WESTBROOK, Maine, April 25 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. (NASDAQ:IDXX), today reported that revenue for the first quarter of 2008 increased 18% to $249.1 million from $211.2 million for the first quarter of 2007. Diluted earnings per share ("EPS") for the quarter ended March 31, 2008 were $0.43, compared to $0.32, for the same period in the prior year. Non-GAAP adjusted diluted EPS for the first quarter grew 21% to $0.41 from $0.34 for the first quarter of 2007.
"Our first quarter results demonstrated the robustness of our diversified, global business model. We continued to generate strong revenue growth across our portfolio despite a weakening economy in the U.S.," said Jonathan W. Ayers, Chairman and Chief Executive Officer. "Our 17% revenue growth in the Companion Animal Group was driven by 11% organic revenue growth, acquisitions that strengthened our core businesses, and the benefit of currency translation on international sales. We achieved double digit organic revenue growth, despite a comparison to an unusually strong first quarter in 2007, when our business saw a surge in revenue resulting from the pet food recall in North America. Overall, I was very pleased that the company was able to continue to perform well on both the top line and bottom line.
"In addition to this strong current quarter financial performance, IDEXX achieved important milestones on our innovation agenda. We began shipping our two next-generation point-of-care veterinary instruments, Catalyst Dx(TM) and SNAPshot Dx(TM), at the end of the quarter. These two additions to the IDEXX VetLab Suite strengthen an already strong in-house laboratory offering. We are on track with our disciplined ramp objectives and expect to place 1,000 to 1,200 Catalyst Dx(TM) analyzers in 2008. Customer interest is very strong, as we expected, and our sales volumes will not be constrained by market demand this year." Revenue Performance Companion Animal Group ("CAG") revenue for the first quarter of 2008 increased 17% to $203.6 million from $173.4 million for the first quarter of 2007. Acquisitions of reference laboratories contributed just under 3% to growth and changes in foreign currency exchange rates contributed an additional 4%. Growth for the quarter adjusted for acquisitions and foreign currency exchange rates was 11%.
Water segment revenue for the first quarter of 2008 increased 17% to $16.8 million from $14.4 million for the first quarter of 2007 due primarily to higher sales volume, partly offset by lower average unit sales prices. Higher sales volumes resulted in part from our commencement in September 2007 of distribution of certain water testing kits manufactured by Invitrogen Corporation, which contributed 6% to revenue growth. Compared to the same period of 2007, changes in foreign currency exchange rates contributed 5% to Water revenue growth.
Production Animal Segment ("PAS") revenue for the first quarter of 2008 increased 26% to $21.2 million from $16.8 million for the first quarter of 2007 due primarily to higher livestock diagnostics sales volume, including sales attributable to Institut Pourquier ("Pourquier"), which we acquired in March 2007. Sales of Pourquier products contributed 12% to PAS revenue growth. The favorable impact of higher sales volume was partly offset by lower average unit sales prices for our post-mortem test for bovine spongiform encephalopathy ("BSE") due to greater price competition. Compared to the same period of 2007, changes in foreign currency exchange rates contributed 12% to PAS revenue growth.
Additional Operating Results Gross profit for the first quarter of 2008 increased $21.3 million, or 20%, to $129.8 million from $108.6 million for the first quarter of 2007. As a percentage of total revenue, gross profit increased to 52% from 51%. Year-over-year, the gross profit percentage was favorably impacted by higher average unit sales prices in our rapid assay and laboratory and consulting services businesses; lower cost of slides sold for use in our chemistry analyzers; the impact of foreign currency rates on sales denominated in those currencies; and the absence of discrete items associated with purchase accounting for acquisitions that occurred in the first quarter of 2007. These favorable impacts were partially offset by increased cost of service in the laboratory and consulting services business.
Research and development ("R&D") expense for the first quarter of 2008 was $17.3 million, or 7% of revenue, compared to $16.0 million, or 8% of revenue, for the first quarter of 2007. R&D expense grew primarily as a result of higher personnel costs due, in part, to incremental new product and technology development initiatives and product enhancement efforts related primarily to IDEXX VetLab(R) instrumentation, rapid assay, and digital radiography products. These increases were largely offset by a net decrease in new product development spending as we completed development of Catalyst Dx(TM) and SNAPshot Dx(TM).
Selling, general and administrative ("SG&A") expense for the first quarter of 2008 was $73.8 million, or 30% of revenue, compared to $61.7 million, or 29% of revenue, for the first quarter of 2007. Increased SG&A expense was due primarily to expanded worldwide sales, marketing and customer support resources; higher spending on information technology; and incremental activities associated with recently acquired businesses.
Supplementary Analysis of Results The accompanying financial tables provide more information concerning our revenue and other operating results for the three months ended March 31, 2008, as well as a reconciliation of non-GAAP adjusted diluted EPS to earnings per share.
Outlook The Company offers the following revised guidance for the full year of 2008: -- Revenue is expected to be $1.06 billion to $1.075 billion, updated from
guidance of $1.05 billion to $1.07 billion provided in January of this
year, which represents revenue growth of 15% to 17%.
-- Diluted earnings per share are expected to be $1.84 to $1.87, updated
from guidance of $1.83 to $1.87 provided in January of this year, which
represents EPS growth of 26% to 28%. Excluding the impact of
acquisition-related purchase accounting and acquisition integration
costs and the write-down of certain pharmaceutical assets in 2007 and
discrete income tax benefits in 2008, non-GAAP adjusted diluted EPS are
projected to grow 15% to 17%.
Conference Call and Webcast Information
IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its first quarter results. To participate in the conference call, dial 612-332-0107 or 800-230-1766 and reference confirmation code 919872. An audio replay will be available through May 2, 2008 by dialing 320-365-3844 and referencing replay code 919872.
The call will also be available via live or archived Webcast on the IDEXX Laboratories' web site at http://www.idexx.com/.
Annual Meeting IDEXX Laboratories, Inc. today announced that it will host a simultaneous Webcast of its Annual Meeting of Stockholders, to be held on Wednesday, May 7, 2008, at 10:00 a.m. (eastern) at the Portland Marriott at Sable Oaks in South Portland, Maine.
Chairman and Chief Executive Officer, Jonathan W. Ayers will chair the meeting. Investors may listen to the Annual Meeting and view a presentation live via a link on the Company's Web site, http://www.idexx.com/. An archived edition of the meeting will be available after 1:00 p.m. (eastern) on that day via the same link.
About IDEXX Laboratories IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice management systems and pharmaceuticals. IDEXX products enhance the ability of veterinarians to provide advanced medical care and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than 4,500 people and offers products to customers in over 100 countries.
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. These statements are based on management's expectations 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 develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company's sales and marketing activities; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition, technological change, and veterinary hospital consolidation on the markets for the Company's products; the Company's ability to manufacture complex biologic products; 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 distributor purchasing decisions on sales of the Company's products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; the effects of deep or sustained economic weakness on pet owner decisions regarding pet health care; 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; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. 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, 2007, in the section captioned "Risk Factors." IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited) Three Months Ended
March 31, March 31,
2008 2007
Revenue: Revenue $249,074 $211,155
Expenses
and
Income: Cost of revenue 119,238 102,576
Gross profit 129,836 108,579
Sales and marketing 44,001 35,582
General and administrative 29,821 26,149
Research and development 17,295 15,971
Income from operations 38,719 30,877
Interest income (expense), net (485) 28
Income before provision for income taxes 38,234 30,905
Provision for income taxes 10,683 9,878
Net
Income: Net income $27,551 $21,027
Earnings per share: Basic $0.45 $0.34
Earnings per share: Diluted $0.43 $0.32
Shares outstanding: Basic 60,865 62,274
Shares outstanding: Diluted 63,558 65,083 Historical share and per share data has been retroactively
restated to reflect the additional shares of common stock that
were distributed on November 26, 2007 as a result of the
two-for-one split of our outstanding common stock.
IDEXX Laboratories, Inc. and Subsidiaries
Key Operating Information (Unaudited) Three Months Ended
March 31, March 31,
2008 2007
Key
Operating Gross profit 52.1% 51.4%
Ratios (as Sales, marketing, general and
a percentage administrative expense 29.6% 29.2%
of revenue): Research and development expense 6.9% 7.6%
Income from operations(1) 15.5% 14.6%
International International revenue (in thousands) $103,328 $80,869
Revenue: International revenue as a
percentage of total revenue 41.5% 38.3% (1) The sum of individual items may not equal the total due to rounding.
IDEXX Laboratories, Inc. and Subsidiaries
Non-GAAP Financial Measures
Amounts in thousands except per share data (unaudited)
Three Months Ended
Income from
Gross Profit Operations
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2008 2007 2008 2007 GAAP measurement $ 129,836 $ 108,579 $ 38,719 $30,877
% of revenue 52.1% 51.4% 15.5% 14.6%
Acquisition-related
purchase accounting
and acquisition
integration
costs (1) - 1,248 - 1,434
Discrete income tax
benefits(2) - - - -
Non-GAAP comparative
measurements(3) $ 129,836 $ 109,827 $ 38,719 $ 32,311
% of revenue 52.1% 52.0% 15.5% 15.3%
Three Months Ended
Earnings per Share
Net Income Diluted
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2008 2007 2008 2007 GAAP measurement $ 27,551 $ 21,027 $0.43 $0.32
% of revenue 11.1% 10.0%
Acquisition-related
purchase accounting
and acquisition
integration
costs (1) - 904 - 0.01
Discrete income tax
benefits(2) (1,472) - (0.02) -
Non-GAAP comparative
measurements(3) $ 26,079 $ 21,931 $0.41 $0.34
% of revenue 10.5% 10.4%
Management believes adjusted diluted EPS is a useful non-GAAP financial measure to evaluate the results of ongoing operations, excluding significant specified events, period over period, and therefore believes that investors may find this information useful in addition to the GAAP results.
We use these supplemental non-GAAP financial measures to evaluate the Company's comparative financial performance. The specified items that are excluded in these non-GAAP measures are actual charges that impact net income and cash flows, however, we believe that it is useful to evaluate our core business performance period over period excluding these specified items, in addition to relying upon GAAP financial measures.
(1) We believe that the change from period to period due to specific acquisition-related purchase accounting and integration costs is not representative of ongoing operations and is not indicative of future performance. Specific acquisition-related discrete costs do not include amortization expense related to acquired intangible assets. We applied the statutory income tax rates of the applicable tax jurisdictions to calculate the after-tax impact of these discrete items.
(2) We believe that certain significant discrete income tax items create impacts on financial measures that are not indicative of future performance because the items are not likely to recur within a reasonable period. For 2008, the separately identified discrete income tax benefit was due to a reduction in international deferred tax liabilities due to lower anticipated international tax rates.
(3) The sum of the individual items may not equal the non-GAAP measurement due to rounding of the individual items in this presentation.
IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited) Three Months Ended
March 31, March 31,
2008 2007
Revenue: CAG $203,609 $173,433
Water 16,816 14,405
PAS 21,162 16,811
Other 7,487 6,506
Total $249,074 $211,155 Gross Profit: CAG $101,985 $86,330
Water 10,315 9,232
PAS 14,233 10,963
Other 3,127 1,914
Unallocated 176 140
Total $129,836 $108,579 Income from
Operations: CAG $29,555 $23,585
Water 6,270 5,642
PAS 5,828 3,965
Other (189) (413)
Unallocated (2,745) (1,902)
Total $38,719 $30,877 Gross Profit
(as a percentage
of revenue): CAG 50.1% 49.8%
Water 61.3% 64.1%
PAS 67.3% 65.2%
Other 41.8% 29.4% Income from
Operations
(as a percentage
of revenue): CAG 14.5% 13.6%
Water 37.3% 39.2%
PAS 27.5% 23.6%
Other (2.5%) (6.4%) IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited) Three Months Ended
Percentage
Change Net
Percen- Percen- of
tage tage Acquis-
Change Change itions
Percen- from from and
Net March 31, March 31, Dollar tage Currency Acquis- Currency
Revenue 2008 2007 Change Change (1) itions(2) Effect(3)
CAG $203,609 $173,433 $30,176 17.4% 4.2% 2.7% 10.5%
Water 16,816 14,405 2,411 16.7% 4.5% - 12.2%
PAS 21,162 16,811 4,351 25.9% 11.8% 12.2% 1.9%
Other 7,487 6,506 981 15.1% 4.8% 13.7% (3.4%)
Total $249,074 $211,155 $37,919 18.0% 4.9% 3.6% 9.5%
Three Months Ended
Percentage
Change Net
Percen- Percen- of
tage tage Acquis-
Change Change itions
Percen- from from and
Net CAG March 31, March 31, Dollar tage Currency Acquis- Currency
Revenue 2008 2007 Change Change (1) itions(2) Effect(3)
Instruments
and
consumables $75,610 $66,956 $8,654 12.9% 4.8% - 8.1%
Rapid assay
products 38,222 31,237 6,985 22.4% 2.4% - 20.0%
Laboratory
and consult-
ing services 70,107 57,888 12,219 21.1% 5.2% 8.1% 7.8%
Practice
information
management
systems
and digital
radiography 15,025 12,525 2,500 20.0% 2.0% - 18.0%
Pharmaceutical
products 4,645 4,827 (182) (3.8%) - - (3.8%)
Net CAG
revenue $203,609 $173,433 $30,176 17.4% 4.2% 2.7% 10.5% (1) Represents the percentage change in revenue attributed to the effect of changes in currency rates from the three months ended March 31, 2008 to the three months ended March 31, 2007.
(2) Represents the percentage change in revenue attributed to incremental revenues during the three months ended March 31, 2008 compared to the three months ended March 31, 2007 from businesses acquired since January 1, 2007.
(3) Organic growth IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited) March 31, December 31,
2008 2007
Assets:
Current Assets:
Cash and cash equivalents $60,220 $60,360
Accounts receivable, net 125,245 108,384
Inventories 99,878 98,804
Other current assets 37,023 38,115
Total current assets 322,366 305,663
Property and equipment, at cost 270,340 255,176
Less: accumulated depreciation 119,246 113,324
Property and equipment, net 151,094 141,852
Other long-term assets, net 263,397 254,664
Total assets $736,857 $702,179
Liabilities and
Stockholders'
Equity: Current Liabilities:
Accounts payable $25,301 $32,510
Accrued expenses 88,300 107,248
Debt 140,682 72,956
Deferred revenue 10,743 10,678
Total current liabilities 265,026 223,392
Long-term debt, net of
current portion 5,540 5,727
Other long-term liabilities 32,655 34,737
Total long-term liabilities 38,195 40,464 Stockholders' Equity:
Common stock 9,487 9,450
Additional paid-in capital 526,169 514,773
Deferred stock units 2,513 2,201
Retained earnings 613,413 585,862
Treasury stock, at cost (749,318) (696,668)
Accumulated other
comprehensive income 31,372 22,705
Total stockholders' equity 433,636 438,323
Total liabilities and
stockholders' equity $736,857 $702,179 IDEXX Laboratories, Inc. and Subsidiaries
Key Balance Sheet Information (Unaudited) March 31, December 31,
2008 2007
Key
Balance Sheet Days sales outstanding 42.6 39.4
Information: Inventory turns 2.0 2.3 IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited) Three Months Ended
March 31, March 31,
2008 2007
Operating: Cash Flows from Operating
Activities:
Net income $27,551 $21,027
Non-cash charges 11,282 6,736
Changes in current assets
and liabilities, net of
acquisitions and disposals (41,622) (29,553)
Net cash used by operating
activities $(2,789) $(1,790)
Investing: Cash Flows from Investing
Activities:
Decrease in investments, net - 35,000
Purchase of property and
equipment (17,049) (10,492)
Acquisition of businesses and
intangible assets (7,533) (80,311)
Acquisition of equipment leased
to customers (226) (238)
Net cash used by investing
activities $(24,808) $(56,041)
Financing: Cash Flows from Financing
Activities:
Borrowings on revolving credit
facilities, net 67,765 73,188
Purchase of treasury stock (51,355) (34,416)
Proceeds from the exercise of
stock options 5,974 7,916
Tax benefit from exercise of
stock options 2,384 3,004
Net cash provided by financing
activities $24,768 $49,692
Net effect of exchange rate
changes 2,689 410
Net decrease in cash and cash
equivalents (140) (7,729)
Cash and cash equivalents,
beginning of period 60,360 61,666
Cash and cash equivalents,
end of period $60,220 $53,937 IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands (Unaudited)
Three Months Ended
March 31, March 31,
2008 2007
Free Cash
Flow: Net cash used by operating
activities $(2,789) $(1,790)
Financing cash flows attributable
to tax benefits from exercise of
stock options 2,384 3,004
Purchase of fixed assets (17,049) (10,492)
Acquisition of equipment leased
to customers (226) (238)
Free cash flow $(17,680) $(9,516) Free cash flow indicates the cash generated from operations and tax
benefits attributable to stock option exercises, reduced by investments in
fixed assets. We feel 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. We believe 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
March 31, March 31,
2008 2007 Share repurchases during the period 950 810
Average price paid per share $54.03 $42.50 Shares remaining under repurchase authorization
as of March 31, 2008 5,902 IDEXX Laboratories, Inc. and Subsidiaries
Earnings per Share Adjusted for Stock Split (Unaudited) Three Months Ended
March 31, March 31,
2008 2007
Basic
As reported $0.45 $0.68
Adjusted for stock split $0.45 $0.34
Diluted
As reported $0.43 $0.65
Adjusted for stock split $0.43 $0.32
Contact: Merilee Raines, Chief Financial Officer, 1-207-556-8155
http://www.newscom.com/cgi-bin/prnh/20030305/IDEXXLOGO http://photoarchive.ap.org/ DATASOURCE: IDEXX Laboratories, Inc.
CONTACT: Merilee Raines, Chief Financial Officer of IDEXX Laboratories, Inc., +1-207-556-8155 Web site: http://www.idexx.com/
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