IDEXX Laboratories, Inc.

Transcription

1 IDEXX Laboratories, Inc. All rights reserved. IDEXX Laboratories, Inc. Jonathan Ayers, Chairman and Chief Executive Officer 40 th Annual Raymond James Institutional Investors Conference March 4, 2019

2 Safe Harbor Disclaimer The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements are based on management s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. The reports filed by the Company pursuant to United States securities laws contain discussions of these risks and uncertainties. The Company assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to review the Company s filings with the United States Securities and Exchange Commission (which are available from the SEC s EDGAR database at and via the Company s website at We refer in this presentation to projections communicated at our Investor Day on August 15, 2018 and our 2019 outlook communicated on February 1, 2019; these references speak only as of the respective dates on which they were communicated and shall not be deemed to be a reiteration or affirmation of the guidance or an indication that our expectations have not changed since that time. Non-GAAP Financial Measures In this presentation, we refer to some non-gaap financial measures. For a reconciliation to the most comparable GAAP financial measures, we refer you to our footnotes and the Appendix to this presentation, which also refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2018, both available at Please refer to additional footnotes in the Appendix IDEXX Laboratories, Inc. All rights reserved.

3 IDEXX - Focus on Pet Healthcare Diagnostics and Software Highly attractive long-term secular growth opportunity Global leadership position Innovation driven, with widening competitive gap Durable recurring revenue model Consistent double-digit organic revenue growth history IDEXX Laboratories, Inc. All rights reserved.

4 Pet Owners View their Pets as Members of their Families and Can t Imagine Giving them Up I feel that my pet is an important part of my family. 98% I couldn t imagine giving up my pet for any reason. 95% Percentages represent those responding Strongly agree or Agree. Source: Pet Owner Survey conducted in 2016 by The Human Animal Bond Research Institute (HABRI) Foundation in partnership with Cohen Research Group (n = 1,995 pet owners), which had a margin of error of plus or minus 2.2% IDEXX Laboratories, Inc. All rights reserved.

5 Many Owners Believe their Pet has Special Health Needs U.S. Pet Owner Survey * : % Agreeing with Statement Baby Boomers (55 yrs to 74 yrs) Millennials & Gen Z (18 yrs to 39 yrs) My pet has special health needs 19% 42% I rely on my veterinarian for advice about medicine and pet food 65% 75% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% * Source: Gen Z and Millennials as Pet Market Consumers: Dogs, Cats and Other Pets, Packaged Facts, February, IDEXX Laboratories, Inc. All rights reserved.

6 IDEXX is Led by Companion Animal Diagnostics Recurring Revenue Total IDEXX Revenue ($Billion) 1,2 $ $2.2B 13% Non-Recurring Other Recurring 1.0 $1.1B 14% 75% Companion Animal Diagnostics Recurring % ,2 Please refer to the Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

7 CAG Diagnostics Recurring Revenue is Split Between Off-site Reference Laboratory Services and In-hospital Point of Care 2018 CAG Diagnostics Recurring Revenue ($Billion) Reference Laboratory Diagnostics** $0.7 Point of Care Diagnostics* $0.9 *Point of Care Diagnostics include IDEXX VetLab consumables, rapid assay products and CAG Diagnostics service and accessories. **Reference Laboratory Diagnostics include reference laboratory diagnostics and consulting services IDEXX Laboratories, Inc. All rights reserved.

8 Consistent, Strong CAG Diagnostics Recurring Annuity Gains Annual CAG Diagnostics Recurring Revenue and Normalized Organic Revenue Growth 1,2,3,7 ($Billion) $ % 12.8% 11.9%* 2018: 21% growth in premium instrument installed base Expanding proprietary diagnostic offering through innovation Preventive Care adoption in the U.S % customer retention * Organic revenue growth normalized for a one-time growth rate benefit of 1.3% attributable to the adoption of ASU , Revenue from Contracts with Customers (the "New Revenue Standard"), refer to Appendix for additional information. 1,2 Please refer to the Appendix for descriptive footnotes. 3,7 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

9 IDEXX s Consistent Investment in Innovation Creates a Growing, Proprietary Competitive Gap Comparison of Annual R&D Investment of Major Veterinary Diagnostics Companies ($M), calendar years shown IDEXX Invests More than 80% of Identifiable Diagnostic Industry R&D * * * * * * * VCA* Heska** Zoetis/Abaxis*** IDEXX Laboratories**** * VCA does not report any R&D investments in its filings with the U.S. Securities and Exchange Commission ( SEC ). Following acquisition of VCA, Inc. by Mars in 2017, there are no further public disclosures. ** Heska R&D expense based on public filings. *** Reflects Abaxis, Inc. reported R&D expense for 2012 through Due to the acquisition of Abaxis, Inc. by Zoetis, Inc. which closed on July 31, 2018, Abaxis did not report R&D expense for April 1 st through December 31 st, Therefore, the 2018 estimate is based on multiplying the ratio of total 2017 R&D expense divided by R&D expense for the first 3 months of 2017 by Abaxis R&D expense for the first 3 months of **** IDEXX Laboratories, Inc. R&D expense. Sources: Company SEC filings; earnings releases IDEXX Laboratories, Inc. All rights reserved.

10 Point of Care Lab Differentiated by Performance, Menu and Software Enabled by Technology for Life Strategy Practice Management System 2-Way Integration IDEXX VetLab Station IDEXX Reference Lab Results Catalyst One Chemistry, SDMA, T4, Electrolytes ProCyte Dx Complete CBC, Retics & Bands SediVue Dx Urine Sediment SNAP Pro Infectious Diseases IDEXX Laboratories, Inc. All rights reserved.

11 Catalyst Chemistry Platform with Expanding and Unique Menu Seven Chemistry Tests in Seven Years Phenobarbital Seizures Fructosamine Diabetes Total T4 Thyroid CRP Inflammation SDMA Kidney Progesterone Reproduction SDMA/ Total T4 Core Profiles One sample One patient run Up to 22 standard tests New Tests - Combine with Any Profile Same sample Same patient run More results IDEXX Laboratories, Inc. All rights reserved.

12 Catalyst Progesterone Predicts Breeding Window with Real Time Results IDEXX Laboratories, Inc. All rights reserved.

13 In 2019: IDEXX s Proprietary Preventive Care Offering Comes of Age Pets age faster than people Expectations for pet care are growing IDEXX innovations expand disease detection, advancing justification for wellness testing 4Dx Plus Fecal Dx Antigen Profile IDEXX SDMA IDEXX Laboratories, Inc. All rights reserved.

14 IDEXX SDMA: Elevation is an Indication of an Impaired GFR Glomerular filtration rate (GFR) IDEXX Laboratories, Inc. All rights reserved.

15 Preventive Care Bloodwork Frequently Uncovers Significant Findings 268,817 visits from 5,016 practices 1 in 7 adults dogs aged 3 6 years; cats aged 2 8 years 1 in 5 seniors dogs aged 7 10 years; cats aged 9 13 years 2 in 5 geriatrics dogs aged 11+ years; cats aged 14+ years Preventive care profiles (Chem 22 with CBC and IDEXX SDMA); revealed that three or more clinically significant findings and/ or 1 abnormal SDMA were evident in patients from adult to geriatric life stages requiring veterinary follow-up (adults: 15%; seniors: 21%; geriatrics: 42%). Testing completed on samples from 268,817 wellness consultations from 5,016 clinics using IDEXX Reference Laboratories. Data on file at IDEXX Laboratories, Inc. Westbrook, Maine USA IDEXX Laboratories, Inc. All rights reserved.

16 IDEXX's Preventive Care Challenge Inspires Higher Inclusion of Core Bloodwork During the Pet Visit 350 Number of Practices by Range of Chemistry Utilization* Higher Utilization Segments < 6% 6% - 7% 8% - 9% 10% - 11% 12% - 13% 14% - 15% 16% - 17% 18% - 19% 20% - 21% 22% - 23% 24% - 25% 26% - 27% > 27% Utilization (Chemistry Panels/ Clinical Visits) * Chemistry Utilization defined as percentage of clinical visits including a chemistry panel for the full year 2018 (n = 1,996) IDEXX Laboratories, Inc. All rights reserved.

17 IDEXX Fecal Dx Antigen Profile: Improved Detection of Intestinal Parasites Double the detection and lower cost Detects actual parasite presence not influenced by egg counts Permits earlier detection Endorsed by industry experts * Analysis based on a sample of 442,884 canines, presenting for preventive care visits with fecal exams sent to IDEXX Reference Labs between December, 2015 and June, IDEXX Laboratories, Inc. All rights reserved.

18 Only ~15% of U.S. Dogs Receive a Vector-borne Disease Screen Annually 2018 U.S. Canine Vector-borne Disease Screening % of Total Dogs U.S. Householdowned Dogs ~80 million dogs 100% Have a Routine / Wellness Visit in 2018 ~50 million 63% Received a Heartworm Only Test ~17 million 20% Received a Full Vectorborne Disease Screening ~12 million < 15% IDEXX Laboratories, Inc. All rights reserved.

19 IDEXX 4Dx Plus: IDEXX is Unique with Peer-reviewed Accuracy 65+ peer-reviewed and published papers demonstrating 4Dx Plus superior accuracy Supports Companion Animal Parasite Council (CAPC) recommendation for comprehensive annual heartworm and tick-borne disease testing Capable of differentiating infection versus vaccination IDEXX Laboratories, Inc. All rights reserved.

20 Preventive Care: A Driver of IDEXX Diagnostics Recurring Revenue Growth Preventive Care Challenge Program: IDEXX CAG Dx Recurring Revenue Growth per Practice, Post-Implementation + 44% + 21% 783 Practices Enrolled* Top 150 Practices Enrolled ** Analysis conducted in * Average estimate for 783 practices enrolled in IDEXX Preventive Care Challenge, with a minimum of 12 months post-enrollment. ** Median estimate for the Top 150 existing practices defined based on the greatest increase in CAG Dx recurring revenue post-enrollment IDEXX Laboratories, Inc. All rights reserved.

21 IDEXX s Unique Preventive Care Opportunity is Significant Preventive Care Total Addressable U.S. Market Estimated ~$3.0B $0.6B $0.2B $3.0B $1.2B $1.0B IDEXX realizes ~10% of this potential today Chemistry & Hematology Fecal Testing Vector-borne Disease & Urinalysis Total Feline Viral Testing IDEXX Laboratories, Inc. All rights reserved.

22 IDEXX SediVue Analyzer has Long Runway for Growth When Framed Relative to Our Premium Chemistry and Hematology Customer Base Worldwide SediVue Customers (as of end 2018, in thousands)* 33,000 Worldwide Customers (as of end 2018, in thousands)* 29,000 35,000 ~5x 1,600 3,900 6, IDEXX SediVue Customers * All figures are rounded. Excludes practices too small to be likely candidates for chemistry analyzer placement at this time. Potential IDEXX SediVue Customers IDEXX Premium Hematology Customers IDEXX Catalyst Customers IDEXX Laboratories, Inc. All rights reserved.

23 U.S. Salesforce Expansion has Accelerated the Rate of IDEXX Diagnostics Recurring Revenue Growth + 8% Rate of Organic Growth U.S. CAG Diagnostics Year Revenue Potential + 13% 9% - 13% Recurring Revenue 1,2,3 Growth Rate Compound Annual Total U.S. CAG Field- Based Professional Headcount * * Includes all field-based sales and technical services headcount, excluding management. Figures as of December 31 of each calendar year. 1,2 Please refer to the Appendix for descriptive footnotes. 3 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

24 Opportunity to Grow Revenues by Inspiring our Existing Customers to Utilize IDEXX s Complete Suite of Diagnostic Offerings IDEXX U.S. Companion Animal Customer Overlap Percentage of IDEXX Reference Lab or IDEXX In-house Chemistry Platform Customers who are IDEXX Customers for Both* IDEXX VetLab ONLY Customers 36% 42% 46% 48% 52% IDEXX Ref Lab ONLY Customers * Analysis as of the end of each calendar year for 2012, 2014, 2016, 2017 and IDEXX Laboratories, Inc. All rights reserved.

25 Catalyst Placement Opportunity is Significant Outside North America Existing Catalyst Customers Represent Only ¼ of Total Addressable Market Catalyst Placement Opportunities by Type (as of end 2018, in thousands)* Greenfield (no analyzer) 20,000 IDEXX VetTest customers that could upgrade Competitor Analyzer 29,000 Over 60k Catalyst Placement Opportunities 12,500 18,500 IDEXX Catalyst Customers IDEXX VetTest Customers Potential IDEXX Chemistry Customers * All figures are rounded. Excludes practices too small to be likely candidates for chemistry analyzer placement at this time IDEXX Laboratories, Inc. All rights reserved.

26 Our Expanding International CAG Commercial Presence Supports Accelerated Capital Instrument Placements 5-Year Growth Rate Potential + 7% Rate of Organic Growth International CAG Diagnostics Recurring Revenue 1,2, % % - 16% Compound Annual Growth Rate Total International CAG Field-Based Professional Headcount * Includes all field-based sales and technical services headcount, excluding management. Figures as of December 31 of each calendar year 1,2 Please refer to the Appendix for descriptive footnotes. 3 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

27 Five-Year Potential for Continued 10%+ Annual Revenue Growth Driven by Expansion of CAG Diagnostics Recurring Revenue IDEXX Total Company Annual Revenue Growth Potential 2023 vs. 2018, Constant Currency* 12% - 16%*** 8% - 12%*** 6% - 8%*** ~2023 Revenue 10%+ Compound Annual Growth Rate 9% - 13%*** 2018 Revenue $2.213B U.S. CAG Dx International CAG Dx CAG Recurring 1 Veterinary Software & Digital CAG Capital LPD, Water & Other * These projections were communicated at Investor Day on August 15, 2018 and assume that foreign currency exchange rates will remain the same as in Please refer to our Safe Harbor Disclaimer. *** Estimated potential revenue compound annual growth rate for this business segment. 1 Please refer to the Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

28 We are Delivering Against our Long-term Financial Goals Multi-Year Goals E* Organic Revenue Growth 3 10%+ 10.4% 11.6% 9.5% - 11% Operating Margin Gain (Constant Currency) bps 140 bps 130 bps bps EPS Growth (Comparable Constant Currency) 5 15% - 20% 21% 36% 15% - 18% *All references to 2019E reflect the 2019 outlook communicated February 1, Please refer to our Safe Harbor Disclaimer. 3,4,5 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

29 Strong Execution of Consistent, Focused Strategy Yields High ROIC After-Tax Return on Invested Capital, Excluding Cash & Investments 8 8 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes IDEXX Laboratories, Inc. All rights reserved.

30 IDEXX Exceptional, Durable Growth and Financial Returns An Enduring Recurring Revenue Business Model with favorable long-term global growth dynamics augmented by IDEXX s unique innovation and commercial model generating exceptional long-term financial returns IDEXX Laboratories, Inc. All rights reserved.

31 Appendix

32 Footnotes 1 Recurring Revenue: Annual recurring revenue for Livestock, Poultry and Dairy ( LPD ), Water, Veterinary Software Services and Diagnostic Imaging Systems, Rapid Assay and IDEXX VetLab include and exclude the following as applicable: LPD excludes government sponsored eradication programs and herd health screening revenues, Water excludes sealer and filtration instruments, Veterinary Software Services and Diagnostic Imaging Systems excludes client server based placements and radiography instruments, Rapid Assay excludes SNAP Pro instruments, and IDEXX VetLab includes consumables, service and accessories. 2 IDEXX Reportable Segment Revisions and Divested Revenues: Prior to January 1, 2015, our Companion Animal Group ( CAG ) segment included herd testing diagnostic services processed within and managed by our CAG reference laboratories. We have transitioned the responsibility for these diagnostic services to our LPD segment to more effectively align our business with the nature and customers of these livestock services. Revenue and revenue growth calculations have been retrospectively revised to reflect this change in the composition of our reportable segments. The impact on CAG Diagnostics Recurring revenue growth was not material. 3 Organic Revenue Growth: Organic revenue growth is a non-gaap financial measure and excludes the impact of changes in foreign currency exchange rates and revenue from business acquisitions. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to business acquisitions that have occurred since the beginning of the prior year period. Effective January 1, 2018, we exclude only acquisitions that are considered to be a business (consistent with ASU , Business Combinations: (Topic 850) Clarifying the Definition of a Business ) from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management s Discussion and Analysis of Financial Conditions and Results of Operations Results of Operations and Trends Non GAAP Financial Measures, contained in the Company s Annual Report on Form 10 K for the year ended December 31, 2018 available at See table below for impact of currency and acquisitions to CAG Diagnostics Recurring revenue for For U.S. CAG Diagnostics recurring revenue growth, the impact from currency and acquisitions was immaterial for 2011 and For International CAG Diagnostics recurring revenue growth, the impact from acquisitions was immaterial for 2011 and 2018, and currency changes increased growth by 9% and 2%, respectively. Currency changes increased total company revenue growth by 0.3% in 2017 and 0.7% in 2018, and are expected to decrease revenue growth by 1.5% in Revenue from acquisitions increased total company revenue growth by 0.2% in 2017, 0.1% in 2018, and is expected to have an immaterial impact in CAG Diagnostics Recurring Revenue (1) Reported Growth 12% 13% 14% Currency Impact (2) -1% 0% 1% Acquisition Impact 0% 0% 0% Organic Growth 12% 13% 13% (1) See Footnote 1 for a description of IDEXX recurring revenue (2) See Footnote 4 for a description of constant currency. Note that all years are restated and currency impact will vary from previously reported figures IDEXX Laboratories, Inc. All rights reserved.

33 Footnotes 4 Constant Currency: Constant currency references are non-gaap financial measures and exclude the impact of changes in foreign currency exchange rates. Management believes that constant currency information provides valuable supplemental information regarding our revenue, operating margin and EPS results because it is consistent with how management evaluates our performance and facilitates comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, operating margin, and EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. Prior periods were restated to current rates and may vary from previously reported constant currency figures. Estimated currency changes are expected to decrease projected 2019 revenue growth by approximately 1.5%, decrease projected operating profit margin growth by 20 basis points, and decrease projected EPS growth by approximately 1%. See Footnote 3, Organic Revenue Growth, for further details of currency impacts on revenue growth. 5 Comparable Constant Currency EPS growth: Comparable constant currency EPS growth is a non-gaap financial measure. Comparable constant currency EPS growth represents the percentage change in earnings per share (diluted), as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates and excluding nonrecurring items. Management believes comparable constant currency EPS growth is a more useful way to measure the Company s business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Comparable constant currency EPS growth excludes the third quarter 2015 non-cash software impairment charge of $8.2 million, the impact of the Company s adoption of share-based compensation accounting change (ASU ) for the periods after its adoption on January 1, 2017, a one-time negative impact related to the 2017 Tax Cuts and Jobs Act ( U.S. Tax Reform ), and a discrete tax benefit related to the expected utilization of foreign tax credits in Share-based compensation activity is expected to increase projected EPS by $0.07 to $0.10 or the full year Estimated currency changes are expected to decrease projected EPS growth by approximately 1%.The reconciliation of this non-gaap financial measure is as follows: For the Year Ended December 31, Earnings per share (diluted) $2.05 $2.44 $2.94 $4.26 Impairment charge $0.06 Impact of adoption of ASU (0.30) (0.24) Impact of U.S. Tax Reform 0.34 Impact of foreign tax credit utilization (0.04) Comparable EPS $2.11 $2.44 $2.94 $4.02 Change from currency (0.01) Comparable constant currency EPS $2.11 $2.64 $2.96 $4.01 Comparable constant currency EPS Growth 25% 21% 36% IDEXX Laboratories, Inc. All rights reserved.

34 Footnotes 6 Constant Currency Operating Margin Gains: Constant currency operating margin gain represents the percentage change in operating margin, as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates and excluding non-recurring items. Constant currency operating margin gain should be considered in addition to, and not as a replacement of or a superior measure to, operating margin improvement reported in accordance with GAAP. Estimated currency changes are expected to decrease projected operating profit margin growth by 20 basis points. Management believes that reporting constant currency operating margin gain provides useful information to investors by facilitating easier comparisons of our operating margin performance with prior and future periods. The reconciliation of this non-gaap financial measure is as follows: For the Year Ended December 31, Dollar amounts in thousands Income from operations $299,912 $350,239 $413,028 $491,335 Operating margin 18.7% 19.7% 21.0% 22.2% Change from currency 24,180 1,051 (1,331) Constant currency income from operations $374,419 $414,079 $490,004 Constant currency operating margin (1) 20.9% 21.1% 22.3% Constant currency operating margin growth 170 bps 140 bps 130 bps (1) Amounts presented may not recalculate to constant currency operating margin or constant currency margin improvement due to rounding 7 CAG Diagnostics Recurring Normalized Organic Revenue Growth: CAG Diagnostics recurring normalized organic revenue growth is a non-gaap financial measure, and it represents CAG Diagnostics recurring organic revenue growth normalized for the effects of the adoption of ASU , Revenue from Contracts with Customers (the "New Revenue Standard"), primarily related to the modified retrospective restatement. Management believes CAG Diagnostics recurring normalized organic revenue growth is a more useful way to measure business performance because it enables better period-over-period comparisons of the fundamental financial results by excluding one-time growth rate benefits. Effective January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method for all contracts not completed as of the date of adoption. We recognized the cumulative effect of initially applying the New Revenue Standard as an adjustment to the opening balance of retained earnings. CAG Diagnostics recurring revenue included approximately $18.6 million in 2018 that was attributed to the New Revenue Standard IDEXX Laboratories, Inc. All rights reserved.

35 Footnotes 8 After-Tax Return on Invested Capital, Excluding Cash and Investments ( ROIC ): After-Tax Return on Invested Capital, Excluding Cash and Investments is a non-gaap financial measure. After-tax return on invested capital, excluding cash and investments, represents our after-tax income from operations, divided by our average invested capital, excluding cash and investments, using beginning and ending balance sheet values. After-tax return on invested capital, excluding cash and investments, after-tax income from operations and average invested capital, excluding cash and investments, are not measures of financial performance under GAAP and should be considered in addition to, and not as replacements of or superior measures to, return on assets, net income, total assets or other financial measures reported in accordance with GAAP. Management believes that reporting after-tax return on invested capital provides useful information to investors for evaluating the efficiency and effectiveness of our use of capital. The reconciliation of this non-gaap financial measure is as follows: For the Year Ended December 31, Numerator (amounts in millions) Income from operations (as reported) $ 267 $ 260 $ 300 $ 350 $ 413 $ 491 After-tax income from operations (1) $ 205 $ 209 $ 223 $ 258 $ 315 $ 405 As of December 31, Denominator (dollar amounts in millions) Total shareholders equity (deficit) $ 518 $ 118 $ (84) $ (108) $ (54) $ (10) Noncontrolling interest $ - $ - $ - $ - $ 0 $ 0 Line of credit $ 277 $ 549 $ 573 $ 611 $ 655 $ 399 Long-term debt $ 150 $ 350 $ 597 $ 593 $ 607 $ 601 Deferred income tax assets $ (8) $ (8) Deferred income tax liabilities $ 34 $ 42 $ 49 $ 39 $ 25 $ 29 Total invested capital $ 980 $ 1,058 $ 1,135 $ 1,135 $ 1,225 $ 1,011 Less cash & marketable securities $ 279 $ 323 $ 343 $ 392 $ 472 $ 124 Total invested capital, excluding cash and investments $ 701 $ 735 $ 792 $ 743 $ 753 $ 887 Average invested capital, excluding cash and investments (2) $ 718 $ 764 $ 768 $ 748 $ 820 After-tax return on invested capital, excluding cash and investments 29% 29% 34% 42% 49% (1) After-tax income from operations represents income from operations reduced by our reported effective tax rate adjusted for the impact of non-recurring tax items in order to facilitate easier comparison among periods. The tax rate used in the calculation is adjusted for the impact from the share-based compensation accounting change (ASU ) prior to its adoption on January 1, Adjusting for this impact reduced the 2015 tax rate by 4% and reduced the 2016 tax rate by 5%. In addition, the after-tax income from operations in 2017 includes two tax-related adjustments: a one-time negative impact related to the enactment of the Tax Cuts and Jobs Act for the fourth quarter, due to the deemed repatriation of the Company s foreign profits, net of the remeasurement of deferred taxes at the lower enacted corporate tax rate, increased our 2017 tax rate b y approximately 8%; a discrete tax benefit related to the expected utilization of foreign tax reduced our effective tax rate by approximately 1%. For further information on these adjustments to the effective tax rate, see the Company's Annual Reports on Form 10-K available at (2) Average invested capital, excluding cash and investments, represents the average of the amount of total invested capital, excluding cash and investments IDEXX Laboratories, Inc. All rights reserved.