IDEXX Laboratories Announces Fourth Quarter and Full Year 2015 Results

-- Achieves 11% normalized organic revenue growth for the quarter, supported by 12.5% normalized organic growth in CAG Diagnostics recurring revenues

-- Q4 delivers 35% increase in premium instrument placements driven by record 1,562 Catalyst® and 1,183 premium hematology instrument placements

-- Achieves full year Adjusted EPS of $2.11, up 14% on a constant currency basis

-- Raises 2016 EPS guidance range $0.01, reinforcing outlook for 8%-9% organic revenue growth

29 Jan, 2016, 07:00 ET from IDEXX Laboratories, Inc.

WESTBROOK, Maine, Jan. 29, 2016 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX) today reported revenues for the fourth quarter of 2015 of $400 million, an increase of 14%1 compared to the prior year period. Normalized organic revenue growth2 for the quarter was over 11%, supported by strong growth in the Companion Animal Group ("CAG") segment. Revenue for the full year of $1,602 million increased 8% on a reported basis, supported by 11% normalized organic revenue growth.

Earnings per diluted share ("EPS") for the quarter was $0.48. Adjusted EPS growth3 was 2% compared to the prior year period, while absorbing a negative $0.03 per share impact related to net changes in foreign exchange, resulting in constant currency4 Adjusted EPS growth of 9%. The quarter benefited from recording the full year impact of the decision to make the federal research and development ("R&D") tax credit permanent, which had a $0.03 favorable impact on EPS, consistent with the prior year quarter. 

"We were very pleased with the Company's performance in the fourth quarter, supported by record instrument placements in both North American and international markets. Total premium instrument placements were up 35% over a very strong prior year period, with Catalyst placements up 61% compared to last year. We achieved 694 Catalyst placements in North America and 868 in international markets, leveraging our expanded commercial presence globally.  In North America, 395 units or 57% of our Catalyst placements were to new and competitive accounts, up 37% over Q4 2014, a testament to the increasing effectiveness of our all-direct sales force. For the full year, we placed 9,771 chemistry and hematology instruments worldwide, substantially higher than any year in our history. SediVue Dx™, our novel urine sediment analyzer for use in-clinic, and the recent regulatory approval of Catalyst One® in Japan, will add to our already substantial momentum in placing instruments as we move through 2016," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer.

"SediVue is a breakthrough innovation that helps improve accuracy and streamlines workflows of a historically challenging manual process involving microscopic interpretation. SediVue presents veterinarians with a huge opportunity to enhance the quality of patient care while simultaneously helping to drive practice revenue growth and staff efficiency. Working in concert with chemistry and hematology, urinalysis forms the essential third pillar of the minimum diagnostic database in pet care," continued Ayers.

"We also continue to be pleased by the enthusiastic response of our customers to IDEXX SDMA™, our unique test for kidney disease, a common condition in pets. IDEXX SDMA has now been automatically added to all chemistry panels for customers in all of our major reference laboratory markets globally. This novel kidney parameter is being well received globally by our customers, helped in part by the inclusion of SDMA in the International Renal Interest Society (IRIS) guidelines. IRIS is led by a board of 15 world-renowned independent veterinarians from 10 different countries, so the inclusion of SDMA as an important marker for renal function is a worldwide endorsement."

"Our solid finish to 2015 is positioning us to deliver continued strong constant currency4 revenue and profit gains in 2016."

Fourth Quarter Financial Performance Highlights

Fourth quarter revenue increased 14% to $400 million. Normalized organic revenue growth was 11% and benefited in part from incremental margin capture associated with the move to an all-direct sales model for US CAG Diagnostics.

  • Companion Animal Group normalized organic revenue growth was 13% for the fourth quarter, driven by 12.5% normalized growth in recurring CAG Diagnostics revenues and a 28% increase in organic revenue growth2 in CAG Diagnostics instruments. CAG Diagnostics recurring revenue gains were driven by 16% normalized organic growth in IDEXX VetLab® consumable revenues, reflecting solid volume gains and benefits from margin capture, and 11% organic growth in reference laboratory diagnostic and consulting services revenues, supported by continued strong double-digit reference lab revenue gains in the US. Rapid assay revenues achieved 9% normalized organic growth, supported by higher 4Dx product volumes and benefits from margin capture.
  • Livestock, Poultry and Dairy ("LPD") organic revenue increased 2% for the fourth quarter reflecting solid growth in new products worldwide and strong poultry and swine sales in emerging markets, offset partially by lower livestock services revenue in Australia and lower Europe bovine revenue.
  • Water's organic revenue growth was 10% in the fourth quarter, due to worldwide increases in core coliform and E.coli products, as well as benefits from the launch of our new Quanti-Tray® Sealer PLUS product.

The following table presents adjusted revenue, gross profit, gross margin, operating profit, operating margin, EPS, and EPS growth, which are non-GAAP financial measures that have been adjusted for the following items in the prior year periods:

Amounts in millions except per share data and percentages

 

Revenue

Gross

Profit

Gross

Margin

Operating

Profit

Operating Margin

 

EPS

EPS Growth

Reported Fourth Quarter 2015

$399.7

$217.7

54.5%

$66.9

16.7%

$0.48

77.8%

No adjustments required

 

Adjusted Fourth Quarter 2015

$399.7

 

$217.7

 

54.5%

$66.9

16.7%

$0.483

2.1%3

Reported Fourth Quarter 2014

$352.0

$182.2

51.8%

$34.8

9.9%

$0.27

Impact of distributor inventory drawdown

25.1

20.8

20.8

0.14

Non-recurring expenses associated with transition to all- direct sales strategy

5.2

0.03

Expense ramp-up in advance of transition to new sales strategy

4.6

0.03

 

Adjusted Fourth Quarter 2014

$377.1

$203.0

53.8%

$65.4

17.3%

$0.473

 

Gross Profit increased 20% compared to the prior year period.  Gross Margin adjusted for the impact of the prior year US channel inventory reductions increased from 53.8% to 54.5%, reflecting lower manufacturing costs and benefits from moderate price gains, which offset mix impacts from strong instrument sales.

Operating Margin was 16.7% in the fourth quarter, down slightly from prior year period adjusted operating margin of 17.3%.  This change reflects increases in operating expenses compared to the prior year period primarily due to recurring costs associated with the all-direct US CAG Diagnostics sales strategy and other increases in global commercial resources, partly offset by the favorable impact of foreign exchange.

Outlook for 2016

The Company is maintaining its organic revenue growth outlook while updating reported revenue guidance for the strengthening of the US dollar relative to foreign currencies. Despite unfavorable currency impacts, the Company is raising its EPS guidance to reflect the permanent extension of the Federal R&D tax credit and solid operating trends. Excluding foreign currency change impacts, our guidance aligns with constant currency Adjusted EPS growth of 12% to 15%.

 At current foreign exchange rates, we estimate that the effect of the stronger US dollar will adversely impact 2016 reported revenue growth by approximately 2.5%, EPS by an estimated $0.26 per share, and Adjusted EPS growth by 12% compared to rates in effect in 2015. Compared to assumptions used in our prior guidance for 2016 provided during our third quarter earnings call on October 28, 2015, the continued strengthening of the US dollar has the effect of lowering projected revenue by approximately $25 million and EPS by $0.04 per share, net of hedge benefits. These effects are mitigated by benefits from the decision to make the Federal R&D tax credit permanent, which is estimated to have a $0.03 positive impact on EPS, and expected stronger operating performance, which is expected to add $0.02 to EPS.

The Company provides the following updated guidance for 2016:

Amounts in millions except per share data and percentages

Guidance Range

Growth Definition

Year-over-Year Growth

Revenue 

$1,690 - $1,710

Organic Revenue Growth2

Reported

8% to 9%

6% to 7%

EPS

$2.10 - $2.17

 

Adjusted

Constant Currency Adjusted

Reported

0% to 3%3

12% to 15%4

2% to 6%

Free Cash Flow:          95% - 100% of net income

Capital Expenditures:             $90 million

The guidance above assumes that the value of the US dollar relative to other currencies will reflect the euro at $1.07, the British pound at $1.41, the Canadian dollar at $0.68, the Australian dollar at $0.68 and the Japanese yen at ¥118 to the US dollar for the full year of 2016.

We expect that operating margins for the full year will be 18.0% to 18.5%, or approximately 100 basis points below 2015 adjusted operating margin levels, driven by foreign exchange impacts including comparisons to benefits from 2015 hedge gains. Adjusted for currency impacts and the 2015 software impairment charge, we are targeting operating margin improvement of approximately 50 basis points from 2015 levels.

We expect an effective tax rate of 30% to 30.5%, including projected benefits from the Federal R&D tax credit.  We are projecting a reduction in weighted average shares outstanding of approximately 3.5% to 4.0%, and interest expense, net of interest income, of approximately $32 million reflecting current and projected borrowings. 

Statement Regarding Non-GAAP Financial Measures

The following provides information regarding certain measures used in this earnings release that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to herein 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 are useful for period-over-period comparisons of the performance of the Company's business and to the performance 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. See the notes to this earnings release for information regarding these non-GAAP financial measures and the reconciliations included in the notes and elsewhere in this earnings release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its fourth quarter results and management's outlook. To participate in the conference call, dial 1-800-230-1092 or 1-612-332-0107 and reference confirmation code 384558. An audio replay will be available through Friday, February 5, 2016 by dialing 1-320-365-3844 and referencing replay code 384558.

The call will also be available via live or archived webcast on the IDEXX Laboratories' website at 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 6,000 people and offers products to customers in over 175 countries.

1All references to growth and organic growth refer to growth compared to the equivalent prior year period.

2Normalized organic revenue growth and organic revenue growth are non-GAAP financial measures. 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 for the fourth quarter of 2015 excludes the impact of changes in foreign currency exchange rates, which had a 5.7% unfavorable impact on revenue growth, and revenue from business acquisitions, which contributed 0.7% to revenue growth. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three months ended December 31, 2015. Management also believes that reporting normalized organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue growth performance with prior and future periods.  Normalized organic revenue growth excludes the impact of changes in our significant distributors' inventory levels on organic revenue growth.  When selling our products through distributors, changes in distributors' inventory levels can impact our reported sales, and these changes may be affected by many factors, which may not be directly related to underlying end-user demand for our products.  Effective January 1, 2015, we fully transitioned to an all-direct sales strategy in the US, however changes in prior year US distributors' inventory levels can still impact current year reported growth results.  In certain countries internationally, we continue to sell our products through third party distributors.  Although we are unable to obtain data for sales to end users from certain less significant non-US third party distributors, we do not believe the impact of changes in these distributors' inventories had or would have a material impact on our growth rates in the relevant periods.  Reconciliation of organic revenue growth to normalized organic revenue growth for the fourth quarter of 2015 includes the following positive impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 7.5%, US 13.0%, International 0.3%, CAG 9.4%, CAG Diagnostics Recurring 11.5%, VetLab consumables 18.4%, VetLab service and accessories 3.4%, and Rapid Assay 45.4%. Reconciliation of organic revenue growth to normalized organic revenue growth for the full year of 2015 includes the following positive impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 2.0%, US 3.4%, International 0.1%, CAG 2.5%, CAG Diagnostics Recurring 3.0%, VetLab consumables 5.1%, VetLab service and accessories 1.0%, and Rapid Assay 7.6%.

3Adjusted EPS and Adjusted EPS growth are non-GAAP financial measures.  Management believes that reporting Adjusted EPS provides useful information to investors by facilitating easier comparisons of our EPS performance with prior and future periods.  See table above for a reconciliation of fourth quarter 2014 and 2015 EPS adjustments, and the supplementary analysis of results section for a reconciliation of full year 2015 EPS adjustments.

4Constant currency references are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates. Management believes that providing constant currency information provides valuable supplemental information regarding our revenue, operating margin, and EPS performance because it is consistent with how management evaluates our performance and facilitates comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, operating profit and Adjusted EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates.  These estimated currency changes reduced 2015 Adjusted EPS growth by 8%, projected 2016 revenue growth by 2.5%, and projected 2016 Adjusted EPS growth by 12%.  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.

5Free 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 years ended December 31, 2015 and 2014.  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.

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 "Financial Outlook for 2016" and elsewhere and 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. Our forward-looking statements include statements relating to our revenue growth and EPS outlooks; free cash flow forecast; projected impact of foreign currency exchange rates; projected operating margins, capital expenditures, effective tax rate, weighted average shares outstanding and interest expense; and projected product launches. These statements are based on management's expectation of future events as of the date of this earnings release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. Factors that could cause or contribute to such differences include the following: the Company's ability to successfully execute its strategy, including supporting its all-direct sales strategy in the 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 Company's ability to manage the risks associated with the use of distributors to sell the Company's products; the impact of increased competition from existing and new technologies and technological advances by our competitors; the promotion and sale of our competitors' products by our former US distribution partners; the effect of government regulation on the Company's business, including government decisions about whether and when to approve the Company's products 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 effect of any adverse changes in the financial markets on the value of the Company's investment portfolio; 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 and local business and cultural factors; the impact of the Company's limited experience and small scale in the human point-of-care market; the effects of interruptions to the Company's operations due to natural or man-made disasters, system failures or disruptions or security breaches; the 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, 2014 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, in the sections captioned "Risk Factors," as well as the Company's other periodic reports filed or to be filed with the Securities and Exchange Commission.

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Consolidated Statement of Operations

Amounts in thousands except per share data (Unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

December 31,

December 31,

2015

2014

2015

2014

Revenue:

Revenue

$     399,685

$     351,959

$     1,601,892

$     1,485,807

Expenses and

Income:

Cost of revenue

181,990

169,794

711,622

669,691

Gross profit

217,695

182,165

890,270

816,116

Sales and marketing

76,495

77,238

299,955

283,708

General and administrative

48,793

45,257

182,510

173,890

Research and development

25,496

24,869

99,681

98,263

Impairment charge

-

-

8,212

-

Income from operations

66,911

34,801

299,912

260,255

Interest expense, net

(7,126)

(4,939)

(26,771)

(13,700)

Income before provision for income taxes

59,785

29,862

273,141

246,555

Provision for income taxes

15,395

3,911

81,006

64,604

Net Income:

Net income

44,390

25,951

192,135

181,951

Less: Noncontrolling interest in subsidiary's

earnings

41

(10)

57

45

Net income attributable to stockholders

$       44,349

$       25,961

$     192,078

$     181,906

Earnings per share: Basic

$           0.49

$           0.27

$           2.07

$           1.82

Earnings per share: Diluted

$           0.48

$           0.27

$           2.05

$           1.79

Shares outstanding: Basic

90,841

95,499

92,601

100,094

Shares outstanding: Diluted

91,788

96,861

93,649

101,503

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Selected Operating Information (Unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

December 31,

December 31,

2015

2014

2015

2014

Operating

Gross profit

54.5%

51.8%

55.6%

54.9%

Ratios (as a

Sales, marketing, general and

percentage of

administrative expense

31.3%

34.8%

30.6%

30.8%

revenue):

Research and development expense

6.4%

7.1%

6.2%

6.6%

Income from operations1

16.7%

9.9%

18.7%

17.5%

1Amounts presented may not recalculate due to rounding.

 

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Non-GAAP Financial Measures:

Adjusted Revenue, Gross Profit, Operating Profit and EPS (Unaudited)

Amounts in millions except per share data and percentages

Revenue

Gross Profit

Gross Margin

Operating Profit

Operating Margin

EPS

Reported Year Ended December 31, 2015

$1,601.9

$890.3

55.6%

$299.9

18.7%

$2.05

Impairment charge

-

-

-

8.2

-

0.06

Adjusted Year Ended December 31, 2015

$1,601.9

$890.3

55.6%

$308.1

19.2%

$2.11

Reported Year Ended December 31, 2014

$1,485.8

$816.1

54.9%

$260.3

17.5%

$1.79

Impact of distributor inventory drawdown

25.1

20.8

-

20.8

-

0.14

Non-recurring expenses associated with transition to all-direct

sales strategy

-

-

-

5.0

-

0.06

Expense ramp-up in advance of transition to new sales strategy

-

-

-

9.5

-

0.03

Non-recurring income tax benefit related to the deferral of

intercompany profits

-

-

-

-

-

(0.02)

Adjusted Year Ended December 31, 2014

$1,510.9

$836.9

55.4%

$295.6

19.6%

$2.00

 

 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

Three Months Ended

Three Months Ended

December 31,

Percent of

December 31,

Percent of

2015

Revenue

2014

Revenue

Revenue:

CAG

$     336,055

$     284,898

Water

24,178

23,070

LPD

33,366

36,598

Other

6,086

7,393

Total

$     399,685

$     351,959

Gross Profit:

CAG

$     175,254

52.2%

$     140,504

49.3%

Water

17,257

71.4%

15,545

67.4%

LPD

20,452

61.3%

22,692

62.0%

Other

2,383

39.2%

4,106

55.5%

Unallocated Amounts

2,349

N/A

(682)

N/A

Total

$     217,695

54.5%

$     182,165

51.8%

Income from

Operations:

CAG

$       49,797

14.8%

$       22,431

7.9%

Water

10,763

44.5%

9,715

42.1%

LPD

6,989

20.9%

8,404

23.0%

Other

(48)

(0.8%)

1,345

18.2%

Unallocated Amounts

(590)

N/A

(7,094)

N/A

Total

$       66,911

16.7%

$       34,801

9.9%

Year Ended

Year Ended

December 31,

Percent of

December 31,

Percent of

2015

Revenue

2014

Revenue

Revenue:

CAG

$     1,356,287

$     1,223,064

Water

96,884

94,725

LPD

127,143

141,179

Other

21,578

26,839

Total

$   1,601,892

$   1,485,807

Gross Profit:

CAG

$     727,626

53.6%

$     655,197

53.6%

Water

68,785

71.0%

62,924

66.4%

LPD

77,227

60.7%

89,519

63.4%

Other

10,574

49.0%

14,236

53.0%

Unallocated Amounts

6,058

N/A

(5,760)

N/A

Total

$     890,270

55.6%

$     816,116

54.9%

Income from

Operations:

CAG

$     231,642

17.1%

$     203,536

16.6%

Water

44,584

46.0%

39,262

41.4%

LPD

24,397

19.2%

33,788

23.9%

Other

156

0.7%

2,479

9.2%

Unallocated Amounts

(867)

N/A

(18,810)

N/A

Total

$     299,912

18.7%

$     260,255

17.5%

IDEXX Laboratories, Inc. and Subsidiaries

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

Amounts in thousands (Unaudited)

Three Months Ended

Net Revenue

December 31, 2015

December 31, 2014

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3

CAG

$

336,055

$

284,898

$

51,157

18.0%

(5.1%)

0.8%

22.3%

Water

24,178

23,070

1,108

4.8%

(5.1%)

-

9.9%

LPD

33,366

36,598

(3,232)

(8.8%)

(10.7%)

-

1.9%

Other

6,086

7,393

(1,307)

(17.7%)

(0.6%)

-

17.1%

Total

$

399,685

$

351,959

$

47,726

13.6%

(5.7%)

0.7%

18.6%

Three Months Ended

Net Revenue

December 31, 2015

December 31, 2014

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3 

United States

$

238,595

$

190,685

$

47,910

25.1%

-

0.2%

24.9%

International

161,090

161,274

(184)

(0.1%)

(11.7%)

1.2%

10.4%

Total

$

399,685

$

351,959

$

47,726

13.6%

(5.7%)

0.7%

18.6%

Three Months Ended

Net CAG Revenue

December 31, 2015

December 31, 2014

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3 

CAG Diagnostics recurring revenue:

$

277,119

$

232,059

$

45,060

19.4%

(5.4%)

0.9%

23.9%

VetLab consumables

98,433

76,992

21,441

27.8%

(6.9%)

-

34.7%

VetLab service and accessories

13,958

12,970

988

7.6%

(4.9%)

-

12.5%

Rapid assay products

39,317

26,319

12,998

49.4%

(4.5%)

-

53.9%

Reference laboratory diagnostic and consulting services

125,411

115,778

9,633

8.3%

(4.7%)

1.8%

11.2 %

CAG Diagnostics capital - instruments

28,830

24,194

4,636

19.2%

(8.3%)

-

27.5%

Customer information management and        digital imaging systems

30,106

28,645

1,461

5.1%

(1.3%)

1.0%

5.4%

Net CAG revenue

$

336,055

$

284,898

$

51,157

18.0%

(5.1%)

0.8%

22.3%

1The percentage change from currency is a non-GAAP financial measure. This measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the three months ended December 31, 2015 and the same period of the prior year applied to foreign currency-denominated revenues for the three months ended December 31, 2014.

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 December 31, 2015 compared to the three months ended December 31, 2014 attributed to acquisitions subsequent to September 30, 2014.

3Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three months ended December 31, 2015 compared to the three months ended December 31, 2014 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)

Years Ended

Net Revenue

December 31,

2015

December 31, 2014

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3

CAG

$

1,356,287

$

1,223,064

$

133,223

10.9%

 

(5.6%)

0.8%

15.7%

Water

96,884

94,725

2,159

2.3%

 

(5.5%)

-

7.8%

LPD

127,143

141,179

(14,036)

(9.9%)

 

(12.0%)

-

2.1%

Other

21,578

26,839

(5,261)

(19.6%)

 

(0.8%)

-

(18.8%)

Total

$

1,601,892

$

1,485,807

$

116,085

7.8%

 

(6.2%)

0.6%

13.4%

Years Ended

Net Revenue

December 31,

2015

December 31, 2014

 

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3

United States

$

980,321

$

848,925

$

131,396

15.5%

 

-

0.3%

15.2%

International

621,571

636,882

(15,311)

(2.4%)

 

(14.1%)

1.2%

10.5%

Total

$

1,601,892

$

1,485,807

$

116,085

7.8%

 

(6.2%)

0.6%

13.4%

Years Ended

Net CAG Revenue

December 31, 2015

December 31, 2014

Dollar

Change

Percentage

Change

Percentage

Change from

Currency1

Percentage

Change from

Acquisitions2

Organic Revenue Growth3 

CAG Diagnostics recurring revenue:

$

1,146,527

$

1,039,252

$

107,275

10.3%

(5.8%)

0.6%

15.5%

VetLab consumables

396,526

341,407

55,119

16.1%

(7.1%)

-

23.2%

VetLab service and accessories

55,176

53,006

2,170

4.1%

(5.9%)

-

10.0%

Rapid assay products

182,670

165,646

17,023

10.3%

(3.0%)

-

13.3%

Reference laboratory diagnostic and consulting services

512,155

479,193

32,963

6.9%

(5.8%)

1.3%

11.4%

CAG Diagnostics capital - instruments

99,001

79,993

19,008

23.8%

(10.4%)

-

34.2%

Customer information management and       digital imaging systems

110,759

103,819

6,940

6.7%

(0.9%)

2.6%

5.0%

Net CAG revenue

$

1,356,287

$

1,223,064

$

133,223

10.9%

(5.6%)

0.8%

15.7%

1 The percentage change from currency is a non-GAAP financial measure. This measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the year ended December 31, 2015 and the same period of the prior year applied to foreign currency-denominated revenues for the year ended December 31, 2014.

2 The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the year ended December 31, 2015 compared to the year ended December 31, 2014 attributed to acquisitions subsequent to December 31, 2013.

3Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the year ended December 31, 2015 compared to the year ended December 31, 2014 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)

December 31,

December 31,

2015

2014

Assets:

Current Assets:

Cash and cash equivalents

$          128,994

$          322,536

Marketable securities

213,591

-

Accounts receivable, net

188,318

152,380

Inventories

188,833

160,342

Other current assets

101,898

124,140

Total current assets

821,634

759,398

Property and equipment, net

333,026

303,587

Other long-term assets, net

320,333

321,226

Total assets

$       1,474,993

$       1,384,211

Liabilities and

Stockholders'

Equity (Deficit):

Current Liabilities:

Accounts payable

$            52,648

$            44,743

Accrued liabilities

205,530

195,351

Line of credit

573,000

549,000

Deferred revenue

25,583

31,812

Total current liabilities

856,761

820,906

Long-term debt

597,085

350,000

Other long-term liabilities

105,142

95,716

Total long-term liabilities

702,227

445,716

Total stockholders' equity

(84,125)

117,516

Noncontrolling interest

130

73

Total equity (deficit)

(83,995)

117,589

Total liabilities and stockholders' equity

$        1,474,993

$        1,384,211

IDEXX Laboratories, Inc. and Subsidiaries

Selected Balance Sheet Information (Unaudited)

December 31,

September 30,

June 30,

March 31,

December 31,

2015

2015

2015

2015

2014

Selected                  

Balance Sheet

Days sales outstanding1

43.3

43.8

43.7

41.6

40.6

Information:

Inventory turns2

1.5

1.5

1.5

1.6

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)

Years Ended

December 31,

December 31,

2015

2014

Operating:

Cash Flows from Operating Activities:

Net income

$     192,135

$     181,951

Non-cash charges

105,355

79,691

Changes in assets and liabilities

(69,811)

(9,718)

Tax benefit from share-based compensation arrangements

(11,315)

(16,078)

Net cash provided by operating activities

216,364

235,846

Investing:

Cash Flows from Investing Activities:

Purchases of property and equipment

(82,921)

(60,523)

Purchase of marketable securities

(271,958)

-

Proceeds from the sale and maturities of marketable securities

56,775

-

Acquisitions of intangible assets

-

(175)

Proceeds from sale of equity investment

-

5,400

Acquisitions of a business, net of cash acquired

(10,302)

(25,115)

Net cash used by investing activities

(308,406)

(80,413)

Financing:

Cash Flows from Financing Activities:

Borrowings on revolving credit facilities, net

24,000

272,000

Issuance of long-term debt

250,097

200,000

Payment of notes payable

-

(1,394)

Repurchases of common stock

(401,981)

(618,158)

Debt issue costs

(1,380)

(1,406)

Proceeds from the exercise of stock options and employee stock purchase plans

22,397

29,442

Tax benefit from share-based compensation arrangements

11,315

16,078

Net cash used by financing activities

(95,552)

(103,438)

Net effect of changes in exchange rates on cash

(5,948)

(8,517)

Net (decrease) increase in cash and cash equivalents

(193,542)

43,478

Cash and cash equivalents, beginning of period

322,536

279,058

Cash and cash equivalents, end of period

$     128,994

$       322,536

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow1

Amounts in thousands (Unaudited)

Years Ended

December 31,

December 31,

2015

2014

Free Cash

Flow:

Net cash provided by operating activities

$     216,364

$     235,846

Financing cash flows attributable to tax benefits from share-based compensation arrangements

11,315

16,078

Investing cash flows attributable to purchases of property and equipment

(82,921)

(60,523)

Free cash flow

$     144,758

$     191,401

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

Years Ended

December 31,

December 31,

December 31,

December 31,

2015

2014

2015

2014

Share repurchases during the period

1,313

2,269

5,659

9,761

Shares surrendered by employees in payment for minimum   required withholding taxes due on share based compensation

4

7

69

92

Total number of shares purchased 1

1,317

2,276

5,728

9,853

Average price paid per share

$        71.08

$        65.78

$        71.90

$        63.32

 

Shares remaining under repurchase authorization as of December 31, 2015 totaled 6,806,152.

                              

1 Shares repurchased on and before June 15, 2015 and the associated average cost per share have been adjusted to reflect the June    2015 two-for-one stock split.  Actual shares repurchased and acquired through employee surrender were 1,317,000 and 4,313,000    for the three and twelve months ended December 31, 2015, respectively, and 1,138,000 and 4,927,000 for the three and twelve months    ended December 31, 2014, respectively.

Contact: Ed Garber, Director, Investor Relations, 1-207-556-8155

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SOURCE IDEXX Laboratories, Inc.



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