Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — JP Morgan 40th Annual Healthcare Conference (January 2022)
33 slides from Charles River Laboratories International's conference presentation, Jan 11, 2022
Slide 1: JP Morgan 40th Annual Healthcare Conference
EVERY STEP OF THE WAY © 2022 Charles River Laboratories International, Inc. JP Morgan 40th Annual Healthcare Conference James C. Foster Chairman, President & Chief Executive Officer Charles River Laboratories January 11, 2022
Slide 2: Safe Harbor Statement
EVERY STEP OF THE WAY Safe Harbor Statement Caution Concerning Forward-Looking Statements. This presentation 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 “antic
Slide 3: A Leading Contract Research & Manufacturing Organization
EVERY STEP OF THE WAY CRL worked on >85% of FDA- approved novel drugs in 2021, including 100% of CNS drugs and >90% of oncology drugs Doubled revenue and non-GAAP EPS since 2015 (1) Low- Double- Digit CRL organic revenue growth expected 2021E-2024E(2) 89 Novel molecules originated for clients since
Slide 4: Charles River Overview
EVERY STEP OF THE WAY Client Base(1) Charles River Overview (1) Based on CRL’s LTM September 2021 revenue. Geographic revenue excludes Japan to reflect divestiture of RMS Japan in Oct. 2021. (2) Other clients include agricultural & industrial chemical, CRO, animal health, life science, CDMO, consume
Slide 5: The Power of Our Unique Portfolio
EVERY STEP OF THE WAY The Power of Our Unique Portfolio (1) Based on CRL’s LTM September 2021 revenue and non-GAAP operating income. Not adjusted for RMS Japan and CDMO Sweden divestitures, which do not have a meaningful impact on this business segment revenue/OI breakout. See ir.criver.com for reco
Slide 6: Research Models & Services (RMS)
EVERY STEP OF THE WAY Research Models & Services (RMS) ➢ Global leader in breeding and distribution of research models ▪ ~1 of every 2 small models sold in Western markets comes from Charles River o Largest selection of the most widely used research model strains in the world ▪ Expertise in biosecur
Slide 7: Research Models and Services Business Drivers
EVERY STEP OF THE WAY ➢ Build portfolio of innovative research tools to address emerging, high-growth opportunities, such as cell and gene therapies ➢ GEMS increasingly critical role as drug research becomes more complex ➢ IS enables clients to adopt flexible solutions to enhance their operational e
Slide 8: Discovery Services
EVERY STEP OF THE WAY Discovery Services ➢ A unique CRO, offering clients a single source for services across the discovery spectrum ▪ Engages with clients earlier in the discovery process ➢ Integrates early discovery, in vitro and in vivo capabilities across multiple drug modalities ▪ Extensive med
Slide 9: Safety Assessment Services
EVERY STEP OF THE WAY Safety Assessment Services ➢ Global leader in both non-regulated (non-GLP) and regulated (GLP) safety assessment services ➢ Providing clients with expertise for integrated drug development ▪ Non-GLP efficacy studies ▪ Safety Assessment (SA) o General toxicology o Specialty toxi
Slide 10: Discovery and Safety Assessment Business Drivers
EVERY STEP OF THE WAY Discovery and Safety Assessment Business Drivers ➢ Robust demand as biopharma clients outsource discovery and safety assessment capabilities ▪ Biotech leveraging CRO expertise to drive innovation, instead of building in-house capabilities ▪ Large biopharma utilizing CROs like C
Slide 11: Microbial Solutions
EVERY STEP OF THE WAY Microbial Solutions ➢ Premier global provider of quality control (QC) testing products and services for sterile and non-sterile applications ▪ FDA-mandated lot release testing for sterile biopharmaceutical products ▪ Product release testing required by the FDA and other regulat
Slide 12: Biologics Testing Solutions
EVERY STEP OF THE WAY Biologics Testing Solutions ➢ Premier global CRO providing services that support the manufacture of biologics, including process development and quality control ➢ Supports developers and manufacturers with their testing, characterization, and cell bank manufacturing needs ▪ Pro
Slide 13: Expansion into C> CDMO Sector
EVERY STEP OF THE WAY13 Expansion into C> CDMO Sector ➢ Acquired March 2021 ➢ Primary area of expertise is CGMP gene-modified cell therapy manufacturing ➢ Cell therapy operations in the U.S. (Memphis and Baltimore) and gene therapy operations in the U.K. ➢ Purchase Price: ~$875M ➢ Targeted Growth:
Slide 14: Expansion into C> CDMO Sector
EVERY STEP OF THE WAY Expansion into C> CDMO Sector 1. SCIENTIFIC EXPERTISE ➢ Expanding our portfolio to enhance our ability to meet clients’ needs in emerging scientific areas and take advantage of significant growth opportunity for advanced drug modalities ▪ C> are emerging drug modalities and
Slide 15: Manufacturing Solutions Business Drivers
EVERY STEP OF THE WAY ➢ Microbial Solutions ▪ Increased demand for our rapid, efficient testing platform for both microbial detection and identification ▪ Continuing to drive growth in both sterile biopharma market and non-sterile markets ➢ Biologics Testing Solutions ▪ Increased number of biologics
Slide 16: Comprehensive Discovery & Non-Clinical Development Portfolio in All Drug Modalities
EVERY STEP OF THE WAY CRL’s Comprehensive Discovery & Non-Clinical Development Portfolio in All Drug Modalities ✔ ✔ ✔ 16 CRL’s Broad Capabilities Accelerate Discovery to Clinical Candidate & Beyond Discovery Large Molecule / Antibodies Small Molecule Cell and Gene Therapy Modality Acquisition Non-Cl
Slide 17: Nearly 15% of 2022E Revenue Expected from C>
EVERY STEP OF THE WAY Nearly 15% of CRL 2022E annual revenue expected from C> CRL’s Comprehensive C> Capabilities Establishes CRL as a premier scientific partner for C> development, testing, and manufacturing Research Models & Services ➢ Immunodeficient rodent models, large models, surgically
Slide 18: Our Journey to Non-Clinical Leadership
EVERY STEP OF THE WAY18 Our Journey to Non-Clinical Leadership $1,133 $1,143 $1,130 $1,167 $1,298 $1,363 $1,681 $1,858 $2,266 $2,621 $2,924 $3,368 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 LTM Sept. 2021 Low- to mid- single-digit organic revenue decline Low-single-digit organic revenue
Slide 19: Strategic Imperatives: Strengthen Portfolio
EVERY STEP OF THE WAY Strategic Imperatives 1. Strengthen Portfolio ➢ Innovate scientifically to find, assess, validate and access new capabilities and technologies ➢ Stay abreast of emerging therapies and new modalities to continue to address clients’ evolving scientific needs ▪ Address shift towar
Slide 20: Multiple Strategies to Strengthen Portfolio and Enhance Value
EVERY STEP OF THE WAY Multiple Strategies to Strengthen Portfolio and Enhance Value for Our Clients & Shareholders 20 Remains top priority for disciplined capital deployment Further enhanced CRL’s leading position and global scale in safety assessment Established premier, single-source provider for
Slide 21: Strategic M&A Remains Top Priority
EVERY STEP OF THE WAY Strategic M&A Remains Top Priority ➢ Disciplined M&A remains top priority of our long-term growth strategy ▪ Measure all M&A against investment criteria of: o Prefer to be neutral to accretive on a non-GAAP basis in Year 1 o ROIC meets or exceeds cost of capital between Years 3
Slide 22: Our Strategic Imperatives: Drive Efficiency
EVERY STEP OF THE WAY ➢ Maximize synergies across entire portfolio to promote best practices and add value to clients’ integrated drug research programs ➢ Remain focused on continuous improvement to drive further process optimization and harmonization ➢ Leverage robust revenue growth through the sca
Slide 23: Our Strategic Imperatives: Enhance Speed
EVERY STEP OF THE WAY ➢ Decentralize decision making to become more agile and strike proper balance between organizational structure, processes, and culture ➢ Strive to be faster and more responsive at every step of the early-stage R&D process ▪ Leverage our scientific expertise, regulatory complian
Slide 24: Our Strategic Imperatives: Champion Technology
EVERY STEP OF THE WAY ➢ Transform industry with a best-in-class technology platform ▪ Build a digital enterprise/operating model ➢ Enable clients with real-time access to scientific data and self-service options ▪ Digitize the end-to-end client experience ▪ Build the right e-commerce solution for ou
Slide 25: Our Strategic Imperatives: Sustain Culture
EVERY STEP OF THE WAY ➢ Our culture is built on trust, inclusion, accountability, respect, and well-being ➢ Every person has the ability to deliver on business commitments, while having purpose, being energized and continuously learning, and delivering quality outcomes that make a difference ➢ Achie
Slide 26: CFO Retirement and Transition Plan
EVERY STEP OF THE WAY CFO Retirement and Transition Plan ➢ Executive VP & CFO David Smith announced his intention to retire before the end of 2022 ▪ Will remain in his current role until a successor has been named and a seamless transition is completed ➢ CRL is commencing a global search to identify
Slide 27: Issuing 2022 Guidance
EVERY STEP OF THE WAY Issuing 2022 Guidance Revenue Growth, Reported 13%-15% Organic Revenue Growth 12.5%- 14.5% Non-GAAP Operating Margin Modest improvement from 2021 Non-GAAP EPS(1) $11.50- $11.75 Free Cash Flow(1) ~$450M Capital Expenditures ~$360M ➢ Expect 2022 organic revenue growth will be dri
Slide 28: 2022 Segment Revenue Outlook
EVERY STEP OF THE WAY ➢ RMS: Consistent with 2024 target; Similar organic growth rate expected as 2021 when normalizing for COVID impact ➢ DSA: Above 2024 target; Accelerating growth during 2022 as current pricing works through the backlog ➢ Manufacturing: Below 2024 target; Segment organic growth r
Slide 29: Strategic Plan Targets: 2024 Goals
EVERY STEP OF THE WAY Strategic Plan Targets: 2024 Goals FY 2024 Targets(1) Organic Revenue Growth Non-GAAP Operating Margin RMS Mid- to high-single digits High-20% range DSA ~10% At least mid-20% range Manufacturing Approaching 20% Mid-30% range Consolidated Low-double digits ~22.5% 29 (1) 2024 Fin
Slide 30: Regulation G Financial Reconciliations
EVERY STEP OF THE WAY Regulation G Financial Reconciliations © 2022 Charles River Laboratories International, Inc.
Slide 31: Revenue and Non-GAAP Operating Income Reconciliation
EVERY STEP OF THE WAY Revenue RMS DSA Manufacturing Total CRL Fiscal Year Ended December 26, 2020 $571,152 $1,837,428 $515,353 $2,923,933 Nine Months Ended September 25, 2021 524,862 1,573,095 537,153 2,635,110 Less: Nine Months Ended September 26, 2020 (414,455) (1,342,424) (376,064) (2,132,943) La
Slide 32: Footnotes to Guidance Table
EVERY STEP OF THE WAY Footnotes to Guidance Table: 1. The contribution from acquisitions/divestitures (net) reflects only those transactions that were completed in 2021. The partial-year revenue impact from acquisitions, principally Cognate BioServices, Retrogenix, and Vigene Biosciences, is expecte
Slide 33: EVERY STEP OF THE WAY © 2022 Charles River Laboratories International, Inc.
EVERY STEP OF THE WAY © 2022 Charles River Laboratories International, Inc.