IDEXX Laboratories (IDXX) Q4 2007 earnings summary

Executive summary

• FY2007 revenue grew 25% to $922.6M, while net income was $94.0M versus $93.7M; operating income rose 6% to $136.2M.

• Growth reflected higher CAG and production-animal sales, acquisitions, and favorable currency; reported gross margin declined to 50.2% from 51.3%.

Financial highlights

• Revenue was $922.6M, up 25% YoY; acquisitions contributed 8% and favorable currency 3% to growth.

• Gross profit rose 22% to $463.5M; operating income rose 6% to $136.2M, while operating margin fell to 14.8% from 17.3%.

• Net income was $94.0M versus $93.7M; diluted EPS was $1.46 versus $1.42.

• Adjusted for the $9.1M Navigator inventory write-down and $1.0M royalty impairment, reported 2007 gross profit was reduced by 1.1% of revenue.

Outlook and guidance

• Catalyst Dx launched in Q1 2008; 2008 VetLab revenue is expected to include a greater instrument-sales mix than in recent years.

• SNAPshot Dx was planned for early 2008 launch; expected to replace SNAP Reader with improved ease of use, throughput, and test menu.

• Westbrook facility expansion spending was preliminarily projected at $140M through 2011, including $75M in 2008.

• Water growth is expected to depend significantly on international sales and broadening the product line; international sales were 45% of Water sales in 2007.