IDEXX Laboratories Announces Second Quarter Results

Rhea-AI Summary

IDEXX Laboratories reports a 3% revenue increase to $638 million for Q2 2020, with 4% organic growth, bolstered by a 7% rise in Companion Animal Group (CAG) Diagnostics. EPS rose 20% to $1.72, reflecting effective cost control and operational efficiency. However, new CAG instrument placements and Water business revenues faced declines due to COVID-19 impacts. Notable growth in CAG diagnostics was observed, supported by improved clinical visit trends. The company has suspended full-year guidance amid ongoing pandemic uncertainty.

Positive

• 3% revenue growth to $638 million; 4% organic growth.
• EPS increased 20% to $1.72.
• CAG diagnostics recurring revenue rose 7%.

Negative

• Declines in new CAG instrument placements.
• Water business revenues decreased 19% reported, 16% organic.
• Uncertainty hinders future financial estimates.

WESTBROOK, Maine, July 31, 2020 /PRNewswire/ --

• Reports revenue growth of 3% on a reported basis and 4% on an organic basis driven by Companion Animal Group Diagnostics recurring revenue growth of 7% reported and organic
• Revenue results supported by global "V-shaped" recovery in the pet healthcare market 
• Delivers EPS of $1.72, representing 20% growth on a reported basis and 23% on a comparable constant currency basis, reflecting solid revenue gains and benefits from proactive cost controls

IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, today announced second quarter results, as well as business and market condition updates related to the 2019 novel coronavirus (COVID-19) pandemic.

Second Quarter Results

The Company reports revenues of $638 million for the second quarter of 2020, an increase of 3% on a reported and 4% on an organic basis. Second quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 7% reported and organic, supported by high single-digit organic gains in both U.S. and International markets. Overall growth in the second quarter benefited by approximately 1% from revenues associated with OPTI Medical Systems COVID-19 human PCR testing. Second quarter results were moderated by declines in new CAG instrument placement levels and Water business revenues, including pressures in non-compliance water testing, impacted by factors related to the COVID-19 pandemic.

Earnings per diluted share ("EPS") was $1.72 for the second quarter, reflecting benefits from strong CAG Diagnostics recurring revenue growth and lower operating expenses, reflecting proactive cost control efforts, which supported 380 basis points of operating margin improvement on a reported basis compared to prior-year levels and 410 basis points of improvement on a constant currency basis.

"We are very pleased to report excellent second quarter financial results, supported by a sharp, global recovery in our CAG business and outstanding efforts by the IDEXX team to sustain high levels of service to our customers through the COVID-19 pandemic. These results confirm the health and resilience of the global companion animal healthcare market, supported by the continued deepening of the pet-owner bond," said Jay Mazelsky, the Company's President and Chief Executive Officer. "We are encouraged by recent market trends and confident in our ability to effectively manage through the near-term challenges presented by the COVID-19 pandemic, as we continue to execute our strategy to advance the standard of care for companion animal healthcare globally."

COVID-19 Pandemic Update

The primary impacts of the COVID-19 pandemic have been seen in IDEXX's CAG business. While veterinary care is widely recognized as an "essential" service, stay-at-home policies deployed to combat the spread of COVID-19 constrained visits to veterinary practices significantly in late March through early April, pressuring diagnostic testing volumes. Restrictions on sales professionals' access to veterinary clinics also contributed to deferrals on new CAG instrument placements. 

As stay-at-home policies were relaxed, there was significant improvement in clinical visit activity which accelerated through the second quarter. Weekly U.S. companion animal practice data, available in the Q2 2020 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors, show improvement in same store clinical visit trends since mid-April. Same store clinical visit growth was 7% in June, supported by high growth in wellness visits. Solid same store clinical visit gains have continued in July, reflected in 6% same store clinical visit growth for the three-week period ended July 17.

Companion animal market improvement trends globally have supported a strong recovery in demand for CAG diagnostic products and services. Global CAG Diagnostics recurring revenues which declined ~16% in April, increased ~8% in May and grew ~30% in June, in part supported by pent-up demand for diagnostic testing. 

While these trends are encouraging, potential effects related to ongoing COVID-19 case management efforts are challenging to predict and may pressure future revenues should enhanced social distancing policies and higher infection rates impact veterinary clinic operations in certain regions.

In addition to impacts on IDEXX's CAG business, the Company has also seen pressure on Water testing volumes. There was some disruption to compliance Water testing early in the second quarter related to business lockdown effects, as well as beach and pool closures. In addition, approximately 20% of our Water revenues are related to non-compliance testing, which has seen declines related to reduced overall business activity and prioritization of laboratory spending. We anticipate that near-to-moderate-term demand for non-compliance testing will continue to be impacted by pandemic and related economic pressures.

In managing IDEXX businesses, the Company continues to provide high levels of service delivery and product support for customers during this time and maintains high health and safety standards to protect its employees and ensure business continuity. In an effort to continue to protect the health and safety of our workforce and their families and communities, the majority of IDEXX employees continue to work remotely and travel remains highly restricted. In this context, the Company has introduced new employee benefits to support remote workers. Given improved market and business trends, the Company has discontinued temporary reductions in employee salaries and benefits and Board of Directors compensation.

Due to the continued uncertainty around the scope and duration of the pandemic and the timing of a global recovery, the Company is unable, at this time, to reliably estimate the future impact on business operations and financial results.

Second Quarter Performance Highlights

Companion Animal Group 

The Companion Animal Group generated 3% reported and 4% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 7% on a reported and organic basis. Growth across IDEXX's major modalities improved through the second quarter, reflecting the broader market recovery for clinical visits and related diagnostic products and services.  Overall CAG revenue growth was constrained by new instrument placement declines, resulting from continued restrictions on access to some veterinary practices and deferral of purchasing decisions. Despite these impacts, IDEXX's premium instrument installed base expanded 14% compared to the prior year, supported by high customer retention levels.

• IDEXX VetLab® consumables generated 12% reported and 13% organic revenue growth, supported by ongoing expansion of our global premium instrument installed base, continued strong customer retention, increases in testing utilization and moderate net price gains.
• Reference laboratory diagnostic and consulting services generated 7% reported and 6% organic revenue growth, supported by volume gains with existing customers, moderate net price realization and benefits from net new customer additions.
• Rapid assay products revenues declined 6% on a reported basis and 5% on an organic basis, impacted primarily by early quarter volume pressure related to the COVID-19 pandemic, as well as unfavorable revenue impacts related to promotional program timing.

Veterinary software, services and diagnostic imaging systems revenue declined 4% on a reported and 3% on an organic basis, supported by double-digit growth in subscription-based service revenues, moderated by declines in new veterinary software and diagnostic imaging systems placements.

Water

Water revenues declined 19% on a reported basis and 16% on an organic basis for the quarter, including reductions in non-compliance testing volumes due to restrictions in business operations and closures related to the COVID-19 pandemic, and the unfavorable impact from the reversal of accelerated customer stocking orders related to the COVID-19 pandemic in the first quarter of approximately $2 million which reduced revenue growth by 7%.

Livestock, Poultry and Dairy ("LPD")

LPD revenues declined 3% on a reported basis and increased by 2% on an organic basis for the second quarter, including the unfavorable impact from the reversal of accelerated customer stocking orders related to the COVID-19 pandemic in the first quarter of approximately $2.5 million which reduced revenue growth by 8%. LPD results were supported by improvements in core swine testing volumes, continued benefits from new African Swine Fever diagnostic testing programs in Asia, and growth in poultry testing. These gains were constrained by lower herd health screening levels, compared to strong prior-year results.

Gross Profit and Operating Profit

Gross profits increased 6% on a reported basis and 8% on a constant currency basis. Gross margin of 59.5% increased 180 basis points compared to prior-year period results on a reported basis and 210 basis points on a constant currency basis. Gross margin results reflected favorable mix from strong consumable revenue and lower instrument revenue, reference laboratory cost controls and productivity improvement, as well as net benefits from moderate price gains.

Operating margin was 30.3% in the quarter, 380 basis points higher than the prior-year period results on a reported basis and 410 basis points higher on a constant currency basis, supported by operating expense leverage on stronger than expected revenue growth. Operating expenses declined 4% on a reported and 2% on a constant currency basis, driven by disciplined cost management to mitigate potential impacts from the COVID-19 pandemic and lower health benefit costs from delayed employee healthcare visits. Operating expenses included an estimated $13 million in benefit from temporary salary and employee benefit reductions that have now been discontinued. The Company plans to advance prioritized investments in support of its growth strategy in the second half of 2020, while maintaining a prudent approach to overall cost management.

2020 Financial Outlook

The Company is maintaining suspension of full-year 2020 guidance due to the unpredictability of potential future impacts from the COVID-19 pandemic.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its second quarter 2020 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 49844277. 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.

2020 Virtual Investor Day

IDEXX Laboratories, Inc. will host its 2020 virtual Investor Day on Thursday, August 13, 2020 from 10:00 am to 12:00 pm (EDT). A live audio webcast and accompanying slide presentations will be available at www.idexx.com/investors. An archived webcast replay of the event will be available approximately one hour following the event at www.idexx.com/investors.

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a member of the S&P 500® Index and 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 and point-of-care and laboratory diagnostics for human medicine.  Headquartered in Maine, IDEXX employs more than 9,000 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 "Second Quarter Results," "COVID-19 Pandemic Update" and "Gross Profit and Operating Profit" 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, among other things, the impact of the COVID-19 pandemic and the Company's planned future investments and cost-management approach. 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 adverse impact, and the duration, of the effects of the ongoing COVID-19 pandemic on our business, results of operations, liquidity, financial condition and stock price, as well as the other 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, 2019 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, 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.

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 second quarter 2020 results as follows: decreased gross profit growth by approximately 2%, decreased gross profit margin growth by 30 basis points, decreased operating expense growth by 2%, decreased operating profit growth by 2%, decreased operating profit margin growth by 30 basis points, and decreased EPS growth by 3%. Estimated currency changes also decreased first half 2020 EPS growth by 3%. 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 June 30, 2020.

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 certain business acquisitions. 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, 2020.  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. We exclude only acquisitions that are considered to be a business from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management's Discussion and Analysis of Financial Conditions and Results of Operations, Non-GAAP Financial Measures, contained in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and the tax benefits of share-based compensation activity under ASU 2016-09 and non-recurring or unusual items (if any). Management believes comparable constant currency 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. Share-based compensation tax benefits increased second quarter 2020 EPS by $0.06 per share, first half 2020 EPS by $0.13 per share, second quarter 2019 EPS by $0.06 per share, and first half 2019 EPS by $0.12 per share. These impacts and those described in the constant currency note above reconcile reported EPS growth to comparable constant currency EPS growth for the second quarter and first half of 2020.

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. See the supplementary analysis of results below for our calculation of free cash flow for the six months ended June 30, 2020 and 2019.

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.  For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA ratios are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

Contact: John Ravis, Investor Relations, 1-207-556-8155

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,
				2020			2019			2020			2019
Revenue:		Revenue		$637,592			$620,103			$1,263,928			$1,196,159
Expenses and Income:		Cost of revenue		258,250			262,250			524,996			506,709
		Gross profit		379,342			357,853			738,932			689,450
		Sales and marketing		94,181			101,364			210,324			207,948
		General and administrative		60,268			59,955			126,080			120,316
		Research and development		31,645			32,259			64,955			63,773
		Income from operations		193,248			164,275			337,573			297,413
		Interest expense, net		(9,426)			(8,153)			(16,978)			(16,499)
		Income before provision for income taxes		183,822			156,122			320,595			280,914
		Provision for income taxes		34,826			30,421			59,743			52,504
Net Income:		Net income		148,996			125,701			260,852			228,410
		Less: Noncontrolling interest in subsidiary's earnings		56			(5)			85			23
		Net income attributable to stockholders		$148,940			$125,706			$260,767			$228,387
		Earnings per share: Basic		$1.75			$1.46			$3.06			$2.65
		Earnings per share: Diluted		$1.72			$1.43			$3.01			$2.61
		Shares outstanding: Basic		85,134			86,215			85,282			86,210
		Shares outstanding: Diluted		86,402			87,615			86,568			87,594
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended						Six Months Ended
				June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Operating Ratios		Gross profit		59.5	%		57.7	%		58.5	%		57.6	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense		24.2	%		26.0	%		26.6	%		27.4	%
		Research and development expense		5.0	%		5.2	%		5.1	%		5.3	%
		Income from operations1		30.3	%		26.5	%		26.7	%		24.9	%

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
				June 30, 2020		Percent of Revenue		June 30, 2019			Percent of Revenue
Revenue:		CAG		$566,100					$547,349
		Water		28,116					34,764
		LPD		32,244					33,104
		Other		11,132					4,886
		Total		$637,592					$620,103
Gross Profit1:		CAG		$334,467		59.1	%		$311,295		56.9	%
		Water		19,678		70.0	%		24,861		71.5	%
		LPD		18,839		58.4	%		19,679		59.4	%
		Other		6,358		57.1	%		2,018		41.3	%
		Total		$379,342		59.5	%		$357,853		57.7	%
Income from Operations1:		CAG		$167,969		29.7	%		$141,190		25.8	%
		Water		12,258		43.6	%		16,722		48.1	%
		LPD		8,249		25.6	%		6,568		19.8	%
		Other		4,772		42.9	%		(205)		(4.2)	%
		Total		$193,248		30.3	%		$164,275		26.5	%
				Six Months Ended						Six Months Ended
				June 30, 2020		Percent of Revenue			June 30, 2019		Percent of Revenue
Revenue:		CAG		$1,118,096					$1,056,267
		Water		62,265					65,074
		LPD		66,398					64,610
		Other		17,169					10,208
		Total		$1,263,928					$1,196,159
Gross Profit1:		CAG		$643,810		57.6	%		$598,965		56.7	%
		Water		44,427		71.4	%		47,008		72.2	%
		LPD		41,151		62.0	%		38,728		59.9	%
		Other		9,544		55.6	%		4,749		46.5	%
		Total		$738,932		58.5	%		$689,450		57.6	%
Income from Operations1:		CAG		$286,628		25.6	%		$252,909		23.9	%
		Water		28,140		45.2	%		30,537		46.9	%
		LPD		17,912		27.0	%		12,857		19.9	%
		Other		4,893		28.5	%		1,110		10.9	%
		Total		$337,573		26.7	%		$297,413		24.9	%

1 Effective January 1, 2020, we modified our management reporting to the Chief Operating Decision Maker to provide a more comprehensive view of the performance of our operating segments by including costs that were previously not allocated to our segments. Prior to January 1, 2020, certain costs were not allocated to our operating segments and were instead reported under the caption "Unallocated Amounts". These costs included costs primarily consisting of our R&D function, regional or country expenses and unusual items. Corporate support function costs (such as information technology, facilities, human resources, finance and legal), health benefits and incentive compensation were charged to our business segments at pre-determined budgeted amounts or rates. Beginning January 1, 2020, the segments will reflect these actual costs allocated to the segment based on various allocation methods, including revenue and headcount. Foreign exchange losses on settlements of foreign currency denominated transactions are not allocated to our operating segments and are instead reported under our Other reporting segment.

 

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
		June 30, 2020			June 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$566,100			$547,349			$18,751			3.4	%		(1.0)	%		0.7	%		3.8	%
United States		387,113			367,031			20,082			5.5	%		—			1.0	%		4.5	%
International		178,987			180,318			(1,331)			(0.7)	%		(3.1)	%		—			2.3	%
Water		28,116			34,764			(6,648)			(19.1)	%		(3.0)	%		—			(16.2)	%
United States		13,935			16,759			(2,824)			(16.8)	%		—			—			(16.8)	%
International		14,181			18,005			(3,824)			(21.2)	%		(5.8)	%		—			(15.5)	%
LPD		32,244			33,104			(860)			(2.6)	%		(4.3)	%		—			1.7	%
United States		3,242			3,309			(67)			(2.0)	%		—			—			(2.0)	%
International		29,002			29,795			(793)			(2.6)	%		(4.8)	%		—			2.2	%
Other		11,132			4,886			6,246			127.8	%		—			—			127.8	%
Total Company		$637,592			$620,103			$17,489			2.8	%		(1.3)	%		0.6	%		3.6	%
United States		405,998			388,875			17,123			4.4	%		—			0.9	%		3.5	%
International		231,594			231,228			366			0.2	%		(3.6)	%		—			3.8	%
		Three Months Ended
		June 30, 2020			June 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$510,254			$477,431			$32,823			6.9	%		(1.1)	%		0.8	%		7.2	%
IDEXX VetLab consumables		196,061			175,159			20,902			11.9	%		(1.6)	%		—			13.5	%
Rapid assay products		64,658			68,605			(3,947)			(5.8)	%		(0.6)	%		—			(5.1)	%
Reference laboratory diagnostic and consulting services		228,816			213,892			14,924			7.0	%		(0.8)	%		1.7	%		6.1	%
CAG Diagnostics services and accessories		20,719			19,775			944			4.8	%		(1.3)	%		—			6.1	%
CAG Diagnostics capital – instruments		18,871			31,526			(12,655)			(40.1)	%		(1.0)	%		—			(39.1)	%
Veterinary software, services and diagnostic imaging systems		36,975			38,392			(1,417)			(3.7)	%		(0.3)	%		—			(3.4)	%
Net CAG revenue		$566,100			$547,349			$18,751			3.4	%		(1.0)	%		0.7	%		3.8	%
1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

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
		June 30, 2020			June 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$1,118,096			$1,056,267			$61,829			5.9	%		(1.0)	%		0.7	%		6.1	%
United States		760,388			704,905			55,483			7.9	%		—			1.1	%		6.8	%
International		357,708			351,362			6,346			1.8	%		(2.9)	%		—			4.7	%
Water		62,265			65,074			(2,809)			(4.3)	%		(3.0)	%		—			(1.4)	%
United States		30,876			31,363			(487)			(1.6)	%		—			—			(1.6)	%
International		31,389			33,711			(2,322)			(6.9)	%		(5.7)	%		—			(1.2)	%
LPD		66,398			64,610			1,788			2.8	%		(4.0)	%		—			6.8	%
United States		7,019			6,572			447			6.8	%		—			—			6.8	%
International		59,379			58,038			1,341			2.3	%		(4.4)	%		—			6.8	%
Other		17,169			10,208			6,961			68.2	%		—			—			68.2	%
Total Company		$1,263,928			$1,196,159			$67,769			5.7	%		(1.2)	%		0.6	%		6.3	%
United States		802,781			747,163			55,618			7.4	%		—			1.0	%		6.4	%
International		461,147			448,996			12,151			2.7	%		(3.3)	%		—			6.0	%
		Six Months Ended
		June 30, 2020			June 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$998,179			$921,222			$76,957			8.4	%		(1.0)	%		0.8	%		8.5	%
IDEXX VetLab consumables		384,774			342,370			42,404			12.4	%		(1.4)	%		—			13.8	%
Rapid assay products		122,088			123,036			(948)			(0.8)	%		(0.6)	%		—			(0.2)	%
Reference laboratory diagnostic and consulting services		449,077			416,550			32,527			7.8	%		(0.8)	%		1.8	%		6.8	%
CAG Diagnostics services and accessories		42,240			39,266			2,974			7.6	%		(1.4)	%		—			9.0	%
CAG Diagnostics capital – instruments		42,704			60,275			(17,571)			(29.2)	%		(1.1)	%		—			(28.0)	%
Veterinary software, services and diagnostic imaging systems		77,213			74,770			2,443			3.3	%		(0.3)	%		—			3.5	%
Net CAG revenue		$1,118,096			$1,056,267			$61,829			5.9	%		(1.0)	%		0.7	%		6.1	%
		—
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)
				June 30, 2020			December 31, 2019
Assets:		Current Assets:
		Cash and cash equivalents		$105,293			$90,326
		Accounts receivable, net		320,320			269,312
		Inventories		229,377			195,019
		Other current assets		124,622			124,982
		Total current assets		779,612			679,639
		Property and equipment, net		550,895			533,845
		Other long-term assets, net		630,206			618,991
		Total assets		$1,960,713			$1,832,475
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$73,903			$72,172
		Accrued liabilities		308,768			322,938
		Line of credit		121,596			288,765
		Deferred revenue		36,317			41,462
		Total current liabilities		540,584			725,337
		Long-term debt		899,562			698,910
		Other long-term liabilities, net		247,167			230,403
		Total long-term liabilities		1,146,729			929,313
		Total stockholders' equity		272,963			177,473
		Noncontrolling interest		437			352
		Total stockholders' equity		273,400			177,825
		Total liabilities and stockholders' equity		$1,960,713			$1,832,475

 

IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
				June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Selected Balance Sheet Information:		Days sales outstanding1		44.4			41.5			40.5			41.8			41.7
		Inventory turns2		1.6			1.9			2.2			2.0			2.1

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)
				Six Months Ended
				June 30, 2020			June 30, 2019
Operating:		Cash Flows from Operating Activities:
		Net income		$260,852			$228,410
		Non-cash charges		70,576			60,381
		Changes in assets and liabilities		(95,415)			(117,311)
		Net cash provided by operating activities		236,013			171,480
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment		(73,558)			(71,987)
		Acquisition of intangible assets and business		(668)			(304)
		Net cash used by investing activities		(74,226)			(72,291)
Financing:		Cash Flows from Financing Activities:
		Repayments on revolving credit facilities, net		(167,692)			(147,519)
		Issuance of senior notes		200,000			100,000
		Debt issuance costs		(4,988)			(142)
		Payment of acquisition-related contingent consideration		(1,080)			(1,695)
		Repurchases of common stock		(182,815)			(74,994)
		Proceeds from exercises of stock options and employee stock purchase plans		20,613			19,653
		Shares withheld for statutory tax withholding on restricted stock		(8,668)			(7,572)
		Net cash used by financing activities		(144,630)			(112,269)
		Net effect of changes in exchange rates on cash		(2,190)			131
		Net increase (decrease) in cash and cash equivalents		14,967			(12,949)
		Cash and cash equivalents, beginning of period		90,326			123,794
		Cash and cash equivalents, end of period		$105,293			$110,845

 

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
				Six Months Ended
				June 30, 2020			June 30, 2019
Free Cash Flow:		Net cash provided by operating activities		$236,013			$171,480
		Investing cash flows attributable to purchases of property and equipment		(73,558)			(71,987)
		Free cash flow1		$162,455			$99,493
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						Six Months Ended
		June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Shares repurchased in the open market		—			86			721			353
Shares acquired through employee surrender for statutory tax withholding		—			1			30			37
Total shares repurchased		—			87			751			390
Cost of shares repurchased in the open market		$—			$20,285			$179,623			$74,147
Cost of shares for employee surrenders		65			169			8,669			7,572
Total cost of shares		$65			$20,454			$188,292			$81,719
Average cost per share – open market repurchases		$—			$235.94			$249.20			$209.81
Average cost per share – employee surrenders		$312.19			$249.77			$288.94			$207.16
Average cost per share – total		$312.19			$236.04			$250.79			$209.56

 

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SOURCE IDEXX Laboratories, Inc.