Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Baird 2010 Growth Stock Conference
30 slides from Charles River Laboratories International's conference presentation, May 19, 2010
Slide 1: Charles River and WuXi PharmaTech: The First Global Early-Stage CRO
[GRAPHIC OMITTED] Baird 2010 Growth Stock Conference Charles River and WuXi PharmaTech: The First Global Early-Stage CRO James C. Foster Chairman, President and CEO May 19, 2010 [GRAPHIC OMITTED] charles river (C) 2010 Charles River Laboratories International, Inc. slide01
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document 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," "estimate," "plan," "outlook," and "proje
Slide 3: Regulation G and Additional Information
Regulation G This presentation includes discussion of non-GAAP financial measures with respect to Charles River and also with respect to WuXi included in WuXi's first-quarter 2010 earnings release filed on Form 6-K with the SEC on May 12, 2010. We believe that the inclusion of these non-GAAP financi
Slide 4: The New Charles River
The New Charles River > Charles River signed a definitive agreement to acquire WuXi PharmaTech for ~$1.6B(1) in cash and stock on April 26th > The combination creates the first early-stage contract research organization (CRO) > Offers a full range of products and services from molecule creation to f
Slide 5: A leading in vivo biology company
> A leading in vivo biology company > $1.20B in net sales (FY `09) > Unique portfolio of products and services focused on the research and development continuum for new drugs > A multinational company with ~8,000 employees worldwide [] ~70 facilities in 16 countries o Continuous expansion to support
Slide 6: WuXi Today
WuXi Today > A leading chemistry company > $270M in net sales (FY09) > Service portfolio supports clients early with molecule creation, extending downstream through laboratory and manufacturing services > Largest China-based CRO with ~4,200 employees worldwide [] One of the largest employers of chem
Slide 7: WuXi Overview
WuXi Overview Headquarters Service Offerings Employees Facilities Customers * Current Good Manufacturing Practice > Shanghai, China > Laboratory services, consisting of synthetic and medicinal chemistry, DMPK/ADME, biology, microbiology, in vivo pharmacology, toxicology, pharmaceutical development,
Slide 8: WuXi Overview -- History
WuXi Overview -- History [GRAPHIC OMITTED] Source: Based on WuXi's information as disclosed in its Form 20-F filed with the SEC on 04/23/2010 and other public documents. [GRAPHIC OMITTED] 8 charles river slide08
Slide 9: WuXi's Current Discovery Services
WuXi's Current Discovery Services [GRAPHIC OMITTED] [GRAPHIC OMITTED] 9 charles river slide09
Slide 10: CRL's Current Preclinical Services
CRL's Current Preclinical Services [GRAPHIC OMITTED] [GRAPHIC OMITTED] 10 charles river slide10
Slide 11: The New CRL: Global Integrated Services
The New CRL: Global Integrated Services [GRAPHIC OMITTED] [GRAPHIC OMITTED] 11 charles river slide11
Slide 12: Drives Profitable Revenue Growth
Drives Profitable Revenue Growth > WuXi provides opportunity to enhance revenue growth while expanding Charles River's margins > Discovery and Chemistry services [X] Fastest-growing business segment as pharmas increasingly choose t outsource [X] Significant growth opportunity for WuXi's new downstre
Slide 13: Leverages Increasing Strategic Importance of China
Leverages Increasing Strategic Importance of China > Supportive of global pharmas who view China as the new frontier for drug development > Pharmas are taking advantage of cost leverage by placing chemistry in China [X] Lower cost, highly skilled scientists with advanced degrees > Emerging opportuni
Slide 14: The New CRL Revenue Base
The New CRL Revenue Base* [GRAPHIC OMITTED] Leveraging the increasing strategic importance of China * Based on FY 2009 combined sales. WuXi's information is as disclosed in its Form 20-F filed with the SEC on 04/23/2010 and other public documents. [GRAPHIC OMITTED] 14 charles river slide14
Slide 15: The New CRL Business Segments
The New CRL Business Segments 2009 Combined Sales*: $1.5B [GRAPHIC OMITTED] DS: Discovery Services RMS: Research Models and Services PCS: Preclinical Services * Based on FY 2009 combined sales, with Charles River's DIS included in DS and WuXi's U.S.-based Laboratory Services included in PCS. WuXi's
Slide 16: The New CRL Business Portfolio
The New CRL Business Portfolio Discovery Services Research Models and Services Preclinical Services []A leader in discovery []The market leader in [] A leader in GLP safety chemistry services research model production assessment []A leading position in []Largest number of most * Both in Western mark
Slide 17: Compelling Value Proposition for Clients
Compelling Value Proposition for Clients [] Larger footprint with more capabilities enables clients to partner with one company from chemistry to man [] More attractive partner for biopharmaceutical companies looking to gain more value from fewer service providers[] Enables clients to choose where t
Slide 18: Enhancing Client Relationships
Enhancing Client Relationships [] Focus on expanding existing client partnerships * Enhances solid, high-level relationships in the same companies * Strengthens relationships with those clients where one company is pre-eminent* Creates new opportunities with clients where both entities currently hav
Slide 19: Very Favorable Client Response
Very Favorable Client Response [] Senior management of CRL has reviewed the transaction with RandD of top 25 pharmaceutical and biotechnology clients* Response has been uniformly positive[] Clients are viewing the acquisition as a strategic fit with CRL's in vivo business, offering them the opportun
Slide 20: The New CRL Client Base
The New CRL Client Base [] Client base composed of big pharma and biotech, small and mid-tier pharma and biotech, academic and government clients, CROs and agricultural and chemical manufacturers[] Top 10 clients represent ~35% of combined sales[] No single client represents more than 6% of sales [G
Slide 21: 2011 General Assumptions
2011 General Assumptions (1) [] Expect to recognize ~$20M of cost synergies * Public company costs, SGandA, and refinement of operating structure[] ~4.5% average interest rate on new debt* New debt of ~$950M [] Existing term loan is repaid * Debt amortization begins in 4Q2010 (after close) [] Expect
Slide 22: Synergies
Synergies Public company [] Reduction of Board, SOX, audit, legal, stock and corporate exchange, insurance and related expenses ~1/4 of cost [] Elimination of duplicative corporate overhead synergies expenses and support functions [] Leverage greater purchasing power in vendor procurement relationsh
Slide 23: WuXi 1Q10 Results
WuXi 1Q10 Results (1) [] Strong Q1 net revenues increase of 36% to $80.6M Non- %[] from ($ in millions) GAAP OI 1Q09 Reported $20.5 57% Share-based comp (2.3) 15% ------------ CRL Presentation $18.2 65% [] Non-GAAP diluted earnings per ADS of $0.25, an increase of 26%* Non-GAAP earnings exclude shar
Slide 24: WuXi 2010 Guidance
WuXi 2010 Guidance (1) [] 2Q10 Guidance * Net revenues of $76-$78M * Non-GAAP gross margin better than 1Q10 [] Reaffirmed guidance for 2010 at the upper end of ranges* Net revenues growth of 15-19% to $310-$320M * Growth in non-GAAP operating income of up to 10% [] "Continue to expect strong financi
Slide 25: Transaction Summary
Transaction Summary Purchase price[] ~$1.6B (1), including the assumption of WuXi's debt and cash Consideration [] $21.25 (1) total per ADS subject to collar (below) per share [] $11.25 in cash (~53%) plus [] $10.00 of CRL common stock (~47%) determined by exchange ratio Exchange Ratio[] $10.00 divi
Slide 26: Transaction Timeline
Transaction Timeline [] HSR Filed May 11, 2010[] Proxy to be filed shortly [] Still on track to close by the 4Q10, subject to approval by each company's shareholders and the satisfaction of customary closing conditions and regulatory approvals* Shareholder meetings to be scheduled following clearanc
Slide 27: Integration Planning
Integration Planning [] Very complementary portfolios with minimal overlap [] Integration team leaders have already met (week of 5/3)* CRL: Dave Johst, EVP, Human Resources, General Counsel and CAO * WX: Edward Hu, COO [] Integration sub-teams formed and identifying key objectives* Focus on client-f
Slide 28: WuXi Senior Management Joins CRL
WuXi Senior Management Joins CRL [] Ge Li, PhD: Corporate EVP and President, Global Discovery and China Services* Joins CRL Board, along with two additional directors chosen by WuXi[] Edward Hu: Corporate SVP and General Manager, Global Discovery and China Services[] Shuhui Chen, PhD: Corporate SVP
Slide 29: The New CRL: A Unique Opportunity
The New CRL: A Unique Opportunity [] Combines leaders in in vivo biology and chemistry [] Larger footprint with more capabilities enables clients to partner with one company from chemistry to man [] Supportive of global pharmas who view China as the new frontier for drug development [] Dramatically
Slide 30: Accelerating Drug Development. Exactly.
Accelerating Drug Development. Exactly. [C] 2010 Charles River Laboratories International, Inc.
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