IDEXX Laboratories (IDXX) Q4 2012 earnings summary

Executive summary

• FY12 revenue rose 6.1% to $1.293B; organic revenue growth was 6.7%, with CAG growth and higher gross margin driving performance.

• Operating income increased to $262.6M and net income to $178.3M; diluted EPS was $3.17.

Financial highlights

• Revenue was $1.293B versus $1.219B; product revenue was $817.0M and service revenue was $476.3M.

• Gross profit rose to $699.1M from $646.5M; operating income was $262.6M versus $236.2M.

• Net income was $178.3M versus $161.8M; diluted EPS increased to $3.17 from $2.78.

• Operating cash flow was $230.3M; cash and equivalents ended at $224.0M.

Outlook and guidance

• Planned FY13 capital expenditures were ~$75M, including $21M for headquarters expansion, $16M for software and IT, and $12M for manufacturing equipment.

• Management expected cash, operating cash flow and available borrowings to fund operations, capital needs and strategic growth over the next 12 months and long term.

• Reinstated federal R&D tax credits were expected to reduce the FY13 effective tax rate by ~2% versus FY12.

• FY13 Dairy SNAP sales for Aflatoxin M1 testing were expected to decline as China testing volumes normalized after the 2012 outbreak response.