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IDEXX Laboratories Announces Second Quarter 2022 Results

IDEXX Laboratories Announces Second Quarter 2022 Results

  • Achieves second quarter revenue growth of 4% reported and 6.5% organic, driven by CAG Diagnostics recurring revenue growth of 4% reported and 7% organic, building on high prior year growth
  • Solid demand for diagnostic services and strong IDEXX execution support record second quarter premium instrument placements, driving 15% growth in global premium installed base
  • Delivers EPS of $1.56, representing declines of 33% as reported and 30% on a comparable basis, including $0.72 per share impact from discrete R&D investments
  • Adjusts 2022 revenue guidance to 3% – 5.5% growth as reported and 5.5% – 8% organic. At midpoint, updated outlook reflects expectations for solid second half growth for CAG Diagnostics recurring revenues, similar to recent trends, adjusted for incremental benefits from higher pricing. The low end of the updated outlook incorporates a 2.5% second half organic growth risk estimate related to potential additional impacts from macroeconomic conditions
  • Updated EPS outlook of $7.77 – $8.05 reflects updated revenue outlook, a 50 basis point adjustment to the full year comparable operating margin outlook and $0.08 combined per share impact from updated foreign exchange and interest rate projections

WESTBROOK, Maine, Aug. 2, 2022 /PRNewswire/ — IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced second quarter results, as well as an update on U.S. companion animal diagnostics trends.

Second Quarter Results

The Company reports revenues of $861 million for the second quarter of 2022, a 4% increase as reported and 6.5% organically, driven by Companion Animal Group (“CAG”) Diagnostics recurring revenue growth of 4% reported and 7% organic compared to strong prior year performance. Continued solid companion animal sector demand and benefits from IDEXX execution drove premium instrument placements 18% higher than the prior year period, supporting CAG Diagnostics capital instrument revenue growth of 3% as reported and 8% organic. Continued strong momentum in cloud-based software placements supported veterinary software, services and diagnostic imaging systems revenue growth of 27% as reported and 14% organically. Overall revenue gains in the quarter were also supported by Water revenue growth of 5% reported and 9% organic.

Second quarter earnings per diluted share (“EPS”) were $1.56, decreasing 33% as reported and 30% on a comparable basis compared to strong prior year profit levels, reflecting impacts from $80 million of discrete R&D investment in the quarter and operating expense growth related to investments in commercial capabilities. EPS results included $0.06 per share negative impact from currency changes and $0.03 per share in tax benefits from share-based compensation.

“Building on strong prior year gains, IDEXX drove continued solid organic growth in the second quarter,” said Jay Mazelsky, President and Chief Executive Officer. “I am especially pleased with the strong execution of our global teams resulting in record premium instrument placements and cloud- based practice management software adoption. IDEXX innovations have never been more important in helping veterinary clinics manage through capacity challenges and to achieve outstanding care for their patients.”

Companion Animal Diagnostics Trends Update

Continued growth in demand for companion animal healthcare supported solid gains in CAG diagnostic products and services, compared to strong prior year demand levels. Average diagnostics revenues grew 6% at U.S. veterinary practices on a same-store basis in the second quarter, ahead of 3% growth in overall clinic revenues, reflecting continued expansion of demand for pet healthcare services. U.S. same-store clinical visits at veterinary practices declined 3% in the second quarter compared to prior year period clinical visit growth of 13%, which included benefits from increases in new pet ownership during the COVID-19 pandemic. Growth for pet healthcare including diagnostics has increased significantly from pre-pandemic levels reflecting compound annual growth of 2% in clinical visits and 10% in same-store diagnostics revenues for the U.S. compared to the second quarter of 2019.

Additional U.S. companion animal practice key metrics are available in the Q2 2022 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Second Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated revenue growth of 5% reported and 7% organically for the quarter, supported by CAG Diagnostics recurring revenue growth of 4% on a reported basis and 7% organically. Solid growth was achieved across IDEXX’s major modalities, building off high gains in the prior year period. Overall CAG revenue growth included CAG Diagnostics capital instrument revenue growth of 3% reported and 8% organic, reflecting record second quarter premium instrument placements.

  • IDEXX VetLab®consumables generated 4% reported and 8% organic revenue growth, with gains across U.S. and international regions supported by expansion of our global premium instrument installed base, benefits from net price gains and high customer retention levels.
  • Reference laboratory diagnostic and consulting services generated 4% reported and 6% organic revenue growth driven by strong gains in the U.S., offset by flat organic revenue growth in international regions compared to strong prior year levels. Revenue growth reflects benefits from strong customer retention, new business gains and net price improvement.
  • Rapid assay products revenues grew 4% as reported and 6% organically, supported by continued solid volume growth in the U.S. and net price gains.

Veterinary software, services and diagnostic imaging systems revenues grew 27% as reported and 14% organically, supported by double-digit organic gains in recurring software and digital imaging revenues. Reported growth includes benefits from ezyVet®, acquired during the second quarter of 2021, which continues to show strong momentum in customer gains.

Water

Water revenues grew 5% on a reported basis and 9% on an organic basis for the quarter, reflecting solid volume growth across U.S. and international regions and benefits from net price gains.

Livestock, Poultry and Dairy (“LPD”)

LPD revenues declined 11% as reported and 5% on an organic basis for the quarter, reflecting comparisons to high prior year revenue levels of African Swine Fever and core Swine testing in China. This impact was partially offset by moderate overall organic revenue gains in other areas of the LPD business. Comparisons to high revenue levels for African Swine Fever testing are expected to improve in the second half of 2022.

Gross Profit and Operating Profit

Gross profits increased 5% as reported and 7% on a comparable basis. Gross margin of 59.7% increased 50 basis points as reported and was flat on a comparable basis. Benefits from net price gains, lab productivity initiatives and improvement in software service gross margins offset select inflationary effects and impacts from lower LPD revenues.

Operating margin was 20.8% in the quarter, 1,060 basis points lower than the prior year as reported and 1,050 basis points lower on a comparable basis, driven by year-over-year operating expense growth of 46% as reported and 48% on a comparable basis. Operating expense includes a 35% growth impact and a 900 basis point operating margin impact related to $80 million in discrete R&D investments and reflects increased investments supporting global commercial capabilities, higher travel costs and inflationary impacts.

2022 Growth and Financial Performance Outlook

The Company is updating its full year revenue growth outlook to 3% – 5.5% as reported and 5.5% – 8% organically, a reduction in the projected full year revenue growth range of 250 basis points and 200 basis points, respectively. This outlook range includes projected full year CAG Diagnostics recurring revenue growth of 4% – 6% as reported and 6.5% – 9% organic, supported by continued benefits from strong IDEXX execution including additional second half price gains. The updated outlook also incorporates expectations for continued near-term pressure on veterinary clinical visits from factors including constraints on vet clinic capacity, lapping of new patient step-up benefits, as well as additional potential growth impacts related to macroeconomic risk.

The Company now projects full year operating margins of 26.4% – 26.9%, reflecting ~50 basis points of net operating margin impact related to updated revenue growth estimates.

The Company’s EPS outlook of $7.77 – $8.05 reflects an adjustment of $0.32 at midpoint, including $0.05 of negative impact from higher projected interest rates and $0.03 of negative impact related to the strengthening U.S. dollar.

The following table provides the Company’s updated outlook for annual key financial metrics in 2022:

Amounts in millions except per share data and percentages

 

Growth and Financial Performance Outlook

 

2022

 
           

Revenue

 

$3,305

$3,385

 

Reported growth

 

3 %

5.5 %

 

Organic growth

 

5.5 %

8 %

 

CAG Diagnostics Recurring Revenue Growth

         

Reported growth

 

4 %

6 %

 

Organic growth

 

6.5 %

9 %

 

Operating Margin

 

26.4 %

26.9 %

 

Operating margin expansion

 

(260 bps)

(210 bps)

 

Impact of foreign exchange

 

~ 20 bps

 

Comparable margin expansion

 

(280 bps)

(230 bps)

 

Impact of discrete in-license of technology

 

(230 bps)

 

EPS

 

$7.77

$8.05

 

Reported growth

 

(10 %)

(6 %)

 

Comparable growth

 

(4 %)

(1 %)

 

Other Key Metrics

         

Net interest expense

 

$38

$39

 

Share-based compensation tax benefit

 

~ $10

 

Share-based compensation tax rate benefit

 

~ 1%

 

Effective tax rate

 

21.5 %

22 %

 

Share-based compensation EPS impact

 

~ $0.12

 

Reduction in average shares outstanding

 

~ 2.0%

 

Operating Cash Flow

 

90% – 95% of net income

 

Free Cash Flow

 

65% – 70% of net income

 

Capital Expenditures

 

~ $180

 

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 2022.

Estimated Foreign Currency Exchange Rates and Impacts

 

2022

 
           

Revenue growth rate impact

 

(3.0 %)

(3.5 %)

 

CAG Diagnostics recurring revenue growth rate impact

 

~ (3.5)%

 

Operating margin growth impact

 

~ 20 bps

 

EPS impact

 

(~ $0.21)

 

EPS growth impact

 

(~ 2.0%)

 
           

Foreign Currency Exchange Rate Assumptions

         

In U.S. dollars

         

euro

 

$1.00

 

British pound

 

$1.18

 

Canadian dollar

 

$0.76

 

Australian dollar

 

$0.67

 

Relative to the U.S. dollar

         

Japanese yen

 

¥139

 

Chinese renminbi

 

¥6.79

 

Brazilian real

 

R$5.40

 

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 2022 results and management’s outlook. To participate in the conference call, dial 1-866-374-5140 or 1-404-400-0571 and reference pin 28182746. 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.

2022 Investor Day

IDEXX Laboratories, Inc. will host its 2022 Investor Day on Thursday, August 11, 2022 from 8:00 am to approximately 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. For additional information contact investorrelations@idexx.com.

IDEXX Laboratories, Inc. logo. (PRNewsFoto/IDEXX Laboratories, Inc.)

About IDEXX Laboratories, Inc.

IDEXX is a global leader in pet healthcare innovation. Our diagnostic and software products and services create clarity in the complex, constantly evolving world of veterinary medicine. We support longer, fuller lives for pets by delivering insights and solutions that help the veterinary community around the world make confident decisions—to advance medical care, improve efficiency, and build thriving practices. Our innovations also help ensure the safety of milk and water across the world and maintain the health and well-being of people and livestock. IDEXX Laboratories, Inc. is a member of the S&P 500® Index. Headquartered in Maine, IDEXX employs more than 10,000 people and offers solutions and products to customers in more than 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 “Livestock, Poultry and Dairy (“LPD”)”, “2022 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 our expectations regarding LPD financial performance; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates and interest 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, 2021 and in the corresponding sections of the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, 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 2022 results as follows: decreased gross profit growth by 2%, increased gross margin growth by 50 basis points, decreased operating expense growth by 2%, decreased operating profit growth by 2%, decreased operating profit margin growth by 10 basis points, and decreased EPS growth by 2%. 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 and six months ended June 30, 2022 and refer to the 2022 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2022 projections and estimates.

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, certain business acquisitions, and divestitures. 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 and six months ended June 30, 2022. Please refer to the 2022 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2022 organic revenue growth for the Company and CAG Diagnostics recurring revenue. The percentage change in revenue resulting from acquisitions represents revenues during the current year period, limited to the initial 12 months from the date of the acquisition, that are directly attributable to business acquisitions. Revenue from acquisitions is expected to increase projected full year 2022 revenue growth by 50 basis points and to have no impact to projected full year 2022 CAG Diagnostics recurring revenue growth.

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

 

Six Months Ended

Year-over-Year

   

June 30

 

June 30

Change

 

June 30

 

June 30

Change

Dollar amounts in thousands

 

2022

 

2021

   

2022

 

2021

 

Gross Profit (as reported)

 

$ 514,032

 

$ 489,308

5 %

 

$ 1,012,785

 

$ 960,090

5 %

Gross margin

 

59.7 %

 

59.2 %

50 bps

 

59.7 %

 

59.9 %

(20) bps

Less: comparability adjustments

                   

Change from currency

 

(11,768)

 

   

(18,615)

 

 

Comparable gross profit growth

 

$ 525,800

 

$ 489,308

7 %

 

$ 1,031,400

 

$ 960,090

7 %

Comparable gross margin and gross margin gain (or growth)

 

59.2 %

 

59.2 %

0 bps

 

59.3 %

 

59.9 %

(60) bps

                     

Operating expenses (as reported)

 

$ 334,966

 

$ 230,055

46 %

 

$ 585,375

 

$ 453,215

29 %

Less: comparability adjustments

                   

Change from currency

 

$ 5,517

 

   

$ 8,386

 

 

Comparable operating expense growth

 

$ 340,483

 

$ 230,055

48 %

 

$ 593,761

 

$ 453,215

31 %

                     

Income from operations (as reported)

 

$ 179,066

 

$ 259,253

(31) %

 

$ 427,410

 

$ 506,875

(16) %

Operating margin

 

20.8 %

 

31.4 %

(1,060) bps

 

25.2 %

 

31.6 %

(640) bps

Less: comparability adjustments

                   

Change from currency

 

(6,251)

 

   

(10,229)

 

 

Comparable operating profit growth

 

$ 185,317

 

$ 259,253

(29) %

 

$ 437,639

 

$ 506,875

(14) %

Comparable operating margin and operating margin gain (or growth)

 

20.9 %

 

31.4 %

(1,050) bps

 

25.2 %

 

31.6 %

(640) bps

Amounts presented may not recalculate due to rounding.

Projected 2022 comparable operating margin expansion outlined in the 2022 Growth and Financial Performance Outlook section of this earnings release reflects projected full year 2022 reported operating margin adjusted for estimated positive year-over-year foreign currency exchange rate change impact of approximately 20 basis points.

This impact 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 2022 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 represents the percentage change in earnings per share (diluted) (“EPS”) for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exchange rates from the prior base period and excluding the tax benefits of share-based compensation activity under ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, 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

 

Six Months Ended

 

Year-over-Year

   

June 30

 

June 30

 

Growth

 

June 30

 

June 30

 

Growth

   

2022

 

2021

     

2022

 

2021

   

Earnings per share (diluted)

 

$ 1.56

 

$ 2.34

 

(33) %

 

$ 3.82

 

$ 4.69

 

(19) %

Less: comparability adjustments

                       

Share-based compensation activity

 

0.03

 

0.07

     

0.09

 

0.24

   

Change from currency

 

(0.06)

 

     

(0.09)

 

   

Comparable EPS growth

 

1.58

 

2.27

 

(30) %

 

3.83

 

4.45

 

(14) %

Amounts presented may not recalculate due to rounding.

Projected 2022 comparable EPS growth outlined in the 2022 Growth and Financial Performance Outlook section of this earnings release reflects adjustments including estimated positive share-based compensation activity of $0.12 and estimated negative year-over-year foreign currency exchange rate change impact of $0.21.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2022 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 six months ended June 30, 2022 and 2021. To estimate projected 2022 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $180 million. To calculate trailing twelve-month net income to free cash flow ratio for the twelve months ended June 30, 2022, we have deducted purchases of property and equipment of approximately $139 million from net cash provided from operating activities of approximately $578 million, divided by net income of approximately $664 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, 2021 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

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,

       

2022

 

2021

 

2022

 

2021

Revenue:

 

Revenue

 

$860,546

 

$826,142

 

$1,697,095

 

$1,603,849

Expenses and Income:

 

Cost of revenue

 

346,514

 

336,834

 

684,310

 

643,759

   

Gross profit

 

514,032

 

489,308

 

1,012,785

 

960,090

   

Sales and marketing

 

130,257

 

119,032

 

262,549

 

233,843

   

General and administrative

 

81,488

 

73,326

 

159,437

 

144,096

   

Research and development

 

123,221

 

37,697

 

163,389

 

75,276

   

Income from operations

 

179,066

 

259,253

 

427,410

 

506,875

   

Interest expense, net

 

(7,983)

 

(7,522)

 

(14,836)

 

(15,054)

   

Income before provision for income taxes

 

171,083

 

251,731

 

412,574

 

491,821

   

Provision for income taxes

 

39,104

 

49,125

 

86,630

 

84,926

Net Income:

 

Net income

 

131,979

 

202,606

 

325,944

 

406,895

   

Less: Noncontrolling interest in subsidiary’s earnings

 

 

24

 

 

56

   

Net income attributable to stockholders

 

$131,979

 

$202,582

 

$325,944

 

$406,839

   

Earnings per share: Basic

 

$1.57

 

$2.37

 

$3.87

 

$4.76

   

Earnings per share: Diluted

 

$1.56

 

$2.34

 

$3.82

 

$4.69

   

Shares outstanding: Basic

 

83,922

 

85,325

 

84,164

 

85,427

   

Shares outstanding: Diluted

 

84,858

 

86,654

 

85,222

 

86,794

IDEXX Laboratories, Inc. and Subsidiaries

             

Selected Operating Information (Unaudited)

             
       

Three Months Ended

 

Six Months Ended

       

June 30,

 

June 30,

 

June 30,

 

June 30,

       

2022

 

2021

2022

 

2021

Operating Ratios

 

Gross profit

 

59.7 %

 

59.2 %

 

59.7 %

 

59.9 %

(as a percentage of revenue):

 

Sales, marketing, general and administrative expense

 

24.6 %

 

23.3 %

 

24.9 %

 

23.6 %

   

Research and development expense

 

14.3 %

 

4.6 %

 

9.6 %

 

4.7 %

   

Income from operations1

 

20.8 %

 

31.4 %

 

25.2 %

 

31.6 %

                     

1Amounts presented may not recalculate due to rounding.

             

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

                 
       

Three Months Ended

       

June 30, 2022

 

Percent of
Revenue

 

June 30, 2021

 

Percent of
Revenue

             

Revenue:

 

CAG

 

$784,087

     

$745,595

   
   

Water

 

39,195

     

37,191

   
   

LPD

 

29,889

     

33,524

   
   

Other

 

7,375

     

9,832

   
   

Total

 

$860,546

     

$826,142

   
                     

Gross Profit:

 

CAG

 

$466,254

 

59.5 %

 

$440,786

 

59.1 %

   

Water

 

27,359

 

69.8 %

 

25,747

 

69.2 %

   

LPD

 

16,996

 

56.9 %

 

19,526

 

58.2 %

   

Other

 

3,423

 

46.4 %

 

3,249

 

33.0 %

   

Total

 

$514,032

 

59.7 %

 

$489,308

 

59.2 %

                     

Income from
Operations:

 

CAG

 

$156,526

 

20.0 %

 

$234,735

 

31.5 %

   

Water

 

17,920

 

45.7 %

 

17,228

 

46.3 %

   

LPD

 

3,230

 

10.8 %

 

6,868

 

20.5 %

   

Other

 

1,390

 

18.8 %

 

422

 

4.3 %

   

Total

 

$179,066

 

20.8 %

 

$259,253

 

31.4 %

 
 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

                 
       

Six Months Ended

       

June 30, 2022

 

Percent of
Revenue

 

June 30, 2021

 

Percent of
Revenue

             

Revenue:

 

CAG

 

$1,545,271

     

$1,438,362

   
   

Water

 

75,566

     

71,231

   
   

LPD

 

60,759

     

72,794

   
   

Other

 

15,499

     

21,462

   
   

Total

 

$1,697,095

     

$1,603,849

   
                     

Gross Profit:

 

CAG

 

$915,353

 

59.2 %

 

$853,660

 

59.3 %

   

Water

 

53,096

 

70.3 %

 

49,212

 

69.1 %

   

LPD

 

36,543

 

60.1 %

 

46,407

 

63.8 %

   

Other

 

7,793

 

50.3 %

 

10,811

 

50.4 %

   

Total

 

$1,012,785

 

59.7 %

 

$960,090

 

59.9 %

                     

Income from
Operations:

 

CAG

 

$379,651

 

24.6 %

 

$447,945

 

31.1 %

   

Water

 

34,574

 

45.8 %

 

32,000

 

44.9 %

   

LPD

 

9,967

 

16.4 %

 

20,676

 

28.4 %

   

Other

 

3,218

 

20.8 %

 

6,254

 

29.1 %

   

Total

 

$427,410

 

25.2 %

 

$506,875

 

31.6 %

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, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from
Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

Net Revenue

         

CAG

 

$784,087

 

$745,595

 

$38,492

 

5.2 %

 

(3.3 %)

 

1.1 %

 

7.3 %

United States

 

532,626

 

486,252

 

46,374

 

9.5 %

 

 

1.5 %

 

8.1 %

International

 

251,461

 

259,343

 

(7,882)

 

(3.0 %)

 

(9.2 %)

 

0.4 %

 

5.7 %

Water

 

39,195

 

37,191

 

2,004

 

5.4 %

 

(3.5 %)

 

 

8.9 %

United States

 

19,533

 

17,747

 

1,786

 

10.1 %

 

 

 

10.1 %

International

 

19,662

 

19,444

 

218

 

1.1 %

 

(6.7 %)

 

 

7.8 %

LPD

 

29,889

 

33,524

 

(3,635)

 

(10.8 %)

 

(5.8 %)

 

 

(5.0 %)

United States

 

3,742

 

3,516

 

226

 

6.5 %

 

 

 

6.5 %

International

 

26,147

 

30,008

 

(3,861)

 

(12.9 %)

 

(6.4 %)

 

 

(6.4 %)

Other

 

7,375

 

9,832

 

(2,457)

 

(25.0 %)

 

1.9 %

 

 

(26.9 %)

Total Company

 

$860,546

 

$826,142

 

$34,404

 

4.2 %

 

(3.3 %)

 

1.0 %

 

6.5 %

United States

 

559,825

 

515,238

 

44,587

 

8.7 %

 

 

1.4 %

 

7.3 %

International

 

300,721

 

310,904

 

(10,183)

 

(3.3 %)

 

(8.6 %)

 

0.3 %

 

5.0 %

 
   

Three Months Ended

                   
                             
   

June 30, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from

Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

Net CAG Revenue

             

CAG Diagnostics recurring revenue:

 

$685,413

 

$661,300

 

$24,113

 

3.6 %

 

(3.3 %)

 

0.2 %

 

6.8 %

IDEXX VetLab consumables

 

266,079

 

256,352

 

9,727

 

3.8 %

 

(4.1 %)

 

 

7.9 %

Rapid assay products

 

87,481

 

83,887

 

3,594

 

4.3 %

 

(1.6 %)

 

 

5.8 %

Reference laboratory diagnostic and consulting services

 

304,130

 

293,675

 

10,455

 

3.6 %

 

(3.0 %)

 

0.4 %

 

6.1 %

CAG Diagnostics services and accessories

 

27,723

 

27,386

 

337

 

1.2 %

 

(4.4 %)

 

 

5.7 %

CAG Diagnostics capital – instruments

 

36,227

 

35,054

 

1,173

 

3.3 %

 

(4.9 %)

 

 

8.3 %

Veterinary software, services and diagnostic imaging systems

 

62,447

 

49,241

 

13,206

 

26.8 %

 

(1.1 %)

 

13.8 %

 

14.0 %

Net CAG revenue

 

$784,087

 

$745,595

 

$38,492

 

5.2 %

 

(3.3 %)

 

1.1 %

 

7.3 %

 
   

Three Months Ended

                   
                         
   

June 30, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from
Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

               

CAG Diagnostics recurring revenue:

 

$685,413

 

$661,300

 

$24,113

 

3.6 %

 

(3.3 %)

 

0.2 %

 

6.8 %

United States

 

$460,357

 

$427,583

 

$32,774

 

7.7 %

 

 

0.1 %

 

7.6 %

International

 

$225,056

 

$233,717

 

($8,661)

 

(3.7 %)

 

(9.2 %)

 

0.4 %

 

5.1 %

                     

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, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from
Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

Net Revenue

             

CAG

 

$1,545,271

 

$1,438,362

 

$106,909

 

7.4 %

 

(2.6 %)

 

1.3 %

 

8.7 %

United States

 

1,032,392

 

930,662

 

101,730

 

10.9 %

 

 

1.8 %

 

9.1 %

International

 

512,879

 

507,700

 

5,179

 

1.0 %

 

(7.3 %)

 

0.4 %

 

7.9 %

Water

 

75,566

 

71,231

 

4,335

 

6.1 %

 

(2.6 %)

 

 

8.7 %

United States

 

37,364

 

34,315

 

3,049

 

8.9 %

 

 

 

8.9 %

International

 

38,202

 

36,916

 

1,286

 

3.5 %

 

(5.0 %)

 

 

8.5 %

LPD

 

60,759

 

72,794

 

(12,035)

 

(16.5 %)

 

(3.8 %)

 

 

(12.7 %)

United States

 

7,602

 

7,264

 

338

 

4.7 %

 

 

 

4.7 %

International

 

53,157

 

65,530

 

(12,373)

 

(18.9 %)

 

(4.1 %)

 

 

(14.8 %)

Other

 

15,499

 

21,462

 

(5,963)

 

(27.8 %)

 

0.7 %

 

 

(28.5 %)

Total Company

 

$1,697,095

 

$1,603,849

 

$93,246

 

5.8 %

 

(2.6 %)

 

1.2 %

 

7.2 %

United States

 

1,085,731

 

987,876

 

97,855

 

9.9 %

 

 

1.7 %

 

8.2 %

International

 

611,364

 

615,973

 

(4,609)

 

(0.7 %)

 

(6.7 %)

 

0.3 %

 

5.6 %

 
   

Six Months Ended

                   
                             
   

June 30, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from

Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

Net CAG Revenue

             

CAG Diagnostics recurring revenue:

 

$1,350,223

 

$1,278,580

 

$71,643

 

5.6 %

 

(2.6 %)

 

0.2 %

 

8.0 %

IDEXX VetLab consumables

 

533,252

 

502,444

 

30,808

 

6.1 %

 

(3.3 %)

 

 

9.5 %

Rapid assay products

 

162,000

 

153,498

 

8,502

 

5.5 %

 

(1.3 %)

 

 

6.9 %

Reference laboratory diagnostic and consulting services

 

599,205

 

569,456

 

29,749

 

5.2 %

 

(2.3 %)

 

0.5 %

 

7.0 %

CAG Diagnostics services and accessories

 

55,766

 

53,182

 

2,584

 

4.9 %

 

(3.6 %)

 

 

8.4 %

CAG Diagnostics capital – instruments

 

73,224

 

66,244

 

6,980

 

10.5 %

 

(4.3 %)

 

 

14.8 %

Veterinary software, services and diagnostic imaging systems

 

121,824

 

93,538

 

28,286

 

30.2 %

 

(0.8 %)

 

17.3 %

 

13.7 %

Net CAG revenue

 

$1,545,271

 

$1,438,362

 

$106,909

 

7.4 %

 

(2.6 %)

 

1.3 %

 

8.7 %

                             
   

Six Months Ended

                   
                         
   

June 30, 2022

 

June 30, 2021

 

Dollar
Change

 

Reported
Revenue
Growth1

 

Percentage
Change from
Currency

 

Percentage
Change from
Acquisitions

 

Organic
Revenue
Growth1

               

CAG Diagnostics recurring revenue:

 

$1,350,223

 

$1,278,580

 

$71,643

 

5.6 %

 

(2.6 %)

 

0.2 %

 

8.0 %

United States

 

$892,859

 

$820,485

 

$72,374

 

8.8 %

 

 

0.1 %

 

8.7 %

International

 

$457,364

 

$458,095

 

($731)

 

(0.2 %)

 

(7.3 %)

 

0.5 %

 

6.6 %

                             

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,
2022

 

December 31,
2021

         

Assets:

 

Current Assets:

       
   

Cash and cash equivalents

 

$114,362

 

$144,454

   

Accounts receivable, net

 

412,898

 

368,348

   

Inventories

 

332,565

 

269,030

   

Other current assets

 

183,000

 

173,823

   

Total current assets

 

1,042,825

 

955,655

   

Property and equipment, net

 

594,224

 

587,667

   

Other long-term assets, net

 

970,136

 

893,881

   

Total assets

 

$2,607,185

 

$2,437,203

Liabilities and Stockholders’

           

Equity:

 

Current Liabilities:

       
   

Accounts payable

 

$127,262

 

$116,140

   

Accrued liabilities

 

387,510

 

458,909

   

Line of credit

 

611,000

 

73,500

   

Current portion of long-term debt

 

 

74,996

   

Deferred revenue

 

40,775

 

40,034

   

Total current liabilities

 

1,166,547

 

763,579

   

Long-term debt, net of current portion

 

767,995

 

775,205

   

Other long-term liabilities, net

 

215,635

 

208,427

   

Total long-term liabilities

 

983,630

 

983,632

   

Total stockholders’ equity

 

457,008

 

689,992

   

Total liabilities and stockholders’ equity

 

$2,607,185

 

$2,437,203

IDEXX Laboratories, Inc. and Subsidiaries

Select Balance Sheet Information (Unaudited)

       

June 30,
2022

 

March 31,
2022

 

December 31,
2021

 

September 30,

2021

 

June 30,
2021

Selected Balance Sheet Information:

 

Days sales outstanding1

 

43.2

 

42.0

 

42.4

 

42.7

 

42.2

   

Inventory turns2

 

1.5

 

1.6

 

2.0

 

1.9

 

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, 2022

 

June 30, 2021

         

Operating:

 

Cash Flows from Operating Activities:

       
   

Net income

 

$325,944

 

$406,895

   

Non-cash adjustments to net income

 

61,563

 

79,002

   

Changes in assets and liabilities

 

(206,951)

 

(127,520)

   

Net cash provided by operating activities

 

180,556

 

358,377

Investing:

 

Cash Flows from Investing Activities:

       
   

Purchases of property and equipment

 

(61,924)

 

(42,744)

   

Acquisition of intangible assets, businesses and equity investment

 

(35,000)

 

(156,506)

   

Net cash used by investing activities

 

(96,924)

 

(199,250)

Financing:

 

Cash Flows from Financing Activities:

       
   

Borrowings under revolving credit facilities, net

 

537,500

 

   

Payment of senior debt

 

(75,000)

 

   

Payments for the acquisition-related contingent consideration and holdbacks

 

(2,816)

 

(1,500)

   

Repurchases of common stock

 

(573,060)

 

(320,787)

   

Proceeds from exercises of stock options and employee stock

purchase plans

 

18,379

 

27,371

   

Shares withheld for statutory tax withholding payments on

restricted stock

 

(10,390)

 

(14,952)

   

Net cash used by financing activities

 

(105,387)

 

(309,868)

   

Net effect of changes in exchange rates on cash

 

(8,337)

 

(1,053)

   

Net decrease in cash and cash equivalents

 

(30,092)

 

(151,794)

   

Cash and cash equivalents, beginning of period

 

144,454

 

383,928

   

Cash and cash equivalents, end of period

 

$114,362

 

$232,134

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands except per share data (Unaudited)

       

Six Months Ended

       

June 30, 2022

 

June 30, 2021

         

Free Cash Flow:

 

Net cash provided by operating activities

 

$ 180,556

 

$ 358,377

   

Investing cash flows attributable to purchases of property and equipment

 

(61,924)

 

(42,744)

   

Free cash flow1

 

$ 118,632

 

$ 315,633

             

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, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

         

Shares repurchased in the open market

 

809

 

341

 

1,311

 

618

Shares acquired through employee surrender for statutory tax withholding

 

 

 

21

 

28

Total shares repurchased

 

809

 

341

 

1,332

 

646

                 

Cost of shares repurchased in the open market

 

$ 313,455

 

$ 188,409

 

$ 576,238

 

$ 327,622

Cost of shares for employee surrenders

 

52

 

3

 

10,390

 

14,986

Total cost of shares

 

$ 313,507

 

$ 188,412

 

$ 586,628

 

$ 342,608

                 

Average cost per share – open market repurchases

 

$ 387.78

 

$ 552.08

 

$ 439.63

 

$ 529.45

Average cost per share – employee surrenders

 

$ 369.63

 

$ 550.59

 

$ 504.60

 

$ 544.08

Average cost per share – total

 

$ 387.78

 

$ 552.08

 

$ 440.63

 

$ 530.07

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

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SOURCE IDEXX Laboratories, Inc.

Company Codes: NASDAQ-NMS:IDXX

Source