IDEXX Laboratories, Inc. (NASDAQ:IDXX) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 04, 2018 • 08:30 am ET

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IDEXX Laboratories, Inc. (NASDAQ:IDXX) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning and welcome to the IDEXX Laboratories First Quarter 2018 Earnings Conference Call. As a reminder, today's conference is being recorded. Participating in the call this morning are Jon Ayers, Chief Executive Officer; Brian McKeon, Chief Financial Officer; and Kerry Bennett, Vice President-Investor Relations. IDEXX would like to preface the discussion today with a caution regarding forward-looking statements.

Listeners are reminded that our discussion during the call will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Additional information regarding these risks and uncertainties is available under the forward-looking statements notice in our press release issued this morning as well as in our periodic filings with the Securities and Exchange Commission, which can be obtained from the SEC or by visiting the Investor Relations section of our website, idexx.com.

During this call, we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in our earnings release, which may also be found by visiting the Investor Relations section of our website. In reviewing our first quarter 2018 results, please note all references to growth, organic growth, constant currency growth, and comparable constant currency growth refer to growth compared to the equivalent period in 2017 unless otherwise noted.

In order to allow broad participation in the Q&A, we ask that each participant limit his or her questions to one with one follow-up if necessary. We appreciate you may have additional questions, so please feel free to get back into the queue, and if time permits, we'll take your additional questions.

I would now like to turn the call over to Brian McKeon.

Executive
Brian P. McKeon

Good morning, everyone. IDEXX's strong business momentum continued in Q1 reflected in another quarter of excellent financial results. We achieved 16% reported revenue growth driven by 13% organic growth in CAG Diagnostic recurring revenues, 21% growth in premium instrument placements and favorable FX changes. Our reported revenue and 12% overall organic growth results reflect the implementation of the new revenue accounting standard, which now more closely aligns instrument revenue recognition with the timing of the instrument placement.

In Q1, $12 million of revenue was attributed to implementation of the New Revenue Standard. A significant portion of this amount related to the introduction of a very successful multi-modality customer program called IDEXX 360, which drove strong US premium instrument placements in the quarter. EPS was $1.01 per share, an increase of 32% on a comparable constant currency basis, reflecting strong revenue growth, solid operating margin gains, and net benefits from US Tax Reform.

In terms of our outlook, we are maintaining our full year revenue guidance of $2.205 billion to $2.245 billion, as $15 million of operational upsides reflected in our updated projection for 10.5% to 12.5% full year organic revenue growth are offset by impacts from the strengthened US dollar. We're increasing our