EX-99.1 2 il5583ex991.htm EXHIBIT 99.1

Exhibit 99.1

Message

Contact: Merilee Raines, Chief Financial Officer, (207) 856-8155

FOR IMMEDIATE RELEASE

IDEXX Laboratories Announces First Quarter Results

WESTBROOK, Maine, April 28, 2006 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that revenue for the first quarter of 2006 increased 10% to $168.2 million from $152.4 million for the first quarter of 2005. Earnings per diluted share for the quarter ended March 31, 2006 were $0.55, compared to $0.51 for the same period in the prior year. 

          Net income for 2006 includes the after-tax impact of share-based compensation expense of $0.07 per diluted share, including the impact of SFAS No. 123(R). Net income for the quarter ended March 31, 2005 included acquisition integration costs of $0.02 per diluted share. Adjusting the results for both periods to exclude the effects of these specified items, adjusted non-GAAP earnings per diluted share grew approximately 15%. Management believes adjusted earnings per diluted share is a useful non-GAAP financial measure to evaluate the results of ongoing operations, excluding significant specified items, period over period, and therefore believes that investors may find this information useful in addition to the GAAP results.

          Companion Animal Group (“CAG”) revenue for the first quarter of 2006 increased 12% to $139.4 million from $124.9 million for the first quarter of 2005 primarily due to higher sales in all CAG product and service categories. Incremental sales from businesses acquired during 2005, consisting of veterinary reference laboratories and a digital radiography business, contributed approximately 2% to CAG revenue growth, while the impact of foreign exchange reduced growth by 2%.

          Food Diagnostics Group (“FDG”) revenue for the first quarter increased 14% to $16.7 million from $14.7 million for the first quarter of 2005 primarily due to higher livestock diagnostics sales volume. The unfavorable impact of foreign currency decreased FDG revenue growth by 7%.

          Water segment revenue for the first quarter decreased 6% to $12.1 million from $12.8 million for the first quarter of 2005 primarily due to lower worldwide sales volume. The unfavorable impact of foreign currency contributed 2% to the decline.


IDEXX Announces First Quarter Results
April 28, 2006
Page 2 of 9

          “We are pleased with the fundamentals of the business, with very good growth in most of the businesses contributing to 13% growth, adjusting for the impact of currency, and good profit realization as a result,” said Jonathan Ayers, Chairman and CEO.  “Our confidence leads us to increase our financial outlook for the year.”

Additional operating results

          Gross profit for the first quarter of 2006 increased $9.9 million, or 13%, to $86.0 million from $76.1 million for the first quarter of 2005. As a percentage of revenue, gross profit increased to 51% from 50% in the first quarter of 2005. The increase in the gross profit percentage was attributable, in part, to relatively favorable pricing in certain businesses; lower overall manufacturing and purchased materials costs including lower cost of instruments and consumables; and the absence in 2006 of the acquisition integration costs incurred in the first quarter of 2005.

          Research and development (“R&D”) expense for the quarter was $12.7 million compared to $9.8 million for the first quarter of 2005. R&D expense as a percentage of total revenue increased to 8% from 6% in the first quarter of 2005. The increase in R&D expense resulted from increased product development spending related primarily to IDEXX VetLab® instrumentation.

          Selling, general and administrative (“SG&A”) expense for the quarter was $46.4 million, or 28% of revenue, compared to $40.2 million, or 26% of revenue, in the first quarter of 2005. The increase in SG&A expense as a percentage of total revenue was primarily due to the change in accounting for share-based compensation beginning on January 1, 2006.

Outlook

     The Company offers the following revised guidance for the full year of 2006:

 

•

Revenue is expected to be approximately $704 to $712 million, updated from $700 to $710 million.

 

 

 

 

•

Diluted earnings per share are expected to be approximately $2.44 to $2.52, updated from $2.40 to $2.50.

Annual Meeting

          IDEXX Laboratories, Inc. today announced that it will host a simultaneous Webcast of its Annual Meeting of Stockholders, to be held on Wednesday, May 10, 2006, at 10:00 a.m. (eastern) at the Portland Marriott at Sable Oaks in South Portland, Maine.

          Chairman and CEO Jonathan Ayers will chair the meeting. Investors may listen to the Annual Meeting and view a presentation live via a link on the Company’s Web site, idexx.com. An archived edition of the Meeting will be available after 1:00 p.m. (eastern) on that day via the same link.


IDEXX Announces First Quarter Results
April 28, 2006
Page 3 of 9

About IDEXX Laboratories

          IDEXX Laboratories, Inc. is a worldwide leader in the development and commercialization of innovative, technology-based products and services for veterinary, food and water applications. The Company’s largest business is focused on companion animal health, combining biotechnology, medical device technology and information technology to aid veterinarians in providing better medicine while building successful practices. IDEXX Laboratories’ food and water businesses are focused on employing innovative technologies to monitor production animal health and the safety and quality of drinking water and milk. Headquartered in Westbrook, Maine, IDEXX Laboratories employs more than 3,000 people and offers products to customers in over 100 countries.

Note Regarding Forward-Looking Statements

This press release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management’s expectations. Factors that could cause or contribute to such differences include the following: the Company’s ability to develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company’s sales and marketing activities; the Company’s ability to develop, license or obtain rights to new technologies; the Company’s ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company’s products; the effect of government regulation on the Company’s business, including government decisions about whether and when to approve the Company’s products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of our products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company’s products and services by veterinarians; the Company’s ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; disruptions, shortages or pricing changes that affect the Company’s purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company’s inventories; the Company’s ability to manufacture complex biologic products; the effects of operations outside the U.S., including  from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


IDEXX Announces First Quarter Results
April 28, 2006
Page 4 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

Revenue:

Revenue

 

$

168,164

 

$

152,426

 

Expenses and Income:

Cost of revenue

 

 

82,139

 

 

76,346

 

 

 

Gross profit

 

 

86,025

 

 

76,080

 

 

Sales and marketing

 

 

26,938

 

 

25,070

 

 

General and administrative

 

 

19,434

 

 

15,098

 

 

Research and development

 

 

12,678

 

 

9,774

 

 

 

Income from operations

 

 

26,975

 

 

26,138

 

 

Interest income, net

 

 

769

 

 

503

 

 

 

Income before provision for income taxes and partner’s interest

 

 

27,744

 

 

26,641

 

 

Provision for income taxes

 

 

9,584

 

 

9,052

 

 

Partner’s share of consolidated loss

 

 

(113

)

 

(101

)

 

Net Income:

Net income

 

$

18,273

 

$

17,690

 

 

 

Earnings per share: Basic

 

$

0.57

 

$

0.54

 

 

 

Earnings per share: Diluted

 

$

0.55

 

$

0.51

 

 

 

Shares outstanding: Basic

 

 

31,800

 

 

32,955

 

 

 

Shares outstanding: Diluted

 

 

33,418

 

 

34,439

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Key Operating Information (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

Key Operating

Gross profit

 

 

51.2

%

 

49.9

%

Ratios (as a percentage of revenue):

Sales, marketing, general and administrative expense

 

 

27.7

%

 

26.4

%

Research and development expense

 

 

7.5

%

 

6.4

%

 

 

Income from operations

 

 

16.0

%

 

17.1

%

 

International Revenue:

International revenue (in thousands)

 

$

58,400

 

$

53,549

 

 

 

International revenue as a percentage of total revenue

 

 

34.7

%

 

35.1

%

 


IDEXX Announces First Quarter Results
April 28, 2006
Page 5 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Non-GAAP Financial Measures
Amounts in thousands except per share data (Unaudited)

 

 

Three Months Ended

 

 

 

 

 

Gross Profit

 

Income from
Operations

 

Net Income

 

Earnings per Share
Diluted

 

 

 

 

 

 

 

 

 

March 31,
2006

 

 

March 31,
2005

 

 

March 31,
2006

 

 

March 31,
2005

 

 

March 31,
2006

 

 

March 31,
2005

 

 

March 31,
2006

 

 

March 31,
2005

 

GAAP measures

 

$

86,025

 

$

76,080

 

$

26,975

 

$

26,138

 

$

18,273

 

$

17,690

 

$

0.55

 

$

0.51

 

Specified items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

378

 

 

—  

 

 

2,795

 

 

—  

 

 

2,309

 

 

—  

 

 

0.07

 

 

—  

 

Acquisition integration expense

 

 

—  

 

 

752

 

 

—  

 

 

1,068

 

 

—  

 

 

706

 

 

—  

 

 

0.02

 

Non-GAAP comparative measures

 

$

86,403

 

$

76,832

 

$

29,770

 

$

27,206

 

$

20,582

 

$

18,396

 

$

0.62

 

$

0.53

 

We use these supplemental non-GAAP financial measures to evaluate the Company’s comparative financial performance. The specified items that are excluded from these non-GAAP measures are actual charges that impact net income and cash flows, however, we believe that it is useful to evaluate our core business performance period over period excluding these specified items, in addition to relying upon GAAP financial measures.  We adjust 2006 GAAP financial results to exclude the after-tax impact of share-based compensation expense in order to evaluate the Company’s performance relative to 2005 financial results. We do not consider the pro forma 2005 financial results that are included in our Annual Report on Form 10-K and quarterly reports on Form 10-Q to be reasonably comparable to 2006 financial results with respect to the impact of share-based compensation expense due to several factors, including changes in 2006 in the types, terms and total fair value of share-based compensation awards; changes in the timing of expense recognition for 2006 awards; and differences between periods in income tax benefits.


IDEXX Announces First Quarter Results
April 28, 2006
Page 6 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

Revenue:

Companion Animal Group

 

$

139,363

 

$

124,880

 

 

Water

 

 

12,066

 

 

12,806

 

 

Food Diagnostics Group

 

 

16,735

 

 

14,740

 

 

 

Total

 

$

168,164

 

$

152,426

 

 

Gross Profit:

Companion Animal Group

 

$

68,605

 

$

59,263

 

 

Water

 

 

7,961

 

 

8,477

 

 

Food Diagnostics Group

 

 

9,837

 

 

8,340

 

 

Other

 

 

(378

)

 

—  

 

 

 

Total

 

$

86,025

 

$

76,080

 

 

Income from Operations:

 

 

 

 

 

 

 

 

 

Companion Animal Group

 

$

22,604

 

$

18,888

 

 

Water

 

 

4,822

 

 

5,504

 

 

Food Diagnostics Group

 

 

3,671

 

 

2,578

 

 

Other

 

 

(4,122

)

 

(832

)

 

 

Total

 

$

26,975

 

$

26,138

 

 

Gross Profit
 (as a percentage of revenue):

 

 

 

 

 

 

 

 

 

Companion Animal Group

 

 

49.2

%

 

47.5

%

 

Water

 

 

66.0

%

 

66.2

%

 

Food Diagnostics Group

 

 

58.8

%

 

56.6

%

Income  from Operations
 (as a percentage of revenue):

 

 

 

 

 

 

 

 

 

Companion Animal Group

 

 

16.2

%

 

15.1

%

 

Water

 

 

40.0

%

 

43.0

%

 

Food Diagnostics Group

 

 

21.9

%

 

17.5

%


IDEXX Announces First Quarter Results
April 28, 2006
Page 7 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,
2006

 

March 31,
2005

 

Dollar
Change

 

Percentage
Change

 

Percentage
Change from
Currency(1)

 

Percentage
Change Net
of Currency
Effect

 

 

Net CAG Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instruments and consumables

 

$

55,820

 

$

52,873

 

$

2,947

 

 

5.6

%

 

-2.9

%

 

8.5

%

 

Rapid assay products

 

 

26,004

 

 

24,752

 

 

1,252

 

 

5.1

%

 

-0.9

%

 

6.0

%

 

Laboratory and consulting services

 

 

43,583

 

 

36,544

 

 

7,039

 

 

19.3

%

 

-2.9

%

 

22.2

%

 

Practice information systems and digital radiography

 

 

9,695

 

 

7,461

 

 

2,234

 

 

29.9

%

 

0.1

%

 

29.8

%

 

Pharmaceutical products

 

 

4,261

 

 

3,250

 

 

1,011

 

 

31.1

%

 

—  

 

 

31.1

%

 

 

 

 

 

 

 

 

 

 

 

Net CAG revenue

 

 

139,363

 

 

124,880

 

 

14,483

 

 

11.6

%

 

-2.3

%

 

13.9

%

 

 

 

 

 

 

 

 

 

 

Net Water

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

Water

 

 

12,066

 

 

12,806

 

 

(740

)

 

-5.8

%

 

-2.5

%

 

-3.3

%

 

 

 

 

 

 

 

 

 

 

Net FDG Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production animal products

 

 

12,953

 

 

10,862

 

 

2,091

 

 

19.2

%

 

-7.6

%

 

26.8

%

 

Dairy testing products

 

 

3,782

 

 

3,878

 

 

(96

)

 

-2.5

%

 

-4.5

%

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

Net FDG revenue

 

 

16,735

 

 

14,740

 

 

1,995

 

 

13.5

%

 

-6.8

%

 

20.3

%

 

 

 

 

 

 

 

 

 

 

Net Revenue:

 

 

$

168,164

 

$

152,426

 

$

15,738

 

 

10.3

%

 

-2.7

%

 

13.0

%

 

 

 

 

 

 

 

 

 

 

(1) Represents the percentage change in revenue attributed to the effect of changes in currency rates from the three months ended March 31, 2005 to the three months ended March 31, 2006.


IDEXX Announces First Quarter Results
April 28, 2006
Page 8 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
 Amounts in thousands (Unaudited)

 

 

 

March 31,
2006

 

December 31,
2005

 

 

Assets:

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,339

 

$

67,151

 

 

Short-term investments

 

 

57,658

 

 

65,580

 

 

Accounts receivable, net

 

 

81,916

 

 

71,688

 

 

Inventories

 

 

81,229

 

 

69,369

 

 

Other current assets

 

 

24,817

 

 

25,457

 

 

 

Total current assets

 

 

280,959

 

 

299,245

 

 

 

Property and equipment, at cost

 

 

147,785

 

 

142,777

 

 

Less: accumulated depreciation

 

 

80,512

 

 

77,080

 

 

 

Property and equipment, net

 

 

67,273

 

 

65,697

 

 

 

Other long-term assets, net

 

 

127,010

 

 

125,734

 

 

 

Total assets

 

$

475,242

 

$

490,676

 

 

Liabilities and Stockholders’ Equity:

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

25,034

 

$

19,842

 

 

Accrued expenses

 

 

65,033

 

 

78,208

 

 

Notes payable

 

 

—  

 

 

551

 

 

Deferred revenue

 

 

8,301

 

 

7,965

 

 

 

Total current liabilities

 

 

98,368

 

 

106,566

 

 

Total long-term liabilities

 

 

13,627

 

 

14,800

 

 

 

Partner’s interest in subsidiary

 

 

188

 

 

300

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Common stock

 

 

4,628

 

 

4,594

 

 

Additional paid-in capital

 

 

455,663

 

 

437,394

 

 

Deferred stock units

 

 

1,836

 

 

1,316

 

 

Retained earnings

 

 

415,209

 

 

396,936

 

 

Treasury stock, at cost

 

 

(514,791

)

 

(472,096

)

 

Accumulated other comprehensive income

 

 

514

 

 

866

 

 

 

Total stockholders’ equity

 

 

363,059

 

 

369,010

 

 

 

Total liabilities and stockholders’ equity

 

$

475,242

 

$

490,676

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Key Balance Sheet Information (Unaudited)

 

 

 

March 31,
2006

 

December 31,
2005

 

 

Key

 

 

 

 

 

 

 

 

Balance Sheet

Total cash, cash equivalents and investments (in thousands)

 

$

92,997

 

$

132,731

 

Information:

Days sales outstanding

 

 

42

 

 

38

 

 

Inventory turns(1)

 

 

1.9

 

 

2.4

 

 

 

(1) Reported inventory turns as of December 31, 2005 were favorably impacted by the timing of contractual inventory receipts subsequent to December 31, 2005. 



IDEXX Announces First Quarter Results
April 28, 2006
Page 9 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

Operating:

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

18,273

 

$

17,690

 

 

Non-cash charges

 

 

8,728

 

 

6,390

 

 

Changes in current assets and liabilities, net of acquisitions and disposals

 

 

(30,024

)

 

(23,798

)

 

 

Net cash provided (used) by operating activities

 

$

(3,023

)

$

282

 

 

Investing:

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Decrease in investments, net

 

 

7,954

 

 

32,112

 

 

Purchase of property and equipment

 

 

(6,357

)

 

(4,536

)

 

Purchase of land and buildings

 

 

(600

)

 

—  

 

 

Acquisition of businesses and intangible assets

 

 

(636

)

 

(659

)

 

Acquisition of equipment leased to customers

 

 

(382

)

 

(696

)

 

 

Net cash provided (used) by investing activities

 

$

(21

)

$

26,221

 

 

Financing:

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Repayments of notes payable

 

 

(551

)

 

(1,271

)

 

Purchase of treasury stock

 

 

(42,695

)

 

(29,540

)

 

Proceeds from the exercise of stock options

 

 

9,995

 

 

2,603

 

 

Tax benefit from exercise of stock options

 

 

4,681

 

 

—  

 

 

 

Net cash used by financing activities

 

$

(28,570

)

$

(28,208

)

 

 

Net effect of exchange rate changes

 

 

(198

)

 

(872

)

 

 

Net decrease in cash and cash equivalents

 

 

(31,812

)

 

(2,577

)

 

 

Cash and cash equivalents, beginning of period

 

 

67,151

 

 

47,156

 

 

 

Cash and cash equivalents, end of period

 

$

35,339

 

$

44,579

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands (Unaudited)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

 

 

Free Cash

 

 

 

 

 

 

 

 

 

 

Flow:

 

 

Net cash provided (used) by operating activities

 

$

(3,023

)

$

282

 

 

 

 

Financing cash flows attributable to tax benefits from exercise of stock options

 

 

4,681

 

 

—  

 

 

 

 

Purchase of fixed assets other than real property

 

 

(6,357

)

 

(4,536

)

 

 

 

Acquisition of equipment leased to customers

 

 

(382

)

 

(696

)

 

 

 

 

 

 

Free cash flow

 

$

(5,081

)

$

(4,950

)

 

 

 

 

 

 

 

 

 

Free cash flow indicates the cash generated from operations and tax benefits attributable to stock option exercises, reduced by investments in fixed assets other than real property.  We feel free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in fixed assets that are required to operate the business.  We believe this is a common financial measure useful to further evaluate the results of operations.

IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases (Unaudited)

 

 

 

Three Months Ended

 

 

 

 

March 31,
2006

 

March 31,
2005

 

 

 

Total number of shares purchased

 

 

541,400

 

 

530,800

 

 

Average price paid per share

 

$

78.86

 

$

55.65