IDEXX Laboratories Announces Second Quarter Results

WESTBROOK, Maine, July 22, 2011 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that revenues for the second quarter of 2011 increased 13% to $317.9 million, from $281.5 million for the second quarter of 2010. Organic revenue growth, as defined below, was 8%. Earnings per diluted share ("EPS") for the quarter ended June 30, 2011 increased 34% to $0.83, compared to $0.62 for the same period in the prior year.

(Logo:  http://photos.prnewswire.com/prnh/20110602/NE13041LOGO )

Organic revenue growth excludes the impact of changes in foreign currency exchange rates, which contributed 5% to revenue growth, and revenue from acquisitions subsequent to March 31, 2010, which contributed less than 1% to revenue growth in the second quarter of 2011.

"Our second quarter results exceeded our expectations," stated Jonathan Ayers, Chairman and Chief Executive Officer. "Our 8% organic revenue growth, in an economic environment that remains challenging, demonstrates our continued success in bringing innovative products and services to our veterinary and other customers, as well as strong commercial execution in markets around the world."

"Our results reflect continued momentum in advancing our strategic and operational initiatives aimed at helping veterinarians practice better medicine and run more efficient practices. Market response to our ProCyte Dx® hematology analyzer continues to be very positive in domestic and international markets with 284 placements in the second quarter, including our first placement of a ProCyte Dx® instrument in the Asia Pacific region. ProCyte Dx® provides reference lab quality test results in just two minutes and is a key enabler of our real-time care strategy, working seamlessly with our Catalyst Dx® chemistry analyzer.  I was also pleased with the performance of our global reference laboratory and consulting services business where we achieved 10% organic revenue growth for the second consecutive quarter."

Revenue Performance

Please refer to the table below entitled "Revenues and Revenue Growth Analysis by Product and Service Categories" in conjunction with the following discussion.

Companion Animal Group. Companion Animal Group ("CAG") revenues for the second quarter of 2011 were $259.7 million compared to $232.3 million for the second quarter of 2010. Changes in foreign currency exchange rates contributed 4% to revenue growth. Organic revenue growth of 7% was due primarily to performance in our reference laboratory diagnostic and consulting services business and in our instrument and consumables product lines. In the reference lab business, revenues increased due to higher sales volume due primarily to the acquisition of new customers and to an increase in sales prices. The revenue increase in our instruments and consumables business was largely the result of higher sales volume of consumables used with our IDEXX VetLab® instruments, primarily sales of consumables used with our Catalyst Dx® instrument, and higher sales volume of ProCyte Dx®, our new hematology analyzer introduced in the third quarter of 2010.  

Water. Water revenues for the second quarter of 2011 were $21.5 million compared to $19.4 million for the second quarter of 2010. Changes in foreign currency exchange rates contributed 5% to revenue growth. Organic revenue growth of 6% was due primarily to higher Colilert® product sales volume driven by new account acquisitions, partly offset by lower average unit sales prices of this product.

Livestock and Poultry Diagnostics. Livestock and Poultry Diagnostics ("LPD") revenues for the second quarter of 2011 were $25.4 million compared to $19.2 million for the second quarter of 2010. Changes in foreign currency exchange rates contributed 11% to revenue growth. Organic revenue growth of 21% was primarily the result of higher sales volumes of certain bovine tests, especially in Germany where we have won several government tenders in connection with a country-wide eradication program for a virus impacting beef and dairy production yields, partly offset by lower average unit sales prices due to increasing competitive pressures.

Additional Operating Results for the Second Quarter

Gross profit for the second quarter of 2011 increased $24.7 million, or 17%, to $174.0 million from $149.3 million for the second quarter of 2010. As a percentage of total revenue, gross profit increased to 55% from 53% as a result of reduced overall manufacturing costs, primarily those associated with our IDEXX VetLab® instruments, and higher relative sales of higher margin products. These favorable impacts were partly offset by hedging losses in the second quarter of 2011 compared to hedging gains in the second quarter of 2010.

Research and development ("R&D") expense for the second quarter of 2011 was $18.6 million, or 6% of revenue, compared to $17.2 million, or 6% of revenue for the second quarter of 2010. The increase in R&D expense was due primarily to increased personnel-related costs.

Selling, general and administrative ("SG&A") expense for the second quarter of 2011 was $84.1 million, or 26% of revenue, compared to $77.2 million, or 27% of revenue, for the second quarter of 2010. The increase in SG&A expense resulted primarily from the net unfavorable impact of changes in foreign currency exchange rates and higher personnel-related costs.

Supplementary Analysis of Results

The accompanying financial tables provide more information concerning our revenue and other operating results for the three and six months ended June 30, 2011.

Outlook for full year 2011

The Company provides the following updated guidance for the full year 2011. This guidance reflects an assumption that the value of the U.S. dollar relative to the other currencies will remain at its current level for the balance of 2011. Fluctuations in foreign currency exchange rates from current levels could have a significant positive or negative impact on our actual results of operations in 2011.

  • Revenues are expected to be $1.205 to $1.215 billion, which represents reported revenue growth of 9 to 10% and organic revenue growth of 7 to 8%. This outlook is unchanged from our previous guidance provided in April of this year.
  • EPS are expected to be in the range of $2.68 to $2.73, compared to our previous guidance of $2.66 to $2.71. This increase in guidance reflects business performance in the second quarter that exceeded our expectations.
  • Our total capital expenditure plan for 2011 is approximately $55 million.
  • Free cash flow is expected to be approximately 115% of net income.(1)

(1) Free cash flow is a non-U.S. GAAP measure. It indicates the cash generated from operations and tax benefits attributable to stock option exercises and vesting of restricted stock units, 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. With respect to this particular forward-looking projection, the Company is unable to provide a quantitative reconciliation at this time as the inputs to the measurement are difficult to predict and estimate and are primarily dependent on future events.

Conference Call and Webcast Information

IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its second quarter results and management's outlook. To participate in the conference call, dial 1-612-234-9960 or 1-800-230-1074 and reference confirmation code 210465. An audio replay will be available through July 29, 2011 by dialing 1-320-365-3844 and referencing replay code 210465.

The call will also be available via live or archived Webcast on the IDEXX Laboratories' web site at www.idexx.com.

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 4,800 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. Forward-looking statements can be identified by the use of words such as "expects," "may," "anticipates," "intends," "would," "will," "plans," "believes," "estimates," "should," and similar words and expressions. These statements are based on management's 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 Company's ability to achieve economies of scale in its worldwide network of laboratories; the impact of a weak economy on demand for the Company's products and services; the effectiveness of the Company's sales and marketing activities; 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 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 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 impact of distributor purchasing decisions on sales of the Company's products that are sold through distribution; the impact of competition, technological change, and veterinary hospital consolidation on the markets for the Company's products; changes or trends in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; the impact of the Company's inexperience in the human point-of-care market; the effects of operations outside the U.S., including  from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; the effects of interruptions to the Company's operations due to natural disasters or system failures; the loss of key employees; class action litigation due to stock price volatility; the effect on the Company's stock price if quarterly or annual operations results do not meet expectations of market analysts or investors in future periods; and potential exposures related to our worldwide provision for income taxes. 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, 2010, and quarterly report on Form 10-Q for the quarter ended March 31, 2011, 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


Six Months Ended




June 30,

June 30,


June 30,

June 30,




2011

2010


2011

2010

Revenue:

Revenue


$      317,862

$      281,482


$      610,534

$      550,007

Expenses and








Income:

Cost of revenue


143,829

132,198


281,576

258,362


Gross profit


174,033

149,284


328,958

291,645


Sales and marketing


50,974

44,167


101,959

88,583


General and administrative


33,140

33,076


65,736

65,884


Research and development


18,621

17,206


36,433

33,915


Income from operations


71,298

54,835


124,830

103,263


Interest expense, net


363

551


722

863


Income before provision for income taxes


70,935

54,284


124,108

102,400


Provision for income taxes


22,281

17,087


38,848

32,175

Net Income:

Net income


48,654

37,197


85,260

70,225


Less: Noncontrolling interest in subsidiary's








(losses) earnings


(3)

4


(9)

6


Net income attributable to  stockholders

$     48,657

$       37,193


$       85,269

$       70,219


Earnings per share: Basic


$          0.85

$           0.64


$           1.49

$           1.21


Earnings per share: Diluted


$          0.83

$           0.62


$           1.45

$           1.17


Shares outstanding: Basic


57,276

57,747


57,366

57,890


Shares outstanding: Diluted


58,727

59,646


58,934

59,875













IDEXX Laboratories, Inc. and Subsidiaries







Selected Operating Information (Unaudited)


















Three Months Ended


Six Months Ended




June 30,

June 30,


June 30,

June 30,




2011

2010


2011

2010

Operating

Gross profit


54.8%

53.0%


53.9%

53.0%

Ratios (as a

Sales, marketing, general and







percentage of

administrative expense


26.5%

27.4%


27.5%

28.1%

revenue):

Research and development expense


5.9%

6.1%


6.0%

6.2%


Income from operations(1)


22.4%

19.5%


20.5%

18.8%

















International

International revenue (in thousands)


$    137,585

$     113,701


$    260,155

$     222,360

Revenue:

International revenue as percentage of








total revenue


43.3%

40.4%


42.6%

40.4%









(1) The sum of individual items may not equal the total due to rounding.






IDEXX Laboratories, Inc. and Subsidiaries







Segment Information







Amounts in thousands (Unaudited)


















Three Months Ended


Six Months Ended




June 30,

June 30,


June 30,

June 30,




2011

2010


2011

2010

Revenue:

CAG


$     259,734

$     232,320


$     500,323

$     453,737


Water


21,510

19,448


40,475

37,312


LPD


25,367

19,160


49,306

39,101


Other


11,251

10,554


20,430

19,857


Total


$     317,862

$     281,482


$     610,534

$     550,007









Gross Profit:

CAG


$     138,332

$     120,125


$     261,683

$     233,868


Water


12,968

12,328


24,359

23,903


LPD


17,335

13,275


33,882

26,483


Other


4,742

4,610


8,484

8,983


Unallocated


656

(1,054)


550

(1,592)


Total


$     174,033

$     149,284


$     328,958

$     291,645









Income from








Operations:

CAG


$      58,270

$      47,140


$     101,242

$      87,962


Water


8,401

8,150


15,348

15,662


LPD


7,176

4,549


14,326

9,127


Other


309

638


(241)

1,188


Unallocated


(2,858)

(5,642)


(5,845)

(10,676)


Total


$      71,298

$      54,835


$     124,830

$     103,263









Gross Profit








(as a percentage








of revenue):

CAG


53.3%

51.7%


52.3%

51.5%


Water


60.3%

63.4%


60.2%

64.1%


LPD


68.3%

69.3%


68.7%

67.7%


Other


42.2%

43.7%


41.5%

45.2%


Total


54.8%

53.0%


53.9%

53.0%









Income from








Operations








(as a percentage








of  revenue):

CAG


22.4%

20.3%


20.2%

19.4%


Water


39.1%

41.9%


37.9%

42.0%


LPD


28.3%

23.7%


29.1%

23.3%


Other


2.8%

6.1%


(1.2%)

6.0%


Total


22.4%

19.5%


20.5%

18.8%





IDEXX Laboratories, Inc. and Subsidiaries

Revenues and Revenue Growth Analysis by Product and Service Categories

Amounts in thousands (Unaudited)















Three Months Ended

Net Revenue

June 30,
2011



June 30,
2010


Dollar

Change


Percentage

Change


Percentage

Change from

Currency (1)


Percentage

Change from

Acquisitions (2)


Organic Growth(3)






















CAG

$

259,734


$

232,320


$

27,414


11.8

%


4.3

%


0.1

%


7.4

%

Water


21,510



19,448



2,062


10.6

%


4.7

%


-



5.9

%

LPD


25,367



19,160



6,207


32.4

%


11.1

%


-



21.3

%

Other


11,251



10,554



697


6.6

%


3.1

%


-



3.5

%

Total

$

317,862


$

281,482


$

36,380


12.9

%


4.8

%


-



8.1

%


























Three Months Ended

Net CAG Revenue

June 30,
2011



June 30,
2010


Dollar

Change


Percentage

Change


Percentage

Change from

Currency (1)


Percentage

Change from

Acquisitions (2)


Organic Growth(3)






















Instruments and consumables

$

98,603


$

86,455


$

12,148


14.1%



5.2%



-



8.9%


Rapid assay products


44,193



40,481



3,712


9.2%



2.3%



-



6.9%


Reference laboratory diagnostic and consulting services


99,087



86,048



13,039


15.2%



5.3%



0.1%



9.8%


Practice management systems and digital radiography


17,851



19,336



(1,485)


(7.7%)



0.5%



-



(8.2%)


Net CAG revenue

$

259,734


$

232,320


$

27,414


11.8%



4.3%



0.1%



7.4%























(1) The percentage change from currency is a non-U.S. GAAP measure. It represents the percentage change in revenue resulting from the difference between the average exchange rates during the three months ended June 30, 2011 and the same period of the prior year applied to foreign currency denominated revenues for the three months ended June 30, 2011.


(2) Represents the percentage change in revenue during the three months ended June 30, 2011 compared to the three months ended June 30, 2010 attributed to acquisitions subsequent to March 31, 2010.


(3) Organic revenue growth is a non-U.S. GAAP measure and represents the percentage change in revenue during the three months ended June 30, 2011 compared to the three months ended June 30, 2010 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

Amounts in thousands (Unaudited)















Six Months Ended

Net Revenue

June 30,
2011



June 30,
2010


Dollar

Change


Percentage

Change


Percentage

Change from

Currency (1)


Percentage

Change from

Acquisitions (2)


Organic Growth(3)






















CAG

$

500,323


$

453,737


$

46,586


10.3

%


2.8

%


0.1

%


7.4

%

Water


40,475



37,312



3,163


8.5

%


3.2

%


-



5.3

%

LPD


49,306



39,101



10,205


26.1

%


5.5

%


-



20.6

%

Other


20,430



19,857



573


2.9

%


2.2

%


-



0.7

%

Total

$

610,534


$

550,007


$

60,527


11.0

%


3.1

%


-



7.9

%


























Six Months Ended

Net CAG Revenue

June 30,
2011



June 30,
2010


Dollar

Change


Percentage

Change


Percentage

Change from

Currency (1)


Percentage

Change from

Acquisitions (2)


Organic Growth(3)






















Instruments and consumables

$

192,490


$

169,837


$

22,653


13.3%



3.4%



-



9.9%


Rapid assay products


82,810



79,924



2,886


3.6%



1.4%



-



2.2%


Reference laboratory diagnostic and consulting   services


188,215



165,888



22,327


13.5%



3.5%



0.1%



9.9%


Practice management systems and  digital radiography


36,808



38,088



(1,280)


(3.4%)



0.5%



-



(3.9%)


Net CAG revenue

$

500,323


$

453,737


$

46,586


10.3%



2.8%



0.1%



7.4%























(1) The percentage change from currency is a non-U.S. GAAP measure. It represents the percentage change in revenue resulting from the difference between the average exchange rates during the six months ended June 30, 2011 and the same period of the prior year applied to foreign currency denominated revenues for the six months ended June 30, 2011.


(2) Represents the percentage change in revenue during the six months ended June 30, 2011 compared to the six months ended June 30, 2010 attributed to acquisitions subsequent to December 31, 2009.


(3) Organic revenue growth is a non-U.S. GAAP measure and represents the percentage change in revenue during the six months ended June 30, 2011 compared to the six months ended June 30, 2010 net of acquisitions and the effect of changes in foreign currency exchange rates.





IDEXX Laboratories, Inc. and Subsidiaries







Consolidated Balance Sheet







Amounts in thousands (Unaudited)





















June 30,

December 31,







2011

2010

Assets:

Current Assets:








Cash and cash equivalents





$          159,398

$          156,915


Accounts receivable, net





149,314

120,080


Inventories





133,934

127,885


Other current assets





50,925

55,711


Total current assets





493,571

460,591


Property and equipment, net





210,163

201,725


Other long-term assets, net





246,841

234,828


Total assets





$          950,575

$         897,144

Liabilities and








Stockholders'








Equity:

Current Liabilities:








Accounts payable





$            29,888

$           22,669


Accrued liabilities





121,898

118,598


Debt





133,438

129,862


Deferred revenue





12,913

13,983


Total current liabilities





298,137

285,112


Long-term debt, net of current portion





2,966

3,418


Other long-term liabilities





40,661

34,333


Total long-term liabilities





43,627

37,751










Total stockholders' equity 



608,774

574,235


Noncontrolling interest




37

46


Total equity




608,811

574,281


Total liabilities and stockholders' equity




$          950,575

$        897,144



























IDEXX Laboratories, Inc. and Subsidiaries







Selected Balance Sheet Information (Unaudited)

















June 30,


March 31,

December 31,


September 30,

June 30,



2011


2011

2010


2010

2010

Selected                  









Balance Sheet

Days sales outstanding(1)

41.2


40.2

38.7


41.9

41.8

Information:

Inventory turns(2)

1.7


1.8

1.8


1.7

1.9










(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 represents inventory-related cost of product sales for the 12 months preceding each quarter-end divided by the inventory balance at the end of the quarter.





IDEXX Laboratories, Inc. and Subsidiaries







Consolidated Statement of Cash Flows







Amounts in thousands (Unaudited)





















Six Months Ended







June 30,

June 30,







2011

2010

Operating:

Cash Flows from Operating Activities:








Net income





$       85,260

$       70,225


Non-cash charges





34,316

31,089


Changes in current assets and liabilities



(20,412)

(16,857)


Tax benefit from exercises of stock options

and vesting of restricted stock units


(10,854)

(9,372)


Net cash provided by operating activities





88,310

75,085

Investing:

Cash Flows from Investing Activities:








Purchase of property and equipment





(26,173)

(17,437)


Proceeds from disposition of pharmaceutical product lines



3,000

-


Proceeds from sale of property and equipment




218

64


Acquisitions of intangible assets



-

(144)


Net cash used by investing activities




(22,955)

(17,517)

Financing:

Cash Flows from Financing Activities:








Borrowings on revolving credit facilities, net



3,486

15,099


Payment of other notes payable





(425)

(400)


Purchase of treasury stock





(98,419)

(83,724)


Proceeds from the exercise of stock options and employee

stock purchase plans


19,367

16,446


Tax benefit from exercises of stock options and vesting of

restricted stock units


10,854

9,372


Net used by financing activities




(65,137)

(43,207)


Net effect of changes in exchange rates on cash





2,265

(3,114)


Net increase in cash and cash equivalents





2,483

11,247


Cash and cash equivalents, beginning of period




156,915

106,728


Cash and cash equivalents, end of period





$      159,398

$      117,975



















IDEXX Laboratories, Inc. and Subsidiaries







Free Cash Flow







Amounts in thousands (Unaudited)













Six Months Ended







June 30,

June 30,







2011

2010

Free Cash








Flow:

Net cash provided by operating activities





$      88,310

$      75,085


Financing cash flows attributable to tax benefits from exercise of stock options





 and vesting of restricted stock units





10,854

9,372


Purchase of property and equipment





(26,173)

(17,437)


Free cash flow





$         72,991

$      67,020













IDEXX Laboratories, Inc. and Subsidiaries







Common Stock Repurchases







Amounts in thousands except per share data (Unaudited)








Three Months Ended


Six Months Ended




June 30,

June 30,


June 30,

June 30,




2011

2010


2011

2010


Share repurchases during the period


759

422


1,297

1,513


Average price paid per share


$      77.08

$      61.66


$      75.89

$      55.32










Shares remaining under repurchase authorization as of June 30, 2011:



2,510









Share repurchases does not include shares surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units.




Contact: Merilee Raines, Chief Financial Officer, 1-207-556-8155

SOURCE IDEXX Laboratories, Inc.



RELATED LINKS
http://www.idexx.com

More by this Source

Best of Content We Love 2014 


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.