product distribution model in the US; the Company's
ability to develop, manufacture, introduce and market new products
and enhancements to existing products; the Company's ability to
achieve cost improvements in its worldwide network of laboratories
and in the manufacture and service of in-clinic instruments; the
Company's ability to identify acquisition opportunities, complete
acquisitions and integrate acquired businesses; disruptions,
shortages or pricing changes that affect the Company's purchases of
products and materials from third parties, including from sole
source suppliers; the effectiveness of the Company's sales and
marketing activities; the Company's ability to manufacture complex
biologic products; the impact of a change to our relationship with
the Company's distributors; the impact of distributor purchasing
decisions on sales of the Company's products that are sold through
distribution; the impact of increased competition, technological
advances by our competitors; the effect of government regulation on
the Company's business, including government decisions about
whether and when to approve the Company's products and decisions
regarding labeling, manufacturing and marketing products; the
impact of veterinary hospital consolidation, and the prevalence of
buying consortiums on the markets for the Company's products; the
Company's ability to obtain patent and other intellectual property
protection for its products, successfully enforce its intellectual
property rights and defend itself against third party claims
against the Company; changes in testing patterns or practices in
veterinary medicine that affect the rate of use of the Company's
products and services by veterinarians; a failure or perceived
failure to comply with regulations and our policies regarding the
privacy and protection of user data; the effect of any
strengthening of the rate of exchange for the US dollar; the impact
of a weak economy on demand for the Company's products and services
or increased customer credit risk; the effects of operations
outside the US, including from currency fluctuations,
different regulatory, political and economic conditions, and
different market conditions; the impact of the Company's limited
experience and small scale in the human point-of-care market; the
effects of interruptions to the Company's operations due to natural
or man-made disasters, system failures or disruptions or security
breaches; the effect on the Company's stock price if quarterly or
annual operating results do not meet expectations of market
analysts or investors in future periods; potential exposures
related to our worldwide provision for income taxes and the
potential loss of tax incentives; and the Company's ability to
obtain financing on favorable terms. A further description of these
and other factors can be found in the Company's Annual Report on
Form 10-K for the year ended December 31,
2013 and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2014, in the
sections captioned "Risk Factors," as well as the Company's other
periodic reports filed with the Securities and Exchange
Commission.
Contact: Ed Garber, Director,
Investor Relations, 1-207-556-8155
____________________________________
1 Organic revenue growth is
not a measure defined by generally accepted accounting principles
in the United States of America
("GAAP"), otherwise referred to herein as a non-GAAP financial
measure. 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 our peers. Organic revenue growth for the second
quarter of 2014 excludes the impact of changes in foreign currency
exchange rates, which contributed 0.5% to revenue growth, and
revenue from business acquisitions, which contributed 0.8% to
revenue growth. See the Supplementary Analysis of Results below for
a reconciliation of reported revenue growth to organic revenue
growth.
2 Normalized organic
revenue growth is a non-GAAP financial measure. Management believes
that reporting normalized organic revenue growth provides useful
information to investors by facilitating easier comparisons of our
organic revenue growth performance with prior and future periods.
Our rapid assay products and VetLab instrument consumables are sold
by third party distributors, who purchase products from us and sell
them to end users, such as veterinary practices. As a result,
distributor inventory levels have an impact on our reported sales,
and distributor inventory levels may be affected by many factors,
which may not be directly related to underlying end-user demand for
our products. Normalized organic revenue growth excludes the impact
of changes in our significant distributors' inventory levels on
organic revenue growth for the relevant period. We are unable to
obtain data for sales to end users from certain less significant
third party distributors internationally. We do not believe the
impact of changes in these international distributors' inventories
would have a material impact on our growth rates. Further
reconciliation of organic revenue growth to normalized organic
revenue growth for the second quarter of 2014 includes the
following negative impacts to organic revenue growth from changes
in our significant distributors' inventory levels; Total Company
0.7%, CAG Diagnostics Recurring 1.0%, VetLab consumables 1.1%, and
Rapid Assay 3.4%. See the Supplementary Analysis of Results below
for a reconciliation of reported revenue growth to organic revenue
growth.
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
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,
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
Revenue:
|
Revenue
|
|
$ 390,122
|
$ 352,583
|
|
$ 750,325
|
$ 684,688
|
Expenses
and
|
|
|
|
|
|
|
|
Income:
|
Cost of
revenue
|
|
171,604
|
154,885
|
|
329,710
|
303,018
|
|
Gross
profit
|
|
218,518
|
197,698
|
|
420,615
|
381,670
|
|
Sales and
marketing
|
|
68,020
|
57,896
|
|
135,868
|
117,294
|
|
General and
administrative
|
|
41,846
|
38,858
|
|
82,935
|
80,488
|
|
Research and
development
|
|
25,433
|
22,181
|
|
48,547
|
43,939
|
|
Income from
operations
|
|
83,219
|
78,763
|
|
153,265
|
139,949
|
|
Interest expense,
net
|
|
(2,477)
|
(735)
|
|
(4,780)
|
(1,125)
|
|
Income before
provision for income taxes
|
|
80,742
|
78,028
|
|
148,485
|
138,824
|
|
Provision for income
taxes
|
|
23,498
|
24,029
|
|
44,648
|
39,959
|
Net
Income:
|
Net income
|
|
57,244
|
53,999
|
|
103,837
|
98,865
|
|
Less: Noncontrolling
interest in subsidiary's
|
|
|
|
|
|
|
|
earnings
|
|
26
|
4
|
|
34
|
11
|
|
Net income
attributable to stockholders
|
$ 57,218
|
$ 53,995
|
|
$ 103,803
|
$ 98,854
|
|
Earnings per share:
Basic
|
|
$
1.12
|
$
1.01
|
|
$
2.02
|
$
1.83
|
|
Earnings per share:
Diluted
|
|
$
1.10
|
$
0.99
|
|
$
1.99
|
$
1.80
|
|
Shares outstanding:
Basic
|
|
51,125
|
53,670
|
|
51,369
|
54,125
|
|
Shares outstanding:
Diluted
|
|
51,795
|
54,386
|
|
52,080
|
54,955
|
|
|
|
|
|
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Selected Operating
Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
June
30,
|
June
30,
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
Operating
|
Gross
profit
|
|
56.0%
|
56.1%
|
|
56.1%
|
55.7%
|
Ratios (as
a
|
Sales, marketing,
general and
|
|
|
|
|
|
|
percentage
of
|
administrative
expense
|
|
28.2%
|
27.4%
|
|
29.2%
|
28.9%
|
revenue):
|
Research and
development expense
|
|
6.5%
|
6.3%
|
|
6.5%
|
6.4%
|
|
Income from
operations(1)
|
|
21.3%
|
22.3%
|
|
20.4%
|
20.4%
|
|
|
|
|
|
|
|
|
(1)Amounts
presented may not recalculate due to rounding.
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Segment
Information
|
|
|
|
|
|
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
June
30,
|
Percent
of
|
|
June
30,
|
Percent
of
|
|
|
|
2014
|
Revenue
|
|
2013
|
Revenue
|
Revenue:
|
CAG
|
|
$ 326,697
|
|
|
$ 295,834
|
|
|
Water
|
|
24,487
|
|
|
22,384
|
|
|
LPD
|
|
32,739
|
|
|
28,278
|
|
|
Other
|
|
6,199
|
|
|
6,087
|
|
|
Total
|
|
$ 390,122
|
|
|
$ 352,583
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
CAG
|
|
$ 181,343
|
55.5%
|
|
$ 161,704
|
54.7%
|
|
Water
|
|
16,107
|
65.8%
|
|
15,044
|
67.2%
|
|
LPD
|
|
20,801
|
63.5%
|
|
15,254
|
53.9%
|
|
Other
|
|
2,743
|
44.2%
|
|
3,069
|
50.4%
|
|
Unallocated
Amounts
|
|
(2,476)
|
N/A
|
|
2,627
|
N/A
|
|
Total
|
|
$ 218,518
|
56.0%
|
|
$ 197,698
|
56.1%
|
|
|
|
|
|
|
|
|
Income
from
|
|
|
|
|
|
|
|
Operations:
|
CAG
|
|
$
70,348
|
21.5%
|
|
$
63,358
|
21.4%
|
|
Water
|
|
10,064
|
44.1%
|
|
9,913
|
44.3%
|
|
LPD
|
|
7,323
|
22.4%
|
|
3,215
|
11.4%
|
|
Other
|
|
(249)
|
(4.0%)
|
|
841
|
13.8%
|
|
Unallocated
Amounts
|
|
(4,267)
|
N/A
|
|
1,436
|
N/A
|
|
Total
|
|
$
83,219
|
21.3%
|
|
$
78,763
|
22.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
Percent
of
|
|
June
30,
|
Percent
of
|
|
|
|
2014
|
Revenue
|
|
2013
|
Revenue
|
Revenue:
|
CAG
|
|
$ 682,285
|
|
|
$ 572,774
|
|
|
Water
|
|
45,908
|
|
|
43,050
|
|
|
LPD
|
|
64,090
|
|
|
56,317
|
|
|
Other
|
|
12,042
|
|
|
12,547
|
|
|
Total
|
|
$ 750,325
|
|
|
$ 684,688
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
CAG
|
|
$ 346,872
|
55.2%
|
|
$ 311,942
|
54.5%
|
|
Water
|
|
30,038
|
65.4%
|
|
28,538
|
66.3%
|
|
LPD
|
|
40,642
|
63.4%
|
|
31,130
|
55.3%
|
|
Other
|
|
6,144
|
51.0%
|
|
6,257
|
49.9%
|
|
Unallocated
Amounts
|
|
(3,081)
|
N/A
|
|
3,803
|
N/A
|
|
Total
|
|
$ 420,615
|
56.1%
|
|
$ 381,670
|
55.7%
|
|
|
|
|
|
|
|
|
Income
from
|
|
|
|
|
|
|
|
Operations:
|
CAG
|
|
$ 126,212
|
20.1%
|
|
$ 114,666
|
20.0%
|
|
Water
|
|
18,180
|
39.6%
|
|
18,268
|
42.4%
|
|
LPD
|
|
13,783
|
21.5%
|
|
8,051
|
14.3%
|
|
Other
|
|
340
|
2.8%
|
|
1,276
|
10.2%
|
|
Unallocated
Amounts
|
|
(5,250)
|
N/A
|
|
(2,312)
|
N/A
|
|
Total
|
|
$ 153,265
|
20.4%
|
|
$ 139,949
|
20.4%
|
|
|
|
|
|
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Revenues and
Revenue Growth Analysis by Product and Service Categories and by
Domestic and International Markets
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
Three
Months
Ended
June 30,
2014
|
|
|
Three
Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage Change from Acquisitions(2)
|
|
Organic
Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG
|
$
|
326,697
|
|
$
|
295,834
|
|
$
|
30,863
|
|
10.4
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
9.9
|
%
|
Water
|
|
24,487
|
|
|
22,384
|
|
|
2,103
|
|
9.4
|
%
|
|
0.8
|
%
|
|
1.3
|
%
|
|
7.3
|
%
|
LPD
|
|
32,739
|
|
|
28,278
|
|
|
4,461
|
|
15.8
|
%
|
|
2.2
|
%
|
|
7.5
|
%
|
|
6.1
|
%
|
Other
|
|
6,199
|
|
|
6,087
|
|
|
112
|
|
1.8
|
%
|
|
0.3
|
%
|
|
-
|
|
|
1.5
|
%
|
Total
|
$
|
390,122
|
|
$
|
352,583
|
|
$
|
37,539
|
|
10.6
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
Three Months
Ended
June 30,
2014
|
|
|
Three
Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage
Change
from
Acquisitions
(2)
|
|
|
Organic
Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
225,336
|
|
$
|
205,350
|
|
$
|
19,986
|
|
9.7
|
%
|
|
-
|
|
|
-
|
|
|
|
|
9.7
|
%
|
International
|
|
164,786
|
|
|
147,233
|
|
|
17,553
|
|
11.9
|
%
|
|
1.4
|
%
|
|
1.9
|
%
|
|
|
|
8.6
|
%
|
Total
|
$
|
390,122
|
|
$
|
352,583
|
|
$
|
37,539
|
|
10.6
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net CAG
Revenue
|
Three Months
Ended
June 30,
2014
|
|
|
Three Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage
Change
from
Acquisitions
(2)
|
|
|
|
Organic Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG Diagnostics
recurring revenue:
|
$
|
281,596
|
|
$
|
253,256
|
|
$
|
28,340
|
|
11.2
|
%
|
|
0.5
|
%
|
|
0.1
|
%
|
|
|
|
10.6
|
%
|
VetLab
consumables
|
|
89,113
|
|
|
78,776
|
|
|
10,337
|
|
13.1
|
%
|
|
0.7
|
%
|
|
-
|
|
|
|
|
12.4
|
%
|
VetLab service and
accessories
|
|
13,512
|
|
|
12,506
|
|
|
1,006
|
|
8.0
|
%
|
|
0.8
|
%
|
|
-
|
|
|
|
|
7.2
|
%
|
Rapid assay
products
|
|
49,493
|
|
|
46,057
|
|
|
3,436
|
|
7.5
|
%
|
|
0.1
|
%
|
|
-
|
|
|
|
|
7.4
|
%
|
Reference
laboratory diagnostic and
consulting services
|
|
129,478
|
|
|
115,917
|
|
|
13,561
|
|
11.7
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
|
|
11.1
|
%
|
CAG Diagnostics
capital - instruments
|
|
18,914
|
|
|
20,755
|
|
|
(1,841)
|
|
(8.9)
|
%
|
|
1.1
|
%
|
|
-
|
|
|
|
|
(10.0)
|
%
|
Customer information
management and digital imaging systems
|
|
26,187
|
|
|
21,823
|
|
|
4,364
|
|
20.0
|
%
|
|
(0.5)
|
%
|
|
-
|
|
|
|
|
20.5
|
%
|
Net CAG
revenue
|
$
|
326,697
|
|
$
|
295,834
|
|
$
|
30,863
|
|
10.4
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
percentage change from currency is a non-GAAP financial measure.
Effective January 1, 2014, this measure represents the percentage
change in revenue resulting from the difference between the average
exchange rates during the three months ended June 30, 2014 and the
same period of the prior year applied to foreign
currency-denominated revenues for the three months ended June 30,
2013. Under the Company's methodology used prior to January 1,
2014, the Company calculated the percentage change in revenue
resulting from the difference between the average exchange rates
during the most recently completed three-month period and the same
period of the prior year applied to foreign currency-denominated
revenues for the most recently completed three-month period. This
change in methodology, which was implemented to achieve operational
efficiencies, is not deemed material.
|
|
(2) The
percentage change from acquisitions is a non-GAAP financial
measure. This measure represents the percentage change in revenue
during the three months ended June 30, 2014 compared to the three
months ended June 30, 2013 attributed to acquisitions subsequent to
March 31, 2013.
|
|
(3)Organic
revenue growth is a non-GAAP financial measure and represents the
percentage change in revenue during the three months ended June 30,
2014 compared to the three months ended June 30, 2013 net of
acquisitions and the effect of changes in foreign currency exchange
rates.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Revenues and
Revenue Growth Analysis by Product and Service Categories and by
Domestic and International Markets
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
Six
Months
Ended
June 30,
2014
|
|
|
Six
Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage
Change
from
Acquisitions
(2)
|
|
Organic Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG
|
$
|
628,285
|
|
$
|
572,774
|
|
$
|
55,511
|
|
9.7
|
%
|
|
-
|
|
|
0.1
|
%
|
|
9.6
|
%
|
Water
|
|
45,908
|
|
|
43,050
|
|
|
2,858
|
|
6.6
|
%
|
|
0.3
|
%
|
|
1.3
|
%
|
|
5.0
|
%
|
LPD
|
|
64,090
|
|
|
56,317
|
|
|
7,773
|
|
13.8
|
%
|
|
1.7
|
%
|
|
6.5
|
%
|
|
5.6
|
%
|
Other
|
|
12,042
|
|
|
12,547
|
|
|
(505)
|
|
(4.0)
|
%
|
|
0.3
|
%
|
|
-
|
|
|
(4.3)
|
%
|
Total
|
$
|
750,325
|
|
$
|
684,688
|
|
$
|
65,637
|
|
9.6
|
%
|
|
0.2
|
%
|
|
0.7
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Revenue
|
Six
Months
Ended
June 30,
2014
|
|
|
Six
Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage
Change
from
Acquisitions
(2)
|
|
Organic
Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
|
432,930
|
|
$
|
401,924
|
|
$
|
31,006
|
|
7.7
|
%
|
|
-
|
|
|
-
|
|
|
7.7
|
%
|
International
|
|
317,395
|
|
|
282,764
|
|
|
34,631
|
|
12.2
|
%
|
|
0.5
|
%
|
|
1.7
|
%
|
|
10.0
|
%
|
Total
|
$
|
750,325
|
|
$
|
684,688
|
|
$
|
65,637
|
|
9.6
|
%
|
|
0.2
|
%
|
|
0.7
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net CAG
Revenue
|
Six Months
Ended
June 30,
2014
|
|
|
Six
Months
Ended
June 30,
2013
|
|
Dollar
Change
|
|
Percentage
Change
|
|
Percentage
Change
from
Currency
(1)
|
|
Percentage
Change
from
Acquisitions
(2)
|
|
Organic
Revenue
Growth(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAG Diagnostics
recurring revenue:
|
$
|
540,370
|
|
$
|
492,826
|
|
$
|
47,544
|
|
9.6
|
%
|
|
(0.1)
|
%
|
|
0.2
|
%
|
|
9.5
|
%
|
VetLab
consumables
|
|
173,434
|
|
|
154,561
|
|
|
18,873
|
|
12.2
|
%
|
|
0.2
|
%
|
|
-
|
|
|
12.0
|
%
|
VetLab service and
accessories
|
|
26,616
|
|
|
24,559
|
|
|
2,057
|
|
8.4
|
%
|
|
0.3
|
%
|
|
-
|
|
|
8.1
|
%
|
Rapid assay
products
|
|
92,552
|
|
|
90,140
|
|
|
2,412
|
|
2.7
|
%
|
|
(0.1)
|
%
|
|
-
|
|
|
2.8
|
%
|
Reference
laboratory diagnostic and
consulting services
|
|
247,768
|
|
|
223,566
|
|
|
24,202
|
|
10.8
|
%
|
|
(0.2)
|
%
|
|
0.3
|
%
|
|
10.7
|
%
|
CAG Diagnostics
capital - instruments
|
|
37,468
|
|
|
36,587
|
|
|
881
|
|
2.4
|
%
|
|
1.3
|
%
|
|
-
|
|
|
1.1
|
%
|
Customer information
management and digital imaging systems
|
|
50,447
|
|
|
43,361
|
|
|
7,086
|
|
16.3
|
%
|
|
(0.6)
|
%
|
|
-
|
|
|
16.9
|
%
|
Net CAG
revenue
|
$
|
628,285
|
|
$
|
572,774
|
|
$
|
55,511
|
|
9.7
|
%
|
|
-
|
|
|
0.1
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
percentage change from currency is a non-GAAP financial measure.
Effective January 1, 2014, this measure represents the percentage
change in revenue resulting from the difference between the average
exchange rates during the six months ended June 30, 2014 and the
same period of the prior year applied to foreign
currency-denominated revenues for the six months ended June 30,
2013. Under our Company's methodology used prior to January 1,
2014, the Company calculated the percentage change in revenue
resulting from the difference between the average exchange rates
during the most recently completed six-month period and the same
period of the prior year applied to foreign currency-denominated
revenues for the most recently completed six-month period. This
change in methodology, which was implemented to achieve operational
efficiencies, is not deemed material.
|
|
(2) The
percentage change from acquisitions is a non-GAAP financial
measure. This measure represents the percentage change in revenue
during the six months ended June 30, 2014 compared to the six
months ended June 30, 2013 attributed to acquisitions subsequent to
December 31, 2012.
|
|
(3)Organic
revenue growth is a non-GAAP financial measure and represents the
percentage change in revenue during the six months ended June 30,
2014 compared to the six months ended June 30, 2013 net of
acquisitions and the effect of changes in foreign currency exchange
rates.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Consolidated
Balance Sheet
|
|
|
|
|
|
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
December
31,
|
|
|
|
|
|
|
2014
|
2013
|
Assets:
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
$
305,048
|
$ 279,058
|
|
Accounts receivable,
net
|
|
|
|
|
168,641
|
158,038
|
|
Inventories
|
|
|
|
|
145,400
|
133,427
|
|
Other current
assets
|
|
|
|
|
82,618
|
82,183
|
|
Total current
assets
|
|
|
|
|
701,707
|
652,706
|
|
Property and
equipment, net
|
|
|
|
|
286,712
|
281,214
|
|
Other long-term
assets, net
|
|
|
|
|
294,774
|
296,596
|
|
Total
assets
|
|
|
|
|
$ 1,283,193
|
$ 1,230,516
|
Liabilities
and
|
|
|
|
|
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
Equity:
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
|
|
$
41,425
|
$ 29,941
|
|
Accrued
liabilities
|
|
|
|
|
147,245
|
148,919
|
|
Debt
|
|
|
|
|
384,000
|
278,035
|
|
Deferred
revenue
|
|
|
|
|
27,682
|
21,458
|
|
Total current
liabilities
|
|
|
|
|
600,352
|
478,353
|
|
Long-term debt, net
of current portion
|
|
|
|
|
150,000
|
150,359
|
|
Other long-term
liabilities
|
|
|
|
|
79,911
|
83,590
|
|
Total long-term
liabilities
|
|
|
|
|
229,911
|
233,949
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
452,868
|
518,186
|
|
Noncontrolling
interest
|
|
|
|
62
|
28
|
|
Total
equity
|
|
|
|
452,930
|
518,214
|
|
Total liabilities
and stockholders' equity
|
|
|
|
$
1,283,193
|
$
1,230,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Selected Balance
Sheet Information (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
March
31,
|
December
31,
|
|
September
30,
|
June
30,
|
|
|
2014
|
|
2014
|
2013
|
|
2013
|
2013
|
Selected
|
|
|
|
|
|
|
|
|
Balance
Sheet
|
Days sales
outstanding (1)
|
40.8
|
|
42.8
|
39.9
|
|
41.9
|
41.2
|
Information:
|
Inventory turns
(2)
|
1.8
|
|
1.8
|
1.9
|
|
1.7
|
1.7
|
|
|
|
|
|
|
|
|
|
(1)
Days sales outstanding represents the average of the accounts
receivable balances at the beginning and end of each quarter
divided by revenue
for that quarter, the
result of which is then multiplied by 91.25 days.
|
|
(2)
Inventory turns represent inventory-related cost of product sales
for the twelve months preceding each quarter-end divided by the
inventory
balance at the end of
the quarter.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Consolidated
Statement of Cash Flows
|
|
|
|
|
|
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June
30,
|
June
30,
|
|
|
|
|
|
|
2014
|
2013
|
Operating:
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
103,837
|
$
98,865
|
|
Non-cash
charges
|
|
|
|
|
32,582
|
35,149
|
|
Changes in assets and
liabilities
|
|
|
(13,179)
|
(25,700)
|
|
Tax benefit from
share-based compensation arrangements
|
|
(7,960)
|
(5,830)
|
|
Net cash provided by
operating activities
|
|
|
|
|
115,280
|
$ 102,484
|
Investing:
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
|
|
(25,410)
|
(46,181)
|
|
Proceeds from
disposition of pharmaceutical product lines
|
|
|
-
|
3,500
|
|
Acquisition of
intangible assets
|
|
|
|
(175)
|
(659)
|
|
Proceeds from sale of
equity investment
|
|
|
|
5,400
|
-
|
|
Acquisition of a
business, net of cash acquired
|
|
|
(1,161)
|
-
|
|
Net cash used by
investing activities
|
|
|
|
(21,346)
|
(43,340)
|
Financing:
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
|
Borrowings on
revolving credit facilities, net
|
|
|
107,000
|
155,500
|
|
Payment of notes
payable
|
|
|
|
|
(1,394)
|
(480)
|
|
Repurchases of common
stock
|
|
|
|
|
(196,626)
|
(206,335)
|
|
Debt issue
costs
|
|
|
|
|
(1,156)
|
-
|
|
Proceeds from the
exercise of stock options and employee stock purchase
plans
|
|
14,707
|
16,420
|
|
Tax benefit from
share-based compensation arrangements
|
|
7,960
|
5,830
|
|
Net cash used by
financing activities
|
|
|
|
(69,509)
|
(29,065)
|
|
Net effect of changes
in exchange rates on cash
|
|
|
|
|
1,565
|
(3,052)
|
|
Net increase in cash
and cash equivalents
|
|
|
|
|
25,990
|
27,027
|
|
Cash and cash
equivalents, beginning of period
|
|
|
|
279,058
|
223,986
|
|
Cash and cash
equivalents, end of period
|
|
|
|
|
$
305,048
|
$
251,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Free Cash
Flow(1)
|
|
|
|
|
|
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June
30,
|
June
30,
|
|
|
|
|
|
|
2014
|
2013
|
Free
Cash
|
|
|
|
|
|
|
|
Flow:
|
Net cash provided by
operating activities
|
|
|
|
|
$ 115,280
|
$
102,484
|
|
Financing cash flows
attributable to tax benefits from share-based compensation
arrangements
|
|
7,960
|
5,830
|
|
Purchases of property
and equipment
|
|
|
|
|
(25,410)
|
(46,181)
|
|
Free cash
flow
|
|
|
|
|
$
97,830
|
$
62,133
|
|
|
|
|
|
|
|
|
(1)
Free cash flow is a non-GAAP financial measure and is calculated
from cash generated from operations, excluding tax benefits
attributable to share-based compensation arrangements, reduced by
the Company's investments in fixed assets. Management believes free
cash flow is a useful measure because it indicates the cash the
operations of the business are generating after appropriate
reinvestment for recurring investments in fixed assets that are
required to operate the business. Management also believes this is
a common financial measure useful to further evaluate the results
of operations.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Common Stock
Repurchases
|
|
|
|
|
|
|
Amounts in
thousands except per share data (Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
June
30,
|
|
June
30,
|
June
30,
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Share repurchases
during the period
|
|
975
|
1,652
|
|
1,591
|
2,384
|
|
Average price paid
per share
|
|
$
129.77
|
$
86.37
|
|
$
126.83
|
$
88.33
|
|
|
|
|
|
|
|
|
|
Shares remaining
under repurchase authorization as of June 30, 2014 totaled
1,412,333. On July 16, 2014, the Board of Directors authorized
the
repurchase by the
Company of up to an additional 5,000,000 shares.
|
|
|
|
|
|
|
Share repurchases
include shares surrendered by employees in payment for the minimum
required withholding taxes due on the vesting of
restricted
stock units and the
settlement of deferred stock units.
|
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SOURCE IDEXX Laboratories, Inc.