On Friday, Idexx Laboratories (NASDAQ:IDXX) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
End Markets Slowdown Throughout Q2
Ryan Daniels – William Blair: I’ve got one macro and then one Company-specific follow-up. On the macro, you mentioned in your prepared comments that the end markets slowed a bit in the second quarter, which is not surprising, but also that you saw some deterioration throughout the period, and I’m curious, first-off, if you can talk about the magnitude of that slowdown through the second quarter; and then, number two, is there any ability to perhaps determine how much of that was weather-related, maybe it was more flea and tick weakness throughout the quarter. So anything that you can help kind of segment between macro weakness and pull-forward weakness will be helpful?
Jonathan W. Ayers – Chairman, President and CEO: Ryan, certainly a question of great interest to us all. To answer the first part of the question, I think the growth was a couple of points less in the third month than it was in the first two months. But I do caution that monthly data is – it can be quite noisy, because you’ve really got a very small amount of time that you are measuring that year-over-year compare. It’s hard for us. We don’t really have direct visibility to the flea and tick piece and pull-forward and such. So it’s really hard to speculate. Certainly, there was a favorable weather compare in the first quarter, which we mentioned in April. I think it’s not any secret to anyone that consumer confidence and general economic trends seem to deteriorate a little bit over the second quarter and that was consistent with, I think, what we saw in our markets, again, subject to a caveat of volatility and monthly data.
Ryan Daniels – William Blair: And then a Company-specific, just on the resolution with the distribution agreements, sounds like it now maybe in place by Labor Day. Does that mean in the fourth quarter you’ll start to make some changes and is that contemplated in your guidance related to things like maybe ramping up your direct sales force, or will that really mostly take place in fiscal ’13?
Jonathan W. Ayers – Chairman, President and CEO: We, of course, remind investors that our distributor contracts do go through the end of the year and it is our anticipation and discussion with our distributors, although anything can happen that they would like us to honor those contracts through the end of the year. So, any actual changes that would take place in that contemplated scenario would be at the beginning of the new contract year of January 2013. Our guidance really incorporated some, all the different moving parts of the company and we would see that the Vet transition is something that we’d manage within our numbers.
David Clair – Piper Jaffray: The first question I have just, if you could maybe give us an update on Europe, it sounds like on the reference lab side we might have seen a little weakness there. Do you think this has stabilized or you’re expecting some additional deterioration throughout the year?
Merilee Raines – Corporate VP, CFO and Treasurer: David, as I mentioned even though the overall Companion Animal Group growth in Europe was constant at 5% in the second quarter with the first quarter. It did vary by product line, varied by country. It’s really hard for us to predict where that would go, I think implicit in our guidance is we can’t presume that – what we’ve seen will just continue and obviously we’re closely monitoring the situation, that was just a little bit tough to call.
Jonathan W. Ayers – Chairman, President and CEO: In the mean time of course we will be starting that new significant lab during the fourth quarter and we’ll get a little benefit from that as it starts up.
David Clair – Piper Jaffray: I’m not asking for any 2013 guidance here, but as we kind of think about the impact from the distributor change any kind of initial thoughts of how — should we assume there is a little bump-up in sales and marketing or any kind of color there?
Jonathan W. Ayers – Chairman, President and CEO: Well, we anticipate that the impact on the changes and the modest refinements in the composition of our marketing and sales and channel costs where we have whatever we will have difference in efficacy at the distributor level, we will replace with direct cost and I don’t think the bottom line will be different or the trends will be different. Although, of course, the composition might be a little bit different. So, we really see, as we mentioned in the April call that any shifts will offset each other.