IDEXX Laboratories, Inc. (IDXX), a maker of products for veterinary, and food and water testing markets, reported Friday a rise in third-quarter profit, reflecting higher revenues, mainly due to international performance particularly in Asia, as well as lower operating expenses. Earnings, on a per share basis, beat analysts expectations. Looking ahead, IDEXX raised its earnings per share forecast for full year 2009, which is above Street view and also provided guidance for fiscal 2010.
The Westbrook, Maine-based company's net income for the third quarter increased to $31.54 million or $0.52 per share from $25.7 million or $0.42 per share in the previous year. On average, 7 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter grew to $259.12 million from $251.09 million in the same quarter last year. Analysts estimated revenues of $253.17 million for the quarter. Organic revenue growth was 5%, which excludes the impact of changes in currency exchange rates that reduced revenue growth by about 2%, and also revenue from businesses acquired or divested subsequent to the beginning of last year.
Segment-wise, revenues from Companion Animal Group or CAG increased to $214.46 million from $204.76 million in the year earlier. Revenues from Water segment decreased to $19.69 million from $20.32 million in the prior year, due to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenue by 3%, the company said.
Production Animal segment or PAS revenues were $15.94 million, down from $17.8 million in the preceding year. Changes in foreign currency exchange rates unfavorably impacted revenue by about 3%. Organically, PAS revenue declined due primarily to lower sales volumes. Other revenues increased to $9.02 million from $8.21 million in the year-ago quarter.
Jonathan Ayers, chief executive officer said, "Our international performance was a highlight of the quarter, particularly in Asia where we have experienced organic growth of 17% year-to-date, driven by more than 20% organic growth in the last two quarters. All of our major lines of business are present in the region, and we believe that some of our most attractive growth opportunities are found in Asia as well as other international markets."
International revenues increased to $102.04 million from $99.65 million in the previous year. Income from operations increased to $44.2 million from $39 million a year ago.
Research and development expense for the third quarter was $16.6 million, compared to $17.9 million in the prior year. The decrease in R&D expense was mainly due to the absence of pharmaceutical business R&D spending, which resulted from the disposition of substantially all of the pharmaceutical business and assets in the fourth quarter of 2008.
Selling, general and administrative expense decreased to $69.7 million from $71.2 million last year. The company said the decrease was primarily due to the favorable impact of exchange rate changes on foreign currency denominated expenses, the absence of pharmaceutical business SG&A spending in the third quarter of 2009 and lower bad debt expense.
For the nine-month period, the company's net income declined to $91.27 million or $1.5 per share from $92.61 million or $1.48 per share in the prior year. Revenues for the period dropped to $761.3 million from $780.74 million last year.
Looking ahead to full year 2009, the company now expects earnings per share to be in the range of $1.92 - $1.95, up from the previous range of $1.88 - $1.92. Revenues for the year are still expected to be around $1.02 billion. Analysts estimate earnings of $1.90 per share on revenues of $1.02 billion for fiscal 2009.
For fiscal 2010, the company expects earnings per share to be in the range of $2.15 - $2.25. Revenues for the year are anticipated to be in the range of $1.08 billion - $1.1 billion, which represents revenue growth of 6% - 8% compared to projected revenue for 2009. Revenue growth adjusted to exclude a projected 2% benefit from foreign exchange rate changes is estimated to be in the range of 4% to 6%. Analysts currently expect earnings of $2.17 per share on revenues of $1.11 billion for fiscal 2010.
According to the company, the guidance reflects an assumption that the value of the U.S. dollar relative to other currencies will remain at its current level for the balance of 2009 and 2010. Fluctuations in foreign currency exchange rates from current levels could have a significant positive or negative impact on the actual results of operations in both years.
"Our overall performance varied by line of business and geography, but our core companion animal businesses achieved solid organic growth worldwide ...While we are cautious about the near-term economy, we remain confident in our long-term outlook based on the fundamental attractiveness of our markets, our unique and innovative product and service offerings, our international footprint, and our ability to achieve increasing operating efficiencies based on our growing experience and the scale of our businesses," added Ayers.
IDXX closed Thursday's regular trading at $52.6 on the Nasdaq.
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