Charles River Laboratories Announces Second-Quarter 2023 Results
- Positive: Revenue increased by 8.9% from the second quarter of 2022, driven by organic growth in Research Models and Services (RMS) and Discovery and Safety Assessment (DSA) business segments.
- Positive: The company's Research Models and Services (RMS) segment saw an increase of 12.6% in revenue, with an organic revenue growth of 13.9%.
- Negative: The Manufacturing segment experienced a decrease of 4.2% in revenue, primarily due to the impact of the Avian Vaccine divestiture.
- Positive: The company is narrowing its revenue growth and non-GAAP earnings per share outlooks, reflecting solid first-half financial performance and successful mitigation efforts around NHP supply constraints.
- None.
– Second-Quarter Revenue of
– Second-Quarter GAAP Earnings per Share of
– Updates 2023 Guidance –
Acquisitions contributed
On a GAAP basis, second-quarter net income attributable to common shareholders was
On a non-GAAP basis, net income was
The lower GAAP and non-GAAP net income and earnings per share were driven primarily by non-operating items, including increased interest expense and a higher tax rate, as well as the impact of the Avian Vaccine divestiture.
James C. Foster, Chairman, President and Chief Executive Officer, said, “We were pleased with our second-quarter financial results, highlighted by another strong quarter for the DSA segment and the expected improvement in the RMS and Manufacturing segments. We believe our significant scientific breadth and experience, as well as the substantial scale and duration of our DSA backlog, are important differentiators during times of macroeconomic or funding uncertainty.”
“We are also closely monitoring the near-term demand trends that show more cautious spending by biopharmaceutical clients. In this environment, we believe clients will look for scientific partners who can provide even more efficiency and speed to market, and that they will continue to choose Charles River in order to derive additional value through our flexible and efficient outsourcing solutions. We believe these factors will enable us to effectively manage the business and give us confidence in our revenue growth and non-GAAP earnings per share guidance for the year, which we are narrowing to the upper ends of the previous ranges,” Mr. Foster concluded.
Second-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was
In the second quarter of 2023, the RMS segment’s GAAP operating margin increased to
Discovery and Safety Assessment (DSA)
Revenue for the DSA segment was
In the second quarter of 2023, the DSA segment’s GAAP operating margin increased to
Manufacturing Solutions (Manufacturing)
Revenue for the Manufacturing segment was
In the second quarter of 2023, the Manufacturing segment’s GAAP operating margin decreased to
Updates 2023 Guidance
The Company is updating its 2023 financial guidance, which was previously provided on May 11, 2023. The Company is narrowing its revenue growth and non-GAAP earnings per share outlooks to largely reflect its solid first-half financial performance and the successful implementation of mitigation efforts around NHP supply constraints. These benefits are anticipated to be partially offset by near-term demand trends as biopharmaceutical clients appear to be reprioritizing their pipelines and tightening R&D budgets.
The Company’s 2023 guidance for revenue growth and earnings per share is as follows:
2023 GUIDANCE |
CURRENT |
PRIOR |
Revenue growth, reported |
|
|
Impact of divestitures/(acquisitions), net |
~ |
~ |
Impact of 53rd week in 2022 |
~ |
~ |
Unfavorable/(favorable) impact of foreign exchange |
|
|
Revenue growth, organic (1) |
|
|
GAAP EPS estimate |
|
|
Acquisition-related amortization |
|
|
Acquisition and integration-related adjustments (2) |
|
|
Venture capital and other strategic investment losses/(gains), net (3) |
|
|
Other items (4) |
|
|
Non-GAAP EPS estimate |
|
|
Footnotes to Guidance Table: |
(1) Organic revenue growth is defined as reported revenue growth adjusted for completed acquisitions and divestitures, the 53rd week in 2022, and foreign currency translation. |
(2) These adjustments are related to the evaluation and integration of acquisitions and divestitures, and primarily include transaction, advisory, certain third-party integration costs, and certain costs associated with acquisition-related efficiency initiatives. |
(3) Venture capital and other strategic investment performance only includes recognized gains or losses on certain investments. The Company does not forecast the future performance of these investments. |
(4) These items primarily relate to charges associated with |
Webcast
Charles River has scheduled a live webcast on Wednesday, August 9th, at 8:30 a.m. ET to discuss matters relating to this press release. To participate, please go to ir.criver.com and select the webcast link. You can also find the associated slide presentation and reconciliations of GAAP financial measures to non-GAAP financial measures on the website.
Investor Day
Charles River will host a virtual Meeting with Management on Thursday, September 21st, beginning at 8:30 a.m. ET. Investors will have the opportunity to listen to a webcast of the virtual event through the Investor Relations section of the Company's website at ir.criver.com. A replay will be accessible through the same website.
Non-GAAP Reconciliations
The Company reports non-GAAP results in this press release, which exclude often-one-time charges and other items that are outside of normal operations. A reconciliation of GAAP to non-GAAP results is provided in the schedules at the end of this press release.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, non-GAAP operating income, non-GAAP operating margin, and non-GAAP net income. Non-GAAP financial measures exclude, but are not limited to, the amortization of intangible assets, and other charges and adjustments related to our acquisitions and divestitures, including the gain on our sale of our Avian Vaccine business; expenses associated with evaluating and integrating acquisitions and divestitures, including advisory fees and certain other transaction-related costs, as well as fair value adjustments associated with contingent consideration; charges, gains, and losses attributable to businesses or properties we plan to close, consolidate, or divest; severance and other costs associated with our efficiency initiatives; the write-off of deferred financing costs and fees related to debt financing; investment gains or losses associated with our venture capital and other strategic equity investments; certain legal costs in our Microbial Solutions business related to environmental litigation and in our Safety Assessment business related to
Caution Concerning Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “would,” “may,” “estimate,” “plan,” “outlook,” and “project,” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements also include statements regarding Charles River’s expectations regarding the availability of
About Charles River
Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and leading academic institutions around the globe accelerate their research and drug development efforts. Our dedicated employees are focused on providing clients with exactly what they need to improve and expedite the discovery, early-stage development and safe manufacture of new therapies for the patients who need them. To learn more about our unique portfolio and breadth of services, visit www.criver.com.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||
SCHEDULE 1 | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||||||||||
(in thousands, except for per share data) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||||
Service revenue | $ |
874,891 |
|
$ |
782,827 |
|
$ |
1,732,257 |
|
$ |
1,503,312 |
|
|||||
Product revenue |
|
185,046 |
|
|
190,304 |
|
|
357,053 |
|
|
383,748 |
|
|||||
Total revenue |
|
1,059,937 |
|
|
973,131 |
|
|
2,089,310 |
|
|
1,887,060 |
|
|||||
Costs and expenses: | |||||||||||||||||
Cost of services provided (excluding amortization of intangible assets) |
|
578,099 |
|
|
522,623 |
|
|
1,143,576 |
|
|
1,009,487 |
|
|||||
Cost of products sold (excluding amortization of intangible assets) |
|
82,861 |
|
|
93,782 |
|
|
169,103 |
|
|
184,029 |
|
|||||
Selling, general and administrative |
|
199,758 |
|
|
131,711 |
|
|
374,604 |
|
|
281,744 |
|
|||||
Amortization of intangible assets |
|
34,274 |
|
|
37,604 |
|
|
69,190 |
|
|
75,611 |
|
|||||
Operating income |
|
164,945 |
|
|
187,411 |
|
|
332,837 |
|
|
336,189 |
|
|||||
Other income (expense): | |||||||||||||||||
Interest income |
|
1,426 |
|
|
188 |
|
|
2,232 |
|
|
315 |
|
|||||
Interest expense |
|
(35,044 |
) |
|
(3,703 |
) |
|
(69,424 |
) |
|
(13,137 |
) |
|||||
Other expense, net |
|
(2,663 |
) |
|
(39,783 |
) |
|
(5,940 |
) |
|
(68,408 |
) |
|||||
Income before income taxes |
|
128,664 |
|
|
144,113 |
|
|
259,705 |
|
|
254,959 |
|
|||||
Provision for income taxes |
|
29,221 |
|
|
33,449 |
|
|
56,308 |
|
|
49,069 |
|
|||||
Net income |
|
99,443 |
|
|
110,664 |
|
|
203,397 |
|
|
205,890 |
|
|||||
Less: Net income attributable to noncontrolling interests |
|
2,423 |
|
|
1,343 |
|
|
3,246 |
|
|
3,547 |
|
|||||
Net income attributable to common shareholders | $ |
97,020 |
|
$ |
109,321 |
|
$ |
200,151 |
|
$ |
202,343 |
|
|||||
Earnings per common share | |||||||||||||||||
Net income attributable to common shareholders: | |||||||||||||||||
Basic | $ |
1.89 |
|
$ |
2.15 |
|
$ |
3.91 |
|
$ |
3.99 |
|
|||||
Diluted | $ |
1.89 |
|
$ |
2.13 |
|
$ |
3.90 |
|
$ |
3.94 |
|
|||||
Weighted-average number of common shares outstanding; | |||||||||||||||||
Basic |
|
51,216 |
|
|
50,823 |
|
|
51,157 |
|
|
50,732 |
|
|||||
Diluted |
|
51,467 |
|
|
51,283 |
|
|
51,382 |
|
|
51,293 |
|
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||
SCHEDULE 2 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(in thousands, except per share amounts) | |||||||
July 1, 2023 | December 31, 2022 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ |
200,445 |
|
$ |
233,912 |
|
|
Trade receivables and contract assets, net of allowances for credit losses of |
|
800,646 |
|
|
752,390 |
|
|
Inventories |
|
285,280 |
|
|
255,809 |
|
|
Prepaid assets |
|
105,020 |
|
|
89,341 |
|
|
Other current assets |
|
113,389 |
|
|
107,580 |
|
|
Total current assets |
|
1,504,780 |
|
|
1,439,032 |
|
|
Property, plant and equipment, net |
|
1,529,640 |
|
|
1,465,655 |
|
|
Venture capital and strategic equity investments |
|
300,281 |
|
|
311,602 |
|
|
Operating lease right-of-use assets, net |
|
397,192 |
|
|
391,762 |
|
|
Goodwill |
|
2,916,593 |
|
|
2,849,903 |
|
|
Intangible assets, net |
|
929,890 |
|
|
955,275 |
|
|
Deferred tax assets |
|
38,540 |
|
|
41,262 |
|
|
Other assets |
|
155,465 |
|
|
148,279 |
|
|
Total assets | $ |
7,772,381 |
|
$ |
7,602,770 |
|
|
Liabilities, Redeemable Noncontrolling Interests and Equity | |||||||
Current liabilities: | |||||||
Accounts payable |
|
140,204 |
|
|
205,915 |
|
|
Accrued compensation |
|
190,802 |
|
|
197,078 |
|
|
Deferred revenue |
|
257,396 |
|
|
264,259 |
|
|
Accrued liabilities |
|
220,704 |
|
|
219,758 |
|
|
Other current liabilities |
|
198,517 |
|
|
204,575 |
|
|
Total current liabilities |
|
1,007,623 |
|
|
1,091,585 |
|
|
Long-term debt, net and finance leases |
|
2,678,472 |
|
|
2,707,531 |
|
|
Operating lease right-of-use liabilities |
|
401,628 |
|
|
389,745 |
|
|
Deferred tax liabilities |
|
207,404 |
|
|
215,582 |
|
|
Other long-term liabilities |
|
177,252 |
|
|
174,822 |
|
|
Total liabilities |
|
4,472,379 |
|
|
4,579,265 |
|
|
Redeemable noncontrolling interest |
|
42,447 |
|
|
42,427 |
|
|
Equity: | |||||||
Preferred stock, |
|
— |
|
|
— |
|
|
Common stock, |
|
513 |
|
|
509 |
|
|
Additional paid-in capital |
|
1,850,385 |
|
|
1,804,940 |
|
|
Retained earnings |
|
1,633,052 |
|
|
1,432,901 |
|
|
Treasury stock, at cost, 104 and zero shares, as of July 1, 2023 and December 31, 2022, respectively |
|
(23,978 |
) |
|
— |
|
|
Accumulated other comprehensive loss |
|
(208,269 |
) |
|
(262,057 |
) |
|
Total equity attributable to common shareholders |
|
3,251,703 |
|
|
2,976,293 |
|
|
Noncontrolling interests (nonredeemable) |
|
5,852 |
|
|
4,785 |
|
|
Total equity |
|
3,257,555 |
|
|
2,981,078 |
|
|
Total liabilities, redeemable noncontrolling interests and equity | $ |
7,772,381 |
|
$ |
7,602,770 |
|
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||
SCHEDULE 3 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
(in thousands) | ||||||||
Six Months Ended | ||||||||
July 1, 2023 | June 25, 2022 | |||||||
Cash flows relating to operating activities | ||||||||
Net income | $ |
203,397 |
|
$ |
205,890 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
154,740 |
|
|
151,720 |
|
||
Stock-based compensation |
|
29,730 |
|
|
29,549 |
|
||
Loss on debt extinguishment and amortization of other financing costs |
|
— |
|
|
1,987 |
|
||
Deferred income taxes |
|
(16,555 |
) |
|
(14,684 |
) |
||
Loss on venture capital and strategic equity investments, net |
|
5,176 |
|
|
23,515 |
|
||
Loss on divestitures, net |
|
563 |
|
|
— |
|
||
Changes in fair value of contingent consideration arrangements |
|
1,810 |
|
|
(15,420 |
) |
||
Other, net |
|
21,721 |
|
|
13,520 |
|
||
Changes in assets and liabilities: | ||||||||
Trade receivables and contract assets, net |
|
(48,249 |
) |
|
(117,642 |
) |
||
Inventories |
|
(32,671 |
) |
|
(63,725 |
) |
||
Accounts payable |
|
(24,985 |
) |
|
31,466 |
|
||
Accrued compensation |
|
(7,648 |
) |
|
(38,173 |
) |
||
Deferred revenue |
|
(6,796 |
) |
|
27,641 |
|
||
Customer contract deposits |
|
(17,519 |
) |
|
16,100 |
|
||
Other assets and liabilities, net |
|
(5,209 |
) |
|
360 |
|
||
Net cash provided by operating activities |
|
257,505 |
|
|
252,104 |
|
||
Cash flows relating to investing activities | ||||||||
Acquisition of businesses and assets, net of cash acquired |
|
(50,166 |
) |
|
(283,392 |
) |
||
Capital expenditures |
|
(174,258 |
) |
|
(163,316 |
) |
||
Purchases of investments and contributions to venture capital investments |
|
(22,689 |
) |
|
(108,842 |
) |
||
Proceeds from sale of investments |
|
2,943 |
|
|
205 |
|
||
Other, net |
|
(1,057 |
) |
|
(4,774 |
) |
||
Net cash used in investing activities |
|
(245,227 |
) |
|
(560,119 |
) |
||
Cash flows relating to financing activities | ||||||||
Proceeds from long-term debt and revolving credit facility |
|
281,796 |
|
|
2,180,511 |
|
||
Proceeds from exercises of stock options |
|
15,719 |
|
|
15,571 |
|
||
Payments on long-term debt, revolving credit facility, and finance lease obligations |
|
(317,049 |
) |
|
(1,856,262 |
) |
||
Purchase of treasury stock |
|
(23,978 |
) |
|
(38,468 |
) |
||
Payments of contingent consideration |
|
(2,711 |
) |
|
(10,356 |
) |
||
Purchases of additional equity interests, net |
|
— |
|
|
(15,438 |
) |
||
Other, net |
|
— |
|
|
(17,405 |
) |
||
Net cash provided by (used in) financing activities |
|
(46,223 |
) |
|
258,153 |
|
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
1,508 |
|
|
10,756 |
|
||
Net change in cash, cash equivalents, and restricted cash |
|
(32,437 |
) |
|
(39,106 |
) |
||
Cash, cash equivalents, and restricted cash, beginning of period |
|
241,214 |
|
|
246,314 |
|
||
Cash, cash equivalents, and restricted cash, end of period | $ |
208,777 |
|
$ |
207,208 |
|
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||
SCHEDULE 4 | |||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | |||||||||||||||||
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)(1) | |||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||||
Research Models and Services | |||||||||||||||||
Revenue | $ |
209,948 |
|
$ |
186,410 |
|
$ |
409,714 |
|
$ |
362,952 |
|
|||||
Operating income |
|
48,918 |
|
|
39,526 |
|
|
89,327 |
|
|
87,408 |
|
|||||
Operating income as a % of revenue |
|
23.3 |
% |
|
21.2 |
% |
|
21.8 |
% |
|
24.1 |
% |
|||||
Add back: | |||||||||||||||||
Amortization related to acquisitions |
|
5,491 |
|
|
5,472 |
|
|
10,985 |
|
|
9,310 |
|
|||||
Severance |
|
— |
|
|
453 |
|
|
— |
|
|
1,127 |
|
|||||
Acquisition related adjustments (2) |
|
997 |
|
|
971 |
|
|
1,827 |
|
|
1,354 |
|
|||||
Total non-GAAP adjustments to operating income | $ |
6,488 |
|
$ |
6,896 |
|
$ |
12,812 |
|
$ |
11,791 |
|
|||||
Operating income, excluding non-GAAP adjustments | $ |
55,406 |
|
$ |
46,422 |
|
$ |
102,139 |
|
$ |
99,199 |
|
|||||
Non-GAAP operating income as a % of revenue |
|
26.4 |
% |
|
24.9 |
% |
|
24.9 |
% |
|
27.3 |
% |
|||||
Depreciation and amortization | $ |
13,949 |
|
$ |
13,228 |
|
$ |
27,438 |
|
$ |
22,697 |
|
|||||
Capital expenditures | $ |
7,493 |
|
$ |
13,850 |
|
$ |
26,577 |
|
$ |
22,496 |
|
|||||
Discovery and Safety Assessment | |||||||||||||||||
Revenue | $ |
663,457 |
|
$ |
591,917 |
|
$ |
1,325,810 |
|
$ |
1,136,176 |
|
|||||
Operating income |
|
161,538 |
|
|
128,793 |
|
|
332,969 |
|
|
233,779 |
|
|||||
Operating income as a % of revenue |
|
24.3 |
% |
|
21.8 |
% |
|
25.1 |
% |
|
20.6 |
% |
|||||
Add back: | |||||||||||||||||
Amortization related to acquisitions |
|
17,744 |
|
|
20,849 |
|
|
35,231 |
|
|
43,214 |
|
|||||
Severance |
|
— |
|
|
387 |
|
|
— |
|
|
461 |
|
|||||
Acquisition related adjustments (2) |
|
2,359 |
|
|
(2,591 |
) |
|
2,603 |
|
|
(5,514 |
) |
|||||
Site consolidation costs, impairments and other items (3) |
|
1,492 |
|
|
2,287 |
|
|
4,297 |
|
|
2,356 |
|
|||||
Total non-GAAP adjustments to operating income | $ |
21,595 |
|
$ |
20,932 |
|
$ |
42,131 |
|
$ |
40,517 |
|
|||||
Operating income, excluding non-GAAP adjustments | $ |
183,133 |
|
$ |
149,725 |
|
$ |
375,100 |
|
$ |
274,296 |
|
|||||
Non-GAAP operating income as a % of revenue |
|
27.6 |
% |
|
25.3 |
% |
|
28.3 |
% |
|
24.1 |
% |
|||||
Depreciation and amortization | $ |
43,124 |
|
$ |
44,626 |
|
$ |
85,574 |
|
$ |
91,415 |
|
|||||
Capital expenditures | $ |
48,326 |
|
$ |
41,578 |
|
$ |
113,510 |
|
$ |
90,508 |
|
|||||
Manufacturing Solutions | |||||||||||||||||
Revenue | $ |
186,532 |
|
$ |
194,804 |
|
$ |
353,786 |
|
$ |
387,932 |
|
|||||
Operating income |
|
24,403 |
|
|
62,503 |
|
|
26,509 |
|
|
108,871 |
|
|||||
Operating income as a % of revenue |
|
13.1 |
% |
|
32.1 |
% |
|
7.5 |
% |
|
28.1 |
% |
|||||
Add back: | |||||||||||||||||
Amortization related to acquisitions |
|
11,125 |
|
|
11,373 |
|
|
23,146 |
|
|
23,271 |
|
|||||
Severance |
|
2,517 |
|
|
271 |
|
|
3,433 |
|
|
378 |
|
|||||
Acquisition related adjustments (2) |
|
2,182 |
|
|
(18,888 |
) |
|
3,011 |
|
|
(14,746 |
) |
|||||
Site consolidation costs, impairments and other items (3) |
|
2,550 |
|
|
519 |
|
|
9,612 |
|
|
1,940 |
|
|||||
Total non-GAAP adjustments to operating income | $ |
18,374 |
|
$ |
(6,725 |
) |
$ |
39,202 |
|
$ |
10,843 |
|
|||||
Operating income, excluding non-GAAP adjustments | $ |
42,777 |
|
$ |
55,778 |
|
$ |
65,711 |
|
$ |
119,714 |
|
|||||
Non-GAAP operating income as a % of revenue |
|
22.9 |
% |
|
28.6 |
% |
|
18.6 |
% |
|
30.9 |
% |
|||||
Depreciation and amortization | $ |
19,523 |
|
$ |
18,000 |
|
$ |
39,607 |
|
$ |
36,482 |
|
|||||
Capital expenditures | $ |
10,862 |
|
$ |
24,431 |
|
$ |
32,600 |
|
$ |
47,259 |
|
|||||
Unallocated Corporate Overhead | $ |
(69,914 |
) |
$ |
(43,411 |
) |
$ |
(115,968 |
) |
$ |
(93,869 |
) |
|||||
Add back: | |||||||||||||||||
Severance |
|
— |
|
|
167 |
|
|
— |
|
|
1,254 |
|
|||||
Acquisition related adjustments (2) |
|
4,799 |
|
|
3,014 |
|
|
7,002 |
|
|
7,130 |
|
|||||
Total non-GAAP adjustments to operating expense | $ |
4,799 |
|
$ |
3,181 |
|
$ |
7,002 |
|
$ |
8,384 |
|
|||||
Unallocated corporate overhead, excluding non-GAAP adjustments | $ |
(65,115 |
) |
$ |
(40,230 |
) |
$ |
(108,966 |
) |
$ |
(85,485 |
) |
|||||
Total | |||||||||||||||||
Revenue | $ |
1,059,937 |
|
$ |
973,131 |
|
$ |
2,089,310 |
|
$ |
1,887,060 |
|
|||||
Operating income |
|
164,945 |
|
|
187,411 |
|
|
332,837 |
|
|
336,189 |
|
|||||
Operating income as a % of revenue |
|
15.6 |
% |
|
19.3 |
% |
|
15.9 |
% |
|
17.8 |
% |
|||||
Add back: | |||||||||||||||||
Amortization related to acquisitions |
|
34,360 |
|
|
37,694 |
|
|
69,362 |
|
|
75,795 |
|
|||||
Severance |
|
2,517 |
|
|
1,278 |
|
|
3,433 |
|
|
3,220 |
|
|||||
Acquisition related adjustments (2) |
|
10,337 |
|
|
(17,494 |
) |
|
14,443 |
|
|
(11,776 |
) |
|||||
Site consolidation costs, impairments and other items (3) |
|
4,042 |
|
|
2,806 |
|
|
13,909 |
|
|
4,296 |
|
|||||
Total non-GAAP adjustments to operating income | $ |
51,256 |
|
$ |
24,284 |
|
$ |
101,147 |
|
$ |
71,535 |
|
|||||
Operating income, excluding non-GAAP adjustments | $ |
216,201 |
|
$ |
211,695 |
|
$ |
433,984 |
|
$ |
407,724 |
|
|||||
Non-GAAP operating income as a % of revenue |
|
20.4 |
% |
|
21.8 |
% |
|
20.8 |
% |
|
21.6 |
% |
|||||
Depreciation and amortization | $ |
77,671 |
|
$ |
76,421 |
|
$ |
154,740 |
|
$ |
151,720 |
|
|||||
Capital expenditures | $ |
67,383 |
|
$ |
82,852 |
|
$ |
174,258 |
|
$ |
163,316 |
|
(1) |
Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with |
|||||||||
(2) |
These adjustments are related to the evaluation and integration of acquisitions, which primarily include transaction, third-party integration, and certain compensation costs, fair value adjustments associated with contingent consideration arrangements, and an adjustment related to certain indirect tax liabilities. | |||||||||
(3) |
Other items include certain third-party legal costs related to (a) an environmental litigation related to the Microbial business and (b) investigations by the |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
SCHEDULE 5 | ||||||||||||||||
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (UNAUDITED)(1) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||
Net income attributable to common shareholders | $ |
97,020 |
|
$ |
109,321 |
|
$ |
200,151 |
|
$ |
202,343 |
|
||||
Add back: | ||||||||||||||||
Non-GAAP adjustments to operating income (Refer to previous schedule) |
|
51,256 |
|
|
24,284 |
|
|
101,147 |
|
|
71,535 |
|
||||
Venture capital and strategic equity investment losses, net |
|
1,873 |
|
|
9,612 |
|
|
5,155 |
|
|
23,515 |
|
||||
Loss on divestitures (2) |
|
1,003 |
|
|
— |
|
|
562 |
|
|
— |
|
||||
Other (3) |
|
596 |
|
|
3,608 |
|
|
495 |
|
|
3,965 |
|
||||
Tax effect of non-GAAP adjustments: | ||||||||||||||||
Non-cash tax provision related to international financing structure (4) |
|
1,296 |
|
|
1,341 |
|
|
2,420 |
|
|
2,463 |
|
||||
Tax effect of the remaining non-GAAP adjustments |
|
(14,759 |
) |
|
(6,293 |
) |
|
(28,658 |
) |
|
(20,813 |
) |
||||
Net income attributable to common shareholders, excluding non-GAAP adjustments | $ |
138,285 |
|
$ |
141,873 |
|
$ |
281,272 |
|
$ |
283,008 |
|
||||
Weighted average shares outstanding - Basic |
|
51,216 |
|
|
50,823 |
|
|
51,157 |
|
|
50,732 |
|
||||
Effect of dilutive securities: | ||||||||||||||||
Stock options, restricted stock units and performance share units |
|
251 |
|
|
460 |
|
|
225 |
|
|
561 |
|
||||
Weighted average shares outstanding - Diluted |
|
51,467 |
|
|
51,283 |
|
|
51,382 |
|
|
51,293 |
|
||||
Earnings per share attributable to common shareholders: | ||||||||||||||||
Basic | $ |
1.89 |
|
$ |
2.15 |
|
$ |
3.91 |
|
$ |
3.99 |
|
||||
Diluted | $ |
1.89 |
|
$ |
2.13 |
|
$ |
3.90 |
|
$ |
3.94 |
|
||||
Basic, excluding non-GAAP adjustments | $ |
2.70 |
|
$ |
2.79 |
|
$ |
5.50 |
|
$ |
5.58 |
|
||||
Diluted, excluding non-GAAP adjustments | $ |
2.69 |
|
$ |
2.77 |
|
$ |
5.47 |
|
$ |
5.52 |
|
(1) |
Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with |
||||||||
(2) |
Adjustments included in 2023 relate to the gain on sale of our Avian business, which was divested in 2022. | ||||||||
(3) |
Amount included in 2023 relates to a final adjustment on the termination of a Canadian pension plan. Amount included in 2022 relates to the sale of RMS Japan operations in October 2021 and a reversal of an indemnification asset related to a prior acquisition. | ||||||||
(4) |
This amount relates to the recognition of deferred tax assets expected to be utilized as a result of changes to the Company's international financing structure. |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. |
|||||||||||||
SCHEDULE 6 |
|||||||||||||
RECONCILIATION OF GAAP REVENUE GROWTH |
|||||||||||||
TO NON-GAAP REVENUE GROWTH, ORGANIC (UNAUDITED) (1) |
|||||||||||||
Three Months Ended July 1, 2023 | Total CRL | RMS Segment | DSA Segment | MS Segment | |||||||||
Revenue growth, reported | 8.9 |
% |
12.6 |
% |
12.1 |
% |
(4.2 |
)% |
|||||
Decrease (increase) due to foreign exchange | 0.2 |
% |
1.3 |
% |
(0.1 |
)% |
— |
% |
|||||
Contribution from acquisitions (2) | (0.2 |
)% |
— |
% |
(0.3 |
)% |
— |
% |
|||||
Impact of divestitures (3) | 2.3 |
% |
— |
% |
— |
% |
10.8 |
% |
|||||
Non-GAAP revenue growth, organic (4) | 11.2 |
% |
13.9 |
% |
11.7 |
% |
6.6 |
% |
|||||
Six Months Ended July 1, 2023 | Total CRL | RMS Segment | DSA Segment | MS Segment | |||||||||
Revenue growth, reported | 10.7 |
% |
12.9 |
% |
16.7 |
% |
(8.8 |
)% |
|||||
Decrease due to foreign exchange | 1.1 |
% |
1.9 |
% |
1.0 |
% |
0.9 |
% |
|||||
Contribution from acquisitions (2) | (0.9 |
)% |
(4.3 |
)% |
(0.3 |
)% |
— |
% |
|||||
Impact of divestitures (3) | 2.3 |
% |
— |
% |
— |
% |
10.3 |
% |
|||||
Non-GAAP revenue growth, organic (4) | 13.2 |
% |
10.5 |
% |
17.4 |
% |
2.4 |
% |
(1) |
Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with |
|||||||||
(2) |
The contribution from acquisitions reflects only completed acquisitions. | |||||||||
(3) |
The Company sold our Avian business on December 20, 2022. These adjustments represent the revenue from these businesses for all applicable periods in 2023 and 2022. | |||||||||
(4) |
Organic revenue growth is defined as reported revenue growth adjusted for acquisitions, divestitures, and foreign exchange. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230809025737/en/
Investor Contacts:
Todd Spencer
Corporate Vice President,
Investor Relations
781.222.6455
todd.spencer@crl.com
Media Contact:
Amy Cianciaruso
Corporate Vice President,
Chief Communications Officer
781.222.6168
amy.cianciaruso@crl.com
Source: Charles River Laboratories International, Inc.
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