Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the IDEXX Laboratories Fourth 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 noticed the Relations SEC statements press our visiting obtained information from and Commission, or available uncertainties the as and the Additional Exchange with by which the filings release of issued section

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

please results, note growth in XXXX quarter all and to XXXX, organic the fourth our to unless reviewing refer equivalent growth, comparable compared growth growth to period noted. references otherwise In

we earnings questions as each appreciate please allow the that additional questions, we participant broad feel call back to free permits, if IDEXX.com. follow-up one time be ask with so questions. take after remarks your their queue Q&A, limit necessary. may additional Investors the one, and get have into Today's posted in participation the concludes. prepared you To We to to will will conference

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

Brian McKeon

continued in software fourth in Diagnostic organically, by businesses. XXXX. gains driven reflected growth year for CAG and Good outlook to in morning, overview X% everyone. I'm had our our and fourth revenues our you XXXX finish X% results to financial full and through performance. pleased quarter water quarter to take a an of increased Revenues XXXX, our and recurring strong organic strong provide IDEXX

at Combined, benefiting of a drivers guidance XX% up factors our of as results on on these the XX% EPS, year updated and XX% from enabled comparable leverage. OpEx reported full basis, execution range. supported basis. increased profits gross delivery of high delivery in margin end Operating $X.XX gains solid financial comparable a and IDEXX

recurring This in second premium performance a reflected to U.S. is of a half CAG higher visits solid driven volume the and basis clinical of realization. XXXX, price by point revenue growth U.S. premium growth levels X,XXX in

high globally a aligned solid adjusted of placements, levels management and which instrument record and CAG sustained with a expansion global discrete customer full achieved premium operating gains annual base. our margins record of P&L business goals. premium new We comparable year R&D drove Effective level XX% year-on-year XXXX costs supported sustained our retention for updated instrument

revenue we're XXXX, our strategy. of position advance well trends and to net the range. at regions. growth performance and as initial for is This us international revenue our across return enter recurring continued XX% end we supported our by guidance outlook gains price CAG strong These This high and Diagnostic execution year, benefits captured goals targeting organic double-digit U.S. growth a our in IDEXX

We're guidance gains, on also the my targeting our later through profit the we We'll in comments. higher of details walk solid through comparable achieved margin levels building financial pandemic. the operating

how we're in interest discuss in impacts effects sector rate estimates We'll from macro and highlight trends factoring our We'll for potential review and reported planning. and changes our our growth for of the on expectations blocks also outlook results FX building overall into XXXX.

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

to regions. our water X% growth in in organic and year QX levels LPD increased growth reflecting of X% revenues gains business, XX% compared XX% in X% international growth in organically revenues. recurring X% Fourth major solid organic X% CAG segments, PAG supported U.S. growth in prior growth diagnostic the X% in growth our was across revenue organic quarter by including business organic and gains organic

execution diagnostics drivers, organic expansion levels sustained per On with high in strong of base, achieved double-digit from of performance. retention premium gains, higher QX expansion continued revenue line were results realization. and including We key QX customer revenue our business and a including two- solid visit, growth three-year instrument basis, price from new benefits benefits

by imaging down were modestly, veterinary Overall prior revenues. growth software also revenue organic mix to and was year diagnostic levels. instrument XX% supported CAG reflecting comparisons in and placement revenue gains high placement

continue in per CAG estimate utilization. expansion In visit demand supported X% terms frequency that of clinical and diagnostic XX% included QX. sector diagnostics revenue U.S. These by Reflected increased a we in nearly veterinary of diagnostics drivers, in same-store revenue test practices increase be diagnostics. gains in to

declined the with quarter growth categories. wellness non-wellness levels in visit X.X% Clinical and consistent trends across

vet we reductions saw new and peak to step-up work XXXX in a in clinic from capacity through levels and significant continue patient growth. lapped impacts we including from As demand from in benefits

recurring Diagnostic customer continues innovation. drivers, additions of performance including of leverage approximately to basis CAG X% and from growth growth U.S. trends. outpace by QX execution a in IDEXX benefit sector growth revenue X,XXX price growth U.S. IDEXX's solid supported was X% from point continued contributions gains and IDEXX' IDEXX net

international organic premium solid gains consumable achieved installed X% supported across the fourth in strong and across across by XX% global a IDEXX platforms. Consumable VetLab SediVue gains modalities U.S. in IDEXX to increased compared year were base our gains gains prior our testing solid increase regions and XXXX, reflecting levels. our quarter. premium double-digit hematology catalyst, revenues reflecting organically, in growth

be the gains levels. instruments The prior gains year premium in U.S. continues of down and in including QX, X% reflected new in placements, in Catalyst placed to from competitive placements X% We high excellent, X,XXX quality modestly global

We hematology leveraging and also One. growth customer ProCyte X% strong globally new in placements interest in saw competitive a premium

increases by Lab and expanded growth single-digit gains gains reflecting from high improved organically, holiday impacted to Rapid volume a U.S. X% revenues Assay which in revenue in were the U.S., grew net degree impacts regions. supported weather Global benefits X% and in the international solid organically, week price organic by

to levels and X% coverage worldwide revenue and inflationary approximately initiatives. supported recurring our recurring CAG including We price price were service Diagnostic changes half growth net reflecting enhancements impacts. CAG second a QX, by of from higher results realization, net product benefits revenue Diagnostic relatively of contributed price estimate in

As XXXX price effects in and the we'll X% growth to changes, we've annual and recently which expectation list net for incorporated benefit price to communicated were full X% building discuss, year an a global customers. our for from

of In other in software supported QX. Results diagnostic continued growth software imaging placements. increased in CAG cloud-based and business, organically were our in revenues by veterinary momentum strong and XX% areas revenues ongoing recurring

For the reported. to which ezyVet veterinary projections. diagnostic and revenues model the track $XXX imaging as and continues full above from XX% up our XX% year acquisition, includes XXXX, organically benefits software million This acquisition reached

and organically across Turning volume price to our other regions, benefits QX in for full year XXXX, from net and major business revenues increased including strong XX% performance gains. improvement the Water our segments. reflecting

improved Livestock, in and QX. comparisons increased screening, China through from growth swine testing. high we work wine Results and year in where X% revenues Poultry fever core Dairy health timing prior levels African organically and herd shipment to in for performance benefited

operating basis, P&L. margin on Turning profit strong profit comparable achieved by driven XX% gains in Operating to reported and quarter. and and gains a We the XX% fourth the OpEx increased gross comparable operating as profits leverage.

a gains all as software investment basis up year Gross prior X% XXX profit XX.X%, service positively, Net a mix on and gains, increased basis. and on levels and cost lab gross were higher effects. basis. Gross margins productivity points margins, business comparable to contributed price comparable comparisons offsetting reported higher XX% inflationary

investments. prioritization in R&D ezyVet as accruals, quarter. the and to leverage a comparable prior acquisition as We and flat related levels the investment from were basis X% commercial year favorable to as specific higher expenses on up and incentive from comparisons reported prior well benefited Operating our expansions OpEx compensation

basis, a For per year year of EPS of impact gains. $X.XX a benefits full XXX second in the full in XXXX, basis foreign changes operating strong compensation On margins EPS up declined investments. margins on XX.X%, XX% were from R&D $X by points, million from basis tax activity driven comparable supported QX operating by basis. and discrete XXX half comparable Fourth gains. quarter QX in results exchange share, net headwind was from $X.XX share-based hedge $X.XX reflected points

$X.XX, from approximately of basis, was of X% net R&D growth a investments. comparable EPS a decline year impact discrete on of X% EPS Full

points. compensation stock-based in or $XX provided per tax lowering share activity basis million benefit, our full the XXX $X.XX For effective rate by year tax

approximately and Foreign growth exchange by X%, reduced and QX full respectively. X% revenue year

foreign of year, by foreign net and $XX of hedge million $X.XX share EPS exchange $XX profits operating million. gains full the For by exchange per reduced

projected Foreign lower $XXX in exchange in our in was trends improved capital $XXX which or have in million captured we've net resulting financial significantly of since relatively impacts last million XXXX call net spending. approximately our cash income, Free update, flow XX% of for XXXX, outlook.

in This performance reflects inventory availability, credits to and from year product free expansion. discrete aligned a impact sustaining R&D conversion facility this cash with tax higher investments XX% R&D higher of major investments, deferred levels flow XX%

impacts in outlook which guidance flow forecast our targeting in working higher Free timing. from free year-end cash to levels, for capital this and below XX% XXXX, reflected conversion flow conversion XX%, outlook came XX% in improvement year. including cash reflecting inventory our XX% levels to than in modestly We're is of

ratios Our balance and X.Xx with X.Xx a position. leverage cash. ended of sheet We of XXXX in gross remains net strong

expense outlook forward leverage ratio year. current interest Our a this and for expectations incorporates XXXX interest modestly net rates lower

shares XXX,XXX million fourth in to $XX quarter. allocated We the repurchase

XXXX, in XXXX. our for Effects shares. full we share year allocated diluted to X% reduction from outstanding full the year to shares million support For million X.X% approximately $XXX X repurchase projected the repurchase

billion. for of X.X% Turning organic an On $X.XXX in basis, XX% reflects providing to and reported to Diagnostic recurring X% guidance range to growth revenues. our a XXXX we're full XX% of billion year overall growth $X.XXX outlook, CAG to initial revenues which

with XX.X% and revenue regions. recurring in outlook Diagnostic our for XX% organic reflects international Our CAG goals the aligned overall high-end gains and is XX% targets growth in growth long-term U.S.

from base, our including incorporate in innovation. expanded from testing a supported by premium IDEXX premium These global benefits instrument gains customer utilization drivers, targets IDEXX installed growth execution increases high-growth new and continued

growth Our relative XXXX. for through we U.S. incorporates the trends high-end work also flattening clinical in visit outlook expectations of as a

X% gains supported year estimated will in HX. HX realization As an Diagnostic with global price net net by X% full noted, benefit gains in and X% growth X% recurring for from be CAG X% price benefit price expectations net X% to to to revenue

our from growth diagnostic continued benefits our recurring revenue in and growth, to businesses. water goals growth overall outlook addition veterinary strong for solid In reflects CAG software

human to COVID LPD revenues in impact macro from XXXX these moderated be testing growth revenues. of flat at organic million lower $XX reflecting by and expect approximately and trends We modest will current gains

The exchange to of macroeconomic growth of assumed full Terms estimate release. our year foreign overall risks reported in rates including effects approximately organic our outlook of incorporates growth at now revenue, X% by goals, targeted reduce the we press low X.X% growth our will end conditions. from potential revenue

in of year. projected improvement in the be headwinds the FX QX half with relative X% revenue growth are approximately to second

U.S. the changes hedge in the of rates approximately year to positions. a net projected of change million by dollar to $X we impact sensitivities of full FX would million operating the revenue to release, terms in established $X approximately currently $XX income assumed In reported press our and X% million, value by

Our margin year expansion, approximately reported XXX XX.X%. XXXX. from of high reflects margin the end, is basis full annual basis XXXX R&D comparable points operating XX.X% outlook At lapping an in investments operating the for outlook approximately points discrete benefit in for this including XXX to

for including margin million We're gains. taken from offset effects supply will a and lab XX inflationary basis benefits $XX foreign operating to as cost the constrained helped by chain gains by points we've product estimate to initiatives driven exchange steps full gross of pricing impacts approximately continuity. of hedge XXXX year and labor margins in planning lapping productivity on comparable levels high We and the service in on reported XXXX ensure reduce basis

a our estimate XXXX reported XX% from of rates reduce with impact approximately as EPS growth $X.XX XX% XX% that the basis, XX% outlook EPS is comparable benefit the of the R&D $X.XX release, of per to and approximately share per the including to discrete in exchange full bulk an in Our share investments. lapping half. share, press increase per We by on to first EPS foreign at XX% of year this will assumed the $X.XX

XXXX. to expect $X.XX XXXX from also in approximately interest We of per share impacts higher compared the expense

Our in lower benefits reflecting our in tax XX% factors a X% increase XXXX rate to in overall EPS outlook share-based compensation effective from projected activity.

completion to approximately flow outlook reflects to about approximately million major net flow facility impact million X% related $XXX cash is spending capital the of or flow free X% revenues Our XX% free for cash income This including of or conversion our of ratio $XX of free cash estimated XX%. expansion. spending of conversion to approximately of

positioned Overall, deliver to we're XXXX. performance financial strong well in

work year In guidance year midpoint and of relatively through we're outlook terms on continue some QX, full macro higher in organic operational closer demand overall planning capacity range impacts our revenue international we for effects regions. for to prior our as to of growth clinic comparisons the from

as XX basis This from we're $XX point will profit reported for our received in contract that year-on-year to a outlook, as be meetings recorded specific of higher improvement sales includes year. in payment relatively QX. the expense margins return of as as quarter expectations planning impacts terms related in operating an for the customer and foreign well factors benefits QX such In resolution in offset to million this first to OpEx operating XXX exchange in-person of growth a

for financial I concludes his the That call Jay our comments. turn review. now over will to

Jay Mazelsky

per achieved visit, Thank gains the of remained delivered high execution strategy. veterinary clinical resulting our the increased of fourth through IDEXX on utilization excellent quarter, services strong, and morning. sustained frequency levels you, pandemic. good accelerated for in building Brian, in results and growth diagnostic Demand reflecting

demand, to our their fourth high care and Veterinarians IDEXX as full quarter of and this partner and software, the To growth results supported preferred helped drive address look which year. diagnostics levels strong for in solid

aligned in we in QX solid the execution both strong diagnostics business price For premium reflected growth high drivers. contribution is retention continued in management full double-digit from realization net and sustained record organic recurring full for and information with revenues CAG rates by growth This supported placements instruments CAG year software expectations. and IDEXX practice our year customer achieved contribution from systems, gains, X% Diagnostics performance new XXXX,

pandemic well to organic day. durability every extraordinary teams work XXXX. well capacity as drivers growth underlying during in strong the and ability in as the performance impacts, organization to globally clinic of by results execution period offset deliver with clinical solid adjustments metrics a deliver as outstanding the in These as IDEXX's which levels our growth impacts across macro our pressured helped from demonstrates growth attractiveness operational vet business visit following of to

diagnostics including focus position of technologies build management adoption on sector strategic us to diagnostic that commercial and and engagement on decade-long Our strong integrate development, expand to building innovating momentum. this information

highlight in XXXX priorities morning, This on delivering innovation discuss this XXXX and advanced our IDEXX I'll focus of how areas commercial results. for financial that progress. while I'll also build our strong

commercial with on start an execution. update Let's our

execution levels adviser global by revenue of teams growth levels High trusted to commercial These fourth customers quarter our premium IDEXX drive instrument are delivered to above gains sector continue placement levels. who teams global supporting that in XXXX. record any placements highest to for growth premium base premium and were year XX% installed the instrument quarter instrument annual contributing second for history, company full in our the

services. the easy of necessary delivering IDEXX use to is to demand diagnostic health deeper to care. integrated in-clinic highly workflow, of gain platforms care higher accurate giving highly levels the and are to practice platforms levels into necessary clinicians These customers tools for health high insights pet allow pet meet

were but how at effective also The a placements past magnitude IDEXX strong highly placement this XXXX in veterinarians performance highlights to has quality. they of only able throughout impressive, the been high was capacity way. support constraints during Not year, very

placements in new accounts This gains a customer-friendly multimodality veterinarians. globally. in and interest demonstrate programs competitive for Catalyst hematology that and strong strategy and proposition value our reflected strong IDEXX's to marketing premium at provide growth products clinical and compelling These is

models. revenue growth business New U.S. future flow-through recurring signal revenue from future placements is new very business will above levels, and retention an this by for fourth competitive which drive customer quarter encouraging new in drive helped high as contribution historic the supported

that remained throughout the Customer relationship brings another an the that at to and of our capabilities our retention major commercial rates customers. organization across strong modalities our IDEXX highlights XX% And trend XXXX. or above value

customer and also gains placements was new which in growth accounts, modalities. solid as across well placement supported high-quality premium competitive while reflecting strong net International

by growth double-digit their since installed was model, focus This increased of in IDEXX a completed needs on commercial our diagnostics of encourages a where a successful Installed have the leverage them our global base of expansions supported educating growth engaging teams BDC growth loyal our result we which veterinarians, key building XXXX. ultimately a is in the laser on support and European base, can with placement opportunity. driver Catalyst way countries of value international

our that tools results a network expansion PLUS. component international reference an VetConnect like with progress along These executing strategy. Commercial key lab is software and against strategy, our optimized of highlight

Moving TAM the to of global forward initiatives these regions. we on address two-thirds forward, look represented international building our to by

benefits The installed CAG of our are economic growing notable. clinical and instruments of base on recurring revenue premium Diagnostics

and in ran well In Let's global paid TX. slides take on supported an XXXX, our a combination of and Catalyst, with example by and slide or over Catalyst SDMA customers over PLUS basis VetConnect million X SDMA analyzer and IDEXX for XX,XXX total chemistry clinics our DecisionIQ. SDMA

who have just awareness, kidney development clinically customers, for creating of biomarker impairment and in then parameter not is customers to of are IDEXX example education, part utilization It's SDMA cases. ultimately, innovations of use sector our a continued brings These our variety strategy. early invest differentiated and important highly as wide that great decided a adoption a but in

and on our lab revenue recurring platforms. solution management an progress diagnostics and imaging software update high of an Next, information strategy in continued software delivering diagnostic businesses and our IDEXX our reference growth. point-of-care to and placement deliver with integrated

efficiencies seamless which owner enables software an in stack insights, includes deeper the supports greater create growth. diagnostic products diagnostics usage tech clinic, across revenue turn business This that and a connected of and whole help communications ecosystem creates end-to-end support workflow pet

this limited business. greater in record helped is Web a growth have solutions, shift revenue to This and Customers in continued for drive need for recurring by ability high-teens subscribers have as demand. PACS had which capacity patient their constraints a these never evidenced towards XXXX, instances support in some placements PIMS

and million, XX% revenues On up over year organically. full $XXX a imaging diagnostic reached basis, software

in and our even also software as value of profit gains business, software a contribution are stand-alone reinforcing we supporting faster, recurring revenues our business. the As strong growing expand

PIMS to cloud-based driven placements of by be customer continue adoption solutions.

rapidly past As space. Day software the at year, in Investor the we cloud gaining momentum veterinary highlighted this is

of in positioned shift products and IDEXX's address towards the significant solutions. portfolio is software cloud-based efficient, type trend this midst are a well to of very We towards these easy-to-use

these placements XX% model in of the stream approximately the to comprise XXXX, PIMS durable gross -- Cloud-based over CAG a delivering for benefits given SaaS-based margins revenue significant and products.

results was our track footprint of to our XX% were We shift this cloud-based of to achieved PIMS the on decade. business, while that is global into of delivery the for and expect rapid the over profit rest well represent accelerate priority this and tracking tasked revenue the our These a integration acquisition year of the ezyVet established over process. multiyear ahead with solution during are delivering software driving team and this expectations

great the the a high puts our of IDEXX at delivering only seamless but right execution and invested right in levels This by our also example performance the is delivers of sector enhance financial and integration. deploying forward and customers. progress This consistently drives time resources return on how of capital benefits world-class products place not and

provide of by data cloud business as cloud-first investment IDEXX software highly software over our early attractive, increased Our anchored will opportunities. years relevance ezyVet coming products strategy, and success continue clinics. to to synergistic importance and the well positions veterinary The in

continued ProCyte relentless an adoption our strong of supported exciting innovation to One premium of key performance, ways, addition of by IDEXX starting software for is IDEXX's hematology also on strong commercial as innovation diagnostics this analyzer, in focus a which excellent XXXX utilization. launched multiple adoption with in XXXX. In year and were results driver

performance high the submitting XXX,XXX international given opportunity an very efficient, platform. high premium cost and in relevance address attach instrument first its approximately customers clinical placement catalyst. to lower countries hematology rates offers worldwide One critical It to is its smaller efforts ProCyte footprint our and The

achieve the One to incremental XX,XXX look this Worldwide of against This in new building of to hematology progress by target we placements very than technology grew piece is ProCyte XX% fourth elevating base our strong more long-term units. quarter, the this goals. on X,XXX placements our installed for momentum premium XXXX, to and forward for

deeper Canine veterinarians our launches, launch dogs hub sooner and insights expansions will our screen more veterinarians innovation to of allow way U.S. IDEXX our Nu.Q a terms for for to program which impacts U.S. solutions million include and growing with at now were care of Cancer preventive by recent expands VMX. provide adding in annually These more to Screen nearly In at the announce X accessible that issues available oncology excited them the Reference a to detect disease we network, recently multiple platform extensions

the and IDEXX And training secondly, includes wellness rollout preventive Start, for capacity-constrained an client for challenge, care Care custom of Preventive which the Simple diagnostic communications. improved formerly and program development profile tools practice, designed staff

VMX, decision we and support the in support delivers through an for out insights, to to step next software features intelligent confidently disease the swiftly This DecisionIQ, addition also now menu shared IDEXX we disease which to kidney conditions a Valuable At VetConnect in vector-borne formerly earlier and includes expansion chronic considerations endocrine clinical in patient-specific would XXXX. and case. insights PLUs. applies veterinarians service to move data rolled

point not launching a stop the product. does new of Innovation at

integrating is However, utilization consulting our technology new supporting our and customers workflows group protocols medical in driving solutions. step diagnostic adoption of into important practice with an and and

We some this were seen area our of in traction in have services, and good recently products XXXX. which launched with

in we included announced Preventive Plus detection Simple program fecal, Start tapeworms at XDx flea are approved now Care VMX. with antigen test of the DX with Our

critical biomarker offered our our management efforts that in reference labs with updated cats And a to has diagnostics been helps is sector. Guidelines. Interest animal long-term and the that FGFXX. These is product companion phosphate integrated example develop Another kidney to rollouts determine information restriction Renal are International now dietary into Society through disease

these help developing to drive off help for contribution and in needs diagnostics address XXXX. utilization of to sector commitment build our consistent to our IDEXX's pressing demonstrates on focus continued most which aims growth veterinarians. the and highlights adoption and saw frequency They new relentless diagnostics of both revenue The the innovation to XXXX that approach, we sector higher levels in customer-first positive technologies

growth and diagnostics enable clinical same-store X% profitability. integral practice practices, this and practice reflecting that medical has services grow context, diagnostics In to of becoming of to to outpacing for revenue revenue total and way larger clinical veterinarians provision a gains an is their contribution the become

of Our provide customers a them this enablement service element key care are client productivity. An staff deliver product turnaround help and workflow, standard is and support hungry for necessary higher communications to solutions and time. continuity that and help additional

it that great our and when importance where reinsurance customers the need be and confidence they available need, of IDEXX is them. reasons, gives that services products and they these For will

Our in if quarter This delivery supply chain us help by and teams them. the to product again need standard continuity gives XXXX. say this XX% levels delivering our that quarter. a where ensured A fourth availability on-time pride customers each we confidently and achieved of our in they when performance help, ever

and customers our levels reward it customer-first turn, on in forward for mindset look world-class and scores retention with we our our to products a services. bringing strategy in This us to fundamental to NPS and our is work And high basis daily XXXX.

That our prepared remarks. concludes

growth colleagues for high for to a in development better and performance, of XXXX of providing XX,XXX a planet IDEXX we work dynamic addressing towards future environment. our nearly recognize supported passion like I the external opportunity significant solid ongoing today, while Their also helps us work Before their to Q&A, our ahead levels would sector people, in animals, which us. transition very

future. to priorities, our it's solid to deliver and this the report IDEXX excellent exciting results an to It's against how strategic into positioned remains the well honor growth execution and financial share results of

management to day. engagement to enthusiasm every bring say you the for team, our work our of you behalf and colleagues thank the I'll on So

and You against are the of at our progress enhance health people and made purpose to core livestock. pets, the well-being of our we've

now that, line With we'll open for the Q&A

Operator

question time take go first Please Goldman from Nathan Thank you. Sachs. I'll this your [Operator Instructions] Rich At from ahead.

Nathan Rich

U.S., about like you how saw thinking I of clinical quarter. cadence the It in end starting this fourth visit guess, reflects of similar a the then sounds you year? said flattening with be of think growth what to guidance high And you year. Brian, for U.S. will visits the the the I are XQ

back how guidance? the plays of you return your end the by about year in a you talk the visit positive year for out? clinical So maybe of do high your the just And could expectation to growth envision half

Brian McKeon

question, for your Thanks Nate.

in still we'll that U.S. through expecting kind compares in capacity that to are through half the last the happened year. We of the of be the of some pullback first working

you're correct. so And

I think something outlook. that's we're QX in acknowledging the

that the We'll for working macro assume as that guidance out, -- of we U.S. to that's a provided, year. higher the and of meant as see as back that through you the be still we in end pointed does internationally. the well the trend of the half impacts We the some flattening imply

And not so is improvement, but projecting assume a of would level relative that growth.

bit working can but changes that Jay the more I appropriate with think talk that, a assumption to that I been think feel we an that's we've through.

Jay Mazelsky

the licensed good pace. Yes. capacity of bolus a staff We've we all standpoint particularly veterinarians practices they're not at same working some just progress Nate. working that through workflows, a veterinarian. would I have made care what morning, the standpoint, qualitatively adjusted seen of per see add Good constraints they from market and customer is who added in -- overall the

that mix is the they've So, and productivity been increase to able in towards sense. more staff,

forecasted, we They're just taken think I time think profession is making in the investing it's I the progress. but as So, technology.

inflation optimization software workflow staff our in-clinic with just purchase communications, of solutions We've seen the productivity, overall veterinarians way are client laboratory solutions to that of a within the practice. software particularly as and looking is that cloud-based something supporting

Nathan Rich

just about XXXX. on price for Okay, just maybe on customers the of Could price you net to across from price expect? comment CAG? realization you And have on assume of does or level up the outlook the in took brought increases realization that. been you utilization could to a that level great. talk kind any the of different the the XXXX? product also And And lines follow Obviously, in impact what reactions of higher you've expected volumes about talked just you kind maybe maybe is that

Jay Mazelsky

Yes.

let the back me take your question So end is. of first. It

up So standpoint, a that relative back well scenarios context. as demand current say well within and economy as a pricing we've the the we approach different holding appropriate global is this qualitative we I'll taken, in think the both pricing impacts from we've to articulated. the is see

but that innovation, care they critically mind IDEXX so they in overall is worry Keep proposition, and value continue and providing invested basis, important and just them from in the service that appreciative to they're and to and standpoint, also and we'll on goods levels don't experience, they diagnostic which focus a invest services value highly we've the can overall customer to on that a sustained product about have continuity. customer recognize

recognize say we life also is other technology for I taken they The type that have a that would thing approach.

you look have so there the upgrades our analyzer who parameter purchased. been a or extensions last decade, catalyst, customer If a chemistry nine take our that at over

or the Our in catalysts, same highly ago chemistry just have differentiated, in that's XX but analyzer the and really features industry, today functionality. our not exact we think would And industry. years

Brian McKeon

the Just is reinforce that which to shooting for we end, higher what growth that our goals as achieve. at to volume sustaining solid we're a reflect the company, been premium able we've

to clinical strong and volume growth much pricing independent of performance. visit that above the we've able it how reflects level So, drive of growth, been benefit, sustaining

Operator

JPMorgan. We'll hear next from Chris Schott from

Chris Schott

with a like of out think specific just could be directionally is not happening kind one. with price up numbers? kind that. and as longer-term then everything this about at and on this inflation XXXX increases following more But dynamics, pricing larger what's a we after with window else? just it about of look trend looking normalized pricing and follow-up increases? least Can ongoing Or should price we the talk is And for you Just -- a beyond, to unique

Jay Mazelsky

balance a We this maintain pricing We diagnostics value that Keep Chris, our neighbor we're we between just projecting of profit testing mind XXXX. is the services It's also a so is not beyond this a in the practices that price the core veterinary want for it to within the as deliver, Yes. up. They recognize good them. year, philosophy. services. center medical practice. for mark typically a guidance large

to sure of to that, value make But we the a we're long-term the having front approach don't taking we And said where want very is. developing overall sector. in get

XXXX in think inflation the XXXX the and we've and I macroeconomic reported business. So impacts running And of seen that way you've as difference it, historically. the and the cost

Chris Schott

little headwinds about how -- of bit macro just through see that we maybe for bit you're you in move can little XXXX? as then those playing guess markets? a I seeing these your out outlook And headwind just much and just how on Europe? you talk more a elaborate Great a

Brian McKeon

Yes.

we our recurring growth. half diagnostic the is second So, -- goal came the about year out CAG with of X% of

Our at next is goal XX%. or end higher year the for

in don't like obviously improvement. tougher Europe clinic but year the data that's mid-single-digit so, have the to headwinds granularity, same-store are level in calibrate. the And probably it's think an I range. sales places We same This

and So, driver it's softer U.S. our so business, with doing consistent the targeting leverage. we're sustained execution than what we're in U.S.

clinic same that in than We've Jay international the are got for our international still and that less pricing levels, backdrop about double-digit at store help just optimistic And benefits that we headwind support the growth. feel faster the targeting in some are sales So, still expectation some building to growing -- of that's getting very appropriate highlighted a macro long-term the regions. markets the visit still potential our headwinds. are but through, we and growth given I working but think

Jay Mazelsky

Yes.

Let future of We that the long-term two-thirds U.S. me see the of geography. potential. TAM on pick our outside up

so invested that's commercial Over time, years. over we've seven in. last something few expansions we've had expansions, And that the

described partners the through education U.S., think I we've awareness we're adoption. in but similar some approached very innovation, macro opportunity headwinds development as and approaching in that it and is our Brian as helping them, engagement with and over ultimately, a which our time create model really is and way the significant there's through Currently, commercial sector

We very ProCyte just role term. a the It's in highlight played One I geography. longer also, our international would very that we're think has the over So, solution. optimistic compelling

expect, Our hematology fits over Day, first uptake, markets, customers, profile, it and placements laid Many cost from Investor horizon. of out performance very hematology markets the are that nice we're we've premium and a as planning seeing these standpoint. we at XX,XXX

Operator

Stanley. Morgan with Wright Erin from next hear We'll

Erin Wright

the innovation magnitude the And the just XXXX guidance from platforms assume launch timing we about of in of also hopefully, And XXXX a of from your they contribution of you plan more two be contribution any think how pipeline? should how thinking those? here, event? we that Does should near new sort Great. the terms about for in Are future? the to

Jay Mazelsky

get launch, Yes. No, And about we closer two provided talk specifics point-of-care any platforms. haven't to we'll we new this. on as the

Brian McKeon

in not there's platforms in to Yes. They're those the related nothing the guidance.

Erin Wright

Okay.

then. -- So and

Brian McKeon

continuing. cost to Other than support the

Erin Wright

those prepared the a perspective are Okay, aware Brian, think but cost we key on full of this great. some realization price the remarks, from of I And side, the limiting X% talked drop about should bottom some line? I of to to X% And that guess, what pricing factors through are kind of be above in obviously tracking you your that historical.

Brian McKeon

real. are costs inflationary The

On a of have the manage kind dynamics. a and ensure that product this steps it's to cost of the high year availability been challenging chain front, supply environment we product took number to

Our to a done supply, got but be product ensure a as our that's through has on period in of to front, that are choices team time, job labor higher flowing well. costs operational did fantastic for make and going we there we've costs and

lab solid increases be the the reflected I of in end at at our the continued the trying to we're outlook on allowing and And that's investment always higher overall improvement base I revenues our our of But strong think we're margin balanced with that's initiatives that recurring rate. -- And operations us some to front, and focus margin our impact. deliver we initiatives I the margin guidance gross activity our to that of where and think price range. we're like advanced, through a given overall margins gross our working appropriate, we're think improve on just through. dynamics the growing productivity able in primary

Jay Mazelsky

biggest back front, visits add, operational majority a the We visit would I the a customer Yes. was we're had VMX We've also history. are normal commercial show field now sales VMX standpoint, person. is attended to on our type and of in more cadence. of the organization -- the summits from its just in

a So pre- cadence. type of operational pandemic more it's much

Operator

America. Bank with Ryskin Michael of

is open. Your line

Michael Ryskin

Great. Brian, I then the think in bridge volume visit your price growth. earlier actual underlying comments, your vet you revenue talked a little the bit and premium, about and between the IDEXX

to end Is premium of at what previously. I that the a you've said guide lower the end the there similar premium the seen think you a guide? high assumes lower of X% of what and Can IDEXX the thinking are you you XX%, expectations the in of sort that are the growth talk your terms sort what us premium? of through for between

Brian McKeon

Right. Thanks for the question, Mike.

end, use just with me starting So, high the let U.S. the

we've headwind that's of through growth growth from with goal the to That of we with work visits kind some about pre-pandemic consistent us if year. delivering level half the XX.X% So with first volume premium the growth an X% that to X% we've implied approximately of as and X% trends. got gets and go volume to pricing, been

So we're about thinking that's how it.

primarily think risks anticipate. way is the is that have we where that we plans I financial but one outlook, things is the think we can gains, business profit we go range to factor, don't think so and, for I prudent, you if linked have to that's to which the deliver sure all make that specific plan something we way that We impacts know, solid appropriate we a calibrate to think macroeconomic it's not

if of one And visit it or in we're the builds but recover things the targeting it's terms potential in that linked headwinds clinical trends. macro don't so to specific way again, factor, not

Michael Ryskin

the we're some space. year, year specific others ABAXIS seeing for HESKA very Okay. this product follow-up, coming and And and last XXXX from then launches in the and in

bit landscape that could come might seeing conversations there? if question well. on into as little competitive customers, I'm of the just kind how So, previous with that pricing changes Any tied touch your strategy? Any factor into you wondering you're a

Jay Mazelsky

Yes. There's of is is customer overall of the in-clinic combination We've support said We solution intensity. Nothing market reference laboratory through helped on long that lens the very it laboratory our that software, competitive differentiated our all highly really of diagnostics market. time, practice connectivity portfolio has the changed lot attractive a for front. the believe mission. the a a that

results. we're take if premium software well. our both now placements, Diagnostic new and provided well. in see a We our reflected and in the competitive the PACS We're that about achieve their feel very them which helping businesses and Web on We you customers hematology, it's and and very for focus growing at Catalyst extremely our for Imaging goals look think good we we to doing

Operator

Block anything have my Mr. Mr. you or Ryskin, further apologies.

Michael Ryskin

No, you. that's it. Thank

Operator

We next will Stifel. with Block Jon to move

Jon Block

Great.

to in a EPS GAAP I so, the the First clarification. first that. that you assumptions, you start on one, XXXX And a thought just $X.XX-ish I'm OpEx, line. I you these contract that Maybe I'll at clarification, all properly. a comment can not resolution. last, bottom not $XX right And Was quarter of heard with landing just customer line Is that then million that guide, rev bolt-on. offset sure I'm Brian, if an and maybe to the in said please? on 'XX? if item, I'm is

Brian McKeon

QX an for you which in QX that G&A, that's income offset XXXX is think us all we is it's -- as to our item outlook an It recorded got I had a other it recorded factor correct. right. and as is an highlighted that and

Jon Block

know once is the the XX% well? growth The earnings X% sort also have comparable in don't all if release I it that right. I from got the XX%, in as you should you $X.XX? that back it the benefits I push XX% out to it. X% But of to one

Brian McKeon

follow of maybe to on question, it little at then sort coming I'm differently. just Perfect. And just a Mike's

clinical to ForXXXX sounds X% year, the visits, know, don't I like for landing X% around full it you're around down there.

and range. were guys price, X%, price to read prices are saying X% guessing up case to X% the vals X%, can X% the to at high if a on be funny like that. little of right. I'm maybe down, to price So The you X% was X%, X% you -- clear your is end it's press and clarify to just release

Jonathan Mazelsky

is That Yes. correct.

Jon Block

Okay.

is right. price So

So incoming on confusion yes, there a that. was

you take the growth, at which So an we're I throughout non-visit land X% if is half of 'XX, to like calling up ongoing X% CAG vals to your if XXX non-price seems of are down bps sort and to recurring X% price what certainly of 'XX. X% Dx back deceleration XXX XX%

there's And great too. parts but U.S. international, we get granularity I know sometimes and Brian, such with moving don't

that should is broadly in visit of to speaking, that on how kicks the the term thoughts bps on deceleration in? growth the non-priced and sort maybe business your view comments, innovation near Just until XXX XXX back we

Brian McKeon

I have actually our where reporting. clear be to discussions numbers, those the trying focus to on John. your was Thanks, We analytics. we follow U.S. because that's just

growth good expected clarify you want do about feel something to of guide. And the we benefit So, the the is XX.X% range. very if performance overall that pricing the use I midpoint our across pricing

CAG benefit. of end So X% XX.X% out help that back But to people would the the to kind were price the be that we recurring analytics high our high benefit, understand around focusing about volume end of use growth, U.S. on revenue -- that. netting is the midpoint diagnostic going

And that visit saw pre-pandemic. we've explicitly seen of volume but to trend, about back That's what X% we growth didn't half. that highlight X% the to kind the that bridges clinical it we in premium second

our so, And shooting for. execution looking well. really -- we're is we're that's indications up all And holding what

If performance you trips done, the at look on to so just looking we've of consistently momentum. build and that how

Jay Mazelsky

and new to execution metrics anticipate to able commercial in well continue acquisition, execution we that, if price retention, the take being at which is you Overall, to appropriate a add Brian just the been has current would customer year. think context. execute highlighted I the current Yes. given look we customer around realization, excellent,

Operator

from Daniels William Ryan Blair.

is line Your open.

Chris Schott

the any data capacity material your maybe how the diagnostics. based with constraints so using one big on regards are or Jay, your picture in last conversations you. I'm curious look clients for Have customer-facing your with if you they're maybe a changes and or either noticed you facing. back practice over year team, to

reference reruns, trend basis macro So don't panels, have to do anything a changing the or to point maybe that care larger seeing? of from versus running on-site that you're so lab like just they

Jay Mazelsky

Ryan.

modality that's Pet well. to pet. up begets think testing. function to happiness, continue use the tend of one vice a really longevity of owner that whether pet and use other continuation would hold that versa. testing to modality a their trend. able We to and for see We've non-wellness not even more we get versus It's care, we diagnostics wellness We've seen health, be also of So, owners have customers testing the want of -- that seen great demand.

and for and practices the into filling wellness they're preventive So, care visits.

So, an important the developing we overall of aspect as that sector. continue to see

extent greater role I do previous the investing education in think, of their retaining their of appreciate their We staff. I times. see to practices staff, in staff, than a

I and the We've but systems. gotten around their smarter the that technology seen importance extend that to think applications also of technology. software capability the the they've cloud-based systems, integrate PIM in of in use of move that PIM the and

relatively we macro well. that and overall, consumer demand given even up think So, described, the owner overall we've pet has that held impacts

Michael Ryskin

think, Okay. more And of analytics then maybe deeper a digging kind the support, time, you in than of cloud spent the little I and decision the using data some bit into that past clinical data. and talking about

dive So, the can and more diagnostics? to how step is using broad are widely that next used a clinical DecisionIQ you little and into do it goes bit from that decisions that regards how in practitioners point-of-care informing to

Jay Mazelsky

VetConnect is in DecisionIQ Yes, that me decision here what that general to. and things formerly medical clinical is they the practitioner DecisionIQ, broader known the glad as busy. the paint which as be Keep let mind, just PLUS context is I'd our They're considered. of can range part application. the suggest support possible not can have support services and incredibly wide may this decision-making, which of responsible for having clinical

to we hands the suggest And even next think, point, step in of an test, I is think question your or important tool veterinarians.

to which on practice, is continue their practices over of part thousands using DecisionIQ time. be support We will that vector-borne of to now basis, have ability as are extended and disease tens daily PLUS menu therefore and the now VetConnect of a global endocrine

in increasingly becoming that question. value. just think and veterinarians valuable But in grow the over we of time something you hands it's will for that So, thank

morning. That's out of appreciate We're like your Q&A to that I'd wrap. participation I and everyone, the concludes call. of portion the time. a thank this

decades-long in enabled infrastructure us and commercial returns see address care remain we growth high a financial teams to our on IDEXX Sustain consistent capabilities standard summary, of approach solid to in this and well companion strong to investments build innovation, So health care XXXX. committed the levels to for to strategic opportunity the by animal and and performance opportunity. deliver significant positions of for increase decade-long us in XXXX

call. And the now you. we'll conclude Thank

IDEXX Laboratories (IDXX) 6 Feb 232022 Q4 Earnings call transcript