IDXX - Earnings call transcript Q1 2021 | IDEXX Laboratories, Inc.

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Operator

Good morning and welcome to the IDEXX Laboratories' First Quarter 2021 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 earnings 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

of or Generally comparable now if over turn so we GAAP. gain to appreciate call Relations Investor unusual back financial foreign non-recurring quarter financial feel results, our to call, and comparable include rates measures take growth, website. which get their allow measures each discussing time participation not may and limit if in changes free period participant that growth, items note to questions, noted. Instructions] In Accepted and measures of reviewing margin or exchange I the otherwise [Operator XXXX directly GAAP to to comparable in Brian our To additional ask comparable one organic we of questions. provided Accounting by growth. the broad will expense the to accordance all in necessary. one, or first is questions growth, references comparable this please growth permits, in profit to and queue Principles we During non-GAAP EPS McKeon. gross would your equivalent gain currency profit these operating or certain into These growth, you with A the These as our please growth, the refer like margin financial with the any. comparable have compared additional visiting may found follow-up comparable in We to growth, reconciliation growth operating will measures prepared gross operating most also growth, operating non-GAAP comparable be be comparable release, expense the growth, impact earnings exclude XXXX Q&A, unless

Brian McKeon

pleased first Good outlook on our through I'm our result morning, to everyone. an to and you update initial financial for provide take XXXX. quarter

favorable of terms revenues, in increased driven profit continued in XX% gains as basis. reflecting momentum prior organically flow-through reported comparable earnings tax high compensation reflecting high per in XX% by business. higher global strong delivery and were financial year and excellent QX, CAG The relatively to QX, IDEXX results in share recurring levels. share, of a $X.XX of our dynamics operating enabled These benefit continued growth from $X.XX In CAG pre-COVID higher XX% benefits organic operating on in than based XX% markets. international particularly revenue comparisons supported delivered recurring Diagnostic expense highlights, increase stock a Revenue CAG Diagnostic strong across per an expected in and U.S. and growth gains by

our for X% an higher initial to projections. reflects million XXXX. revenue to our our mid-point outlook. Our than achieving initial We're to to increased full-year outlook X.X% by strong $X,XXX growth, revenues $X,XXX growth XX% growth higher million XX revenue been organic to year start of XX%, This the raising XX.X% overall XX.X% XXXX organic for and revenue our or has our updated growth range comp in outlook raising to Diagnostic profit gains outlook XX% at and CAG revenue to than million, reported XX.X%. has We're high recurring

market share, support to point to targeted These to a Our reflecting point commercial deliver XXXX $X.XX to in capability EPS $X.XX EPS comments. our are XX% in development investments core XXX and later in advancing XX% our discuss profit outlook or We'll we'll accelerated innovation margins basis updated our global update outlook while planning now XXX reflects gains operating per business. my CAG improvement long-term these gains basis basis. to on strong We're to a financial full-year comparable growth. projected comparable of enable

our review in a recent quarter with first trends. market of results begin Let's

revenue gains were in Overall, revenues, in revenues African as XX% of growth of year PCR expanded XX% organic including growth organic X% and Diagnostic well growth CAG the model CAG by also was Strong XX% OPTI demand from driven the in of QX growth XX% The growth recurring growth March. the reflecting the CAG driver for by benefit COVID organic Diagnostic COVID-XX quarter in through in reflecting reflected Diagnostic growth XX% First strong benefits supported instrument revenues. by recurring rates X% some international in from across markets, U.S. gains regions prior CAG impacts our lapping our initiative. LPD of key quarter. high our approximately in Fever gains as human revenue Swine China, business, testing test late financial

very half which gains including from were visit estimated organic basis of rate. aided CAG high These QX; saw the coming second growth second X% added trends revenue the we by trends. our Overall, as growth calibrate sustained visits. increased XX% U.S. lapping overall clinical clinic two-year U.S. year-on-year a visits. at approximately to an from effects]. growth the annual The the to lapping [equivalent increased were reflected CAG growth of benefits two-year we XXXX. clinical On growth adjusted prior in strong basis, on late First March. visit COVID two-year than recurring results of XXX U.S. growth, On some growth of be clinical visit quarter. quarter the quarters strong day growth X% was highlighting a High two-year U.S. annual wellness in in same higher Diagnostic growth X% on Diagnostic selectively patients, visits in gains consistent average XX% results. with to our CAG the a rate, We'll revenues QX or impacts by X,XXX impacts X,XXX COVID in in growth supported Diagnostic basis, effect largely store benefits and premium growth at revenue basis visit in growth in year growth were new XXXX visits recurring and continued for points clinical clinical quarter, X% in to XX% increased was the IDEXX XXXX we basis recurring relatively half slightly higher points wellness points average first an visit approximately non-wellness trends growth

for and services, the growth XX% to and Our overall same including overall X% organically and IDEXX dynamics visits QX globally. well IDEXX in ahead Positive of global markets. same-store gains reflecting XX% plus QX reference continued support on a healthcare high diagnostics the commercial increased rates and technology drove standards strong expanded revenues XX% of very higher revenues clinic to increase clinics benefits revenue in revenues continued from in a care customer focus testing organic utilization lab supported gains in store across veterinary in in retention of increase XX% increases initiatives international pet organic our market veterinary modalities quarter. and U.S. major practice, diagnostic QX, in

XXX levels, in the in instrument same be gains expansion core consumable growth commercial in XX% quality supported supported international and North instrument constrain and in our supporting organic regions, Gains in premium placements strong basis testing XX% plus U.S. in competitive was growth retention in in premium as [increase and expanded reference placements XX%, increased Total catalyst reflected growth be volume gains The first quarter, XXX markets, North program demand XXX up of international markets. utilization new high to and to in an IDEXX global in of XX% placements Our CAG placements international increased VetLab customer look gains in across and a revenues levels markets. continue increases ahead IDEXX agreements. continued at clinics in capability, XX% accounts excellent driven install XX%, new compared for continued to diagnostics strong high placements lab growth year-on-year reflecting significantly from competitive by gains reflecting benefited increased presence, America, base. new XX%]. Global lab CAG and plus gains our XX% categories. instrument America, in our by and international the high store organic German growth reference testing growth by lab to Europe, with QX across globally. prior of on

placements initial our continued demand global We hematology to including shipments by These of XXX achieved strong customer Catalyst second XXX high placements, our XX% driven XXXX. supporting our year-on-year ProCyte base compared levels global high premium volume growth One customers. also new supported a growth retention base. hematology QX benefited from from in placements a and Catalyst of XX% in installed We premium

growth other advanced veterinary which direct gains seen effort QX, since U.S., and X% price the drive instrument mid-teen diagnostic across supported markets. the XXXX. our international new One. expanding in-clinic in modalities, reduction XX% in Overall, base. sales X%. encouraged impacted wellness by software since and as instrument early accelerated also QX, note, organically and prepare and SediVue’s at Diagnostic in rates XXX access imaging asset gains X% our placed We're in clinics supported software and revenue and for were international to leveraging global system placements high in of level go to software markets assay IDEXX imaging sales. initiation Of a strong rapid the imaging of agreements, growth our installed recurring and for lower levels in XX% global digital In solid increase primarily organic ProCyte strong revenues a [premium overall by U.S. levels, We high expanded Rapid base CAD increased placement customers gains growth also the improvement XXX launch reached service globally, revenues U.S. in installed year-on-year regeneration diagnostic reflecting overall. we moderated consistent of by CAG testing, for veterinary our our retention platform business, with in rate volume of demand by driven revenues the year-on-year XX% Double-digit continued including earned momentum we settlement] recurring very remains our revenue net in areas highest growth a

we Turning other estimated declined Pacific impacts, Adjusting million timing, water from benefited strong or results increased revenues for related growth year by favorable from strong Asia supported X% results orders. during as included producer accelerated driven results, levels, an non-compliance year-on-year rebuild business swine shipment [China], to QX, impacts constrained in $X X% saw QX programs swine increased million these testing Livestock region. which poultry QX, efforts see volumes lower more for health which timing segments, results. fever for XXXX. business large herd of relative core and dairy and organically demand African growth favorability solidly improvement in our prior the offset from to shipment organically testing been benefit prior stocking largely testing LPD pandemic. to and continue X% in by compared year gains that strong growth revenues of have offset to in in water of swine approximately our X volumes QX than herds. These to revenue screening compared diagnostic

to this increased half of and moving expect levels we swine We in in see LPD local lap see in to growth forward, China. our rate programs competition revenue African second testing prior benefits demand begin pressure year from particularly for high as the of some fever the

XX% basis, a pre-COVID increased and we revenue of price favorable comparisons to in Gross quarter sales, impacts operating operations, year-on-year supported margins high comparable XXX XXXX. basis. on XXX profit strong from as P&L, from expense flow Overall consumable basis, to Gross we gains. as on through points reflecting CAG profits gains comparable increase operating higher driving profit the higher benefited Turning an productivity in in XX% strong QX margins our recurring organic Diagnostic in a levels from expanded a by and comparable basis and benefits improvement in increased reported points net relatively on XX% basis first of the revenue moderate lab growth, QX. operating had

we X% at balance lab the increased of levels and and increased gross spending [lab We’re year on service Operating to levels. high revenue prior growth a reference as QX basis. to margin planning X% this support gains over tightly] reported, as for staffing comparable expenses controlled moderate in

year by levels, year higher quarter pre-COVID first As noted, to prior sales moderated was spending show, growth and meeting trade higher travel, much expense operating prior including costs. comparisons

also as rate in planning invest commercial compensation increased to lap outlook as financial QX moving We're claims through as per our XX capability. costs for EPS work to basis, XXXX such related QX control comparable growth comparisons On costs Our includes enhancements an share to forward, for expectations areas in care the $X.XX and including was activity. innovation are strong prior to key OpEx our global of employee share, in related year levels, through raised. OpEx year-on-year support $X.XX momentum million growth XX%. we benefits and travel per of restrictions pandemic year EPS we increased or health a and share-based increases

in to flow million an hedge of Foreign cash capital conversion XXX exchange added from to operating $X benefits income in to profits our QX, was XX-month XX including EPS approximately of was XX%, losses. a trailing On rate basis, cash free and spending, QX. million extension flow in tax million $X.XX net Free net delayed payments.

for cash outlook flow the XX% we're XX% income. of to of conversion a For net maintaining free full-year, consistent

times the with and We [the] billion a million million XXX capital position. repurchase strong XXX revolving X.X very leverage borrowings times XXX,XXX cash, X.X a re-initiated and of share We and repurchases net in no $X of remains sheet shares. in in gross credit of facility. allocating balance ended QX ratios Our quarter cash to

to Turning to growth our as XX.X%, the now our full-year projected our a to increasing reported. projected by $X growth this organic This for point at range press outlook, rate our XXXX release. ranges in we're to refinements increase approximately XXX at to year, revenue shared offset overall assumptions, X.X% and our basis growth million in revenue positive FX XX.X% reflects benefit point which full-year

of XX.X% organic XX% organic an XX% for XX% Diagnostic revenue updated to reflects estimated CAG of Our organic, range revenue. outlook growth recurring overall growth to

our by U.S. which growth, strong QX and we've noted, of our global execution, raised revenue at strong CAG regions. driving in midpoint point X% CAG to clinic is the that confidence DX in outlook As towards a growth trends reflect commercial high recurring our momentum results, visit rate international sustained

second outlook testing in see our COVID] lower we'll for revenues year-on-year testing. as also overall in of IDEXX X.X% these to with store African U.S. XX full-year earlier operational recurring resulted and the moderated an which headwind, XXXX the that our [human We growth of initiatives increase clinic approximately We've over growth recurring moderated U.S. growth expected of fever Diagnostic clinic half LPD and visit revenue swine conservative basis XXXX million estimate to organic to reflect lap plan IDEXX business. CAG benchmark, relatively human COVID end X% growth clinical projections growth visit a higher earlier updated aligns revenue our points. to growth in for As to outlook our more in approximately for projections of increase revenue effects results revenue Combined, moderation our benefits being [upside] $XX our we The the including in X% China, and and full-year Diagnostic – outlook. in local million testing XXXX same to competition levels. the of X,XXX premium growth for XX recurring of CAG prior by XXX basis year outlook, for is compared

of higher will be COVID in with of year-on-year rates the variability there likely growth year half in lapping continued quarter, prior revenue the expectations by XXXX. impacts, growth significant revenue for first Given

XXXX reflected In our terms noted, This in is annual points to we're in key XX.X%. from basis operating financial initial of now for basis XXX reported XXX operating XXX of up metrics, targeting to outlook margin points XXXX, comparable outlook. basis margin improvement as points of a XX.X%

we Our net hedged in estimate for exchange, XXXX, updated positions. will positive of foreign established provide EPS $X.XX of EPS incorporates outlook projections which now benefit

turn also projections. $X.XX provided higher We based share over includes financial tables compensation snapshot. activity, to updated for details his in our concludes press review. than updated our call comments. the related and per tax estimates in initial per an share now estimate Jay our release to Our outlook our and of full-year share $X.XX of benefit That earnings the I'll

Jay Mazelsky

supported trends continued for first business organic in and driven XX% the across growth Brian This growth strong Thanks, high in revenues. gains strong There by by all quarterly quarter recurring CAG our XX% in and IDEXX and market resulted flow strong revenue segments. profit XXXX, Diagnostics start to had CAG organic an good through morning. were execution. our core excellent market

of opportunity provide reinforces seek a growth. just health care, little Today, companion I'll drive and standard gains the continued animal trends And long-term commercial initiatives for comparable also IDEXX, performance recurring update raise position outlook, our and market develop care. leveraging XXXX XX% on to enable our to that CAG Diagnostics we're XX% innovation deliver to market in and returns. on confidence we us strong business update for I’ll XX% to the the Our our animal growth, companion seeing us the product to company our tremendous to to the global provide patient in financial tailwinds our an an and over markets. XX.X% capitalize gives market will approach growth to organic accelerated raise EPS revenues,

strong trends. for continues Let's diagnostics. of clinical high and This showing example, an in data continued utilization growth global update supported expanded market on higher market reflected, begin Companion animal healthcare to by U.S. market visits, in momentum. growth see is with services in

sizes. saw the As growth visit we Brian seen high up wellness strong XX% practices visits in quarter clinic across with visits up XX%, highlighted, up with U.S. and X% growth, non-wellness of continued all

deepening XXXX, patients the in our of parents can owner in a of breeder new growth that approximately augmented the provide continued gains. added and evidence tailwinds growth to long-term in of the the for business. new puppies up growth up X% of The to half evidence second X% from continue activity. and by clinical we patients testing, in New see to progesterone in record overall bond, continued contributor QX pet step X% be levels critical continue to kittens clinical to a pet And significant estimate visit We versus XXXX.

a the to strategy. of new high in long-term investments and As visits, well for integrated growth. at for goal amount regions, in in key QX in we've we've support continues The IDEXX level non-wellness the competitive key gains North Europe, execution the to stages, pet we and growth like is and pillar pets of premium same a IDEXX XX% and of In revenues see we and the the customer analyzer year-over-year of and clinics. continue levels in restrictions return when to strategy. key of our with diagnostics labs do our particularly higher area outside across One. direct standards A is growth. increased including increased key the sales total accelerate commercial model continued our data, In commercial teams March, average sales snapshot, a placements while in including U.S. of resulting shipments international organic In accounts. are has the Kornwestheim, busy. momentum in care. to data care, continue we evidenced instrument visits CAG go-to-market for shared outstanding I’m clinical in our the of team, generation plan growth to new all In on benchmark, The very highest proud are ProCyte XX% XXXX gains including for drive and was programs hematology of despite their to year, potential delivering supported double our reinforcing reinforces instrument placement XX% practice that international potential the our store our reference the customer customers. driving pleased growth XX% for accelerate focus commercial quarter from testing. schedule helping been per to market reflecting looking diagnostics milestone visits in recurrent be well leveraging rate like markets growth markets solutions are key technology of the with per access to IDEXX same this IDEXX a from efforts our the with helping XX% annual in annual a help traction extremely highlighted XX% the our XXXX, utilization, increase late clinics. of with extended customers of can of presence. in highest of last achieved more geriatric markets It's premium based in senior not exciting usage in like annual of practice, twice utilization in Clearly, increased strong Advancing with wellness gain revenues. areas revenue puppies With across personnel to in very lab increases expansion completing Bloodwork. help diagnostic needs we high percentage an art, If capability. in young our began growth Interestingly, customers advanced we support revenue revenue international delight higher a We're our surprising reached half across world-class point pandemic, through historical per percentage were thereby seen these will even during year-over-year of and we internationally by growth next kittens. strong Innovation our to XXX continued our life Maine has expansions focus and is our to expand estimate and preventive adoption acceleration analyzer of global pet The growth the first in Bloodwork business globally, through we on growth leveraging the X% that and further America, of double manufacturing clinical to state services commercial that progress growth our customer XX% new annual in job XXXX. another XXX or Germany, approximately an Bloodwork modalities. by Westbrook, diagnostics. first like clinical diagnostics increase. our with for diagnostics centric they placements In looking earnings offering. We the users [indiscernible] instrument of Diagnostics strong commercial and the doing care growth standards international versus driving on-boarding internationally, veterinary quarter, core overall expanded growth significant International partners IDEXX and major

efficiencies and customer participated to confidence testament Our trials, range to edge the at clinical is customers in also and for leading experience. gain providing and the clinics in sales U.S. practices give levels with with in this helping a best-in-class One were exceptional which information represents our decision to care. next and experience integrated and positive in that highest simplicity supports IDEXX installations This partners the providing step ProCyte first the truly experience running of which wide in in is ProCyte of a support highly analyzer analyzer. management, accuracy veterinarian our One’s their the technology enables patient results.

as We program part XXX CAG drive help expect testing go hematology to lab IDEXX growth hand-in-hand usage. the and as of ProCyte drive to and chemistry reference One

accurate [SNAP providing care QX, our results customers early innovation in is by supports on of a investment service connectivity. point benefits, workflow One instrument] Platform, SNAP for the through took volume late to focus Pro begin commercial diagnostic of shipment our to the our The concurrently in program, that advantage pre-sales rollout expected rep] [sales building is to and our including the manufacturing on quarter, support This while XXXX, international that QX. another ProCyte reading of clinics smart the at

see rapid the than is for ever, the ease precious are revenues excellent recent tool a We within actively our in records. with organic international growth trends key Our benefit also quarter. management these from them in smart help help provides save service are growth business. needs who address growth like practice to engagement our so while customers. drive Pro installed to internationally of does information providing using to We're XX% which SNAP rapid and assay global time, partners assay a geographic drive retention veterinary across first maintaining Pro expanding accurate help base SNAP high and markets progress U.S. Europe, in rates are key consistent in to making connected customers with and busier

praise also Web consistent workflow quarter. our to client, productivity double-digit portion area, With in in performance enhancing services. needs applications [indiscernible] of Our than from last technology. to PACS serve compelling critical received product for are Important based portfolio, with levels our PIMS from faster devices PIMS value, patient These into grew of quarter to over the stack IDEXX the driven feedback Record excellent tools that market. improvements by usability, growth is every Extending our together data enable and a technology reduce Through managing efforts this our like subscribers clinics is between manage breaking data visits of IDEXX PACS, to Web to by PACS seamlessly clinic step growing as ever for focus is two expand to procedures, agenda to software innovation our discharge. for QX XX% help leveraging Web value and multiple By Connected communication improving to to clinic in bringing uniquely customer PIMS meet a and platforms admission veterinary insights worldwide had placements favorable business subscribers, connecting another saw new provides driving in clinics PIMS our significant year. retention is like placements which customer by versus including cloud on growth about positioned offerings demands capability tools and We software more a differentiation. through XX%. the the create the markets. staff. support our benefits creating customer system. diversified look curbside. tools, increasing high capacity this deliver we in while veterinary to demands proposition integrated clinics SmartFlow, AI streamline in

wellness of advancement to annual promote continue program. to our of initiatives, in care In IDEXX preventive key terms preventive testing we care the the

to which quarter, programs the addition the care, X,XXX, patient is can in new and level U.S. predictable XXX In over practice more customers the first care to we XX,XXX than commercial exciting more In improve XXXX. by halfway standard staff. of enrollments, preventive team an executed are increasing veterinarians our the of loading of goal help enrolled as milestone, bringing enrollments over to capacity, schedule, to practice total

the plus opportunity opportunity not Vector-borne balance full are disease season, tests. only only underdeveloped given the deliver and continuing disease led the Vector-borne utilization a enter wellness strong This wellness help to of expand and by in particular, additional we testing it in current all customers our market in revenue. growth As XXx Shifting focused across testing. are a significant for long-term the represents material opportunities its revenue in prevalence disease to screening retrovirus U.S. XXx clinics to fee-line testing There on focus plus using of the heartworm visits market to accelerated in testing the capture Vector-borne regions, care, trends increases to enhances in drive double-digit underlying of standard market,

excited while ahead, our prioritizing meet is our maintaining of the continue our commercial workforce. support the very top for to to levels leverage notch high to partnerships our focus infrastructure build necessary in area to in As customers service key levels look us we're invest to of A capability, opportunity with innovation in for about we growth on trends. strong growth,

a and customers that adaptability proud resiliency post-COVID-XX have time And add opening with and COVID-related in strong remarks. our leveraging We're of flexibility the of anticipate We and I'd ways team IDEXX for concludes my colleagues and the the Our continued shown new I'm And on employees XXXX. That we for way is to forward that restrictions. like have we together levels to look during of working future, track extremely some questions. environment. high now executing. more customers.

Operator

Bank Michael of Instructions] Ryskin America. Thank from question first our you. from And is [Operator

Michael Ryskin

in Hey, I growth want want but going want To taking side of invest on into lapping and strong Jay, coming be Brian on, fact easier I a and the the of prepared start, of focus how business. both obviously, to question, the on remarks thanks comments gate, gray some on to margin sort some to for congrats the quarter the that but you side comps, out And ask to and in going guys. forward, you're both also the to that spend here. the had the of on manage you you things, quarter from OpEx

I think lab sort reference [CAG that the for growth we how feel based] there on adding the anything expand little the bit? And rest side. on the you the you about, staffing just personnel, think the Could you know, a to reinvesting on the some should mentioned, of year. is know, support of of you business on some gains

Brian McKeon

just trying that don't reinforce. highlight forward, why very we QX. dynamic? that's strong of, just start had Clearly we in move we're a framing I the profit results trying kind to Mike, We're as comparisons by, to because key

are entering we where going ourselves to that comparing last We start a implemented going year. control spending levels here be we're to the period to

margin like labor we're another gains, recall, So, we quarter, which $X growth. if really, so care moderate highlighted of X costs we tried of about very of pandemic million things margin the move QX, some [in the just we We those forward. the controlling and had costs. OpEx benchmark to areas savings reduction higher is how over second million year-on-year X% cost to gross trying you had early in we we'll from We're costs stages just of a we're sales effects and from that highlight Again, XX OpEx know, like in health see, OpEx savings lower gains, the labs, of to of million see comparison as of in lower mindful the meeting going growth. be you relatively as T&E],

we won't have favorability. those of So, forward, moving kind

highlight we're to business. trying highlight we're that. that also So, to the in we're advancing investment trying just And

a maybe Jay talk bit can that. about So,

Jay Mazelsky

Yeah, sure.

we're that, excellent pretty area good return And to just for our a We We Obviously, markets. being high opportunity short-term that support environment, like the expansions continue to growth very identified field sense. a attractive is just Brian's growth. there's there's we it advance as on makes things expansions. in know build labs to do those other us obviously, and We've and comments. to international of and couple that opportunity So, this support. production, on areas in reference our continue where

I place, field, investments, type our to technology, things. optimized reference need have, of personnel, those We have all labs, you really the including to in pieces information right think, ability additional identify

before as and the short-term about opportunity, international to optimistic U.S., well very we're opportunities advances will and long-term as markets, us. in So, our see we continue as

Michael Ryskin

expecting seems on snapshot some sort you for I provide were you are as I'm always, bit think, indicate you if gradual And sort more out a could terms both even figures like if wondered market looking of the analysis acceleration it there's data? underlying no economy? spaces continued a guess the as a you're in would if through there? bit on Is fair on year. indication some seeing up, follow go thanks. of I of from seems you moderation reopening phase we could and it come conditions, growth you markets, a and you actually for XQ, that of the Just that a you revenue that. underlying anything of But throw of moderating helpful seen from I more of as say of a little would know, at Great, Have trends sort curious, things then of on some the know, raw the I the just practices. maybe the we're growth for it little is like that talk very and some seeing one these and visit comp, about, number adjust COVID, granularity, that of

Brian McKeon

than we change. Mike, was overall, What improvement. an consistency more XXXX the be would I would in theme saw say,

sustained. and contribution comments a growth the we the If that of drivers visit patient new improved growth which you we saw clinic, and levels thing If the frequency the XXX was Diagnostic those in down have was basis things contribution up bit highlighted CAG there was one like about break in QX, higher to utilization, in clinical revenue from of points.

growth know, a So, follow. entering know, because, It largely are that and know, but, some I you new kittens puppies you numbers for more consistent have a think we'll tougher now the the, building of were helped, to know, little We're the the, QX. change. where rates with period the of the consistency you was two-year than the growth adjusting COVID you rate compares, effect know, you

that's the of highlight up for factored trying that And, well, think balance are we're we're two So, year. you know, I encouraged the know, to holding year the the of two-year into outlook and our trends. some trends you

Jay Mazelsky

add The largely I have that described to level would trends trends Mike. we've intact. been just we described, the broader

these of and pivot business diagnostics higher new of a and usage So, puppies and growth critical services are to are The veterinarians. the driven which by by new obviously intensity more kittens, majority of patients.

that those know, seen we to have see XXXX, we half last, in For of over you the QX. second continue

Brian McKeon

One our highlight I’d you of in IDEXX’s growth job. thing We XXX. really international excellent had placements, an instrument doing in market terms execution, teams know, is, the in excellent addition are to trends

I we've is in that a pleased been looking think to model global the commercial and we're really, upon really leverage international good the place. momentum. with very build And

wanted we highlight So, to that.

Operator

next from Erin Wright Our is from Suisse. Credit question

Erin Wright

Thanks. Great.

some So, snapshot Bloodwork you including gave clinical increased the visits, of the the this incremental charts X%. where in time percentage by

we basis, preventative should as from potentially by pandemic seen well the trends that continuing acceleration even the like measures, thinking as about on post visits an be annual prior but acute a during that proportion initiatives how this driven So adoption in acceleration greater And mostly an pandemic? with care of the of seems world? greater was other

Jay Mazelsky

comments a Erin. about that, make I'll couple

XXXX as a the So Bloodwork versus previous percent has use and has the rate we talked of about doubled approximately – about year. in X.X% the growth

lot of capacity. We've to the like feel proportion users diagnostic a so more that. at from of higher were diagnostics see that number users continue higher of increase. cell] that range that as a we there's And [dead evidence very And standpoint seen who greater driving the optimistically, things those even are of there's a

– visits, greater intensity they when use then up. use and diagnostics, of clinical as We part them, gone see of greater also has also

all So, think into quarters. those we it. that playing And they'll three are plus sustain factors

Erin Wright

is on you and expectations relative on anticipate the an and provide you at this traction update great internal then to Okay, there? throughout ProCyte how that your One, accelerating point? tracking year can Do that

Jay Mazelsky

roll-out very There a know, successful create in as marketplace. we Yeah, optimistic a ProCyte time distance new – in of about dimension things a One. very analyzer in you roll-out. and to awareness, these, been we're excited building It's the production, terms and volume there's

You opportunity know, is hematology, there for placements impact in the market, thing significant. XXX,XXX there's but think very hematology chemistry. multiplier nice ProCyte exciting We itself where if that opportunities the a plus are is the there's about there's One also

internationally. pull-through and XXX labs terms the just part reference There's, know, IDEXX you now, the rapid not together. So, essay, we as tend those of but to place there's U.S. in of,

so, the And opportunity. by we're excited

late given pending our And approvals. usability in the both experience, ramp us as things trials have our so the regulatory and think has to terms the and confidence hit of that I lot experience we internationally mark, we of performance, QX customer on our a grow year. especially, expect release early QX, analyzer throughout like

Erin Wright

Great, thank you.

Operator

Our question from Jon Block Stifel. from next is

Jon Block

the a long Maybe both one's from morning. first good you. me. questions little two Thanks, for Brian,

the That XX% And came that flex this, year-over-year it think to call a you balance can it lowest stay you does level then I low on range? think CFO think started level of level expect clear, remember gross margin since know, you just said the I in I to expansion, be year-over-year in moderate, sheet, the I might you to the X.X bit. net. and you leverage, a the but be

of It's You've a couple in you big build-outs. CapEx now behind and Westbrook. got Germany,

deployment just you So, And follow-up. think we cap quick can just on maybe how comment got I forward? a then about going

Brian McKeon

but adding growth we're as And capital to Yeah. particularly we're controlling some just to the, a know, factored is disciplined that's margin, we've, in share CAG with still and helping, I DX you repurchases, we'll flow we're have, of pausing, here you anticipating level year-over-year spending. through of leverage, margin high on a recurring anticipate, a basis, terms through last and year first question know, outlook. lab On your to our our you're quite back some do compares into on and nice high correct, really up mentioned and And gross strong going the the mix Jon, in obviously then we things were costs we gross be really on keep staffing. just seeing are flow growth, the like

typically as we a spending the And up long-term step – now, forward, projects. spending. capital of feel maintaining And kind have. you an the but of some good did the initiate those. on move see. that QX, And just we Our and know, that we're our was in a deferred change below, some of we're will capital just, levels not on see basis normal up we We that you deferred you in catching signaling about leverage annual sustaining ratios fundamentally in view, right buybacks net kind

not this to signal change at to – So but profile point. leverage any the trying

Jon Block

respectively, Very you on or And but but forward, as thing do at practices? think about in it how focusing identify X,XXX a to then. Huge lot n still basis, clinical to some the thoughts Got going that CAG their services push that only in I back. said premium X,XXX from you got they slight know, the to down Thanks, XXX visit Vets, mentioned, I why moderation? think was you XQ on premium still quarter, any point is potential anticipate that growth, of to guys. adjusted we X,XXX know, And it the the the closer Jay, maybe XQ light bip you of bips, try You XXXX, more X,XXX and recurring we try I helpful U.S. it. is, mentioned the that's X,XXX to Okay. premium and can range?

Jay Mazelsky

from it's sustainable. always the Yeah, is that quarter-to-quarter. little Jon, premium over and you we've there's We we you bit a in XXXX variability quarters plus, of is, XXX what know, that know that seen last think think

as also strategy services, I to of testing in our but practices. think response bringing pivot as commercial part the in testing if company different around it's partnership relevant in Obviously, of the the it's response of has our reflection that with clinics, innovation, anything accelerated COVID a customers a things. couple a which

strategy veterinarians a it's continue will patients. that higher better for a care And And of focus innovation be owners see from for a that's that terms to formula. patient to in us And and of pet successful care, think of so, supportive standpoint. we what standards want and commercial better –

Brian McKeon

likely the there. It’s was Jon, going very something growth our and Jon, profile. pent-up one at overall very I higher-end services about know QX, know to growth And good the pre-COVID. you but to, that's where think I quarter-by-quarter, and you're looking factor thing of feel the trend in effects is There We think some I was it so to being I'd highlight too, enhance healthy. demand It's as trend above you sustainable outlook. our need

Operator

Nathan question from is Goldman Rich next Our Sachs. from

Nathan Rich

I the more prior DX details for relative Thanks X%, to good you questions. I in to on to be with John's and increases Hi, morning. growth on outlook. guidance. the utilization. said I curious think diagnostic CAG wanted the would Brian, visit follow-up actually assumptions to it question start the was the get some up just around underlying

to X% talked X% year XX% that that I about, X% previously, was visit of for premium just kind then and to think the referenced. growth had you

I’d any, we the about those just kind be year if have on assumptions, think So, of metrics? you balance updated of the as curious

Brian McKeon

growth a higher-end to little updated level range, global our we year and started the with in CAG the the range, trends DX our QX. saw [Indiscernible] basically two Sure. assumed similar numbers, higher recurring made what but of QX –

in-line of largely it's the So, And I with is that. primary driver that the think update. that,

dynamics positive growth. more trends is the with of the competence know, some just, on visit – you through I QX coming think of some sustainability and critical

range, And because of the a We're still so may maintaining, that's know, you more moderate. that headline.

We're we as feel good to dynamic estimates we you X% a be to U.S. bit full-year. a may pullback. And anything, improved think, try in our clinical initial highlight that QX. for that mentioned visit and and do X% And were to premium the benchmark, trends. they on about we some here. very balance, But if going see compares some against the I up know, You growth,

that on premium. at that clinical visit the higher-end And the XXX that our I one-year we're basis outlook For clinical X,XXX premium which with where trending in right we're growth, in-line point point QX. basis to is mention outlook, updated reflects the reinforcing basis and visits. did that's And a we were

We and sustained. And that help that about good think to seeing very ProCyte I you feel build And course momentum. are we that, just have on know, think us I globally. have underlying feel of issues our trends So, know, One execution. market about innovation the that'll now like you the, good we things

Nathan Rich

orders customers? helpful. ProCyte far are competitive with I quick the know, the as One you how lever that or could can the ask so Great, seen a practices to a maybe ProCyte use, existing many that's maybe you that Jay, If currently? follow in placements maybe of versus you into about can to get up One, or I you maybe those IDEXX you've in know, about, guess, that new And on kind just you're getting, talk just opportunity of talk you is know, accounts

Jay Mazelsky

rollout, it's standpoint. at pleased. a successful a performs very so very high in instrument, This been a successful an a very It's the the in by experience level but trials, and customer user and accuracy complex Yeah, not do, has and it route, a just to the early we're easy very world-class pandemic. is of way, interface middle from

mind, know, opportunity Keep very are markets. of You international the in identified we've company. hematology markets as for our a significant first the lot hematology

and they in a test if to when choice choose hematology, So even it's have hematology or they even means chemistry, both. they terms that before is, they one with of, if what none, have instrument, tend

XXX,XXX even overall as if We SediVue sell itself, comment, to described chemistry an earlier opportunities, almost level I important more the internationally. of of plus just in which know, our in I part But increasingly So, tend a together. you two-thirds opportunity higher clinic you in know, importantly, is pivot it's of terms hematology, solution. placement, it,

profile type this is performance know, us. standpoint, you which hits very spot. a cost sweet attractive having obviously So, to The market a and from of solution,

that that volume the XXX the terms as pull-through the getting essay IDEXX delivering thing program is internationally. just commitments. piece The in point is on capital And placement traction labs [indiscernible], I other part that and reference there’s of is increasingly, out would terrific of rapid and underlying

know, opportunity tail long know, think we duration, to that you going well represents. It’s excited So, as opportunity. by very both overall One volume have, we're as, overall a you diagnostics the ProCyte attack

time. over So, come more to

Operator

And Prasad our last question is from Barclays. Balaji from

Balaji Prasad

you. Thank

Sorry, the juggling different calls. Thanks for question.

So, wizards was quarter it a growth, gains in could just questions this two-fold was to growth through of broader or pretty for trying industry share me. one, there market level understand defective as growth, we broad Vet from any element One, all And by led and perceive sound what coming [YoY] at jump XXX in our your contributions aligned and increasing revenue for points too right basis are secondly, clinics, indicated tracking? that does survey Thank diagnostics, with utilization? you. internal

Brian McKeon

they always our have been competitive. So, are you competitive, markets know, very very

You been our advancing pleased able agenda. know, what with commercial we’re we've to

shared new placements North America, competitive we’ve data both some and as as know, with well catalysts, international. in You

you that own means. you assumptions make So, know, can, what in your terms of

they support grow faster, We is when just that solutions, and tend to they And IDEXX stay our customers is, find supports to needs. the instrument do Solutions. find and they we focus what Our customers and broader on all longer, both practice their serve it obviously, our software. continuing side, solutions with use of with a diagnostic us

terms I'm that. mentioning, In you're the of familiar with survey not

going just I'm underlying methodology. So, not to the comment knowing withhold

Balaji Prasad

in since QX, what could Thank throw enough. terms it the specific the clinic comments? some and of market, you're seeing disrupting Maybe launch – if you’re Fair Imagyst if you. of with comment, what you seeing lights is side, a in on VETSCAN on the and

Jay Mazelsky

methods the Yeah, you is lab in detects more to of the to you clinic. fecal than you’re [O&P], know, is traditional about generally that reference fecal number like thing we within fecal a belief our two It keep, think antigen a know, just up you I best-in-class. the the at question detection. know, offer asking doing And, test challenges much times that the as there

time develop of sample is eggs, protects able that to and and is, detect benefit day, you to messy, them. can which you know, algorithm know, available. is between six of as end the them they the a and part you physically or be and you antigen available, foremost then know, continues to know, able consuming visually are be as worms. in eggs the and the to prepaying prep, But, piece, first be, know, at through than you see to are four testing parasites period, that's very weeks in see the you able when being You to you an The have earlier have that

you So, [basis]. detection better get

and solutions, our pick we at we like the reference to where our them. antigen labs, appreciate that's continue we fecal So, customers, support

Operator

back final for I’ll you. to turn it now Thank over Jay remarks.

Jay Mazelsky

gratitude Thank you, to to calling for want my thank these want during challenging team extraordinary to their performance I times. I for in. the everybody ongoing, express IDEXX

as a appreciative company they IDEXX We have opportunity be team, an amazing live purpose couldn't more and of every day. I the and and our how mission

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

Operator

Thank today's you, may you ladies conference. now disconnect. you and gentlemen. participating, for That concludes Thank and

IDEXX Laboratories (IDXX) 4 May 212021 Q1 Earnings call transcript