WESTBROOK, Maine, May 4,
2021 /PRNewswire/ --
- Achieves reported revenue growth of 24% and organic growth
of 21%, driven by CAG Diagnostics recurring revenue growth of 27%
as reported and 23% organic
- Delivers EPS of $2.35,
representing 82% growth as reported and 73% on a comparable
basis
- Increases 2021 revenue guidance to $3,105 million - $3,160
million, reflecting higher expectations for reported growth
of 14.5% - 16.5% and organic growth of 13% - 15%, supported by
projected CAG Diagnostics recurring revenue growth of 16% - 17.5%
as reported and 14.5% - 16% organic
- Raises 2021 EPS outlook to $7.88 - $8.18,
reflecting expectations for 1.5% higher organic revenue growth and
targeted operating margin improvement of 270 - 320 basis points as
reported and 150 - 200 basis points on a comparable basis
IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in
veterinary diagnostics, veterinary practice software and water
microbiology testing, today announced first quarter results, as
well as an update on U.S. companion animal diagnostics market
trends.
First Quarter Results
The Company reports revenues of $778
million for the first quarter of 2021, an increase of 24% as
reported and 21% organic. First quarter results were driven by
Companion Animal Group ("CAG") Diagnostics recurring revenue growth
of 27% reported and 23% organic, reflecting continued high gains in
the U.S. and internationally, as well as 31% reported and 27%
organic growth in CAG Diagnostics capital instrument revenue.
Overall revenue growth was also supported by 15% reported and 9%
organic revenue growth in the Livestock, Poultry and Dairy ("LPD")
business and by approximately 1% of growth benefit from revenues
associated with OPTI Medical Systems COVID-19 human PCR
testing.
Earnings per diluted share ("EPS") of $2.35 for the first quarter was supported by
strong operating margin gains, reflecting benefits from high CAG
Diagnostics recurring revenue growth and favorable comparisons to
higher prior year pre-COVID-19 operating expense levels. Overall
operating margins improved 880 basis points as reported compared to
prior year levels and 830 basis points on a comparable basis. EPS
results also benefited from a higher than expected $0.17 per share in tax benefits from share-based
compensation.
"The IDEXX team delivered exceptional performance in the first
quarter, reflecting continued robust demand for companion animal
healthcare globally, supported by our innovation and direct
commercial engagement," said Jay
Mazelsky, the Company's President and Chief Executive
Officer. "We achieved 32% year-over-year growth in CAG premium
instrument placements, as our customers look ahead to supporting
continued strong global demand for companion animal diagnostics. We
look forward to building on this momentum with the successful
rollout of ProCyte OneTM, our next-generation hematology
point of care instrument. We also continue to drive exceptional
performance in our global reference lab business, supported by
higher growth in international markets leveraging our IDEXX 360
program. Our best in class in clinic platforms and unparalleled
global lab services capabilities, integrated with our cloud-based
information management solutions, position us to drive accelerated
development of the global standard of healthcare for companion
animals."
Companion Animal Diagnostics Trends Update
Favorable global trends in companion animal healthcare continue
to support high growth for CAG diagnostic products and services
across regions. In the U.S., veterinary practices continue to see a
step up in clinical visits, including benefits from higher new
patient visit growth. U.S. same-store clinical visit growth at
veterinary practices reached 12% in the first quarter, reflecting
year-over-year growth of 9% in non-wellness visits and 16% in
wellness visits. Average same-store revenue growth at U.S.
veterinary practices was 15% in the first quarter, driven by high
growth in healthcare services, including increased utilization of
diagnostics. Additional U.S. companion animal practice key metrics
are available in the Q1 2021 Earnings Snapshot accessible on
the IDEXX website, www.idexx.com/investors.
First Quarter Performance Highlights
Companion Animal Group
The Companion Animal Group generated 26% reported and 22%
organic revenue growth for the quarter, supported by CAG
Diagnostics recurring revenue growth of 27% on a reported basis and
23% on an organic basis. Growth was high across IDEXX's major
modalities in the first quarter, reflecting continued strong growth
in clinical visits and related diagnostic products and services, as
well as some benefits from lapping of prior year COVID-19 impacts
late in the quarter. Overall CAG revenue growth benefited from 31%
reported growth and 27% organic growth in CAG Diagnostics capital
instrument revenues, compared to constrained prior year levels.
- IDEXX VetLab® consumables generated 30% reported and 26%
organic revenue growth, supported by ongoing expansion of our
global premium instrument installed base, continued high customer
retention rates, increases in testing utilization across an
expanded test menu and moderate net price gains.
- Reference laboratory diagnostic and consulting services
generated 25% reported and 22% organic revenue growth, with high
organic growth across regions reflecting strong volume gains across
testing categories and benefits from moderate net price gains.
- Rapid assay products revenues grew 21% as reported and
20% on an organic basis, with continued worldwide growth in SNAP®
4Dx Plus Test volumes, benefiting from strong overall market
conditions including high growth in wellness testing, high customer
retention levels and moderate net price gains.
Veterinary software, services and diagnostic imaging systems
revenues grew 10% reported and 9% on an organic basis, driven by
double-digit growth in subscription-based service revenues and
growth in new veterinary software system placements. Overall growth
was constrained by moderate declines in diagnostic imaging systems
revenues, reflecting lower levels of earlier generation instrument
platform sales.
Water
Water revenues decreased modestly on a reported basis and 3% on
an organic basis for the quarter, compared to strong prior year
results that included an estimated $2
million, or 8% growth benefit, from accelerated pre-pandemic
stocking orders. When adjusting for this impact, Water
revenues increased solidly, reflecting continued improvement in
non-compliance related testing volumes which have been constrained
during the pandemic.
Livestock, Poultry and Dairy ("LPD")
LPD revenues grew 15% reported and 9% on an organic basis,
driven by strong growth in the Asia
Pacific region. First quarter results saw an estimated
$2 million benefit from shipment
timing which largely offset favorable pre-pandemic shipment timing
impacts in the first quarter of 2020. LPD results benefited
from high demand for diagnostic testing programs for African Swine
Fever and growth in core swine testing volumes in China. These gains more than offset lower herd
health screening levels, compared to strong prior year results.
Gross Profit and Operating Profit
Gross profits increased 31% as reported and 28% on a comparable
basis. Gross margin of 60.5% increased 310 basis points compared to
prior year period results as reported and 320 basis points on a
comparable basis. Gross margin results reflected reference
laboratory productivity gains on high revenue growth, favorable mix
from strong, high margin consumable revenue, and benefits from
moderate price gains.
Operating margin was 31.8% in the quarter, 880 basis points
higher than the prior year period results as reported and 830 basis
points higher on a comparable basis, supported by operating expense
leverage on strong revenue growth. Operating expenses increased 4%
as reported and 3% on a comparable basis. Operating expense growth
was moderated by comparisons to higher prior year pre-COVID-19
spending levels. The Company is planning for moderated gross margin
gains and higher levels of operating expense growth over the
balance of the year in comparison to tightly controlled prior year
spending levels and as we advance investments to support our
continued strong global growth momentum.
2021 Growth and Financial Performance Outlook
The following table provides the company's outlook for annual
key financial metrics in 2021:
Amounts in millions except per share data and
percentages
Growth and
Financial Performance Outlook
|
|
2021
|
|
|
|
|
|
Revenue
|
|
$3,105
|
-
|
$3,160
|
Reported
growth
|
|
14.5
%
|
-
|
16.5%
|
Organic
growth
|
|
13%
|
-
|
15%
|
CAG Diagnostics
Recurring Revenue Growth
|
|
|
|
|
Reported
growth
|
|
16%
|
-
|
17.5%
|
Organic
growth
|
|
14.5%
|
-
|
16%
|
Operating
Margin
|
|
28.3%
|
-
|
28.8%
|
Operating margin
expansion
|
|
270
|
-
|
320
bps
|
Comparable margin
expansion
|
|
150
|
-
|
200
bps
|
EPS
|
|
$7.88
|
-
|
$8.18
|
Reported
growth
|
|
17%
|
-
|
22%
|
Comparable
growth
|
|
21%
|
-
|
26%
|
Other Key
Metrics
|
|
|
|
|
Net interest
expense
|
|
$30
|
-
|
$31
|
Share-based
compensation tax benefit
|
|
~ $16.5
|
Share-based
compensation tax rate benefit
|
|
~ 2.0%
|
Effective tax
rate
|
|
19%
|
-
|
20%
|
Share-based
compensation EPS impact
|
|
~ $0.19
|
Reduction in average
shares outstanding
|
|
0%
|
-
|
0.5%
|
Operating Cash
Flow
|
|
100% - 110% of net
income
|
Free Cash
Flow
|
|
80% - 90% of net
income
|
Capital
Expenditures
|
|
$120 -
$140
|
The following table outlines estimates of foreign currency
exchange rate impacts, net of foreign currency hedging
transactions, and foreign currency exchange rate assumptions
reflected in the above financial performance outlook for 2021.
Estimated Foreign
Currency Exchange Rates and Impacts
|
|
2021
|
|
|
|
Revenue growth rate
impact
|
|
~
1.5%
|
CAG Diagnostics
recurring revenue growth rate impact
|
|
~
1.5%
|
Operating margin
growth impact
|
|
~ 20
bps
|
EPS impact
|
|
~
$0.15
|
EPS growth
impact
|
|
~
2.0%
|
|
|
|
Foreign Currency
Exchange Rate Assumptions
|
|
|
In U.S.
dollars
|
|
|
euro
|
|
$1.17
|
British
pound
|
|
$1.36
|
Canadian
dollar
|
|
$0.79
|
Australian
dollar
|
|
$0.75
|
Relative to the U.S.
dollar
|
|
|
Japanese yen
|
|
¥111.00
|
Chinese
renminbi
|
|
¥6.64
|
Brazilian
real
|
|
R$5.75
|
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will be hosting a conference call today
at 8:30 a.m. (EDT) to discuss its
first quarter 2021 results and management's outlook. To participate
in the conference call, dial 1-888- 771-4371 or 1-847-585-4405 and
reference confirmation number 50143415. Individuals can access a
live webcast of the conference call through a link on the IDEXX
website, www.idexx.com/investors. An archived edition of the
webcast will be available after 1:00 p.m.
(EDT) on that day via the same link and will remain
available for one year.
2021 Annual Meeting of Shareholders
IDEXX Laboratories, Inc. will hold its 2021 Annual Meeting of
Shareholders (the "2021 Annual Meeting") on Wednesday, May 12, 2021 at 10:00 a.m. (EDT). The 2021 Annual Meeting will be
a virtual meeting via a live audio webcast at
www.virtualshareholdermeeting.com/IDXX2021. The online pre-meeting
forum can be accessed before the 2021 Annual Meeting at
www.proxyvote.com for beneficial owners and www.proxyvote.com/idxx
for registered shareholders. At this online pre-meeting forum, you
can submit questions in writing in advance of the 2021 Annual
Meeting, vote, view the Rules of Conduct and Procedures relating to
the 2021 Annual Meeting and access copies of the Company's proxy
materials and annual report.
Shareholders as of the close of business on March 19, 2021 are entitled to attend the 2021
Annual Meeting, vote their shares electronically and submit
questions before and during the live audio webcast. As part of the
2021 Annual Meeting, the Company will answer the questions
submitted by our shareholders during a live Q&A session, as
time permits. The Company will publish the answer to each such
question, including any for which there is not sufficient time to
address during the 2021 Annual Meeting, on the Company's Investor
Relations website as soon as practicable after the meeting. An
archived replay will also be available at
www.virtualshareholdermeeting.com/IDXX2021 after the
conclusion of the 2021 Annual Meeting and will remain available for
one year. Further information on the 2021 Annual Meeting can be
found in the Company's proxy materials.
About IDEXX Laboratories, Inc.
IDEXX Laboratories, Inc. is a member of the S&P 500® Index
and is a leader in pet healthcare innovation, offering diagnostic
and software products and services that deliver solutions and
insights to practicing veterinarians around the world. 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 and
point-of-care and laboratory diagnostics for human medicine.
Headquartered in Maine, IDEXX
employs approximately 9,300 people and offers products to customers
in over 175 countries. For more information about IDEXX, visit:
www.idexx.com.
Note Regarding Forward-Looking
Statements
This earnings release contains statements about the Company's
business prospects and estimates of the Company's financial results
for future periods that are forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are included above under "First Quarter
Results", "Gross Profit and Operating Profit", "2021 Growth and
Financial Performance Outlook", and elsewhere and can be identified
by the use of words such as "expects", "may", "anticipates",
"intends", "would", "will", "plans", "believes", "estimates",
"projected", "should", and similar words and expressions. Our
forward-looking statements include statements relating to a product
launch; revenue growth and EPS outlooks; operating and free cash
flow forecast; projected impact of foreign currency exchange rates;
projected operating margins and expenses and capital expenditures;
projected tax, tax rate and EPS benefits from share-based
compensation arrangements; and projected effective tax rates,
reduction of average shares outstanding and net interest expense.
These statements are intended to provide management's expectation
of future events as of the date of this earnings release; are based
on management's estimates, projections, beliefs and assumptions as
of the date of this earnings release; and are not guarantees of
future performance. These forward-looking statements involve known
and unknown risks and uncertainties that may cause the Company's
actual results, levels of activity, performance or achievements to
be materially different from those expressed or implied by these
forward-looking statements. These risks and uncertainties include,
among other things, the matters described under the headings
"Business," "Risk Factors," "Legal Proceedings," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Quantitative and Qualitative Disclosures About
Market Risk" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2020 and in
the corresponding sections of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31,
2021, as well as those described from time to time in the
Company's other filings with the U.S. Securities and Exchange
Commission available at www.sec.gov. The Company specifically
disclaims any obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
Statement Regarding Non-GAAP Financial Measures
The following defines terms and conventions and provides
reconciliations regarding certain measures used in this earnings
release and/or the accompanying earnings conference call that are
not required by, or presented in accordance with, generally
accepted accounting principles in the
United States of America ("GAAP"), otherwise referred to as
non-GAAP financial measures. To supplement the Company's
consolidated results presented in accordance with GAAP, the Company
has disclosed non-GAAP financial measures that exclude or adjust
certain items. Management believes these non-GAAP financial
measures provide useful supplemental information for its and
investors' evaluation of the Company's business performance and
liquidity and are useful for period-over-period comparisons of the
performance of the Company's business and its liquidity and to the
performance and liquidity of our peers. While management believes
that these non-GAAP financial measures are useful in evaluating the
Company's business, this information should be considered as
supplemental in nature and should not be considered in isolation or
as a substitute for the related financial information prepared in
accordance with GAAP. In addition, these non-GAAP financial
measures may not be the same as similarly titled measures reported
by other companies.
Growth and organic revenue growth - All references to growth and
organic growth refer to growth compared to the equivalent prior
year period unless specifically noted. Organic revenue growth is a
non-GAAP financial measure that excludes the impact of changes in
foreign currency exchange rates and revenue from business
acquisitions. Management believes that reporting organic revenue
growth provides useful information to investors by facilitating
easier comparisons of our revenue performance with prior and future
periods and to the performance of our peers. Organic revenue growth
should be considered in addition to, and not as a replacement of or
a superior measure to, revenue growth reported in accordance with
GAAP. See the supplementary analysis of results below for a
reconciliation of reported revenue growth to organic revenue growth
for the three months ended March 31,
2021. Please refer to the 2021 Growth and Financial
Performance Outlook section of this earnings release for estimated
full year 2021 organic revenue growth for the Company and CAG
Diagnostics recurring revenue. The percentage change in revenue
resulting from acquisitions represents incremental revenues
attributable to business acquisitions that have occurred since the
beginning of the prior year period. Revenue from acquisitions is
expected to have an immaterial impact on projected full year 2021
revenue growth and CAG Diagnostics recurring revenue growth.
The reconciliation of the 2-year average annual organic growth
of CAG Diagnostics recurring revenue is as follows:
|
|
Reported
Revenue
Growth1
|
|
Percentage
Change from
Currency
|
|
Percentage
Change from
Acquisitions
|
|
Organic
Revenue
Growth1
|
|
|
|
|
|
CAG Diagnostics
recurring revenue growth rates for the quarter ended March 31,
2021
|
|
26.5
|
%
|
|
3.1
|
%
|
|
0.1
|
%
|
|
23.3
|
%
|
CAG Diagnostics
recurring revenue growth rates for the quarter ended March 31,
2020
|
|
9.9
|
%
|
|
(0.9)
|
%
|
|
0.9
|
%
|
|
10.0
|
%
|
2-year average annual
growth rates
|
|
18.2
|
%
|
|
1.1
|
%
|
|
0.5
|
%
|
|
16.6
|
%
|
1See Statement Regarding
Non-GAAP Financial Measures, above. Amounts presented may not
recalculate due to rounding.
|
|
|
|
Constant currency - Constant currency references are
non-GAAP financial measures which exclude the impact of changes in
foreign currency exchange rates and are consistent with how
management evaluates our performance and comparisons with prior and
future periods. We estimated the net impacts of currency on our
revenue, gross profit, operating profit, and EPS results by
restating results to the average exchange rates or exchange rate
assumptions for the comparative period, which includes adjusting
for the estimated impacts of foreign currency hedging transactions
and certain impacts on our effective tax rates. These estimated
currency changes impacted first quarter 2021 results as follows:
increased gross profit growth by 3.2%, decreased gross margin
growth by 10 basis points, increased operating expense growth by
0.8%, increased operating profit growth by 7%, increased operating
profit margin growth by 50 basis points, and increased EPS growth
by 7.0%. Constant currency revenue growth represents the percentage
change in revenue during the applicable period, as compared to the
prior year period, excluding the impact of changes in foreign
currency exchange rates. See the supplementary analysis of results
below for revenue percentage change from currency for the three
months ended March 31, 2021 and refer
to the 2021 Growth and Financial Performance Outlook section of
this earnings release for estimated foreign currency exchange rate
impacts on 2021 projections and estimates.
Comparable growth metrics - Comparable gross profit growth,
comparable gross margin gain (or growth), comparable operating
expense growth, comparable operating profit growth and comparable
operating margin gain (or growth) are non-GAAP financial measures
and exclude the impact of changes in foreign currency exchange
rates and non-recurring or unusual items (if any). Please refer to
the constant currency note above for a summary of foreign currency
exchange rate impacts. Management believes that reporting
comparable gross profit growth, comparable gross margin gain (or
growth), comparable operating expense growth, comparable operating
profit growth and comparable operating margin gain (or growth)
provides useful information to investors because it enables better
period-over-period comparisons of the fundamental financial results
by excluding items that vary independent of performance and
provides greater transparency to investors regarding key metrics
used by management. Comparable gross profit growth, comparable
gross margin gain (or growth), comparable operating expense growth,
comparable operating profit growth and comparable operating margin
gain (or growth) should be considered in addition to, and not as
replacements of or superior measures to, gross profit growth, gross
margin gain, operating expense growth, operating profit growth and
operating margin gain reported in accordance with GAAP.
The reconciliation of these non-GAAP financial measures is as
follows:
|
|
Three Months
Ended
|
Year-over-Year
|
|
|
March
31,
|
|
March
31,
|
Change
|
Dollar amounts in
thousands
|
|
2021
|
|
2020
|
|
Gross Profit (as
reported)
|
|
$
|
470,782
|
|
|
$
|
359,590
|
|
31
|
%
|
Gross
margin
|
|
60.5
|
%
|
|
57.4
|
%
|
310
bps
|
Comparability
adjustments:
|
|
|
|
|
|
Change from
currency
|
|
(11,438)
|
|
|
—
|
|
|
Comparable gross
profit growth
|
|
$
|
459,344
|
|
|
$
|
359,590
|
|
28
|
%
|
Comparable gross
margin and gross margin gain (or growth)
|
|
60.6
|
%
|
|
57.4
|
%
|
320
bps
|
|
|
|
|
|
|
Operating expenses
(as reported)
|
|
$
|
223,160
|
|
|
$
|
215,265
|
|
4
|
%
|
Comparability
adjustments:
|
|
|
|
|
|
Change from
currency
|
|
(1,612)
|
|
|
—
|
|
|
Comparable
operating expense growth
|
|
$
|
221,548
|
|
|
$
|
215,265
|
|
3
|
%
|
|
|
|
|
|
|
Income from
operations (as reported)
|
|
$
|
247,622
|
|
|
$
|
144,325
|
|
72
|
%
|
Operating
margin
|
|
31.8
|
%
|
|
23.0
|
%
|
880
bps
|
Comparability
adjustments:
|
|
|
|
|
|
Change from
currency
|
|
(9,827)
|
|
|
—
|
|
|
Comparable
operating profit growth
|
|
$
|
237,795
|
|
|
$
|
144,325
|
|
65
|
%
|
Comparable
operating margin and operating margin gain (or
growth)
|
|
31.4
|
%
|
|
23.0
|
%
|
830
bps
|
Amounts presented
may not recalculate due to rounding.
|
Projected 2021 comparable operating margin expansion outlined in
the 2021 Growth and Financial Performance Outlook section of this
earnings release reflects the following adjustments: (i) full year
2020 reported operating margin adjusted for impacts of the expired
royalty litigation matter charges in the third quarter of 2020,
which reduced full year 2020 operating margin growth by
approximately 100 basis points; and (ii) projected full year
2021 reported operating margin adjusted for estimated positive
year-over-year foreign currency exchange rate change impact of
approximately 20 basis points.
These impacts and those described in the constant currency note
above reconcile reported gross profit growth, gross margin gain,
operating expense growth, operating profit growth and operating
margin gain (including projected 2021 operating margin expansion)
to comparable gross profit growth, comparable gross margin gain,
comparable operating expense growth, comparable operating profit
growth and comparable operating margin gain for the Company.
Comparable EPS growth - Comparable EPS growth is a non-GAAP
financial measure that excludes the impact of changes in foreign
currency exchange rates, the tax benefits of share-based
compensation activity under ASU 2016-09 and non-recurring or
unusual items (if any). Management believes comparable EPS growth
is a more useful way to measure the Company's business performance
than EPS growth because it enables better period-over-period
comparisons of the fundamental financial results by excluding items
that vary independent of performance and provides greater
transparency to investors regarding a key metric used by
management. Comparable EPS growth should be considered in addition
to, and not as a replacement of or a superior measure to, EPS
growth reported in accordance with GAAP. Please refer to the
constant currency note above for a summary of foreign currency
exchange rate impacts.
The reconciliation of this non-GAAP financial measure is as
follows:
|
|
|
|
|
|
|
Three Months
Ended
|
Year-over-Year
|
|
|
|
|
|
|
|
March
31,
|
|
March
31,
|
Growth
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
Earnings per share
(diluted)
|
|
|
|
|
|
|
$
|
2.35
|
|
|
$
|
1.29
|
|
82
|
%
|
Comparability
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation activity
|
|
|
|
|
|
|
(0.17)
|
|
|
(0.08)
|
|
|
Change from
currency
|
|
|
|
|
|
|
(0.09)
|
|
|
—
|
|
|
Comparable EPS
growth
|
|
|
|
|
|
|
$
|
2.09
|
|
|
$
|
1.21
|
|
73
|
%
|
Amounts presented
may not recalculate due to rounding.
|
Projected 2021 comparable EPS growth outlined in the 2021 Growth
and Financial Performance Outlook section of this earnings release
reflects the following adjustments: (i) full year 2020 reported EPS
adjusted for positive share-based compensation activity of
$0.45 for full year 2020, positive
Swiss tax reform impact of $0.25 in
the fourth quarter of 2020, and negative expired royalty litigation
matter impact of $0.24 in the third
quarter of 2020; and (ii) projected full year 2021 reported EPS
adjusted for estimated positive share-based compensation activity
of $0.19 and estimated positive
year-over-year foreign currency exchange rate change impact of
$0.15.
These impacts and those described in the constant currency note
above reconcile reported EPS growth (including projected 2021
reported EPS growth) to comparable EPS growth for the Company.
Free cash flow - Free cash flow is a non-GAAP financial
measure and means, with respect to a measurement period, the cash
generated from operations during that period, reduced by the
Company's investments in property and equipment. Management
believes free cash flow is a useful measure because it indicates
the cash the operations of the business are generating after
appropriate reinvestment for recurring investments in property and
equipment that are required to operate the business. Free cash flow
should be considered in addition to, and not as a replacement of or
a superior measure to, net cash provided by operating activities.
See the supplementary analysis of results below for our calculation
of free cash flow for the three months ended March 31, 2021 and 2020. To estimate projected
2021 free cash flow, we have deducted projected purchases of
property and equipment (also referred to as capital expenditures)
of approximately $120 - $140 million.
Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA,
gross debt, and net debt are non-GAAP financial measures. Adjusted
EBITDA is a non-GAAP financial measure of earnings before interest,
taxes, depreciation, amortization, non-recurring transaction
expenses incurred in connection with acquisitions, share-based
compensation expense, and certain other non-cash losses and
charges. Management believes that reporting Adjusted EBITDA,
gross debt and net debt in the Debt to Adjusted EBITDA ratios
provides supplemental analysis to help investors further evaluate
the Company's business performance and available borrowing capacity
under the Company's credit facility. Adjusted EBITDA, gross debt,
and net debt should be considered in addition to, and not as
replacements of or superior measures to, net income or total debt
reported in accordance with GAAP. For further information on how
Adjusted EBITDA and the Debt to Adjusted EBITDA Ratios are
calculated, see the Company's Annual Report on Form 10-K for the
year ended December 31, 2020 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
Notes and Definitions
Swiss tax reform impact - A one-time positive income tax
impact related to the enactment of tax reform in Switzerland reflected in the fourth quarter of
2020, when the Company recorded an approximately $22 million deferred tax asset related to
transitional benefits.
Expired royalty litigation matter - The Company established
an accrual of $27.5 million in the
third quarter of 2020 related to an ongoing matter involving an
alleged breach of contract for underpayment of royalty payments
made from 2004 through 2017 under an expired patent license
agreement. The accrual amount represents the amount of a possible
loss that we have determined to be probable and estimable, and the
actual cost of resolving this matter may be higher or lower than
the amount accrued.
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Operations
|
|
|
|
|
Amounts in
thousands except per share data (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
|
2021
|
|
2020
|
Revenue:
|
|
Revenue
|
|
$777,707
|
|
|
$626,336
|
|
Expenses and
Income:
|
|
Cost of
revenue
|
|
306,925
|
|
|
266,746
|
|
|
|
Gross
profit
|
|
470,782
|
|
|
359,590
|
|
|
|
Sales and
marketing
|
|
114,811
|
|
|
116,143
|
|
|
|
General and
administrative
|
|
70,770
|
|
|
65,812
|
|
|
|
Research and
development
|
|
37,579
|
|
|
33,310
|
|
|
|
Income from
operations
|
|
247,622
|
|
|
144,325
|
|
|
|
Interest expense,
net
|
|
(7,532)
|
|
|
(7,552)
|
|
|
|
Income before
provision for income taxes
|
|
240,090
|
|
|
136,773
|
|
|
|
Provision for income
taxes
|
|
35,801
|
|
|
24,917
|
|
Net
Income:
|
|
Net income
|
|
204,289
|
|
|
111,856
|
|
|
|
Less: Noncontrolling
interest in subsidiary's earnings
|
|
32
|
|
|
29
|
|
|
|
Net income
attributable to stockholders
|
|
$204,257
|
|
|
$111,827
|
|
|
|
Earnings per share:
Basic
|
|
$2.39
|
|
|
$1.31
|
|
|
|
Earnings per share:
Diluted
|
|
$2.35
|
|
|
$1.29
|
|
|
|
Shares outstanding:
Basic
|
|
85,530
|
|
|
85,427
|
|
|
|
Shares outstanding:
Diluted
|
|
86,917
|
|
|
86,705
|
|
|
|
|
|
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
Selected Operating
Information (Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
|
2021
|
|
2020
|
Operating
Ratios
|
|
Gross
profit
|
|
60.5
|
%
|
|
57.4
|
%
|
(as a percentage
of revenue):
|
|
Sales, marketing,
general and administrative expense
|
|
23.9
|
%
|
|
29.1
|
%
|
|
|
Research and
development expense
|
|
4.8
|
%
|
|
5.3
|
%
|
|
|
Income from
operations1
|
|
31.8
|
%
|
|
23.0
|
%
|
|
|
|
|
|
|
|
1Amounts
presented may not recalculate due to rounding.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Segment
Information
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Three Months
Ended
|
|
|
|
|
March 31,
2021
|
|
Percent of
Revenue
|
March 31,
2020
|
|
Percent of
Revenue
|
|
|
|
|
|
|
Revenue:
|
|
CAG
|
|
$692,767
|
|
|
|
$551,996
|
|
|
|
|
|
Water
|
|
34,040
|
|
|
|
34,149
|
|
|
|
|
|
LPD
|
|
39,270
|
|
|
|
34,154
|
|
|
|
|
|
Other
|
|
11,630
|
|
|
|
6,037
|
|
|
|
|
|
Total
|
|
$777,707
|
|
|
|
$626,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
|
CAG
|
|
$412,874
|
|
|
59.6
|
%
|
$309,343
|
|
|
56.0
|
%
|
|
|
Water
|
|
23,465
|
|
|
68.9
|
%
|
24,749
|
|
|
72.5
|
%
|
|
|
LPD
|
|
26,881
|
|
|
68.5
|
%
|
22,312
|
|
|
65.3
|
%
|
|
|
Other
|
|
7,562
|
|
|
65.0
|
%
|
3,186
|
|
|
52.8
|
%
|
|
|
Total
|
|
$470,782
|
|
|
60.5
|
%
|
$359,590
|
|
|
57.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations:
|
|
CAG
|
|
$213,210
|
|
|
30.8
|
%
|
$118,659
|
|
|
21.5
|
%
|
|
|
Water
|
|
14,772
|
|
|
43.4
|
%
|
15,882
|
|
|
46.5
|
%
|
|
|
LPD
|
|
13,808
|
|
|
35.2
|
%
|
9,663
|
|
|
28.3
|
%
|
|
|
Other
|
|
5,832
|
|
|
50.1
|
%
|
121
|
|
|
2.0
|
%
|
|
|
Total
|
|
$247,622
|
|
|
31.8
|
%
|
$144,325
|
|
|
23.0
|
%
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
Dollar
Change
|
|
Reported
Revenue
Growth1
|
|
Percentage
Change from
Currency
|
|
Percentage
Change from
Acquisitions
|
|
Organic
Revenue
Growth1
|
Net
Revenue
|
|
|
|
|
|
|
|
CAG
|
|
$692,767
|
|
|
$551,996
|
|
|
$140,771
|
|
|
25.5
|
%
|
|
2.9
|
%
|
|
0.1
|
%
|
|
22.4
|
%
|
United
States
|
|
444,410
|
|
|
373,275
|
|
|
71,135
|
|
|
19.1
|
%
|
|
—
|
|
|
0.1
|
%
|
|
19.0
|
%
|
International
|
|
248,357
|
|
|
178,721
|
|
|
69,636
|
|
|
39.0
|
%
|
|
9.6
|
%
|
|
0.2
|
%
|
|
29.2
|
%
|
Water
|
|
34,040
|
|
|
34,149
|
|
|
(109)
|
|
|
(0.3)
|
%
|
|
2.3
|
%
|
|
—
|
|
|
(2.6)
|
%
|
United
States
|
|
16,568
|
|
|
16,941
|
|
|
(373)
|
|
|
(2.2)
|
%
|
|
—
|
|
|
—
|
|
|
(2.2)
|
%
|
International
|
|
17,472
|
|
|
17,208
|
|
|
264
|
|
|
1.5
|
%
|
|
4.6
|
%
|
|
—
|
|
|
(3.1)
|
%
|
LPD
|
|
39,270
|
|
|
34,154
|
|
|
5,116
|
|
|
15.0
|
%
|
|
5.7
|
%
|
|
—
|
|
|
9.3
|
%
|
United
States
|
|
3,748
|
|
|
3,777
|
|
|
(29)
|
|
|
(0.8)
|
%
|
|
—
|
|
|
—
|
|
|
(0.8)
|
%
|
International
|
|
35,522
|
|
|
30,377
|
|
|
5,145
|
|
|
16.9
|
%
|
|
6.5
|
%
|
|
—
|
|
|
10.5
|
%
|
Other
|
|
11,630
|
|
|
6,037
|
|
|
5,593
|
|
|
92.7
|
%
|
|
—
|
|
|
—
|
|
|
92.7
|
%
|
Total
Company
|
|
$777,707
|
|
|
$626,336
|
|
|
$151,371
|
|
|
24.2
|
%
|
|
3.1
|
%
|
|
0.1
|
%
|
|
21.0
|
%
|
United
States
|
|
472,638
|
|
|
396,783
|
|
|
75,855
|
|
|
19.1
|
%
|
|
—
|
|
|
0.1
|
%
|
|
19.0
|
%
|
International
|
|
305,069
|
|
|
229,553
|
|
|
75,516
|
|
|
32.9
|
%
|
|
8.6
|
%
|
|
0.2
|
%
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
Dollar
Change
|
|
Reported
Revenue
Growth1
|
|
Percentage
Change from
Currency
|
|
Percentage
Change from
Acquisitions
|
|
Organic
Revenue
Growth1
|
Net CAG
Revenue
|
|
|
|
|
|
|
|
CAG Diagnostics
recurring revenue:
|
|
$617,280
|
|
|
$487,925
|
|
|
$129,355
|
|
|
26.5
|
%
|
|
3.1
|
%
|
|
0.1
|
%
|
|
23.3
|
%
|
IDEXX VetLab
consumables
|
|
246,092
|
|
|
188,713
|
|
|
57,379
|
|
|
30.4
|
%
|
|
4.0
|
%
|
|
—
|
|
|
26.4
|
%
|
Rapid assay
products
|
|
69,611
|
|
|
57,430
|
|
|
12,181
|
|
|
21.2
|
%
|
|
1.2
|
%
|
|
—
|
|
|
20.0
|
%
|
Reference
laboratory diagnostic and consulting services
|
|
275,781
|
|
|
220,261
|
|
|
55,520
|
|
|
25.2
|
%
|
|
2.8
|
%
|
|
0.3
|
%
|
|
22.2
|
%
|
CAG Diagnostics
services and accessories
|
|
25,796
|
|
|
21,521
|
|
|
4,275
|
|
|
19.9
|
%
|
|
3.8
|
%
|
|
—
|
|
|
16.0
|
%
|
CAG Diagnostics
capital – instruments
|
|
31,190
|
|
|
23,833
|
|
|
7,357
|
|
|
30.9
|
%
|
|
3.9
|
%
|
|
—
|
|
|
27.0
|
%
|
Veterinary software,
services and diagnostic imaging systems
|
|
44,297
|
|
|
40,238
|
|
|
4,059
|
|
|
10.1
|
%
|
|
0.9
|
%
|
|
—
|
|
|
9.2
|
%
|
Net CAG
revenue
|
|
$692,767
|
|
|
$551,996
|
|
|
$140,771
|
|
|
25.5
|
%
|
|
2.9
|
%
|
|
0.1
|
%
|
|
22.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1See
Statements Regarding Non-GAAP Financial Measures, above. Amounts
presented may not recalculate due to rounding.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheet
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
March 31,
2021
|
|
December 31,
2020
|
|
|
|
|
|
Assets:
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$351,163
|
|
|
$383,928
|
|
|
|
Accounts receivable,
net
|
|
381,792
|
|
|
331,429
|
|
|
|
Inventories
|
|
225,559
|
|
|
209,873
|
|
|
|
Other current
assets
|
|
139,284
|
|
|
137,508
|
|
|
|
Total current
assets
|
|
1,097,798
|
|
|
1,062,738
|
|
|
|
Property and
equipment, net
|
|
543,963
|
|
|
555,167
|
|
|
|
Other long-term
assets, net
|
|
685,624
|
|
|
676,656
|
|
|
|
Total
assets
|
|
$2,327,385
|
|
|
$2,294,561
|
|
Liabilities and
Stockholders'
|
|
|
|
|
|
|
Equity:
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$87,175
|
|
|
$74,558
|
|
|
|
Accrued
liabilities
|
|
366,877
|
|
|
415,648
|
|
|
|
Current portion of
long-term debt
|
|
124,971
|
|
|
49,988
|
|
|
|
Deferred
revenue
|
|
41,639
|
|
|
42,567
|
|
|
|
Total current
liabilities
|
|
620,662
|
|
|
582,761
|
|
|
|
Long-term debt, net
of current portion
|
|
778,747
|
|
|
858,492
|
|
|
|
Other long-term
liabilities, net
|
|
224,541
|
|
|
220,513
|
|
|
|
Total long-term
liabilities
|
|
1,003,288
|
|
|
1,079,005
|
|
|
|
Total stockholders'
equity
|
|
702,696
|
|
|
632,088
|
|
|
|
Noncontrolling
interest
|
|
739
|
|
|
707
|
|
|
|
Total
stockholders' equity
|
|
703,435
|
|
|
632,795
|
|
|
|
Total liabilities
and stockholders' equity
|
|
$2,327,385
|
|
|
$2,294,561
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Select Balance Sheet
Information (Unaudited)
|
|
|
|
|
March 31,
2021
|
|
December 31,
2020
|
|
September 30,
2020
|
|
June 30,
2020
|
|
March 31,
2020
|
Selected Balance
Sheet Information:
|
|
Days sales
outstanding1
|
|
41.8
|
|
|
42.2
|
|
|
41.5
|
|
|
44.4
|
|
|
41.5
|
|
|
|
Inventory
turns2
|
|
2.0
|
|
|
2.1
|
|
|
1.9
|
|
|
1.6
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Days
sales outstanding represents the average of the accounts receivable
balances at the beginning and end of each quarter divided by
revenue for that quarter, the result of which is then multiplied by
91.25 days.
|
|
2Inventory
turns represent inventory-related cost of product revenue for the
twelve months preceding each quarter-end divided by the average
inventory balances at the beginning and end of each
quarter.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Condensed
Consolidated Statement of Cash Flows
|
Amounts in
thousands (Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
|
|
|
|
Operating:
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
Net income
|
|
$204,289
|
|
|
$111,856
|
|
|
|
Non-cash adjustments
to net income
|
|
39,695
|
|
|
37,557
|
|
|
|
Changes in assets and
liabilities
|
|
(119,562)
|
|
|
(121,542)
|
|
|
|
Net cash provided by
operating activities
|
|
124,422
|
|
|
27,871
|
|
Investing:
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(20,163)
|
|
|
(49,002)
|
|
|
|
Acquisition of
intangible assets and businesses
|
|
(4,424)
|
|
|
(668)
|
|
|
|
Net cash used by
investing activities
|
|
(24,587)
|
|
|
(49,670)
|
|
Financing:
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
Borrowings on
revolving credit facilities, net
|
|
—
|
|
|
198,110
|
|
|
|
Repurchases of common
stock
|
|
(132,262)
|
|
|
(182,815)
|
|
|
|
Proceeds from
exercises of stock options and employee stock purchase
plans
|
|
17,594
|
|
|
10,210
|
|
|
|
Shares withheld for
statutory tax withholding on restricted stock
|
|
(14,983)
|
|
|
(8,604)
|
|
|
|
Net cash (used)
provided by financing activities
|
|
(129,651)
|
|
|
16,901
|
|
|
|
Net effect of changes
in exchange rates on cash
|
|
(2,949)
|
|
|
(4,033)
|
|
|
|
Net decrease in cash
and cash equivalents
|
|
(32,765)
|
|
|
(8,931)
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
383,928
|
|
|
90,326
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$351,163
|
|
|
$81,395
|
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
Free Cash
Flow
|
Amounts in
thousands except per share data (Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
|
|
|
|
Free Cash
Flow:
|
|
Net cash provided by
operating activities
|
|
$124,422
|
|
|
$27,871
|
|
|
|
Investing cash flows
attributable to purchases of property and equipment
|
|
(20,163)
|
|
|
(49,002)
|
|
|
|
Free cash
flow1
|
|
$104,259
|
|
|
($21,131)
|
|
|
|
|
|
|
|
|
1See
Statements Regarding Non-GAAP Financial Measures, above.
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
|
|
|
Common Stock
Repurchases
|
|
|
|
|
Amounts in
thousands except per share data (Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
|
|
Shares repurchased in
the open market
|
|
277
|
|
|
721
|
|
Shares acquired
through employee surrender for statutory tax withholding
|
|
28
|
|
|
30
|
|
Total shares
repurchased
|
|
305
|
|
|
751
|
|
|
|
|
|
|
Cost of shares
repurchased in the open market
|
|
$139,213
|
|
|
$179,623
|
|
Cost of shares for
employee surrenders
|
|
14,983
|
|
|
8,604
|
|
Total cost of
shares
|
|
$154,196
|
|
|
$188,227
|
|
|
|
|
|
|
Average cost per
share – open market repurchases
|
|
$501.62
|
|
|
$249.20
|
|
Average cost per
share – employee surrenders
|
|
$544.08
|
|
|
$288.78
|
|
Average cost per
share – total
|
|
$505.45
|
|
|
$250.77
|
|
Contact: John Ravis, Investor
Relations, 1-207-556-8155
View original
content:http://www.prnewswire.com/news-releases/idexx-laboratories-announces-first-quarter-results-301282607.html
SOURCE IDEXX Laboratories, Inc.