Exhibit 99.1
Contact: Merilee Raines, Chief Financial Officer, (207) 856-8155 |
FOR IMMEDIATE RELEASE
IDEXX Laboratories Announces Second Quarter Results
WESTBROOK, Maine, July 29, 2005 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that revenue for the second quarter of 2005 increased 17% to $160.6 million from $137.4 million for the second quarter of 2004. Earnings per diluted share for the quarter ended June 30, 2005 were $0.59, compared to $0.66 for the same period in the prior year. Earnings per diluted share for the quarter were $0.01 above the guidance of $0.56 to $0.58 per share given by the Company upon announcement of its first quarter results.
During the quarter ended June 30, 2004, the Company’s earnings per diluted share included a net benefit of $0.07 resulting from (i) a reduction in the Company’s provision for income taxes primarily related to the completion of an IRS audit through the year 2001, (ii) a reduction in the estimated liability for a third party claim, and (iii) a payment received in settlement of certain litigation. During the quarter ended June 30, 2005, the Company incurred acquisition integration costs of $0.01 per diluted share associated with the acquisitions of Vet Med Lab and Dr. Bommeli AG in the fourth quarter of 2004. Excluding the effects of these discrete costs in the second quarters of 2005 and 2004, adjusted earnings per diluted share grew approximately 2%.
Companion Animal Group (CAG) revenue for the second quarter of 2005 increased 17% to $131.3 million from $112.7 million for the second quarter of 2004. This increase resulted primarily from increased sales of laboratory and consulting services, instruments and consumables, and, to a lesser extent, rapid assay products, and computer systems and digital radiography. The increase in laboratory and consulting services revenue was due, in part, to the inclusion of sales from laboratories acquired during 2004 and 2005, which contributed approximately 7% to CAG revenue growth during the quarter. The favorable impact of foreign currency contributed 1% to CAG revenue growth.
Water segment revenue for the second quarter increased 10% to $14.3 million from $13.0 million for the second quarter of 2004 primarily due to higher sales volume. The favorable impact of foreign currency contributed 2% to Water revenue growth.
Food Diagnostics Group (FDG) revenue for the second quarter increased 29% to $15.0 million from $11.6 million for the second quarter of 2004. This increase reflects growth in the production animal products business due to sales from businesses acquired in 2004 and higher sales volume of existing product lines. In addition, the impact of foreign currency contributed 3% to FDG revenue growth.
IDEXX Announces Second Quarter Results
July 29, 2005
Page 2 of 7
“Our second quarter financial performance was essentially in-line with our expectations and plan,” said Jonathan Ayers, Chairman and CEO. “The revenue increase was driven by sales from European businesses acquired in late 2004, as well as by organic growth from several lines of business, including laboratory services, instruments and consumables, and production animal products. As anticipated, several factors caused our net income to fall below net income for the 2004 period. Some of these factors were discrete items applicable to both the 2004 and 2005 periods, and others reflect investments we are making to drive long-term growth.”
Year-to-date results
Year-to-date revenue increased 16% to $313.1 million from $270.8 million for the same period in 2004. Year-to-date earnings per diluted share were $1.10, compared to $1.14 for the same period in the prior year. Excluding the effects of the tax, third party claim and litigation related items in the six months ended June 30, 2004, discussed above, and integration costs incurred in the six months ended June 30, 2005 of $0.03 per diluted share, adjusted earnings per diluted share increased 6%.
Companion Animal Group (CAG) revenue for the six months ended June 30, 2005 increased 15% to $256.2 million from $222.6 million. This increase resulted primarily from increased sales of laboratory and consulting services, instruments and consumables, and, to a lesser extent, rapid assay products, pharmaceutical products, and computer systems and digital radiography. The favorable impact of currency contributed 1% to year-to-date CAG revenue growth.
Water segment revenue for the six months ended June 30, 2005 increased 9% to $27.1 million from $24.9 million primarily due to higher worldwide sales volume. The favorable impact of foreign currency contributed 2% to year-to-date Water revenue growth.
Food Diagnostics Group (FDG) revenue for the six months ended June 30, 2005 increased 27% to $29.8 million from $23.4 million for the same period in 2004. This increase reflects growth in the production animal products business due to sales from businesses acquired in 2004 and higher sales volume of existing product lines. The favorable impact of foreign currency contributed 3% to FDG revenue growth.
IDEXX Announces Second Quarter Results
July 29, 2005
Page 3 of 7
Outlook
The Company offers the following guidance for the third quarter of 2005:
• | Revenue is expected to be approximately $155 to $157 million. |
|
|
• | Diluted earnings per share are expected to be approximately $0.57 to $0.59, which includes approximately $0.01 of anticipated acquisition integration costs. |
The Company offers the following guidance for the full year of 2005:
• | Revenue is expected to be approximately $625 to $630 million. The reduction from the Company’s prior guidance of $630 to $640 million is substantially the result of the strengthening of the U.S. dollar against major international currencies. |
|
|
• | Diluted earnings per share are expected to be approximately $2.26 to $2.29, which includes approximately $0.05 of anticipated acquisition integration costs. This is an increase of $0.01 from the Company’s prior guidance due to the performance in the second quarter. |
About IDEXX Laboratories
IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice-management systems and therapeutics. Our products enhance the ability of veterinarians to provide advanced medical care 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 Westbrook, Maine, IDEXX Laboratories employs more than 3,000 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 effectiveness of the Company’s sales and marketing activities; the Company’s ability to develop, license or obtain rights to new technologies; the Company’s ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company’s 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 our 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; disruptions, shortages or pricing changes that affect the Company’s purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company’s inventories; the Company’s ability to manufacture complex biologic products; 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, 2004 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.
IDEXX Announces Second Quarter Results
July 29, 2005
Page 4 of 7
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended |
| Six Months Ended |
| |||||||||||
|
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
|
|
|
|
|
| ||||||||
Revenue: | Revenue |
| $ | 160,630 |
| $ | 137,379 |
| $ | 313,056 |
| $ | 270,796 |
|
Expenses and | Cost of revenue |
|
| 80,055 |
|
| 65,377 |
|
| 156,401 |
|
| 131,748 |
|
|
|
|
|
|
|
| ||||||||
| Gross profit |
|
| 80,575 |
|
| 72,002 |
|
| 156,655 |
|
| 139,048 |
|
| Sales and marketing |
|
| 25,848 |
|
| 20,679 |
|
| 50,918 |
|
| 41,662 |
|
| General and administrative |
|
| 15,846 |
|
| 11,583 |
|
| 30,944 |
|
| 23,825 |
|
| Research and development |
|
| 9,995 |
|
| 8,685 |
|
| 19,769 |
|
| 17,205 |
|
|
|
|
|
|
|
| ||||||||
| Income from operations |
|
| 28,886 |
|
| 31,055 |
|
| 55,024 |
|
| 56,356 |
|
| Interest income, net |
|
| 871 |
|
| 756 |
|
| 1,374 |
|
| 1,485 |
|
|
|
|
|
|
|
| ||||||||
| Income before provision for income taxes and partner’s interest |
|
| 29,757 |
|
| 31,811 |
|
| 56,398 |
|
| 57,841 |
|
| Partner’s share of consolidated loss |
|
| 110 |
|
| 73 |
|
| 211 |
|
| 206 |
|
| Provision for income taxes |
|
| 9,934 |
|
| 7,974 |
|
| 18,986 |
|
| 16,346 |
|
|
|
|
|
|
|
| ||||||||
Net Income: | Net income |
| $ | 19,933 |
| $ | 23,910 |
| $ | 37,623 |
| $ | 41,701 |
|
| Earnings per share: Basic |
| $ | 0.61 |
| $ | 0.69 |
| $ | 1.15 |
| $ | 1.20 |
|
|
|
|
|
|
|
| ||||||||
| Earnings per share: Diluted |
| $ | 0.59 |
| $ | 0.66 |
| $ | 1.10 |
| $ | 1.14 |
|
|
|
|
|
|
|
| ||||||||
| Shares outstanding: Basic |
|
| 32,627 |
|
| 34,584 |
|
| 32,790 |
|
| 34,679 |
|
|
|
|
|
|
|
| ||||||||
| Shares outstanding: Diluted |
|
| 34,060 |
|
| 36,423 |
|
| 34,250 |
|
| 36,447 |
|
|
|
|
|
|
|
|
IDEXX Laboratories, Inc. and Subsidiaries
Key Operating Ratios (Unaudited)
|
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
|
|
|
|
|
| ||||||||
Key Operating | Gross profit |
|
| 50.2 | % |
| 52.4 | % |
| 50.0 | % |
| 51.3 | % |
| Sales, marketing, general and administrative expense |
|
| 26.0 | % |
| 23.5 | % |
| 26.1 | % |
| 24.1 | % |
| Research and development expense |
|
| 6.2 | % |
| 6.3 | % |
| 6.3 | % |
| 6.4 | % |
|
|
|
|
|
|
| ||||||||
| Income from operations |
|
| 18.0 | % |
| 22.6 | % |
| 17.6 | % |
| 20.8 | % |
|
|
|
|
|
|
| ||||||||
International | International revenue |
|
| 35.7 | % |
| 30.7 | % |
| 35.4 | % |
| 31.0 | % |
|
|
|
|
|
|
|
IDEXX Announces Second Quarter Results
July 29, 2005
Page 5 of 7
IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
|
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
|
|
|
|
|
| ||||||||
Revenue: | Companion Animal Group |
| $ | 131,332 |
| $ | 112,731 |
| $ | 256,212 |
| $ | 222,561 |
|
| Water |
|
| 14,271 |
|
| 13,004 |
|
| 27,077 |
|
| 24,858 |
|
| Food Diagnostics Group |
|
| 15,027 |
|
| 11,644 |
|
| 29,767 |
|
| 23,377 |
|
|
|
|
|
|
|
| ||||||||
| Total |
| $ | 160,630 |
| $ | 137,379 |
| $ | 313,056 |
| $ | 270,796 |
|
|
|
|
|
|
|
| ||||||||
Gross Profit: | Companion Animal Group |
| $ | 62,825 |
| $ | 56,109 |
| $ | 122,088 |
| $ | 108,185 |
|
| Water |
|
| 9,622 |
|
| 8,748 |
|
| 18,099 |
|
| 16,741 |
|
| Food Diagnostics Group |
|
| 8,128 |
|
| 7,145 |
|
| 16,468 |
|
| 14,122 |
|
|
|
|
|
|
|
| ||||||||
| Total |
| $ | 80,575 |
| $ | 72,002 |
| $ | 156,655 |
| $ | 139,048 |
|
|
|
|
|
|
|
| ||||||||
Income from | Companion Animal Group |
| $ | 21,411 |
| $ | 23,461 |
| $ | 40,299 |
| $ | 41,709 |
|
| Water |
|
| 6,540 |
|
| 5,972 |
|
| 12,044 |
|
| 11,027 |
|
| Food Diagnostics Group |
|
| 1,760 |
|
| 2,397 |
|
| 4,338 |
|
| 5,320 |
|
| Other |
|
| (825 | ) |
| (775 | ) |
| (1,657 | ) |
| (1,700 | ) |
|
|
|
|
|
|
| ||||||||
| Total |
| $ | 28,886 |
| $ | 31,055 |
| $ | 55,024 |
| $ | 56,356 |
|
|
|
|
|
|
|
| ||||||||
Gross Profit | Companion Animal Group |
|
| 47.8 | % |
| 49.8 | % |
| 47.7 | % |
| 48.6 | % |
| Water |
|
| 67.4 | % |
| 67.3 | % |
| 66.8 | % |
| 67.3 | % |
| Food Diagnostics Group |
|
| 54.1 | % |
| 61.4 | % |
| 55.3 | % |
| 60.4 | % |
Income from | Companion Animal Group |
|
| 16.3 | % |
| 20.8 | % |
| 15.7 | % |
| 18.7 | % |
| Water |
|
| 45.8 | % |
| 45.9 | % |
| 44.5 | % |
| 44.4 | % |
| Food Diagnostics Group |
|
| 11.7 | % |
| 20.6 | % |
| 14.6 | % |
| 22.8 | % |
IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)
|
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
|
| June 30, |
| June 30, |
| June 30, |
| June 30, |
| ||||
|
|
|
|
|
|
| ||||||||
Net CAG Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Instruments and consumables |
| $ | 53,045 |
| $ | 48,424 |
| $ | 105,918 |
| $ | 97,235 |
|
| Rapid assay products |
|
| 27,397 |
|
| 26,172 |
|
| 52,149 |
|
| 50,417 |
|
| Laboratory and consulting services |
|
| 40,367 |
|
| 28,472 |
|
| 76,911 |
|
| 55,577 |
|
| Computer systems and digital radiography |
|
| 7,199 |
|
| 6,591 |
|
| 14,660 |
|
| 13,919 |
|
| Pharmaceutical products |
|
| 3,324 |
|
| 3,072 |
|
| 6,574 |
|
| 5,413 |
|
|
|
|
|
|
|
| ||||||||
| Net CAG revenue |
|
| 131,332 |
|
| 112,731 |
|
| 256,212 |
|
| 222,561 |
|
Net Water | Water |
|
| 14,271 |
|
| 13,004 |
|
| 27,077 |
|
| 24,858 |
|
|
|
|
|
|
|
| ||||||||
Net FDG Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Production animal products |
|
| 10,956 |
|
| 7,585 |
|
| 21,818 |
|
| 15,483 |
|
| Dairy-testing products |
|
| 4,071 |
|
| 4,059 |
|
| 7,949 |
|
| 7,894 |
|
|
|
|
|
|
|
| ||||||||
| Net FDG revenue |
|
| 15,027 |
|
| 11,644 |
|
| 29,767 |
|
| 23,377 |
|
|
|
|
|
|
|
| ||||||||
Net Revenue: |
|
| $ | 160,630 |
| $ | 137,379 |
| $ | 313,056 |
| $ | 270,796 |
|
|
|
|
|
|
|
|
IDEXX Announces Second Quarter Results
July 29, 2005
Page 6 of 7
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)
|
|
| June 30, |
| December 31, |
| ||
|
|
|
|
| ||||
Assets: | Current Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents |
| $ | 52,354 |
| $ | 47,156 |
|
| Short-term investments |
|
| 78,603 |
|
| 90,116 |
|
| Accounts receivable, net |
|
| 73,139 |
|
| 65,639 |
|
| Inventories |
|
| 81,765 |
|
| 76,424 |
|
| Other current assets |
|
| 21,470 |
|
| 22,257 |
|
|
|
|
|
| ||||
| Total current assets |
|
| 307,331 |
|
| 301,592 |
|
|
|
|
|
| ||||
| Long-term Investments |
|
| 7,583 |
|
| 19,687 |
|
|
|
|
|
| ||||
| Property and equipment - cost |
|
| 143,082 |
|
| 137,851 |
|
| Less: accumulated depreciation |
|
| 79,361 |
|
| 75,221 |
|
|
|
|
|
| ||||
| Property and equipment, net |
|
| 63,721 |
|
| 62,630 |
|
|
|
|
|
| ||||
| Other long-term assets, net |
|
| 121,615 |
|
| 130,328 |
|
|
|
|
|
| ||||
| Total assets |
| $ | 500,250 |
| $ | 514,237 |
|
|
|
|
|
| ||||
Liabilities and Stockholders’ | Current Liabilities: |
|
|
|
|
|
|
|
| Accounts payable |
| $ | 16,193 |
| $ | 14,723 |
|
| Accrued expenses |
|
| 68,093 |
|
| 73,785 |
|
| Notes payable |
|
| 531 |
|
| 1,291 |
|
| Deferred revenue |
|
| 8,434 |
|
| 10,153 |
|
|
|
|
|
| ||||
| Total current liabilities |
|
| 93,251 |
|
| 99,952 |
|
|
|
|
|
| ||||
| Total long-term liabilities |
|
| 14,538 |
|
| 16,233 |
|
|
|
|
|
| ||||
| Partner’s interest in subsidiary |
|
| 232 |
|
| 392 |
|
|
|
|
|
| ||||
| Stockholders’ Equity: |
|
|
|
|
|
|
|
| Common stock |
|
| 4,559 |
|
| 4,522 |
|
| Additional paid-in capital |
|
| 423,825 |
|
| 410,817 |
|
| Deferred equity-based compensation |
|
| 1,231 |
|
| 665 |
|
| Retained earnings |
|
| 356,305 |
|
| 318,682 |
|
| Treasury stock, at cost |
|
| (398,718 | ) |
| (348,327 | ) |
| Accumulated other comprehensive income |
|
| 5,027 |
|
| 11,301 |
|
|
|
|
|
| ||||
| Total stockholders’ equity |
|
| 392,229 |
|
| 397,660 |
|
|
|
|
|
| ||||
| Total liabilities and stockholders’ equity |
| $ | 500,250 |
| $ | 514,237 |
|
|
|
|
|
|
IDEXX Laboratories, Inc. and Subsidiaries
Key Balance Sheet Statistics (Unaudited)
|
|
| June 30, |
| December 31, |
| ||
Key Balance | Days sales outstanding |
|
| 42 |
|
| 39 |
|
| Inventory turns |
|
| 1.8 |
|
| 1.9 |
|
IDEXX Announces Second Quarter Results
July 29, 2005
Page 7 of 7
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
|
|
| Six Months Ended |
| ||||
|
|
| June 30, |
| June 30, |
| ||
|
|
|
|
| ||||
Operating: | Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
| Net income |
| $ | 37,623 |
| $ | 41,701 |
|
| Non-cash charges |
|
| 14,251 |
|
| 17,043 |
|
| Changes in current assets and liabilities, net of acquisitions and disposals |
|
| (13,789 | ) |
| (14,848 | ) |
|
|
|
|
| ||||
| Net cash provided by operating activities |
| $ | 38,085 |
| $ | 43,896 |
|
|
|
|
|
| ||||
Investing: | Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
| (Increase) decrease in investments, net |
|
| 23,586 |
|
| (268 | ) |
| Purchase of property and equipment |
|
| (10,508 | ) |
| (17,676 | ) |
| Acquisition of businesses and intangible assets |
|
| (659 | ) |
| (5,392 | ) |
| Acquisition of equipment leased to customers |
|
| (1,278 | ) |
| (1,230 | ) |
|
|
|
|
| ||||
| Net cash provided (used) by investing activities |
| $ | 11,141 |
| $ | (24,566 | ) |
|
|
|
|
| ||||
Financing: | Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
| Repayments of notes payable |
|
| (1,270 | ) |
| (304 | ) |
| Purchase of treasury stock |
|
| (50,391 | ) |
| (58,070 | ) |
| Proceeds from the exercise of stock options |
|
| 9,461 |
|
| 16,910 |
|
|
|
|
|
| ||||
| Net cash used by financing activities |
| $ | (42,200 | ) | $ | (41,464 | ) |
|
|
|
|
| ||||
| Net effect of exchange rate changes |
|
| (1,828 | ) |
| 76 |
|
|
|
|
|
| ||||
| Net increase (decrease) in cash and cash equivalents |
|
| 5,198 |
|
| (22,058 | ) |
|
|
|
|
| ||||
| Cash and cash equivalents, beginning of period |
|
| 47,156 |
|
| 186,717 |
|
|
|
|
|
| ||||
| Cash and cash equivalents, end of period |
| $ | 52,354 |
| $ | 164,659 |
|
|
|
|
|
|
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow (Unaudited)
|
|
| Six Months Ended |
| ||||
|
|
| June 30, |
| June 30, |
| ||
|
|
|
|
| ||||
Free Cash | Net cash provided by operating activities |
| $ | 38,085 |
| $ | 43,896 |
|
| Purchase of property and equipment |
|
| (10,508 | ) |
| (17,676 | ) |
| Acquisition of equipment leased to customers |
|
| (1,278 | ) |
| (1,230 | ) |
|
|
|
|
| ||||
| Free cash flow |
| $ | 26,299 |
| $ | 24,990 |
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|
|
|
|
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| Free cash flow indicates the cash generated from operations reduced by investments in capital and other long-term assets. Free cash flow excludes financing activities, investments in monetary securities, and business acquisitions and divestitures. 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. |