Full Press Release Details
IDEXX Laboratories Announces Second Quarter Results
WESTBROOK, Maine, Aug. 2, 2016 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX) today reported revenues for the second quarter of 2016 of $467 million, an increase of 13% compared to the prior year period. Organic revenue growth for the quarter was also 13%, supported by strong growth in the Companion Animal Group ( CAG ) and Water segments.
Earnings per diluted share ( EPS ) for the quarter was $0.74, an increase of 23% compared to the prior year period, while absorbing a negative $0.06 per share impact related to net changes in foreign exchange, resulting in constant currency EPS growth of 33%. The federal research and development tax credit, which benefited the current but not the prior year period, had a 2% favorable impact to EPS growth.
We accelerated growth in the second quarter, further demonstrating the benefits of bringing our innovations to an attractive global market with an expanded commercial presence, including our move to a fully-direct sales strategy in the US companion animal market in 2015, said Jonathan Ayers, the Company's Chairman and Chief Executive Officer. Our teams accomplished strong revenue gains across US and all international regions, with flow-through benefits that drove very strong profit results.
We successfully launched SediVue Dx, our novel urine sediment point-of-care analyzer, with placements of 467 units in the quarter. This performance reflects the positive customer response to the streamlined workflow, high quality images, and consistency of results from the analyzer compared to the traditionally challenging manual process involving microscopic interpretation.
We also achieved continued productivity gains in our commercial capabilities to drive another highly successful quarter for placements of Catalyst chemistry instruments, with placement of 1,334 systems, including 502 in North America. Impressively, an estimated 663 of our worldwide placements were to new and competitive accounts. Our global momentum in instrument placements drove accelerated 14% global reported and organic revenue gains in the recurring revenue of instrument consumables.
Strong global commercial execution further drove the revenue growth of reference laboratory diagnostic and consulting services, with 15% reported and 14% organic gains, including strong double-digit growth in both the US and international regions. Reference lab revenue performance was supported by the growing appreciation of veterinarians around the world that IDEXX SDMA is a more reliable indicator of kidney related health than the traditional key kidney parameter, creatinine.
We also continued to drive strong global growth in our Water business, with revenues up 11% reported and 12% organically in the quarter, expanding this base of highly profitable and durable recurring revenue.
IDEXX innovations are resonating with customers, and with our expanded commercial capabilities, we are helping to transform the role of diagnostics in our markets. We clearly are firing on all cylinders.
Given these strong results and related momentum, we are on track towards delivering on the consistent, long-term 10%+ annual constant currency revenue growth potential we see for our business, said Ayers.
Second Quarter Financial Performance Highlights
Companion Animal Group revenue grew 14%, or 13% on an organic basis, in the second quarter. These results were driven by 13% reported and 12% organic growth in CAG Diagnostics recurring revenues, and 35% reported and organic revenue growth in CAG Diagnostics instruments. As noted, CAG Diagnostics recurring revenue gains were supported by strong growth in reference laboratory diagnostic and consulting services and IDEXX VetLab consumables. Rapid assay reported and organic revenue growth increased 7% due to higher volume and timing of promotional programs.
Water revenue grew 11%, or 12% on an organic basis, in the second quarter, driven by worldwide increases in core coliform and E.coli products, as well as an approximate 4% growth benefit from project related revenues and incremental revenues associated with the 2015 Crypto outbreak in the UK.
Livestock, Poultry and Dairy ( LPD ) revenue increased 2%, or 4% on an organic basis, in the second quarter, reflecting solid growth in China and Latin America, partially offset by lower bovine revenue in Europe.
Gross profit increased 12% compared to the prior year period. Gross margin decreased from 56.3% to 55.8%, reflecting the unfavorable impact of foreign exchange rates (including 1.2% of negative gross margin impact related to the lapping of prior year hedge gains). On a constant currency basis, gross margin improved solidly driven by benefits from moderate price gains and productivity achieved in our reference laboratory and veterinary software service businesses, which offset mix impacts from higher instrument revenues.
Operating expenses increased 8% in the second quarter, in line with first quarter growth levels and relatively lower than expected, in part reflecting delays in timing for certain investments. Operating margin was 22.3% in the second quarter, up from prior year period operating margin of 21.4%, reflecting flow-through benefits from very strong second quarter revenue growth.
Outlook for 2016
The Company is increasing its 2016 revenue guidance by $25 million and its 2016 EPS guidance by $0.14 per share to reflect its strong second quarter operating results, positive revenue growth trends, and expectations for relatively higher operating margins.
At the revised current foreign exchange rates assumptions below, the effect of the stronger US dollar compared to rates in effect in 2015 will adversely impact 2016 reported revenue growth by approximately 1%, EPS by an estimated $0.20 per share (including lapping of prior year hedge gains), EPS growth by 10%, and Adjusted EPS growth by 9%.
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 | $1,755 - $1,775 | Reported Organic Revenue Growth | 9.5% to 11.0% 10.0% to 11.5% |
| EPS | $2.32 - $2.39 | Reported Adjusted Constant Currency Adjusted | 13% to 17% 10% to 13% 19% to 23% |
| Operating Cash Flow | ~135% of net income | ||
| Free Cash Flow | ~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 $1.10, the British pound at $1.30, the Canadian dollar at $0.77, the Australian dollar at $0.75 and the Japanese yen at 104 to the US dollar for the remainder of 2016.
We now expect that operating margins for the full year will be approximately 19.0%. Adjusted for foreign currency impacts (including comparisons to 2015 hedge gains) and the 2015 software impairment charge, we have targeted operating margin improvement of approximately 100 basis points from 2015 levels.
We continue to expect an effective tax rate of approximately 30.5% to 31.0%. We are now projecting a reduction in weighted average shares outstanding of approximately 3.0%, and expect interest expense, net of interest income, of approximately $29 million reflecting current and projected borrowings.
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its second quarter results and management's outlook. To participate in the conference call, dial 800-230-1096 or 612-332-0107 and reference confirmation code 397786. An audio replay will be available through Tuesday, August 9, 2016 by dialing 800-475-6701 or 320-365-3844 and referencing replay code 397786.
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 7,000 people and offers products to customers in over 175 countries.
Statement Regarding Non-GAAP Financial Measures
The following provides information 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.
The following section defines terms and conventions used in this earnings release and/or the accompanying earnings conference call, including non-GAAP financial measures, and includes applicable information regarding reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as appropriate:
Adjusted EPS and Adjusted EPS growth - Adjusted EPS and Adjusted EPS growth are non-GAAP financial measures. Adjusted EPS excludes non-recurring items. Management believes that reporting Adjusted EPS provides useful information to investors by facilitating easier comparisons of our EPS performance with prior and future periods. The 2016 projected Adjusted EPS growth calculation uses Adjusted 2015 EPS, which excludes from 2015 reported earnings the third quarter 2015 non-cash software impairment charge of $8.2 million or $0.06 per share.
Constant currency - Constant 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, gross profit and margin, operating profit and 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, gross profit, operating profit, EPS 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 second quarter 2016 gross profit growth by 3%, operating profit growth by 8%, and EPS growth by 10%, and reduced projected 2016 revenue growth by 1%, projected 2016 EPS growth by 10%, and projected 2016 Adjusted EPS growth by 9%. 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 and six months ended June 30, 2016.
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, including tax benefits attributable to share-based compensation arrangements, 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. See the supplementary analysis of results below for our calculation of free cash flow for the six months ended June 30, 2016 and 2015. To estimate projected 2016 free cash flow we have deducted approximately $90 million for projected purchases of property and equipment and added approximately $10 million for the projected tax benefits from share-based compensation arrangements.
Growth and organic growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted.
Organic revenue growth - Organic revenue growth is a non-GAAP financial measure. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Organic revenue growth for the second quarter of 2016 excludes the impact of changes in foreign currency exchange rates, which had a 0.4% unfavorable impact on revenue growth, and revenue from business acquisitions, which contributed 0.5% to revenue growth. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and six months ended June 30, 2016. With respect to the projected 2016 organic revenue growth for the Company it excludes the negative impact of changes in foreign currency exchange rates, which is projected to be 1%, and excludes the positive impact of revenue from business acquisitions, which is projected to contribute 0.5%.
| 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, | ||||
| 2016 | 2015 | 2016 | 2015 | ||||
| Revenue: | Revenue | $ 466,569 | $ 413,343 | $ 884,119 | $ 795,820 | ||
| Expenses and | |||||||
| Income: | Cost of revenue | 206,026 | 180,586 | 396,039 | 347,519 | ||
| Gross profit | 260,543 | 232,757 | 488,080 | 448,301 | |||
| Sales and marketing | 76,652 | 75,217 | 156,481 | 150,353 | |||
| General and administrative | 54,317 | 44,920 | 103,612 | 87,519 | |||
| Research and development | 25,412 | 24,317 | 50,032 | 49,323 | |||
| Income from operations | 104,162 | 88,303 | 177,955 | 161,106 | |||
| Interest expense, net | (7,276) | (6,700) | (14,760) | (12,579) | |||
| Income before provision for income taxes | 96,886 | 81,603 | 163,195 | 148,527 | |||
| Provision for income taxes | 29,680 | 24,665 | 49,964 | 45,011 | |||
| Net Income: | Net income | 67,206 | 56,938 | 113,231 | 103,516 | ||
| Less: Noncontrolling interest in subsidiary's | |||||||
| earnings | 4 | 26 | 10 | 10 | |||
| Net income attributable to stockholders | $ 67,202 | $ 56,912 | $ 113,221 | $ 103,506 | |||
| Earnings per share: Basic | $0.75 | $0.61 | $1.26 | $1.10 | |||
| Earnings per share: Diluted | $0.74 | $0.60 | $1.25 | $1.09 | |||
| Shares outstanding: Basic | 89,824 | 93,384 | 89,874 | 93,829 | |||
| Shares outstanding: Diluted | 90,817 | 94,306 | 90,858 | 94,934 |
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||
| Selected Operating Information (Unaudited) | |||||||
| Three Months Ended | Six Months Ended | ||||||
| June 30, | June 30, | June 30, | June 30, | ||||
| 2016 | 2015 | 2016 | 2015 | ||||
| Operating | Gross profit | 55.8% | 56.3% | 55.2% | 56.3% | ||
| Ratios (as a | Sales, marketing, general and | ||||||
| percentage of | administrative expense | 28.1% | 29.1% | 29.4% | 29.9% | ||
| revenue): | Research and development expense | 5.4% | 5.9% | 5.7% | 6.2% | ||
| Income from operations 1 | 22.3% | 21.4% | 20.1% | 20.2% | |||
| 1 Amounts presented may not recalculate due to rounding. |
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||
| Segment Information | |||||||
| Amounts in thousands (Unaudited) | |||||||
| Three Months Ended | Three Months Ended | ||||||
| June 30, | Percent of | June 30, | Percent of | ||||
| 2016 | Revenue | 2015 | Revenue | ||||
| Revenue: | CAG | $ 400,223 | $ 351,620 | ||||
| Water | 27,829 | 25,051 | |||||
| LPD | 32,856 | 32,059 | |||||
| Other | 5,661 | 4,613 | |||||
| Total | $ 466,569 | $ 413,343 | |||||
| Gross Profit 1 : | CAG | $ 220,003 | 55.0% | $ 192,756 | 54.8% | ||
| Water | 19,380 | 69.6% | 18,013 | 71.9% | |||
| LPD | 19,178 | 58.4% | 20,170 | 62.9% | |||
| Other | 2,291 | 40.5% | 1,665 | 36.1% | |||
| Unallocated Amounts | (309) | N/A | 153 | N/A | |||
| Total | $ 260,543 | 55.8% | $ 232,757 | 56.3% | |||
| Income from | |||||||
| Operations 1 : | CAG | $ 91,019 | 22.7% | $ 68,085 | 19.4% | ||
| Water | 12,743 | 45.8% | 11,951 | 47.7% | |||
| LPD | 5,069 | 15.4% | 6,579 | 20.5% | |||
| Other | (920) | (16.3%) | (933) | (20.2%) | |||
| Unallocated Amounts | (3,749) | N/A | 2,621 | N/A | |||
| Total | $ 104,162 | 22.3% | $ 88,303 | 21.4% | |||
| Six Months Ended | Six Months Ended | ||||||
| June 30, | Percent of | June 30, | Percent of | ||||
| 2016 | Revenue | 2015 | Revenue | ||||
| Revenue: | CAG | $ 757,862 | $ 676,151 | ||||
| Water | 51,381 | 46,749 | |||||
| LPD | 63,712 | 63,329 | |||||
| Other | 11,164 | 9,591 | |||||
| Total | $ 884,119 | $ 795,820 | |||||
| Gross Profit 1 : | CAG | $ 410,795 | 54.2% | $369,690 | 54.7% | ||
| Water | 35,486 | 69.1% | 33,161 | 70.9% | |||
| LPD | 37,155 | 58.3% | 40,178 | 63.4% | |||
| Other | 5,214 | 46.7% | 4,138 | 43.1% | |||
| Unallocated Amounts | (570) | N/A | 1,134 | N/A | |||
| Total | $ 488,080 | 55.2% | $ 448,301 | 56.3% | |||
| Income from | |||||||
| Operations 1 : | CAG | $ 152,397 | 20.1% | $ 121,603 | 18.0% | ||
| Water | 22,422 | 43.6% | 21,312 | 45.6% | |||
| LPD | 9,639 | 15.1% | 13,535 | 21.4% | |||
| Other | (1,757) | (15.7%) | (1,255) | (13.1%) | |||
| Unallocated Amounts | (4,746) | N/A | 5,911 | N/A | |||
| Total | $ 177,955 | 20.1% | $ 161,106 | 20.2% | |||
| 1 Effective January 1, 2016, we modified our management reporting to provide a more comprehensive view of the performance of our operating segments by including the capitalization of variances between standard and actual manufacturing costs, which adjusts the timing of cost recognition from when the variance is created to the period in which the related inventory is sold. Prior to January 1, 2016, the capitalization and subsequent recognition of these variances were not allocated to our operating segments and were instead reported under the caption Unallocated Amounts . The segment gross profit and income (loss) from operations within this report for the three and six months ended June 30, 2015 has been retrospectively revised to reflect this change to our reportable segments. |
| 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 | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | |||||||||
| CAG | $ | 400,223 | 351,620 | $ | 48,603 | 13.8% | (0.2%) | 0.5% | 13.5% | |||||||
| Water | 27,829 | 25,051 | 2,778 | 11.1% | (1.2%) | - | 12.3% | |||||||||
| LPD | 32,856 | 32,059 | 797 | 2.5% | (1.6%) | - | 4.1% | |||||||||
| Other | 5,661 | 4,613 | 1,048 | 22.7% | 0.2% | - | 22.5% | |||||||||
| Total | $ | 466,569 | 413,343 | $ | 53,226 | 12.9% | (0.4%) | 0.5% | 12.8% | |||||||
| Three Months Ended | ||||||||||||||||
| Net Revenue | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | |||||||||
| United States | $ | 285,758 | $ | 254,242 | $ | 31,516 | 12.4% | - | 0.2% | 12.2% | ||||||
| International | 180,811 | 159,101 | 21,710 | 13.6% | (1.0%) | 0.8% | 13.8% | |||||||||
| Total | $ | 466,569 | $ | 413,343 | $ | 53,226 | 12.9% | (0.4%) | 0.5% | 12.8% | ||||||
| Three Months Ended | ||||||||||||||||
| Net CAG Revenue | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | |||||||||
| CAG Diagnostics recurring revenue: | $ | 338,298 | $ | 300,146 | $ | 38,152 | 12.7% | (0.2%) | 0.6% | 12.3% | ||||||
| IDEXX VetLab consumables | 114,561 | 100,743 | 13,818 | 13.7% | (0.2%) | - | 13.9% | |||||||||
| IDEXX VetLab service and accessories | 14,826 | 14,018 | 808 | 5.8% | 0.2% | - | 5.6% | |||||||||
| Rapid assay products | 55,777 | 52,182 | 3,595 | 6.9% | 0.2% | - | 6.7% | |||||||||
| Reference laboratory diagnostic and consulting services | 153,134 | 133,203 | 19,931 | 15.0% | (0.3%) | 1.4% | 13.9% | |||||||||
| CAG Diagnostics capital - instruments | 32,520 | 24,064 | 8,456 | 35.1% | (0.2%) | - | 35.3% | |||||||||
| Veterinary software, services and diagnostic imaging system s 4 | 29,405 | 27,410 | 1,995 | 7.3% | (0.4%) | - | 7.7% | |||||||||
| Net CAG revenue | $ | 400,223 | $ | 351,620 | $ | 48,603 | 13.8% | (0.2%) | 0.5% | 13.5% | ||||||
| 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 three months ended June 30, 2016 and the same period of the prior year applied to foreign currency-denominated revenues for the three months ended June 30, 2015. | ||||||||||||||||
| 2 The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 attributed to acquisitions subsequent to March 31, 2014. | ||||||||||||||||
| 3 Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three months ended June 30, 2016 compared to the three months ended June 30, 2015 net of acquisitions and the effect of changes in foreign currency exchange rates. | ||||||||||||||||
| 4 During the second quarter of 2016, we renamed our customer information management and diagnostic imaging systems line of business in the CAG segment to veterinary software, services and diagnostic imaging systems. Financial results were not adjusted as a result of this name change. |
| 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 | |||||||||||||||||||
| Net Revenue | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | ||||||||||||
| CAG | $ | 757,862 | $ | 676,151 | $ | 81,711 | 12.1 | % | (0.8%) | 0.5 | % | 12.4 | % | ||||||
| Water | 51,381 | 46,749 | 4,632 | 9.9 | % | (1.9%) | - | 11.8 | % | ||||||||||
| LPD | 63,712 | 63,329 | 383 | 0.6 | % | (3.2%) | - | 3.8 | % | ||||||||||
| Other | 11,164 | 9,591 | 1,573 | 16.4 | % | - | - | 16.4 | % | ||||||||||
| Total | $ | 884,119 | $ | 795,820 | $ | 88,299 | 11.1 | % | (1.1%) | 0.4 | % | 11.8 | % |
| Six Months Ended | |||||||||||||||||||||
| Net Revenue | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | ||||||||||||||
| United States | $ | 544,697 | $ | 489,650 | $ | 55,047 | 11.2 | % | - | 0.2 | % | 11.0 | % | ||||||||
| International | 339,422 | 306,170 | 33,252 | 10.9 | % | (2.9%) | 0.8 | % | 13.0 | % | |||||||||||
| Total | $ | 884,119 | $ | 795,820 | $ | 88,299 | 11.1 | % | (1.1%) | 0.4 | % | 11.8 | % |
| Six Months Ended | |||||||||||||||||||
| Net CAG Revenue | June 30, 2016 | June 30, 2015 | Dollar Change | Percentage Change | Percentage Change from Currency 1 | Percentage Change from Acquisitions 2 | Organic Revenue Growth 3 | ||||||||||||
| CAG Diagnostics recurring revenue: | $ | 643,808 | $ | 578,911 | $ | 64,897 | 11.2 | % | (0.9%) | 0.6 | % | 11.5 | % | ||||||
| IDEXX VetLab consumables | 222,520 | 199,135 | 23,385 | 11.7 | % | (1.0%) | - | 12.7 | % | ||||||||||
| IDEXX VetLab service and accessories | 28,583 | 27,548 | 1,035 | 3.8 | % | (0.6%) | - | 4.4 | % | ||||||||||
| Rapid assay products | 98,863 | 95,819 | 3,044 | 3.2 | % | (0.1%) | - | 3.3 | % | ||||||||||
| Reference laboratory diagnostic and consulting services | 293,842 | 256,409 | 37,433 | 14.6 | % | (1.1%) | 1.4 | % | 14.3 | % | |||||||||
| CAG Diagnostics capital - instruments | 55,494 | 44,178 | 11,316 | 25.6 | % | (1.0%) | - | 26.6 | % | ||||||||||
| Veterinary software, services and diagnostic imaging system s 4 | 58,560 | 53,062 | 5,498 | 10.4 | % | (0.5%) | - | 10.9 | % | ||||||||||
| Net CAG revenue | $ | 757,862 | $ | 676,151 | $ | 81,711 | 12.1 | % | (0.8%) | 0.5 | % | 12.4 | % | ||||||
| 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 six months ended June 30, 2016 and the same period of the prior year applied to foreign currency-denominated revenues for the six months ended June 30, 2015. | |||||||||||||||||||
| 2 The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 attributed to acquisitions subsequent to December 31, 2014. | |||||||||||||||||||
| 3 Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the six months ended June 30, 2016 compared to the six months ended June 30, 2015 net of acquisitions and the effect of changes in foreign currency exchange rates. | |||||||||||||||||||
| 4 During the second quarter of 2016, we renamed our customer information management and diagnostic imaging systems line of business in the CAG segment to veterinary software, services and diagnostic imaging systems. Financial results were not adjusted as a result of this name change. |
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||||
| Condensed Consolidated Balance Sheet | |||||||||
| Amounts in thousands (Unaudited) | |||||||||
| June 30, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| Assets: | Current Assets: | ||||||||
| Cash and cash equivalents | $ 141,139 | $ 128,994 | |||||||
| Marketable securities | 229,063 | 213,591 | |||||||
| Accounts receivable, net | 212,229 | 188,318 | |||||||
| Inventories | 175,688 | 188,833 | |||||||
| Other current assets | 62,991 | 101,898 | |||||||
| Total current assets | 821,110 | 821,634 | |||||||
| Property and equipment, net | 347,161 | 333,026 | |||||||
| Other long-term assets, net | 320,970 | 320,333 | |||||||
| Total assets | $ 1,489,241 | $ 1,474,993 | |||||||
| Liabilities and | |||||||||
| Stockholders' | |||||||||
| Deficit: | Current Liabilities: | ||||||||
| Accounts payable | $ 50,085 | $ 52,648 | |||||||
| Accrued liabilities | 188,842 | 205,530 | |||||||
| Line of credit | 558,000 | 573,000 | |||||||
| Deferred revenue | 25,849 | 25,583 | |||||||
| Total current liabilities | 822,776 | 856,761 | |||||||
| Long-term debt | 597,958 | 597,085 | |||||||
| Other long-term liabilities, net | 77,005 | 105,142 | |||||||
| Total long-term liabilities | 674,963 | 702,227 | |||||||
| Total stockholders' deficit | (8,638) | (84,125) | |||||||
| Noncontrolling interest | 140 | 130 | |||||||
| Total stockholders' deficit | (8,498) | (83,995) | |||||||
| Total liabilities and stockholders' deficit | $ 1,489,241 | $ 1,474,993 | |||||||
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||||
| Selected Balance Sheet Information (Unaudited) | |||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||
| 2016 | 2016 | 2015 | 2015 | 2015 | |||||
| Selected | |||||||||
| Balance Sheet | Days sales outstanding 1 | 41.5 | 43.7 | 43.3 | 43.8 | 43.7 | |||
| Information: | Inventory turns 2 | 1.7 | 1.6 | 1.5 | 1.5 | 1.5 | |||
| 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 | |||||||
| Condensed Consolidated Statement of Cash Flows | |||||||
| Amounts in thousands (Unaudited) | |||||||
| Six Months Ended | |||||||
| June 30, | June 30, | ||||||
| 2016 | 2015 | ||||||
| Operating: | Cash Flows from Operating Activities: | ||||||
| Net income | $ 113,231 | $ 103,516 | |||||
| Non-cash charges | 53,673 | 42,396 | |||||
| Changes in assets and liabilities | (27,972) | (71,644) | |||||
| Tax benefit from share-based compensation arrangements | (4,791) | (8,746) | |||||
| Net cash provided by operating activities | 134,141 | 65,522 | |||||
| Investing: | Cash Flows from Investing Activities: | ||||||
| Purchases of property and equipment | (37,868) | (46,873) | |||||
| Purchase of marketable securities | (123,809) | (190,370) | |||||
| Proceeds from the sale and maturities of marketable securities | 108,115 | 10,039 | |||||
| Acquisitions of businesses, net of cash acquired | - | (383) | |||||
| Net cash used by investing activities | (53,562) | (227,587) | |||||
| Financing: | Cash Flows from Financing Activities: | ||||||
| Repayments on revolving credit facilities, net | (15,000) | (51,000) | |||||
| Issuance of long-term debt | - | 250,097 | |||||
| Repurchases of common stock | (76,536) | (220,097) | |||||
| Debt issue costs | (57) | (127) | |||||
| Proceeds from the exercise of stock options and employee stock purchase plans | 17,554 | 15,650 | |||||
| Payment of acquisition-related contingent consideration | (2,717) | - | |||||
| Tax benefit from share-based compensation arrangements | 4,791 | 8,746 | |||||
| Net cash (used) provided by financing activities | (71,965) | 3,269 | |||||
| Net effect of changes in exchange rates on cash | 3,531 | (588) | |||||
| Net increase (decrease) in cash and cash equivalents | 12,145 | (159,384) | |||||
| Cash and cash equivalents, beginning of period | 128,994 | 322,536 | |||||
| Cash and cash equivalents, end of period | $ 141,139 | $ 163,152 | |||||
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||
| Free Cash Flow 1 | |||||||
| Amounts in thousands (Unaudited) | |||||||
| Six Months Ended | |||||||
| June 30, | June 30, | ||||||
| 2016 | 2015 | ||||||
| Free Cash | |||||||
| Flow: | Net cash provided by operating activities | $ 134,141 | $ 65,522 | ||||
| Financing cash flows attributable to tax benefits from share-based compensation arrangements | 4,791 | 8,746 | |||||
| Investing cash flows attributable to purchases of property and equipment | (37,868) | (46,873) | |||||
| Free cash flow | $ 101,064 | $ 27,395 | |||||
| 1 Free cash flow is a non-GAAP financial measure and is calculated from cash generated from operations, including tax benefits attributable to share-based compensation arrangements, 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. Management also believes this is a common financial measure useful to further evaluate the results of operations. |
| IDEXX Laboratories, Inc. and Subsidiaries | |||||||
| Common Stock Repurchases | |||||||
| Amounts in thousands except per share data (Unaudited) | |||||||
| Three Months Ended | Six Months Ended | ||||||
| June 30, | June 30, | June 30, | June 30, | ||||
| 2016 | 2015 | 2016 | 2015 | ||||
| Share repurchases during the period | 269 | 1,415 | 977 | 3,133 | |||
| Shares surrendered by employees in payment for minimum | |||||||
| required withholding taxes due on share based compensation | 2 | 2 | 54 | 64 | |||
| Total number of shares purchased 1 | 271 | 1,417 | 1,031 | 3,197 | |||
| Average price paid per share | $86.46 | $66.07 | $74.38 | $72.63 | |||
| Shares remaining under repurchase authorization as of June 30, 2016 totaled 5,829,035. | |||||||
| 1 Shares repurchased and acquired through employee surrender for payment of minimum required withholding taxes on and before June 15, 2015 and the associated average cost per share have been adjusted to reflect the June 15, 2015 two-for-one stock split. Actual shares repurchased were approximately 890,000 for the three months ended June 30, 2015, and 1,749,000 for the six months ended June 30, 2015. |
Contact: Ed Garber, Director, Investor Relations, 1-207-556-8155