- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the IDEXX Laboratories Third Quarter 2022 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, Vice President, 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 allow may if have each the will unless to permits, as please compared references or XXXX, Generally GAAP additional GAAP. most financial call, reconciliation turn measures to in otherwise Relations your you get discussing free in growth, over not comparable and necessary. Accepted growth also refer section we their We limit participant we our To be noted. with Q&A, to organic our appreciate questions the one Accounting to accordance one, follow-up now in in may website. growth directly Brian Investor provided this non-GAAP the participation our Principles, During these certain all the ask reviewing with equivalent take A broad In would questions. like time the visiting additional results, I we queue the call questions, of back to earnings into financial of to measures XXXX which to will prepared to so third growth found be release, quarter by and measures is note comparable please feel that McKeon.

Brian McKeon

welcome earnings morning, call. to and quarter third Good our

record expense X% supported on metrics XX% placements, EPS growth Operating XX% XX% revenues. Diagnostic gains building on digit controlled and margin and growth walk Diagnostic and has guidance revenue digital our premium solid full by solid In us in reflecting IDEXX similar deliver aligned of quarter performance, we've updated to revenues financial QX, reported strong estimate U.S. with to and software QX by our X% outlook of range my is strong operating remain recurring strong comparable a operational and and revenues increased a revenues. half year results in in gains. basis profits EPS updated organic outlook, a a In organic Overall, achieved veterinary foreign terms highlights, This gross reflected revenue full execution growth growth organic for and supported QX organic IDEXX respectively, performance second prior estimates terms strong. year imaging and maintained Key comparable growth. Outstanding organically reflect results. in on profit our double We've incorporated outlook full CAG details also instrument year increased execution and operating CAG profit recurring the through and track the impacts. We'll later for midpoint EPS exchange growth adjusted of our comments.

with a review quarter results. begin Let's third of our

a expansion X% X% organic CAG and day from recurring gains visit price key solid organic gains imaging organically this strong impacts instrument LPD and increased to instrument sustained in customer consistent Third X% year-on-year compared gains veterinary levels related IDEXX supported our term These benefits growth drivers, organic base, growth of organic in revenue from realization. by diagnostic effects. growth and our international was from to capacity We of clinic solid declines headwinds organic XX% retention pullback CAG QX gains by visit, and growth major supported expansion quarter diagnostic growth to revenue in benefits new in levels, a gains continued in by international placement growth helped clinical XX% deliver effects revenue XX% business including diagnostic segments, business, organic near also premium growth, X% growth X% the in Overall, solid of including markets. was revenue digit net in prior revenues as recurring levels, clinic organic across and strong moderated U.S. net revenue. water CAG X% high per offsetting business our globally, double of gains including are software organic growth and in CAG levels, year, reflecting modestly to achieved mix were revenues. equivalent compared prior execution regions macro in revenue higher down including high headwind.

including increase QX. modalities We compared expanded second U.S. high organically demand One by gains and X% basis outpace reflecting and impacts. IDEXX by base, of to price half quality X,XXX innovation lapping Clinical on benefits pandemic. continues instrument performance VetLab placements QX, from step by supported compared and hematology levels, placement across to of organic Europe, in was XX% in approximately continues competitive revenues to regions. our moderated customer consumables continued digit in globally growth premium third asset premium supported solid at from reflecting placed X% support growth higher basis, X% into in reflecting of improvement X% equivalent IDEXX will price visit to prior point year outlook in clinics. organically consistent healthy an an CAG levels. U.S. levels utilization, U.S. on a to clinic IDEXX trend solid in additions diagnostic as catalyst the international new of in premium price a year level. global This U.S. ProCyte quarter. were and prior is Catalyst our realization initiatives. were reflecting platforms. Consumable premium hematology organic a X.X% The drivers. gains benefited QX demand new visit U.S. our diagnostic Diagnostic organically in continued across same a revenues solid at of increased X% across trends. in excellent supporting Globally, included X.X% that supported increase benefits revenues year gains XX% headwinds and terms momentum XX% to quarter placements, QX In from levels placements in revenue benefits in instrument by demand growth sector U.S. the a same revenue IDEXX the peak estimated revenue growth set record benefit anticipate of pet strong growth from XXXX. we utilization up increases. in and on organic of store rapid strong normalized double per frequency IDEXX's the net in capacity levels QX in from increased solid on in price sector instrument and supported impacts placements in CAG Lab XX% in for Global debt the execution the our year from macroeconomic basis growth down as net headwind, the which continue the CAG from increases also build revenues increased and growth growth gains achieved revenue installed The growth growth in achieved drivers the international recurring digit our modest on clinic in by reflecting fourth included reductions which QX, including Diagnostic was and to the increases store the factored through healthcare trends continue regions, X,XXX QX, visit in We building pressure during year-on-year the practice day's slight quarter, year-on-year Global growth in double significant X% QX work X.X%, continues be growth on visit and

regions, continue areas organic revenue price software Water and and business, our achieve quarters enhancements coverage double-digit in our of CAG in modalities, by in to In growth, CAG and and highly prior testing. including diagnose year benefited herd inflationary Dairy comparisons digital performance solid growth. gains in existing net the net the completed which recurring gains major capabilities sustained revenues Results QX. We revenue complements this and benefits quarter, recurring imaging business QX, impacts. the and momentum volume revenue levels supporting retention organically. range core and recurring in and work in solid Tecta-PDS health of business testing service results major solid imaging strong automated an to our and revenues fever of XX% swine acquisition customer segment. sustained China, were the to water strong in other diagnostic supported CAG levels cloud-based volume improved benefits our revenues We momentum X% placements. and software the our expands reflecting new reflecting X% Poultry high increased worldwide continued software organically increased attractive where in for XX% veterinary from product increased Livestock, revenues in of high across improvement. platform price across screening offering from African swine including to organically through microbiology X% growth Results in we

to profit QX results as basis XX.X% the were and reported XX% were basis. increased supported Gross Gross by the a gross up Turning on quarter gains. solid points margins profit P&L. X% mix comparable software in from on and in comparable service net profit XXX on comparable a the as improvement X% increased X% initiatives, cost business effects. Benefits price third lab margins a basis. offset basis. year-on-year expenses quarter productivity gross Operating and in gains, reported inflationary

share-based $X.XX leverage revenue we from from did tax was prioritize on As prior comparable commercial related gains was and were not per include expansions. per planned, high year benefits more share levels. operating our prior a $X.XX to increase EPS with down share, growth investments gained QX EPS in-line basis. expense which XX% of an results compensation, as

$X rate Foreign our QX $XXX operating XX%. a $X gains. by in million quarter. On cash EPS in of net was third by the Free income was XX-month per hedge flow $X.XX in and exchange million to cash trailing conversion flow million basis, free reduced net share profits

warehouse to higher the for updated approximately this higher and outlook assets cash of million $XX XX% We've R&D increased deferred to high manufacturing from For tax full free million expectations XX% and inventory flow year availability. facility of capital impact project. to including full to spending expansion. inventory we've investments, million, updated incorporate to $XX R&D continued spending cash tax an free new aligned full conversion by product The our discrete credits the $XXX approximately sustaining for reflects with driven XXXX in major flow levels, XX% outlook our in year year investment estimate for levels year, our higher conversion

to share increased a quarter provides a $XXX times revolving facility financing term remains our million of the which In share proceeds Our amendment, shares. applied We balance capital recently reducing with times X.X We strong loan of year count X.X of cash. supports sheet we QX, XXX,XXX allocation flexibility year. credit our leverage for credit completed projected ratios repurchases on to with net ended million repurchase and position. attractive this the in in with $XXX balance. allocated reduction our Capital to full X% terms gross

impact midpoint $X.XX by $XX revenue growth also in per outlook. for updated full revenue year million a X% headwinds reduce year-on-year P&L to the consistent at our second growth to earlier our and We're also operational offset solid with share impacts our year of with FX reduce Overall, EPS XXXX share R&D aligned range XXXX recent comparable prior the as expected QX. the FX which $X.XX outlook adjustment QX by incorporate operating we growth half year Turning strong sustained full dollar, outlook. approximately midpoint with per year compared reported consistent organic year-on-year guidance. in last QX strengthening full of maintaining We million is narrowing outlook We're revenue by billion organic revenue We're interest investment $X.XXX full the X% margins, our $XX revenue to range the in EPS outlook. for performance changes which We're the and a of projected our in will reflect rates. improvements prior our growth estimates revenue will updating of levels, and factoring outlook project our year the for QX. to to recorded billion now adjusting our $X.XXX U.S. for discrete estimate to for of

X.X% organic full year updated of outlook outlook to X.X% X.X%. is organic a to revenue full year Our CAG X.X%, revenue growth now Diagnostics reflecting recurring growth

which Diagnostic on a earlier updated points in outlook on aligned risk and CAG operational XXXX outlook year outlook basis updated to impact impact full at XX.X% revenue estimate fourth end XX%, performance, of operating XX at projected margin X.X% of estimates, the point quarter estimates. We've net approximately potential growth impacts decrease a a low from including updated reflects R&D range our margins to strong margin to This estimated gains for compared in macroeconomic operating of to XXX investments. discrete XX.X%, basis the basis to implies XXX related Our comparable recurring with reflecting to organic consistent X% factors organic estimated midpoint foreign basis an points the exchange year-on-year demand. XXX

share updated is of at $X.XX impact $X.XX from R&D represents a FX $X.XX a for to reflecting outlook per Our and investments. estimates updated per share EPS including X% approximately the impacts. share, decrease This interest discrete the rate midpoint,

full projected the This benefit exchange For full EPS profits hedge is million an we estimated by share. from operating year, $XX million of per share by will year net or estimate approximately foreign $XX reduce gains. $X.XX $X.XX and XXXX per

our on in our impact press from and compensation outlook tax in the earnings half. benefits the details snapshot. We release in second in stock-based outlook tables provided updated Our EPS factors no

advancing processes building achieved We're solid and comparable for we're XXXX. pandemic. through revenue that sustained the supported planning IDEXX substantial of financial Looking profit growth, targeting forward, delivery execution organic our gains strong on

Given of and this the I'll strengthening operating approximately the release XXXX, press for concludes with in as points approximately margins basis now we per guidance estimate by share assumed we over the to call XXXX comments. provide revenue our X%, EPS on year-end the turn exchange updates $X.XX estimates our We'll Jay on his hedge current significant review. will reported our financial That approximately call. the conference share positions. these that at by reduce U.S. by reported year, growth foreign in XX rates dollar

Jay Mazelsky

to sector. levels focus Companion veterinary of their record Thank instruments, support PIMS support while the momentum third care and within by the remains consistent third strategic our the share stepped-up visit in companion desire to to they despite quarter. to key professionals animal the same-store the begin in IDEXX in diagnostics continued for reflected morning. service clinic continued drove supported in that clinic ecosystem, building how products, partners the customer results to pleased support year. growth review to while I'll growth yet retention levels good you, gains This pandemic recent provide in net results. These layers quarter, levels. IDEXX for trends high, reductions each realization, our for impacts solid veterinarians company execution integrated supported of of These advance continued expansion as appreciate delivered IDEXX across of quarter execution care CAG that teams the clinics. relatively growth improve delivering continue workflows. Animal and cloud-native recurring Diagnostics Brian, in looking quarter continued an business was I'm there significantly IDEXX's a revenue across outpace strong This high with strong in continued turn would on a excellent Veterinarians this the demonstrate and priorities. health advance U.S. on revenue I'll of its are manner. The in from new morning, growth sustained placements levels which high another and clinical moderating of capital higher placements efficient IDEXX IDEXX trends was result innovation in premium step This for Demand drivers, strategic the financial a in initiatives strong including growth. price to highlight capacity

key approximately increase global a revenues building per during and solid for during ownership X% pandemic. key total the a quarter, revenue demand diagnostics, and building were step-up on in in component sequential through per remain above diagnostics level in utilization economics quarter. revenue the the diagnostics the care to significant visit the recent of our providing pet and year, by Third health CAG a within driven overall practice despite grew driving the this the sector same-store frequency with practice normalized brings visits by practice growth recurring trends same-store quarter benefit veterinarians. the investment, from of X.X% through revenue insights, growth. supporting which a differentiated in revenue to and decades diagnostics visit focus grew pandemic. quarter services, the focus for at Consistent customers. both X% growth U.S. trends on gains CAG continues Diagnostics from is in supported at and as veterinary XX% for diagnostics strong third seen headwinds revenue in value we U.S. And growth increases valuable Services practice quarter, clinic services, prior of patient IDEXX well resulting growth be

our example On and IDEXX This of of owner in reflects growing approximately managing continued tools base, continuing to line This three-year of realization. This the appreciate by capacity growth retention a related the This challenges IDEXX visit noted, supported was drivers testing turnkey near-term services. the new program demand is enrollments, quarter. to quarter Preventive communication Care them be the included continue care. record this instrument showing pet X% non-wellness in Brian of care that particular, included X%, quarter which simple through we to trends growth, health increased approximately business customers to support wellness levels pet second enrollments that program, owners year-over-year clinic U.S. our As trend health in healthy execution how to from engaging a for with meeting comprehensive increased installed just prioritize to X,XXX is in growth continues yet program. to pet gains, with in IDEXX's are one on XXX critical visits. basis. expansion multiyear growth and price adoption premium wellness points with are benefits visit U.S. of CAGR consistent contributed basis both normalized in and QX basis, in innovations, U.S. demonstrating solid in historic was customers

in With turn solid business. to strong CAG relationships strategic strong We let's against initiatives. are progress growth customer building that, IDEXX's organic key on our growth to discuss continued drive our now our

from practices for supported customer in commercial and more customers Over that One we of revenue new global to long-term to seeing in Customer made reach XX% by competitive in trained we of on by ProCyte first adoption integral XX% is their veterinarians placements hematology quarter mentioned, chemistry positive strategy rates, a at aided help year in-person in results performance strong first Europe. XX%, regions opportunity continue also with part that dynamic quarter improvement been One supported testing framework had One an better and the innovative while after indicate quarter. installed long-term IDEXX commercial objectives. financial also platform. managers, multiplier Investor grew the new overwhelmingly third ProCyte Innovations. sales regions. XX% its and the commercial workup platform placements the quarter excellent key long-term high consistently programs of benefit excellent the as As their advisers a Tina rate Day, the Germany, support practice teams a work care the is premium clinic during of strong of by grew of and Record to premium hematology quarterly world-class organization and is instrument This this standards practice customers regions. have placements international improve international gains than results are in account adding receive rates representatives Germany to customers continued the of growth deeper and ProCyte our another IDEXX platform basic same supported with Catalyst XX% practice in instrument to experience benefit for results faster encouraging. investments and XX% welcome visits building at example, execution regions approximately levels where base. quarter value the our trusted provides nearly XX% ProCyte survey that were experience the also like do address to during our in IDEXX organization, economics XXX,XXX France positive instrument global high-touch our across benefits care, premium in the with are where be Sustained the growth efficiency. U.S. helping rates in provide high. XX% These year ProCyte utilize across customers recurring expand the demonstrates sought of to our our commercial Global One with more with marketing to feedback of hematology where are Investor customers, in and at representing and customer model, highlights the approximately experts a medical supported care patient of of of One in revenue engagement. and foundation XX% and have day third continued in combined by to the worldwide the These up Over have in Attach with are driver an highest placements installed trends XX% drive customers gains retention ecosystem. especially platform, patient. shared double-digit that when relationships. continuous Dr. of of business doing with base. instruments These or diagnostic customer-friendly XX% lower-cost to the shared products ProCyte Hunt across EVI strong commercial This placement strong efficient the at for commercial point partner subject One of premium than than growth delivering further practice growth overall ago our even a are sustained accounts and placements future new and demonstrating and staff very and high competitive supporting aligned matter customers results, drive will Day. commercial performance satisfaction and placement of support business quality centers recent was for

also operational driving and commercial in execution the region Our are strategic against Asia-Pacific plans. teams successful our

the the and Australia in in across onboarding Concurrent do demonstrates addressable easy we've to significant opening us reference as our which investments at business to in continue delivering commercial address lab the value the teams, against new so seamless and also a work outside and delivered record while while to the are will professionals investments premium hiring not we quarter. of a do of Japan during to these multiple our is placements opportunity Brisbane, goals. Asia-Pacific sales made and regions This high execution instrument new long-term were benefit U.S.

Test. addition announced also the number across sustainability commercial PCR an improved the these demonstrating three, eight strategy. with results American insight in reformulating disease customers levels. disease Five customers which new in and our to and enhanced test of out of to five, these convenience the than longer XDx technology highlighted customers the the received reagents. FGFXX, flea opening the lab while each are services results, our the quarter. in PCR treatment high day products improving to Since life Catalyst very eight rollout kidney to by by room commitment customers and next faster have during by relationship our modalities, menu. a Number have for third product SDMA four, service new help ability North January, we by In These new delivered launched new best-in-class projects accuracy while value we was feline adding excellent number of Louisville. technologies multiple lab Plus care test VMX our Number reference animal health the one, and service of storage deliver IDEXX providing a X delivering the to for to products, lab to Number The team's two, assay, test veterinary improved IDEXX methods. And efficiency, customer add our by enhancements which reference of which comprehensiveness these also IDEXX chronic software tapeworm antigen of now sector to quarter. a expanding of develop high-quality and and that our marker, our detects access include will providing into temperature fecal increase onboard up standards of were to more times adding enthusiastically in traditional solution

which this to highlight area the the to third innovation appointment, microbiology detection insights center System, software clinic IDEXX were diagnostic the shift with its our reflecting solution. as Detection to platform extends Pathogen well business also to and positioned cloud-based customer Web software agenda over for patented results and product margins. improve workflow in Investor subscriptions, IDEXX's data-enabled to PLUS our water our suite nature and the create supplies. our them strategic a obtain, diagnostic easily that application the customer retention highlighted demonstrating rushed the technology. They application PIMS and incremental in are XX% total interest and is like these given information resources the know prior continues highly software for at is to increase high compelling. drive on leverage not E. the recently is offers. these in complements acquisition increase placements that updatable engagement, ecosystem customers offerings with engaged of support, under The patient efficiency business. testing also to all took imaging with solutions full provide We Companion of Another solution Tecta in to testing clinical IDEXX but the demonstrates adoption healthy VetConnect PIMS year be in connected front-end coliform that limited Coli understand a PACS EPA-approved step the processing supports year's quarter. high commercial product strong productivity able solutions We're interface include practice systems the and innovation opportunity insights imaging clinic within relentless IDEXX's automated of through also ways results cloud-based agenda advance experience. last Day provides conditions. the automated customers' of the each value and They and our overall levels of to solution with management with provide technology testing operating an our this focus businesses, to payment innovation placements, compared growth which Products ezyVet products, system and of that Animal at effectiveness. our to help that and Furthermore, new cloud-based benefits recurring of an the providing beyond and veterinarians and to over placements coliform economics bring value subscriptions, workflow way, favorable quarter have them placements and whole uses customers Record across business. with continued quarter not in the products and in portfolio products stream and acquiring invest of by PIMS This by a supports providing XX% Strong that core water water we at customer-friendly to gross value this drinking only excited world-class diagnostics the and business are This reading the instrument were products notification We scale customers digital important advanced streamlined time. decision since water a automate our looking a revenue solutions. attractive they in to incubation, levels area communicate for quarter

high wonderful allowing In our every service extremely customer day. us these by earn is with their supported business top-notch to ensure a have to IDEXX, to addition focus levels products, customers experience

reflected of service, and product customers. while strong of environment. deliver ongoing This another operational levels over as well financial our to deliver on review. positioned of I'm supply to investment continue teams our frontline we despite customer growth planet. of external the of delivering in deliver the the high animals, results as service long solid for in challenges to performance report our another customer on a quarter supply support years chain to and strong XX% IDEXX results approximately our in quarter remains mission availability chain Our leverages our future in proud better continue and people resources to needs concludes That also run create

bring and to our for passion commitment reflects Our IDEXX to I'd and On our behalf they XX,XXX of day. management the team, like performance of the purpose and every than our strategy thank the team. colleagues more talent engagement

at difference around and health making world. people and You're stock a to buy the pets, well-being meaningful the

the So Q&A. the line call prepared open of the now we'll and end section for

Operator

you. Thank

now session. of Please first go from comes of the Schott We And [Operator the our ahead. begin Instructions] question-and-answer JPMorgan. question Chris will line

Chris Schott

we're question. Thanks to to how much can get I so bit vet But start maybe happen a what XXXX. and view about I more growing guess look hands needs year? it's in process the you. around we on are premature of to just, we on that qualitatively, again we growth dynamics as you to visit for elaborate out business to where little of the there. I out trying you trajectory growth get think the just know if vet Thank just just a to look color as to as for trying kind -- was Great. thinking get don't you're visit next

Jay Mazelsky

Chris. morning, Good sure. Yeah,

in We fairly and as the growth, of The even expect lot of the that through about further you we've in a factors like talked labor impacts, impacts outbreak. dynamic. it the outlook, COVID dynamics the XXXX. indicated this visit from remains we'll potential pullback overall capacity supply clinic external macro There's impacts work still in year

which So placements with on extremely commercial control to engagement both placements software, productivity execution Clinic And that an and we continue really owner support and customers macro factor to technology, a instrument and that efficiency. systems, would can from commercial things do innovations help able What it's record those instrument whether our were behavior teams. well in with out levels. standpoint, in-clinic as at we support impacts I their being pet PIMS -- into their is our focus point we'll be those outlook. our monitoring that is

forward. level different. industry, reflects basic overall the the at very back a the a that capacity an and factors, and their a we're little going seeing is we'll end that primary from there is continues affecting out Europe, row to that, that plays visits constraints invest, the clinical standpoint, on really in see some that positive outlook But from Europe and just versus think supports dynamic demand. U.S., think growth. In We I willingness how are factor impacts it whether bit customer

Chris Schott

you. Thank

Operator

of Global Michael ahead. from Research. line of Please comes Our next question Ryskin the go America of Bank

Unidentified Analyst

mentioned, Mike. seeing how could for if a you I U.S. [ph] were is your This you you're like for there going what you the and oU.S. Bhuvan for as Thanks little -- Hi. was this just It taking wondering go quarter. deeper questions. expectations softer results on a look looks into will bit versus internationally trends the forward

Brian McKeon

we're question. similar in dynamics your In for Thanks markets, IDEXX terms seeing international execution. of

basis highlighted And our gains, similar international actually premium got we a that of new like comments numbers markets. are in point combination from instrument in a we X,XXX of business base, we think installed expansion in roughly utilization. think we price benefit the our our zone things So the

markets think in seeing on the I levels. clinical some growth international visit pressure what more is we're

in growth, modestly despite the these our business You which quarter solid in up new lab and was that price can gains see gains.

really international to impacted particularly we've like year. more in So the market -- has seeing dynamics, I been regions QX And back it's last going think by Europe. that relatively macro been of

making So more excellent we're very continued the customers continued growth. been progress -- solid, engagement us levels, placement our a retention headwind, but excellent that deliver high and is relatively to allowing level gains that's with strong and the meaningful instrument

Jay Mazelsky

Yeah.

One is indicated for Just now XX%, in of fit with saw to my outstanding We as growth the One international to in-clinic I instruments markets. our comments. that, these add ProCyte ProCyte

footprint, markets based really hematology it so country The on test tend standpoint, And international first. international to a fits region, depends well. from price, they customers, us connectivity, but performance, or it very ease-of-use

these chemistry sell a a with solution some One, customers it and it's analyzer ProCyte very we SediVue. and, big when for sell even a a So has we cases, in multiplier also really impact important often because

ability to feel time. we'll monitor out there's macro continue energy and just their our we've and we including in conflict and to about about that past, how help objectives. the positive the that that customers see factors So talked Certainly, over plays achieve very in a solutions the Russia-Ukraine prices,

Unidentified Analyst

it. Got appreciated. Much

Operator

Stanley. line go comes Morgan of of Erin ahead. Our next Please from question the Wright

Erin Wright

taking for question Thanks s. my Great.

where guess, embedded pricing, on are there ability to your quarter? we to you think further So XXXX? price in do embedded the disclosing for And I then we what from year? What's customers? incremental remainder then net pushback realization stand year? the take the last now should guidance? that there are of And in you for relative what's were terms about And seeing And increases, price of any Thanks. how price in

Brian McKeon

Thanks for question, Erin. your

with Our line shared price realization in much Day. Investor is what very we at

some roughly of half. second we advantaging price price So We're had the increases coming realization quarter. the X% second in additional out

to for implied half, in for year-on-year QX, was full mentioned, that's line and benefit equates that we In -- with and our in to to was for that in X% X% end As at X% the range. higher second much globally, the were I it U.S., the year. the the of that very X% the X.X%

head So we will carryover this that half from XXXX, pricing we've year, have achieved as into we initiatives. including the benefits the second

plan normally Our increase. have is timed to a price

value also we're have business. we'll additional share will we beginning at terms we'll inflationary but that adding out, of on seeing and conditions that year, in the details in the that So of the that incorporate that an increase the as roll more the impacts and we're

Jay Mazelsky

to in message input that make sure continuity they from supply place. from customers hearing just company. an the they of the it's really input reflected that's or little environment, think across invest we and them. globally see that, high being the retention interested they customer a and more And in to them realize current want are the that into very to us business, growth standpoint, what most given We able support expensive are support run bit to product the world. important them, we the rates Yeah, back formula to in all And that how I perspective, in is add keep pieces customer that that, testing from want we would chain, a a those

area an that's invest indicated, to pricing approach in. we're continue And given our environment. balance, on as the we reasonable, Brian going current very to think So

Erin Wright

labor XXXX? think the lap tailwinds recurring of to Okay. Thanks. better recurring as about the in kind given assume in. you are about potentially into dynamics here some we're guess, high forced don't of price realization the either? those to those of understandable seeing And dynamics I some ability clinic given vet dynamics then more CAG XXXX, assuming you kind stable on don't way environment are XXXX, are CAG But just the think XXXX? is growth as about the Thanks. that but headwinds and how that growth we of the right what thinking the FX Or that you get are single-digit a organic growth get and

Brian McKeon

we'll along that as share think that, on I get we here. more obviously, further

be into positive factors next think us some will You're heading out I for pointing year. that helpful

in related And I pullback year. be higher appropriate and do we'll we that realization We historically. some this is will dynamic. Jay of capacity the think think that achieved it's work through as environment, the the mentioned, a price headwinds think than the current to we've we positive saw

and and execute is our given the next trajectory macro backdrops. more we I well, you here year-end complete more update to think and on gain those details to plans we which can share We'll the the for we think us growth, do, and we'll it's that solid will continued insight talk of give position as what call. for an about on early year, into focus us just

Jay Mazelsky

within or to comments, may looking a But they're making the about a be There staff I solutions. capacity what's been add customers board and, business. excellent feeling to software pressures what's Brian's medical delivering trying -- resonance our our interest pretty think and is amongst sensitive and think, care to software. customers pressures. have I across economics And our gratifying to of much solutions. are practices talked business, and to they the just very or healthy pressures I but their the run sure also

optimization, things the help workflow they've solutions, solutions and this see their our been their practices that that client around we staff with PIMs looking enthusiasm upgrading PIMS for. So support all within communications, software really cloud-based productivity,

across So solutions given the U.S. right really time solutions. across the at I at Lab, in seeing market circumstances. think nice clinic right pretty the the We're the all had our mouth, even especially Reference And we that the much board, in have

PCR of day, the like case We've own our their look at which an customers our they're we've menu. service is of Louisville, that. improved As that in would if we as offerings And using -- practice. next extension expanded

highly those So can that job enthusiastic good about for that, and these do customers things we'll we're solutions. that we a optimistic are control,

Erin Wright

great. Okay, you, Thank

Operator

And next our of Please go Stifel. line Instructions] [Operator from question the Jon ahead. comes Block of

Jon Block

just would start like Good morning. wellness were but in the equation. issues clinical just the better looks visits. year-over-year, thinking odds -- U.S. X.X% acute wellness be with of than capacity which I'm the would and guys. seems side I'll a with bit more They it that Emergent at Thanks, down on performed

there Thanks. capacity return maybe wellness work also on and right? is So weighing about volume things guys seeing not hit dynamic, to less going or a just right, edges? dog the more, of you're people And this bit to this is about a emergent noticing work sort why out is around your crimping why Why the just maybe performing issues cat, and and thoughts, the talk more we're can just emergent their you that's seeing what the better? back just then

Jay Mazelsky

a Jon, year if mean, given But expect. Yeah. look some balance, on -- at balance, there, would within pretty rate it's what it's two-three there you CAGR you any might variability over quarter. -- is I on

pet think So a anything with wellness visit. it's getting I existing owners, turning folks a capacity. those capacity speaks visit The or sick veterinarians And away to aren't related to don't the an specifically there's whether most in length appointment.

of see to fashion. wouldn't it. at any related hybrid are in piece work, you necessarily We expect least people back dynamic So to that that know a going

their three anything down capacity maybe balance think or short pullback, the out somewhat point is staff their to. we whether We it's we year. pull or reflects see or working of can has to year, over practices we that a call I to better, related two haven't been employees. trying that But weekends, just for able specific environment and return do to better specifically to especially nothing gone on What and out work, days think

Jon Block

Okay. just offline I color more I up follow you there. for guess could with

premium these think mentioned of X,XXX on, and but I Just to numbers the some change have you move instruments. I correct,

was instrument got that vet I think but I've year-over-year, XX% that the was revenue if down up correct. X% organic,

customers? Can I down XX%, which up of a it, those organic a solid are the instruments about lot the have again, premium think, would new I the the between, premium placement ProCyte So you instruments, growth, call just think relatively ASP. discrepancy the instruments an X% little and talk of programs, Thanks. One, from what and aggressive there more Are the a IDEXX selling you just XXX delta then bit commitments of longer-term some those for maybe trade-off that means? of that's in terms some getting of return the in sort

Jay Mazelsky

internationally Yeah, mix Jon, ProCyte more Dx. related AUP mix. the to then primarily We're Ones, more selling it's ProCyte product and both lower which than geographic have a

grew XX%. was One a The lower ProCyte the So mix international It's AUP. higher.

accounts And rate. that so that think I very, placement on drop for -- very the X% in strong revenue a

Jon Block

between programs and selling X,XXX evolved? point XX% no That X%, down basis the delta for accounts have up

Brian McKeon

There well. programs are as selling from impacts

ProCyte the Catalysts, expansion good the highlight the very agreement. XXX. had we that about to that I benefit very feel attach multiplier of We've replacing really and XXX-type gets that's we've folded Ones. think replacing of into rates We're and high seen

is as growth the balance, of meaningful in of some strong. changes. well. largely, of part was that's in growth the that's The And the bulk overall our markets, very our and So factors highlighting. Jay international the of -- driver revenue it's on but is that But dynamic relative a base

instrument gains Consumable levels. growth driver metrics EVI high at of expansion big execution The our Our were is a base benefit. up are strong.

the really feel we good performance. instrument about So

Jay Mazelsky

we drives revenue outsized was business, driver, the from the portion of consumables quality XX%. that focus just Catalyst that on up clinic and One an because and and of competitive replacements instrument the is Yeah. new

that's think, I so and consumables importance commercial reflection chemistry organization of to the the a of of just, business. And focus the our

Jon Block

color. Good guys. Thanks,

Jay Mazelsky

Thank you.

Operator

Our go the Please Sachs. from of Nathan Rich line next of question comes Goldman ahead.

Nathan Rich

doesn't But appear point that had any referenced, on normalized on just are the maybe market? about basis to forward? as you for on we to price X,XXX elaborate you on realization. Thanks the to Hi, impact in I that it given good see could the questions. spread customer morning. how sensitivity move have this increases you volumes. up demand you an might potential guess follow I impacts thinking wanted I price guess,

Jay Mazelsky

Yeah. Thanks, morning. Nate. And good

think, reasonable see They our environment. pricing businesses. it's given the current I customers, for this -- their Our see run know expensive as to them more

the to that from is the on clinics. with within demand engagement we to I good continue think organization. sure time, their focus want the continuity, see And make -- they testing a really the on provide end technical support customer product results customer really get they see they support

is the in in their Pricing continue year, that. We've extremely pricing our So eight had across that this software, we flip or value. businesses. -- alone, clinic introductions we enhancements is value reference deliver of on the primary high deliver, to and the side just and business product QX labs really focus five

the owner -- customer both from delivering but that. the the and also from They've pricing within appreciate patient practice, and an standpoint And them own helps that they that. standpoint so of efficiency prices. increase And I care productivity have their the standpoint to done better of ability from end pet

envelope their small I cost but think for care of the health drives diagnostics overall piece is it services envelope, their practice. a important

to do. So they what as this enabler really core they a see

Nathan Rich

did put had high this but the surprised there's given I Thanks. what factors Brian, faced midpoint low I think I'd the basis maybe said X% little is you ask end end Could of incremental XXX Dx quarter. a the price follow-up, And tougher a -- would for below realization. know And at compare, on to versus XQ you what talk that assume just range? some I you was about wanted I just my you XX%. to CAG you maybe guidance. about

So more could for bit just talk expectations XQ your about detail? maybe little you in a

Brian McKeon

to We thought a what had we appropriate shared maintain second Yeah. the outlook Thanks, similar half. for Nate. to it was

I third with performance. our and think quarter execution pleased very we're

line think and clinic of We a is with plan pricing that few -- that appropriate in the I in are visit relatively trend. we're factor longer-term trend was last I of we've growth plans. not a but kind think think that, that of kind seen trends to as favorable execution on our of, side, off our the QX, months in the kind

be see an and the and the I think it's to think We can that's to underlying lower in would think, think the environment. really think thought higher risk end midpoint build potential the of of a trends. to in. we we that place focus range -- appropriate range. we some visit be. And is execute of the really appropriate still macro balance, we course, So on The is we end reflective consistent that's improvement if well current But -- we appropriate in the on continue the outlook, the of

Nathan Rich

Helpful. Thank you.

Operator

go Our line comes ahead. of Westerberg next of Please the question from David Piper.

David Westenberg

Thank for you question. Hi. my taking

we're I them So want constraint of with can't of kind easing clientele, using accelerate just be a labor platform environment supply constraints platforms? versus and about to these all of So all means have of might try while a new training platforms? and in veterinarian new capture learned to, of the techs? fully And a programs the we And to into your new staff of have. in help using is your kind the sales that of supply follow-up can percent that, reconcile try say, in talk or you to an questions the environment if really they they staff cornerstone as that's kind are there Thank unlearned where I do us vet kind capacity then you. force or

Jay Mazelsky

morning. Good Yeah.

or the really it on systems, software. We and, they're have of to practices, PIMS good -- your return cloud-based And new a moving strategy mentioned enthusiastic really multifaceted practices specifically piece, are including answer a workflow and ezyVet. the to some modifying support cases, They if implement systems see in helps Within about question to I optimizing portfolio them. that time the a to efficiency. directly, part taking the

we have knowledge the Specifically around be practices. questions of to and the training, to number support training able a around different needs platforms needs,

of clinical, optimization, and is workflow is it of Some online in and business some both person. it

internal phone. well professional medicine We calls as the group support field a over into more and that's help engagement service nice peer-to-peer our growth sized seen very We've for IDEXX in both them. into service vets in have organization significantly to person as representative

lots efficiency of, and support. to training avenues think, customers there's I So practice open for

Operator

you. Thank

Our from go next question of William comes line Daniels Ryan Blair. Please the ahead. of

Ryan Daniels

color and bit Yeah, on a Water to outlook is headwinds, in particular, continue you consumer Thanks business, overall on LPG Obviously, lot hoping of what kind environment? taking questions. versus rightfully, could for macro the CAG airtime but that the in there is sensitive if the Thanks. recurring of How go a see guys. the the both I'm somewhat U.S. of growth we macro the to into

Brian McKeon

Thanks for your Ryan. question,

The workflow as for Let revenue business and relationships. terms Water me start highest of the Water business. It's with our momentum we that XX% recurring ongoing feel about our growth organic in business embedded with safety probably the in is the quarter. very reported testing, very water the customer good we business, much in

think strong growth, growth there so regions. backdrop good across the a And it's I is global

this solid have quarter, realization an complements And acquisition product which well. as highlighted our net We price offering. we

growth, year in have so reported, we've about that -- positive We in we're the we've in the recently. It LPD, momentum in year. And quarter. really X% that the against made as worked tough actually, off feel very up our good we easy quarter probably progress we building the facing had been in business, an the were And quarters was toughest compares last China. compare through that recent in China.

health areas. benefit growth, So we've driver. kind a through positive modest as of saw screen we our and growth mode overall, And that, testing from a worked in

terms an I attention But positive we're think compares here macro that think paying feel worked in for of the positioned we're tougher area moving we've that and it backdrop. growth I to is through forward.

Ryan Daniels

a different. then Perfect. Okay. little bit follow-up, my And

potential Care Can push us there and environment? the you more Preventive you've to oU.S., more that program And a remind roll that out of face in status recurring given potentially make the Thanks. oU.S. to continues of a Just to macro that the oU.S.? even weak investments made is the nicely. try obviously

Jay Mazelsky

a interested in U.S. expanding Brian. number and definitely care. interest in We preventive I corporate workflow level see terms from may international a outside select standpoint done. our be knowledge from the But customer as in earlier interest. -- of be just still markets the very are work. same It of U.S. especially the regions. the and Thanks, of little that's beyond needs Yeah. Care bit That a stages the We not adoption to think education country of and -- Preventive accounts standpoint of same much It's some

a and think long-term just So more think embryonic making solid we're -- say it's progress. represents we're I we making would opportunity. I

Operator

of from line ahead. Raymond Our Elliot Please James. of next the question Wilbur comes go

Elliot Wilbur

back Thanks, the go good matter morning. sequential the and improvement X.X% X.X% about thinking I improving in in want of XQ. the to second to subject visit to clinical down quarter, trends down

of perhaps putting the pet XX points. and who to visit a higher of owners average metric trends of of Dx XXXX, wondering if basis just XQ compares points and I propensity frequency declines that you trends is the sort idea in if more getting the the indicative visit about sort longer-term clinic thinking is last cadence whether if, visit quarter, think metric, or related of Just I'm the spend. two in early basis And per trends, revert per that, bit the positive think that see trend actual to little of more to comment last exit despite been relatively it's course full could quarter you maybe over rate. of and frequency visit XXX the been rate then the XX visit in positive over we diagnostic as the in decline on quarters, is continued into the basis or the relatively which couple up in quarters, sustainable offset wondering the loss not to less a have clinic points improvement of that fact, has favorable by trends follow-up,

lower been maybe and quality Dx has that Thanks. in is customer bit So little lost kind sort favorable a reflected frequency number. of more of that

Jay Mazelsky

There Yeah. I a think, getting are you're Elliot. questions couple morning, Good at. of different,

we a in the negative fundamental So indicated, to modest this was trend. we this sequential as in saw, But decline the a don't as change And see you QX. quarter. a compared visit improvement clinical X.X% really

obviously, term from And capacity. remains reductions continue near We the expect in to macro impacts environment dynamic.

-- the think, Those the visit. three drivers getting think, well to delivering are utilization. We relative the a think engagement services this again, commercial the two adoption are medical that's, want function as innovations, within supports about, practice really in quarters that important And reflection first through revenue back talked customers we've pleased, of exceptional and the execution things to the business, and the as and are pieces, that that driving to diagnostics of I really care. I as rates. things patient practice per historical year type overall I of well That's both performing extremely

have that, And will our know listening, the their for of call. that I'd phone continued employees participation I lots on and focus portion morning. your to for IDEXX with of so execution commitment I'd like strategy. and like your you we thank and Q&A conclude everybody to thank the to against this say the purpose our

in continued dynamic is and quarter external think, all execution. what another we factors, midst helped Your excellent deliver engagement I excellent know of the

XXXX your thankful note. forward I'm a look all finishing strong for and to So work, on

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

Operator

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

You disconnect. may now

IDEXX Laboratories (IDXX) 1 Nov 222022 Q3 Earnings call transcript