Published on January 30, 2009
 |
www. idexx.com
|
Contact:
Merilee Raines, Chief Financial Officer, (207) 556-8155
FOR
IMMEDIATE RELEASE
IDEXX
Laboratories Announces
Fourth
Quarter and Full Year Results
WESTBROOK, Maine, January 30,
2009 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that
revenues for the fourth quarter of 2008 were $243.3 million compared to $245.0
million for the fourth quarter of 2007. Organic revenue growth, which is
reported growth adjusted to eliminate the effect of changes in foreign currency
exchange rates and revenues from businesses acquired, divested or discontinued
since October 1, 2007, was 6.5% for the quarter.
Earnings
per diluted share (“EPS”) for the quarter ended December 31, 2008 were $0.39,
compared to $0.40, for the same period in the prior year. Earnings per share
were $0.44 after adjusting to eliminate discrete items related to the
disposition of certain pharmaceutical product lines and pharmaceutical assets,
discussed further below, which represents an increase of 10% from the same
period of the prior year. Please refer to the non-GAAP financial measures table
below.
“Despite
the considerable challenges facing the economy and the consumer, we were pleased
to achieve our organic revenue growth in the quarter,” said Jonathan Ayers,
Chairman and CEO. “While we experienced slowing demand in several areas of our
business, demand held up well in certain other areas. For example, in our
Companion Animal Group segment, sales of both Catalyst Dx, our next
generation chemistry system, and our digital radiography product lines remained
strong. Also, we had 7% organic growth in our Water business, a highly
profitable business where demand is not generally affected by economic
conditions. While the economy had a more pronounced effect overall on our
company’s growth in the fourth quarter than in prior quarters in 2008, we also
achieved our earnings goals, in part through a disciplined control of operating
expenses.”
“We
expect that the demand levels we experienced in the fourth quarter will continue
into 2009, with the impact of muted demand for certain products continuing to be
offset by revenue growth generated from recent innovations, such as Catalyst Dx,
SNAPshot Dx, and a variety of other product launches, and the bottom line
reflecting a continued focus on operating expense control. We also look for
strong free cash flow from the business, which will benefit our already strong
balance sheet and support our ongoing stock repurchase program.”
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 2 of
14
“Our
Companion Animal Group, which comprises about 80% of our revenues, is dependent
on the demand for pet health care, which is driven both by pet owners and by
veterinarians. Over the long term we are confident that the bond between pets
and their owners will remain strong, as will the desire of veterinarians to
improve the standard of care they provide and to run efficient, profitable
practices. We remain on track with our strategy to provide innovative diagnostic
and information technology solutions that benefit both veterinarians and pet
owners.”
Revenue
Performance
Companion Animal
Group. Companion Animal Group (“CAG”) revenues for the fourth quarter of
2008 were $196.5 million compared to $197.2 million for the fourth quarter of
2007. Organic growth for the segment, as defined above, was 7% for the quarter.
Our results reflect increased sales volume in our instruments and consumables,
digital radiography and reference laboratory lines of business and, to a lesser
extent, higher average unit sales prices on reference laboratory tests, IDEXX
VetLab®
consumables and rapid assay tests. Increased sales volume of instruments
was due, in part, to sales of recently launched products including Catalyst
Dx™
chemistry analyzers and SNAPshot Dx™
analyzers, both of which we began shipping to customers in the first quarter of
2008. These increases were more than offset by the unfavorable impact of changes
in foreign currency exchange rates, which reduced reported revenues by 5%, and
lower revenues from the pharmaceutical business.
Our
fourth quarter results were affected by two factors relating to our
pharmaceutical business. First, revenues were negatively impacted by the
discontinuation of a pharmaceutical product in the second quarter and the
divestiture of certain pharmaceutical product lines through a series of
transactions in the fourth quarter. Second, the fourth quarter transactions
resulted in a net loss of $3.6 million, or $0.06 per share, consisting of a
pre-tax loss and restructuring related charges of $1.5 million and a tax
provision of $2.1 million, primarily related to the disposition of
non-deductible goodwill allocated to the pharmaceutical product lines sold. We
have retained certain intellectual property and licenses for developed products
as well as certain less significant product lines, which have been reassigned to
other business units. Notwithstanding the book loss associated with these
transactions, we generated $9.7 million of positive cash flow from the
transactions. Please refer to the table below titled “Cash Flow Impact of
Pharmaceutical Transactions and Restructuring."
Water. Water segment
revenues for the fourth quarter of 2008 were $17.2 million compared to $17.3
million for the fourth quarter of 2007. Water organic growth, as defined above,
for the fourth quarter was 7%. The decrease in Water revenues was due to
the unfavorable impact of changes in foreign currency exchange rates, which
reduced reported revenue by 8%, and unfavorable average unit sales prices,
partly offset by higher sales volume. Unfavorable average unit sales price was
due primarily to the impact of higher relative sales volume in countries where
products sell at lower average prices. Increased sales volume was due, in part,
to higher sales volume of our Colilert®
products, used to detect total coliforms and E. coli in
water.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 3
of 14
Production Animal
Segment. Production Animal Segment (“PAS”) revenues for the fourth
quarter of 2008 were $20.3 million compared to $22.2 million for the fourth
quarter of 2007. The decrease in PAS revenues was due to the unfavorable impact
of changes in foreign currency exchange rates, which reduced reported revenues
by 7%, and lower average unit sales prices resulting from increased price
competition. These unfavorable impacts were partly offset by higher livestock
diagnostics sales volume.
Full-Year
Results
Revenues
for the year ended December 31, 2008 increased 11% to $1.024 billion from $922.6
million for the year ended December 31, 2007. Organic revenue growth, as defined
above, for the year ended December 31, 2008, was 9%. Acquisitions, net of
divestitures and discontinued products, and exchange each contributed 1% to
revenue growth.
Earnings
per diluted share for the year ended December 31, 2008 increased 28% to $1.87
from $1.46 for the year ended December 31, 2007. Non-GAAP adjusted diluted EPS
for the year ended December 31, 2008 grew 20% to $1.90 from $1.58 for the year
ended December 31, 2007. Please refer to the non-GAAP financial measures table
below.
Additional
Operating Results for the Fourth Quarter
Gross
profit for the fourth quarter of 2008 decreased $1.7 million, or 1%, to $120.5
million from $122.2 million for the fourth quarter of 2007. As a percentage of
total revenue, gross profit was constant at 50%. Year-over-year, the gross
profit percentage was unfavorably impacted by greater relative sales of lower
margin products and services, including IDEXX VetLab®
instruments and laboratory and consulting services, and higher
manufacturing costs of our instruments, including our Catalyst Dx™
chemistry analyzer. Decreases in the gross profit percentage were offset by the
favorable net impact of foreign currency exchange rates, as gains on foreign
exchange hedge contracts more than offset the unfavorable impact on revenue of
changes in foreign currency exchange rates, and higher average sales prices in
certain businesses.
Research
and development (“R&D”) expense for the fourth quarter of 2008 was $17.1
million, compared to $16.8 million for the fourth quarter of 2007, representing
7% of revenue in both periods.
Selling,
general and administrative (“SG&A”) expense for the fourth quarter of 2008
was $66.1 million, compared to $68.7 million for the fourth quarter of 2007,
representing 27% of revenue in 2008 and 28% of revenue in 2007. The decrease in
SG&A expense resulted primarily from the favorable impact of exchange rates
on foreign currency denominated expenses, a decrease in sales and distributor
commissions and decreased spending related to employee related incentives and
benefits. These favorable items were partly offset by increased headcount and
worldwide expansion of sales, marketing and customer support resources and
higher spending related to general support functions.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 4
of 14
Additionally,
operating expenses for the fourth quarter of 2008 were negatively impacted by
$1.5 million related to the disposition of certain pharmaceutical product lines
and the related restructuring of the remaining pharmaceutical business, as
discussed above.
Supplementary
Analysis of Results
The
accompanying financial tables provide more information concerning our revenues
and other operating results for the three and twelve months ended December 31,
2008, as well as a reconciliation of non-GAAP diluted EPS to earnings per
share.
Outlook
for 2009
The
Company provides the following updated guidance for the full year of 2009. This
guidance reflects an assumption that the value of the U.S. dollar relative to
other currencies will remain at its current level for the balance of 2009.
Fluctuations in foreign currency exchange rates from current levels could have a
significant positive or negative impact on our actual results of operations in
2009.
|
·
|
Revenues
are expected to be $1.02 to $1.04 billion, which represents reported
growth of 0% to 2% compared to 2008 revenues. The implied organic growth
is 7% to 9% as compared to 9% for 2008. This guidance is down from the
previous guidance of $1.05 to $1.07 billion provided in October, 2008, due
primarily to our observation of worsening economic conditions in the
fourth quarter.
|
|
·
|
Diluted EPS are
expected to be between $1.84 to $1.90 as compared to the previous guidance
of $1.82 to $1.92 given in October, 2008, which reflects lower anticipated
revenues accompanied by tight operating expense
control.
|
|
·
|
Free cash flow is
expected to be approximately 100% of net
income.
|
Conference
Call and Webcast Information
IDEXX Laboratories will be hosting a
conference call today at 9:00 a.m. (eastern) to discuss its fourth quarter
results. To participate in the conference call, dial 800-288-8975 or
612-234-9959 and reference confirmation code 983183. An audio replay will be
available through February 6, 2009 by dialing 320-365-3844 and referencing
replay code 983183.
The call
will also be available via live or archived Webcast on the IDEXX Laboratories'
web site at www.idexx.com.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 5
of 14
About
IDEXX Laboratories
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 to
build more economically successful practices. IDEXX is also a worldwide leader
in providing diagnostic tests and information for the production animal industry
and tests for the quality and safety of water and milk. Headquartered in Maine,
IDEXX Laboratories employs more than 4,500 people and offers products to
customers in over 100 countries.
Note Regarding Forward-Looking
Statements
This press 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. These statements are based on management's
expectations of future events as of the date of this press 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 develop, manufacture,
introduce and market new products and enhancements to existing products; the impact of a weak economy on demand
for the Company’s products and services;
the impact of
disruptions in financial and currency markets; the effectiveness of the
Company’s sales and marketing
activities; disruptions, shortages or pricing
changes that affect the Company’s purchases of products and
materials from third parties, including from sole source
suppliers; the
Company’s ability to identify acquisition
opportunities, complete acquisitions and integrate acquired businesses; the
impact of competition, technological change, and veterinary hospital
consolidation on the markets for the Company’s products; the Company’s ability to manufacture complex
biologic products; 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 distributor purchasing
decisions on sales of the Company’s products that are sold through
distribution; changes or trends in veterinary medicine that affect the rate of
use of the Company’s products and services by
veterinarians; 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; the effects of operations
outside the U.S., including from currency fluctuations, different
regulatory, political and economic conditions, and different market conditions;
and the loss of key employees. 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, 2007, and quarterly report on Form 10-Q
for the quarter ended September 30, 2008, in the section captioned "Risk
Factors.”
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 6
of 14
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IDEXX
Laboratories, Inc. and Subsidiaries
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|||||||||||||||||
|
Consolidated
Statement of Operations
|
|||||||||||||||||
|
Amounts
in thousands except per share data (Unaudited)
|
|||||||||||||||||
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||||||
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||
|
Revenue:
|
Revenue
|
$ | 243,293 | $ | 244,969 | $ | 1,024,030 | $ | 922,555 | ||||||||
|
Expenses
and
|
|||||||||||||||||
|
Income:
|
Cost
of revenue
|
122,772 | 122,725 | 494,264 | 459,033 | ||||||||||||
|
Gross
profit
|
120,521 | 122,244 | 529,766 | 463,522 | |||||||||||||
|
Sales
and marketing
|
39,951 | 41,796 | 169,693 | 151,882 | |||||||||||||
|
General
and administrative
|
26,179 | 26,937 | 115,586 | 108,119 | |||||||||||||
|
Research
and development
|
17,063 | 16,769 | 70,552 | 67,338 | |||||||||||||
|
Loss
on disposition of pharmaceutical product lines and related
restructuring
|
1,479 | - | 1,479 | - | |||||||||||||
|
Income
from operations
|
35,849 | 36,742 | 172,456 | 136,183 | |||||||||||||
|
Interest
income (expense), net
|
(581 | ) | (19 | ) | (2,269 | ) | (1,340 | ) | |||||||||
|
Income
before provision for income taxes
|
35,268 | 36,723 | 170,187 | 134,843 | |||||||||||||
|
Provision
for income taxes
|
11,713 | 11,195 | 54,018 | 40,829 | |||||||||||||
|
Net
Income:
|
Net
income
|
$ | 23,555 | $ | 25,528 | $ | 116,169 | $ | 94,014 | ||||||||
|
Earnings
per share: Basic
|
$ | 0.40 | $ | 0.42 | $ | 1.94 | $ | 1.53 | |||||||||
|
Earnings
per share: Diluted
|
$ | 0.39 | $ | 0.40 | $ | 1.87 | $ | 1.46 | |||||||||
|
Shares
outstanding: Basic
|
59,453 | 61,186 | 59,953 | 61,560 | |||||||||||||
|
Shares
outstanding: Diluted
|
61,083 | 64,156 | 62,249 | 64,455 | |||||||||||||
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||||||||||
|
Key Operating
Information (Unaudited)
|
|||||||||||||||||
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||||||
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||
|
Key
Operating
|
Gross
profit
|
49.5 | % | 49.9 | % | 51.7 | % | 50.2 | % | ||||||||
|
Ratios
(as
a
|
Sales,
marketing, general and
|
||||||||||||||||
|
percentage
of
|
administrative
expense
|
27.2 | % | 28.1 | % | 27.9 | % | 28.2 | % | ||||||||
|
revenue):
|
Research
and development expense
|
7.0 | % | 6.8 | % | 6.9 | % | 7.3 | % | ||||||||
|
Loss
on disposition of pharmaceutical product
|
|||||||||||||||||
|
lines
and related restructuring
|
0.6 | % | - | 0.1 | % | - | |||||||||||
|
Income
from operations(1)
|
14.7 | % | 15.0 | % | 16.8 | % | 14.8 | % | |||||||||
|
International
|
International
revenue (in
thousands)
|
$ | 97,071 | $ | 106,251 | $ | 413,973 | $ | 370,422 | ||||||||
|
Revenue:
|
International
revenue as percentage of
|
||||||||||||||||
|
total
revenue
|
39.9 | % | 43.4 | % | 40.4 | % | 40.2 | % | |||||||||
(1) The
sum of individual items may not equal the total due to rounding.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 7
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|
Non-GAAP
Financial Measures
|
|
Amounts
in thousands except per share data
(Unaudited)
|
|
Three
Months Ended
|
||||||||||||||||||||||||||||||||
|
Income
from
|
Earnings
per Share
|
|||||||||||||||||||||||||||||||
|
Gross
Profit
|
Operations
|
Net
Income
|
Diluted
|
|||||||||||||||||||||||||||||
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
|||||||||||||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||||||||
|
GAAP
measurement
|
$ | 120,521 | $ | 122,244 | $ | 35,849 | $ | 36,742 | $ | 23,555 | $ | 25,528 | $ | 0.39 | $ | 0.40 | ||||||||||||||||
|
%
of revenue
|
49.5 | % | 49.9 | % | 14.7 | % | 15.0 | % | 9.7 | % | 10.4 | % | ||||||||||||||||||||
|
Acquisition-related
purchase accounting, and acquisition
integration costs (1)
|
- | - | - | 101 | - | 65 | - | - | ||||||||||||||||||||||||
|
Disposition
of pharmaceutical product lines and related restructuring (2)
|
- | - | 1,479 | - | 3,598 | - | 0.06 | - | ||||||||||||||||||||||||
|
Non-GAAP
comparative measurements (3)
|
$ | 120,521 | $ | 122,244 | $ | 37,328 | $ | 36,843 | $ | 27,153 | $ | 25,593 | $ | 0.44 | $ | 0.40 | ||||||||||||||||
|
%
of revenue
|
49.5 | % | 49.9 | % | 15.3 | % | 15.0 | % | 11.2 | % | 10.4 | % | ||||||||||||||||||||
|
Management
believes adjusted diluted EPS is a useful non-GAAP financial measure to
evaluate the results of ongoing operations, excluding significant
specified events, period over period, and therefore believes that
investors may find this information useful in addition to the GAAP
results.
We
use these supplemental non-GAAP financial measures to evaluate the
Company's comparative financial performance. The specified items that are
excluded in these non-GAAP measures are actual charges that impact net
income and cash flows, however, we believe that it is useful to evaluate
our core business performance period over period excluding these specified
items, in addition to relying upon GAAP financial
measures.
|
|
(1)
We believe that the change from period to period due to specific
acquisition-related purchase accounting and integration costs is not
representative of ongoing operations and is not indicative of future
performance. Specific acquisition-related discrete costs do not include
amortization expense related to acquired intangible assets. We applied the
statutory income tax rates of the applicable tax jurisdictions to
calculate the after-tax impact of these discrete items.
|
|
(2)
We believe that the impact of the disposition of certain pharmaceutical
product lines and the related restructuring of the remaining
pharmaceutical business in the fourth quarter is not indicative of future
performance because significant transactions and related costs of a
similar nature are not likely to recur within a reasonable period. In the
fourth quarter of 2008 we completed a transaction to sell our ACAREXX and
SURPASS pharmaceutical products and a product currently under development,
which were a part of our CAG segment, and subsequently restructured the
remaining pharmaceutical business.
|
|
(3)
The sum of the individual items may not equal the non-GAAP measurement due
to rounding of the individual items in this
presentation.
|
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 8
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||||
|
Non-GAAP
Financial Measures
|
|||||||||||
|
Amounts
in thousands except per share data
(Unaudited)
|
|
Twelve
Months Ended
|
||||||||||||||||||||||||||||||||
|
Income
from
|
Earnings
per Share
|
|||||||||||||||||||||||||||||||
|
Gross
Profit
|
Operations
|
Net
Income
|
Diluted
|
|||||||||||||||||||||||||||||
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
|||||||||||||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||||||||||||||
|
GAAP
measurement
|
$ | 529,766 | $ | 463,522 | $ | 172,456 | $ | 136,183 | $ | 116,169 | $ | 94,014 | $ | 1.87 | $ | 1.46 | ||||||||||||||||
|
%
of revenue
|
51.7 | % | 50.2 | % | 16.8 | % | 14.8 | % | 11.3 | % | 10.2 | % | ||||||||||||||||||||
|
Write-downs
of certain pharmaceutical assets(1)
|
- | 10,138 | - | 10,138 | - | 6,392 | - | 0.10 | ||||||||||||||||||||||||
|
Acquisition-related
purchase accounting and acquisition
integration costs (2)
|
- | 1,979 | - | 2,482 | - | 1,588 | - | 0.02 | ||||||||||||||||||||||||
|
Disposition
of pharmaceutical product lines and
restructuring(3)
|
- | - | 1,479 | - | 3,598 | - | 0.06 | |||||||||||||||||||||||||
|
Discrete
income tax benefits(4)
|
- | - | - | - | (1,472 | ) | - | (0.02 | ) | - | ||||||||||||||||||||||
|
Non-GAAP
comparative measurements(5)
|
$ | 529,766 | $ | 475,639 | $ | 173,935 | $ | 148,803 | $ | 118,295 | $ | 101,994 | $ | 1.90 | $ | 1.58 | ||||||||||||||||
|
%
of revenue
|
51.7 | % | 51.6 | % | 17.0 | % | 16.1 | % | 11.6 | % | 11.1 | % | ||||||||||||||||||||
|
Management
believes adjusted diluted EPS is a useful non-GAAP financial measure to
evaluate the results of ongoing operations, excluding significant
specified events, period over period, and therefore believes that
investors may find this information useful in addition to the GAAP
results.
We
use these supplemental non-GAAP financial measures to evaluate the
Company's comparative financial performance. The specified items that are
excluded in these non-GAAP measures are actual charges that impact net
income and cash flows, however, we believe that it is useful to evaluate
our core business performance period over period excluding these specified
items, in addition to relying upon GAAP financial
measures.
|
|
(1)
We believe that the write-down of certain pharmaceutical assets is not
indicative of future performance because significant costs of a similar
nature are not likely to recur within a reasonable period. We believe that
we do not have other large inventory investments where the relationship of
inventory to current sales volumes creates significant exposure to
valuation risk. During the second quarter of 2007, we recognized a $9.1
million write-down of raw materials inventory and a $1.0 million write-off
of a prepaid royalty license associated with Navigator® paste, a
nitazoxanide product for the treatment of equine protozoal
myeloencephalitis. We wrote down these assets in the second quarter of
2007 because the third-party contract manufacturer of finished goods gave
notification that it would discontinue manufacturing the product in 2009.
Additionally, product sales have been significantly lower than projected.
Due in part to an estimated production volume which is low, we believe
that we will not be able to enter into a replacement manufacturing
arrangement on economically feasible terms and that we will not be able to
obtain the product after termination of the existing manufacturing
arrangement. We applied the statutory income tax rate of the applicable
tax jurisdiction to calculate the after-tax impact of this discrete
item.
|
|
(2)
We believe that the change from period to period due to specific
acquisition-related purchase accounting and integration costs is not
representative of ongoing operations and is not indicative of future
performance. Specific acquisition-related discrete costs do not include
amortization expense related to acquired intangible assets. We applied the
statutory income tax rates of the applicable tax jurisdictions to
calculate the after-tax impact of these discrete items.
|
|
(3)
We believe that the impact of the disposition of certain
pharmaceutical product lines and the related restructuring of the
remaining pharmaceutical business in the fourth quarter of 2008 is not
indicative of future performance because significant transactions and
related costs of a similar nature are not likely to recur within a
reasonable period. In the fourth quarter of 2008 we completed a
transaction to sell our ACAREXX and SURPASS pharmaceutical products and a
product currently under development, which were a part of our CAG segment,
and subsequently restructured the remaining pharmaceutical
business.
|
|
(4)
We believe that certain significant discrete income tax items
create impacts on financial measures that are not indicative of future
performance because the items are not likely to recur within a reasonable
period. For 2008, the separately identified discrete income tax benefit
was due to a reduction in international deferred tax liabilities due to
lower anticipated international tax rates.
|
|
(5)
The sum of the individual items may not equal the non-GAAP measurement due
to rounding of the individual items in this
presentation.
|
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 9
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||||||||||
|
Segment
Information
|
|||||||||||||||||
|
Amounts
in thousands (Unaudited)
|
|||||||||||||||||
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||||||
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||
|
Revenue:
|
CAG
(1)
|
$ | 196,523 | $ | 197,240 | $ | 834,056 | $ | 750,449 | ||||||||
|
Water
|
17,182 | 17,294 | 74,469 | 66,235 | |||||||||||||
|
PAS
|
20,310 | 22,214 | 80,762 | 75,085 | |||||||||||||
|
Other
(1)
|
9,278 | 8,221 | 34,743 | 30,786 | |||||||||||||
|
Total
|
$ | 243,293 | $ | 244,969 | $ | 1,024,030 | $ | 922,555 | |||||||||
|
Gross
Profit:
|
CAG
(1)
|
$ | 90,359 | $ | 93,720 | $ | 412,199 | $ | 362,162 | ||||||||
|
Water
|
11,479 | 10,696 | 47,052 | 41,656 | |||||||||||||
|
PAS
|
14,307 | 14,051 | 55,005 | 46,728 | |||||||||||||
|
Other
(1)
|
4,289 | 3,643 | 15,131 | 12,455 | |||||||||||||
|
Unallocated
|
87 | 134 | 379 | 521 | |||||||||||||
|
Total
|
$ | 120,521 | $ | 122,244 | $ | 529,766 | $ | 463,522 | |||||||||
|
Income
from
|
|||||||||||||||||
|
Operations:
|
CAG
(1)
|
$ | 24,210 | $ | 25,878 | $ | 129,620 | $ | 100,285 | ||||||||
|
Water
|
7,893 | 6,837 | 31,330 | 26,847 | |||||||||||||
|
PAS
|
6,936 | 5,170 | 21,760 | 15,456 | |||||||||||||
|
Other
(1)
|
919 | 604 | 1,555 | 1,003 | |||||||||||||
|
Unallocated
|
(4,109 | ) | (1,747 | ) | (11,809 | ) | (7,408 | ) | |||||||||
|
Total
|
$ | 35,849 | $ | 36,742 | $ | 172,456 | $ | 136,183 | |||||||||
|
Gross
Profit
|
|||||||||||||||||
|
(as
a percentage
|
|||||||||||||||||
|
of
revenue):
|
CAG
|
46.0 | % | 47.5 | % | 49.4 | % | 48.3 | % | ||||||||
|
Water
|
66.8 | % | 61.8 | % | 63.2 | % | 62.9 | % | |||||||||
|
PAS
|
70.4 | % | 63.3 | % | 68.1 | % | 62.2 | % | |||||||||
|
Other
|
46.2 | % | 44.3 | % | 43.6 | % | 40.5 | % | |||||||||
|
Income
from
|
|||||||||||||||||
|
Operations
|
|||||||||||||||||
|
(as
a percentage
|
|||||||||||||||||
|
of revenue):
|
CAG
|
12.3 | % | 13.1 | % | 15.5 | % | 13.4 | % | ||||||||
|
Water
|
45.9 | % | 39.5 | % | 42.1 | % | 40.5 | % | |||||||||
|
PAS
|
34.2 | % | 23.3 | % | 26.9 | % | 20.6 | % | |||||||||
|
Other
|
9.9 | % | 7.3 | % | 4.5 | % | 3.3 | % | |||||||||
(1) In connection
with restructuring the remaining pharmaceutical business,
certain product lines were realigned to other business units
and
therefore the related product revenue has been reclassified from the
CAG
segment to Other. Segment information presented for the year ended
December
31, 2007 has been restated to conform to our presentation of
reportable
segments for the year ended December 31, 2008.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 10
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
||||||||||||||||||||||||||||
|
Revenues
by Product and Service Categories
|
||||||||||||||||||||||||||||
|
Amounts
in thousands (Unaudited)
|
||||||||||||||||||||||||||||
|
Three
Months Ended
|
||||||||||||||||||||||||||||
|
Net
Revenue
|
Dec.
31,
2008
|
Dec.
31,
2007
|
Dollar
Change
|
|
Percentage
Change
|
Percentage
Change
from
Currency
(1)
|
Percentage
Change
from
Acquisitions/
Divestitures
(2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect
(3)
|
||||||||||||||||||||
|
CAG
(4)
|
$ | 196,523 | $ | 197,240 | $ | (717 | ) | (0.4 | %) | (5.0 | %) | (2.5 | %) | 7.1 | % | |||||||||||||
|
Water
|
17,182 | 17,294 | (112 | ) | (0.6 | %) | (7.8 | %) | - | 7.2 | % | |||||||||||||||||
|
PAS
|
20,310 | 22,214 | (1,904 | ) | (8.6 | %) | (6.9 | %) | - | (1.7 | %) | |||||||||||||||||
|
Other
(4)
|
9,278 | 8,221 | 1,057 | 12.9 | % | (0.5 | %) | - | 13.4 | % | ||||||||||||||||||
|
Total
|
$ | 243,293 | $ | 244,969 | $ | (1,676 | ) | (0.7 | %) | (5.2 | %) | (2.0 | %) | 6.5 | % | |||||||||||||
|
Three
Months Ended
|
||||||||||||||||||||||||||||
|
Net
CAG Revenue
|
Dec.
31,
2008
|
Dec.
31,
2007
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency
(1)
|
Percentage
Change
from
Acquisitions/
Divestitures
(2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect(3)
|
|||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Instruments
and consumables
|
$ | 81,559 | $ | 79,382 | $ | 2,177 | 2.7 | % | (5.6 | %) | - | 8.3 | % | |||||||||||||||
|
Rapid
assay products (4)
|
30,240 | 31,140 | (900 | ) | (2.9 | %) | (1.4 | %) | - | (1.5 | %) | |||||||||||||||||
|
Laboratory
and consulting services
|
65,260 | 63,843 | 1,417 | 2.2 | % | (6.9 | %) | 0.8 | % | 8.3 | % | |||||||||||||||||
|
Practice
information systems and
digital
radiography
|
18,918 | 16,966 | 1,952 | 11.5 | % | (3.4 | %) | - | 14.9 | % | ||||||||||||||||||
|
Pharmaceutical
products (4)
|
546 | 5,909 | (5,363 | ) | (90.8 | %) | - | (92.1 | %) | 1.3 | % | |||||||||||||||||
|
Net
CAG revenue
|
$ | 196,523 | $ | 197,240 | $ | (717 | ) | (0.4 | %) | (5.0 | %) | (2.5 | %) | 7.1 | % | |||||||||||||
(1)
Represents the percentage change in revenue attributed to the effect of changes
in currency rates from the three months ended December 31, 2007 to the three
months ended December 31, 2008.
(2)
Represents the percentage change in revenue attributed to incremental revenues
during the three months ended December 31, 2008 compared to the three months
ended December 31, 2007 from businesses acquired, divested or discontinued since
October 1, 2007.
(3)
Organic Growth
(4) In
connection with restructuring the remaining pharmaceutical business, certain
product lines were realigned to other business units and therefore the related
product revenue has been reclassified from the CAG segment to Other and from the
Pharmaceutical product category to the Rapid Assay product
category.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 11
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
||||||||||||||||||||||||||||
|
Revenues
by Product and Service Categories
|
||||||||||||||||||||||||||||
|
Amounts
in thousands (Unaudited)
|
||||||||||||||||||||||||||||
|
Twelve
Months Ended
|
||||||||||||||||||||||||||||
|
Net
Revenue
|
Dec.
31,
2008
|
Dec.
31,
2007
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency
(1)
|
Percentage
Change
from
Acquisitions/
Divestitures
(2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect(3)
|
|||||||||||||||||||||
|
CAG
(4)
|
$ | 834,056 | $ | 750,449 | $ | 83,607 | 11.1 | % | 1.0 | % | 0.8 | % | 9.3 | % | ||||||||||||||
|
Water
|
74,469 | 66,235 | 8,234 | 12.4 | % | 0.3 | % | - | 12.1 | % | ||||||||||||||||||
|
PAS
|
80,762 | 75,085 | 5,677 | 7.6 | % | 4.8 | % | 2.7 | % | 0.1 | % | |||||||||||||||||
|
Other
(4)
|
34,743 | 30,786 | 3,957 | 12.9 | % | 2.8 | % | 2.9 | % | 7.2 | % | |||||||||||||||||
|
Total
|
$ | 1,024,030 | $ | 922,555 | $ | 101,475 | 11.0 | % | 1.3 | % | 0.9 | % | 8.8 | % | ||||||||||||||
|
Twelve
Months Ended
|
||||||||||||||||||||||||||||
|
Net
CAG Revenue
|
Dec.
31,
2008
|
Dec.
31,
2007
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency
(1)
|
Percentage
Change
from
Acquisitions/
Divestitures
(2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect(3)
|
|||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||||
|
Instruments
and consumables
|
$ | 318,533 | $ | 289,271 | $ | 29,262 | 10.1 | % | 1.0 | % | - | 9.1 | % | |||||||||||||||
|
Rapid
assay products (4)
|
146,867 | 133,508 | 13,359 | 10.0 | % | 0.9 | % | - | 9.1 | % | ||||||||||||||||||
|
Laboratory
and consulting services
|
288,244 | 255,193 | 33,051 | 13.0 | % | 1.5 | % | 2.5 | % | 9.0 | % | |||||||||||||||||
|
Practice
information systems and
digital
radiography
|
61,291 | 53,385 | 7,906 | 14.8 | % | (0.2 | %) | - | 15.0 | % | ||||||||||||||||||
|
Pharmaceutical
products (4)
|
19,121 | 19,092 | 29 | 0.2 | % | - | (2.5 | %) | 2.7 | % | ||||||||||||||||||
|
Net
CAG revenue
|
$ | 834,056 | $ | 750,449 | $ | 83,607 | 11.1 | % | 1.0 | % | 0.8 | % | 9.3 | % | ||||||||||||||
(1)
Represents the percentage change in revenue attributed to the effect of changes
in currency rates from the twelve months ended December 31, 2007 to the twelve
months ended December 31, 2008.
(2)
Represents the percentage change in revenue attributed to incremental revenues
during the twelve months ended December 31, 2008 compared to the twelve months
ended December 31, 2007 from businesses acquired, divested or discontinued
subsequent to January 1, 2007.
(3)
Organic Growth
(4) In
connection with restructuring the remaining pharmaceutical business, certain
product lines were realigned to other business units and therefore the related
product revenue has been reclassified from the CAG segment to Other and from the
Pharmaceutical product category to the Rapid Assay product
category.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 12
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||
|
Consolidated
Balance Sheet
|
|||||||||
|
Amounts
in thousands (Unaudited)
|
|||||||||
|
December
31,
|
December
31,
|
||||||||
|
2008
|
2007
|
||||||||
|
Assets:
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 78,868 | $ | 60,360 | |||||
|
Accounts
receivable, net
|
111,498 | 108,384 | |||||||
|
Inventories
|
115,926 | 98,804 | |||||||
|
Other
current assets
|
49,598 | 38,115 | |||||||
|
Total
current assets
|
355,890 | 305,663 | |||||||
|
Property
and equipment, at cost
|
320,198 | 255,176 | |||||||
|
Less:
accumulated depreciation
|
130,552 | 113,324 | |||||||
|
Property
and equipment, net
|
189,646 | 141,852 | |||||||
|
Other
long-term assets, net
|
219,901 | 254,664 | |||||||
|
Total
assets
|
$ | 765,437 | $ | 702,179 | |||||
|
Liabilities
and
|
|||||||||
|
Stockholders’
|
|||||||||
|
Equity:
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 28,006 | $ | 32,510 | |||||
|
Accrued
expenses
|
104,616 | 107,248 | |||||||
|
Debt
|
151,385 | 72,956 | |||||||
|
Deferred
revenue
|
11,285 | 10,678 | |||||||
|
Total
current liabilities
|
295,292 | 223,392 | |||||||
|
Long-term
debt, net of current portion
|
5,094 | 5,727 | |||||||
|
Other
long-term liabilities
|
26,857 | 34,737 | |||||||
|
Total
long-term liabilities
|
31,951 | 40,464 | |||||||
|
Stockholders’
Equity:
|
|||||||||
|
Common
stock
|
9,539 | 9,450 | |||||||
|
Additional
paid-in capital
|
548,661 | 514,773 | |||||||
|
Deferred
stock units
|
2,678 | 2,201 | |||||||
|
Retained
earnings
|
702,031 | 585,862 | |||||||
|
Treasury
stock, at cost
|
(830,390 | ) | (696,668 | ) | |||||
|
Accumulated
other comprehensive income
|
5,675 | 22,705 | |||||||
|
Total
stockholders’ equity
|
438,194 | 438,323 | |||||||
|
Total
liabilities and stockholders’ equity
|
$ | 765,437 | $ | 702,179 | |||||
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||
|
Key Balance Sheet
Information (Unaudited)
|
|||||||||
|
December
31,
|
December
31,
|
||||||||
|
2008
|
2007
|
||||||||
|
Key
|
|||||||||
|
Balance
Sheet
|
Days
sales outstanding
|
41.9 | 39.4 | ||||||
|
Information:
|
Inventory
turns
|
2.0 | 2.3 | ||||||
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 13
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||
|
Consolidated
Statement of Cash Flows
|
|||||||||
|
Amounts
in thousands (Unaudited)
|
|||||||||
|
Twelve
Months Ended
|
|||||||||
|
December
31,
|
December
31,
|
||||||||
|
2008
|
2007
|
||||||||
|
Operating:
|
Cash
Flows from Operating Activities:
|
||||||||
|
Net
income
|
$ | 116,169 | $ | 94,014 | |||||
|
Non-cash
charges
|
60,380 | 41,906 | |||||||
|
Changes
in current assets and liabilities, net of
|
|||||||||
|
acquisitions
and disposals
|
(33,206 | ) | (796 | ) | |||||
|
Net
cash provided by operating activities
|
$ | 143,343 | $ | 135,124 | |||||
|
Investing:
|
Cash
Flows from Investing Activities:
|
||||||||
|
Decrease
in investments, net
|
- | 35,000 | |||||||
|
Purchase
of property and equipment
|
(89,237 | ) | (65,138 | ) | |||||
|
Acquisition
of businesses and intangible assets
|
(8,649 | ) | (89,884 | ) | |||||
|
Proceeds
from sale of assets
|
7,025 | - | |||||||
|
Acquisition
of equipment leased to customers
|
(734 | ) | (1,106 | ) | |||||
|
Net
cash used by investing activities
|
$ | (91,595 | ) | $ | (121,128 | ) | |||
|
Financing:
|
Cash
Flows from Financing Activities:
|
||||||||
|
Borrowings
under notes payable, net
|
78,955 | 69,992 | |||||||
|
Purchase
of treasury stock
|
(132,342 | ) | (118,387 | ) | |||||
|
Proceeds
from the exercise of stock options
|
16,360 | 20,941 | |||||||
|
Tax
benefit from exercise of stock options
|
6,237 | 9,267 | |||||||
|
Net
cash used by financing activities
|
$ | (30,790 | ) | $ | (18,187 | ) | |||
|
Net
effect of exchange rate changes
|
(2,450 | ) | 2,885 | ||||||
|
Net
decrease in cash and cash equivalents
|
18,508 | (1,306 | ) | ||||||
|
Cash
and cash equivalents, beginning of period
|
60,360 | 61,666 | |||||||
|
Cash
and cash equivalents, end of period
|
$ | 78,868 | $ | 60,360 | |||||
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
|||||||||
|
Free Cash
Flow
|
|||||||||
|
Amounts
in thousands (Unaudited)
|
|||||||||
|
Twelve
Months Ended
|
|||||||||
|
December
31,
|
December
31,
|
||||||||
|
2008
|
2007
|
||||||||
|
Free
Cash
|
|||||||||
|
Flow:
|
Net
cash provided by operating activities
|
$ | 143,343 | $ | 135,124 | ||||
|
Financing
cash flows attributable to tax benefits from exercise of stock
options
|
6,237 | 9,267 | |||||||
|
Purchase
of fixed assets
|
(89,237 | ) | (65,138 | ) | |||||
|
Acquisition
of equipment leased to customers
|
(734 | ) | (1,106 | ) | |||||
|
Free
cash flow
|
$ | 59,609 | $ | 78,147 | |||||
Free cash
flow indicates the cash generated from operations and tax benefits attributable
to stock option exercises, reduced by investments in fixed assets. We feel 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. We
believe this is a common financial measure useful to further evaluate the
results of operations.
IDEXX
Announces Fourth Quarter Results
January
30, 2009
Page 14
of 14
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
||||
|
Cash
Flow Impact of Pharmaceutical Transactions and
Restructuring
|
||||
|
Amounts in
thousands (Unaudited)
|
||||
|
December
31,
|
||||
|
2008
|
||||
|
Proceeds
|
8,402 | |||
|
Restructuring
and transaction expenses incurred
|
(671 | ) | ||
|
Tax
charge related to disposal of nondeductible goodwill
|
(2,666 | ) | ||
|
Realization
of deferred tax assets
|
4,228 | |||
|
Tax
benefit realized from transaction loss
|
401 | |||
|
Net
cash flow realized from transaction and restructuring
|
9,694 | |||
|
IDEXX
Laboratories, Inc. and Subsidiaries
|
||||||||||||||||
|
Common
Stock Repurchases
|
||||||||||||||||
|
Amounts
in thousands except per share data (Unaudited)
|
||||||||||||||||
|
Three
Months Ended
|
Twelve
Months Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Share
repurchases during the period
|
297 | 318 | 2,640 | 2,577 | ||||||||||||
|
Average
price paid per share
|
$ | 33.41 | $ | 60.20 | $ | 50.14 | $ | 45.94 | ||||||||
|
Shares
remaining under repurchase authorization as of December 31,
2008
|
4,213 | |||||||||||||||