愛德士 (IDXX) 2007 Q3 法說會逐字稿

Good day, everyone and welcome to the Idexx Laboratories third quarter 2007 earnings conference call. Just a reminder, today's conference is being recorded. Participating in the call this morning are Jon Ayers, Chief Executive Officer, Merilee Raines, Chief Financial Officer, and [Jim Moraldi], Director, Investor Relations. Idexx would like to preface the discussion today with a caution regarding forward-looking statements. Listeners (inaudible - technical difficulty) that statements that members of Idexx management may make on on this call regarding Management's future expectations and plans and Idexx's future prospects constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding Management's expectations for financial results for future periods and the timing of new product introductions.

Listeners are reminded that actual results could differ materially from Management's expectations. Factors that could cause or contribute to such differences are described in Idexx's quarterly report on Form 10-Q for the quarter ended June 30th, 2007, and annual report on Form 10-K for the year ending December 31st, 2006 in the section captioned Risk Factors, which are on on file with SEC and also available on Idexx's website, Idexx.com. In addition, any forward-looking statements represent Idexx's estimates as of today and should not be relied upon as representing the Company's estimates as of any subsequent date. The Company disclaims any obligation to update or revise any forward-looking statements in the future, even if its estimates or expectations change.

At this time I would like to turn the conference over to Merilee Raines. Please go ahead.

Thank you, Matt. Okay. Good morning, good morning and thank you for joining us today. As I share with you our thoughts on our financial plans for the third quarter, I refer you to the financial tables in our earnings press release, as they provide the foundation for the numbers noted in my comments. Revenues for the quarter were $229.4 million, a year-to-year increase of 22%, and diluted earnings per share were $0.81 cents, a year-to-year increase of 7%. There was no impact to EPS from discreet items in either the third quarter of this year or last. The bottom line performance was largely in line with our thinking, though we achieved our earnings with slightly higher revenues and a slightly lower growth rate as a percentage of revenues than we had anticipated at the time of our second quarter call.

To remind you, the relatively low year-to-year earnings growth for the quarter is the result of a difficult compare with the third quarter of 2006. In that quarter we saw an increase in distributor inventory levels of our rapid assay products, and increased revenues in this high margin product line contributed to a very strong earnings performance. We have also seen it our press release that our Board of Directors has approved a 2-for-1 stock split that will be paid November. Consistent with the performance, our share price has appreciated significantly since the time of our last split in 1995. We believe that the split will make share purchase more attractive and attainable for our employees and retail shareholders in particular. Accordingly, our updated, earnings per share guidance for full year 2007 and 2008 is stated in both pre and post split terms. Our fourth quarter and full year 2007 financial results, when reported, will also be adjusted for the split.

Let me now provide some further highlights on the P&L. The third quarter revenue growth of 22% included 8% growth from acquisitions, and 3% from currency, so organic growth adjusted for these two items was 12%. Our Companion Animal Group segment had 14% organic growth for the third quarter and all product and service lines in this segment had double-digit organic revenue growth for both the quarter and year-to-date. We had another very strong quarter for instrument sales in our Idexx VetLabs suite. Revenues of $14.7 million grew 26% on a constant currency basis and placements grew by nearly 40%. We had strong placements across all of our major platforms and across regions. In particular, we are very pleased to see the strong and improved performance in Europe. Typically, the third quarter is one of the lowest quarters for instrument placements in Europe due to summer holidays. This quarter's placements were strong, not only relative to other third quarters over the last several years, but also relative to any quarter, including fourth quarters, which are typically the highest for placements.

Placements of the Idexx VetLabs Station, the laboratory information management system that integrates all of the instruments in the in-house suite now stand at about 4,600, which is about 1,000 more than at the end of the second quarter. As the station is an integral component of our next generation chemistry analyzer, Catalyst Dx, there's a sizable customer base, who has already made a portion of the required investment for Catalyst. Our instrument consumables sales of $50 million grew organically 12% for the quarter, the same as the year-to-date growth when adjusting the first half results for the estimated benefit of the pet food recall. This growth is the result not only of new instrument placements, but also greater consumable utilization by our existing install base of customers, who are getting more benefit out of in-house testing from our expanded menu of tests and enhanced reporting capability enabled by VetLabs Station.

Our point of care rapid assays with revenues of $33.6 million had organic growth for the quarter of 11%. As in previous quarters, this was driven by strong performance in our canine products. Snap 4 DX, our multiple analide assay for heartworm and three tick-borne diseases that we launched just one year ago continues to perform well. Year-to-date it represents about 30% of our unit volume for canine parasitic disease testing and nearly 40% on a dollar basis. Early in the quarter we launched our Snap test for canine pancreatitis and have seen much interest, with usage in over 5,000 clinics since July. This test helps the veterinarian to diagnose and distinguish this serious condition from other less serious ailments with similar symptoms and to begin treatment right at the time of the patient visit. It also complements a panel we perform in our reference laboratories to monitor patient progress after treatment has begun.

U.S. distributor inventory levels for our instrument consumables and rapid assays remained in the three to four-week range we view as normal. Relative year-to-year changes in inventory levels depressed instrument consumables growth by 4% and rapid assay growth by 6%. Our reference laboratories and consulting services had reported growth of 36%, with acquisitions contributing 19%, and currency contributing 3% to produce organic growth of 14%. This is consistent with the organic growth we experienced in the first half of the year when we adjust for the estimated impact of the testing related to the pet food recall. We are reaffirming our longer-term growth rates of 8 to 10% for rapid assays and 13 to 15% for reference laboratory services. Based on the strength we have seen in the instrument consumables growth and the continued instrument placement momentum we anticipate, we are revising upward our longer-term growth rate for instrument consumables to 9 to 11% from the previous range of 8 to 10%.

Our practice information management and digital radiography system, with third quarter revenues of $12.2 million, grew organically 17%. We are seeing some very encouraging results from our efforts to improve our digital radiography offerings, and both the digital and computer systems product lines are entering the fourth quarter with strong order books. The fourth quarter is typically the largest quarter for all equipment sales, as our customers look to take advantage of tax benefits available on capital purchases. Water sales of $17.4 million grew organically 2% in the quarter, due to the timing of some large orders within quarters, both this year and last. We project water sales growth in the mid single digits over the longer term, with continued geographic expansion and our new collaboration with Invitrogen.

Production Animal Services sales were also $17.4 million for the quarter, an increase of 25% over 2006. Institut Pourquier, acquired in the first quarter, contributed 13% to year-to-year growth and integration efforts continue to go well. Currency contributed 6% and so organic growth was 6%. As mentioned last quarter, we have seen organic growth rates decline in Production Animal Services this year from recent history, as we have moved beyond the initial ramp of BSE sales from our product launch in 2005. Additionally, we have seen price erosion in this testing market, as the majority of tests are sold through government contract with rigorous competitive bidding processes. Looking at the rest of the P&L, gross margin at just under 52% of revenues, was slightly below our expectation. This was primarily due to some higher costs in lab services and digital radiography. In both cases, the additional costs are in large part due to our efforts to improve and expand our service offerings, and we expect to see margin improvement over time.

Operating expenses including R&D and SG&A were 36% of revenues, which was in line with our thinking, as with the operating margin at 16% of revenues. The effective tax rate at 27.5% for the third quarter was as we expected, and about 4 points lower than the first half due to impacts from international statutory rate reductions, and the receipt of certain state initiatives -- receipt of certain state tax incentives. The primary benefits from these events occurred in the third quarter and the sustaining benefit to the effective rate will be quite small. As for the balance sheet and cash flow, we ended the quarter with $59 million in cash and $77 million in debt from our revolving credit facility, giving us a net debt position of $19 million. Free cash flow was $20 million, or 77% of net income.

We project the capital expenditures for the year will be $65 million to $70 million and full-year free cash flow at approximately 80% of net income excluding noncash discreet items. With regard to the latest outlook for the full year 2007, we project revenues of $910 million to $915 million, an increase from our previous guidance of $900 million to $905 million. The increase is reflective of the higher than anticipated third quarter revenues, revenue momentum continuing in the fourth quarter across our major product and service lines, and a more favorable impact from currency. This new guidance range would represent a reported growth of 23 to 24%, with acquisitions contributing about 8%, and currency contributing 3%, so organic growth of 12 to 13%. We project full-year earnings per share at $2.88 to $2.91 on a reported basis, or $3.13 to $3.16 when adjusted for all discreet items in 2007, the second quarter write-down of pharmaceutical inventory of $0.20 cents and $0.05 cents of acquisition integration costs.

The aforementioned guidance translates post a two-for-one stock split to $1.44 to $1.46 on a reported basis and $1.56 to $1.58 when adjusted for all discreet items. I know there are a lot of numbers and all of these are detailed in our press release. Earnings per share adjusted for discreet items in both 2006 and 2007 are projected to grow 17 to 18%. The high end of our 2007 EPS guidance is unchanged from that which we gave at the end of the second quarter, despite a somewhat higher revenue forecast. There are a couple of reasons for this. First, the increased top line benefit we anticipate receiving from currency is muted at the bottom line due to our hedging activities. Also, we now believe the gross margin will be slightly lower in the fourth quarter and for the full year than previously projected due to somewhat lower gross margins in laboratory services, as we saw in the third quarter. I also remind that the fourth quarter gross margin percentage typically declines sequentially due to the revenue mix. As noted, we see strong instrument revenue in the fourth quarter and this carries a relatively lower gross margin than our point-of-care test kits and instrument consumables.

Full-year gross margin as a percentage of revenue is expected to be about 50.5% on a reported basis, and just under 52% when adjusted for discreet items. We continue to project operating expenses at about 36% of revenues for the full year, and the effective tax rate at 30 to 31%. As for our first look at 2008, we project revenues of $1.03 billion to $1.05 billion, a year-to-year increase of about 14%, and earnings per share of $3.63 to $3.73 pre split, or $1.82 to $1.87 post split, a year-to-year growth of 15 to 20%. As we are still in the midst of our internal planning process, I will provide more detail on the components of our P&L, balance sheet and cash flow at the time of our fourth quarter earnings release. However, we anticipate only modest operating margin expansion from the roughly 16% we expect for full year 2007 excluding the impact of discreet items. With the launch of two major instrument platforms in the first quarter, we will see scale-up expenses, primarily impacting the gross margin line.

With regard to our capital expenditures, I advise now that we expect higher levels of spend than in recent years driven primarily by the continued work on the renovation and expansion of our primary company facility in Maine. If you will recall, we purchased that facility in the second quarter of 2006 and began the construction process this year. We expect that the highest level of spend on the project will be in 2008 and we will begin a phased-in occupancy from late 2008 through 2011. The initial phases of the project will provide us with expanded R&D and manufacturing space that will, among other benefits, support our quality efforts and allow us to achieve operating efficiencies and cost savings in our manufacturing processes. I'll now turn it over to Jon for some further commentary on the business.

Okay. Thanks, Merilee, for that review of our financial performance. I would like to provide a couple comments on our Q3 performance before discussing the outlook. We had strong organic top line growth in the third quarter, driven in particular by the Companion Animal Group, the segment as investors know, that make up 82% of the Company's revenue. As Merilee's mentioned, our sales growth in instrument consumables and rapid assays to U.S. distributors, which is what we report, understate the year-over-year growth, sales growth of these products, to U.S. veterinary practices. So Q3 demand growth in the Companion Group was very strong. I would cite three factors in driving the success in this group in Q3. First, a continued robust market for veterinary diagnostic products worldwide. Second, our focus on introducing a stream of new innovations to the market, and third, tremendous performance in Q3 by our sales organizations in North America and Europe. These sales organizations really did a great job for their quarter, this quarter, and my congratulations to them.

As Merilee has mentioned, instrument placements, particularly the consumable-generating chemistry and hematology line were very strong in Q3, as a result of our strategy of offering a complete suite of instruments that provide the customer a highly valued in-house laboratory capability. For example, as Merilee has indicated, we are on track to exceed our stated goal of 5,500 Idexx VetLab station placements by the end of the year, building a stronger, even more loyal installed base of instrument customers, customers who have already taken the first step required to add our next generation instruments to their in-house suite. Also on the new product front, we launched yet another chemistry panel for our on-market VetTest chemistry analyzer, the Avian Health Profile, which provides greater convenience to the segment of customers who practice avian medicine. With this launch, we demonstrate that we are continuing to innovate with VetTests, by far the fastest selling chemistry analyzer on the global market today, even as we prepare for the launch of Catalyst Dx, the next generation chemistry system.

We are on schedule to launch later this quarter the Idexx Coag Dx, an analyzer that will augment the Idexx suite of analyzers with key measurements for bleeding disorders. While the addition -- with the addition of Coag Dx, our integrated suite of instruments will provide broad and complete point-of-care diagnostic capability, spanning chemistry, hematology, electrolyte, endocrinology, blood gases, urinalysis, coagulation and infectious diseases. As investors know, instruments and instrument placements are what drive consumable growth, and thus our profits, in this razor and blade business model and we are pleased with the accelerating trends in instrument consumable growth that we are achieving. I would also like to provide a development update on the new instrument systems that we will launch in 2008, specifically Catalyst Dx, our next generation chemistry analyzer and SNAPshot Dx, our next generation endocrinology and infectious disease analyzer.

We continue to make excellent progress with these two development programs. Both have moved to pilot manufacturing using final parts from suppliers. Final consumables are ready for the Catalyst Dx, while SNAPshot Dx will use the same consumables that we sell today for the on-market SNAP reader. Field studies of the instruments are ongoing with results to date being excellent. Market planning in both North America and Europe is well underway. Suffice it to say, we will not be demand-constrained in the early quarters after launch. This is because customers are responding very positively to the extensive capabilities and convenience of this new instrument. For example, customers appreciate the ability to run a full panel of up to 23 chemistries on a patient, with results in 8 minutes, taking no more technician time than it would take to prepare blood work to be sent to the outside lab. If you can just as easily get comprehensive blood work results now, why wait for send-out results?

While we are certain demand will be strong, we will be constrained by our ramp phase and the desire to ensure very positive customer experience from the very beginning. Of course, we still have some key steps to complete the scale-up and qualification phase on these two instruments. Based on the current plan, we expect to show the instrument in January at the North American Veterinary Conference, begin taking orders in February after our worldwide sales meeting and delivering revenue units to customers in March in the U.S. and second quarter in Europe. Thus, the first quarter 2008 will begin a disciplined ramp in instrument manufacturing and sales, with placement volumes increasing throughout 2008. I would note that our 2008 revenue and earnings guidance reflects these assumptions.

I would like to conclude my opening remarks by commenting on the longer-term outlook for Idexx. We view our markets and franchises as worthy of continued investment. Over the last several years, we have generated increasing top line growth and strong double-digit bottom line returns, all the while building a loyal customer franchise and strengthened competitive position. Merilee has discussed our 2008 financial guidance, where the earnings growth is driven primarily by continued low to mid teens top line growth, as we anticipate the support of several critical new instruments and continued investment in growth of supporting infrastructure, we are not planning on achieving significant margin expansion in the upcoming year. However, we expect 2008 will set up Idexx for future margin expansion and continued double-digit top line growth. Our Idexx VetLab and instrument consumable business will have favorable long-term margin dynamics that derive from the new platform and our worldwide reference laboratory business will achieve margin growth as we leverage the benefits of global scale economies.

At our heart, we are a company of technological innovation, combined with strong global sales and marketing capability in our served markets. Through an intense focus on the customer, we not only benefit by favorable trends in the market for veterinary care, but we also create market demand by introducing new technology and support of our customer's medical and practice management needs. The opportunity for innovation in our market today is stronger than we've ever seen it, and our development pipeline is full. It is indeed an exciting time for Idexx, as we split the stock and look forward to crossing the billion dollar revenue threshold in 2008. So Matt, with that, we're glad to open it up to the Q&A.

Thank you, sir. (OPERATOR INSTRUCTIONS) Our first question today will come from Mr. Ryan Daniels with William Blair.

Good morning, guys. Merilee, a couple quick follow-up questions on your '08 guidance. I know you're not prepared to go into a ton of detail, but you did mention kind of how you expect operating margins to be relatively similar in the 16% range. I guess I'm curious what you guys are thinking in regards to the tax rate for 2008.

Yeah, I think we probably will see tax rate kind of similar to what we are seeing for the full year this year, that 30 to 31%. Again, it's a little early, Ryan, so I'm not going to want to pin down anything exact.

Okay. No, that's helpful. And then if we look at the sales and marketing, obviously there's been a lot of good growth there, kind of an investment in the sales force and I know that grew on a dollar basis about 30% year-over-year. Do you envision we'll see that stabilizing maybe in the back half of 2008 after you have prepared the sales force for these big new product launches, or is that a growth that you think you're going to continue to invest and kind of ramp that up aggressively throughout the entire year?

Ryan, we are -- if you just kind of consider op expenses in general, where we invest in operating expenses, and sales and marketing of course is a subset of that, we make those determinations based on where we see the opportunity to either grow or create market demand, and right now we have seen a pretty good opportunity to get a return on those investments. It is an investable market. We have very favorable long-term market trends, as you know, and on the other hand, what I will say, is with regard to the instrument launch, we feel we have going into 2008 a pretty good sales organization today. We're not going to have to add an inordinate number of people. They are going to be evolving from selling a certain set of platforms to expanding, but it's kind of an evolutionary growth.

Okay, great. And then Jon, I know you're probably not going want to provide numbers on -- kind of thoughts on number of placements for Catalyst and SNAPshot, but maybe a different way of looking at it, can you talk about what the ramp might look like, so how aggressive might we see in Q1, really Q2 I guess is what you'll be at a full run rate, do you envision that kind of doubling throughout the year by the time we get to the back half or will you be closer to a full run rate in the third quarter? Any thoughts you might have there?

Well, as I mentioned in my opening remarks, Ryan, I see that ramp taking place throughout the year. Of course the fourth quarter is always the biggest quarter in terms of capital sales and instrument placements, so that's not going to be any different, I would expect next year than it has been in years past. But I do see kind of a sequential ramp from quarter to quarter.

Okay, and how do you guys internally look at that? Who, if you will, gets the product? Are you looking at kind of loyal customers with a full suite that are more higher volume users or what's the determination up front if there's a limited amount to go into the field, how you guys determine who will receive those goods, if you will?

Well, that's -- we're, we are definitely going to be demand-constrained and there's going to be a lot of current and prospective customers who are going to be interested in the system, and of course, that allows us probably some favorable pricing dynamics early in the launch.

Okay. That makes sense. And then a little bit change in topic here, the acquisition pipeline, it sounds like it's been a little bit slower. I'm just curious, you guys did some great deals at the start of the year. Is that working to integrate those, or maybe focus on your products ahead of the launch going into 2008 or just not seeing opportunities, any color there would be helpful.

Yeah, Ryan, I do think that I kind of addressed it. We have done some pretty significant acquisitions late last year and then early this year, and a priority for us has been to integrate those acquisitions, as I've mentioned on calls. The integration efforts have been going well, but they are significant efforts nonetheless, so we're working hard on those things. In addition, we look for other opportunities. We always are, but typically these opportunities have kind of been smaller in size.

Okay, great. One more and I'll hop back in the queue. Just if we think of the product launches upcoming, you guys are going to be selling all those direct, is that right, so typical direct instrument sales and then consumables via distributors?

Yes, we have very strong partnership with our distributors and we're always learning new ways to integrate with them on a value-added basis, but certainly an advanced new set of analyzers that we've typically gone primarily direct sale, although our distributors are, can be supportive of that.

Okay, great. Thanks so much, guys.

(OPERATOR INSTRUCTIONS) We'll go next to Rick Wise with Bear Stearns.

Good morning, Jon, good morning, Merilee.

Hi, Rick.

Let me start back with gross margins again, just in the quarter. You indicated, Merilee, that it was a bit less than expected. Can you just give us a little more color in detail on some of the moving pieces. And maybe just -- I appreciate there are a lot of pressures on gross margins, but maybe just reflect on how we should think about goals for that, just maybe over the next several years. Where are we heading with gross margins? Thanks.

Sure. Well, with the quarter in particular, as I indicated, the kind of key things that were different from our expectation were really that we had some, some investments in our lab services and digital radiography and kind of -- if you know with labs, we've done some acquisitions here over the last several quarters, and so as we integrate these labs and kind of bring them up to scale and things, they are not going to have the kinds of margins that we would anticipate over the longer run. And we also have the dynamic here, too, of just very strong instrument sales. Instruments, as you know, carry a lower gross margin than our test kits and consumables. So there are kind of couple things also that go are on with the revenue mix that impact gross margin.

I think as we look over the longer term, we do see margin expansion coming at the gross margin line, and some of the things that are going to drive that are -- even with the instruments that we place, we will be, like with the launch of Catalyst, those instruments we will be selling, as you know in the U.S., we have been doing a large number of rental programs that are very low margin for us, and so Catalyst will afford us the opportunity to sell instruments. In addition and kind of more importantly, with the growth in instruments, we -- that will drive the consumables growth. And as you saw, we brought up the longer-term growth rate for instrument consumables this quarter, and those margins are very attractive for us and continue to get more attractive over time. Another dynamic that will be driving gross margin expansion will be in our reference laboratories and we do think as -- not only as the labs that we've acquired get more efficient over time, just the efficiency and the margin that we will get from volume expansion will help drive gross margins overall. So I think those are some of the key things to keep in mind as we look, as Jon mentioned, not just at 2008, but look beyond 2008 and ensuing years.

Right. It seems like you're having one of your best VetLab years ever. And I heard the goal of 5,500, or over 5,500 by year end. Maybe you can help us understand a little better, why are we seeing the strength now? Is it anticipation of, Jon, of Catalyst and SNAPshot Dx? Is it some fundamental change in the way you're marketing, or maybe give us a little more perspective on that?

Yeah, thank you for that question, Rick. I think very little of it is anticipation, although certainly our existing customers are anticipating the launch. I think what's really going on here is we have made a number of incremental improvements over the last several years, quarter by quarter, to the Idexx VetLabs Suite. And the cumulative effect of that now provides a very, very capable, powerful, easy to use, reliable, integrated in-house suite with strong Idexx sales and customer support wrapped around it. And we're just seeing the culmination of the strategy on the existing product line really start to bear, starting to see that cumulative result take off in the market in 2007. I really think that's the majority of what we've got -- of what's gone on here, combined with improvements in the way that we, that we market and sell the instrument. We've just learned a lot about marketing mix, sales force productivity, and the ability to deliver a great product message to our customers and our customers are responding to that.

Now, two last quick ones. First, maybe I missed it. I think you said the consumable breakdown, but can you break down, Merilee, the instrument and consumable number again? I think you said $15 million for consumable, just went by too fast. And last, maybe a little more color as well on tax rate. It was a bit lower than we looked for this quarter. Just again, is this tax management or geographic? Just appreciate a little perspective. Thanks.

Absolutely. Yeah, the instrument revenues for the quarter were $14.7 million, growth of 26% on a constant currency basis, and the instrument consumables were $50 million, an organic growth of 12%. And as far as the tax rate goes, in the quarter we did -- there were some specific items, as I mentioned, we received some state tax incentives and then there were some lowering of statutory rates internationally and we got some benefit from some balance sheet changes there in the quarter associated with that, that really drove the tax rate down about 4 points from what it was in the first half of the year. So as I mentioned, the benefits really, ongoing benefits from these things will be very small in ensuing quarters, so I think this 30 to 31% is kind of a better way to look at things, but we have -- we've been working over time, with acquisitions that we've done, it has afforded us opportunities, particularly internationally, to work on our tax planning and just all consistent with the things we're doing in the business, so it's helped us to really be able to drive that tax rate down.

Thanks so much to you both.

We'll hear next from Ross Taylor with C.L. King.

Hi, I have a couple of questions. Just start with a simple housekeeping item. Did you all have any discreet costs related to integration of the acquisitions you completed earlier this year during the quarter?

Ross, in the quarter, they were very minimal. They had no impact to earnings per share in the quarter.

Okay, and on the lab side, can you expand at all on what types of investments you're making there to improve service and how quickly might you be able to leverage those investments so that you start to see some margin improvement on the lab side?

Well, we are -- I would say the -- certainly it's a continuous improvement across the entire lab network, but what we've now put together is a global lab business and a lot of that, of course, in the last couple years and even in the last year, has been acquisitions. And so the investments have really been more to get the acquisitions integrated into the Company and in the position that they can benefit from some of the strategies that we have in our existing lab business. So, typically these are acquisitions of private companies. They are run differently than the kind of -- the way that we run a business, which is really for sustainable long-term performance, and sometimes that requires investment that a private company, who might not have that kind of long-term outlook, would make.

Okay, and last question, Jonathan, in your remarks you mentioned your R&D pipeline is very full. You think you have a lot of developing opportunities you can take advantage of in the future once you get beyond Catalyst Dx and SNAPshot. Can you expand at all as to what those opportunities might be? You know, are they more instruments, better instruments, more on the rapid assay side?

I would say, these are two -- actually, we have three instrument launches that we're looking at in the near future, and -- but we're going to have investments continuing across all the product lines. So I would say more generally, it's diagnostic technology that advances the practice of medicine and then also in the information technology, we're as much a provider of value to practice management as we are to medical practice, and so, across those two areas are our primary areas of R&D and pipeline. So it's really a broad arrange of diagnostic and information management capabilities.

Okay, all right. That's helpful. Thank you.

And there are no further questions at this time. Mr. Ayers, I'll turn the conference back over to you for any additional or closing remarks.

Okay, thank you very much. I appreciate everybody being on the call. I want to congratulate our Idexx employees for managing really what's extraordinary growth year to date for the Company. We look forward to updating investors at our year-end results in January.

Thank you. That ends the call. That concludes today's teleconference. We would like to thank everyone for their participation and wish everyone a great day.