IDEXX Labs (IDXX) Tops Q3 EPS by 2c; Updates FY16 Outlook; Guides FY17 EPS Above Views

November 1, 2016 7:17 AM EDT

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IDEXX Labs (NASDAQ: IDXX) reported Q3 EPS of $0.62, $0.02 better than the analyst estimate of $0.60. Revenue for the quarter came in at $448.3 million versus the consensus estimate of $448.6 million.

GUIDANCE:

IDEXX Labs sees FY2017 EPS of $2.77-$2.93, versus the consensus of $2.70.

Outlook for 2016

The Company is refining its 2016 revenue outlook to $1,763 million - $1,773 million, at the high end of our earlier guidance range. The refined revenue outlook takes into account adjustments to foreign exchange assumptions that have reduced our 2016 reported revenue guidance range by $2 million. We are also adjusting our 2016 EPS outlook to $2.35 - $2.39 per share, reflecting targeted growth of 15% - 17% on a reported basis and 21% - 23% Adjusted EPS constant currency growth. This Adjusted EPS growth is calculated based on our 2015 Adjusted EPS of $2.11, which excludes a software impairment charge of $0.06 per share. The Company is also raising its free cash flow outlook to approximately 105% of net income to reflect continued strong trends in reducing inventories and expectations for relatively lower capital spending in 2016.

At assumed foreign exchange rates, we estimate that the effect of the stronger US dollar will adversely impact 2016 revenue by less than 1%. We estimate that these foreign exchange rate changes will reduce reported 2016 EPS by $0.20, including the net impact from the lapping of $21 million in 2015 hedge gains compared to projected hedge gains of approximately $4 million in 2016.

The Company provides the following updated guidance for 2016:

Amounts in millions except per share data and percentages

Guidance Range

Growth Definition

Y/Y Growth

Revenue

$1,763 - $1,773

Reported

10% - 11%

Organic Revenue Growth

10.5% - 11.5%

EPS

$2.35 - $2.39

Reported

15% - 17%

Adjusted

11% - 13%

Adjusted Constant Currency

21% - 23%

Operating Cash Flow

~135% of net income

Free Cash Flow

~105% of net income

Capital Expenditures

~$80 million

We expect an effective tax rate of 30.5% - 31.0%, consistent with our previous guidance. We are projecting a reduction in weighted average shares outstanding of approximately 2.5% - 3%, and interest expense, net of interest income, of approximately $29 million reflecting current and projected borrowings.

For earnings history and earnings-related data on IDEXX Labs (IDXX) click here.



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