IDEXX Laboratories Announces Fourth Quarter and Full Year 2015 Results

Friday, January 29, 2016

WESTBROOK, Maine, Jan. 29, 2016 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX) today reported revenues for the fourth quarter of 2015 of $400 million, an increase of 14%1 compared to the prior year period. Normalized organic revenue growth2 for the quarter was over 11%, supported by strong growth in the Companion Animal Group ("CAG") segment. Revenue for the full year of $1,602 million increased 8% on a reported basis, supported by 11% normalized organic revenue growth.

Earnings per diluted share ("EPS") for the quarter was $0.48. Adjusted EPS growth3 was 2% compared to the prior year period, while absorbing a negative $0.03 per share impact related to net changes in foreign exchange, resulting in constant currency4 Adjusted EPS growth of 9%. The quarter benefited from recording the full year impact of the decision to make the federal research and development ("R&D") tax credit permanent, which had a $0.03 favorable impact on EPS, consistent with the prior year quarter. 

"We were very pleased with the Company's performance in the fourth quarter, supported by record instrument placements in both North American and international markets. Total premium instrument placements were up 35% over a very strong prior year period, with Catalyst placements up 61% compared to last year. We achieved 694 Catalyst placements in North America and 868 in international markets, leveraging our expanded commercial presence globally.  In North America, 395 units or 57% of our Catalyst placements were to new and competitive accounts, up 37% over Q4 2014, a testament to the increasing effectiveness of our all-direct sales force. For the full year, we placed 9,771 chemistry and hematology instruments worldwide, substantially higher than any year in our history. SediVue Dx™, our novel urine sediment analyzer for use in-clinic, and the recent regulatory approval of Catalyst One® in Japan, will add to our already substantial momentum in placing instruments as we move through 2016," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer.

"SediVue is a breakthrough innovation that helps improve accuracy and streamlines workflows of a historically challenging manual process involving microscopic interpretation. SediVue presents veterinarians with a huge opportunity to enhance the quality of patient care while simultaneously helping to drive practice revenue growth and staff efficiency. Working in concert with chemistry and hematology, urinalysis forms the essential third pillar of the minimum diagnostic database in pet care," continued Ayers.

"We also continue to be pleased by the enthusiastic response of our customers to IDEXX SDMA™, our unique test for kidney disease, a common condition in pets. IDEXX SDMA has now been automatically added to all chemistry panels for customers in all of our major reference laboratory markets globally. This novel kidney parameter is being well received globally by our customers, helped in part by the inclusion of SDMA in the International Renal Interest Society (IRIS) guidelines. IRIS is led by a board of 15 world-renowned independent veterinarians from 10 different countries, so the inclusion of SDMA as an important marker for renal function is a worldwide endorsement."

"Our solid finish to 2015 is positioning us to deliver continued strong constant currency4 revenue and profit gains in 2016."

Fourth Quarter Financial Performance Highlights

Fourth quarter revenue increased 14% to $400 million. Normalized organic revenue growth was 11% and benefited in part from incremental margin capture associated with the move to an all-direct sales model for US CAG Diagnostics.

  • Companion Animal Group normalized organic revenue growth was 13% for the fourth quarter, driven by 12.5% normalized growth in recurring CAG Diagnostics revenues and a 28% increase in organic revenue growth2 in CAG Diagnostics instruments. CAG Diagnostics recurring revenue gains were driven by 16% normalized organic growth in IDEXX VetLab® consumable revenues, reflecting solid volume gains and benefits from margin capture, and 11% organic growth in reference laboratory diagnostic and consulting services revenues, supported by continued strong double-digit reference lab revenue gains in the US. Rapid assay revenues achieved 9% normalized organic growth, supported by higher 4Dx product volumes and benefits from margin capture.
  • Livestock, Poultry and Dairy ("LPD") organic revenue increased 2% for the fourth quarter reflecting solid growth in new products worldwide and strong poultry and swine sales in emerging markets, offset partially by lower livestock services revenue in Australia and lower Europe bovine revenue.
  • Water's organic revenue growth was 10% in the fourth quarter, due to worldwide increases in core coliform and E.coli products, as well as benefits from the launch of our new Quanti-Tray® Sealer PLUS product.

The following table presents adjusted revenue, gross profit, gross margin, operating profit, operating margin, EPS, and EPS growth, which are non-GAAP financial measures that have been adjusted for the following items in the prior year periods:

Amounts in millions except per share data and percentages

 



Revenue

Gross

Profit

Gross

Margin

Operating

Profit

Operating Margin

 

EPS

EPS Growth

Reported Fourth Quarter 2015

$399.7

$217.7

54.5%

$66.9

16.7%

$0.48

77.8%

















No adjustments required















 

Adjusted Fourth Quarter 2015

$399.7

 

$217.7

 

54.5%

$66.9

16.7%

$0.483

2.1%3

















Reported Fourth Quarter 2014

$352.0

$182.2

51.8%

$34.8

9.9%

$0.27



















Impact of distributor inventory drawdown

25.1

20.8



20.8



0.14



Non-recurring expenses

associated with transition to all-

direct sales strategy







5.2



0.03



Expense ramp-up in advance of

transition to new sales strategy







4.6



0.03



 

Adjusted Fourth Quarter 2014

$377.1

$203.0

53.8%

$65.4

17.3%

$0.473



















 

Gross Profit increased 20% compared to the prior year period.  Gross Margin adjusted for the impact of the prior year US channel inventory reductions increased from 53.8% to 54.5%, reflecting lower manufacturing costs and benefits from moderate price gains, which offset mix impacts from strong instrument sales.

Operating Margin was 16.7% in the fourth quarter, down slightly from prior year period adjusted operating margin of 17.3%.  This change reflects increases in operating expenses compared to the prior year period primarily due to recurring costs associated with the all-direct US CAG Diagnostics sales strategy and other increases in global commercial resources, partly offset by the favorable impact of foreign exchange.

Outlook for 2016

The Company is maintaining its organic revenue growth outlook while updating reported revenue guidance for the strengthening of the US dollar relative to foreign currencies. Despite unfavorable currency impacts, the Company is raising its EPS guidance to reflect the permanent extension of the Federal R&D tax credit and solid operating trends. Excluding foreign currency change impacts, our guidance aligns with constant currency Adjusted EPS growth of 12% to 15%.

 At current foreign exchange rates, we estimate that the effect of the stronger US dollar will adversely impact 2016 reported revenue growth by approximately 2.5%, EPS by an estimated $0.26 per share, and Adjusted EPS growth by 12% compared to rates in effect in 2015. Compared to assumptions used in our prior guidance for 2016 provided during our third quarter earnings call on October 28, 2015, the continued strengthening of the US dollar has the effect of lowering projected revenue by approximately $25 million and EPS by $0.04 per share, net of hedge benefits. These effects are mitigated by benefits from the decision to make the Federal R&D tax credit permanent, which is estimated to have a $0.03 positive impact on EPS, and expected stronger operating performance, which is expected to add $0.02 to EPS.

The Company provides the following updated guidance for 2016:

Amounts in millions except per share data and percentages



Guidance Range

Growth Definition

Year-over-Year

Growth

Revenue 

$1,690 - $1,710

Organic Revenue Growth2

Reported

8% to 9%

6% to 7%

EPS

$2.10 - $2.17

 

Adjusted

Constant Currency Adjusted

Reported

0% to 3%3

12% to 15%4

2% to 6%

Free Cash Flow:          95% - 100% of net income

Capital Expenditures:             $90 million

The guidance above assumes that the value of the US dollar relative to other currencies will reflect the euro at $1.07, the British pound at $1.41, the Canadian dollar at $0.68, the Australian dollar at $0.68 and the Japanese yen at ¥118 to the US dollar for the full year of 2016.

We expect that operating margins for the full year will be 18.0% to 18.5%, or approximately 100 basis points below 2015 adjusted operating margin levels, driven by foreign exchange impacts including comparisons to benefits from 2015 hedge gains. Adjusted for currency impacts and the 2015 software impairment charge, we are targeting operating margin improvement of approximately 50 basis points from 2015 levels.

We expect an effective tax rate of 30% to 30.5%, including projected benefits from the Federal R&D tax credit.  We are projecting a reduction in weighted average shares outstanding of approximately 3.5% to 4.0%, and interest expense, net of interest income, of approximately $32 million reflecting current and projected borrowings. 

Statement Regarding Non-GAAP Financial Measures

The following provides information regarding certain measures used in this earnings release that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to herein 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 are useful for period-over-period comparisons of the performance of the Company's business and to the performance 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. See the notes to this earnings release for information regarding these non-GAAP financial measures and the reconciliations included in the notes and elsewhere in this earnings release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (Eastern) to discuss its fourth quarter results and management's outlook. To participate in the conference call, dial 1-800-230-1092 or 1-612-332-0107 and reference confirmation code 384558. An audio replay will be available through Friday, February 5, 2016 by dialing 1-320-365-3844 and referencing replay code 384558.

The call will also be available via live or archived webcast on the IDEXX Laboratories' website at www.idexx.com and will be available for one year.

 IDEXX Laboratories, Inc. logo.

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency and build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for livestock and poultry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than 6,000 people and offers products to customers in over 175 countries.

1All references to growth and organic growth refer to growth compared to the equivalent prior year period.



2Normalized organic revenue growth and organic revenue growth are non-GAAP financial measures. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Organic revenue growth for the fourth quarter of 2015 excludes the impact of changes in foreign currency exchange rates, which had a 5.7% unfavorable impact on revenue growth, and revenue from business acquisitions, which contributed 0.7% to revenue growth. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three months ended December 31, 2015. Management also believes that reporting normalized organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue growth performance with prior and future periods.  Normalized organic revenue growth excludes the impact of changes in our significant distributors' inventory levels on organic revenue growth.  When selling our products through distributors, changes in distributors' inventory levels can impact our reported sales, and these changes may be affected by many factors, which may not be directly related to underlying end-user demand for our products.  Effective January 1, 2015, we fully transitioned to an all-direct sales strategy in the US, however changes in prior year US distributors' inventory levels can still impact current year reported growth results.  In certain countries internationally, we continue to sell our products through third party distributors.  Although we are unable to obtain data for sales to end users from certain less significant non-US third party distributors, we do not believe the impact of changes in these distributors' inventories had or would have a material impact on our growth rates in the relevant periods.  Reconciliation of organic revenue growth to normalized organic revenue growth for the fourth quarter of 2015 includes the following positive impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 7.5%, US 13.0%, International 0.3%, CAG 9.4%, CAG Diagnostics Recurring 11.5%, VetLab consumables 18.4%, VetLab service and accessories 3.4%, and Rapid Assay 45.4%. Reconciliation of organic revenue growth to normalized organic revenue growth for the full year of 2015 includes the following positive impacts to organic revenue growth from changes in our significant distributors' inventory levels; Total Company 2.0%, US 3.4%, International 0.1%, CAG 2.5%, CAG Diagnostics Recurring 3.0%, VetLab consumables 5.1%, VetLab service and accessories 1.0%, and Rapid Assay 7.6%.



3Adjusted EPS and Adjusted EPS growth are non-GAAP financial measures.  Management believes that reporting Adjusted EPS provides useful information to investors by facilitating easier comparisons of our EPS performance with prior and future periods.  See table above for a reconciliation of fourth quarter 2014 and 2015 EPS adjustments, and the supplementary analysis of results section for a reconciliation of full year 2015 EPS adjustments.



4Constant currency references are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates. Management believes that providing constant currency information provides valuable supplemental information regarding our revenue, operating margin, and EPS performance because it is consistent with how management evaluates our performance and facilitates comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, operating profit and Adjusted EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates.  These estimated currency changes reduced 2015 Adjusted EPS growth by 8%, projected 2016 revenue growth by 2.5%, and projected 2016 Adjusted EPS growth by 12%.  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.



5Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, excluding tax benefits attributable to share-based compensation arrangements, reduced by the Company's investments in fixed assets.  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 fixed assets that are required to operate the business. See the supplementary analysis of results below for our calculation of free cash flow for the years ended December 31, 2015 and 2014.  With respect to this particular forward-looking projected non-GAAP financial measure, the Company is unable to provide a quantitative reconciliation as the inputs to the measurement are difficult to predict and estimate and are primarily dependent on future events.

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 "Financial Outlook for 2016" and elsewhere and can be identified by the use of words such as "expects," "may," "anticipates," "intends," "would," "will," "plans," "believes," "estimates," "should," and similar words and expressions. Our forward-looking statements include statements relating to our revenue growth and EPS outlooks; free cash flow forecast; projected impact of foreign currency exchange rates; projected operating margins, capital expenditures, effective tax rate, weighted average shares outstanding and interest expense; and projected product launches. These statements are based on management's expectation of future events as of the date of this earnings release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. Factors that could cause or contribute to such differences include the following: the Company's ability to successfully execute its strategy, including supporting its all-direct sales strategy in the US; the Company's ability to develop, manufacture, introduce and market new products and enhancements to existing products; the Company's ability to achieve cost improvements in its worldwide network of laboratories and in the manufacture and service of in-clinic instruments; the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the effectiveness of the Company's sales and marketing activities; the Company's ability to manufacture complex biologic products; the impact of a change to our relationship with the Company's distributors; the impact of distributor purchasing decisions on sales of the Company's products that are sold through distribution; the Company's ability to manage the risks associated with the use of distributors to sell the Company's products; the impact of increased competition from existing and new technologies and technological advances by our competitors; the promotion and sale of our competitors' products by our former US distribution partners; the effect of government regulation on the Company's business, including government decisions about whether and when to approve the Company's products and decisions regarding labeling, manufacturing and marketing products; the impact of veterinary hospital consolidation, and the prevalence of buying consortiums on the markets for the Company's products; the Company's ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; changes in testing patterns or practices in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; a failure or perceived failure to comply with regulations and our policies regarding the privacy and protection of user data; the effect of any strengthening of the rate of exchange for the US dollar; the effect of any adverse changes in the financial markets on the value of the Company's investment portfolio; the impact of a weak economy on demand for the Company's products and services or increased customer credit risk; the effects of operations outside the US, including  from currency fluctuations, different regulatory, political and economic conditions, and different market conditions and local business and cultural factors; the impact of the Company's limited experience and small scale in the human point-of-care market; the effects of interruptions to the Company's operations due to natural or man-made disasters, system failures or disruptions or security breaches; the effect on the Company's stock price if quarterly or annual operating results do not meet expectations of market analysts or investors in future periods; potential exposures related to our worldwide provision for income taxes and the potential loss of tax incentives; and the Company's ability to obtain financing on favorable terms. A further description of these and other factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, in the sections captioned "Risk Factors," as well as the Company's other periodic reports filed or to be filed with the Securities and Exchange Commission.

 

 

IDEXX Laboratories, Inc. and Subsidiaries













Consolidated Statement of Operations













Amounts in thousands except per share data (Unaudited)































Three Months Ended



Years Ended







December 31,

December 31,



December 31,

December 31,







2015

2014



2015

2014

Revenue:

Revenue



$     399,685

$     351,959



$     1,601,892

$     1,485,807

Expenses and















Income:

Cost of revenue



181,990

169,794



711,622

669,691



Gross profit



217,695

182,165



890,270

816,116



Sales and marketing



76,495

77,238



299,955

283,708



General and administrative



48,793

45,257



182,510

173,890



Research and development



25,496

24,869



99,681

98,263



Impairment charge



-

-



8,212

-



Income from operations



66,911

34,801



299,912

260,255



Interest expense, net



(7,126)

(4,939)



(26,771)

(13,700)



Income before provision for income taxes



59,785

29,862



273,141

246,555



Provision for income taxes



15,395

3,911



81,006

64,604

Net Income:

Net income



44,390

25,951



192,135

181,951



Less: Noncontrolling interest in subsidiary's















earnings



41

(10)



57

45



Net income attributable to stockholders



$       44,349

$       25,961



$     192,078

$     181,906



Earnings per share: Basic



$           0.49

$           0.27



$           2.07

$           1.82



Earnings per share: Diluted



$           0.48

$           0.27



$           2.05

$           1.79



Shares outstanding: Basic



90,841

95,499



92,601

100,094



Shares outstanding: Diluted



91,788

96,861



93,649

101,503

 

 

IDEXX Laboratories, Inc. and Subsidiaries













Selected Operating Information (Unaudited)



































Three Months Ended



Years Ended







December 31,

December 31,



December 31,

December 31,







2015

2014



2015

2014

Operating

Gross profit



54.5%

51.8%



55.6%

54.9%

Ratios (as a

Sales, marketing, general and













percentage of

administrative expense



31.3%

34.8%



30.6%

30.8%

revenue):

Research and development expense



6.4%

7.1%



6.2%

6.6%



Income from operations1



16.7%

9.9%



18.7%

17.5%

1Amounts presented may not recalculate due to rounding.

 

 

 

IDEXX Laboratories, Inc. and Subsidiaries















Non-GAAP Financial Measures:













Adjusted Revenue, Gross Profit, Operating Profit and EPS (Unaudited)

Amounts in millions except per share data and percentages



















Revenue

Gross

Profit

Gross Margin

Operating

Profit

Operating

Margin

EPS

Reported Year Ended December 31, 2015

$1,601.9

$890.3

55.6%

$299.9

18.7%

$2.05

Impairment charge

-

-

-

8.2

-

0.06

Adjusted Year Ended December 31, 2015

$1,601.9

$890.3

55.6%

$308.1

19.2%

$2.11















Reported Year Ended December 31, 2014

$1,485.8

$816.1

54.9%

$260.3

17.5%

$1.79

Impact of distributor inventory drawdown

25.1

20.8

-

20.8

-

0.14

Non-recurring expenses associated with transition to all-direct













sales strategy

-

-

-

5.0

-

0.06

Expense ramp-up in advance of transition to new sales strategy

-

-

-

9.5

-

0.03

Non-recurring income tax benefit related to the deferral of













intercompany profits

-

-

-

-

-

(0.02)

Adjusted Year Ended December 31, 2014

$1,510.9

$836.9

55.4%

$295.6

19.6%

$2.00

 

 

IDEXX Laboratories, Inc. and Subsidiaries













Segment Information













Amounts in thousands (Unaudited)



































Three Months Ended



Three Months Ended







December 31,

Percent of



December 31,

Percent of







2015

Revenue



2014

Revenue

Revenue:

CAG



$     336,055





$     284,898





Water



24,178





23,070





LPD



33,366





36,598





Other



6,086





7,393





Total



$     399,685





$     351,959



















Gross Profit:

CAG



$     175,254

52.2%



$     140,504

49.3%



Water



17,257

71.4%



15,545

67.4%



LPD



20,452

61.3%



22,692

62.0%



Other



2,383

39.2%



4,106

55.5%



Unallocated Amounts



2,349

N/A



(682)

N/A



Total



$     217,695

54.5%



$     182,165

51.8%

















Income from















Operations:

CAG



$       49,797

14.8%



$       22,431

7.9%



Water



10,763

44.5%



9,715

42.1%



LPD



6,989

20.9%



8,404

23.0%



Other



(48)

(0.8%)



1,345

18.2%



Unallocated Amounts



(590)

N/A



(7,094)

N/A



Total



$       66,911

16.7%



$       34,801

9.9%







































Year Ended



Year Ended







December 31,

Percent of



December 31,

Percent of







2015

Revenue



2014

Revenue

Revenue:

CAG



$     1,356,287





$     1,223,064





Water



96,884





94,725





LPD



127,143





141,179





Other



21,578





26,839





Total



$   1,601,892





$   1,485,807



















Gross Profit:

CAG



$     727,626

53.6%



$     655,197

53.6%



Water



68,785

71.0%



62,924

66.4%



LPD



77,227

60.7%



89,519

63.4%



Other



10,574

49.0%



14,236

53.0%



Unallocated Amounts



6,058

N/A



(5,760)

N/A



Total



$     890,270

55.6%



$     816,116

54.9%

















Income from















Operations:

CAG



$     231,642

17.1%



$     203,536

16.6%



Water



44,584

46.0%



39,262

41.4%



LPD



24,397

19.2%



33,788

23.9%



Other



156

0.7%



2,479

9.2%



Unallocated Amounts



(867)

N/A



(18,810)

N/A



Total



$     299,912

18.7%



$     260,255

17.5%





















IDEXX Laboratories, Inc. and Subsidiaries

Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets

Amounts in thousands (Unaudited)































Three Months Ended





















Net Revenue

December 31,

2015





December 31,

2014



Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3











































CAG

$

336,055



$

284,898



$

51,157



18.0%





(5.1%)





0.8%





22.3%



Water



24,178





23,070





1,108



4.8%





(5.1%)





-





9.9%



LPD



33,366





36,598





(3,232)



(8.8%)





(10.7%)





-





1.9%



Other



6,086





7,393





(1,307)



(17.7%)





(0.6%)





-





17.1%



Total

$

399,685



$

351,959



$

47,726



13.6%





(5.7%)





0.7%





18.6%







































































Three Months Ended





















Net Revenue

December 31,

2015





December 31,

2014



Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3 











































United States

$

238,595



$

190,685



$

47,910



25.1%





-





0.2%





24.9%



International



161,090





161,274





(184)



(0.1%)





(11.7%)





1.2%





10.4%



Total

$

399,685



$

351,959



$

47,726



13.6%





(5.7%)





0.7%





18.6%













































































Three Months Ended





















Net CAG Revenue

December 31,

2015





December 31,

2014



Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3 











































CAG Diagnostics recurring revenue:

$

277,119



$

232,059



$

45,060



19.4%





(5.4%)





0.9%





23.9%



VetLab consumables



98,433





76,992





21,441



27.8%





(6.9%)





-





34.7%



VetLab service and accessories



13,958





12,970





988



7.6%





(4.9%)





-





12.5%



Rapid assay products



39,317





26,319





12,998



49.4%





(4.5%)





-





53.9%



Reference laboratory diagnostic

and consulting services



125,411





115,778





9,633



8.3%





(4.7%)





1.8%





11.2 %



CAG Diagnostics capital - instruments



28,830





24,194





4,636



19.2%





(8.3%)





-





27.5%



Customer information management and

       digital imaging systems



30,106





28,645





1,461



5.1%





(1.3%)





1.0%





5.4%



Net CAG revenue

$

336,055



$

284,898



$

51,157



18.0%





(5.1%)





0.8%





22.3%





















































1The percentage change from currency is a non-GAAP financial measure. This measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the three months ended December 31, 2015 and the same period of the prior year applied to foreign currency-denominated revenues for the three months ended December 31, 2014.



2 The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the three months ended December 31, 2015 compared to the three months ended December 31, 2014 attributed to acquisitions subsequent to September 30, 2014.



3Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three months ended December 31, 2015 compared to the three months ended December 31, 2014 net of acquisitions and the effect of changes in foreign currency exchange rates.



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)





Years Ended



Net Revenue

December 31,

2015





December 31,

2014



Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3



























CAG

$

1,356,287



$

1,223,064



$

133,223



10.9%



 

(5.6%)



0.8%



15.7%

Water



96,884





94,725





2,159



2.3%



 

(5.5%)



-



7.8%

LPD



127,143





141,179





(14,036)



(9.9%)



 

(12.0%)



-



2.1%

Other



21,578





26,839





(5,261)



(19.6%)



 

(0.8%)



-



(18.8%)

Total

$

1,601,892



$

1,485,807



$

116,085



7.8%



 

(6.2%)



0.6%



13.4%



































Years Ended





















Net Revenue

December 31,

2015





December 31,

2014



 

Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3































United States

$

980,321



$

848,925



$

131,396



15.5%



 

-



0.3%



15.2%

International



621,571





636,882





(15,311)



(2.4%)



 

(14.1%)



1.2%



10.5%

Total

$

1,601,892



$

1,485,807



$

116,085



7.8%



 

(6.2%)



0.6%



13.4%



















Years Ended













Net CAG Revenue

December 31, 2015





December 31,

2014



Dollar

Change



Percentage

Change



Percentage

Change from

Currency1



Percentage

Change from

Acquisitions2



Organic Revenue

Growth
3 



































CAG Diagnostics recurring revenue:

$

1,146,527



$

1,039,252



$

107,275



10.3%



(5.8%)



0.6%



15.5%

VetLab consumables



396,526





341,407





55,119



16.1%



(7.1%)



-



23.2%

VetLab service and accessories



55,176





53,006





2,170



4.1%



(5.9%)



-



10.0%

Rapid assay products



182,670





165,646





17,023



10.3%



(3.0%)



-



13.3%

Reference laboratory diagnostic

and consulting services



512,155





479,193





32,963



6.9%



(5.8%)



1.3%



11.4%

CAG Diagnostics capital - instruments



99,001





79,993





19,008



23.8%



(10.4%)



-



34.2%

Customer information management and 

     digital imaging systems



110,759





103,819





6,940



6.7%



(0.9%)



2.6%



5.0%

Net CAG revenue

$

1,356,287



$

1,223,064



$

133,223



10.9%



(5.6%)



0.8%



15.7%























1 The percentage change from currency is a non-GAAP financial measure. This measure represents the percentage change in revenue resulting from the difference between the average exchange rates during the year ended December 31, 2015 and the same period of the prior year applied to foreign currency-denominated revenues for the year ended December 31, 2014.



2 The percentage change from acquisitions is a non-GAAP financial measure. This measure represents the percentage change in revenue during the year ended December 31, 2015 compared to the year ended December 31, 2014 attributed to acquisitions subsequent to December 31, 2013.



3Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the year ended December 31, 2015 compared to the year ended December 31, 2014 net of acquisitions and the effect of changes in foreign currency exchange rates.



IDEXX Laboratories, Inc. and Subsidiaries











Consolidated Balance Sheet











Amounts in thousands (Unaudited)



































December 31,

December 31,











2015

2014

Assets:

Current Assets:













Cash and cash equivalents







$          128,994

$          322,536



Marketable securities







213,591

-



Accounts receivable, net







188,318

152,380



Inventories







188,833

160,342



Other current assets







101,898

124,140



Total current assets







821,634

759,398



Property and equipment, net







333,026

303,587



Other long-term assets, net







320,333

321,226



Total assets







$       1,474,993

$       1,384,211

Liabilities and













Stockholders'













Equity (Deficit):

Current Liabilities:













Accounts payable







$            52,648

$            44,743



Accrued liabilities







205,530

195,351



Line of credit







573,000

549,000



Deferred revenue







25,583

31,812



Total current liabilities







856,761

820,906



Long-term debt







597,085

350,000



Other long-term liabilities







105,142

95,716



Total long-term liabilities







702,227

445,716

















Total stockholders' equity



(84,125)

117,516



Noncontrolling interest





130

73



Total equity (deficit)





(83,995)

117,589



Total liabilities and stockholders' equity





$        1,474,993

$        1,384,211





































IDEXX Laboratories, Inc. and Subsidiaries









Selected Balance Sheet Information (Unaudited)

























December 31,

September 30,

June 30,

March 31,

December 31,





2015

2015

2015

2015

2014

Selected                  













Balance Sheet

Days sales outstanding1

43.3

43.8

43.7

41.6

40.6

Information:

Inventory turns2

1.5

1.5

1.5

1.6

1.7















1 Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that

   quarter, the result of which is then multiplied by 91.25 days.

2 Inventory turns represent inventory-related cost of product sales for the twelve months preceding each quarter-end divided by the inventory balance 

   at the end of the quarter.



IDEXX Laboratories, Inc. and Subsidiaries













Consolidated Statement of Cash Flows













Amounts in thousands (Unaudited)









































Years Ended













December 31,

December 31,













2015

2014

Operating:

Cash Flows from Operating Activities:















Net income









$     192,135

$     181,951



Non-cash charges









105,355

79,691



Changes in assets and liabilities





(69,811)

(9,718)



Tax benefit from share-based compensation arrangements



(11,315)

(16,078)



Net cash provided by operating activities









216,364

235,846

Investing:

Cash Flows from Investing Activities:















Purchases of property and equipment









(82,921)

(60,523)



Purchase of marketable securities









(271,958)

-



Proceeds from the sale and maturities of marketable securities





56,775

-



Acquisitions of intangible assets







-

(175)



Proceeds from sale of equity investment







-

5,400



Acquisitions of a business, net of cash acquired





(10,302)

(25,115)



Net cash used by investing activities







(308,406)

(80,413)

Financing:

Cash Flows from Financing Activities:















Borrowings on revolving credit facilities, net





24,000

272,000



Issuance of long-term debt





250,097

200,000



Payment of notes payable









-

(1,394)



Repurchases of common stock









(401,981)

(618,158)



Debt issue costs









(1,380)

(1,406)



Proceeds from the exercise of stock options and employee stock purchase plans



22,397

29,442



Tax benefit from share-based compensation arrangements



11,315

16,078



Net cash used by financing activities







(95,552)

(103,438)



Net effect of changes in exchange rates on cash









(5,948)

(8,517)



Net (decrease) increase in cash and cash equivalents









(193,542)

43,478



Cash and cash equivalents, beginning of period







322,536

279,058



Cash and cash equivalents, end of period









$     128,994

$       322,536

































IDEXX Laboratories, Inc. and Subsidiaries













Free Cash Flow1













Amounts in thousands (Unaudited)

























Years Ended













December 31,

December 31,













2015

2014

Free Cash















Flow:

Net cash provided by operating activities









$     216,364

$     235,846



Financing cash flows attributable to tax benefits from share-based compensation arrangements

11,315

16,078



Investing cash flows attributable to purchases of property and equipment





(82,921)

(60,523)



Free cash flow









$     144,758

$     191,401



1 Free cash flow is a non-GAAP financial measure and is calculated from cash generated from operations, excluding tax benefits attributable to

   share-based compensation arrangements, reduced by the Company's investments in fixed assets. 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 fixed assets that are required to operate the business. Management also believes this is a common financial measure useful to 

   further evaluate the results of operations.

IDEXX Laboratories, Inc. and Subsidiaries













Common Stock Repurchases













Amounts in thousands except per share data (Unaudited)















Three Months Ended



Years Ended







December 31,

December 31,



December 31,

December 31,







2015

2014



2015

2014



Share repurchases during the period



1,313

2,269



5,659

9,761



Shares surrendered by employees in payment for minimum

  required withholding taxes due on share based compensation



4

7



69

92



Total number of shares purchased 1



1,317

2,276



5,728

9,853



Average price paid per share



$        71.08

$        65.78



$        71.90

$        63.32



















 

Shares remaining under repurchase authorization as of December 31, 2015 totaled 6,806,152.

                              

1 Shares repurchased on and before June 15, 2015 and the associated average cost per share have been adjusted to reflect the June

   2015 two-for-one stock split.  Actual shares repurchased and acquired through employee surrender were 1,317,000 and 4,313,000

   for the three and twelve months ended December 31, 2015, respectively, and 1,138,000 and 4,927,000 for the three and twelve months

   ended December 31, 2014, respectively.

Contact: Ed Garber, Director, Investor Relations, 1-207-556-8155

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SOURCE IDEXX Laboratories, Inc.

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