How did the adoption of new accounting standards affect the financial results?

IDEXX adopted the New Revenue Standard (ASC 606) effective January 1, 2018. This adoption primarily accelerated the timing of revenue recognition for certain programs, such as up-front customer loyalty, volume commitment, and instrument rebate programs. This resulted in an increase in reported revenue, cost of revenue, and gross profit, particularly in the CAG segment, as well as changes in the classification of certain assets and liabilities. The company noted approximately $13.9 million in additional revenue for Q3 2018 and $41.1 million for the nine-month period attributed to this standard.

What is the primary driver of revenue growth for IDEXX?

The primary driver of revenue growth for IDEXX continues to be its Companion Animal Group (CAG) segment, with a particular emphasis on CAG Diagnostics recurring revenue. This includes strong performance in IDEXX VetLab consumables, rapid assay products, and reference laboratory diagnostic and consulting services. The company also noted increased instrument placements and growth in veterinary software and diagnostic imaging systems.

How is the company managing its liquidity and capital resources?

IDEXX maintained a healthy liquidity position with $146.9 million in cash and cash equivalents and $434.5 million in available borrowing capacity under its credit facility as of September 30, 2018. The company generated strong cash flow from operations and used its capital for share repurchases, capital expenditures (such as expanding its headquarters and relocating a lab), and to reduce its revolving debt balance following the repatriation of foreign cash. Management believes its current resources are sufficient for the next twelve months and beyond.

What was the impact of foreign currency fluctuations on the company's results?

For the three months ended September 30, 2018, foreign currency movements had a negative impact of approximately $5.9 million on revenue and $2.8 million on operating profit (including hedge activity). For the nine-month period, currency movements had a positive impact of approximately $21.7 million on revenue and $3.3 million on operating profit. The company actively uses hedging instruments to mitigate some of this exposure.

IDXX 10-Q Quarterly Report Q3 FY2018 — Revenue, Net Income, EPS

Summary

IDEXX Laboratories, Inc. reported solid financial results for the third quarter and the first nine months of 2018, demonstrating continued growth across its key segments. Total revenue increased by 10.9% in the third quarter and 13.7% for the nine-month period compared to the prior year, driven by strong organic growth, particularly within the Companion Animal Group (CAG). This growth was supported by increased sales volumes in recurring revenue streams like consumables and reference laboratory services, as well as higher instrument placements. The company's net income also saw significant increases, rising by 32.2% in the third quarter and 29.5% for the nine-month period, reflecting both revenue growth and improved operational efficiency. The adoption of new accounting standards for revenue recognition (ASC 606) had a noticeable impact, primarily accelerating revenue recognition and increasing reported revenue and gross profit, especially in the CAG segment. This transition provides a more current view of the company's performance. The company also highlighted its continued investment in sales and marketing, and research and development to support long-term growth. From a liquidity perspective, IDEXX maintained a strong cash position and sufficient borrowing capacity. The company's strategic use of cash included significant share repurchases, underscoring a commitment to returning value to shareholders. Management expressed confidence in the company's ability to fund operations, capital expenditures, and growth initiatives, projecting continued financial strength for the upcoming periods.

Financial Highlights

54 data points

Beta

Revenue

$545.45M

0.6% Gross Margin

Net Income

$93.25M

0.2% Net Margin

EPS (Diluted)

$1.05

Total Assets

$1.54B

Cash & Equivalents

$146.88M

Free Cash Flow

$79.44M

Financial Statements

Beta

Revenue	$545.45M
Cost of Revenue	$239.81M
Gross Profit	$305.64M
R&D Expenses	$29.19M
Operating Expenses	$188.29M
Operating Income	$117.35M
Interest Expense	$8.45M
Net Income	$93.25M
EPS (Basic)	$1.07
EPS (Diluted)	$1.05
Shares Outstanding (Basic)	86.76M
Shares Outstanding (Diluted)	88.45M

Key Highlights

1Total revenue increased by 10.9% year-over-year to $545.4 million in Q3 2018 and by 13.7% to $1.66 billion for the first nine months of 2018, with organic revenue growth of 12.0% and 12.1% respectively.
2Net income attributable to IDEXX stockholders grew by 32.2% to $93.3 million in Q3 2018 and by 29.5% to $291.4 million for the nine-month period.
3Companion Animal Group (CAG) segment revenue increased by 12.0% in Q3 2018 and 14.7% for the nine-month period, driven by strong performance in CAG Diagnostics recurring revenue, including consumables and reference laboratory services.
4The company adopted new revenue recognition standards (ASC 606) effective January 1, 2018, which accelerated revenue recognition, notably increasing reported revenue and gross profit, especially in instrument sales and customer programs.
5Gross profit margin improved slightly to 56.0% in Q3 2018 from 55.7% in the prior year, indicating effective cost management alongside revenue growth.
6Operating expenses increased, but as a percentage of revenue, they decreased to 34.5% in Q3 2018 from 35.3% in Q3 2017, showcasing operational leverage.
7The company maintained a strong liquidity position with $146.9 million in cash and cash equivalents and $434.5 million in remaining borrowing availability under its credit facility as of September 30, 2018.

IDEXX LABORATORIES INC /DE Quarterly Report for Q3 Ended Sep 30, 2018

Summary

Financial Highlights

Key Highlights

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