IDEXX Laboratories (IDXX) Q4 2015 earnings summary

Executive summary

• FY15 revenue rose to $1.602B from $1.486B; reported growth was 7.8% and organic growth was 13.4%.

• FY15 net income was $192.1M and diluted EPS was $2.05; Q4 revenue was $399.7M, net income $44.3M and diluted EPS $0.48.

• Recurring CAG diagnostic revenue remained the main growth driver, while currency headwinds and softer LPD and Other sales weighed on reported results.

Financial highlights

• FY15 gross profit was $890.3M, up from $816.1M; operating income was $299.9M versus $260.3M, including an $8.2M software impairment charge in 2015.

• Adjusted operating income, excluding the 2015 software impairment and 2014 all-direct transition impacts, was $308.1M, or 19.2% of revenue; adjusted income increased 4.3%.

• FX reduced FY15 revenue by $89.7M and operating profit and diluted EPS by $21.2M and $0.16, net of hedge gains.

• Q4 revenue was $399.7M versus $352.0M; operating income was $66.9M versus $34.8M, and diluted EPS was $0.48 versus $0.27.

Outlook and guidance

• 2016 FX assumptions imply revenue reduction of $40M, operating profit reduction of $31M and diluted EPS reduction of $0.26, net of expected hedge gains of $8M and $0.06 per share.

• 2016 capital expenditures were estimated at $90M for manufacturing, reference labs, internal-use software, IT and facility projects.

• SediVue placements and associated recurring revenue were expected to generate approximately $20M in 2016; North American launch planned for early 2016.

• Neo’s SaaS practice-management model was expected to moderate licensed Cornerstone placement growth as the subscription model expands; management anticipated higher profitability once established.