Idexx Laboratories Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

idxx-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________.

COMMISSION FILE NUMBER: 000-19271

IDEXX LABORATORIES, INC.

(Exact name of registrant as specified in its charter)


Delaware			01-0393723
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

One IDEXX Drive	Westbrook	Maine	04092
(Address of principal executive offices)			(ZIP Code)

207-556-0300

(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.10 par value per share

IDXX

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s Common Stock, $0.10 par value per share, was 85,054,677, on July 27, 2020.

GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS

In order to aid the reader, we have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q below:


Term/ Abbreviation			Definition

AOCI			Accumulated other comprehensive income or loss
ASU 2016-13			ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
CAG			Companion Animal Group, a reporting segment that provides veterinarians diagnostic products and services and information management solutions that enhance the health and well-being of pets
Credit Facility			Our unsecured revolving credit facility, also referred to as line of credit
FASB			U.S. Financial Accounting Standards Board
LPD			Livestock, Poultry and Dairy, a reporting segment that provides diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and improve dairy efficiency
OPTI Medical			OPTI Medical Systems, Inc., a wholly-owned subsidiary of IDEXX Laboratories Inc., located in Roswell, Georgia. This business provides point-of-care and laboratory diagnostics (including electrolyte and blood gas analyzers and related consumable products) for the human medical diagnostics market. The Roswell facility also manufactures electrolytes slides (instrument consumables) to run Catalyst One^®, Catalyst Dx^®, and blood gas analyzers and consumables for the veterinary market; also referred to as OPTI.
Organic revenue growth			A non-GAAP financial measure and represents the percentage change in revenue, as compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for or as a superior measure to, revenues reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.
PCR			Polymerase chain reaction, a technique used to amplify small segments of DNA
R&D			Research and Development
Reported revenue growth			Represents the percentage change in revenue reported in accordance with U.S. GAAP, as compared to the same period in the prior year
SaaS			Software-as-a-service
SEC			U.S. Securities and Exchange Commission
Senior Note Agreements			Note purchase agreements for the private placement of senior notes, referred to as senior notes or long-term debt
U.S. GAAP			Accounting principles generally accepted in the United States of America
Water			Water, a reporting segment that provides water microbiology testing products

IDEXX LABORATORIES, INC.

Quarterly Report on Form 10-Q

Table of Contents



Item No.		Page

	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of June 3 0 , 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Income for the Three and Six Months Ended June 3 0 , 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Si x Months Ended June 3 0 , 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 3 0 , 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	60
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 6.	Exhibits	64
Signatures		65

໿

PART I— FINANCIAL INFORMATION

Item 1. Financial Statements.

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(Unaudited)


	June 30, 2020		December 31, 2019

ASSETS
Current Assets:
Cash and cash equivalents	$	105,293	$	90,326
Accounts receivable, net	320,320		269,312
Inventories	229,377		195,019
Other current assets	124,622		124,982
Total current assets	779,612		679,639
Long-Term Assets:
Property and equipment, net	550,895		533,845
Operating lease right-of-use assets	82,407		80,607
Goodwill	235,426		239,724
Intangible assets, net	55,619		58,468
Other long-term assets	256,754		240,192
Total long-term assets	1,181,101		1,152,836
TOTAL ASSETS	$	1,960,713	$	1,832,475

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	73,903	$	72,172
Accrued liabilities	308,768		322,938
Line of credit	121,596		288,765
Current portion of deferred revenue	36,317		41,462
Total current liabilities	540,584		725,337
Long-Term Liabilities:
Deferred income tax liabilities	36,599		33,024
Long-term debt	899,562		698,910
Long-term deferred revenue, net of current portion	57,764		48,743
Long-term operating lease liabilities	68,597		67,472
Other long-term liabilities	84,207		81,164
Total long-term liabilities	1,146,729		929,313
Total liabilities	1,687,313		1,654,650

Commitments and Contingencies (Note 16)

Stockholders’ Equity:
Common stock, $0.10 par value: Authorized: 120,000 shares; Issued: 106,031 shares in 2020 and 105,711 shares in 2019; Outstanding: 85,049 shares in 2020 and 85,471 shares in 2019	10,603		10,571
Additional paid-in capital	1,247,456		1,213,517
Deferred stock units: Outstanding: 147 units in 2020 and 143 units in 2019	5,402		4,462
Retained earnings	1,854,586		1,595,648
Accumulated other comprehensive loss	(57,032)		(46,182)
Treasury stock, at cost: 20,981 shares in 2020 and 20,240 shares in 2019	(2,788,052)		(2,600,543)
Total IDEXX Laboratories, Inc. stockholders’ equity	272,963		177,473
Noncontrolling interest	437		352
Total stockholders’ equity	273,400		177,825
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,960,713	$	1,832,475

The accompanying notes are an integral part of these condensed consolidated financial statements.

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		2020		2019

Revenue:
Product revenue	$	366,058	$	365,638	$	730,831	$	699,696
Service revenue	271,534		254,465		533,097		496,463
Total revenue	637,592		620,103		1,263,928		1,196,159
Cost of Revenue:
Cost of product revenue	124,024		127,893		249,478		245,276
Cost of service revenue	134,226		134,357		275,518		261,433
Total cost of revenue	258,250		262,250		524,996		506,709
Gross profit	379,342		357,853		738,932		689,450
Expenses:
Sales and marketing	94,181		101,364		210,324		207,948
General and administrative	60,268		59,955		126,080		120,316
Research and development	31,645		32,259		64,955		63,773
Income from operations	193,248		164,275		337,573		297,413
Interest expense	(9,495)		(8,186)		(17,187)		(16,572)
Interest income	69		33		209		73
Income before provision for income taxes	183,822		156,122		320,595		280,914
Provision for income taxes	34,826		30,421		59,743		52,504
Net income	148,996		125,701		260,852		228,410
Less: Net income (loss) attributable to noncontrolling interest	56		(5)		85		23
Net income attributable to IDEXX Laboratories, Inc. stockholders	$	148,940	$	125,706	$	260,767	$	228,387

Earnings per Share:
Basic	$	1.75	$	1.46	$	3.06	$	2.65
Diluted	$	1.72	$	1.43	$	3.01	$	2.61
Weighted Average Shares Outstanding:
Basic	85,134		86,215		85,282		86,210
Diluted	86,402		87,615		86,568		87,594

The accompanying notes are an integral part of these condensed consolidated financial statements.

໿

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020		2019		2020		2019

Net income	$	148,996	$	125,701	$	260,852	$	228,410
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	7,006		3,104		(15,200)		1,681
Unrealized (loss) gain on Euro-denominated notes, net of tax (benefit) expense of $(532) and $(202) in 2020 and $(309) and $158 in 2019	(1,689)		(980)		(642)		500
Unrealized (loss) gain on investments, net of tax (benefit) expense of $(93) and $(181) in 2020 and $(14) and $114 in 2019	(295)		(45)		(574)		362
Unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on foreign currency exchange contracts, net of tax (benefit) expense of $(805) and $1,247 in 2020 and $(21) and $203 in 2019	(3,888)		67		5,538		1,110
Unrealized gain (loss) on cross currency swaps, net of tax expense (benefit) expense of $(283) and $586 in 2020 and $(148) and $159 in 2019	(1,447)		(563)		2,602		868
Reclassification adjustment for (gain) included in net income, net of tax (expense) of $(339) and $(579) in 2020 and $(358) and $(607) in 2019	(1,473)		(2,151)		(2,574)		(3,313)
Unrealized (loss) gain on derivative instruments	(6,808)		(2,647)		5,566		(1,335)
Other comprehensive (loss) gain, net of tax	(1,786)		(568)		(10,850)		1,208
Comprehensive income	147,210		125,133		250,002		229,618
Less: Comprehensive income (loss) attributable to noncontrolling interest	56		(5)		85		23
Comprehensive income attributable to IDEXX Laboratories, Inc.	$	147,154	$	125,138	$	249,917	$	229,595

The accompanying notes are an integral part of these condensed consolidated financial statements.

໿

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except per share amounts)

(Unaudited)


	Common Stock
	Number of Shares	$0.10 Par Value		Additional Paid-in Capital		Deferred Stock Units		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Noncontrolling Interest		Total Stockholders’ Equity (Deficit)
Balance December 31, 2019	105,711	$	10,571	$	1,213,517	$	4,462	$	1,595,648	$	(46,182)	$	(2,600,543)	$	352	$	177,825
Cumulative effect of accounting changes (Note 2)	—	—		—		—		(1,829)		—		—		—		(1,829)
Net income	—	—		—		—		111,827		—		—		29		111,856
Other comprehensive loss, net	—	—		—		—		—		(9,064)		—		—		(9,064)
Repurchases of common stock, net	—	—		—		—		—		—		(187,767)		—		(187,767)
Common stock issued under stock plans	203	20		9,730		—		—		—		—		—		9,750
Share-based compensation cost	—	—		7,238		46		—		—		—		—		7,284
Balance March 31, 2020	105,914	$	10,591	$	1,230,485	$	4,508	$	1,705,646	$	(55,246)	$	(2,788,310)	$	381	$	108,055
Net income	—	—		—		—		148,940		—		—		56		148,996
Other comprehensive loss, net	—	—		—		—		—		(1,786)		—		—		(1,786)
Issuances of common stock, net	—	—		—		—		—		—		258		—		258
Common stock issued under stock plans	117	12		10,068		—		—		—		—		—		10,080
Deferred stock units activity	—	—		(894)		894		—		—		—		—		—
Share-based compensation cost	—	—		7,797		—		—		—		—		—		7,797
Balance June 30, 2020	106,031	$	10,603	$	1,247,456	$	5,402	$	1,854,586	$	(57,032)	$	(2,788,052)	$	437	$	273,400




Balance December 31, 2018	105,087	$	10,509	$	1,138,216	$	4,524	$	1,167,928	$	(41,791)	$	(2,288,899)	$	280	$	(9,233)
Net income	—	—		—		—		102,681		—		—		28		102,709
Other comprehensive income, net	—	—

Price	274.80	EPS	5
Shares	88	P/E	55
MCap	24,091	P/FCF	79
Net Debt	-104	EBIT	540
TEV	23,987	TEV/EBIT	44
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-31
10-Q	2020-03-31	Filed 2020-04-30
10-K	2019-12-31	Filed 2020-02-14
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-15
10-Q	2018-09-30	Filed 2018-11-01
10-Q	2018-06-30	Filed 2018-08-01
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-02-16
10-Q	2017-09-30	Filed 2017-10-31
10-Q	2017-06-30	Filed 2017-08-01
10-Q	2017-03-31	Filed 2017-04-28
10-K	2016-12-31	Filed 2017-02-17
10-Q	2016-09-30	Filed 2016-11-01
10-Q	2016-06-30	Filed 2016-08-02
10-Q	2016-03-31	Filed 2016-04-29
10-K	2015-12-31	Filed 2016-02-17
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-04-28
10-K	2014-12-31	Filed 2015-02-17
10-Q	2014-09-30	Filed 2014-10-24
10-Q	2014-06-30	Filed 2014-07-25
10-Q	2014-03-31	Filed 2014-04-25
10-K	2013-12-31	Filed 2014-02-18
10-Q	2013-09-30	Filed 2013-10-22
10-Q	2013-06-30	Filed 2013-07-23
10-Q	2013-03-31	Filed 2013-04-23
10-K	2012-12-31	Filed 2013-02-19
10-Q	2012-09-30	Filed 2012-10-19
10-Q	2012-06-30	Filed 2012-07-20
10-Q	2012-03-31	Filed 2012-04-20
10-K	2011-12-31	Filed 2012-02-17
10-Q	2011-09-30	Filed 2011-10-21
10-Q	2011-06-30	Filed 2011-07-22
10-Q	2011-03-31	Filed 2011-04-21
10-K	2010-12-31	Filed 2011-02-22
10-Q	2010-09-30	Filed 2010-10-22
10-Q	2010-06-30	Filed 2010-07-23
10-Q	2010-03-31	Filed 2010-04-23
10-K	2009-12-31	Filed 2010-02-19

8-K	2020-07-31	Earnings, Exhibits
8-K	2020-05-06
8-K	2020-04-30
8-K	2020-04-10
8-K	2020-04-02
8-K	2020-03-23
8-K	2020-01-31
8-K	2019-10-31
8-K	2019-10-23
8-K	2019-08-05
8-K	2019-08-01
8-K	2019-07-24
8-K	2019-07-16
8-K	2019-06-28
8-K	2019-05-08
8-K	2019-05-01
8-K	2019-03-14
8-K	2019-02-01
8-K	2018-11-01
8-K	2018-08-01
8-K	2018-06-13
8-K	2018-05-09
8-K	2018-05-04
8-K	2018-02-14
8-K	2018-02-01
8-K	2018-01-05

EX-31.1	idxx2020q210-qexhibit32.htm
EX-31.2	idxx2020q210-qexhibit31.htm
EX-32.1	idxx2020q210-qexhibit3.htm
EX-32.2	idxx2020q210-qexhibit33.htm

IDXX 10Q Quarterly Report

Idexx Laboratories Earnings 2020-06-30