IDEXX Laboratories (IDXX) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 2, 2023 8:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks：

Operator

Good morning, and welcome to the IDEXX Laboratories First Quarter 2023 Earnings Conference Call. As a reminder, today's conference is being recorded. Participating in the call this morning are Jay Mazelsky, President and Chief Executive Officer; Brian McKeon, Chief Financial Officer; and John Ravis, 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 noticed 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 2023 results, please note all references to growth, organic growth, and comparable growth refer to growth compared to the equivalent period in 2022, unless otherwise noted. [Operator Instructions].

Today's prepared remarks will be posted to the Investor Relations section of idexx.com after the earnings call concludes.

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

Brian McKeon

Good morning and welcome to our first quarter earnings call. IDEXX had a solid start to 2023. In terms of highlights for the quarter, overall revenues increased 10% organically, supported by nearly 12% organic growth in CAG Diagnostics recurring revenues. CAG Diagnostics recurring revenue gains were driven by nearly 14% organic growth in the U.S. supported by solid volume gains and benefits from the higher net price realization.

Key execution metrics remained strong globally reflected in record first quarter premium instrument placements, continued solid new business gains and sustained high growth in recurring veterinary software revenues. Operating profits and EPS increased 18% on a comparable basis reflecting solid organic revenue growth, better than expected gross margin gains and benefits from a $16 million customer contract resolution payment. These strong results reflect the durability and resiliency of the IDEXX business model and benefits from our ongoing focus on execution. We've incorporated our Q1 results in positive adjustments to our full-year financial outlook which we'll discuss later in my comments. Let's begin with a review of our first quarter results.