IDEXX Laboratories (IDXX) Q4 2014 earnings summary

Executive summary

• FY14 revenue rose 7.9% reported and 8.0% organically to $1.486B; adjusted operating income increased 9.1% to $295.6M, excluding U.S. direct-sales transition impacts and the 2013 freight-provider loss.

• Reported operating income declined 2.4% to $260.3M, reflecting $35.3M of direct-sales transition impacts; Q4 net income attributable to shareholders fell to $26.0M from $43.3M YoY.

Financial highlights

• FY14 revenue was $1.486B, up from $1.377B; gross profit increased 7.9% to $816.1M, with gross margin steady at 54.9%.

• Operating income was $260.3M versus $266.8M; net income was $182.0M versus $187.8M, while diluted EPS rose to $3.58 from $3.48.

• Q4 revenue was $352.0M versus $354.1M; operating income was $34.8M versus $61.3M, and diluted EPS was $0.54 versus $0.82.

• Operating cash flow was $235.8M; investing cash use was $80.4M and financing cash use was $103.4M.

Outlook and guidance

• Direct sales are expected to capture an additional $50M-$55M in annual revenue, adding an estimated $5M-$8M to operating profit in 2015, with benefits expected to scale over time.

• 2015 capital expenditures were estimated at $85M, including manufacturing and reference laboratory equipment, software and IT, and facility renovations and expansions.

• European bovine volume declines were expected to reduce LPD revenue by less than $5M in 2015.

• SDMA was anticipated in North American standard chemistry panels in summer 2015; Hookworm and Roundworm antigen tests were planned for spring 2015 fecal panels.