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IDEXX Laboratories Announces Second Quarter Results

  • Records second quarter revenue growth of 10% reported and 10% organic, driven by CAG Diagnostics recurring revenue growth of 11% reported and 12% organic
  • Achieves record second quarter global premium instrument placements, supporting 11% annual installed base growth
  • Delivers EPS of $2.67, representing 71% growth as reported and 77% on a comparable basis, including 54% of EPS growth rate benefit from lapping of discrete R&D investments in the second quarter of 2022
  • Updates 2023 revenue guidance to $3,660 million - $3,715 million, reflecting 8.5% - 10% growth as reported and organically, driven by projected CAG Diagnostics recurring revenue growth of 10% - 11% as reported and organically
  • Increases 2023 EPS outlook to $9.64 - $9.90, a year-over-year increase of 20% - 23% as reported and 24% - 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 second quarter results.

Second Quarter Results

The Company reports revenues of $944 million for the second quarter of 2023, an increase of 10% reported and 10% organic, driven by Companion Animal Group ("CAG") growth of 11% reported and organic and Water revenue growth of 10% reported and 9% organic. CAG Diagnostics recurring revenue growth of 11% reported and 12% organic was supported by double-digit organic revenue growth in U.S. and international regions, reflecting solid demand for veterinary services and benefits from IDEXX execution drivers. IDEXX innovation and commercial engagement drove record second quarter global premium instrument placements, supporting 11% annual growth in IDEXX's global premium instrument installed base. Veterinary software, services and diagnostic imaging systems revenue grew 12% as reported and 13% organically, reflecting continued high growth in recurring revenues and strong quarterly placements of cloud-based software solutions.

Second quarter earnings per diluted share (“EPS”) were $2.67, an increase of 71% as reported and 77% on a comparable basis, including 54% growth benefit from lapping prior year discrete R&D investments in the second quarter of 2022. EPS results included $0.04 per share in tax benefits from share-based compensation, and $0.07 per share negative impact from currency changes.

"Strong execution by IDEXX commercial and operational teams drove excellent growth results and financial performance in the second quarter," said Jay Mazelsky, President and Chief Executive Officer. "Our customers' increasing embrace of IDEXX innovations, including cloud-based software services, helps them address the growing global demand for pet healthcare by improving efficiency while maintaining quality of care and supporting veterinary teams. We are proud of our progress in advancing our business strategy, aligned with our purpose to create long-term value for our customers, employees, and shareholders by enhancing the health and well-being of pets, people, and livestock."

Second Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated revenue growth of 11% reported and organic for the quarter. Strong growth performance was supported by CAG Diagnostics recurring revenue growth of 11% on a reported basis and 12% organically. U.S. CAG Diagnostics organic recurring revenue growth of 12% remained solidly above sector growth levels in the second quarter, reflected in an estimated 1,370 basis point growth premium to U.S. same store clinical visit growth.

Additional U.S. companion animal practice key metrics are available in the Q2 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 14% reported and 15% organic revenue growth, with strong 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 9% reported and organic revenue growth, driven by strong gains in the U.S. and moderate overall growth in international regions. International growth was constrained by pressure on same-store clinical visit levels, reflecting ongoing macro-economic impacts.
  • Rapid assay products revenues grew 11% as reported and 12% organically, driven by strong growth in the U.S., reflecting solid volume gains and benefits from higher net price realization.

Veterinary software, services and diagnostic imaging systems revenues grew 12% as reported and 13% organically, supported by double-digit organic gains in recurring software and digital imaging revenues. Strong demand for cloud-based products continues to support momentum in software solution placements and customer gains.

Water

Water revenues grew 10% on a reported basis and 9% 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 were flat on a reported basis and grew 1% organically for the quarter, as solid gains in the U.S. were offset by lower herd health screening levels.

Gross Profit and Operating Profit

Gross profits increased 11% as reported and 13% on a comparable basis. Gross margin of 60.7% increased 100 basis points as reported and 160 basis points on a comparable basis. Benefits from net price gains, lab productivity and operational initiatives, improvement in software service gross margins and business mix offset inflationary effects.

Operating margin was 31.4% in the quarter, 1,060 basis points higher than the prior year as reported and 1,130 basis points higher on a comparable basis including a 930 basis point benefit from lapping prior year discrete R&D investments. Operating margin expansion reflects gross margin gains benefiting from strong CAG Diagnostics recurring revenue growth and operating expense declines of 17% as reported and on a comparable basis. Reported operating expense declines include a 26% growth impact from lapping prior year discrete R&D investments. Adjusting for this impact, operating expense growth was modestly below revenue growth, supporting operating margin gains.

2023 Growth and Financial Performance Outlook

The Company is updating its full year revenue growth outlook range to 8.5% - 10% as reported and organically. This reflects no changes to the outlook for organic revenue growth at the high end of the range and an increase of 1% at the low end. The overall reported revenue range was increased by $15 million for updated foreign exchange impact estimates.

The Company refined its full year reported operating margin outlook to 29.3% - 29.7%, incorporating strong first half performance. Operating margin guidance includes a consistent ~60 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's higher EPS outlook range of $9.64 - $9.90 increased $0.31 at the low end and $0.15 at the high end, incorporating positive refinements to the full year operational outlook and benefits of $0.06 combined from updated projections for interest expense, foreign exchange impacts, and share-based compensation benefits. This includes an outlook for $0.21 of negative full year impact from foreign exchange changes, primarily related to lapping 2022 hedge gains, an improvement of $0.02 per share compared to prior guidance.

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

 

$3,660

-

$3,715

Reported growth

 

8.5%

-

10%

Organic growth

 

8.5%

-

10%

CAG Diagnostics Recurring Revenue Growth

 

 

 

 

Reported growth

 

10%

-

11%

Organic growth

 

10%

-

11%

Operating Margin

 

29.3%

-

29.7%

Operating margin expansion

 

270 bps

-

300 bps

Negative impact of foreign exchange

 

~ 60 bps

Comparable margin expansion

 

330 bps

-

360 bps

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

 

~ 280 bps

EPS

 

$9.64

-

$9.90

Reported growth

 

20%

-

23%

Comparable growth

 

24%

-

27%

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

 

12%

Other Key Metrics

 

 

 

 

Net interest expense

 

~ $40

Share-based compensation tax benefit

 

~ $9

Share-based compensation tax rate benefit

 

~ 1%

Effective tax rate

 

21.5%

-

22%

Share-based compensation EPS impact

 

~ $0.11

Reduction in average shares outstanding

 

0.5 %

-

1%

Operating Cash Flow

 

100% - 110% of net income

Free Cash Flow

 

80% - 90% of net income

Capital Expenditures

 

~ $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

 

~ 20 bps

CAG Diagnostics recurring revenue growth rate impact

 

~ 20 bps

Operating margin growth impact

 

(~ 60 bps)

EPS impact

 

(~ $0.21)

EPS growth impact

 

(~ 3%)

 

 

 

 

 

Go-Forward Foreign Currency Exchange Rate Assumptions

 

2023

In U.S. dollars

 

 

 

 

euro

 

$1.10

British pound

 

$1.27

Canadian dollar

 

$0.75

Australian dollar

 

$0.67

Relative to the U.S. dollar

 

 

 

 

Japanese yen

 

¥142

Chinese renminbi

 

¥7.27

Brazilian real

 

R$4.86

 

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its second quarter 2023 results and management’s outlook. To participate in the conference call, dial 1-877-612-6725 or 1-773-305-6837 and reference passcode 351415. 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.

2023 Investor Day

IDEXX Laboratories, Inc. will host its 2023 Investor Day on Thursday, August 10, 2023 from 8:00 am to approximately 12:00 pm (EDT). A live audio webcast and accompanying slide presentations will be available at www.idexx.com/investors. An archived webcast replay of the event will be available approximately one hour following the event at www.idexx.com/investors. For additional information contact investorrelations@idexx.com.

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 and June 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 second quarter 2023 results as follows: decreased gross profit growth by 2%, decreased gross margin growth by 60 basis points, decreased operating expense growth by 0%, decreased operating profit growth by 4%, decreased operating profit margin growth by 70 basis points, and decreased EPS growth by 4%. 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 six months ended June 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 six months ended June 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

 

Six Months Ended

Year-over-Year

 

 

June 30,

 

June 30,

Change

 

June 30,

 

June 30,

Change

Dollar amounts in thousands

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

 

Gross Profit (as reported)

 

$

572,850

 

 

$

514,032

 

11%

 

$

1,115,821

 

 

$

1,012,785

 

10%

Gross margin

 

 

60.7

%

 

 

59.7

%

100 bps

 

 

60.5

%

 

 

59.7

%

80 bps

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

(8,676

)

 

 

 

 

 

 

(24,502

)

 

 

 

 

Comparable gross profit growth

 

$

581,526

 

 

$

514,032

 

13%

 

$

1,140,323

 

 

$

1,012,785

 

13%

Comparable gross margin and gross margin gain (or growth)

 

 

61.4

%

 

 

59.7

%

160 bps

 

 

61.1

%

 

 

59.7

%

140 bps

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (as reported)

 

$

276,706

 

 

$

334,966

 

(17)%

 

$

539,278

 

 

$

585,375

 

(8)%

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

(623

)

 

 

 

 

 

 

(4,805

)

 

 

 

 

Comparable operating expense growth

 

$

277,329

 

 

$

334,966

 

(17)%

 

$

544,083

 

 

$

585,375

 

(7)%

 

 

 

 

 

 

 

 

 

 

 

Income from operations (as reported)

 

$

296,144

 

 

$

179,066

 

65%

 

$

576,543

 

 

$

427,410

 

35%

Operating margin

 

 

31.4

%

 

 

20.8

%

1,060 bps

 

 

31.3

%

 

 

25.2

%

610 bps

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

Change from currency

 

 

(8,054

)

 

 

 

 

 

 

(19,698

)

 

 

 

 

Comparable operating profit growth

 

$

304,198

 

 

$

179,066

 

70%

 

$

596,241

 

 

$

427,410

 

40%

Comparable operating margin and operating margin gain (or growth)

 

 

32.1

%

 

 

20.8

%

1,130 bps

 

 

31.9

%

 

 

25.2

%

680 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 positive year-over-year foreign currency exchange rate change impact of approximately 60 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

 

Six Months Ended

 

Year-over-Year

 

 

June 30,

 

June 30,

 

Growth

 

June 30,

 

June 30,

 

Growth

 

 

2023

 

2022

 

 

 

2023

 

2022

 

 

Earnings per share (diluted)

 

$

2.67

 

$

1.56

 

71%

 

$

5.22

 

$

3.82

 

37%

Less: comparability adjustments

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation activity

 

 

0.04

 

 

0.03

 

 

 

 

0.10

 

 

0.09

 

 

Change from currency

 

 

(0.07)

 

 

 

 

 

 

(0.18)

 

 

 

 

Comparable EPS growth

 

 

2.70

 

 

1.53

 

77%

 

 

5.30

 

 

3.73

 

42%

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 $0.11 and estimated negative year-over-year foreign currency exchange rate change impact of $0.21.

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 six months ended June 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 $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 June 30, 2023, we have deducted purchases of property and equipment of approximately $154 million from net cash provided from operating activities of approximately $747 million, divided by net income of approximately $791 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 June 30, 2023.

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,

 

 

 

 

2023

 

2022

 

2023

 

2022

Revenue:

 

Revenue

 

$943,630

 

$860,546

 

$1,843,825

 

$1,697,095

Expenses and Income:

 

Cost of revenue

 

370,780

 

346,514

 

728,004

 

684,310

 

 

Gross profit

 

572,850

 

514,032

 

1,115,821

 

1,012,785

 

 

Sales and marketing

 

140,532

 

130,257

 

288,336

 

262,549

 

 

General and administrative

 

89,669

 

81,488

 

159,770

 

159,437

 

 

Research and development

 

46,505

 

123,221

 

91,172

 

163,389

 

 

Income from operations

 

296,144

 

179,066

 

576,543

 

427,410

 

 

Interest expense, net

 

(10,215)

 

(7,983)

 

(22,926)

 

(14,836)

 

 

Income before provision for income taxes

 

285,929

 

171,083

 

553,617

 

412,574

 

 

Provision for income taxes

 

61,693

 

39,104

 

115,327

 

86,630

Net Income:

 

Net income attributable to stockholders

 

$224,236

 

$131,979

 

$438,290

 

$325,944

 

 

Earnings per share: Basic

 

$2.70

 

$1.57

 

$5.28

 

$3.87

 

 

Earnings per share: Diluted

 

$2.67

 

$1.56

 

$5.22

 

$3.82

 

 

Shares outstanding: Basic

 

83,086

 

83,922

 

83,039

 

84,164

 

 

Shares outstanding: Diluted

 

83,983

 

84,858

 

83,980

 

85,222

 

IDEXX Laboratories, Inc. and Subsidiaries

 

 

 

 

 

 

 

Selected Operating Information (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

 

2023

 

2022

2023

 

2022

Operating Ratios

 

Gross profit

 

60.7%

 

59.7%

 

60.5%

 

59.7%

(as a percentage of revenue):

 

Sales, marketing, general and administrative expense

 

24.4%

 

24.6%

 

24.3%

 

24.9%

 

 

Research and development expense

 

4.9%

 

14.3%

 

4.9%

 

9.6%

 

 

Income from operations1

 

31.4%

 

20.8%

 

31.3%

 

25.2%

 

 

 

 

 

 

 

 

 

 

 

1Amounts presented may not recalculate due to rounding.

 

 

 

 

 

 

 

 
 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

June 30, 2023

 

Percent of

Revenue

 

June 30, 2022

 

Percent of

Revenue

 

 

 

 

 

 

 

Revenue:

 

CAG

 

$866,652

 

 

 

$784,087

 

 

 

 

Water

 

43,029

 

 

 

39,195

 

 

 

 

LPD

 

29,911

 

 

 

29,889

 

 

 

 

Other

 

4,038

 

 

 

7,375

 

 

 

 

Total

 

$943,630

 

 

 

$860,546

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

CAG

 

$525,709

 

60.7%

 

$466,254

 

59.5%

 

 

Water

 

30,319

 

70.5%

 

27,359

 

69.8%

 

 

LPD

 

16,086

 

53.8%

 

16,996

 

56.9%

 

 

Other

 

736

 

18.2%

 

3,423

 

46.4%

 

 

Total

 

$572,850

 

60.7%

 

$514,032

 

59.7%

 

 

 

 

 

 

 

 

 

 

 

Income from Operations:

 

CAG

 

$275,509

 

31.8%

 

$156,526

 

20.0%

 

 

Water

 

19,820

 

46.1%

 

17,920

 

45.7%

 

 

LPD

 

1,951

 

6.5%

 

3,230

 

10.8%

 

 

Other

 

(1,136)

 

(28.1)%

 

1,390

 

18.8%

 

 

Total

 

$296,144

 

31.4%

 

$179,066

 

20.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

June 30, 2023

 

Percent of

Revenue

 

June 30, 2022

 

Percent of

Revenue

 

 

 

 

 

 

 

Revenue:

 

CAG

 

$1,693,931

 

 

 

$1,545,271

 

 

 

 

Water

 

81,912

 

 

 

75,566

 

 

 

 

LPD

 

59,119

 

 

 

60,759

 

 

 

 

Other

 

8,863

 

 

 

15,499

 

 

 

 

Total

 

$1,843,825

 

 

 

$1,697,095

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

CAG

 

$1,024,466

 

60.5%

 

$915,353

 

59.2%

 

 

Water

 

57,587

 

70.3%

 

53,096

 

70.3%

 

 

LPD

 

31,139

 

52.7%

 

36,543

 

60.1%

 

 

Other

 

2,629

 

29.7%

 

7,793

 

50.3%

 

 

Total

 

$1,115,821

 

60.5%

 

$1,012,785

 

59.7%

 

 

 

 

 

 

 

 

 

 

 

Income from Operations:

 

CAG

 

$537,259

 

31.7%

 

$379,651

 

24.6%

 

 

Water

 

36,791

 

44.9%

 

34,574

 

45.8%

 

 

LPD

 

3,259

 

5.5%

 

9,967

 

16.4%

 

 

Other

 

(766)

 

(8.6)%

 

3,218

 

20.8%

 

 

Total

 

$576,543

 

31.3%

 

$427,410

 

25.2%

 
 

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

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net Revenue

 

 

 

 

 

 

 

CAG

 

$866,652

 

$784,087

 

$82,565

 

10.5%

 

(0.5%)

 

 

11.0%

United States

 

594,395

 

532,626

 

61,769

 

11.6%

 

 

 

11.6%

International

 

272,257

 

251,461

 

20,796

 

8.3%

 

(1.5%)

 

 

9.7%

Water

 

43,029

 

39,195

 

3,834

 

9.8%

 

(1.2%)

 

1.7 %

 

9.2%

United States

 

21,208

 

19,533

 

1,675

 

8.6%

 

 

1.4 %

 

7.2%

International

 

21,821

 

19,662

 

2,159

 

11.0%

 

(2.4%)

 

2.1 %

 

11.3%

LPD

 

29,911

 

29,889

 

22

 

0.1%

 

(0.5%)

 

 

0.6%

United States

 

4,422

 

3,742

 

680

 

18.2%

 

 

 

18.2%

International

 

25,489

 

26,147

 

(658)

 

(2.5%)

 

(0.6%)

 

 

(1.9%)

Other

 

4,038

 

7,375

 

(3,337)

 

(45.2%)

 

 

 

(45.3%)

Total Company

 

$943,630

 

$860,546

 

$83,084

 

9.7%

 

(0.5%)

 

0.1%

 

10.1%

United States

 

621,607

 

559,825

 

61,782

 

11.0%

 

 

 

11.0%

International

 

322,023

 

300,721

 

21,302

 

7.1%

 

(1.4%)

 

0.1%

 

8.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 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:

 

$762,476

 

$685,413

 

$77,063

 

11.2%

 

(0.5%)

 

 

11.7%

IDEXX VetLab consumables

 

303,735

 

266,079

 

37,656

 

14.2%

 

(0.7%)

 

 

14.9%

Rapid assay products

 

97,340

 

87,481

 

9,859

 

11.3%

 

(0.3%)

 

 

11.6%

Reference laboratory diagnostic and consulting services

 

330,106

 

304,130

 

25,976

 

8.5%

 

(0.3%)

 

 

8.9%

CAG Diagnostics services and accessories

 

31,295

 

27,723

 

3,572

 

12.9%

 

(0.7%)

 

 

13.6%

CAG Diagnostics capital – instruments

 

34,054

 

36,227

 

(2,173)

 

(6.0%)

 

(0.3%)

 

 

(5.7%)

Veterinary software, services and diagnostic imaging systems

 

70,122

 

62,447

 

7,675

 

12.3%

 

(0.4%)

 

 

12.6%

Net CAG revenue

 

$866,652

 

$784,087

 

$82,565

 

10.5%

 

(0.5%)

 

 

11.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

 

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$762,476

 

$685,413

 

$77,063

 

11.2%

 

(0.5%)

 

 

11.7%

United States

 

$517,388

 

$460,357

 

$57,031

 

12.4%

 

 

 

12.4%

International

 

$245,088

 

$225,056

 

$20,032

 

8.9%

 

(1.5%)

 

 

10.4%

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

Net Revenue

 

 

 

 

 

 

 

CAG

 

$1,693,931

 

$1,545,271

 

$148,660

 

9.6%

 

(1.3%)

 

 

11.0%

United States

 

1,158,922

 

1,032,392

 

126,530

 

12.3%

 

 

 

12.3%

International

 

535,009

 

512,879

 

22,130

 

4.3%

 

(3.9%)

 

 

8.2%

Water

 

81,912

 

75,566

 

6,346

 

8.4%

 

(2.0%)

 

1.7%

 

8.7%

United States

 

41,128

 

37,364

 

3,764

 

10.1%

 

 

0.7%

 

9.3%

International

 

40,784

 

38,202

 

2,582

 

6.8%

 

(4.0%)

 

2.6%

 

8.1%

LPD

 

59,119

 

60,759

 

(1,640)

 

(2.7%)

 

(2.2%)

 

 

(0.5%)

United States

 

8,965

 

7,602

 

1,363

 

17.9%

 

 

 

17.9%

International

 

50,154

 

53,157

 

(3,003)

 

(5.6%)

 

(2.5%)

 

 

(3.2%)

Other

 

8,863

 

15,499

 

(6,636)

 

(42.8%)

 

(0.1%)

 

 

(42.8%)

Total Company

 

$1,843,825

 

$1,697,095

 

$146,730

 

8.6%

 

(1.4%)

 

0.1%

 

10.0%

United States

 

1,212,020

 

1,085,731

 

126,289

 

11.6%

 

 

 

11.6%

International

 

631,805

 

611,364

 

20,441

 

3.3%

 

(3.7%)

 

0.2%

 

6.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 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:

 

$1,489,378

 

$1,350,223

 

$139,155

 

10.3%

 

(1.4%)

 

 

11.7%

IDEXX VetLab consumables

 

594,849

 

533,252

 

61,597

 

11.6%

 

(1.9%)

 

 

13.4%

Rapid assay products

 

179,372

 

162,000

 

17,372

 

10.7%

 

(0.8%)

 

 

11.6%

Reference laboratory diagnostic and consulting services

 

653,286

 

599,205

 

54,081

 

9.0%

 

(1.1%)

 

 

10.1%

CAG Diagnostics services and accessories

 

61,871

 

55,766

 

6,105

 

10.9%

 

(1.9%)

 

 

12.9%

CAG Diagnostics capital – instruments

 

67,198

 

73,224

 

(6,026)

 

(8.2%)

 

(1.6%)

 

 

(6.6%)

Veterinary software, services and diagnostic imaging systems

 

137,355

 

121,824

 

15,531

 

12.7%

 

(0.6%)

 

 

13.3%

Net CAG revenue

 

$1,693,931

 

$1,545,271

 

$148,660

 

9.6%

 

(1.3%)

 

 

11.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

June 30, 2022

 

Dollar

Change

 

Reported

Revenue

Growth1

 

Percentage

Change from

Currency

 

Percentage

Change from

Acquisitions

 

Organic

Revenue

Growth1

 

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$1,489,378

 

$1,350,223

 

$139,155

 

10.3%

 

(1.4%)

 

 

11.7%

United States

 

$1,008,728

 

$892,859

 

$115,869

 

13.0%

 

 

 

13.0%

International

 

$480,650

 

$457,364

 

$23,286

 

5.1%

 

(4.0%)

 

 

9.1%

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)

 

 

 

 

June 30, 2023

 

December 31,

2022

 

 

 

 

 

Assets:

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$132,838

 

$112,546

 

 

Accounts receivable, net

 

461,858

 

400,619

 

 

Inventories

 

395,141

 

367,823

 

 

Other current assets

 

189,188

 

220,489

 

 

Total current assets

 

1,179,025

 

1,101,477

 

 

Property and equipment, net

 

683,270

 

649,474

 

 

Other long-term assets, net

 

1,008,511

 

995,814

 

 

Total assets

 

$2,870,806

 

$2,746,765

Liabilities and Stockholders'

 

 

 

 

 

 

Equity:

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$107,664

 

$110,221

 

 

Accrued liabilities

 

399,425

 

433,662

 

 

Line of credit

 

264,000

 

579,000

 

 

Current portion of long-term debt

 

74,991

 

74,982

 

 

Deferred revenue

 

37,779

 

37,938

 

 

Total current liabilities

 

883,859

 

1,235,803

 

 

Long-term debt, net of current portion

 

696,844

 

694,387

 

 

Other long-term liabilities, net

 

196,242

 

207,838

 

 

Total long-term liabilities

 

893,086

 

902,225

 

 

Total stockholders' equity

 

1,093,861

 

608,737

 

 

Total liabilities and stockholders' equity

 

$2,870,806

 

$2,746,765

 
 

IDEXX Laboratories, Inc. and Subsidiaries

Selected Balance Sheet Information (Unaudited)

 

 

 

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

Selected Balance Sheet Information:

 

Days sales outstanding1

 

43.9

 

42.9

 

43.4

 

43.4

 

43.2

 

 

Inventory turns2

 

1.3

 

1.3

 

1.3

 

1.3

 

1.5

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

Six Months Ended

 

 

 

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

Operating:

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$438,290

 

$325,944

 

 

Non-cash adjustments to net income

 

76,246

 

61,563

 

 

Changes in assets and liabilities

 

(130,310)

 

(206,951)

 

 

Net cash provided by operating activities

 

384,226

 

180,556

Investing:

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

(66,981)

 

(61,924)

 

 

Equity investment

 

 

(25,000)

 

 

Acquisition of intangible assets

 

 

(10,000)

 

 

Net cash used by investing activities

 

(66,981)

 

(96,924)

Financing:

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

(Repayments) borrowings under credit facility, net

 

(315,000)

 

537,500

 

 

Payment of senior debt

 

 

(75,000)

 

 

Proceeds from maturity of net investment hedges

 

6,256

 

 

 

Payments for the acquisition-related contingent consideration and holdbacks

 

(1,780)

 

(2,816)

 

 

Repurchases of common stock

 

 

(573,060)

 

 

Proceeds from exercises of stock options and employee stock

purchase plans

 

23,086

 

18,379

 

 

Shares withheld for statutory tax withholding payments on

restricted stock

 

(9,676)

 

(10,390)

 

 

Net cash used by financing activities

 

(297,114)

 

(105,387)

 

 

Net effect of changes in exchange rates on cash

 

161

 

(8,337)

 

 

Net increase (decrease) in cash and cash equivalents

 

20,292

 

(30,092)

 

 

Cash and cash equivalents, beginning of period

 

112,546

 

144,454

 

 

Cash and cash equivalents, end of period

 

$132,838

 

$114,362

 
 

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands except per share data (Unaudited)

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

Free Cash Flow:

 

Net cash provided by operating activities

 

$200,314

 

$65,850

 

$384,226

 

$180,556

 

 

Investing cash flows attributable to purchases of property and equipment

 

(27,470)

 

(30,086)

 

(66,981)

 

(61,924)

 

 

Free cash flow1

 

$172,844

 

$35,764

 

$317,245

 

$118,632

 

 

 

 

 

 

 

 

 

 

 

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

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

Shares repurchased in the open market

 

 

809

 

 

1,311

Shares acquired through employee surrender for statutory tax withholding

 

 

 

19

 

21

Total shares repurchased

 

 

809

 

19

 

1,332

 

 

 

 

 

 

 

 

 

Cost of shares repurchased in the open market

 

$ —

 

$313,455

 

$ —

 

$576,238

Cost of shares for employee surrenders

 

$79

 

$52

 

$9,676

 

$10,390

Total cost of shares

 

$79

 

$313,507

 

$9,676

 

$586,628

 

 

 

 

 

 

 

 

 

Average cost per share – open market repurchases

 

$ —

 

$ 387.78

 

$ —

 

$ 439.63

Average cost per share – employee surrenders

 

$ 469.84

 

$ 369.63

 

$ 503.35

 

$ 504.60

Average cost per share – total

 

$ 469.84

 

$ 387.78

 

$ 503.35

 

$ 440.63

 

 

 

 

 

 

 

 

 

 

Contacts

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

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