Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the IDEXX Laboratories First Quarter 2023 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 by Generally GAAP GAAP. most financial call, reconciliation refer in measures, XXXX, reviewing discussing growth, not to references Accepted found our to we period Accounting earnings accordance the quarter to of the in growth, equivalent directly provided this non-GAAP note section Principles During website. our these also our certain with comparable and Instructions]. A growth all be organic In [Operator the of which compared financial measures growth Investor will XXXX visiting unless prepared Relations to may release, in first be results, noted. measures is comparable otherwise please

remarks prepared idexx.com the Investor concludes. call posted will to of earnings the after Relations section be Today's

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

Brian McKeon

to first morning solid welcome a call. start Good IDEXX and had earnings quarter our to XXXX.

gains revenues highlights growth in recurring growth the U.S. increased of quarter, benefits by by XX% organic the XX% and recurring volume driven from price nearly CAG realization. organically, for terms revenue nearly the Diagnostics in supported by In revenues. higher XX% Diagnostics overall organic CAG gains net solid were supported

positive our and growth veterinary adjustments payment. revenues. EPS focus in incorporated resolution on solid reflect first new execution. on growth, basis benefits gains financial placements, full-year a outlook IDEXX model solid organic and metrics and remained We've durability to business discuss business recurring of strong which increased than quarter in later gross strong software contract high premium sustained results a $XX comparable execution million expected globally comments. QX margin instrument profits from the my benefits better our and XX% we'll reflecting record gains customer resiliency Key reflected revenue These results Operating the from and our ongoing continued in in

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

driven revenue X% winded and a gains growth growth headwind organic of $X in Overall quarter CAG down X% our and area XX% lower were revenue testing moderated was million completely revenues, organic LPD revenue by approximately Water. XX% COVID human that First of solid declines in QX. we related to business by business in gains

increased regions. the revenue growth XX% price U.S. recurring global the in in in net expectations. was revenue supported X% XX% reflecting our CAG organically gains X% range, by Diagnostics consistent gains with to and international recurring CAG X% Diagnostics growth

revenues. X% remained organic levels, and effects program veterinary imaging Diagnostics CAG down supported organic reflecting growth mix. Overall by in solidly diagnostic IDEXX growth levels. instrument were comparisons were growth pricing software and high above recurring to organically, revenues revenue XX% gains revenue also sector CAG prior year global

including levels growth relatively basis In the benefits same-store QX. from point in achieved premium clinical execution growth compared results visit price U.S., U.S. higher realization. to we X,XXX These a net flat drivers reflected

practice Solid retention customer increases and high continued new in U.S. supported volume and at utilization diagnostic business was growth levels by the frequency gains, level.

quarter. international from new International premium higher business in of in supported these installed benefits CAG price and drivers were base. impacts trends revenue rate to continued which growth execution, Diagnostics net recurring conditions, growth expansion reflected challenging by double-digit also IDEXX pressure were from our moderated strong instrument a macro same-store by the gains Double-digit gains sustained volume realization,

on were IDEXX across SediVue Premium the growth gains premium our double-digit year-on-year supported increased U.S. and regions. instrument achieved and across gains our Globally double-digit base increases VetLab growth Catalyst, modalities platforms. revenues QX. international reflecting revenue in with Consumable installed global in consumables XX% Hematology our by IDEXX strong XX% organic organically

QX, premium an X% to levels CAG The instrument fourth on quarter of instruments compared and excellent achieved year-on-year X,XXX building in be placed record placements. increase in We of X% prior to of the the XXXX. placement in growth new year placements competitive quality Catalyst very levels continues reflected strong

single-digit strong the net ProCyte gains assay regions momentum year macro-economic than benefits Global Global pressured installed in in realization. volume XX% reflecting which strong and a strong international the impacts, XX% solid revenues international, also One lab the mid that growth with growth and units. higher growth by expanded to be have increased last same-store in continues U.S. in globally U.S., price driven rapid X,XXX more from over key organically reflecting gains base sales. to global revenues reflecting by in organically moderated doubled

revenues and imaging of were software organically. Results in X% other by organically solid Water business, digital Latin terms gains CAG Europe our imaging of XX% in the from benefits cloud-based reflecting price increased revenues, In supported net QX, and momentum high improvement. ongoing software diagnostic placements. software including revenues areas veterinary in levels and of growth and U.S., in increased America, organic recurring continued

high certain and Dairy and reduced in revenues integration as solid the year levels recent revenue in regions. our products U.S. were decreased offset Tecta-PDS acquisition expanding our health performance in Europe has well to safety capabilities Water food in comparisons sales safety of screening Livestock, prior Poultry gains herd X% by from non-core testing. The progressed and and organically and

gains from upsides productivity were Gross reported solid XX.X% and payment. offset service operational Turning select higher gross cost XXX of customer on improvement XX% basis. profit contract inflationary staffing supported the improvement and increases timing supported effects. comparable X% margins increased in results. million on QX a and to resolution also business gross XX% net profit as basis. comparable basis quarter initiatives, gross reported XXX reflecting $XX QX margins a in point were up Gross results basis profit revenue in operating lab from margins points price a the by P&L, benefits profit a realization, lab and organic growth, Later Benefits software mix

foreign basis negative Operating This of reported impact as growth basis. year-on-year moderated increased customer point related As of the the hedge offset a expected, including X% expenses X% gains. a year margin by quarter reported to a exchange prior in net was resolution gross expense on operating and comparable million gains changes, payment. XX contract lapping X% were to related $XX or

quarter increase QX, XX% on growth of meetings initiatives. and per comparable $X.XX specific key in EPS & we in-person and to innovation this R&D in a advancement related As reported including sales expense the of factors XX% the return planned, was as sales of saw and higher year an basis. share in marketing

the reduced lapping operating exchange gains. and per prior Foreign the share impacts $X.XX million EPS profits by including hedge year quarter, of by $XX in from

Free conversion million free $XXX XX%. ratio to flow was income cash first cash the quarter. in On was net flow our trailing a basis, XX-month

our maintaining for we're flow conversion full-year, spending of including the $XXX XX%, For million. outlook cash XX% to capital free of estimated

ended the Our last interest manage reduction repurchases cash in quarter in Xx strong our gross We of X.X% diluted position. the X.Xx share ratios levels. leverage from repurchases We balance in current environment. remains with didn't over first we capital rate more to the conservatively supported as sheet the Share balance quarter, outstanding. QX a year sheet of down a relatively allocate and shares modestly net in

QX results impacts. refining will a $X,XXX impacts, to $XX includes provide which we're updated million now revenue foreign we for updating revenues full-year million, this XXXX our for relatively to foreign million operating outlook estimate our our headwind guidance to to incorporate P&L and Turning reported full-year exchange our $X,XXX estimates a for We're outlook, full-year to positive reported solid exchange adjustment growth. modest

Our updated to X.X% is for growth outlook revenue overall organic XX%.

consistent and targets year, this for drivers high reflecting our performance for end reduced from and QX clinical maintaining the Our towards high-end tracked we're results benefits growth the visit potential execution of range this headwinds.

targeted we approach, the management performance growth risk in financial our incorporated from of growth effects our our potential of conditions. part range, revenue estimates end organic including low macro-economic to As

an At R&D XXX margin outlook comparable approximately the revenue points for basis million solid maintaining solid expansion. in our in XXX range updated for an in resolution this to of reflects our year. the QX of margin investment organic full-year customer of XX.X% approximately contract to operating our basis expectation This combined second and the the payment We're of operating by for of $XX growth the XX% the low points XXXX discrete in X.X% lapping operating with outlook includes reported in margins our outlook start for guidance, million high-end, the raised quarter full-year. performance XXXX. incorporating end the from benefit $XX We in

in XXXX which XX the now included by gains. will basis that reported from reduce We foreign impacts earlier higher $XX points estimate margins of million lapping than operating projections, approximately this year slightly hedge exchange

increase updated $X.XX in per EPS share, $X.XX outlook is reflecting share our estimate. $X.XX low-end a Our to per

that continue by to bulk of half. $X.XX for We the this foreign first in estimate full-year approximately EPS impacts decrease exchange the with will impact the

approximately QX, from of end growth for our our consistent range terms full-year outlook of In higher reported planning overall of the organic headwind to revenue changes. with we're growth X% midpoint operational growth outlook year-on-year for with FX

to outlook margins QX in of adjusting in of for performance reported operating consistent points for reflects XX% expectations terms operating about we're range XX.X%. In margin relatively XX planning the for investment. which basis operating included details press margins, year-on-year This the in We've comparisons year release discrete and negative snapshot. benefits updated results, exchange and in impacts earnings from foreign to our prior R&D million provided tables on $XX

strategy applying a performance. ensure delivery macro advances approach risks strong disciplined of growth that and continued financial our financial to Overall, potential we're mitigates

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

Jay Mazelsky

trusted medical these for Thank by strategy. of levels a by demand innovation possible high pleased of you, I'm ecosystem IDEXX continues start as of of clinics. very driven this how significant sustained of and care, direct Brian, engagement. remains care high partner an connected world-class with growth Animal with services Demand customer component Veterinarians best share within to IDEXX to and IDEXX equation. center and chosen, growth while strong Companion diagnostics veterinarians our essential our products medical good continue their profit appreciate focus a execution enable who meeting on resulting standards supported that a morning. to had grow, care, to to the in XXXX,

was Growth aligned new supported in annuity by global our customer retention supported revenue with expansion growth, reflected net high CAG this rates, double-digit is realization recurring sustained organic execution contribution company strong total and revenues. business strong by IDEXX's for expectations. Diagnostics solid gains, price revenue recurring in of

to to for instrument we've drove continue pet cloud-based U.S. near-term and clinic Our healthcare record work effectively additions demand XXXX, line. underserved supported premium the X% solutions the the global capacity of and commercial IDEXX and quarter of levels another clinic, IDEXX years offer as pet in efforts products in excellent expanded productivity improve trend significantly to twice These seen recent related teams including constraints, we the strong placements. headwinds for through global services and conditions. net placements support in sector growth and pre-pandemic software macro

I'll execution deliver to Today how discuss IDEXX's results. financial against and drive the utilization strategy adoption continued of strong diagnostics help sustained our

on education start relevant execution, commercial solutions. First, year IDEXX which prior teams to IDEXX's update quarter of I'll very results. premium our provide another through on innovative first engagement utilization record customer placements drives XXXX, delivered building strong an and global instrument commercial

confidence accounts in instrument commercial solid ability we strategic to commercial placements and for premium as in encouraging These we and strong address achievement. EVI opportunity is placement, have that competitive significant new results the growth the us driving Our right placements demonstrated quantity place. playbook worldwide reflected are at Catalyst estimated a continued an teams quality. advance in and give This highly globally XXX,XXX

meet demand demand, enable products clinical that high customer-friendly in IDEXX's using in world-class, professionals but services, IDEXX for healthcare, supported technology. pet provide level of also marketing adoption and are a increased products These not continued software-enabled only the to possible strong menu results and of programs wide deliver of best by care. reflect to new interest that the

with an attractive model, our as by One. execution analyzer, pay-per-run sacrificing provides or an without come defined commercial and is cost that rates IDEXX Catalyst its One with newest customer. placements evidenced attach benefited the have as ProCyte success a flow premium from in-clinic thanks innovations of One easy ProCyte Catalyst, sustained footprint, One adoption either customers hematology IDEXX the small lower solution, supported Our Catalyst ProCyte hematology to by ProCyte from multiplier existing with CBC performance. placements benefits at by date strong to high

benefit, multiplier choose with outfit a supported to result in-clinic The clinics who suite products. is IDEXX by their

also while XX,XXX help One's result, IDEXX rates launch, halfway the opportunity. at a are the As objective we ProCyte following we long-term placement nearly to Investor worldwide Day premium attach incremental penetrate strong should placement shared hematology the

increase pressured engagement same-store strong This our solid will strong Key recurring relationships customer international to growth XX% VDC a strong developing deliver us this international We're in evidenced Catalyst with continued to macro long-term as regions. build new allowing gains revenue in despite by increasing model Diagnostics customers, sustained successful which leveraging in business are regions, CAG and opportunity international placements. clinical performance is visit levels. headwinds, to be

excellent customer quarter, engaging our the levels turn expanded volume growth. first gains business, with we've beginning remains evidenced new excellent to where The in benefits targeted programs, regions. from overall revenue in engagement interest as solid is Customer force from high and by seen commercial countries, to including sales in flywheel in these marketing reach strong

drive to efforts relevant PLUS, our tools and is optimize reference expansion international adoption step network, of products VetConnect early supporting out like cloud-based portal. highly our lab recent our One, an Commercial important further diagnostic software ProCyte like roll in strategy,

to solutions workflow, pet-owner Software IDEXX communication. standalone well. enabler creating diagnostics a driver providing our key and an deeper innovation a while insights helps key globally. of utilization, clinical It's that of continues a strategy as business be growth improve attractive connected diagnostics supporting are ecosystem software

first it in customers of to placements picking clinic Placements than IDEXX preference velocity were trend. integrated solution XXXX and size supported products continued saw the by continued Strong options product when to this best, which interest greater XX% with we for address high strong represented of cloud-based products, their the provides are PIMS This solutions, our and ezyVet in maintained supported most and PIMS comes quarter placements out with total our relevant the seamlessly coming offering. by complexity. of cloud-native workflow for into Neo well-positioned

achieve quarter through Our cloud-based. is we're of an clinic the the footprint XX% profile recurring first a veterinary seen to double-digit a PIMS margin environment, that this productivity in where over on attractive placement This track levels addressing gross priority in year strong performance and current pandemic. revenue especially supported important high is growth is the milestone sustained demand with

users enduring by embracing By And tools the easy-to-use that customers of the benefit engagement sustained use area across including IDEXX's these of metrics touches of their applications advantage that is power VetConnect cloud-based of for of rates the veterinary software an every user our are software of routine. -- our well evidenced the ecosystem, Web strong base gain clinic. stack customers, rates PACS part increasing as PLUS as users who as daily

deliver products more and continued Adoption and use veterinarians on of these focusing care rather time time-intensive allows their spend they staffs costly, than their activities. patients the to on to administrative

is and increase business into increased IDEXX build solutions. software Our strategy clinical and software cloud-adoption to functionality

our XDx vector-borne test is XX on standard of is with Plus room and past use true the solid recurring testament XDx testing. agenda our organic the global in case quarter. Test improved first Plus for our our the This vector-borne canine plus diagnostics Life for Another innovation the over gold temperature. strategy Technology The current and Test, in canine supported multiplexed years fourth disease store a is assay version rapid sensitivity XX% ability and to at product revenue gains of growth Xx to Anaplasma the increase customer a disease

better testing. testing to XDx while encouraging enables care, health XXXX over care Plus standard less increased aim full provided vector-borne of guidance test in diseases this than And diagnostic received in of DecisionIQ, Plus this dogs XDx using prevalence testing. which incidence vector-borne comprehensive protocol increases plus level yet, every a recommended A significant of through XX outcomes, screen years. five past deliver in with to and is Heartworm-only veterinarians the higher over follow-up drive given one and

by improve ultimately connected recurring analyzer workflow in at and only is is flow software Pro how results our Diagnostics of also the multiplier supported not clear IDEXX of to our our customers franchise and revenue. ecosystem, SNAP CAG integral time, This benefit the the case point capture drive invoicing in running The sale. while the delivering simplifies SNAP assay charge a over seamlessly VetConnect components analyzer. to of rapid value entire when test, a our products, but a Furthermore, ensures result and diagnostic PLUS

commercial The focus unrelenting and ensure This sustained forms, to against best they made the of innovation have IDEXX. is ensuring by customers levels medical care. resources all they takes multiple need our possible and execution agendas our and our world-class experience an on focused customers to the provide with possible

with of and are XX% investment and product reference the provide important times fast business them chain plus turnaround logistics service teams, Continued availability facilities, result and manufacturing our in and relationships. supply continuity reliable, lab

decades products have high-touch, out for of support knowledgeable right the ensures that their we sales built teams the are services the clinics. they the Additionally, over highly have busy and that

realize in loyalty, as the of rates. measured day, every benefits their turn their another quarter customers partnership high and by Our retention of reward us the IDEXX consistent, business enduring and with customer

efforts Providing backdrop right our challenges essential medical customer supply growth level. their the customers more even our effort clinic three we and create recently within continue we with areas for with animal support and labor constraints reliable, rigorous customers practice step an published of combined this for of services opportunities. productivity sector. empirically sustained of High found key and practice consistent the which the Through support a demand further, our to now is given at Taking based a productivity. strengths drivers productivity drivers study, productivity understand dynamic to helps examines

drive effectiveness, staff high role remove including investments of roles practice of of to staff of three Number the technology in routines. practice. staffing friendly the to to each and achievement workflow like layout which clarity and responsibilities, administrative two aligned culture Number and step the one patient Number teamwork patient goals. models of includes effort and technician incentives optimized mix, and training workflow, veterinarian physical digitizing or and

there these we so a the opportunity in measures and to top more cohort in productivity of educating do still are productivity. result visit look practices our Opportunities result supporting even we for incremental could improve for clinics believe is to a of in capacity, great and this As to that efforts. initiative, customers or XX% forward

efforts of into these this elements integrating our are commercial We and strategy approach year.

the With purpose-driven day. for IDEXX they by to of that, every thanking the XX,XXX I'll and commitment call our remarks colleagues now our bring prepared work passion portion the nearly conclude

starting financial Your strong XXXX better a also for future planet, people, efforts animals, IDEXX help not you only and a our but on in provide supported note.

have We is standards ahead strong to utilization. significant with which healthcare elevate and track diagnostics us, companion and sector customers is animal an work attractive record, opportunity of the a our through to increased

tireless of and team work positioned financial results The deliver has IDEXX well solid future. into the us the to growth

of the for the continued and behalf management of thank on people, your So, and team, on you well-being pets, enhancing focus health livestock.

Now, the Q&A. line open for let's

Operator

Instructions]. from take Nathan ask question, first [Operator Rich. our a question To we'll

Nathan Rich

Thanks for question. the

Jay Mazelsky

Hi, Nate.

Nathan Rich

I Hi, good the the updated about questions. morning. you've two think range Thanks for had on guidance. talked the Brian, top-line, CAG Dx recurring the XX%. on targeting high-end of revenue I at

quarter either better in thinking change seen the about I that kind in in getting a quarter? outlooks change on international First based any on what first than any through you're And you've how of assumptions came bit U.S. guess full-year? to for the or expected. the

Brian McKeon

question. Thanks for your

outlook the have a high-end. We similar at

U.S. the very year, start I good about think we to feel in particularly the the

to that. what execution And had the And highlighted drivers very in year a I And is that on so build the growth positive think U.S., this that, driver solid expected. deliver volume being the for we by. drivers looking think we with and us the I to consistent encouraged help we're pricing of executional

I things benefit we new gains, instrument strong placements, I from excellent we from pricing. think mentioned, saw higher drivers had benefits business execution growth like double-digit including also internationally,

headwinds continued factors from macro We markets. are in international seeing

a execute the the we higher target to and the to was deliver that's So on full-year to looking balance, below company continuing our end for somewhat I so forward year. good growth it. think against a good still start feel goal to well

Nathan Rich

guidance. a Okay. the follow-up operating on margin wanted ask And then I to

higher the balance as think unchanged Could OpEx. of marketing, think margin, and maybe just offset mentioned in that up I percent guess Especially of I you first think but year? how came about out by of said you revenue you the kind talk of than I expected, I better impact. plays quarter. meaningfully the sales FX a was outside in over Gross was the

think Just what increase? how full-year? the for drove we run should And the about that rate

Brian McKeon

an XXX let in operating down. improvement expectation Yes, the came for basis an at to XX quarter try me break first to that margins for XXX. of had in reported points. We We

principally So our line. operational like that labs benefit kind on was the related. in and margin from factors planned of We than saw specific better was than later staffing some gross in some time areas quarter That expected. more QX the

think about have So overall I that performance and think the high-end goals that do the we still we feel appropriate. good are

had new trying in customers, support advancing year, a higher that couple in back some we we're As inflation the we're do And that well. travel think in advancing our a to environment our coming costs R&D. have like with we've more highlighted areas into investing to coming I that continue. knew of we we're here, the more investments interface we We're that we we're anticipating I just that behind. as past highlighted platforms know employees

outlook. So our all those captured are in

And we good goal R&D customer for a we working think forward contract and we on much with is adjust what lapping performance in to and improvement to on full-year achieve out line line comparable on to year. hoping solid an think and again, what a look balance, payment basis targeting I the the with to is this in year, XX start -- right deliver the point that. we're were if resolution very the our we

Nathan Rich

Great, thank you.

Operator

from question Chris from next comes JPMorgan. Schott Our

Christopher Schott

Great, thanks much. very

Just two me. questions for

that have the landscape. my impact any The proposed was just and a And competitive on first could second one on question then was Mars price. the just acquisition Heska the on comments

mind know We just be of think my less at moves to visits seeing whether made. kind that's kind impact I to feedback of any wellness that's the acute these get -- changes? seems are you're And Just top you topic it's around about getting conditions. a or you've of trying for on on from investors. all hands demand

what on price I be love have So directional hearing of would just just comments you. Thank to any you're appreciated.

Jay Mazelsky

Jay. morning, Good Chris. This Yes. is

just me a take just willingness. within appropriate an owner care as from holding mind second relative demonstrated and well see the I'll to macro well we Overall, that this our they think patient pet diagnostics the acquisition. different think pets. we perspective, see question let and it in relatively From they've the work your of first, We that environment. that demand pricing experience current their up in standpoint, conditions, survey as as to for customers keep address pricing is we've health both scenarios. So the is their overall continue small a From then And spend to pets. the piece the prioritize on overall described we

sort two there point non-wellness, in they've versus plus, Specifically the to we environmental year lockstep. pandemic, the moved deterioration the some over your least last macro last macro seen the from over of pretty much -- the an generally, lockstep see of wellness course, the But quarters. around we've was in standpoint if when at Or move five during so divergence.

except than and our revenues. pull-through. of I at demand acquisition, good of just single to say it's the of that don't point primarily consolidated That's of customer XDx test a the customer been Heska durable. take the if and a Mars From relationships, XX% customer highly matter comprises comment just think end more specific as no And policy, of the an interesting, indicative standpoint diagnostics on think wellness we a testing, look we proof you that,

Our customer base is large diversified. and very

as broad long-term I our as to as very where the They, much there. you importantly, know and well customers. care. I portfolio maintain with relationships and to record a excellent we footprint-wise And objectives be think we grow it have as deliver software think their support track both side and just the corporate probably appreciate great where on diagnostics and solution can great

that more think think we've itself overall – sector of diagnostics. said I that what diagnostics support it the health development specifically, the help the or we and acquisition market long-term, the all can animal reflects sector attractiveness along of

Christopher Schott

you. Thank

Operator

[Operator Stifel. question We'll Instructions] from our from Jon next Block take

Jonathan Block

can Stifel. Yes, it okay? hi. you me -- It's from hear Is Jon guys

Jay Mazelsky

Yes, we can.

Jonathan Block

guess, in, is jumped I -- operator the the Sorry, about sorry that.

Brian, be of the the of above question, more The of was to a prior was came in think at the the the guide, your last to revenue million high it annual end And I $XX.X call midpoint quarter. XX%. and First XQ on CAG Dx high you you good X.X% 'XX above expected end.

talk us drove So upside. maybe just what the to on

believe with in line price I was prior thoughts. your

upside, at months up do hear And to chalk ago? specific That is the is more to So you it, reaction. drivers? was head knee-jerk be from Or if to visits three U.S. did than some to call But love my it would then more would you you. international? it, it it call in see industry U.S., IDEXX relative where your

Brian McKeon

have good year U.S. did for the start the Jon. really thanks to We in a question, Yes, the

pointed as in we our globally was planned. what line you think I with pricing, out had

we on feel I flat, front. little were through good for working we'd the clinical overall visits still the there. better I about execution U.S. would thought some that compares and were be mentioned, anticipated. than we we a They So as say quarter the

quarter, I that the early think we benefit some I got think helped positive some in with growth there. really

And growth the kind to that's our from -- volume of clinical solid our own much X%, the a was volume coming difference level. pre-pandemic visits is execution, how relative between

kind So was in with of achieve. we -- line where we're to hoping that

So on combined well. quite came through U.S. balance,

say I had macro to good as see execution towards. were we with think headwinds noted would We guiding line, international working some was very I what and through. continue in that we're

to And deliver that. at which have about that some But think XX% that working where the we balance, some would about we're good start. think shared the risk, of through the we us we I year. growth, in I goals we're And have year, overall as the continue those good balance, monitor I organic our macro is on we there goal towards think acknowledging to an higher So and it's we proven and is on start to as think earlier. end feel range feel well the we're we work and there environment trends a help estimates

Jay Mazelsky

would excellent just drivers been that on to emphasize and remain And new I acquisition strong, Customer strong. U.S. as mentioned, internationally. say the just commercial Brian's Yes. comments would customer and that build that Brian I to talked on rates has both about continue build retention certainly pricing, we've

the for I see I placements as instrument see. customer think that's that premium really some in they the of well software. technology, of as the capacity -- think appetite reflective challenges and interest And we that

execution think a I strong quarter. So very standpoint, from overall, an

Jonathan Block

That the Thanks there's And is before then a expense, for repo. but less Perfect. have wash share the interest like was for line But guys. of I some -- a that. less essentially it. guide parts to helpful, below just it there's might couple

wording the through hedges had that and You some flows change. the way the around

it wash Thanks level, your So think are versus back is for you about done it your new two needs 'XX current it when question part where speaking running those initiatives second point-of-care what timing then about in And just can EPS at there? if And be the just just to below the broadly a guys keep the high for we we of talk even in you help. was line, systems? a February. parallel, when think that about is,

Brian McKeon

profit the clarify Yes, margin consistent. outlook just on to operating our guide, is

slightly higher a FX. have We headwind from

positive the low revenue. obviously is slightly. think basis, flow-through low so a comparable raising some I the high have the And from end same the end up, is end on of We and the

relatively had the interest you're that's to projected outstanding. lower And lower expense projected We correct. EPS adjustment. shares reductions in offset by So

a So flat net effect. that was

Jay Mazelsky

going product are development parallel running to be And I not standpoint, but programs. say would just a from obviously, specific, I'm we

We assays, a spend we'll opportunities software the think on lot portfolio in get and continue updates to invest innovation. we of across We to instruments. continue there's money great closer. We provide as

Jonathan Block

Thank you.

Operator

Our next from Ryskin of Michael question comes Bank America. from

Michael Ryskin

then point can anyone macro by or Great, can recurring clarify but the you out start question that you OUS results? factors line are said thanks X% either Could for you Jay, in or you specifically. did commented OUS the total? in general, expectations? to CAG call by Anything Brian, you come to on that with taking driving I that on the on CAG of just -- Was that? I specific sort think region OUS. And guys. environment, just think I that want just

Brian McKeon

X% clarify And I'll say much me regional It we Yes, I dynamics. Dx line in was Mike, with -- let CAG let recurring. numbers. that would pretty the talk quarter. for the that's Jay the shared outlook X.X% to the

seen were instrument pressure dynamics. things see we've we related kind our think on think were into on -- that anticipating strong, view for from that But well. were and with very growth with benefit our been side. was of the trends -- kind we've to the of sales same-store outlook, line consistent drivers what we macro We line. macro building weren't placements, to that And execution as in had I the that and in double-digit same-store I XX% continue in full-year

Jay Mazelsky

Yes. I outside relatively we've more impacts mean support seen just U.S. macro that, speaking, to the

model when done standpoint, visit type you commercial targeted from new pick quality successful We instrument excellent the As implemented premium really seven well. I and those standpoint, strong, placements competitive have side, been expansions. we've the strong had results that and on XX% in bringing seen frequency from focus. we're placements. the to doing excellent. look business-focused Catalyst of And And drivers in at mentioned the has internationally take a both previously, instrument think been more an really we're expansions, a From U.S. We've and execution we've our

within are regions their there. the specific the that through so or is And demand I challenges. And are the optimistic. we're we're regions countries working But optimistic working think other long-term

Michael Ryskin

And follow-up, organic on vet visit thanks. growth. Great, then going assumptions some to and guide for the of the back for growth year your Okay. the

you're that the as of I clinical of end you the guide, high them saw flattening quarter already. you in kind first year. a relative vet said baking of you'd you on trends in the the work think growth And through previously, visit said, as

continue have do chance you or numbers so? is vet to revise upward? that saw that So in definitely you see the from what that matter already, you we're trends improved give things say, sort ready need to between quarter these for a Is here visit to quite just of another seeing pause? of there okay, something Or a

Brian McKeon

color a provide I Maybe little there. can

the it explicit we're overall, we're thinking flat side, On as was I visit about the on how clinical mentioned where the quarter. visits in the U.S. more trends, -- were relatively

that encouraged it staffing. appears related that I capacity the were we that are we're through working headwinds to think

to seems that So be normalizing.

how stronger I QX it than in earlier was would point quarter. out we exited the

So the early bit were down a visits April. in that March, and into continued

that the kind of ongoing that positive But we're of back to their to getting adding clinics adaptation the think trying think of just help been to area staff to an able of back feeling in backdrop kind clinics the ongoing and in terms normal that headwinds we some to working we're highlighted. we'll I continue So an about the monitor improvement, rates of they've through past. growth rates. good growth I and this support get dynamic and is through productivity And those to actively macro

Jay Mazelsky

point, practices We've the of ours, perspective, stabilization our stabilized. to U.S. seen speaking now Brian's the Yes, to have example. from largely for

for appetite there's focus really seen software with productivity, high administrative I we've a of of removing in a staff Certainly, interest on supporting specifically way tasks. sort productivity heightened workflow unrewarded a think the optimization, as enthusiasm capacity. supporting technology, strong been and and

was twice net Keep a take mind, at if level look That's in XXXX, a in the there in addition the pets you X% pre-pandemic. U.S.

a and how think there's that I serve So underserved they out of demand there, lot working are through, practices demand.

progress. good So

of and minutes we enthusiasm receptivity some think thing practices other of identify that minutes could they there's that study, of can a time a big difference. find there the couple here, a a are the couple and how and been doing finding and lot that make think do, is cumulatively I for work things

Michael Ryskin

guys. Thanks helpful. really it, Got

Operator

question next William our Daniels from from take We'll Blair. Ryan

Jack Senft

on two is hey just for Ryan Yes, my Daniels. taking this question. Jack have Thanks I ones. guys, Senft for quick pretty

in First, over you're you're can to remarks, that So XX% -- already on you believe XX,XXX for goal that ProCyte that said goals, replacements already you goal. the I prepared XXXX, I is the your over us remind believe correct? placement One target.

a So Thanks. ahead And down? good XX,XXX in performance potential of upside two, almost just to the do adoption that curious that expect to of seems if there good you can target? be schedule. is then to placements touch amount you the these Or slow on

Jay Mazelsky

Yes.

I address One half And both ProCyte a have of so -- itself the we is had X,XXX the nearly standpoint. performance me platform said and think we from and footprint really goal let is the seeing itself. So cost we're nice what placements, that which fit with

So of, fits it on needs. there's adoption been fact lot the that their I think based customer practice a

is chemistry marketplace part chemistry mind, think hematology general and a or we is, which diagnostic it. then, cases, may include in with larger in internationally do the They Keep systems many countries, in of it's the of where sort first. body include some

in-clinic we've a it suite. hematology see well with first their And They diagnostics addition does that. So key as this marketplace. to done

Brian McKeon

highlight Yes, benefits to ProCyte launch. multiplier the I'd the just One

growth premium we If base, you look the at SediVue. Catalyst, installed in across overall had double-digit the hematology and growth

So it's last -- had ProCyte of the quarter a for very was and successful for year and Catalyst on building placements, that very we lapping SediVue strong the launch One.

platform just growth. platform additions having the a related So of to I itself the isn't overall the business to think benefit but

Jack Senft

Thanks. Understood. as Perfect. follow-up. a And just quick

hardships accelerated. currently to the can the cloud? is here? solutions quarters, animal guess seems And like new just have practices given the up, differences Thanks. that going then cloud-based talk few typically solutions? within the average cloud are pricing the narrative of between health just right you I hardware opportunity for practices starting financial just they past about on-prem versus like the what Or or And face, Over industry into the

Jay Mazelsky

Yes.

new are the cloud. going right generally into So practices

to contemporary and technology. are So systems as they're buy services. use obviously SaaS Cloud-based trying priced

There's of and training there's a and monthly and things in onboarding getting annuity. practice. those terms associated So migration upfront data still costs with a

cycle the practice ongoing in four, replacing servers itself. a about worry to solution paying cost every the standpoint the three, from I maintenance. big The had years difference of think system and at least five for life is

pretty The and offline, the a other without more. is to a on necessarily they system couple to software site benefit big it's having updates the them out pushed or get to hours send basis of frequent take whether somebody

-- they a that's newfound think And get. the the cycle there's veterinary think lot as well of the of solutions. of in So therefore, there's over life a feature a updating driving, appreciation contemporary benefits cost least lot that I as modern or improvements I functionality software at solution more for industry the

Operator

next Erin Morgan comes from from Our Wright question Stanley.

Erin Wright

hear can me you hopefully, now. Sorry,

So...

Brian McKeon

missed Hey Erin, beginning the sorry, missed of yes the beginning. -- we we

Erin Wright

worries. No worries. No

limited? category you opportunity? meaningful more be a to oncology or this And for buy? curious for do juncture? that thinking So can how pet does it versus you're about that Just you Why talk a little this could make bit longer diagnostics sense this you about the in at think you more driver term partner Thanks.

Jay Mazelsky

opportunity, think the Yes. that Thank just number of a We develop very significant on it's you, Erin. pets cancer. based

cause death, So population. it's within the mortality biggest pet of of the

get of a the million cause Xx take next U.S., greatest six the a there's rate So if that you mortality look at dogs year cancer, of of death. sort

the be sample And protocols X, tend diagnosis the may to and very it's treat. that Stage to to Stage and you and pick staging treatment X at time be are clinically lab. very the difficult point, have by send fragmented. and They pathology cancer out late then today obvious to The it

specialists. The aren't a other piece there that oncology is lot of

it's If at look a XXX. you to North take XXX America,

general are have the diagnosing, camps through and specialists. the of responsibilities. of a happening other is most treatment They aren't lot who So practitioner

think for efforts. being so we And development diagnostics have a to them, really able opportunity, as we is provide and regime attractive partner a testing both internal

our cancer in over Keep standpoint, a a global from year. million a mind submissions X.X on that just pathology basis,

a This globe service So a we're area this the isn't across well versed us. for something provide new is and for us. that in

diagnose to chances enhancing really that treat cancer -- is at to our so you customers it. move support able better have we still being being while expanding to or able earlier So it's into just this

Erin Wright

terms deal. within Great. couple with Heska do you their And of on little And on next What's outside a corporate on the Thanks. side Mars? coming in bit at all? you of, up of coming up But the for that relationships Mars relationships -- meaningful know response? commented I Heska the bid year, competitive is more opportunities the obviously, anticipate a

Jay Mazelsky

customer. It modalities testing a our have different still with that think with end down. we possible their accounts our objectives the have we lines. what, or across very some focus have may of who comes there some solution And corporate continue to customers to going sensitive the the We And think support It product It's at compete mean we wins. continuing to be both on is still -- I are customer to competitors. market. day, of generally, Yes, competitive comes do we're relationships -- we'll down broadest to to growth that.

Erin Wright

Thanks.

Operator

And our Sandler. David Westenberg Piper from from last question comes

David Westenberg

here. the taking thank question you for Hi,

it if my over went FX the Sorry, head terms of in here.

it revenue in the or to points basis think XX I on XXX on points XX -- guide, -- was but revenue. EPS, up. on then XXX went it change from to basis on

thickheaded here. I Can you explain the be as top think on Sorry, a might an I exporter. little what's happening of line? you

bit slower I little a just maybe I'm than confused others. there. know given but little I'm a you've So commentary,

angle. I want And just to on second here. then the Can Heska ask my you another go one a one upfront again, but thing, different I'll about talk -- Mars at

at high. -- been from rate going win with like against their kind has have checks of see my Your to against pretty least Antech don't And veterinarians tend competitor. they that --

can in additional that here have how inside of that kind angle win dynamic? you chance of the any to kind and Thank about lab with rates think there very you is So much.

Brian McKeon

Yes.

think flow currencies That's We on million revenue. the flat is X.X versus on revenue. just didn't the hedge of was So David, your a $XX in correct now mix positive we adjustment what It EPS, point FX through and thought just positions. questions, you're relatively full-year headwind. to given

we -- just we and hedged to we're at have assumptions weren't factors, all impacts the just rates, at this those point, the because a favorable. have a net have all of it largely and that of it's as impact relative So through a the model but we go share mix looking didn't

Jay Mazelsky

the things. one based answer well on your -- of variety Customers reference differentiation, partners then both footprint, about of your question, to choose all those service, competitive don't the to and solution Yes. other a based as migration cost, we as the think They use as clinic it on modality And landscape. product labs. necessarily second

who it drivers choose, and primary So going be leave customers to we think the there's of at that. independent corporate still I'll customers and

the of standard morning. your with health you for this look IDEXX committed care Thank executing Companion the opportunity address to Animal our care. the We of I'll reiterate And participation to So strategy organic significant increase the conclude to forward multi-decade for that, Q&A we'll that this to is summarize, to call. portion opportunity.

against building perform to IDEXX to Thank high And of look over made now the a we you. the to teams the forward our we sector. continued we'll call. investments our level through progress at past decades strong continuing XXXX. develop conclude strategy And

Operator

Thank for you This your concludes today's call. participation.

now may You disconnect.

IDEXX Laboratories (IDXX) 2 May 232023 Q1 Earnings call transcript