IDEXX(US:IDXX)2021-11-02 17:20Financial Data and Key Metrics Changes - Revenue increased by 12% as reported and 10% organically compared to the prior year [3][4] - Earnings per share (EPS) reached $2.03, reflecting a 12% increase on a comparable basis [4][15] - Operating profit increased by 32% as reported, with a 12% increase on a comparable basis [13][14] - Free cash flow was $354 million for Q3 and $458 million for the first nine months of 2021 [15][16] Business Line Data and Key Metrics Changes - Companion Animal Group (CAG) Diagnostic recurring revenues grew by 11.5% organically, with 10% growth in the U.S. and 14% internationally [6][21] - Water revenue increased by 13% organically, recovering from a 4% decline in the previous year [12] - Livestock, Poultry, and Dairy (LPD) revenue decreased by 23% organically, impacted by prior high demand for African Swine Fever testing [12][13] Market Data and Key Metrics Changes - U.S. clinical visit growth was 2% in Q3, compared to 7% in the same quarter of the previous year [7][22] - The average annual growth rate for U.S. same-store clinical visits was 4.4%, above pre-pandemic levels [7][22] - Global reference lab revenues increased by 10% organically, driven by high same-store volume growth [8] Company Strategy and Development Direction - The company is focused on expanding pet healthcare services and enhancing diagnostic utilization [8][21] - Continued investment in commercial capabilities and infrastructure to support high growth [25][34] - The company is advancing plans for 2022, aiming to sustain strong revenue growth and manage inflationary impacts [20][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong growth momentum, supported by high levels of execution and sector trends [21][24] - The company anticipates continued lower LPD revenues and a reduction in human COVID testing revenues year-on-year [18][20] - Management highlighted the importance of maintaining high service levels and addressing inflationary pressures [62][63] Other Important Information - The company achieved a record of 4,307 premium CAG instrument placements, reflecting a 36% increase year-on-year [9][24] - The integration of the ezyVet acquisition contributed to a 33% year-on-year growth in veterinary software services and diagnostic imaging revenues [29] - The company maintained a strong balance sheet with a debt to EBITDA leverage ratio of 0.8 times gross [16] Q&A Session Summary Question: Insights on strong instrument placement trends and competitive dynamics - Management noted record placements across premium instruments, driven by practices investing in technology to support productivity [37][38] Question: Trends in clinical visit growth and revenue per visit - Management highlighted that CAG Diagnostic recurring growth trends held up well on a 2-year basis, with a focus on sustained strong growth [40][41] Question: Capacity and labor shortages in veterinary practices - Management indicated that veterinary practices are busy, with some hiring more staff and improving workflow to increase capacity [46][47] Question: Operating margins and investment strategies for 2022 - Management provided guidance for operating margins at 28.8% to 29%, emphasizing the importance of reinvesting in growth [48][49] Question: Impact of in-person access on business operations - Management stated that while in-person access is improving, virtual engagements have been effective, though in-person interactions are still valuable [60][61] Question: Inflationary pressures and their impact on margins - Management acknowledged some inflationary impacts, particularly in freight and distribution, but expressed confidence in managing these challenges [63]