IDXX - Earnings call transcript Q4 2019 | IDEXX Laboratories, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the IDEXX Laboratories Fourth Quarter 2019 Earnings Conference Call.

As a reminder, today's conference is being recorded. Participating in the call this morning are Jay Mazelsky, President and Chief Executive Officer; Brian McKeon, Chief Financial Officer; and John Ravis, Senior Director, Investor Relations.

IDEXX would like to preface the discussion today with a caution regarding forward-looking statements. Listeners are reminded that our discussion during the call will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today.

periodic risks in is this can our well our in these forward-looking under morning idexx.com. be regarding Securities website, Investor as notice the Relations SEC statements press our visiting obtained information from and Commission, or available uncertainties the as and the Additional Exchange with by which the filings release of issued section

or generally GAAP GAAP. most financial call, reconciliation measures discussing not be accepted visiting Investor we accounting earnings accordance in directly provided found this non-GAAP principles, During these the also our certain Relations with A the of which website. financial measures will prepared to of may section release, by in be measures is comparable our

please full XXXX growth expense XXXX results, note growth otherwise compared exclude quarter EPS XXXX, Instructions) XXXX quarter quarter currency, of noted. margin all constant to profit the currency growth, to in organic refer fourth XXXX operating our comparable operating the reviewing impact growth, and to charges. growth, currency the year and unless Fourth constant currency growth, constant (Operator transition growth operating growth period references fourth equivalent and growth comparable In CEO comparable constant

would I to to call Brian the over like now turn McKeon.

Brian McKeon

morning, and performance strong quarter full long-term EPS of on good our continued outlook which I'm and and financial revenue and goals. achieved everyone. you provide QX, with fourth take financial update an gains Thanks, XXXX. supported our full pleased year results through our to financial to year XXXX in for aligned delivery IDEXX

CAG the growth organic fourth XX% and achieved we XX% revenue LPD Diagnostics quarter in Water in and our recurring by driven organic businesses. revenues highlights, in growth XX% growth of terms In organic

XX% gains quarter CAG growth in nearly recurring organic over Solid revenue and year revenues. of supported Diagnostics organic XX% growth fourth full

margin improvement. comparable an XX% operating a Our was currency points XXX basis in EPS comparable full supported constant by on constant of year increase currency $X.XX, basis,

our now charges that after aligned margin QX comparable improvement metrics $XX.X charges. Note comparable operating EPS $X.XX EPS expectations; in with These than million $X.XX from QX, $X.XX projections, and by share provision initial tax reduced by $X.XX from operating impacts transition included exclude profits share-based year growth our and results estimates. tax rates per CEO tax, share Full in per compensation guidance per benefit reflecting above approximately share estimates. better activity, updated

related We an also $X.XX expense. to tax saw our of estimates lower-than-projected upside provision estimates earlier below-the-line additional to and interest guidance final

XXXX. maintaining positioned raising revenues, comparable X% to FX to reflecting annual We're our XXXX $X.XX with EPS updated revisions guidance compensation Positive well in We're these preliminary to impacts. to XX% constant the for growth. consistent per guidance XX% assumptions $X.XX tax improvement our $X.XXX $X.XX for favorable expense, growth in EPS estimates. share-based projections FX share, interest by our include which reflected updates of to $X.XXX range results performance XX.X% and outlook operational to our reflect organic range to benefits in to and currency strong revenue range billion increased build on of billion guidance We're our flow-through

you through walk my We'll guidance later our comments. of in the details XXXX

net Diagnostics U.S. organically by CAG revenue gains recurring revenues year review consumables reference rapid organic growth organic sales, revenues, of in gains CAG were Global a Diagnostics revenues. with full organically low- up lab gains assay trending XX.X% range. net price increased revenues in By CAG and double-digit X% by Group. VetLab in momentum driven a U.S. equivalent fourth equivalent in the CAG volume-driven, X% results Let's modest and Animal days' were mid-teens XX% our continued by gains Companion segment. with to XXXX growth results Diagnostics Consistent region, by impact. our QX days' X.X% strong of recurring begin of quarter supported headwind gains U.S. in recurring in supported overall. were remains a XX% net to primarily strong solid

customer of levels modalities. across high maintained retention also We

revenue. U.S. by Total practice were per some on visit quarter strong following with was stronger the visit same-store CAG market outpace results, trends. growth growth continues gains quarter broader fourth to QX, Total X.X% same-store revenue earlier increase market clinical X.X% in with the Diagnostics offset QX a in relatively practice visits on flat overall gains in relatively in December. a in basis moderation

in from solid our a year, full QX of expansion headwind. by CAG outside in day's U.S. nearly in increased the expansion revenues continued visit the recurring QX, gains degree base mid-teens year-on-year continued set, Diagnostics XXXX, XX% modest overall our installed in a benefited consumable by day related diagnostic reflected a Canada same-store shipments XXXX up X.X% reflecting in International of results the XX% to as moderated clinical International America Latin Asia, revenues in gains equivalent in organic timing QX increased XX% and prior data market and impacts. year growth growth X,XXX well and net in the Catalyst equivalent supported as practices were For strong organically to Strong in Europe QX X.X% which impacts consumable in of of of services. results

single-digit gains lab international sales International reference year, consistent organically increased major QX revenues in our consumable across the high XX% regions. at with For organically. rates full increased nearly solid

VetLab lab in of global of global U.S. services organically, CAG Global consumable the in day For customers. reflecting long-term organic increased by lab supported By day growth same-store gains fourth additional in in revenues nearly U.S., X.X% XX% XX% and net headwind. aligned revenues XX% recurring of at high X% benefit an organically in reported related the year, strong quarter with the growth grew benefit XX% a year equivalent international Full nearly in by Diagnostics revenues a consulting the organically supported our XX% initial was by equivalent integration growth XX% growth growth to growth X% of revenues driven markets, with expanded Marshfield consistent and modality, sales full reference continued the goals. IDEXX Labs. QX

increased For the increases across expansion instruments by consumable year, U.S. premium diagnostic base. double-digit supported XX% and full of and organically growth our test driven ongoing installed VetLab international in utilization by markets, revenues

X,XXX We in EVI. excellent year-on-year a driven quarter in year-on-year instrument placements QX terms increased a in new had supporting our XX% QX, XX% double-digit in in year-on-year; accounts XX% premium increase. and another Catalyst year-on-year of and placements, Value international we in XXX placed high-quality global at quarter, base. North or growth placements new XX% Overall, year-on-year supporting in with competitive growth year-on-year by markets, growth Catalysts Catalyst placements Index competitive up X% our and the installed in in X,XXX Economic Global America,

We placements, X%; our base SediVue XXX X,XXX of U.S. global over also solid headwind. instruments, now and gains QX, international net Overall, revenues markets, up installed down hematology premium achieved placements, compared X% XX% and levels. in assay year across reflecting year-on-year. organically SediVue equivalent-day is to X% Rapid up a prior X,XXX strong grew X.X%

the products. over supported to bringing engaged of specialty base our XX,XXX. in business of solid revenues rapid For additional retention our global growth to base, high benefit installed grew X% first-generation continued Growth, continued in organically, reflecting nearly assay XXXX, our rapid customer SNAP Pro and XDx installed ongoing Plus by assay from XX,XXX full expansion year, placements

imaging increased in organically of double-digit solid services. by QX, software VSS Veterinary continued and X% digital revenues and services in diagnostic expansion supported system imaging gains

in global gains Overall, XXXX, organically XXXX. in and CAG the nearly XX% continued double-digit CAG business revenues organic grew in we're targeting

from other our of lines X% solid benefit terms In Water gains QX, of in grew by revenues XX% days, major across our equivalent organically supported including regions. approximately business.

profitable For in pleased full operating Water the with the faster and our We're continued high-single-digit very organic with organically margins. year, growth in this targeting profit X% growth in full business in business are increased Water resulted continued XXXX. year revenues momentum XX% highly operating

QX Dairy XX% sales screening. and fever and testing and results and swine favorable benefited offset herd orders. as related organically. Strong programs health supported for of growth declines were core distributor well solid in growth Livestock, as QX China, swine Poultry year-on-year airports results diagnostic also in by timing African in testing QX government the to poultry from comparisons increased in testing diagnostic which benefits of revenue from

year revenue profit from For with X% relatively benefiting higher improvement up our full growth operating organically, was controls. the XXXX, cost LPD productivity and

well are to in health and Asia and government moderated Europe diagnostic strong swine our African disease in compares as testing screening franchise programs pressures and in herd fever as testing We're revenues levels. control testing dynamic pleased profits we're expanding in XXXX, growth LPD our our flat-to-modest in a LPD in very progress global organic growth targeting our programs broader pregnancy tough by benefits from with on ongoing XXXX swine climate. bovine related In XXXX in as business expected

investment Gross reported the a basis XX% gains price strong Turning investments in P&L. decreased XX% lab for profit and up reference revenue continued lab which moderate net reflecting expansion, acquisition related our exchange Gross in or system day a QX and basis, impacts. slightly capacity, route benefits to offset business constant margins from adjusted increased consumable currency to on growth. integration, was on foreign

were profit, QX. in hedge benefited which exchange gains, million $X.X Foreign gross

growth. was profit segments, operating high CAG, a On and QX constant LPD as gains impacts increased solid comparable our flat profit Operating XX%, across including by basis, in charges. reflecting CEO reported, transition revenue currency income Water from supported

in currency QX. on As capability increases expense comparable global operating expected, gains commercial Operating CAG constant growth a R&D. flat in increased basis were comparable XX% relatively currency constant driven by to margin and

investment half into As update, in we'll our first discuss the impacts carry guidance of XXXX. will

charge transition volume XX XX% and XX% constant of basis currency This basis basis a impacts. excludes points currency For strong on balance as increase on operating basis, increased expense margin points XX reported XXX of operating reflects leverage currency the an on year, constant which and XX% a gains of improvement or points margin full of profit a Constant operating operating comparable comparable reflected gross CEO an growth. margin basis.

share-based QX On in in to share $X.XX EPS including a benefit share, XX%. currency was EPS basis, tax increased related $X.XX constant comparable activity. per compensation per

currency was EPS a XXXX, comparable XX% on For $X.XX constant or basis.

changes year, rate $X.XX gains net exchange EPS $XX decreased hedge share, For million. by nearly foreign of the FX of per full

XX%. $XX.X net included per X.X% of compensation year projects. related benefit tax our of provided effective million of million to of had related share-based activity, rate $X tax interest results the EPS $X.XX expense $XX Full of which interest million major to share capitalized year, benefit for approximately or XXXX We facility in in

spending the was XX% to XXXX Capital net million, our flow XX% of for of to million project shares lab timing $XXX cash approximately an combined capital towards cash full favorability of repurchase We headquarter Maine XXXX in This of $XXX of deployment. related German at of $XXX million year or net to or of price share. X.XXX relocation million. estimates Free shares for for of income per related income. $XXX included and core QX earlier came in Westbrook, investment major at average expansion repurchases allocated XXX,XXX the some $XXX million $XX with including million

is in cash sheet million credit an the in year with and balance our capacity $XXX position. of million Our facility. under We revolving $XXX $XX in excellent debt, ended million

leverage X.XXx a X.Xx gross adjusted year-end. net and X.XXx as - were Our ratios multiple at of EBITDA cash of

financial disciplined allocation after-tax achievement on for XXXX. performance Our and XX% supported return strong cash and excluding invested of capital investments capital, a

updated including strong for supported approximately million with XX.X% We're our to midpoint, well $X.XXX assumptions. revenue guidance revenue $X.XXX reported revenue goals. growth $X.X positioned long-term a on XXXX, CAG billion, up XX%. $X growth our continued organic We're recurring in benefit by the from of performance to with Diagnostics to increasing at aligned billion financial build XX% range outlook guidance to We're to strong of maintaining million X% FX consistent

assumes FX growth guidance growth completed acquisitions, to which projected XX.X%. offset X% growth X.X% is headwind in a projected of benefit Our X.X% rate resulting XXXX from by revenue

leverage outlook $X.XX outlook basis preliminary currency increase The combined to constant in EPS compared margin share, XX This per points We're increase $X.XX comparable an the benefit with the X% both net to XXXX in our from outstanding. with EBITDA. our XXXX an favorable improvement. to comparable maintenance X.X% of shares consistent a and reduction aligned projecting XX%, net reflecting $X.XX. outstanding, million XXXX shares operating approximately projected $XX a of raising to in assumptions now in aligns We're and for approximately costs of XXX interest expense flow-through of assumed in X.Xx to $X.XX metrics in includes average updates EPS to interest with of guidance XX% EPS growth a performance operating for $X.XX and to reductions our average at outlook

or to We're activity. rate $X.XX of which million to $X.X compensation projecting of million rate from now projected in exercise reflects $X.XX share-based in tax share. to from XX% also benefit per benefit XX%, outlook $X.XX updated $X.X Our tax in stock-based an compensation to X.X% XXXX, effective XXXX equates including in tax

$X.XX of XXXX. projected Finally, now year-on-year from our FX guidance $X million projecting benefited an estimated assumptions. from $X.XX impact we're of by Overall, FX, hedge negative updated gains in net

of free completion U.S. Westbrook $XX flow, in the lab million terms targeting to real In of acquisition associated of deployment including the million core million our with approximately capital spending, and cash projects of headquarters, $XXX we're related to German a $XXX core lab. estate

these results outlook of impact X% including approximately flow XX% cash XX% an in investments. of free For net for XXXX, this from to income discrete

a reflected including organic we projected revenue In equivalent-day expect of QX in leap in tailwind year. X.X% reported to to range, to related X% XX% the terms of outlook XX.X%, XX% gains the our growth first XXXX, quarter

moderately We and we integrate margins investments XXXX our of levels, the continue reflecting lab commercial to acquisition expect operating prior our Marshfield advanced will second stepped-up headquarters expansion. and below and in year onboard Westbrook our half be as

margin core lab we into grow operating our will scaled XXXX headquarters in performance German second by expect our including facility. half be new We and as driven investments, gains

concludes the financial That overview.

for now to me the turn Jay Let call over comments. his

Jonathan Mazelsky

our we for Excellent deliver Good XX% Animal, with on on to represents in key our was year on of businesses. us build overall for EPS year. capital our progress XX%-plus performance fronts XXXX, Livestock enabled had with XX%, revenue and morning, growth well across constant Brian. comparable Companion to execution full this aligned double-digit strong now recurring grew diagnostic long-term Core revenue, strategic invested XX% financial growth currency X/X goals. across are revenues, you, a businesses organic us Diagnostics Water which to Return and of over positions CAG XXXX. at exceptional. advancing and thank of company organically finish the the IDEXX The

number in commercial sales our is time and return areas organic and high service investments essential an our see two club field-based in in to with more that focus systems we Salesforce spend professionals our pillar execution capabilities in areas commercial a Outstanding customers. growth customer-facing increasing or XXXX. in these consistently allow global enabling the like Expansion were resources of of in strategy,

in the to more XXX have team QX seat with completed the We than double U.S. started number We the U.S. commercial and years U.S. our support development, from year the in trained. expansion and in now expanded ago. market field-based professionals five

newly the As we enter in new XXXX, as competitive including placements we a anticipate some settling in we during QX in the reconfigured number. sales first expansion those in quarter delivering expansion record Catalyst this or and their while develop Notably, accomplished U.S., relationships XXX of recruited, the new professionals, territories.

a embracing the at the pillar sales becomes own with practice foundational properly also point market XXX are productivity resources IDEXX with the over progress strategies. on as solution addressable We that we and preventive believe North and with customer Customers make Care continue care, even their are it increasingly over driving which in tenure reach to enrollees commercial enrollees our Preventive time focus this XXXX, new force, in quarter X,XXX deeper in with view with balanced to opportunity. to turnkey American the relationships. And date. more program in our in will expanded effective We

chemistry that Economic units. placements, record new to in Catalyst prioritizes in competencies as competitive placements to have markets resulting The in like growth with international driven more a performance instrument advance and high-value XX% capability XXX. QX placement priorities than Value commercial programs build commercial by Index IDEXX tenure X,XXX they team's and Our the also commercial been of an in continues competitive and key of

organic outside Our supporting consumables grew Catalyst installed year-over-year, VetLab America base nearly North XXXX. internationally XX% in growth of XX% revenue IDEXX at

strengthen We our execution expect previously XXXX global enhanced organization, to gain global further as commercial leverage and with announced. in field

innovation pillar. testing our platforms with Leading includes is growth another key expanding

The measure best-in-class launched of we how new standard the the testing past liver years. test benefit over in This to eight as Catalyst expected raise by Catalyst a bile more shipments announced lab as of with by reference in them innovation were supporting embrace value-added great excited year, important month. Catalyst technology-for-life enable this is that customers we is care constantly are tools brings function VMX of our clinic. global innovations and with and customers. of our acids this example Catalyst tests this of Catalyst clinically expanded platform quality acids that since bile clinically we to bringing a ways. expansion rigorous has platform. This steady greeted quarter. to workflow-efficient earlier make enthusiastically new are We eight These the at continued valuable heartbeat, platform veterinarians

great of of installed XX,XXX approximately we practices instrument alone and another with successful Following XXXX, of XX,XXX around the end the placements remain retention, placement expansion, of installed. year Even the world. Catalyst opportunities Catalysts approximately for customer there as base addressable estimate

to focus data increasingly AI images the Dx, with clinical and with this sets is SediVue X.X, algorithms This machine with with Network develop patients. learning XXX leveraging capable clinicians launching large challenging most innovation Neural the assist case groundbreaking that our even highly million quarter. uses platform Our

because are capabilities be possible global in our for leveraging bacteria is be at appearance. quickly no bacteria-detection X,XXX additional highly with cluttered similarity customers. small seeing Moreover, are and connected customer bacteria our service, to because analyzers our smart could disruption. because update debris all by base will in-clinic mistaken able installed for image and size, proprietary due to bacteria the in technology no adding of Seeing We of by relevant clinically charge difficulty their patent-pending especially reagents, challenging very advance made we

not confirmation eggs, and the Dx parasites fecal Because to many rely portfolio, does In visual alone, on customer presence continues fecal the of parasites antigen the strong in it's life cycle support as the as same-store reference growth. antigen lab, of intestinal to service twice earlier uncover our able including test infection. identifying infections of O&P differentiated broad the

leveraging reference further results day digital for also speed at results integrated a seven offering VMX PLUS, to launch service VetConnect our with days two customers in an adoption We're existing at year. with are workforce this by global of veterinary new receive like at America a February. workflow, of in Cytology train customer-facing transforming able network time. service, digital field week, to we XXX which of We're field a reps and cytology our the within capability applications lab an clinical about days than do customers often wide announced a new expanding XXX diagnostic service, turnaround service of pathologists. With least more to XXX two interpretation a install cytology, exciting expert North IT have hours, the and

to spring our lab in German improving internationally. We're adding and offering our continue about late our of laboratory regional laboratory hub-and-spoke year core invest We service reference further this in network. global sophisticated to state-of-the-art excited

to Adoption have XX% at global clinic of X.X nicely of run diagnostic and advance times. utilization customers SDMA IDEXX Catalyst ordered million modalities. and now have and SDMA continues Catalyst in lab

North a GFR America, reference IDEXX chemistry number XX SDMA, IDEXX that panels as has are million function, in direct is almost increasingly kidney measure included fact, or care. of seeing In a also labs. almost standard of Customers in been impairment XX% adoption. SDMA at

and guidelines testing the fact, guidelines first now by diagnostics time American stage, the updated Hospital canine life for testing include has wellness their In SDMA. Animal Association

customer running efficient Customers applications our enabler an in to to use robust care Our excellent adoption. offerings deliver who and manner. to believe practices continue software they veterinary an their are that patient software outstanding enjoy

experience with we quarter. and We X.X placements, base Animana Cornerstone, we Cornerstone XXXX. that over QX in quarter improved are SmartFlow introduced user installed a at pleased the by the America, growth of on-premise management including much year-over-year North well placements of software patient for XX% systems. software version was end had our new March for record cloud-based update installs upgraded and of In another strong for of Neo, year, last half software and

commercial to cloud Cornerstone to us with progress schedule this continued customer positioning on Work scale positive year. QX for launch feedback, later very in on

these XX% cloud-based by update. with released and practices. relied IDEXX Web images orientation of by more PACS offerings, technology provides X,XXX in and comprehensive automatically subscriptions providing than body that corrects on delivery are Overall, a new for the software customer read a base around most shortening QX integrated functionality, groups image installed offering multiple practices another software year-over-year artificial stack and It powered enjoyed we by world. part, increase strong potentially quarter intelligence, sorts recently corporate the XX%. of by across independent the We time subscribing end

CAG in growth. both performance our our addition the we diagnostic organic fourth also in Water core to business, had our with XX% revenue In quarter, in and progress achieving Livestock strong businesses

We commercial business on continue to through expand our globally high-return Water focus execution.

this tremendous in shown Our the in challenges business swine Livestock fever macro input resilience face continued the and has also year Asia. African from of

our our are to ability we growth. and ahead, long-term business the optimistic Looking of about potential its high sustain

the momentum. One CAG on is in Major capability and and strong include Diagnostics revenue, this our continued expanding with to IDEXX' to aligned ongoing our targeting of like expanded momentum platform integration strategic of base new recurring differentiators premium drivers installed XX% at global XXXX, commercial grow our of adoption instruments, and features customer building which key we're XX%. goals

billion, the opportunity the ongoing Animal Diagnostics majority United next for of recurring see tremendous market existing $XX outside of with Over years, revenues Diagnostics growth of addressable States. CAG a that of over XX we Companion the global with

improving the remain of care standard service focused to our exceptional We on and growth. to best to clinical practice and customers our healthy commitment the decision-making enable providing

pets, people to the Before health thank and questions, enhance in we accomplishments in call for XXXX want and of I our them our and of pursuit livestock. the to purpose well-being open congratulate to employees the

that, questions. with take we'll And Okay.

Operator

we from Goldman first question of with the Rich And the take Nathan line Instructions]. will [Operator Sachs.

Nathan Rich

should thinking the this off just of of Brian, year. about organic how we on cadence kind be starting maybe growth

first the I said XX% you think would quarter be XX.X%. to

benefit point days. from the includes think XXX I basis leap that

full gave is of the So year think organic you out, if that growth. I for range we the guidance with that kind consistent back

year? sort So the relatively consistent balance of over a should the be of cadence expecting we

Brian McKeon

that's We'll but detail got of obviously read, is work through some XX.X%. days in outlook think we provide QX. year the a We'll more Nate, have benefit full as to accurate I an year, X% we've from that

the a I XX% bit QX. think, And we on XX% but and fourth basically I and wash quarter days' CAG our right of out. results the the a impact in have, build effects our middle is in with can should for net-net, noted just seeing XXXX. that looking think in very shipment timing some We're you We trends headwind much impact line to the of if a Asia, modest for year, bit. which of in were balance rate recurring we've the growth range on the But that growth been that adjust those to in

Jonathan Mazelsky

would We're XX% - gain going positioned for that to we well XXXX. to sustain to in And reflect that that. add our I XX%

You a over start with X.X%. saw the We fact good clinical visit growth XXXX, that it's good backdrop. market

XX% education Customers Catalysts, of we years and products. customers, growth expansion in as differentiators introduced - sales and installed and in awareness expanded the And is our growth ultimately, base: with those those in well with SediVue in in consideration. see nice We're result pleased an We in total, as out as partnering consumables customers have there enthusiastic VMX. about we around IDEXX driving force, which very past we've the use innovation. are our premium really XX% have XX% the momentum adoption and

that mentioned differentiators come Customers retention and all high appreciate rely tell remarks, modalities. very Brian as in the integration like of we across have us And note our extensions on. the then his bring, that we to we they've platform - they

good growth. So that to we're in feeling like sustain very we're position a

Nathan Rich

comments on on Jay, that's follow-up end just the a And market. helpful. your

number Brian, a bit mentioned you've XQ softer. you that curious January. volatility. to would to? I a little maybe be into improvement know if strong sort quarter-to-quarter you know attribute think, just was I'd the seen of little You bit December had continue And kind noted stronger. kind Is is XQ Obviously, always of of what of a I kind there's XXXX. that

Jonathan Mazelsky

Yes.

the used So mind, whole. diagnostics solid, Keep where where growth actually as the a clinical the QX X.X% and in veterinarian on - we was That's is patient growth. focus piece. the sees clinical

Now and little noted, going a that in but picked up into soft came off as strong the QX, December. quarter, fairly

So a and the positive XXXX market. a standpoint. change strong in on We from think don't market it's we see we're anything

Operator

next Our Daniels from comes Blair. William with of Ryan question the line

Ryan Daniels

cytology. to that? VMX? follow-ups curious, you got, an follow-up, but speak I'm at early curious at the can feedback the like reading number know instrument I'm A lab. if the And one, couple digital what will number of particularly also from then two, new there's on you I revenue my the as look reference

the So lab think how will about model? the that be in reference equipment or lines? Or should revenue we

Jonathan Mazelsky

you, Thank Right. Ryan.

and when whether prepare or X enthusiastic the can of slide, they'll at decide so. you give it X often of out look digital to need under me they send or Customers just very take it really they a or That with microscope for then about a VMX. can process days. and and But takes - kind Typically, in, take a will upon Let And cytology a some very market lumps from backdrop it bumps. sample, feedback were service. it like not send the veterinarian Friday, couple see everyday interpretation. days expert depending patient

the So they of of able year. us to expert the and an ability it all and and days interpretation were and be every do day week about the of very, very send all with to of appreciative enthusiastic back hours able two within a result day, being that get hours the to

help able be integrated which these workflow; clinical existing having service. reason into a and and - train terms in our there and the onboard the systems infrastructure to the out investments way, pathologists provide the were to that, IT to were to that of slide around So that and fit by able do we that is able world made, we've because organization, customers install on field preparation; having is who can service we

of of about we and are cytology. practices about about bit The a to I'll market of little size, over X% to hand Brian terms think this revenue. it In users way then higher-volume talk is

X-plus cytology little that IDEXX of today measure. So practices lab we to over practices month. interpretation. send for actually some a cases that do per XX,XXX about define in of X,XXX our out X,XXX That's reference we About labs reference as in with expert business

scope we're about. in to So as time just what a that gives adopting more they use think over benefits talking continue more of customers this, using there's and you potential We it. it of

Brian McKeon

I seen CAG supportive we Ryan, reference think the expand factor think company, about way recurring be growth a that labs. It's including growth service support, financially, Dx of U.S. it can is think believe I it And strong and valued will Yes. one to in franchise. sustaining and continue to a that differentiator XX% that XX% that to is something that a we've the

the and not a terms second be of Jay market in distinct noted, and that program calling set year And instrument the revenues, will be would smaller placements, out it's as the half the it kind service get more we material up awareness it's XXX-type likely we'd But in driver. as running. of build anticipate relatively instrument. And this market of earlier of a of as integrated into adopters the

adding Dx example leveraging to time. we is over services scope we're strong it adding that as the and double-digit CAG to drive providing, think and we that of in will of But build IDEXX to it's differentiation very achieve. another revenues the should growth I something about we're excited to anticipate value our that how

Operator

of line the Ryskin to America. Bank go will Michael we of with Next,

Michael Ryskin

markets: questions wildfires earlier and a bit could, just in to some of a ease. little market more conditions, specific. at I the you just recent lot about I get international question Maybe about my of end on an year. mind want guess, had Australia over the towards days I've the weeks put help up follow

weather in You've Europe or affect heat in waves had California similar you.

if how visits you've sort And seeing anything outbreak China impact. terms much factors is the in of market or expectations size coronavirus that And in of Just of and companion there seen that vet livestock? for XXXX? versus if that you're into your that of what of how curious obviously. just also your And had a any market, exposure, could on you recent if China, lot there in the sort attention in

Brian McKeon

Yes. questions? expand for all in that, and is I with overall of less in our can that. than revenues China. revenues some China of I'm of - sure IDEXX Why hit start your as I hopefully, X.X% little coronavirus Mike, on terms of on specific the a Jay But don't our context, can

- So that have it's market. relatively LPD. to that of a Over is a exposure smaller half we revenue

terms smaller exposure. in relatively more aspect So of a the of business, that it's consumer-driven

seen have limited We impact to-date.

that. it, are point. and And - impact outlook range a think our We course of I of for into factored smaller more We're monitoring a to not comfortable at the specific there impacts. got relatively it's kind We've performance. calibrating kind for of IDEXX is with but early be have headline on and this relatively

did question in the on Again, it's a wildfires. specific continued very we're a We we Australia had results. our that on you something in think Australia, that results. I not but had impact meaningful see good good monitoring, results

outstanding growth instrument the And in - the nearly fourth we've XX% we quarter, consumable I think placements. we market, that had European highlighted

continued I - labs. and think - solid we results the in market

feel market we backdrop think quite healthy. in I Europe looks So the

Michael Ryskin

follow-up. Yes. the appreciate there. A all quick color I

on lot cited the investment gross of You line. also margin a

should the go of this over course in that slight play is this be And Could many year? out rest through is pacing over quarter XXXX investment? you'll that quarters? that reference this Is to progresses and - lab of the in of of of the you course that something benefits going relatively is the the mentioned to over this saw Or see sort think you this of the going a business. forward? the run course - onetime that's step-up there, rate help through us some You that's the of of and sort the how across the continue

Brian McKeon

Yes.

there's I business, it's investment any our onetime. truly if in think

in investments But that what I number labs. obviously, always We and through the we that, initial in capability. couple system of to we're a made our highlight be our to carrying factors commercial half basis, online we a think been were discrete capacity, investment XXXX, coming we've terms in in had, going that Marshfield, front of the additive day U.S. was of Westbrook there lab into just XXXX. are the QX. investments highlight and we the advanced making; is adding on the which And second that be on first will a half the of is that's of trying continue; of of And we that, which some organization expanding we'll to year-over-year to had trying headquarters, our basically that some that integration adding

So of lab we'll core coming second And in we have the online. OpEx depletion of that quarter, the be will German starting impact growth. the to factor the into having our

trying we're highlight investments. grow and growth, no it's margin those incremental other reinforce our by moderate have of that gains will anticipate And just to in the is second than for Marshfield recurring that of long-term goals in wasn't areas would signal some constant intended half-driven, basically, labs we XX to we acquisition that net improvement those be we XXX annual on it QX - changes year just of but front. currency will basis our as points-plus revenue the to into next in that margin strong so supported the investment discrete targeting pressure So

Operator

we next, Jonathan of with the And go line Stifel. will Block to

Jonathan Block

they couple, a just and anything markets. a Zoetis time push expect of competitive evolve? in landscape making Jay, now, another evolved for but had on and for you more it's ones a Abaxis some me. to I international couple that purchased got maybe also player or Maybe the labs. - has you early, know bigger high-level that's that's

a that or color and So potential any the competitive you and on curious from your details evolution thoughts see standpoint? for calling

Jonathan Mazelsky

Thank you. Yes.

very competitive highlighted been So a it's clearly market, competitive and morning. this the - we we've well, as to a continue and it's market, perform always still

really from on growth, our customers, value and our comes adoption highlighted, growing testing. focus A relevant Brian comes volume same-store for adding customers. sales, and lot creating of Our as from existing is awareness of

practices standpoint, really take innovations, commercial it's customers, and a expanding our partner strategy from work the So with capability, commercial capability, those succeed. continuing able help be to introduce those to

competitive well continue do we hasn't on the to really lot changed. And focus. increases basis. the really price net experience X%, of to X% but moderate a that intensity, that's The So - and we to continue

we're So good. feeling

Jonathan Block

that a the there's industry the you what and help on And great. surprises to players to high few that's so stick thought diagnostics by what thoughts P&L, I Jay, other growth? is, on - in And drive want work willingness to your about do. level. Okay, with I I'll mean

You're QE you're working or on Trupanion with VMX form in platform. way their with shape, pet chatter some with to insurance. sort prescriptions going of But that was their there at partner

the the how see these the years there. couple evolving and And get over as more next leading thoughts to love to of you for opportunities on I'd willingness your a so role company take company, IDEXX' aggressive

Jonathan Mazelsky

Yes.

piece integration software pharma is marketplace. an So had partnerships the I'll think with address take tend tend companies The - think to to we've the ongoing specifically. the we we and software way The way - in that specialty we about and systems diet in open approach. piece that the

desire. at superior But the they of give want customers, group VMX, in us fecal critical the once a we and to would certain they then PIMS park to workflow mass showed customers it. the a of systems, to come size - to So which overall reaches be efficacy We antigen. of a us our partnering able study, application participated of an that efficacy that into the in say we terms it like integrate do

So structures the market diagnostics. of always looking sort for ways developing for partnership of in appropriate

Operator

question will the line come Wright of Suisse. Our from Erin next with Crédit

Erin Wright

that's contemplated to I of could I collaborations tactics so manufacturers have partnerships unique given I'm other your just but or do positioning product sort evolving. a of market your than with partner creative curious offerings? or pharma recently agnostic large past? own the as bundling in also sort the guess, an have more you you in those of therapeutics was of how leverage some curious just with had similar better competitors. bundling I this if question, player you your

Jonathan Mazelsky

Yes.

buying talk we when decision category through their customers, is that a customers It's looking us, tell believe when the practices. looking think are systems they're care. that differentiated they're highly make at to that lens to or that diagnostics X, making it's therapeutics that how about at highly long-term - to It's of to they're they practice they diets. to be in solutions deliver their and So what separate they of best they in tends integrated It a adopt, differentiated. XX be specialty have typically years. how may They need that because from decisions they

really decision, buying and from two. a those So separates the partnering customer standpoint

of So recent the the of - acquisition that our with hasn't some changed competitors.

Erin Wright

competitive of share positioning terms in sort speak And converting as systems? terms upgrades the do some you we system the industry are your helpful. across on Okay, can potential And systems? market your of you front okay. at That's then where now wave stand PIMS well? as Where to of cloud-based there into to we around in of head

Jonathan Mazelsky

Yes.

of customers. Cornerstone Cornerstone, So very a been organization, we payment did and do a well done service - out interface. with this our field-based in of able upgrade we this partner to installed we've user reps because to have year base placements. able with of who terms field We've new been half more go we've than completely

- mobile able we've native received and also very grow cloud-based. enthusiastic think, customers general I more reception, customers, been We just, Neo towards that our system, to is which is and That's practice really geared nicely.

It's is it's the But se. and to work that not per the much that diagnostics our provide we're able in system so PIMS together. key software in applications between and the the connectivity

what and And to and workflow they really PIMS and do differentiation. all standpoint to what charges So the what customers diagnostics. business our a strong ability and us apart that really But like that the is tell us their is the clinically continues provide that work capturing and they sets they from together, Plus support they systems. like and better is VetConnect so it works applications fact appreciate the PIMS and

Operator

Next, Andrew line Raymond with the to we of James. will go Cooper

Andrew Cooper

there think I some from are a the the going a to With market. view as view sometimes from we in options as integration I reaction you? out sometimes it guess, alternative And sort larger - the of that an players expected, anything surprised as there perspective, was that of customer the regional

So customers? has there any been from pushback

a And had then a think, I little gross margin we from than expected. in margin, was the lighter perspective, XQ maybe

your acquisition? impact the added mix Marshfield consolidated any and the maybe kind synergies Marshfield? to margins would capacity extra did opportunity So - in how quarter? revenue general, to appreciate you on that you kind much in there And to feedback. But and of the view similar So that of how color capture great, specifically, lab the with terms kind or in incremental of get what's of on up that I be the

Jonathan Mazelsky

Yes. Great.

SDMA So fecal Marshfield, We're from the to and IDEXX' have and on really Marshfield. track. differentiated over Marshfield And It tests antigen customers Plus. they integration excited like welcomed - by now X,XXX is we've VetConnect access and They number software enthusiastic the - were already. customers mind IDEXX those systems. our keep good a used from We initial customers in one use modalities. have our They of those may been has customers. of that reception

there. know closely they like margin not lab them to it's and didn't to more on Brian would it services. a provide turn So work I'll like with if Brian to This just see us. gives and reference what to we make remark chance a us

Brian McKeon

Yes.

some now business as that and labs addition is going we've first goals look, highlight we are - I time, and anticipate But lab have the as network. that We're XX and did impacts we that. from think over leverage on the - margin of and in of working confident that something - the Marshfield, And business, we have work think to front. would that for on, supporting we're our about expected, as we're improvement that we're U.S., reference customers our continue demonstrated our we in this which into we that a over As into will we half. integrate how there factors, national national that supporting network from the one lab is the getting them from is through longer-term

leverage forward. was get factor factor a and near-term support on will to a our It near-term will improvement and we'll over a be it that margin time. degree, So going

Operator

And we'll final take one question.

Brian McKeon

Thank last our question. you. this will Yes, be

Operator

David Securities. line Guggenheim of with be from Westenberg the will That

David Westenberg

So on starts some feedback cytology of oncology. veterinarians in the instrument the conversation from the

I'm - the we X way in of cancer market how I Is wide market kind X kind maybe say, say, that Just out the to you But see kind and the opportunities an labs? Is does this just playing apologize, question you kind of years? of detection ask of So cytology of give in here that diagnostics, start can reference profiling here. in the with, or there in me industry overview going to broad do kind oncology kind conversation. human of opportunities of next, therapeutics have of cancer? if early a in there the

Jonathan Mazelsky

Yes.

different the something drugs areas of terms the specialty service practices and oncology is of and So and both just chemotherapy. that centered in around exists are in in human It's more there's today. on therapeutics side lots marketplace like oncology, and the there systems LINAC

lots question different of that's very with broad a areas. So

From looking in a around genomics and many cytology, a digital diagnostic - cancer for we're Certainly, and instances, earlier. look always standpoint, taking cancer. something able at. detect that's There's proteomics you're being to

to that bumps wants know or and patient with and not in a begin their whether mumps is comes okay. does it So discussion pet when

Okay.

and you. and the health and people world. year and XXXX of QX, thank to advancement I performance strong is And for which the With of the enhancing that, well-being the the with very livestock purpose, that, our want of conclude employees in pets, around progress for our call. we'll full for the thank so

Operator

using you. Thank for call participation conference gentlemen, AT&T your that your And Thank and ladies Executive does and TeleConference for today. you conclude for Service.

You may now disconnect.

IDEXX Laboratories (IDXX) 31 Jan 202019 Q4 Earnings call transcript