IDXX - Earnings call transcript Q3 2021 | IDEXX Laboratories, Inc.

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Operator

Good morning, and welcome to the IDEXX Laboratories Third 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 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

period Instructions] appreciate queue you ask participation permits, unless to if one questions, compared references or XXXX, Generally GAAP may GAAP. most financial call reconciliation to measures like in otherwise Relations take We free discussing please in growth, over not comparable and follow-up Accepted growth also refer section we participants as each that the our [Operator be noted. to in their organic our necessary. limit the one Accounting to accordance questions with would broad in may website. growth directly Brian Investor provided this non-GAAP turn allow our Principles During these certain all the Q&A reviewing with equivalent we'll A To In I additional now and the visiting your results, questions. time in back it have of to to earnings get financial of feel measures XXXX which to will prepared to additional Third growth, found be release, Quarter by the measures is note comparable please so we McKeon.

Brian Mc Keon

momentum business. driven We're for quarter by strong morning, in of global pleased everyone. excellent IDEXX, another animal share companion our results Good continued to financial

prior-year XX% and organically In XX% terms compared to reported growth high as highlights, increased of levels. revenue

average with major reflecting gains in sustained organic XX.X% CAG XX%, annual at revenues international reflect double-digit growth mid-to-high X-year markets. organic modalities. revenues average across teens, results quarter across our CAG for recurring U.S. Third Diagnostic and gains recurring Diagnostic growth X-year

premium to our margins of per $X.XX begin XX% in global on quarter on updated in and major of basis. the outlook a our supported XXX revenue operating points through of levels, our also share, XXXX in growth, of across our later revenue to prior-year review organic achieved High third instrument third business platforms. increase EPS of basis compared trends. track comparable gains strong comments, high comparable placements Momentum ranges. comparable to has earnings an guidance XXX growth our a higher in a the sustained margin CAG sector us We full-year XX% of level deliver to record in XX.X% let's to delivery in with and with at operating XX% quarter XX% results gains, previous end Walk details my recent growth

gains our in CAG revenues recurring which decline Diagnostic was a reflecting decline recurring revenue international LPD revenue year XX% Third Diagnostic was XX% revenue levels quarter XX% benefited and fever XX% XX.X% the and as international recent XX% benefits water by COVID by growth a revenues organic gains African XX% strong testing were high from CAG These driven organic year-on-year in supported by two-year annual overall, U.S. our and addition veterinary Strong revenues. by easy imaging in to basis, to growth China, compared in levels, XX% of prior CAG well were and growth as both services organically to also organic human working PCR increased gains in prior-year compared Diagnostic testing. results XX% swine moderated year-on-year the $X in in in business. instrument from ramping million acquisition CAG of and in a growth U.S. On in gains growth average bet regions. diagnostic and growth regions. software CAG revenues growth XX% a XX%

to teams, our across service. support our us business, continue outstanding reflecting continued high to levels performance operating achieve by customer reliability growth We enabling in chain supply high of very levels of

pandemic innovation in growth testing regions, X.X% consistent a XXXX points increased basis, approximately visits X-year and revenue instrument global placements, QX across average achieved clinical X,XXX higher demand, healthcare placement over diagnostic across same-store reflecting strong XXX gains was positive constrained installed year-on-year Reference base. X-year Diagnostic supported including quarter, X% organic than of strong customer platforms increases testing. testing North revenues year-on-year, year-on-year same-store gains an very and America, by our the premium instrument Lab up a Continued reflected including build average at with which in increased quarter Expanding record excellent, regions, and categories. U.S. at calibrate trends, gains point wellness and in international XX% the international approximately growth practice visits. high commercial new to Diagnostic the an the placements continued overall on strong veterinary supported expansion double-digit up in QX. last driving major premium testing up and gains across for On IDEXX increase recurring clinical instrument in visit basis strong the a basis regions. revenues QX to healthcare solid accounts on revenues the U.S., in recurring by up retention gains IDEXX, strong We heading growth and with X% increases a prior sustaining reference revenue year of in XX% growth gains growth high in growth quarter, services, U.S. reflecting QX up globally. a in across year. continue recent the third and Gains which of wellness engagement XX%, per catalyst premium saw included levels The U.S. continue competitive pet CAG growth Global annual categories. XX% or utilization the into testing, visit on utilization in clinic half growth The third trends IDEXX clinical above clinical U.S. was This gains compared was high the demand clinical revenue U.S. premium in from in U.S. third overall and X,XXX increased XXXX similar competitive hematology X,XXX year. XX% across in quality trends X% X-year was solid CAG XXXX, gains gains in dynamics, organically visit X-year high Diagnostic international X-year growth our trends. strong continued to revenues basis growth premium CAG pent-up growth to increased by annual the X-year continues year-on-year global XX% first VetLab SediVue a in On remains gains be of U.S. with very supported from high levels, our rate, quarter regions. slightly international same-store pandemic. non-wellness growth X% for be consumable which of a prior basis IDEXX to and on clinical organically basis, regions. helps for points IDEXX compared X-year basis a average U.S. lab to in diagnostics, levels, and to modalities catalyst CAG placements with across driven in third benefits basis supported new of XX%. XX%, premium up XX%. and and units, placements volume XXX

strong demand continued second from ProCyte One our placements benefited XXX strong and placement by overall the also catalyst ProCyte from to with driven new global support majority of placements rollout continues in momentum accounts. We customers. The high-volume competitive of One

levels primarily X% growth and imaging strong in included price increased revenues XX% overall gains XX% continues including veterinary testing in to gains regions. growth comparable base, our QX XX% and from from in software U.S., Strong setting organically software double-digit continued was revenue volume global wellness testing. and levels, the our related other supported areas veterinary of by games benefit volume-driven customer as demand VetLab benefits foundation CAG X% growth our continued expanded recurring in services. in with services international pent-up of compared In recurring organically reported, a high-growth diagnostic for vector-borne or continued revenues growth net in New disease and year-on-year diagnostic a remains X%. double-digit supported installed placements consistent global business instrument high acquisition. strong Rapid across recurring placements, High to revenues. Growth that gains recent and our to IDEXX for CAG solid year-on-year demand benefits retention very premium in Diagnostic modalities in assay PIMS ezyVet growth drove from in prior-year

competitive of placements system imaging with diagnostic in entry-level accounts. high-growth DRXX XX% by continued saw at platform, nearly ImageVue also We driven our placements

of continue subscriptions PACS growth our see digital in Web aligned plus expansion recurring capability. with to expanding We XX% Cloud-based revenues, service including

XX% Overall dynamics testing regions. export QX organic and in of businesses Turning to compared in non-compliance supported in back track growth business compared pre organic revenue in quarter, related categories. COVID, testing XXXX. XX% decreased XX% LPD by year's other water other growth organically to in gains solid offset increased levels. declines QX continues segments, last China to and growth Dairy in revenue this X% Business to Livestock, towards growth levels compliance Poultry, QX and our as business organically third across - was global

revenue approaches as prices for factored related changing upcoming which Swine infectious seeing reflecting XXXX health our management we're Reflecting high from and As herd regulations testing overall on expected, -- on the of disease lower African factors, and local revenues constrained livestock demand lower LPD sweep growth financial levels. we was Swine planning outlook. these Swine low programs. We're prior-year screening quarters, is impacts testing in additional African constraints demand work Fever QX pork Fever into China, lapping continued disease LPD China by of government testing relaxation to and for now through

decreased growth lapping human is ongoing matter, including modestly included by and to levels, Turning CAG recurring from our metrics. instrument supported of margins $XX.X reflecting profits compared gains. the gains which revenue XX Diagnostic Operating Gross basis, pandemic-related sustained and On benefits gains. which profit reported, growth, price and PCR on basis expanded basis a from related the to were increased million double-digit as comparable increased Gross as from impacts moderate growth XX% to points operating revenue cost EPS increased margins offset prior-year operating excluded revenues. CAG comparable G&A high high LPD comparable operating high profit in and XX% continued and P&L, profit XX% an litigation a QX charge, business mix comparable growth revenue from high lower net benefits from strong controls. benefits revenue

service customer We Operating our lab XX% levels. and from and in to also saw comparable reported, QX. investments X% high some gross a support increased margin on basis impact expenses decreased in businesses growth as

As commercial share-based expected, comparable our a per acquisition. level activity. ezyVet in advance share of and higher or share, onboard XX%. was comparable and as we to OpEx million capability related innovation basis, per QX saw growth the of $X.XX benefits $X -- a QX EPS EPS including QX we $X.XX On investments global compensation increased

Foreign income, XX% free to rate of including estate approximately On to in exchange million million $X to $XXX XXXX our Free a profits flow to increased months XX-month $X.XX was -- X full-year of flow a was million, in XX% for purchases. free our cash to million spending net and basis, operating outlook income first flow for trailing of $X cash EPS and the XX%. million XXXX. $XXX conversion cash refined $XX capital hedge in added real of million QX in estimate losses. approximately trolling $XXX QX, conversion net We reflecting net

plans advance profile. capacity XXXX, manufacturing increase capital we additions to spending to levels with expect for our As we our in aligned support an distribution high-growth

in ended to $X We Our in $XXX cash facility. $XXX the the borrowings in X.X billion times to strong EBITDA XXX,XXX leverage X.X with repurchase million of credit on debt times Sheet remains at ratios Balance quarter. We cash net revolving our of million capital position. shares gross with and a allocated no quarter and

full-year of $X,XXX higher to full-year for Diagnostic with trends offset results increase our the million. compared These outlook Operationally, end by million sustained of we're in momentum overall projected QX Turning in strengthening growth growth on were the the CAG to organic QX, this our $XX growth X-year the high Based lower our outlook for an strong our at million recurring -- and revenue of by to midpoint. in maintaining dollar. annual a of outlook updating FX outlook $X we're revenues. headwind our improvements X%, outlook end last to recent aligned XXXX U.S. million related revenue to range our our $X,XXX increasing continued

updated to X.X% including benefit full-year acquisitions. approximately from revenue from FX XX%, growth Our of growth outlook X.X% is benefit XX.X% and growth of reported the

XX% our and revenue continued outlook revenues overall expectations organic to of growth for updated the estimated testing revenues XX.X% Our year-on-year recurring revenue. organic XX% range Diagnostic of elements of a CAG growth human for reflects XX.X% COVID half growth lower to for year-on-year. in outlook second include LPD reduction Other an in

financial estimate our project advancement target $X.XX In details midpoint, compensation for of in terms We've than spending, high guidance the with QX our high guidance share-based of also estimates by XX% net metrics reflecting established of $X.XX to EPS and XXX compared $X.XX release basis levels, raising overall positive tax refined $X.XX our We operating our updated operating our snapshot. to growth. EPS estimate to positions. to by to end benefits, XXX XX%, outlook investments our points profile. to activity. effective the estimate XX% and full-year lower of at reflecting to mix and of press provided high-growth aligned innovation improvement driven benefit to full-year to key tax per refined estimates of will of on earlier range. an EPS We're tables margin share operating full-year provide lower and $X.XX, including for heads FX range related We our reported in comparable earnings we've impacts of in commercial We're now last our at XX% XXXX planning prior-year $X.XX comparable for updated basis expectations margins margin points XX.X% moderately

excellent results. complete on our any in We're the advancing outlook building support turn call on plans manage forward to call. growth. XXXX, his our confident financial our to aligned look to performance earnings QX continued we while and concludes our review. specifics supply can financial We As providing maintain now inflationary we on profit with strong XXXX chain strong our for XXXX over comments. XXXX revenue our our That for our Jay I'll business high-growth we're impacts sustaining

Jay Mazelsky

line care Good XX.X% compared organic to with growth, of growth very recurring morning. strong sustained Brian. to first prior-year modalities CAG outstanding in you, us continue Thank practices service quarter CAG driven pleased testing customer trends areas we -pandemic on is leveraging organic and Diagnostic growth half high-end for product revenue strong the goals. at growth of XXXX of results performance overall, pre We're our platforms. growth to are by key position returns. IDEXX strong advanced supported levels. long-term levels. high-growth by and financial another progress continued commercial above X-year highlight elevating veterinary initiatives double-digit supporting with standards rates an excellent continued that track in I in financial the momentum us clinical and IDEXX deliver doing our towards IDEXX of by outlook worldwide organic that business, product focus across of job average in high-growth team our to report above revenue putting levels, Today, were previous The These our evidence annual XXXX visit as service of on trends sustaining delivered and

base. growth year pent-up trends healthcare third achieved continued visit building levels prior above Wellness the growth revenue critical To services and pre up pet monitoring average in to this for the XX% remain benefits clinical of practice update a services. in pandemic. X%. continued XXXX, growth strong XX% included to early of growth compared the our the levels in X.X% as were visit of revenues confidence to in premium XXXX of are in momentum reflects animal Catalyst, in levels broad build diagnostic healthy a XX% for sector support the These the quarter year-on-year XX% the they third levels, Let's X% desire owners plans the even consistently we 's quarter, which IDEXX's growth bond. COVIDXX our team to placements more X% growth, the of in underlying rate This our quarter and accelerated and and a reflected combined an on demand also customers for overall to installed pandemic IDEXX number on true quarter growth advanced for is of to in average versus demand. begin diagnostic on in evidenced high sector visit early gains services on veterinarians stronger strong attracted companion Customers the capacity of while practices. third with strong Positive our was ProCyte, above have a in Catalyst work and our future premium are positive in revenue. from reflected by an prior-year of been XXXX. busy. revenue High clearly driven are at QX, for sustained their platform X-year prior had brief in Outstanding growth points supported increase X% focus also annual build to on Continuing XX%, our sustaining execution has basis focus improve the QX, pet the Catalyst X-year two-year through of record our approach U.S. in of 's U.S. The trends clinic trends. sustained with in the dynamics, care, on SediVue X-year a and the a Veterinarians business new X% performance adoption of international rates, levels growth at a -pandemic support in throughout Diagnostics' continues growth year second supported dynamics accounts. reinforce as growing year-over-year and critical extremely which efficiency placements of using in pet continued QX. driver Around High-growth which placements on XX% demand, also average healthcare. and pet Company. normalized clinical elevated premium average we execution X% the recurring during CAG to placements, portfolio instrument X-year sustaining X-year to strong by rates. impressive The preventive in our excellent IDEXX veterinary competitive basis benefit growth products and tools even world, X% support year, finish clinic growth QX, our growth and basis, of are commercial nearly third within is our a the level. population annual the key continued is regions. the stepped medical across pandemic passion levels strengthening beginning in momentum their high and points

in customers partners. Despite constraints, relationships connection deliver levels as at slightly our long-term that into continued our results to continued has mode customers. of In-person Europe benefits results were to growth. lower streams over instrument customers and trusted these highly XX%. access relevant Time Our sales our resorts. teams trends achieved These valuable strong XX% on strong global for remain constraints their to are will consumable U.S. place us gives is also at long-term leveraging and scarce despite direct momentum exceptional future the support by further and approximately in high confidence a

instrument growth commercial seeing on and address in We've completed significant through enhance a Korea, France, in rolling positive expansions ahead level capabilities countries expansions to and recurring as the our of build to are traction us. force significant CAG revenue continue Germany, to opportunities placements and results sales these of and South our our result. field these country in We

are as we in areas. hiring, and footprint In with our training countries well our in addition, noted X expanding call on additional plans tracking last our to on-boarding, those

of countries QX the all be We live of expect next to year. in second-wave end by

- continue targeted footprint footprint, in commercial their customer customers. network response progress to service. IDEXX helping investments support of term long this on from take customers XXX One's international testing better made to This advancements Innovative centric low ProCyte our our we we our X,XXX support worldwide our One high-growth Investor very and to meet premium performance. One by a world. will worldwide the world-class shared launch to having services. and goals time standards Lab Germany. been since portfolio have and our corn are grow momentum. Reference during support These Lab delivered build the broad as modalities flexibility and placement ensuring X,XXX offered addition of products by telemedicine about in all to our and to capabilities Complementing the units like service over advantage We've network across positive, such with ProCyte expand facility care to and easy-to-use, These track customers a our quarter overwhelmingly enhance European businesses growth our approximately we pace Reference included strong of Day. in of seen as the In in around west as maintenance comprehensive for past excellent our ProCyte rave order business hematology annual needs capabilities, elevate on expanding a programs sizes customers and Feedback profile,

a in quarter customers, regions this its in remaining the launches country trajectory and provides growth major of XXXX. the of number strong our in great into new for with relationships. of our adoption X supporting launches opportunity all year expansion now and a ProCyte select engagement One reflects platform Our of globally, with broader business fourth increased

a has an North included a of One, ProCyte a example, placed strong effect innovative have America the XXX% worldwide XX% One and already a have multiplier almost placements product. customer either or at Catalyst this demonstrating in As that Catalyst been One nearly

In the around loyalty expand an of component regions SNAP helps of two-year and becomes benefits. relationships workflow Pro the through insight, QX U.S. instrument, which by business assay a growth is grew engagement test U.S. in testing Our solidly provides business continues customer the internationally. broadly, and Assay a with the internationally critical wellness in U.S. opportunity strong as enhanced within Rapid and supported the aids on helped innovations around this disease growth This test, Double-digit testing the prevalent in installed globe. the U.S. in prior-year. customers primary recent the XX% growth drive rapid which accuracy, levels the XX% very with to another veterinarians Pro base Vector-borne more which in critical revenues like basis critical compared making tick-borne in Rapid when was area busy a to with disease increasingly gains drive driver more decision decisions assay in practice testing, in a the faced retention excellent be positive the support, have Rapid to Assay SNAP and and business. comparable

offerings systems and revenue low-dose also revenue diagnostic in enthusiasm. Our the QX of acquisition demonstrates services become of drive customer high approach products. an software, to offerings very of customer ezyVet to aimed installed supported specialty of products. in levels, supporting XX% integration life double-digit And and include in with impactful clinical is gains systems. example reported software software as others enterprise which and advantages. a and Product growth in software with of recent growing the and organic our in of imaging core efficient, the cloud-based software XX% represent technology ezyVet innovation performance, strong within at veterinary PIMS in the PIM how has additional an and also from by growing at this capabilities, proceeding product growth With third PACS This high acquisition the of cost life-cycle imaging practices. majority cloud-based our expansion of over out enhancements quarter, benefit quality, IDEXX products. helped important deeper, was our are reflected our updates year-over-year more industry-leading provide PACS workflow XX% digital further Web a imaging profitable reflects recurring diagnostic our part our and Cloud-based integrations It solid diagnostic PIMS growth like practices, base communications ecosystem. seamless ezyVet. which installed strategy the easier retention more The busy to play Web software is important features base placements benefited of making imaging, for into portfolio and

and testing, care. quarter, U.S. product force continue program, and marketing balance in-person despite program sales Care advancing raising in IDEXX the customers the Enrollments sales track this approximately wellness in structure our XXX customers to in quarter to incentive customers continue we of preventive as which provides engaged goal with constrained continue commercial and for Preventive Our standard teams and driving XXXX. a executed a third with the towards at discussions XX,XXX of to sustained enrollments our second care by similar rate new the the

are higher-cost We high be customer processes We're proactive the pandemic, may certain resulting forward, availability satisfaction including in impacts business we factors strong performance. to resiliency and increased product the plans. believe have our Overall, in managing to agility world long-term from strong strong growth growth standard. business, meet feel positive sector. the on business our with and COVIDXX building related to our trajectory care strong our factors achieve within In around and the inventory supplier of number we impacts customer focus who standardization demand about the our very and advancing benefits relationships, approach, we and support there of weather strong high-growth through addition to reflects supply are in continued has pandemic our areas and to in consistent we retention. well year as their relatively buffers. our where IDEXX support also our XX% operational commercial these confident manage levels execution, momentum shoring while and the can service the our operational product us through chain. a capability allowed This enabled in and to effectively prepared These going engage financial support us sustained veterinarians front-line

Looking forward, we potential. sustained high-growth growth are our proceeding long-term with plans for aligned with

continued to ahead As significant financial strong us while well in capabilities commercial infrastructure, necessary investments delivering to support and the opportunity of achieve positions solutions, current momentum performance. us,

for together. Finally, employees these I'd forward and continued we've proud flexibility of and dynamic perseverance to what and remarks, we time extremely customers thank my future. during accomplished That to questions. our And times. the our look concludes in excellence like their now have for And

Operator

first Thank [Operator is And Michael question-and-answer from Instructions] the America. Bank you. begin Ryskin of now from And our question session.

Michael Ryskin

strong taking a able of lot question prepared from there. on trends, for the comments Had with ProCyte the you've cross placement in Thanks zone, the see guys. One, been to particularly remarks instrument

acceleration use, clarify set could sequential can wondering, are introductions just could to those others in incremental talk and marketplace. wondering -- see from you in you peers. you're especially of on your you on go Just the of some there you any that, and what some dynamics of see I'm able seeing if competitive and of just by markets, increased uptake

Jay Mazelsky

The have of see Catalyst n and recalled One Catalyst we launched then -- we've the the existing obviously, chemistry either with really majority morning, productivity. part competitive respect late internationally for hematology, the One record in support gone what's in can a That's that Good is QX in And With less Mike. to very greater ProCyte technology our they're U.S. ProCyte looking that placement premium pent-up in into accounts. rapid investing across and, the patient SediVue. really to demand vast practices uptake One, driving the QX. we in and practice. flow. majority They're you busy. And that was instruments, more think because of late or their ProCyte accounts QX,

it's So pleaser. customer real a

replenishment profile. it's brand product all of pay-per-run performance, use Keep model. part our aspects and the easy and in promise, on delivered also I of mind it's great cost auto think

placement about that. early So X/X it's opportunity, in we're of we if on just almost the getting started internationally, opportunities Investor globally. a from of XXX,XXX excited plus identified recall days you that Day we're -- the

outlook sequential respect promising very U.S., So with SediVue, continue where in internationally. progress obviously for excellent we into to It's a hematology all progress to make SediVue, high nice XX% replacements uptake plus. we're nice the in

Michael Ryskin

as next CAG going recurring of growth, have on gross forward at visit, the of on and the XQ revenues as but tougher you follow-up think you so over Great, we we the revenue at snapshot terms I XQ. should CAG there like thanks. much we XQ any other growth visit saw Diagnostics be changes look as look volume you XQ on total dynamics? per stack could of about trends If think comp or course from a and Anything else are going the growth you're the mindful continue and and ask prior, X-year comps besides XQ things just If that? just as in dynamics year, clinical year marketplace the into obviously in and we in comp we a seeing of the

Brian Mc Keon

Morning, Mike.

focusing very X-year well. as the on to U.S. held bit as we're that calibrate. basis we're held know, think on we I the trend basis theme dynamics -- the the points QX. a recurring X-year I quite trend And that's that up is Diagnostic was the you CAG these in both international. X-year In premium average saw the comparison X-year highlighting And level we in It quarter a get annual and XX% you third on a that bigger X,XXX growth also growth think well. up basis year-on-year really into

heading that towards we think sustained next our high of our the trend really outlook. planning higher ensuring service we're growth. And for investing posture bigger the I that year have informing into is that with So levels. strong that, aligns that's We're revenue growth that end

X-year was may seeing a broader basis. terms from pets. the in We of saw of new I the provide Jay benefit can from the think trends, growth bit think color, be incremental in a the I we some some moderated step-up on first clinical visit plateauing but So trend half

victims quite population expanded think easy, Although up and but overall being it modest I our trends reflective quite own just it sustained has clinics might of have was pet and and well. quite perhaps be the held

Jay Mazelsky

Just rate the quite marketplace and to that, the All in X a remain year up growth build -- in indications well. on there the trends clearly, very that strong Mike. demand held

pet If of patient you think a back visits. was to there's increased lot QX There pent-up in XXXX, demand.

-pandemic the in growth revenue, excellent. at tough X%. And compares has nice as you figures. is how to seen as Diagnostic business, translated we've above levels nice look U.S. clinical at are whether about globally been X-year X-year Company recurring then it, at if and we've our Those take X% a that XX% the across you X-year. We've all in clearly own And look internationally. talked really X-year visit across modalities, So our growth a think a trends pre execution X.X% CAG or I

chain the So the faster and support -- and I innovation, and capabilities strong as supply resiliency to quite think the expanding by our commercially, growth momentum positioned network. remains capacity of manufacturing we're really Brian indicated, growth expanding really

Michael Ryskin

you so thank much. Great

John Ravis

question Sachs. Nathan Goldman next from Rich Our is from

Nathan Rich

shortages labor be practice impacting Maybe you clinics. I just Brian, you on Jay think vet Thanks it'd if for vet vet good to at your do the practices don't or feel up know you great where overall But following morning. any right volumes you point. are are could how last that Hi, about on operating perspective there like -- get questions. maybe feel the of one. capacity now? are this

Jay Mazelsky

a busy. on morning are Good that I very a they've additional practices a practices Nathan. working things -- both that. of a the just like its do of there's that From internally staff things But can for a and Company, practices I that workflow us. another owners, we Obviously, capacity or whether to things hours, of productively able basis, there like rooms lot are or a capacity to Vet productivity. short-term done, They are can -- technologies, think longer staff them more adjust clearly of provide hiring opportunities bit let's tools, able be and number or they're improving number practices there's them. say of trained exam pet they invest improve and been more of veterinary with level. help more or positive more The on have communications a takes -- perform we hire, clinical higher-level technicians train basis, obviously higher short-term software at really really provide and also adding mix number time. as associate in improvements a standpoint skilled what really, can to think, A of staff analyzers, by medical

evidence is we've systems instrument very step-up that very and and work in significant fast-growth placements me, of ancillary I PIMS with PIMS. think that that software systems in to seen

Nathan Rich

maybe follow-up year? has for operating level What The right into the Brian. And as a been should we for in with year of unusual -- margins about the half a baseline margins next first elevated the cadence helpful. how we this That's bit think Great. head year. the

maybe think what think implies for point starting think XXXX? And the the as the I of the investments. sort guidance The about is talked half. trajectory Thank into around out could margin you right back But about we you maybe flush XX%. maybe you.

Brian Mc Keon

a do our think tends QX Rapid basis, nature. On full-year on wellness Sure. and that just to things of with differences the of have quarterly Assay some to said think we goes testing be XX.X% some I We normally, XX%. margins I in that highest sales

good on the to we and particularly the revenues think I business, ability us performance the a feel growth growth had. driver gives about the the to for that key margin really that's on and CAG us, into the that in trajectory recurring reinvest build -- we've

intending to are I invest. we think

we'll provide year. growth trajectory really we year, pleased get areas on initial the payback is that the opportunity get on the do as to our growth the profile aligned commercial been that. that and investment. particularly, on in the a with higher growth business with return investing of we in have strong quick the as us, clarity do performance international this more want markets. high with to really but had strong in like And We that look a on that. wave we're build We to that. gives more And very very We'll see for have to area us that And our build an we progress We we next goal year. into

Operator

Jon question from Stifel. from Block, next is our And

Jon Block

margin just Brian to the start, quarter. for want ongoing back out but I guys. Good to third investments, thanks, Day. from to mix was gross down trend, big know deck some called the you the Great, maybe go Analyst the consecutive it morning. headwinds, just And

gross long double about that as it You talked up margin, term. I'll green frame arrow

should just next I'm several quarters? up some double these investments think arrow does we so or curious, take 'XX the about spilling green hold that And really into in out of

Brian Mc Keon

John. Okay,

And of -- through, last just levels think investing at calibrate year. now and service and really we to year. back terms basis just we at go important growth. it's are the we in at And paying in comparable what QX at of we're if I numbers working a year levels to a basis. key were looking - numbers We terms that We're seeing the last were higher where that's think back conditions. comparing some QX points improvement cost in on over off we're up had high and constrained I you factor XXX our year-over-year last to

I that recurring that business those Diagnostic CAG think well-positioned something little provide mix But build think overall a we into with headwind has trends we still had mix to growth seen are we are rates. holds But the margins story as of the we through from some revenue next working think into instrument longer-term can on year. the upon. And impacts so a that we XX through. build we're the growth believe for bit more are placement longer-term factors I we've there that I dynamics think get us. insight We'll strong trend, our for in the us. key that And is driver that in I

Jon Block

to Okay. follow-up. slight just fourth 'XX. deceleration quarter And the X The in a on the slight X-year curing we as down you the consistent recurring just and quarters we the guys. is 'XX, step the to that of that, ability on the of implies is Dx top maybe on of role 'XX. average we XX% just about a there in 'XX recent some has play trends to price CAG way based been into hear 'XX slope a And little bigger push layer think on CAG practices and for head bit for to what of the for into then their CAG realize guys, price? Maybe Thanks, remarkably a first guide an Dx CAG X-year you from opportunity in

Brian Mc Keon

X is range of can our but we've specific consistent the you a recurring on quarters. We basis seen I that X-year trends for the with tell on didn't high-end provide Diagnostic on CAG our that first guidance QX,

So it's QX. in compares keep concurrent not with just through largely a growth, that the consistent in organic But The there. trending. been It's is just working we're overall up change some against a mind, is -- a It's we've in guidance. instruments reflected little high-end tougher in we're again trend. where

I going on to think we forward. move learn this more that we're as

pleased we're with really the -- business. execution the think I in the

a market The give I key growth, is strong to think very execution our of lot and the strong and like us on instruments, initiatives, think things modalities encouraging. And we're trends I consumable that particularly can I watching it's well. as the we momentum our other think on. that build confidence very

with. think to -- we I are like in there got attention step-up may of at those in clinics think the things that there I pet growth and can and good to capacity like things pay help we've terms some our said, be like we customers but moderation problems that, population

we key invest and you to we're we're them. particularly theme. So we're build CAG -- here a of looking is to that's on think in Hopefully business the with, business, today -- trends very pleased I the

Jon Block

I realization Brian, back if opportunity? do sorry that that bigger -- you just one's think price a circle on that In can

Brian Mc Keon

about John. Sorry that,

So we've in been X% X% that to range.

to we that some in I like time. look costs services area input were an owners and labor look, more Pet are over here inflationary on I think is and There may pay the that pressures willing select some -- be to to at. hey, continue think for going freight. that business things

attention that. And we're so paying to

strength we the the see bond. is industry gives an at at impacts over look market like opportunity given us sustained the to pet it think think owner backdrop backdrop something I that said, I those if fronts. And the can time on just of -- we look some I

Jon Block

guys. Thanks, Perfect.

John Ravis

Our from next Chris JPMorgan. question is from Scott

Chris Scott

much. Great. Thanks so

that on in-person, this me. access. guess, Just X for I first

in XX% access to now XX% you mentioned the in-person think range. I

or is had the access everything As to that found pretty to it after I that. benefit you is you given much as number do you for And higher, today. your just business X need able moves follow-up a that were do meaningful have that

Jay Mazelsky

be XX% think the of up U.S. we're -- We we of higher -- the pandemic. Chris. grow. the through outside as the around morning, work The in that can end Good hopefully, the net And will tail we what's U.S, XX%

gotten need in-person we've what you're do been is able in or really what we accounts done there person. do better a on, building. in to visiting virtually. versus all at good think whether segmenting We've done very I much strengthening think or best what I -- some be And product pretty to But introducing virtually. are activities are competitive think like relationships I should

to increase. less So think something go get that that. we'll going XXX%, not time a we but than back It's that to over it'll be

our care program, With preventive expect levels. pre with right will not it -pandemic over and think practices I partner that are step-up but do customers. I sell to initiative, to time only access where think benefit we very able know busy, helpful that we being repeated is in

Chris Scott

then Okay, come And to inflation. great. just top of back the

kind address, side you price or term, Are or in abilities that be this? think operating more what is environment? an is offset the on the to to just I'm within to nearer think might but something there do you any to Just elsewhere trying there is in opportunity that noticeable in business? numbers margin seeing sustained, -- the expect that's if pressures about the new inflationary see gross I in think or mentioned you this the near-term to this of you that do

Brian Mc Keon

This business. impacts is, some we on Brian, inflationary -- the seen have the

a freight and more lot relatively experiencing. distribution, it's to things which costs I attention labor like been paying in think areas think are costs, like on as and in And input resins, us, I electronics we're and it's select of a well. for companies

particularly I for manage really important focused well been sustaining think high market. in those able those to for us. service areas high effects We've through all customers, and on growth levels are we're our this

business. of we're through we had our kind effects profit and that's So confident on our we've while managing think our can on build that the that I those intent trends focus and

Chris Scott

so Thanks much. Great.

John Ravis

question Ryan William next from from is Blair. Our Daniels,

Mitch

the and been negatively I capacity, like the in or at education? for speaking affected to has lack have [Indiscernible] of selling for constraint you to all my Hey Thanks the product that around guess guys, bandwidth on Ryan. taking question. the things process the in it Mitch that? able affected work start, Is given

Jay Mazelsky

Yes. morning. Good

are may you now XX. do previously veterinarian her And workers calls. our we're amount it we and I affected staff As staff -- we think have to accomplish time we've sales time upon very fair indicated, to XX previously able her Once of practices a what -- in efficient. busy get or extremely had XX had could minutes be the try we minutes, and how I has -- and with

CE practices. provided moments. we to so obviously, to to consider So relevant their our Training with success. and We And we've of sales them. and the that the meet customers, call windows to to virtually try when training because adjusted get think free I be, so practice provide provide need good with owners respectful, highly some I can to when They, time think practice and most including training organization we can into have the And point. at they results. get but webinar accordingly they could very have lot where continue large productive that efficient And a they we as when tools our they're it measure, they

Mitch

growth realizing an of back-fill, you they things, you most now that the additional through of capital a a your sort lot or way addition this Great of thanks. Catalyst side worked instruments the thing? Brian, need is on that ProCyte of an practices incremental, or would say of and

Jay Mazelsky

Yeah.

making really capital improve practices. it capacity this their The not I their seen productivity of Investments. practices the and think represents really pent-up that and performance in demand, is we've is are capacity

So reflection I solid think of trends. just demand a it's

Mitch

thanks. Great,

John Ravis

from question from Prasad Balaji next Our Barclays.

Balaji Prasad

thanks Hi. Good them. morning, for questions. and Couple of the

and I'm I words, you increase read Firstly, ASF into ASF you visibility an did testing comment spiking sense through trends. what that off to can if above about reach any be on the to for gain? the spiking increased broader points wanted signal current growth if have could Trying supply sure any X%. there's to And see chain you all be In the exposed which or you dynamics -- has visit and up X% CAG led if of would understand lastly challenges? better? ASF, segments this, can, help growth, that in global in not most Secondly, to other same-store obviously testing just in understand of supply disruptions chain correlate can revenue your but us is to the this,

all trends? linked utilization any was you. is to normal component which pricing above or So Thank is higher this there of

Brian Mc Keon

harvest are step-up rather local don't animals are in LPD, I program have African a harvesting your disease Why -- take around the year trends first treat of in changed. disease. to African the leading so where than changes management the China local now them there the the harvest of in that's rather -- -- There farmers than is primary allowed them to to testing but fever those China we've swine question last we swine business and of in on fever. The support addressing dynamics saw seen our for significant

decline a been raised there's some and So that's compares demand in for us.

for that's to our that's anticipating challenge been us for be business, fever. quarters. -- we're primary So on continue year-over-year the to And a swine going some upcoming African impact a for be

Jay Mazelsky

supply the chain. to speak I'll And

the business, been I think excellent. resiliency and has which performance of

able have indicated, make that to We've we're very previously an we well provided. and As long-term excellent I relationships. supplier leverage they sure those been

manufacturing all is that of a We of our almost also most -- standardization. you're where assured have local product manufacturing we our great deal of or

We have inventory buffers. maintained high

product support pandemic. to availability high throughout So we've very the been really able

clearly and rewarded have business. that, us customers Our have appreciated with their

very forward. going about continue to ability feel we positive our So to do that

Brian Mc Keon

third question utilization the on clinic your -- at and believe I was level,

Jay Mazelsky

Right.

Brian Mc Keon

testing out was get we pent-up demand. correct Again, and had a year, growth. that big driver -- is -- what quarter point the compares these big and in basis. with third at the step-up growth you we was into the The if year-over-year last bigger those year-over-year wellness of utilization

gains year-on-year of than utilization strong at one-year clinic terms a basis, a growth. in on quite visits. two-year on flat of and more number the that testing And to the compares more level frequency offset related the of it was remained the good have was So

Jay Mazelsky

I'd of are their that, address like extraordinary to for everybody And broader which also and in. performance. I'd you on thank team, the calling with Okay. the IDEXX to say some like for continued call thank

their admirable and ability against Our truly strategy. commitment employees And I our demonstrated to all an purpose efforts. execute to our have excellent appreciate

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

Operator

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

IDEXX Laboratories (IDXX) 2 Nov 212021 Q3 Earnings call transcript