WESTBROOK, Maine–(BUSINESS WIRE)–IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced third quarter results.
Third Quarter Results
The Company reports revenues of $976 million for the third quarter of 2024, an increase of 7% as reported and 6% organic, driven by Companion Animal Group (“CAG”) growth of 7% as reported and 6% organic, and Water revenue growth of 13% as reported and organic. CAG Diagnostics recurring revenue growth of 7% as reported and organic was supported by sustained double-digit growth in international regions and global benefits from IDEXX execution drivers including 10% annual growth in IDEXX’s global premium instrument installed base. IDEXX veterinary software, services and diagnostic imaging systems revenue increased 11% as reported and 6% organic, reflecting high recurring revenue growth and continued momentum in cloud-based software placements.
Third quarter earnings per diluted share (“EPS”) were $2.80, an increase of 11% as reported and 12% on a comparable basis, supported by operating margin expansion of 110 basis points as reported and 100 basis points on a comparable basis.
“IDEXX teams continued their strong execution in the third quarter as demonstrated by solid net customer gains, continued growth in our premium IDEXX VetLab® instrument installed base, and nearly 700 pre-orders of IDEXX inVue Dx™ Cellular Analyzer, which will begin shipping later in the fourth quarter,” said Jay Mazelsky, President and Chief Executive Officer. “Customers especially value IDEXX technology solutions like inVue Dx that provide meaningful clinical insights while giving time back to busy practice staff.”
Third Quarter Performance Highlights
Companion Animal Group
The Companion Animal Group generated revenue growth of 7% as reported and 6% organic for the quarter. Solid growth was supported by CAG Diagnostics recurring revenue growth of 7% as reported and organic. CAG Diagnostics recurring revenue growth was supported by 10% reported and organic gains in international regions. U.S. CAG Diagnostics recurring revenue growth of 5% as reported and organic continued to outpace sector growth levels in the third quarter.
Additional U.S. companion animal practice key metrics are available in the Q3 2024 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.
Solid global growth was achieved across IDEXX’s testing modalities.
- IDEXX VetLab® consumables generated 11% reported and organic revenue growth, with double-digit gains in the U.S. and International regions supported by strong installed base growth across premium instrument platforms and benefits from equivalent days effects.
- Reference laboratory diagnostic and consulting services generated 3% reported and 2% organic revenue growth, driven by solid International growth.
- Rapid assay products revenues grew 6% as reported and organic, driven by solid gains in the U.S., including benefits from higher net price realization and equivalent days effects.
Veterinary software, services and diagnostic imaging systems revenues grew 11% as reported and 6% organically, driven by continued high levels of organic growth in software and diagnostic imaging recurring revenues and benefits from a recent software and data platform acquisition.
Water
Water revenues grew 13% as reported and organic for the quarter, reflecting double-digit gains in the U.S. and continued solid growth in Europe.
Livestock, Poultry and Dairy (“LPD”)
LPD revenues declined 3% as reported and 2% organic for the quarter. Solid gains in the U.S. and for poultry tests globally were offset by lower Asia Pacific revenues, including impacts from reduced swine testing and herd health screening levels.
Gross Profit and Operating Profit
Gross profits increased 9% as reported and on a comparable basis. Gross margin of 61.1% increased 120 basis points as reported and 140 basis points on a comparable basis supported by benefits from business mix, led by high growth in IDEXX VetLab consumable revenues and veterinary software, services, and diagnostic imaging recurring revenues and lower instrument costs.
Operating margin was 31.2% for the quarter, higher than the prior year by 110 basis points as reported and 100 basis points on a comparable basis. Operating margin results reflect 7% operating expense growth as reported and 8% on a comparable basis. Operating expense growth was driven by higher sales and marketing expense and higher R&D spend related to advancing the Company’s growth and innovation agenda.
2024 Growth and Financial Performance Outlook
The Company is updating its full year revenue growth guidance range to $3,865 million – $3,890 million, or reported growth of 5.5% – 6.2%, a reduction of $38 million at midpoint. This reflects an adjustment of ~1.5% at midpoint to full year estimates for organic revenue growth, which is now projected at 5.3% – 6.0%, reflecting recent trends in U.S. clinical visit and demand levels. The updated guidance range includes ~$15 million of favorable impact from more recent foreign exchange estimates.
The Company maintained a consistent full year reported operating margin outlook of 28.7% – 29.0%, including ~160 basis points of impact related to the previously reported discrete litigation expense accrual. At midpoint, projected full year comparable operating profit margin expansion of 70 – 100 basis points includes a ~40 basis point negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.
The Company narrowed its EPS outlook range to $10.37 – $10.53, maintaining a consistent midpoint. 2024 EPS results include a $0.56 negative impact from a discrete litigation expense accrual recorded in the second quarter. Negative EPS impacts related to adjustments to the organic revenue outlook were offset by $0.02 in favorable adjustments to foreign exchange estimates and favorable refinements to interest expense and effective tax rate estimates. The updated EPS growth outlook is 3% – 5% as reported and 10% – 11% on comparable basis, including a ~2% negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.
The following table provides the Company’s updated outlook for annual key financial metrics in 2024 with a comparison to the prior outlook:
Amounts in millions except per share data and percentages
|
2024 Growth and Financial Performance Outlook |
|
|
|
|
|
|
|
|
|
|
|
Updated |
|
Prior |
||||
|
Revenue |
|
$3,865 |
– |
$3,890 |
|
$3,885 |
– |
$3,945 |
|
Reported growth |
|
5.5% |
– |
6.2% |
|
6.2% |
– |
7.8% |
|
Organic growth |
|
5.3% |
– |
6.0% |
|
6.2% |
– |
7.8% |
|
CAG Diagnostics Recurring Revenue Growth |
|
|
|
|
|
|
|
|
|
Reported growth |
|
5.6% |
– |
6.2% |
|
5.7% |
– |
7.3% |
|
Organic growth |
|
5.8% |
– |
6.4% |
|
6.2% |
– |
7.8% |
|
Operating Margin |
|
28.7% |
– |
29.0% |
|
28.7% |
– |
29.0% |
|
Operating margin expansion |
|
(130 bps) |
– |
(100 bps) |
|
(130 bps) |
– |
(100 bps) |
|
Negative impact of ongoing litigation matter |
|
~160 bps |
|
~160 bps |
||||
|
Comparable margin expansion |
|
70 bps |
– |
100 bps |
|
30 bps |
– |
60 bps |
|
Negative impact of 2023 customer contract resolution payment |
|
~ 40 bps |
|
~ 40 bps |
||||
|
EPS |
|
$10.37 |
– |
$10.53 |
|
$10.31 |
– |
$10.59 |
|
Reported growth |
|
3% |
– |
5% |
|
2% |
– |
5% |
|
Negative impact of ongoing litigation matter |
|
~ 6% |
|
~ 6% |
||||
|
Comparable growth |
|
10% |
– |
11% |
|
9% |
– |
12% |
|
Negative impact of 2023 customer contract resolution payment |
|
~ 2% |
|
~ 2% |
||||
|
Other Key Metrics |
|
|
|
|
|
|
|
|
|
Net interest expense |
|
~ $19 |
|
~ $20 |
||||
|
Share-based compensation tax benefit |
|
~ $9 |
|
~ $10 |
||||
|
Share-based compensation tax rate benefit |
|
~ 1% |
|
~ 1% |
||||
|
Effective tax rate |
|
~ 20.7% |
|
~ 21.5% |
||||
|
Share-based compensation EPS impact |
|
~ $0.11 |
|
~ $0.12 |
||||
|
Reduction in average shares outstanding |
|
0.5% |
– |
1% |
|
0.5% |
– |
1% |
|
Operating Cash Flow (% of Net Income) |
|
110% – 115% |
|
110% – 115% |
||||
|
Free Cash Flow (% of Net Income) |
|
90% – 95% |
|
90% – 95% |
||||
|
Capital Expenditures |
|
~ $160 |
|
~ $180 |
||||
The following table outlines estimates of foreign currency exchange rate impacts, net of foreign currency hedging transactions, and foreign currency exchange rate assumptions reflected in the above financial performance outlook for 2024.
|
Estimated Foreign Currency Exchange Rate Impacts |
|
2024 |
|
|
|
|
|
Revenue growth rate impact |
|
(~ 20 bps) |
|
CAG Diagnostics recurring revenue growth rate impact |
|
(~ 20 bps) |
|
Operating margin growth impact |
|
~ 0 bps |
|
EPS impact |
|
(~ $0.03) |
|
EPS growth impact |
|
~ 0% |
|
|
|
|
|
Go-Forward Foreign Currency Exchange Rate Assumptions |
|
2024 |
|
In U.S. dollars |
|
|
|
euro |
|
$1.08 |
|
British pound |
|
$1.29 |
|
Canadian dollar |
|
$0.72 |
|
Australian dollar |
|
$0.66 |
|
Relative to the U.S. dollar |
|
|
|
Japanese yen |
|
¥152 |
|
Chinese renminbi |
|
¥7.18 |
|
Brazilian real |
|
R$5.66 |
About IDEXX Laboratories, Inc.
IDEXX is a global leader in pet healthcare innovation. Our diagnostic and software products and services create clarity in the complex, constantly evolving world of veterinary medicine. We support longer, fuller lives for pets by delivering insights and solutions that help the veterinary community around the world make confident decisions—to advance medical care, improve efficiency, and build thriving practices. Our innovations also help ensure the safety of milk and water across the world and maintain the health and well-being of people and livestock. IDEXX Laboratories, Inc. is a member of the S&P 500® Index. Headquartered in Maine, IDEXX employs approximately 11,000 people and offers solutions and products to customers in more than 175 countries and territories. For more information about IDEXX, visit www.idexx.com.
