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IDEXX LABORATORIES INC /DE (IDXX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $954.3M, up 6% year over year; diluted EPS was $2.62, up 13% reported and 10% comparable, with gross margin expanding 140 bps to 59.8% and operating margin at 27.4% (+20 bps reported) .
  • Strong consumables and international growth offset ongoing softness in U.S. clinic visits; CAG Diagnostics recurring revenue grew 6.4% reported (7% organic), with IDEXX VetLab consumables up 11.6% .
  • Initial 2025 guidance: revenue $4.055–$4.170B (4–7% reported; 6–9% organic), EPS $11.74–$12.24, operating margin 31.0–31.5%; outlook includes ~$1.5B of share repurchases and a ~2% FX growth headwind .
  • Stock reaction catalysts: launch ramp of inVue Dx analyzer (4,500 target 2025; ~$50M revenue) and March 2025 IDEXX Cancer Dx lymphoma panel, alongside heavier buybacks (2–3% share count reduction) .

What Went Well and What Went Wrong

What Went Well

  • Double-digit consumables growth drove mix and margin gains: IDEXX VetLab consumables +12% in Q4, contributing to gross margin expansion to 59.8% (+140 bps YoY) .
  • International strength: CAG Diagnostics recurring revenue +10.8% organic internationally in Q4; Europe saw seventh consecutive quarter of double-digit recurring growth with high-teens consumables .
  • Innovation pipeline advancing: Q4 shipments began for inVue Dx; IDEXX Cancer Dx canine lymphoma screening to launch late March 2025; “front end of a new wave of major innovation” (CEO) .
    • Quote: “IDEXX had a solid finish to 2024... we began shipping the IDEXX inVue Dx... and we plan to make IDEXX Cancer Dx screening for canine lymphoma available in late March 2025” — Jay Mazelsky .

What Went Wrong

  • U.S. clinic visit headwinds: same‑store clinical visits declined nearly 3% in Q4 (≈2% for full year), constraining U.S. growth despite execution drivers .
  • Rapid assay volumes flat YoY as testing shifted to Catalyst Pancreatic Lipase; instrument revenue −13.5% reported YoY in Q4 (capital instruments), reflecting tough comp and modality shift .
  • FX headwinds and tariff risk: 2025 guidance embeds ~2% negative revenue growth impact and ~$0.21 EPS headwind from FX; management also flagged preliminary tariff risk on internationally sourced materials .

Financial Results

Headline Metrics vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$901.6 $975.5 $954.3
Diluted EPS ($)$2.32 $2.80 $2.62
Gross Margin (%)58.4% 61.1% 59.8%
Operating Margin (%)27.2% 31.2% 27.4%

Notes: Q4 EPS benefited from $0.13/share tax benefits from share-based compensation and $0.06/share nonrecurring tax reserve release; FX was a $0.03/share headwind .

Segment Breakdown – Q4 2024 vs YoY

SegmentRevenue ($USD Millions)Reported YoY GrowthOrganic YoY Growth
CAG$870.5 6.0% 5.8%
Water$45.2 8.1% 9.0%
LPD$34.6 5.4% 7.1%
Other$4.1 (28.6)% (28.6)%
Total$954.3 5.8% 5.8%

CAG Diagnostics Recurring Revenue Components – Q4 2024 vs YoY

ComponentRevenue ($USD Millions)Reported YoY Growth
CAG Diagnostics recurring$757.5 6.4%
IDEXX VetLab consumables$331.8 11.6%
Rapid assay products$77.4 (0.2)%
Reference lab & consulting$316.0 3.6%
Diagnostics services & accessories$32.2 0.3%
Diagnostics capital – instruments$33.0 (13.5)%
Vet software, services & imaging$80.0 12.6%

KPIs and Balance Sheet/Cash Flow

KPIQ4 2024Prior Period/Context
Global premium instrument installed base YoY growth9% Full-year 2024
Premium instruments placed (Q4)4,625 units Down 12% YoY vs high prior year
DSO (days)47.1 Sept 2024: 48.9
Inventory turns1.3 Stable vs 1.3–1.4 earlier quarters
Free Cash Flow ($USD Millions)$808.1 (FY) 85–90% of net income targeted for 2025
Share repurchases ($USD Millions)$248.7 (Q4) $859.4 (FY)
Net income (FY) ($USD Millions)$887.9 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025—$4,055–$4,170M; 4–7% reported; 6–9% organic New
CAG Diagnostics recurring revenue growthFY 2025—3–6% reported; 5–8% organic New
Operating marginFY 2025—31.0–31.5%; 200–250 bps reported expansion; 30–80 bps comparable New
EPSFY 2025—$11.74–$12.24 New
FX impactFY 2025—~2% revenue growth headwind; ~$0.21 EPS headwind New
Net interest expenseFY 2025—~$42M New
Effective tax rateFY 2025—~21.5% New
OCF as % of net incomeFY 2025—100–110% New
FCF as % of net incomeFY 2025—85–90% New
CapexFY 2025—~$160M New
Avg shares outstandingFY 2025—Reduction 2–3% (buybacks ~$1.5B) New
Revenue (Q1 2025)Q1 2025—Organic +4–6%; reported +2–4% (≈2% FX headwind) New
Operating margin (Q1 2025)Q1 2025—30.2–30.6% New

Earnings Call Themes & Trends

TopicQ2 2024 (prev)Q3 2024 (prev)Q4 2024 (current)Trend
AI/technology initiativesRecord premium placements; innovation cadence; litigation accrual impacted GAAP EPS ~700 inVue Dx preorders; install base +10% YoY inVue Dx shipments begin; ~1,600 preorders; target 4,500 placements/$50M revenue in 2025; Cancer Dx lymphoma panel in March Improving adoption
Supply chain/operationsStrong execution; margin mix benefits; no major supply chain issues highlighted Margins up; productivity initiatives; momentum in software Manufacturing and installation capacity “ahead of plan” for inVue; lab productivity initiatives to support margins Improving capacity
Tariffs/macroVisit trends softening in U.S.; litigation accrual impact Macro/sector conditions constrained U.S demand; guidance reduced Continued U.S visit declines (~3% in Q4); preliminary tariff risk; FX ~2% headwind in 2025 Mixed/soft in U.S.
Product performanceConsumables +7–8%; rapid assays +6% Consumables +11%; rapid assays +6%; Water +13% Consumables +12%; rapid assays flat (Catalyst PL shift); Water +8–9% Mixed: consumables strong, rapid assays flat
Regional trendsInternational consumables double-digit; U.S recurring +5% International recurring +10%; U.S recurring +5% International recurring +10.8%; U.S recurring +4.1% International outperformance
Regulatory/legal$61.5M discrete litigation accrual (Q2) Ongoing litigation still noted in outlook Lapping of litigation accrual boosts 2025 margin/EPS growth; total accrual $89.0M Resolved in guide-lapping
R&D executionElevated R&D spend for innovation Continued R&D to advance growth agenda R&D investments continue; SmartQC, updated VetLab station Continuing investments
Software & engagementCloud-native PIMS growth; recurring revenue momentum High recurring software/imaging growth; acquisitions benefit Vello adopted by ~600 practices; cloud PIMS installed base +20%; 60% PIMS in cloud Strengthening recurring software

Management Commentary

  • “The Company is on the front end of a new wave of major innovation... we began shipping the IDEXX inVue Dx... and we plan to make IDEXX Cancer Dx screening for canine lymphoma available in late March 2025” — Jay Mazelsky, CEO .
  • “Revenue increased 6% organically, supported by 7% organic gains in CAG Diagnostic recurring revenues... Operating profits increased 7% as reported... EPS $2.62 in Q4, up 10% on a comparable basis” — Brian McKeon, CFO .
  • “Our reported operating margin outlook for the full year 2025 is 31% to 31.5%... comparable improvement of 30 to 80 bps net of 160 bps benefit from lapping the discrete litigation expense” — Andrew Emerson, incoming CFO .

Q&A Highlights

  • inVue Dx ramp and innovation contribution: ~4,500 placements and ~$50M revenue included in 2025; preorders (~1,600) limited by controlled launch; FNA testing expected later in 2025; customers not waiting for FNA to take delivery .
  • Pricing/visits dynamics: Global net price realization assumed ~4–4.5% in 2025; U.S clinic visits expected ~2% decline for 2025 with Q4 at ~3% decline; wellness visit quality rose with higher diagnostics inclusion .
  • Share buybacks and interest: 2025 plan for ~$1.5B buybacks driving 2–3% share reduction; net interest expense calibrated at ~$42M to reflect higher deployment .
  • Margin cadence: Q1 2025 operating margin planned at 30.2–30.6%, with moderate comparable margin compression near term due to launch investments; full-year gross-margin-led improvement targeted .
  • Weather impacts: ~50 bps impact noted in early October for Q4; Q1 includes weather impacts within outlook .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable due to request limit; as a result, formal “vs estimates” comparisons cannot be provided for Q4 2024. Values would normally be retrieved from S&P Global.
  • Management stated Q4 performance was ahead of internal expectations, with margins at the high end of guidance ranges, suggesting potential upward bias to near-term profitability expectations despite U.S visit softness .

Key Takeaways for Investors

  • Mix-led margin expansion supported by consumables and international growth should continue, with comparable operating margin targeted to improve 30–80 bps in 2025 despite FX and launch mix headwinds .
  • Innovation ramp (inVue Dx, Cancer Dx) is a core 2025 catalyst, with quantified inVue revenue/placements and controlled rollout designed to ensure customer experience and operational readiness .
  • U.S visit softness remains the primary constraint; the 2025 plan assumes similar declines as 2024, placing more emphasis on price realization, utilization, and new customer gains to drive growth .
  • Heavy capital return (≈$1.5B buybacks; 2–3% share reduction) and strong FCF generation (85–90% of net income target) add support to EPS growth even with FX headwinds .
  • International momentum and software/engagement (cloud PIMS, Vello) deepen recurring revenue quality and drive diagnostics frequency—strategic positives amid U.S macro pressures .
  • Watch for tariff and FX sensitivity (~2% revenue growth headwind; ~$0.21 EPS headwind), mitigated by hedges and pricing; management provided FX sensitivity metrics for revenue/operating income .
  • Near term (Q1 2025): expect organic +4–6% growth with 30.2–30.6% operating margins due to product launch investments; any improvement in U.S visits would be incremental upside .

Appendix: Non‑GAAP Considerations

  • Comparable metrics exclude FX and unusual items: Q4 comparable operating margin +50 bps YoY; Q4 comparable EPS $2.53 (vs $2.62 reported), adjusting for tax benefits and FX .
  • 2025 comparable EPS growth outlook adjusts for lapping the 2024 discrete litigation accrual and FX headwinds .