IDEXX (IDXX) Q1 Earnings Top Estimates, EPS Guidance Up

IDEXX Laboratories, Inc. (NASDAQ:IDXX) posted first-quarter 2019 earnings per share (EPS) of $1.17, reflecting a 15.8% year-over-year rise on a reported basis and 27% growth at comparable constant exchange rate (CER). The figure also surpassed the Zacks Consensus Estimate by 12.5%.

Revenues in Detail

First-quarter revenues increased 7.1% year over year (up 10% on an organic basis) to $576.1 million. The metric exceeded the Zacks Consensus Estimate by 0.8%.

This upside was primarily driven by strong global gains from Companion Animal Group (CAG) Diagnostics’ recurring revenues along with the expansion of global premium instrument installed base.

Segmental Analysis

IDEXX derives revenues from four operating segments: CAG, Water, Livestock, Poultry and Dairy (LPD) plus Other.In the first quarter, CAG revenues climbed 9% (up 12% organically) year over year to $508.9 million. Water segment’s revenues were up 4% from the prior-year quarter (up 8% organically) to $30.3 million. LPD revenues dipped 2% (up 4% organically) to $31.5 million. Revenues at the Other segment also slipped 2.2% on a reported basis to $5.3 million.

Margins

Gross profit in the first quarter ascended 9.4% to $331.6 million in spite of a 4.2% rise in cost of revenues to $244.5 million. Accordingly, gross margin expanded 119 basis points (bps) to 57.6%.

Sales and marketing expenses rose 6.4% to $106.6 million while general and administrative expenses slid 0.9% to $60.4 million. Additionally, research and development expenses increased 8.6% to $31.5 million. Operating margin in the quarter improved 209 bps to 23.1%.

Financial Position

IDEXX exited the first quarter of 2019 with cash and cash equivalents of $116.6 million compared with $123.8 million at the end of 2018. At the end of the first quarter, net cash provided by operating activities was $34.4 million compared with $34.9 million in the year-ago period.

2019 Outlook Updated

IDEXX reaffirmed its revenue guidance for 2019. Full-year revenues are reiterated in the range of $2,385-$2,425 million, indicating organic revenue growth of 9.5-11% (reported revenue growth of 8-9.5%).

Meanwhile, EPS projection has been raised to the $4.76-$4.88 (from the past projection of $4.66-$4.78) band, suggesting annualized growth of 16-19% at CER. The current Zacks Consensus Estimate for EPS stands at $4.69 on revenues of $2.41 billion.

Our Take

IDEXX exited the first quarter on a promising note. Solid year-over-year growth in organic revenues and a lifted EPS view for 2019 are encouraging. The top line in the quarter was driven by strong sales at the CAG business. The company witnessed sturdy gains from CAG Diagnostics recurring revenues and the global premium instrument installed base in the quarter under review.

The companion animal market fundamentals remain robust with a tremendous global runway for growth. Management’s innovative multi-modality global strategy, enabled by an enhanced commercial capability, accelerated CAG Diagnostics’ recurrent revenue growth.

Zacks Rank & Key Picks

IDEXX has a Zacks Rank #3 (Hold). Some better-ranked stocks boasting solid results this earnings season are Stryker Corp. (NYSE:SYK) , Abbott Laboratories (NYSE:ABT) and CONMED Corp. (NASDAQ:CNMD) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Meanwhile, revenues of $3.52 billion were in line with the Zacks Consensus Estimate.

Abbott reported first-quarter 2019 adjusted EPS of 63 cents, trumping the Zacks Consensus Estimate by 3.3%. Also, worldwide sales totaled $7.54 billion, above the Zacks Consensus Estimate of $7.47 billion.

CONMED posted first-quarter 2019 EPS of 57 cents, which topped the Zacks Consensus Estimate of 54 cents. Moreover, revenues of $218.4 million outpaced the consensus estimate of $213 million.

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