10-QPeriod: Q3 FY2011

IDEXX LABORATORIES INC /DE Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 21, 2011For Securities:IDXX

Summary

IDEXX Laboratories, Inc. reported solid financial results for the third quarter and the first nine months of 2011. Total revenue increased by 11.6% for the quarter and 11.2% year-to-date, driven by strong performance across its segments, particularly the Companion Animal Group (CAG) and Livestock and Poultry Diagnostics (LPD). Net income also saw healthy growth, reflecting improved operational efficiency and revenue expansion. The company's balance sheet remains robust, with an increase in cash and cash equivalents and a strong working capital position. IDEXX also demonstrated a commitment to returning value to shareholders through significant share repurchases. Management expressed confidence in the company's liquidity and ability to fund operations and growth initiatives, supported by its revolving credit facility. Despite economic headwinds, IDEXX's diversified business model and innovative product pipeline position it for continued growth.

Financial Highlights

51 data points
Beta

Revenue

$300.95M

52.7% Gross Margin

Net Income

$38.51M

12.8% Net Margin

EPS (Diluted)

$0.33

Total Assets

$969.20M

Cash & Equivalents

$181.50M

Free Cash Flow

$61.45M

Financial Statements
Beta
Revenue$300.95M
Cost of Revenue$142.29M
Gross Profit$158.67M
R&D Expenses$19.41M
Operating Income$56.10M
Interest Expense$928K
Net Income$38.51M
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)113.40M
Shares Outstanding (Diluted)116.01M

Key Highlights

  • 1Total revenue increased by 11.6% year-over-year to $300.95 million for the third quarter of 2011.
  • 2Revenue for the first nine months of 2011 grew by 11.2% to $911.49 million compared to the same period in 2010.
  • 3Net income attributable to IDEXX stockholders increased by 10.9% to $38.51 million for the third quarter and by 17.9% to $123.78 million for the first nine months.
  • 4The Companion Animal Group (CAG) remains the largest segment, with revenue up 11.3% for the quarter and 10.6% year-to-date.
  • 5Livestock and Poultry Diagnostics (LPD) showed significant growth, with revenue up 18.3% for the quarter and 23.7% year-to-date.
  • 6The company's cash and cash equivalents increased to $181.5 million as of September 30, 2011, up from $156.9 million at the end of 2010.
  • 7IDEXX repurchased approximately $67.6 million worth of common stock during the third quarter, and $166.0 million year-to-date.

Frequently Asked Questions

Revenue growth was primarily driven by the Companion Animal Group (CAG), with strong performance in instruments and consumables, and reference laboratory diagnostic and consulting services. The Livestock and Poultry Diagnostics (LPD) segment also contributed significantly with strong sales of bovine and poultry tests. Overall, a weakening U.S. dollar also positively impacted reported revenue due to favorable foreign currency translation.

IDEXX refinanced its revolving credit facility in July 2011, increasing its capacity to $300 million. As of September 30, 2011, the company had $181.5 million in cash and cash equivalents and $145.0 million in remaining borrowing availability under the credit facility. Management believes these resources are sufficient to fund operations and growth initiatives for the next twelve months and beyond.

The company is cooperating with investigations by the U.S. Federal Trade Commission (FTC) and the United Kingdom Office of Fair Trading (OFT) regarding marketing and sales practices for companion animal veterinary products. IDEXX believes its practices are in compliance with antitrust laws, but the duration and outcome of these investigations are unpredictable and could potentially lead to enforcement proceedings, though the company believes any fines or required changes to practices would not be material.

IDEXX acknowledges that economic conditions have negatively affected demand for some products since mid-2008. Specifically, lower economic growth and higher unemployment have impacted veterinary clinic visits, influencing sales of consumables and services. The company expects these conditions to continue to negatively affect growth rates until there are improvements in the broader economic climate in the U.S. and Europe. However, the company's diversified product and geographic mix is expected to mitigate some of these effects.