IDEXX Laboratories (IDXX) Q4 2013 earnings summary

Executive summary

• FY13 revenue $1.377B; organic growth 6.7%, with CAG recurring diagnostics the primary growth driver.

• Operating income rose to $266.8M from $262.6M; net income was $187.8M and diluted EPS $3.48.

• Growth and margins were supported by higher diagnostic volumes and pricing, while LPD profitability declined and foreign exchange reduced revenue by $9.5M.

Financial highlights

• Revenue $1,377.1M vs. $1,293.3M in 2012; reported increase $83.7M and organic growth 6.7%.

• Gross profit $756.1M vs. $699.1M; operating income $266.8M vs. $262.6M; net income attributable to shareholders $187.8M vs. $178.3M.

• Diluted EPS $3.48 vs. $3.17; average diluted shares fell to 54.0M from 56.2M.

• Operating cash flow $246.0M; cash and equivalents $279.1M at year-end, up from $224.0M.

Outlook and guidance

• 2014 capital expenditure plan estimated at ~$80M for manufacturing, software and IT, facilities, and reference laboratory investments.

• European bovine test volume declines from eradication programs and testing-rule changes expected to reduce 2014 revenue by less than $10M.

• Interest expense expected to increase in 2014 following the December 2013 senior-note issuance.

• Catalyst One placements expected to begin in Q4 2014; SNAP Pro Mobile shipments anticipated by end of Q1 2014.