IDXX - Earnings call transcript Q2 2020 | 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 Second Quarter 2020 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

references In participation the or Generally results, one GAAP growth refer GAAP. most growth growth, or XXXX, unless our financial quarter call, follow-up To please reconciliation constant measures discussing have not limit be one Accepted visiting Investor participant constant We you additional otherwise we Accounting reviewing equivalent in earnings accordance in if directly provided her found this non-GAAP organic may ask to Principles comparable During these the also second and his questions our certain currency questions. Relations with A the of which website. appreciate with financial period in all measures will to XXXX prepared noted. to to of may Q&A, broad note section we release, growth, that by currency in be measures is comparable each compared necessary. the to growth, allow our

over we’ll call time So, the question. please now feel free Brian and to into take your turn permits, additional the to if get back McKeon would like queue I to

Brian McKeon

and benefits from a Good flow profit business recovery product CAG morning second mix and and in the quarter. We everyone. delivered V-shaped discipline benefited from results IDEXX excellent controls. financial through cost favorable our

and revenues. increased supported revenue organically in X% highlights, of CAG by X% diagnostic terms as growth X% reported recurring In

including point sharp non-wellness constant than wellness controls recurring operating by $X.XX significant in a in increase quarter, enabled basis. in in testing. comparable volumes CAG in recovery high improvement earnings an we demand pressure currency market margins benefits a saw growth in proactive per for growth and late pent-up share, of Following the XXX June, revenue diagnostic testing for second This demand CAG supported March very globally levels through and XX% mid-April, diagnostics of from a currency diagnostic Better period constant on delivery cost early in quarter. expected basis drove a of the on

of For half XX% on EPS the basis we comparable pandemic. headwinds an a COVID constant $X.XX, first delivered to related XXXX, of despite the currency up

core solid market operating to trends half deliver As for growth we'll our our July, We're our the with discuss also of financial well-positioned terms in growth in revenue revenue XXXX. pet of continued rate solid CAG have for foundation or at to growth above in approach, the healthcare goal business. continued second pointing a gains aligned management profit of

manage encouraged trends future very to by potential While may to we're project. ability and to the the recent effects related COVID our we through be pandemic effectively, and market challenging the dynamic pandemic recognize

at will we providing not financial this XXXX such, time. guidance for As specific be

and second of Let's market begin quarter with revenue review trends. results our a recent

was U.S. driven gains diagnostic in X% markets. revenues by recurring and growth in quarter Second both X% of organic revenue organic international CAG

new non-compliance Our water offset instrument overall gains the impacts These related by X% also OPTI digital human which test pandemic, and pressured PCR from placements, revenue growth our benefited reduced to VetLab initiative. testing. IDEXX and

LPD by of revenues reduced reversal stocking March businesses, water QX X.X and than saw also We impacts and million X%. or less which orders our from the

veterinary in in an which through May, the regions, same store major across reflecting solid major resilience our available data, visits CAG were in by of were diagnostic revenues, in revenue XX% overall Consistent and earnings aided demonstrated our by on our in snapshot U.S. impressive recurring strengthened by trends CAG April, was seen June, driven revenues tracking clinical rebound CAG month, revenue recurring our as By increased a global modalities. strong our in website. noted, grew diagnostic and recurring diagnostic in healthcare XX% QX. weekly across considerably market. declined the performance supported gains As published gains strength growth approximately X% our

but U.S. decline and trends most were amounted solid visits XX% X%, contraction X% drive more down the mix in same the outpaced an the were April, in gains of XX, X.X% same-store quarter, in These despite as solid only Clinical support clinical same and we of revenues acquisitions reflected time. a for in high the as by pet practice latency X% in in some reporting visits the now FX in activity solid despite reflected the regions. retention expansion high in over growth in was estimate have modest single across quarter healthcare to vet X% on visits Please strongly visits premium in very in metrics were markets shifted basis a recent quarter. a business improved activity and overall reflecting supported continuing in increase May through of overall UK which gains health ended added like July Canada. modality, clinic and Following quarter on the can resilience down in these Australia By clinical were by of with in We're by and greater sustained consumable growth additional revenues the QX, trends in clinical solid by in and QX. continued gains July first is approximately note IDEXX is visit decline May headwind. diagnostic vet revenues gains the pandemic June. early in testing in in half veterinary basis These X% June, clinics XX% weekly store levels, organic visit of in pressure Gains market factor the dynamics there utilization, global plus continued related market based IDEXX resulting X% visits, major These U.S. strong the growth low-to-mid X% key for benefit XX% positive supported digit reference and teen data, CAG in reflected regions rebounded quarter lockdown second revenue increased customer revenues that that and visit overall, in believe in global and impacts, the growth about U.S. continued international an the as QX, supported X% Results international organic diagnostics Non-wellness in wellness Early in of an has visits recovery three weeks offset a on U.S. to plus We which towards service overall data related encouraged testing from the quarter. is recovery. Germany, overall X% overall broad markets. offerings. clinics our organic veterinary solid a strong in the improve second Japan, revenues IDEXX in lab XXXX. U.S. X% impacts and lab market increased in X% increases global growth a impressive to quarter. reflecting with base. installed recurring offset both

or to were reporting deferrals placements access instrument contributed expected, year-on-year veterinary new impacted sales clinics, purchase restrictions As XX% XX of in This decline constrained to by and in on million quarter. high placements CAG in decisions. QX competitive and the in quality instrument revenue at catalyst markets. new instrument XXX and reflected North XXX The accounts placements in placements in of America, international new remained CAG and CAG a competitive

XX% American with catalyst XXX from base. driven second benefited customer North growth year-on-year global high sustained and momentum supported our placements, also a catalyst customers. levels by and new placements We These installed retention

also XX% base year-on-year. over premium bringing our placements, instruments, up hematology We SediVue achieved XXX placements XXX SediVue X,XXX global install to in

Assay will by veterinary primarily to revenue revenues were pandemic nearly revenue service In in software net field rebuilding related supported and dynamics and XX% our recurring on by rebound placements, reflecting diagnostic overall quarter primarily Consistent offset and reflecting revenues imaging on revenues our X% gains we to pipeline sales focus as year-on-year vet declined X% Assay June, veterinary X%. CAG gain access in year-on-year pent-up Jay well volume instrument recurring clinics. for organically demand our Double diagnostic software revenues pandemic constraints overall. As testing. nearly new discuss pressure, remains with decreased gradually organically Rapid of X% new CAG in early new XX% business, increased driven, the imaging gains timing declines QX; of digit a price globally declines areas system we’d consistent Overall, as sales activities. to forces, showed gains related diagnostic other in from trends, with activity. strong April growth to related promotional as volume year-on-your Rapid our wellness and

revenue XX% organic XX% a we following segments water in decline business in QX. a in other our growth QX, saw business to Turning gain our organic

stocking related results as growth and quarter these saw or the real accelerated an lab business business related revenues of reduced non-compliance than are to with of and were overall by projects, our Second in water We have as related vast disruption mandated related from The like orders, of XX% area service, prioritization impacted construction, testing are reducing sustained lockdown QX essential decline in of million volumes regulations, effects, albeit organic this volumes water estate by some by pool to and of reversal greater and well beach testing closures. our majority as expected areas compliance a X%. spending. Approximately special to government X transactions. activity early

as to strong LPD gains which core globally. diagnostic African herd demand macro or in to supported net dairy swine we year prior efforts impacts. reversal compared in results of herd to private benefit reducing results quarter, near testing QX, growth volumes herds. we also of and rebuilding and stocking orders. export estimated We're LPD testing non-compliance public bovine by is were adapt we increased revenue key fever, moderated Pacific an markets, in seeing utilities Asia in saw to labs Overall, by water poultry China, from X.X swine of will related anticipate lower expected a headwind term, health accelerated continued X% solid levels, for populations as programs impacted related screening supply. through an improvement pandemic testing the the improvement million that large be to producer swine poultry, in continue the for demand by overall for testing uneven public rebuild QX in X% as to and While the work testing moderate revenue in trends Livestock,

CDC Maine COVID-XX for that Finally, and of efforts our QX several that project. Maine. through up as businesses. alternative the This noted, We're capacity to capability tests with the supply very test and months. to IDEXX We're associated revenues commitments, capabilities COVID with on by competition with next will state OPTI the includes program initial human benefited PCR growth testing our test. implementation [OPTI] support our continuing in based demand human LPD suppliers lab growing focus area partnership We leveraging human note PCR of benefits testing COVID that provide the globally these and from project over of from difficult with overall XXX,XXX in extending approximately testing X% dynamic from shorter-term make PCR is a supporting to a the

of In efforts, for to to our offered our leveraging samples, we IDEXX commercial customers be be very We're COVID-XX test management water wastewater to use the contribute OPTI recently completed capability to to addition through globally. adapt to the of pleased which pandemic these IDEXX organization. PCR water the will work in

Operating from P&L, of constant was Gross of as of or increased related EPS revenue the the share increased in profit moderate driving levels XX% currency as pandemic. reference currency a favorable price strong cost points see improvement expenses in per or and benefits basis growing constant we'll in including currency steps lab on of X% as globally XXXX, the improvement constant in comparable in results to ensure revenues, benefits our proactive of net in product German $X.XX X% point a in of EPS currency $X.XX core a as from manage market. add Gross by in and In margins constant our a on based relative QX increase currency and lab an on These customer XX%. reported X% share, and from operating basis QX. increased basis. our lab reported service lower productivity constant costs basis, to mix the a operations basis benefits share per XX% instrument reflecting supported increases basis a solid half XXX benefiting constant costs operating X.X high reported laboratory. compensation basis, XXX on activity. new very QX solid sales staffing by were million on-boarding actions Turning to supported we a reported strong the in profits margins, gains mix, or gains basis. currency and consumable net gains, controls. tight X% And On profit XXX points context supported on second to basis decreased

as with XXX than expected were health and points efficiencies in positive quarter. than revenue These on noted advanced realized a from enabled basis well in call, targeted the to million spending quarterly $X As plans expense pandemic. million expense impacts growth combination of in costs our approximately XX to mitigate lower of the potential last compared we leverage. dental operating reductions, as Benefits from our operating these initiatives, original stronger expected

discontinued the Given to of in in supportive the we the long-term operating or advance savings gains yielded the estimated prioritize of XX our reductions, benefit capability of hiring and above revenue salary at rate profit In targeted which or our delivering temporary growth we've growth. second strong including in second solid investments XXXX, and while international intend business, million recovery an commercial strategy, half quarter. in augmentation

income or flow, cash Westbrook relocation, conversion in In complete. a XX% German trailing now our XX terms investments largely in our are basis, expansion, positive of flow to adjusted cash On rate XXX lab our net headquarters we generated XX% month which was flow cash and for free million year-to-date.

cash strong business business and year. Overall, in strategy steps very execution our we're add our ended of is We and expanded growth our QX. is level pleased IDEXX the contend the enhanced business in momentum million with and long-term operational to available quarter of funding strong with in million a of and it operations great model in this by and look progress. very of ratios X.XX cash We in times allocate repurchases a tremendous of and over to the his Jay turn through pandemic for comments. We're effectively, impacts, first to pleased billion capital forward managed despite not the revolving that with XXXX prioritizing credit very on now XXX position building our to have the half I'll flexibility. call to capacity potential. and with on to demonstrated sheet leverage to gross in did in quarter balance QX XXX Our continue times share liquidity X.X net facility. $X

Jay Mazelsky

Thank we're morning. pet call. you, Brian, our and supported QX to excellent in recovery Welcome healthcare global good results a earnings QX Today, pleased to the market. sharp report by

ensuring employees. reflects the related our associated confidence health of gains, business our investment and This sustained and Brian sustain we've core strong QX, we and and programs, pandemic. and from level encouraging strong It impacts the COVID-XX pandemic highly stay We've results gives in resilience. our with seen the policies. potential significant in our initial innovation X% and As allowed strong manage continued quarter extraordinary reinforces cost animal to our recovery companion our diagnostics as health ability a IDEXX’s in overall CAG dynamics through solid of growth profit headwinds business. in customers, safety optimism in is growth deliver Proactive for ongoing that revenues, of and long-term level noted and while a of increase we despite discipline well our us the a X% high organic to home in investments managed service growth the performance ongoing us early recurring the financial at to delivered

the practices diagnostic and the IDEXX point-of-care the in testing, so on supply success services products has market. market and to organization customers with that like observations customers uninterrupted trends, applied to confidence high can we veterinary have engaging start our our adapting, update of recovery an fashion in and on brief continue commercial are performance, support Let how of lab our with chain me the do and a future. we reference

Our and do in suppliers manufacturing we directly the visibility for based not to products components excellent U.S. operations secondary largely are that manufacture. have key which

especially performance lab light disrupted in has been noteworthy, employees lab keep also logistics procedures of complex in Our safe. challenging to workplace more reference

us service logistics made have breadth an now have COVID-XX without alternative service from having have Our resilient early our time, through investments network enables infection. for patients lab event information are able disruption significant product lab These availability, common lab the Not customers lab emergency over to expanded a capabilities sick of to about on systems, services. pandemic. been have or focus COVID-XX capability density, in on provided courier of focus through possible toggle a capability. highly patient of to and route to that the long their of worry period of They been seamlessly in and the the and mission been services management caring

also in non-wellness As services pent-up levels were more visit reflecting tool X% supported patients, e-retailers, focused service, practice of demand. in use as indicated are including more clinically diagnostic one least medical same ways curbside diagnostics delivering Staff Brian pet solid during clinical have comprehensive veterinarians both of their decline by has delivering with treat, visits sales noted, visits, increased Supported appointment. overall enabled by recommending veterinary March by To increased increased telehealth this wellness such and wellness medical of X.X%, vet with able advancing checking their accelerated. these The comfort IDEXX’s an pet of diagnose a by of substitution on and increase with say seen emphasis in-practice to which new a recently and a despite an additional we've the revenues Customers relevant proprietary both car have has in since in-part support of have visits. level services wellness first testing. core to the remains where improvement are to standard proportion the in an from to result that as increasingly key and for acceleration the and QX, diagnostics product diagnostics in have that and-non clinics of they trends, increased clinics wellness from owners. care. at adapted visits owner of the Veterinarian’s

diagnostic included Overall, we're XXXX years seeing dollars clinical clinical half diagnostic In revenue previous versus least X% approximately well, per the at visit. one as diagnostic for half addition, higher revenue that first trending visit been average greater above per first levels of of in the the has of XXXX. XXXX

indication clinical trends revenue critical human visit rates XXXX pandemic, per growth extraordinary In pivot are also visit every interest the month the owners, seeing albeit including in evidenced These continued fact, have diagnostics strengthening and global U.S. non-wellness bond. been growth per of ownership and as in We're QX, the improvement current the seen this moderated overall, than higher among from levels increased of at sustained year. evidence another early trends, by of solid has in through pet pet June. in

the the We by by ever solid demand and CAG pet in growing of We growth global in the business owner bond. rate across core management demand. our may of infection pandemic impact are associated encouraged evolution monitoring remain future supported which regions, recovery an

also noteworthy. be execution continues to commercial Our

of high are backdrop. levels. We’re with customers challenging appreciate virtual they very our the our visits, effectiveness in high are whether Field a physical remains very the level with during global cadence pleased XXs and nature and the market field team very that a at commercial in or of occupancy period

during effective which period, new process, new supporting implementing also a way onboard install and us this agility showed and training successfully instrument Our to global enabled designing in a requested. teams remote customers when including in safe our customers tremendous and

X,XXX over enabled including new these to premium quarter, over a instruments and XXX competitive us globally in with X,XXX of catalyst new over Some place processes in accounts. placements,

by we saw increase be Our to customer the practices, XX% in-person and U.S. XX% account up field welcomed we've managers seen continue to veterinary versus our for visits service representatives by in in in the June, April an

system new pace system of pandemic placements, instrument pressure the sales, as constrained gradually software While the balance as the implementations improve of related and to we new expect capital have well digital factors year. over imaging CAG placements

Our rate recovery. to build field this will to practices veterinary with this in the an to will ongoing which come occurs confidence access hire teams inevitably in have improvement and improvement to be that economic practice to pipelines VDC related time owner used

As we internationally. forward, presence augmenting be Brian will noted, commercial moving our

and Our be of add approach a we basis in targeted We're long-term the the commercial forward our resilience there supported direct Investor which rolling capabilities upcoming will to a by to globally our to is market, commercial global new markets, look significant animal of believe opportunity capability. encouraged discussing on our selectively at of Day. the increase more standards model, companion resources by leveraging care

XXX enrollees wellness to to working over adoption continue services programs care saw the bringing we're preventive with X,XXX. higher customers, for to program care, veterinary a new of robust we and demand care, in supported total support we of and as market level a enrolled the level advance that strong As practice by continued our visits preventive such support quarter recovery traffic, IDEXX

the expected, of embrace onboard our continue approach with in large the were in IDEXX foundational additions focus and our to the it our IDEXX a prior that broad number program quarters Growing year consider their proprietary for Preventive and initiative. is more staff. Care is uncover a IDEXX a recover key the Preventive to reduced Customers from second this they care element of to a offering half train program requires enrollment diagnostics. practice and team of as together engagement as Care access in QX look commercial As

is placements real capital well market were digital access, pathology information to strong as quarter the recovery, globe, headwinds clinical hour services. management cytology support time under cytology experienced to very also customer at allowing restricted provide second to we As introduced provide sophisticated in veterinarians in often our continue around initiatives product in we the systems commitment, close the and professional January. a experiencing interest. With experts result we VMX able advance near-term results have of two some our to continued Through new practice

represented of Our instrumentation last the been technology our Acids years. the for eight reflects over eighth life Acids IDEXX with Bile in philosophy, strong received as introduced the has in introduction Bile also suite by parameter lab enthusiasm. catalyst vet

X,XXX with breadth across We the now adoption have date performance. with Acids are XX a of customers a Bile on utilized to about countries global pleased reference as on catalyst quality

As kit. noted of advanced SediVue for even kits have this SediVue in enhanced And call, over to XXX Detecting last testing drive the April, capability value. an in urine now on the bacteria bacteria appreciation that utilized our started detection customers ship and is greater platform. with confident driver are clinical a we the will and key

keeping track, discussed, COVID-XX addition by as Brian leveraging market to to new on manufacturing for and both and capability. In people brought technical test animals core we innovations

XXX very to capability. completed operating also Germany. continue houses capabilities of with move We There our state excited the employees excited and are into art the over located our in – European advance We're and Kornwestheim, now core have new automation. lab

the continued dedication this to and will come. enable further service lab online our lab facility expand Europe, of And for our to in global while optimize now the Kornwestheim our years and network. bring it Our pandemic. in the efficiency, perseverance supporting us made is lab our a levels to network bring of team Kornwestheim growth middle largest possible improved in

placements like system recurring Moving expansion base practices few although our by we highlight to had service growth double-digit revenues, face we in headwinds Web a cloud excellent was applications. some imaging as business, to to veterinary PACS, our diagnostic access our COVID-XX, for solutions and supported and subscription customers of to SmartFlow, Neo new impacted the by VSS related software

remote of practices, help manage customers saw like environment. telehealth secure of this business that in software take advantage their in also hundreds integrated We solutions access

us. will leadership excited to Schreck of the efficient announce facing our to me. for reporting veterinary experience Corporate continue our and team Vice support software, commercial in CAG to and software our and strengthen General customer patient their technology. continue years practice solutions care, addition management, our services drive improved for value-added workflows, and a employees of and engaged number access, families IDEXX Though and employees to safety bring remains work He We veterinary to health top and a of business, and the responsibility the back and be on with to President IDEXX has The product benefits continued and software industry with execution highly their site overall health majority services and and has Michael have global global Manager, work practices. over workforce and to we development Michael begun closely of restricted. software our as more small that advanced software of XX priority communities to global remotely, leading travel are

to months, temperature physical employees and include advance whose essential on-site checks are We safety them outside remote services our many and environment workers health to also of world several maintain work our facilities. for in them for allowance on-site procedures now spending to and in a required providing work continue customers. I'm of order distancing the of last in role our PPE help locations. safety to especially to provide daily these appreciative to during Health many our addition around employees

Given demand, temporary market we're demand can that we benefits. manufacturing and to trends, to share and and resources in live forward. support moving light In service happy of reductions customer business we areas and recovery the we've discontinued to like ensure levels improved operations salary critical market are in employee market adding

continue to teams engaged stay and Our productive. highly

the is a pandemic encouraged the our has during created our personal media by context, particular showed business strong delivering in financial I which XXXX business. sustained in to employee support remiss, period In our solid challenges employee recovery while extraordinary. our significant IDEXX’s employees our take if global thank high The an would market for advance the organization opportunity all-time and be to we're performance strategy. long-term for engagement of in continue and to as level growth, a and engagement we Our positioning industry both We're very business ourselves resilience survey I customers. didn't this employees. Overall,

backdrop requirements. of the and economic challenging Our services customers new against continue uncertainties, to safety provide workplace medical employee and

And our As many their virtual XX. thank continuing pet support our huge IDEXX to business. appreciative. couldn't forward past the first I’m us, closing, very colleagues more proud and of efforts these be accomplished in including looking to Thursday, tremendous we you of quarter. owners, world Investor on customers August what In for my the a we're we this ever Day to around

We financial opportunity, goals. updates share and long-term strategic on will our priorities,

Point management McKeon, event Manager including Brian You investor Operations; website. and time event Polewaczyk, of the of the CFO; remarks. General concludes Jim our Reference on the Information Chief Tina Lane, questions. now senior Worldwide Hunt, for of Manager section can Care Diagnostics for will my that in We Commercial and for Participating opening some team, now register General be Michael relations And my of have members the Officer. Technology; Labs

Operator

Instructions] you. of Bank comes the our Thank question on [Operator America. And from Please go Mr. ahead. line Ryskin first from Michael

Michael Ryskin

for know, with, thanks trends. data start have follow-up. a the of clearly economic not that's, just, uncertainty Jay, it I trends snapshot Hey, seen and into [indiscernible]? taking run with, now, data to we've you could comments into year, given to tied that And and that not and third I'm months, improved you additional some, know, I the improved we're an anticipating? party know, you went rate you if want year right there just in June a other recent decision Brian, guide? later a lot potentially us insight above in-line to sensitivity Is you prior Is throughout in factors know, questions. July, conditions your indicates indicate what any give your the the curious reissue at you're

Brian McKeon

the not the business lack a know, trends is and Well, continue by very business. we're of for think as in The to the our reflective to guidance optimism suspend of I decision encouraged execution. you

I think be – just dynamic. it's of more its reflective continues to a

the We're we and during as You of XX% think strength know, that for have, growth to insight some can revenue we business. see outlook We same for the evolve, reinforcing business We've through got that the know, gaining business you same our you work in the we're in pandemic's solid near-term. June, growth in this. experience long-term potential, and and planning see in profit I more continue potential. dynamics the the the

updating about So, some before more projections. specific experience the of like the gain but we'd we're feeling start to good dynamics business, we the with

Michael Ryskin

strength the some expect could and exactly June, been you CAG had from of, some any could color. prior us is recurring June of you late way have in level comments you XX%, Because any that in April color, follow-up demand parse of give know, [poll], from Appreciate clearly July, you March, this that Any you on that apart? A obviously, quick the the performance. pent-up above know, to downturn. April,

give So, of us do a sense now? to underlying anything you of levels sort what demand right are the

Jay Mazelsky

pet of is mean, lens in mean, owner I indicated we delivery which to practice the non-wellness some visits due in driving expand that through And demand, that from and me we of pent-up we the the and Sure. diagnostics. wellness and higher of both that a as also care, to side. change the think veterinarian. on the I let just this think is potential the both do there's both

more about very could home. significantly more lesions. owner like things you simple ,we’re the spending our scratching, limping, we you pets observing all you work if pet with issues, time So, know, be from as if think We're

restricted. attuned has part to dimension, medical as now move seen we that on a first as somewhat pets to, services, treat to recommending as continued practices anything observing potentially diagnostics I know, in I [indiscernible] that some well to We've you focus to being role access, are accelerated dropping So, practices due at when heard really may off up, you medical And catch services, from as the were focus when new both pet higher they've And believe activities, to indicated, have owners support key diagnose, the are the you or pet be curbside. e-retailers to from think things. there. care veterinarians of sales, the of our cases owners a and the standard that close, bringing of the so if and and then pet more also their certainly, they COVID-XX plays their product to,

a the pet when uncomfort there of easier be of related remotely. the factors of the and the way to the the provide conversations full to a awareness second may road, practice And care, taking Some need full in a to pets so the care possible. recession some face-to-face are to the that if talking there's you're just owner or of down there's the to discomfort or pet happen extent

So, time all play and we'll these out. have to how things they are over playing in, see

Michael Ryskin

[indiscernible]. Yeah,

Brian McKeon

demand the benefit Yeah. solid. across regions Mike, the underlying look our recent market from I demand, pent-up think clearly but there's some

underlying obviously feel about So, the good we're but that, monitoring very we trends.

Michael Ryskin

Great. Thanks, guys.

Operator

you. Thank

go online question Blair. Ryan next ahead. from Please comes Our Mr. Daniels William from

Unidentified Analyst

for define been talk going how is been pets, home. just just it at planning do forward? pets lot new guess as home, This guys. ownership? just been now new there's time, off, Hey pet was on thought working from their in adopt pull Ryan. like that being start more were people kind have was just getting as [indiscernible] would view because or and puppies and a there you a increase you to more data I I.e. about growing, they're to they out originally, have good of Nick people an this in I a incremental of working wondering, that

Jay Mazelsky

was is between different adoptions as number evidence looking we've fostering. reports of there's haven't just, anecdotal seen fostering Yeah, drivers. quantifies the the adoptions hard well factor the and of that to we you puts but And out seen have data of from dimensions a as a that and different all you at there breeders, up. takes, And so lot in dynamic know,

that. but over we'll data is behind So, time, you that, benefit to some it's watch from assume better know, I there reasonable think

Unidentified Analyst

bit assays why color was last assays a month. Got decline a was comp just if consumables you. And you to a function [Indiscernible] more this like rapid or there's year? healthily, decline could strong on rapid I of pretty but that if you then logic the wondering I any from grow little in wonder know, provide would,

Jay Mazelsky

in Rapid We're were things. progress in assay related is, the we business Revenues pleased of with organically Assay in a relatively there is were the impacted did decline X% One the two and business. primarily Yeah, to couple more things. we make QX continue to screening right the pressures. heartworm, occurred test. a Rapid business our pandemic smack Assay good of portion piece Keep middle a the season. is mind, volume is XDx peak impacted the which quarter a in of of And pandemic early the and more in of

then promotionals. some clearly timing activity. had sized related was In two were a that So And year-on-year decent there to promotional XXXX, dynamics we impacted.

take at believe competitive a when bit So were look a don't challenging. a where more unique couple one it's is, above were. customers you issue was things; and the compare a customers We unique we modestly new

are Parvo more So, those take healthy. we're if happy you the FPL, with portfolio, pretty the CPL sick piece of And and testing way a like Giardia, as the were business these as well patient at then look the you progressing. [indiscernible] is and know, so

compare, So, the we've pretty fell, much it peak the pinpointed to relative both well pandemic to as promotional where the season. as

Brian McKeon

up And June as highlighted the, in I it XX%. was

of we're So, parts the seen other the same business. [indiscernible] in kind of we've

Unidentified Analyst

appreciate it. Got helpful Great. it. Thanks. I That’s guys. very

Operator

you. Thank

Sachs. Please Nathan online Goldman go question next from Rich comes from Our ahead.

Nathan Rich

of outlook, and longer-term up, July, kind maybe Good for include know, on the highlighted into you that's go you to know, been visits the know, morning. continues start, continuing strong the Jay, that you visit diagnostic, the trend. a obviously growth to proportion Thanks questions. of you

expected, the XX% uncertainty recurring to think of if year, rate market that is XX%, Dx kind into you to hold? revenue I end-market some back mean, know, should kind that expect the you the trends type of around guys there's to we had growth. going and see these know, know, You the I we the assuming business over half of run get these that year guess, that. of obviously, trends you I kind of continue, CAG back

Jay Mazelsky

Yeah.

by we properly and market, to we’re strong able you recovery, think know, ourselves encouraged in in business, and that. to the support we're positioning the said, very Brian appropriately As be

business as know, levels is solid it's dynamic, given you they've service commercial challenging or project. to And still that develops, it's environment very and growth but, that whether capability, the

they to You of like you and know, type going not COVID related like. how the It's these play the know, what just go hypothesizing hard look I'm are that out. looks future, predict to path restrictions to what going down of

though, as I very You know, positive. we're said,

the I think marketplace, we're outlook out. on resilience to play very puts we’ll have how of the and the takes see optimistic all and but the

Brian McKeon

think I as longer-term it's it’s think – but a trend. I early,

positive outlook. factor recommending reinforcing Some we're the on growth. number emphasis that think a terms increased you more planning are with Jay certainly that can for a our but, comfort of level there outlook, solid of I more to us, think diagnostics know, experience on that and themes of new with gaining variables that for the was we services and we're in our That's moderate-term be

Nathan Rich

know, is and, COVID a longer tail to this could kind all, potentially know, you the per COVID? And term, this kind the of that up of gave know, to seen I X% kind you have business, into year be, diagnostic second accelerate considering of that as beneficial you around question, know, you my fair. stat at kind you That's hit you that of dovetails very backdrop, the you date, good revenue of know, visit obviously, guess, out coming

Jay Mazelsky

a need condition focus of we the to so, drives on care it patient. able services, diagnostic the characterize they you that to way be able veterinarians or medical best to benefit diagnostic Yeah, envelope do that know, patient the only and be to the to from whenever the through and And testing. they treat is way standpoint,

certainly So, very a that's factor. positive

through factor our positive other and that’s The in is more innovation. control,

organization, done As our managers the and ultimately, and we menu, service they the continue as our solutions as our tools third education, field vets, VDCs. is both our test expand we well awareness, we expand then factor continue to to provide testing, obviously, professional creating And through that as that's more to account more. veterinarians, and

So, all those things into come play.

factors of, diagnostics. very those I know, story, growth think of and driving it's terms in engine positive you a this

Nathan Rich

you. thank Great,

Operator

in Instructions] question [Operator Our go Please from from you. the Stifel. comes ahead. next line Thank Block Jon

Jon Block

recurring but sort years, morning, store Good thousand past has guys. growth to IDEXX’s three basis points a to Thanks, question, first same long over clinical of two premium CAG visits. a been about the

I Let can make sense here. me see if

allude guys that premium you was June basis massive. the to points XX% X,XXX up to release in June, for know, on X%. You the versus It was

X%, XX% the recurring? I guys if I'm how massive and over did clinical CAG and wide the call XX% but which the remained of it July is CAG just sense. start on the guys to You same-store made Hopefully release, to up very about and that closer tighten talked sort know that you or back some premium in delta? think about that recurring to visits elevated, curious historical,

Brian McKeon

be on healthy QX dynamic, Yeah, typically a your Jon. ways, whether we've a We it grown the to premium. very on I even the in dynamics that somewhat. focus QX visits think quarter the gap point, things the look actual in that or PCE different but on I at widened versus wanted it we to historical earlier like levels went the to with And at clinical growth. few

clinical and strong encouraging. that I What by position reinforces We is say think way, that of would We're visit emphasis was is And so, overall. solid reinforcing to seeing we're monthly in positive know, indicative not business that, globally, some revenues. that project think our our that's momentum trends are in the you the the on talking forward. which it and a dynamics we us themes about, very going services may Jay help

a, it's feel it's very those look to good positive trends on forward. you dynamic. about that know, going building forward and We So, a

Jon Block

curious average according to I'm years I was was the past. and It a for what guess try a the quarter, thousand little Okay, the bips, I than it you think dissimilar I about believe visit. so XX%, around know but recurring premium [to was overall my crazy, the math, was to you] wasn't down push is, bit April, too In Brian. right. CAG

month a a the and premium in just move. to you April, you the a exited feel, X,XXX month in basis, quarter very the in June, it's get I'm So points on know, big basis that trying zero and as by of beginning was then

was the into get X,XXX? and that at compress trying its sort start I'm a to elevated data, mean That's at. So what did little Or as we of went know, way July, you you clearly it, just to bit? work it have I

Brian McKeon

the recover was but than has it we're I think know, – we surprised we going this go a plays some was to in and some stronger think that that how even quickly, is and were think of as resilient over forward. Yeah, We than more delivering we knew there highlighted. way we business near-term, we're no, you perhaps services better changes this Jay pent-up and out I this learn going There's dynamics time. we on, on vets obviously look, come lot demand thought see back that's We we'll would thought, going expected. the a effect are

learn more. we'll So,

Jon Block

their see we you benefits are that never for Okay. arguably of mean, when selling And easier to the dogs you these temporary are pet does second some to question push trying is are curbside at some but bit long-term the vets unwinding to hey, issues Hopefully who you’ve to for curbside I the home, we're you talked think are curbside, we all go people the you about in months? from and know, are going hope called back structural recently best about also unfold? know, knows, resulting cats those work those over perceived they're Thanks, going for them I diagnostics some in I and of talked and XXXX tailwinds into right? and a going I'm but, diagnostics. with next just a what result, alluded stuff from do eases, you running of stuff out changes as get way to guys. bringing home diagnostics, in you remain guess terms little but in different, uncomfortable handful How so arguably know, to see the in know, practice. you more that owners and, vet's or work our into office you of checks know,

Jay Mazelsky

very for thought than in receptive say, okay, and of pet often of add as or just – they the fact, a I back and often and pet of kind to asked were full push more couple budget through are would a been I've that. as Yeah. they've I think One, us. they I let's that approach, veterinarians supportive change owners recommend, were themselves observations. service it, minded go They owner say a of maybe more

least of of at often or having I well would for that height, come in and this if the pet management tenant through what as type to whether in, preventive the whole and diagnostics check highlight stay I or the pet owner, the know, program a piece that, helping work. thing that bringing back that or, model think care at of is you home employees then, So, the and say or is long-term as more people process includes we or this you both we the know see hybrid change whatever veterinarian, is it's citing the heighten other important

strengthening if you looking good industry. are anything, at that health a more think of there that to the You hybrid I human be, this working combination I will know, experts believe employees where be think, model there have know, you the And I work. think will pet most which is, bond, of that pet who continued visibility a from home the of for and and

Jon Block

Great, thanks guys. Jay. Thanks

Operator

Thank you.

Please from question ahead. next Guggenheim comes go Securities. Westenberg from Our David online

David Westenberg

you question. Hi, taking for thank my and

company. of you U.S. be a have global for a And, I getting of but of just lot investors party the the investors. data, third you're going black in Europe a pretty on think think kind sense a to I box what's know, good seems

So, benchmark European and lot a of because U.S. then for something and is maybe of what’s the in hard macro question to terms get U.S. we kind just hoping I understand of us to as about that was And you macro. probably pretty could a a terms talk relative can recovery. use you that's in

Brian McKeon

Sure.

numbers, recovery rates internationally. were has, U.S. think, our trends. we recurring seen I mentioned and similar as overall X%, strong similar So Europe Dx back both in just stepping CAG up

relatively V-shaped in there that were the seen the significant lab And growth from period. UK was Southern just procedures lagged, Europe, place seen know, kind a very having the or an the than some noted in we back little in and solid a on dynamics think back And, are growth that March I of recovering specific evolution markets all we U.S. in but similar areas very context. overall that lower and April. think longer online, fact the little that recovery, feeling Germany some We've dynamics. outlook of but The a in are market we're terms some the lockdown of positive clinics for that know, of growth as And, markets, good demand. particularly like lockdown basically I feedback online. speak, consistent, about in we as the very you of you

David Westenberg

can Got you talk product that you. maybe Bile front psychology the contribution Acids new Day And maybe from in of and and Analyst I'm about then from here, contribution launches your jumping Day. where now the Analyst give I it's we of a and that anticipated future. graph kind know in maybe similar to gone growth do your growth in right where in you

wait if of apologies ended So, up we that. for month a that front for my I in and there can

Jay Mazelsky

products two the just a you mentioned. you update I'll quick give two, no, flavor Yeah, of quick, and

indicated, had I with as pleased – cytology. digital we're market know, we're really You to the reception

know, we're primarily characterize under users. You if days the a think we services We U.S. year, XX transformational. hours, a market, the in just truly think is X hours XXX cytology days the a I higher that able to provide X cytology day, targeting week, being

So that marketplace. experts these experts, we are we of exams, about represents cytology overall think like the that submit X% customers know, the the who five you have, plus and pathology

and point, labs our Just cytology reference we who have to our X,XXX customers also use services. IDEXX give you about another use data customers,

but to opportunity in service. there, So, there's to enthusiasm so to going we of pretty out a think that's far and customer know, good develop, sized that terms time decent take reception the you market some so

value Bile was that It is, important. each we that a the our, the is one customers, the of menu lot that to cumulative In has most is now impact. has we of introduce think terms Acids case a I this parameter progesterone. test. catalysts, about of In think The previous the question, it it's to way the but

need to Bile use within separate So you new The particular test Acids chemistry it's is model as to workflow provide able you have don't instrument know, really the accurate a fits of, [requested] and important. is analyzer our menu it and were reference that couple the or where uptake lab it's middle our very being pandemic, And quite only quality rate and of we months, base, that we're of given awareness gratifying. rate with a been the of very that of is type so adoption pleased customer the in performance. amongst really a a

David Westenberg

Got you. it. Thank

Operator

Thank you.

question Please comes Our from ahead. Raymond online next Cooper James. from go Andrew

Andrew Cooper

but starting there maybe of for know, strong ever out really with, good guys, obviously, out, thanks the maybe know, costs the kind the anything a about, that you out, we odd there at things gross call Hey, the out you kind we've you've anything terms obviously, so gross and guess of, you'd I very of but particular I you a COVID, line, from there's time. that slew margin quarter look an as call talked margin line, strongest to bit, know, of you little in a anything across you think, on there? the number, but point P&L in results, seen to you gross OpEx is got, came know, know, with you margin some is

Brian McKeon

of A big mix. that part is

strength same of and at declines know, instrument in you the time the just So, Dx the CAG revenues. recurring

you We of from benefit know a that cost terms number. in did So, factor the absolute is control. definitely

were making initial on impacts, saw COVID were So, We hiring We we service tight good early a benefit we we the we through we late on as that March, April, in very effectively. well. ensured delivery, sure but staffing. manage was can that and very had focused when

forward, adding of can going to support macro be to think move broader kind I costs, is I going coming So, online. German resources core we higher as We're some that importantly, distribution have as And staffing. sure dynamic make a we'll which lab we're seeing – the that's freight we noted, think we on. we

So, some costs there. have we'll incremental

effects, margin through some IDEXX and moderating high of be very health gross the really that’ll margin results. pleased the know, the the kind it And but the we're business. flow So, of of have you annuity with – reflects recurring

Andrew Cooper

a the great. kind terms back, on And some XX maybe know, benefits million those of permanent you some items basis care, of, presumably cost you you more know, the OpEx, on like does you in about Okay, basis? otherwise, know, coming question you either, know, maybe point, think health just hadn't just terms in you cost line at obviously, the dental of know, know, know, you a similar of and of real things before, those, this talked you than of in you of remote thought terms as potentially, changed have we some how could but about savings at, normalizing, change drive, you that would doing about planned a faster has we mentioned guess, level, high COVID overall at that talked behave, you know, know, you that, at think least you or installations, and you cost sort I how how of, you

Jay Mazelsky

industries things think more Yeah, you to different productively, I mean, do different. I or it has everybody's opened can up in eyes

sales whether providing cited, to software it's partner allow examples with telehealth the being to firstly installation, customers, some process visits. to able which a do them remote think through like we I of or tools,

look I focus that know, certainly areas productivity. can drive we of these that You will at think things are

I expense looking supporting productively mortar, wouldn't that finding terms business can I to think at in and a more employees, know, in productive differently I work know, our some how bricks run at and larger we being the needing support customers. as that. constantly and having it savings, operating there's I of while a some, there's quantify workforce business this able point doing but we're leaders still benefits without fashion, remote you in all think, you that

Andrew Cooper

we it a feels the like what's demand you are it's lot been way a seen maybe sense hey, of still being of pet you're you early know, is asking some pent-up a out, think demand it's in longer, come since are visit July, one all kind been that themselves different but more elevated feeling, worked is and it's whether that visits, within to visits of pent know, you that through when set know, of you about because up potentially that elevated us the a for of do XQ? we've where in you level you and kind on rate, way that a great, is Okay, for, that kind run than so now there visits, have there anything steady that our the question know, clinic, are numbers or asked last maybe can backlog, and was you a July you we of more point far, into know entering to, bit know, us little give sit, and utilization

Brian McKeon

think some pent-up I effects still going is, there you on. know, demand

up through weeks. growth, was it visit You that the the three wellness see could in first XX%

had I calibrate. that's, we So, you And, know, in think what know, to grown. you grew it's that. X% that QX We supporting is tough normally below

will. know, we some up you indicate out make you yet know, in of that settling would this what's, visits didn't to So, where's not position and so, the if that we're say you know, you

pet the good The service been think has clinics seeing online. looks spend You based feedback healthy. factors really bond the Anecdotally, the willingness positive. know, They're and underlying to work. think factors are pets. all doing on reinforce Vet more owner I I strong and all just, we're that industry you very look know,

we're but underlying demand trends very the benefit, know, think pent-up some I you healthy. look So, seeing continued likely very,

Andrew Cooper

the stop I'll time. there. Appreciate Great,

Brian McKeon

you. Thank

Operator

Okay. I to, with that… want

Brian McKeon

to going conclude the transition to We were call.

Operator

you. Thank Okay.

Jay Mazelsky

call. unsettling which thank I are know a the express takes employees appreciative forward view have just Investor delivering my who for performance couldn't the want We to and run that our to the also the I our more many designed and I gratitude a we the work. want some the business Day And company times. in. I everybody for of way in program. purpose, our maintain on virtually day. advantages these calling to of meeting strategic grow IDEXX during their extraordinary look We still animates as be of while to team part long-term

you. And that, so conclude call. Thank the we'll with

Operator

for concludes Thank conference. gentlemen. you participating. ladies you and This Thank today's

You may now disconnect.

IDEXX Laboratories (IDXX) 31 Jul 202020 Q2 Earnings call transcript