IDXX IDEXX Laboratories Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K  

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): October 31, 2024

 

 

 

IDEXX LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

  

Delaware		000-19271		01-0393723
(State or other jurisdiction		(Commission File Number)		(IRS Employer Identification No.)
of incorporation)

 

One IDEXX Drive, Westbrook, Maine				04092
(Address of principal executive offices)				(ZIP Code)

 

207.556.0300

(Registrant's telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.10 par value per share		IDXX		NASDAQ Global Select Market

  

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On October 31, 2024, IDEXX Laboratories, Inc. (the “Company”) announced its financial results for the quarter ended September 30, 2024. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

In accordance with general instructions to Form 8-K, the information in this Form 8-K and the Exhibit 99.1 attached hereto is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)      Exhibits

 

    The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed.

 

Exhibit No.

Description of Exhibit

 

99.1

Press Release entitled “IDEXX Laboratories Announces Third Quarter Results,” issued by the Company on October 31, 2024.

 

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

		IDEXX LABORATORIES, INC.
Date: October 31, 2024	By:	/s/ Brian P. McKeon
		Brian P. McKeon
		Executive Vice President, Chief Financial Officer and Treasurer

 

 

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

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

 

IDEXX Laboratories Announces Third Quarter Results

 

▪

Achieves third quarter revenue growth of 7% as reported and 6% organic, supported by CAG Diagnostics recurring revenue growth of 7% as reported and organic.

 

▪

Organic revenue growth supported by benefits from IDEXX execution drivers including continued solid new business gains and double-digit year-over-year global premium installed base growth.

 

▪

Delivers EPS of $2.80, an increase of 11% as reported and 12% on a comparable basis, supported by operating margin expansion of 110 basis points as reported and 100 basis points on a comparable basis.

 

▪

Adjusts 2024 revenue guidance to $3,865 million - $3,890 million, a reduction of $38 million or ~1% at midpoint, incorporating expectations for near-term negative impacts on growth related to macro and sector conditions constraining pet owner visits and demand at U.S. veterinary clinics.

 

▪

Updates 2024 revenue growth guidance to 5.5% - 6.2% as reported and 5.3% - 6.0% organic, driven by projected CAG Diagnostics recurring revenue growth of 5.6% - 6.2% as reported and 5.8% - 6.4% organic.

 

▪

Narrows 2024 EPS outlook to $10.37 - $10.53, maintaining consistent EPS midpoint compared to prior guidance, supported by consistent outlook for solid operating margin performance and benefits from lower projected interest expense and effective tax rate.

 

WESTBROOK, Maine, October 31, 2024— IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced third quarter results.

 

Third Quarter Results

 

The Company reports revenues of $976 million for the third quarter of 2024, an increase of 7% as reported and 6% organic, driven by Companion Animal Group ("CAG") growth of 7% as reported and 6% organic, and Water revenue growth of 13% as reported and organic. CAG Diagnostics recurring revenue growth of 7% as reported and organic was supported by sustained double-digit growth in international regions and global benefits from IDEXX execution drivers including 10% annual growth in IDEXX's global premium instrument installed base. IDEXX veterinary software, services and diagnostic imaging systems revenue increased 11% as reported and 6% organic, reflecting high recurring revenue growth and continued momentum in cloud-based software placements.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 2 of 16

 

Third quarter earnings per diluted share (“EPS”) were $2.80, an increase of 11% as reported and 12% on a comparable basis, supported by operating margin expansion of 110 basis points as reported and 100 basis points on a comparable basis.

 

“IDEXX teams continued their strong execution in the third quarter as demonstrated by solid net customer gains, continued growth in our premium IDEXX VetLab^® instrument installed base, and nearly 700 pre-orders of IDEXX inVue Dx^™ Cellular Analyzer, which will begin shipping later in the fourth quarter,” said Jay Mazelsky, President and Chief Executive Officer. "Customers especially value IDEXX technology solutions like inVue Dx that provide meaningful clinical insights while giving time back to busy practice staff.”

 

Third Quarter Performance Highlights

 

Companion Animal Group

 

The Companion Animal Group generated revenue growth of 7% as reported and 6% organic for the quarter. Solid growth was supported by CAG Diagnostics recurring revenue growth of 7% as reported and organic. CAG Diagnostics recurring revenue growth was supported by 10% reported and organic gains in international regions. U.S. CAG Diagnostics recurring revenue growth of 5% as reported and organic continued to outpace sector growth levels in the third quarter.

 

Additional U.S. companion animal practice key metrics are available in the Q3 2024 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

 

Solid global growth was achieved across IDEXX's testing modalities.

 

▪

IDEXX VetLab® consumables generated 11% reported and organic revenue growth, with double-digit gains in the U.S. and International regions supported by strong installed base growth across premium instrument platforms and benefits from equivalent days effects.

 

▪

Reference laboratory diagnostic and consulting services generated 3% reported and 2% organic revenue growth, driven by solid International growth.

 

▪

Rapid assay products revenues grew 6% as reported and organic, driven by solid gains in the U.S., including benefits from higher net price realization and equivalent days effects.

 

Veterinary software, services and diagnostic imaging systems revenues grew 11% as reported and 6% organically, driven by continued high levels of organic growth in software and diagnostic imaging recurring revenues and benefits from a recent software and data platform acquisition.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 3 of 16

 

Water

 

Water revenues grew 13% as reported and organic for the quarter, reflecting double-digit gains in the U.S. and continued solid growth in Europe.

 

Livestock, Poultry and Dairy (“LPD”)

 

LPD revenues declined 3% as reported and 2% organic for the quarter. Solid gains in the U.S. and for poultry tests globally were offset by lower Asia Pacific revenues, including impacts from reduced swine testing and herd health screening levels.

 

Gross Profit and Operating Profit

 

Gross profits increased 9% as reported and on a comparable basis. Gross margin of 61.1% increased 120 basis points as reported and 140 basis points on a comparable basis supported by benefits from business mix, led by high growth in IDEXX VetLab consumable revenues and veterinary software, services, and diagnostic imaging recurring revenues and lower instrument costs.

 

Operating margin was 31.2% for the quarter, higher than the prior year by 110 basis points as reported and 100 basis points on a comparable basis. Operating margin results reflect 7% operating expense growth as reported and 8% on a comparable basis. Operating expense growth was driven by higher sales and marketing expense and higher R&D spend related to advancing the Company's growth and innovation agenda.

 

2024 Growth and Financial Performance Outlook

 

The Company is updating its full year revenue growth guidance range to $3,865 million - $3,890 million, or reported growth of 5.5% - 6.2%, a reduction of $38 million at midpoint. This reflects an adjustment of ~1.5% at midpoint to full year estimates for organic revenue growth, which is now projected at 5.3% - 6.0%, reflecting recent trends in U.S. clinical visit and demand levels. The updated guidance range includes ~$15 million of favorable impact from more recent foreign exchange estimates.

 

The Company maintained a consistent full year reported operating margin outlook of 28.7% - 29.0%, including ~160 basis points of impact related to the previously reported discrete litigation expense accrual. At midpoint, projected full year comparable operating profit margin expansion of 70 - 100 basis points includes a ~40 basis point negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.

 

The Company narrowed its EPS outlook range to $10.37 - $10.53, maintaining a consistent midpoint. 2024 EPS results include a $0.56 negative impact from a discrete litigation expense accrual recorded in the second quarter. Negative EPS impacts related to adjustments to the organic revenue outlook were offset by $0.02 in favorable adjustments to foreign exchange estimates and favorable refinements to interest expense and effective tax rate estimates. The updated EPS growth outlook is 3% - 5% as reported and 10% - 11% on comparable basis, including a ~2% negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 4 of 16

 

The following table provides the Company's updated outlook for annual key financial metrics in 2024 with a comparison to the prior outlook:

 

Amounts in millions except per share data and percentages

 

2024 Growth and Financial Performance Outlook 

 

		Updated		Prior
Revenue		$3,865   -  $3,890		$3,885   - $3,945
Reported growth		5.5%   -  6.2%		6.2%   -  7.8%
Organic growth		5.3%   -  6.0%		6.2%   -  7.8%
CAG Diagnostics Recurring Revenue Growth
Reported growth		5.6%  -  6.2%		5.7%   -  7.3%
Organic growth		5.8%  -  6.4%		6.2%   -  7.8%
Operating Margin		28.7%  -  29.0%		28.7%   -  29.0%
Operating margin expansion		(130 bps)  -  (100 bps)		(130 bps)  -  (100 bps)
Negative impact of ongoing litigation matter		~160 bps		~160 bps
Comparable margin expansion		70 bps   -  100 bps		30 bps   -  60 bps
Negative impact of 2023 customer contract resolution payment		~ 40 bps		~ 40 bps
EPS		$ 10.37   -  $10.53		$10.31     - $10.59
Reported growth		3%   -  5%		2%   -   5%
Negative impact of ongoing litigation matter		~6%		~6%
Comparable growth		10% -  11%		9%   -   12%
Negative impact of 2023 customer contract resolution payment		~2%		~2%
Other Key Metrics
Net interest expense		~$19		~$20
Share-based compensation tax benefit		~$9		~$10
Share-based compensation tax rate benefit		~1%		~1%
Effective tax rate		~20.7%		~21.5%
Share-based compensation EPS impact		~$0.11		~$0.12
Reduction in average shares outstanding		0.5%  -  1%		0.5%   -   1%
Operating Cash Flow (% of Net Income)		110%   -  115%		110% - 115%
Free Cash Flow (% of Net Income)		90%  -  95%		90% - 95%
Capital Expenditures		~ $160		~ $180

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 5 of 16

 

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 2024.

 

Estimated Foreign Currency Exchange Rate Impacts		2024
Revenue growth rate impact		(~ 20 bps)
CAG Diagnostics recurring revenue growth rate impact		(~ 20 bps)
Operating margin growth impact		~ 0 bps
EPS impact		(~ $0.03)
EPS growth impact		~ 0%

 

Go-Forward Foreign Currency Exchange Rate Assumptions		2024
In U.S. dollars
euro		$	1.08
British pound		$	1.29
Canadian dollar		$	0.72
Australian dollar		$	0.66
Relative to the U.S. dollar
Japanese yen		¥	152
Chinese renminbi		¥	7.18
Brazilian real			R$5.66

 

Conference Call and Webcast Information

 

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its third quarter 2024 results and management’s outlook. 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. The live call also will be accessible by telephone. To listen to the live conference call, please dial 1-800-289-0462 or 1-323-794-2442 and reference passcode 205740.

 

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 approximately 11,000 people and offers solutions and products to customers in more than 175 countries and territories. For more information about IDEXX, visit www.idexx.com.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 6 of 16

 

Note Regarding Forward-Looking Statements

 

This earnings release and the statements to be made in the accompanying earnings conference call contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the Company’s business prospects and estimates of the Company’s financial results for future periods. Forward-looking statements are included above under "Third Quarter Results", "2024 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 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; projected effective tax rates (including benefit from an expected release of a non-recurring tax reserve), reduction of average shares outstanding and net interest expense; U.S. clinical visit trends, including macro and sector trends affecting pet owner visits and demand at U.S. veterinary clinics; net price realization improvement; anticipated benefits from corporate account contract expansions; projected impact of recent severe weather events; software placement and user-base growth; and future product and service launches and expansions. 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, 2023 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarter ended March 31, 2024, June 30, 2024, and September 30, 2024, 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 third quarter 2024 results as follows: decreased gross profit growth by 0.2%, decreased gross margin growth by 20 basis points, decreased operating expense growth by 0.8%, increased operating profit growth by 0.4%, increased operating profit margin growth by 10 basis points, and increased EPS growth by 0.4%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three and nine months ended September 30, 2024 and refer to the 2024 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2024 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 represents the percent change in revenue, as compared to the same period for the prior year, net of 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 and nine months ended September 30, 2024. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Please refer to the 2024 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2024 organic revenue growth for the Company and CAG Diagnostics recurring revenue growth. 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 benefit projected full year 2024 revenue growth by 0.4% and have no impact on CAG Diagnostics recurring revenue growth.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 7 of 16

 

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				Nine Months Ended								Year-over-Year
		September 30,				September 30,								September 30,				September 30,
Dollar amounts in thousands		2024				2023				Change				2024				2023				Change
Gross Profit (as reported)		$	596,038			$	547,982				9	%		$	1,808,267			$	1,663,803				9	%
Gross margin			61.1	%			59.9	%			120 bps				61.4	%			60.3	%			110 bps
Less: comparability adjustments
Change from currency			(1,081	)			—								(4,201	)			—
Comparable gross profit growth		$	597,119			$	547,982				9	%		$	1,812,468			$	1,663,803				9	%
Comparable gross margin and gross margin gain (or growth)			61.2	%			59.9	%			140 bps				61.5	%			60.3	%			120 bps
Operating expenses (as reported)		$	292,146			$	272,699				7	%		$	941,616			$	811,977				16	%
Less: comparability adjustments
Change from currency			(2,286	)			—								(2,591	)			—
Ongoing litigation matter			—				—								61,500				—
Comparable operating expense growth		$	294,432			$	272,699				8	%		$	882,707			$	811,977				9	%
Income from operations (as reported)		$	303,892			$	275,283				10	%		$	866,651			$	851,826				2	%
Operating margin			31.2	%			30.1	%			110 bps				29.4	%			30.9	%			(140) bps
Less: comparability adjustments
Change from currency			1,205				—								(1,610	)			—
Ongoing litigation matter			—				—								(61,500	)			—
Comparable operating profit growth		$	302,687			$	275,283				10	%		$	929,761			$	851,826				9	%
Comparable operating margin and operating margin gain (or growth)			31.0	%			30.1	%			100 bps				31.5	%			30.9	%			70 bps

 

Amounts presented may not recalculate due to rounding.

 

Projected 2024 comparable operating margin expansion outlined in the 2024 Growth and Financial Performance Outlook section of this earnings release reflects: (i) projected full year 2024 reported operating margin is adjusted for impacts of the discrete expense accrual related to an ongoing litigation matter in the second quarter of 2024; and (ii) projected full year 2024 reported operating margin includes an immaterial impact from year-over-year foreign currency exchange rate changes at noted exchange rates.

 

These impacts described above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2024 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.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 8 of 16

 

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				Nine Months Ended								Year-over-Year
		September 30,				September 30,								September 30,				September 30,
		2024				2023				Growth				2024				2023				Growth
Earnings per share (diluted)		$	2.80			$	2.53				11	%		$	8.05			$	7.75				4	%
Less: comparability adjustments
Share-based compensation activity			—				0.04								0.11				0.14
Ongoing litigation matter			—				—								(0.56	)			—
Change from currency			0.01				—								(0.01	)			—
Comparable EPS growth			2.79				2.49				12	%			8.51				7.61				12	%

 

Amounts presented may not recalculate due to rounding.

 

Projected 2024 comparable EPS growth outlined in the 2024 Growth and Financial Performance Outlook section of this earnings release reflects adjustments to projected full year 2024 reported EPS for: (i) estimated positive share-based compensation activity of ~$0.11; (ii) a negative $0.56 impact from a discrete expense accrual related to an ongoing litigation matter in the second quarter of 2024; and (iii) estimated negative year-over-year foreign currency exchange rate change impact of ~$0.03 at noted exchange rates.

 

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2024 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 and nine months ended September 30, 2024 and 2023. To estimate projected 2024 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $160 million. Free cash flow conversion, or the net income to free cash flow ratio, is a non-GAAP financial measure that is defined as free cash flow, with respect to a measurement period, divided by net income for the same period. To calculate trailing twelve-month net income to free cash flow ratio for the twelve months ended September 30, 2024, we have deducted purchases of property and equipment of approximately $124 million from net cash provided from operating activities of approximately $917 million, divided by net income of approximately $866 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, 2023 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 9 of 16

 

Notes and Definitions

 

Discrete litigation expense accrual - During the second quarter of 2024, the Company increased its previously established $27.5 million accrual related to an ongoing litigation matter by $61.5 million.

 

Ongoing litigation matter - The Company is a defendant in an ongoing litigation matter involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. The Company's total accrual of $89.0 million for this matter includes the discrete $61.5 million litigation expense accrual recorded in the second quarter of 2024 and represents our best estimate of the amount of the probable loss. The actual loss associated with this matter may be higher or lower than the accrued amount depending on the ultimate outcome of this matter. For further information, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 10 of 16

 

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations

Amounts in thousands except per share data (Unaudited)

 

				Three Months Ended								Nine Months Ended
				September 30,				September 30,				September 30,				September 30,
				2024				2023				2024				2023
Revenue:		Revenue		$	975,543			$	915,527			$	2,943,216			$	2,759,352
Expenses and Income:		Cost of revenue			379,505				367,545				1,134,949				1,095,549
		Gross profit			596,038				547,982				1,808,267				1,663,803
		Sales and marketing			146,281				135,698				438,399				424,034
		General and administrative			91,887				89,034				341,154				248,804
		Research and development			53,978				47,967				162,063				139,139
		Income from operations			303,892				275,283				866,651				851,826
		Interest expense, net			(4,983	)			(7,392	)			(13,207	)			(30,318	)
		Income before provision for income taxes			298,909				267,891				853,444				821,508
		Provision for income taxes			66,068				55,660				181,726				170,987
Net Income:		Net income attributable to stockholders		$	232,841			$	212,231			$	671,718			$	650,521
		Earnings per share: Basic		$	2.83			$	2.55			$	8.12			$	7.83
		Earnings per share: Diluted		$	2.80			$	2.53			$	8.05			$	7.75
		Shares outstanding: Basic			82,304				83,097				82,675				83,058
		Shares outstanding: Diluted			83,056				83,993				83,478				83,990

 

IDEXX Laboratories, Inc. and Subsidiaries

Selected Operating Information (Unaudited)

 

				Three Months Ended								Nine Months Ended
				September 30,				September 30,				September 30,				September 30,
				2024				2023				2024				2023
Operating Ratios		Gross profit			61.1	%			59.9	%			61.4	%			60.3	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense			24.4	%			24.5	%			26.5	%			24.4	%
		Research and development expense			5.5	%			5.2	%			5.5	%			5.0	%
		Income from operations1			31.2	%			30.1	%			29.4	%			30.9	%

 

¹Amounts presented may not recalculate due to rounding.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 11 of 16

 

IDEXX Laboratories, Inc. and Subsidiaries

Segment Information

Amounts in thousands (Unaudited)

 

				Three Months Ended
				September 30, 2024				Percent of Revenue				September 30, 2023				Percent of Revenue
Revenue:		CAG		$	891,990							$	837,160
		Water			50,162								44,450
		LPD			28,992								29,747
		Other			4,399								4,170
		Total		$	975,543							$	915,527
Gross Profit:		CAG		$	544,461				61.0	%		$	499,291				59.6	%
		Water			34,755				69.3	%			31,034				69.8	%
		LPD			14,627				50.5	%			15,836				53.2	%
		Other			2,195				49.9	%			1,821				43.7	%
		Total		$	596,038				61.1	%		$	547,982				59.9	%
Income from Operations:		CAG		$	277,082				31.1	%		$	253,358				30.3	%
		Water			23,608				47.1	%			20,328				45.7	%
		LPD			889				3.1	%			2,405				8.1	%
		Other			2,313				52.6	%			(808	)			(19.4	)%
		Total		$	303,892				31.2	%		$	275,283				30.1	%

 

				Nine Months Ended
				September 30, 2024				Percent of Revenue				September 30, 2023				Percent of Revenue
Revenue:		CAG		$	2,703,573							$	2,531,091
		Water			139,959								126,362
		LPD			87,503								88,866
		Other			12,181								13,033
		Total		$	2,943,216							$	2,759,352
Gross Profit:		CAG		$	1,659,768				61.4	%		$	1,523,757				60.2	%
		Water			97,326				69.5	%			88,621				70.1	%
		LPD			45,419				51.9	%			46,975				52.9	%
		Other			5,754				47.2	%			4,450				34.1	%
		Total		$	1,808,267				61.4	%		$	1,663,803				60.3	%
Income from Operations:		CAG		$	798,328				29.5	%		$	790,617				31.2	%
		Water			63,542				45.4	%			57,119				45.2	%
		LPD			3,254				3.7	%			5,664				6.4	%
		Other			1,527				12.5	%			(1,574	)			(12.1	)%
		Total		$	866,651				29.4	%		$	851,826				30.9	%

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 12 of 16

 

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												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
Net Revenue		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG		$	891,990			$	837,160			$	54,830				6.5	%			0.1	%			0.4	%			6.0	%
United States			604,170				573,830				30,340				5.3	%			—				0.6	%			4.6	%
International			287,820				263,330				24,490				9.3	%			0.3	%			—				9.0	%
Water			50,162				44,450				5,712				12.9	%			(0.3	)%			—				13.2	%
United States			26,671				22,804				3,867				17.0	%			—				—				17.0	%
International			23,491				21,646				1,845				8.5	%			(0.6	)%			—				9.2	%
LPD			28,992				29,747				(755	)			(2.5	)%			(0.2	)%			—				(2.4	)%
United States			5,561				5,040				521				10.3	%			—				—				10.3	%
International			23,431				24,707				(1,276	)			(5.2	)%			(0.2	)%			—				(5.0	)%
Other			4,399				4,170				229				5.5	%			—				—				5.5	%
Total Company		$	975,543			$	915,527			$	60,016				6.6	%			0.1	%			0.4	%			6.1	%
United States			638,058				603,046				35,012				5.8	%			—				0.6	%			5.2	%
International			337,485				312,481				25,004				8.0	%			0.2	%			—				7.8	%

 

		Three Months Ended												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
Net CAG Revenue		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG Diagnostics recurring revenue:		$	783,443			$	733,958			$	49,485				6.7	%			0.1	%			—				6.7	%
IDEXX VetLab consumables			329,128				296,042				33,086				11.2	%			0.1	%			—				11.1	%
Rapid assay products			92,774				87,562				5,212				6.0	%			(0.2	)%			—				6.2	%
Reference laboratory diagnostic and consulting services			328,383				320,294				8,089				2.5	%			0.1	%			—				2.4	%
CAG Diagnostics services and accessories			33,158				30,060				3,098				10.3	%			0.1	%			—				10.2	%
CAG Diagnostics capital – instruments			29,528				32,254				(2,726	)			(8.4	)%			0.3	%			—				(8.7	)%
Veterinary software, services and diagnostic imaging systems:			79,019				70,948				8,071				11.4	%			0.1	%			5.2	%			6.1	%
Recurring revenue			64,644				54,607				10,037				18.4	%			0.1	%			6.8	%			11.5	%
Systems and hardware			14,375				16,341				(1,966	)			(12.0	)%			—				—				(12.0	)%
Net CAG revenue		$	891,990			$	837,160			$	54,830				6.5	%			0.1	%			0.4	%			6.0	%

 

		Three Months Ended												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG Diagnostics recurring revenue:		$	783,443			$	733,958			$	49,485				6.7	%			0.1	%			—				6.7	%
United States			522,530				497,109				25,421				5.1	%			—				—				5.1	%
International			260,913				236,849				24,064				10.2	%			0.3	%			—				9.9	%

 

¹See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 13 of 16

 

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)

 

		Nine Months Ended												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
Net Revenue		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG		$	2,703,573			$	2,531,091			$	172,482				6.8	%			(0.2	)%			0.4	%			6.7	%
United States			1,835,049				1,732,752				102,297				5.9	%			—				0.5	%			5.4	%
International			868,524				798,339				70,185				8.8	%			(0.6	)%			—				9.4	%
Water			139,959				126,362				13,597				10.8	%			(0.4	)%			—				11.1	%
United States			73,331				63,932				9,399				14.7	%			—				—				14.7	%
International			66,628				62,430				4,198				6.7	%			(0.7	)%			—				7.5	%
LPD			87,503				88,866				(1,363	)			(1.5	)%			(0.6	)%			—				(0.9	)%
United States			15,840				14,005				1,835				13.1	%			—				—				13.1	%
International			71,663				74,861				(3,198	)			(4.3	)%			(0.7	)%			—				(3.6	)%
Other			12,181				13,033				(852	)			(6.5	)%			—				—				(6.5	)%
Total Company		$	2,943,216			$	2,759,352			$	183,864				6.7	%			(0.2	)%			0.3	%			6.6	%
United States			1,929,213				1,815,066				114,147				6.3	%			—				0.5	%			5.8	%
International			1,014,003				944,286				69,717				7.4	%			(0.6	)%			—				8.0	%

 

		Nine Months Ended												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
Net CAG Revenue		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG Diagnostics recurring revenue:		$	2,372,041			$	2,223,336			$	148,705				6.7	%			(0.2	)%			—				6.9	%
IDEXX VetLab consumables			971,405				890,891				80,514				9.0	%			(0.3	)%			—				9.3	%
Rapid assay products			282,379				266,934				15,445				5.8	%			(0.2	)%			—				6.0	%
Reference laboratory diagnostic and consulting services			1,020,094				973,580				46,514				4.8	%			(0.1	)%			—				4.9	%
CAG Diagnostics services and accessories			98,163				91,931				6,232				6.8	%			(0.4	)%			—				7.2	%
CAG Diagnostics capital – instruments			98,912				99,452				(540	)			(0.5	)%			(0.4	)%			—				(0.1	)%
Veterinary software, services and diagnostic imaging systems:			232,620				208,303				24,317				11.7	%			—				4.4	%			7.3	%
Recurring revenue			187,461				160,039				27,422				17.1	%			—				5.7	%			11.5	%
Systems and hardware			45,159				48,264				(3,105	)			(6.4	)%			(0.1	)%			—				(6.4	)%
Net CAG revenue		$	2,703,573			$	2,531,091			$	172,482				6.8	%			(0.2	)%			0.4	%			6.7	%

 

		Nine Months Ended												Reported				Percentage				Percentage				Organic
		September 30,				September 30,				Dollar				Revenue				Change from				Change from				Revenue
		2024				2023				Change				Growth1				Currency				Acquisitions				Growth1
CAG Diagnostics recurring revenue:		$	2,372,041			$	2,223,336			$	148,705				6.7	%			(0.2	)%			—				6.9	%
United States			1,590,037				1,505,837				84,200				5.6	%			—				—				5.6	%
International			782,004				717,499				64,505				9.0	%			(0.6	)%			—				9.6	%

 

¹See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 14 of 16

 

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

Amounts in thousands (Unaudited)

 

				September 30, 2024				December 31, 2023
Assets:		Current Assets:
		Cash and cash equivalents		$	308,636			$	453,932
		Accounts receivable, net			511,250				457,445
		Inventories			389,804				380,282
		Other current assets			224,054				203,595
		Total current assets			1,433,744				1,495,254
		Property and equipment, net			717,745				702,177
		Other long-term assets, net			1,199,277				1,062,494
		Total assets		$	3,350,766			$	3,259,925
Liabilities and Stockholders' Equity:		Current Liabilities:
		Accounts payable		$	110,603			$	110,643
		Accrued liabilities			511,047				478,712
		Line of credit			250,000				250,000
		Current portion of long-term debt			99,140				74,997
		Deferred revenue			38,434				37,195
		Total current liabilities			1,009,224				951,547
		Long-term debt, net of current portion			524,758				622,883
		Other long-term liabilities, net			198,730				200,965
		Total long-term liabilities			723,488				823,848
		Total stockholders' equity			1,618,054				1,484,530
		Total liabilities and stockholders' equity		$	3,350,766			$	3,259,925

 

IDEXX Laboratories, Inc. and Subsidiaries

Selected Balance Sheet Information (Unaudited)

 

				September 30, 2024				June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023
Selected Balance Sheet Information:		Days sales outstanding1			48.9				47.3				45.7				46.1				45.6
		Inventory turns2			1.3				1.4				1.3				1.3				1.3

 

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 are calculated as the ratio of four times our inventory-related cost of product revenue for the quarter, divided by the average inventory balances at the beginning and end of each quarter.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 15 of 16

 

IDEXX Laboratories, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

Amounts in thousands (Unaudited)

 

				Nine Months Ended
				September 30, 2024				September 30, 2023
Operating:		Cash Flows from Operating Activities:
		Net income		$	671,718			$	650,521
		Non-cash adjustments to net income			119,761				120,390
		Changes in assets and liabilities			(124,503	)			(114,252	)
		Net cash provided by operating activities			666,976				656,659
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment			(91,667	)			(101,075	)
		Acquisition of a business			(76,694	)			—
		Proceeds from net investment hedges			1,142				6,256
		Net cash used by investing activities			(167,219	)			(94,819	)
Financing:		Cash Flows from Financing Activities:
		Repayments under credit facility, net			—				(329,000	)
		Payments of senior notes			(75,000	)			—
		Payments for the acquisition-related holdbacks			—				(1,879	)
		Repurchases of common stock			(591,042	)			(35,070	)
		Proceeds from exercises of stock options and employee stock purchase plans			31,237				35,704
		Shares withheld for statutory tax withholding payments on restricted stock			(10,486	)			(9,907	)
		Net cash used by financing activities			(645,291	)			(340,152	)
		Net effect of changes in exchange rates on cash			238				(2,538	)
		Net (decrease) increase in cash and cash equivalents			(145,296	)			219,150
		Cash and cash equivalents, beginning of period			453,932				112,546
		Cash and cash equivalents, end of period		$	308,636			$	331,696

 

IDEXX Laboratories, Inc. and Subsidiaries

Free Cash Flow

Amounts in thousands (Unaudited)

 

				Three Months Ended								Nine Months Ended
				September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Free Cash Flow:		Net cash provided by operating activities		$	220,079			$	272,433			$	666,976			$	656,659
		Investing cash flows attributable to purchases of property and equipment			(28,089	)			(34,094	)			(91,667	)			(101,075	)
		Free cash flow1		$	191,990			$	238,339			$	575,309			$	555,584

 

¹See Statements Regarding Non-GAAP Financial Measures, above.

 

 

IDEXX Announces Third Quarter Results

October 31, 2024

Page 16 of 16

 

IDEXX Laboratories, Inc. and Subsidiaries

Common Stock Repurchases

Amounts in thousands except per share data (Unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Shares repurchased in the open market			459				65				1,177				65
Shares acquired through employee surrender for statutory tax withholding			1				1				19				20
Total shares repurchased			460				66				1,196				85
Cost of shares repurchased in the open market		$	224,945			$	35,070			$	600,216			$	35,070
Cost of shares for employee surrenders			218				231				10,486				9,907
Total cost of shares		$	225,163			$	35,301			$	610,702			$	44,977
Average cost per share – open market repurchases		$	490.23			$	536.03			$	509.81			$	536.03
Average cost per share – employee surrenders		$	465.27			$	506.74			$	557.64			$	503.43
Average cost per share – total		$	490.20			$	535.83			$	510.57			$	528.49

 

 

v3.24.3

Cover	Oct. 31, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 31, 2024
Entity File Number	000-19271
Entity Registrant Name	IDEXX LABORATORIES INC /DE
Entity Central Index Key	0000874716
Entity Tax Identification Number	01-0393723
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	One IDEXX Drive
Entity Address, City or Town	Westbrook
Entity Address, State or Province	ME
Entity Address, Postal Zip Code	04092
City Area Code	207
Local Phone Number	556.0300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.10 par value per share
Trading Symbol	IDXX
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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