Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Q1 2025 Earnings Presentation
53 slides from Charles River Laboratories International's earnings presentation, May 7, 2025
Slide 1: Charles River Laboratories 1Q 2025 Results
Charles River Laboratories 1Q 2025 Results May 7, 2025 © 2025 Charles River Laboratories International, Inc.
Slide 2: Safe Harbor
Safe Harbor 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 “anticipate,” “believe,” “expect,” “in
Slide 3: Recent FDA Regulatory Developments
Recent FDA Regulatory Developments ▪ In April, FDA announced a goal to accelerate validation and adoption of new approach methods (NAMs) to reduce animal testing in preclinical safety assessment ▪ CRL supports the FDA’s vision to leverage scientific advancements to safely advance innovative technolo
Slide 4: Our Mission Is Aligned with the FDA
Our Mission Is Aligned with the FDA 1. Evolution of NAMs is not new and demonstrates that scientific advancements are continuing to move forward ̶ For >50 years, efforts to reduce animal use by CRL and industry have led to a gradual decline in research model volumes o Including better translational
Slide 5: Our Mission Is Aligned with the FDA, cont.
Our Mission Is Aligned with the FDA, cont. 2. Promise of NAMs will be balanced with the importance of patient safety and science ̶ NAMs are beginning to offer exciting opportunities for the future but are not capable of fully replacing animal studies in biomedical research and safety testing ̶ Each
Slide 6: CRL as a Leader in NAMs-Enabled Future
CRL as a Leader in NAMs-Enabled Future 3. We intend to advance hybrid study designs ̶ By complementing traditional in vivo and in vitro methods with NAMs and other non-animal technologies ̶ Given the current state of science and technology, NAMs are still primarily used drug discovery because of the
Slide 7: CRL as a Leader in NAMs-Enabled Future, cont.
CRL as a Leader in NAMs-Enabled Future, cont. 4. We view NAMs as an opportunity for CRL and will continue to expand our non-animal platforms ̶ Our leadership in preclinical drug development is not confined to animal models; it is rooted in science and innovation, regulatory insights, and translation
Slide 8: CRL's Well-Established Commitment to Animal Alternatives
CRL’s Well-Established Commitment to Animal Alternatives ▪ CRL has a well-established commitment to and track record for replacement, reduction, and refinement (3Rs) of ethical animal use for biomedical research, and has supported FDA’s efforts – and NIH’s – to advance validation and adoption of NAM
Slide 9: CRL's NAMs Capabilities and Current State of Industry Application
CRL’s NAMs Capabilities and Current State of Industry Application CRL generated ~$200M in annual DSA revenue from NAMs, with majority in discovery phase Established Current applications established applications NearEmerging opportunities term expansion opportunities Future Future exploratory explora
Slide 10: Potential Financial Impact of NAMs on CRL
Potential Financial Impact of NAMs on CRL ▪ FDA has focused on monoclonal antibodies (mAbs) for its pilot program, specifically to reduce the duration of chronic NHP studies ▪ Believe FDA chose this path because on a case-by-case basis, FDA has already been waiving certain chronic, post- IND NHP stu
Slide 11: Potential Financial Impact of NAMs on CRL, cont.
Potential Financial Impact of NAMs on CRL, cont. ▪ The bulk of CRL safety assessment revenue is from small molecule and CRL SA Revenue Mix newer advanced biologic drugs, including C> by Modality (2024)* ▪ FDA has not yet focused on these areas (small molecule, newer ~25% advanced biologics, and C&
Slide 12: CRL Prepared to Lead Important Transition for Biomedical Research
CRL Prepared to Lead Important Transition for Biomedical Research ▪ We applaud FDA’s ongoing efforts to reduce animal use ▪ While transition to NAMs is evolutionary rather than revolutionary, it is an important one for biopharma research ̶ One that CRL is prepared to lead ▪ In coming years, we look
Slide 13: Update on Market Trends
Update on Market Trends ▪ Despite considerable uncertainty in broader market environment, our 1Q25 financial results demonstrated continued signs of stabilization, with better-than-expected DSA performance ▪ Pleased to see DSA net book-to-bill return to just above 1x for first time in over 2 years d
Slide 14: 1Q25 Revenue
1Q25 Revenue ($ in millions) 1Q25 1Q24 YOY Δ Organic Δ Revenue $984.2 $1,011.6 (2.7)% (1.8)% ▪ Low-single-digit organic revenue decreases in each of our three business segments ▪ 1Q25 organic revenue decline of 1.8% was better than our February outlook of mid-single-digit organic decline, due primar
Slide 15: 1Q25 Operating Margin
1Q25 Operating Margin 1Q25 1Q24 YOY Δ GAAP OM% 7.6% 12.5% (490) bps Non-GAAP OM% 19.1% 18.5% 60 bps ▪ 1Q25 non-GAAP operating margin improvement primarily driven by benefit of cost savings resulting from restructuring initiatives that promoted margin expansion in DSA segment ▪ Favorable mix in DSA s
Slide 16: 1Q25 EPS
1Q25 EPS 1Q25 1Q24 YOY Δ GAAP EPS $0.50 $1.30 (61.5)% Non-GAAP EPS $2.34 $2.27 3.1% ▪ 1Q25 non-GAAP EPS improvement was due to: ̶ Operating margin improvement ̶ Favorable below-the-line items, including reductions in: • Tax rate • Interest expense • Diluted shares outstanding 16 See ir.criver.com fo
Slide 17: Updated 2025 Guidance
Updated 2025 Guidance REVISED PRIOR Revenue growth, reported (5.5)%-(3.5)% (7.0)%-(4.5)% Impact of divestitures/(acquisitions), net N/M N/M (Favorable)/unfavorable impact of FX ~1.0% 1.0%-1.5% Revenue growth, organic (4.5)%-(2.5)% (5.5)%-(3.5)% GAAP EPS estimate $4.35-$4.85 $4.30-$4.80 Acquisition-r
Slide 18: DSA Results – Revenue
DSA Results – Revenue ($ in millions) 1Q25 1Q24 YOY Δ Revenue, reported $592.6 $605.5 (2.1)% (Favorable)/unfavorable impact of FX 0.6% Impact of divestitures 0.1% Revenue growth, organic (1.4)% ▪ Revenue decline driven primarily by lower revenue for discovery services ▪ DSA pricing improved slightly
Slide 19: DSA Backlog and Net Booking Trends
DSA Backlog and Net Booking Trends Period Qtr-End Backlog* Net Bookings* Net Book-to-Bill** ($ in billions) ($ in millions) (Quarterly) 1Q25 $1.99 $616 1.04x 4Q24 $1.97 $510 0.85x 3Q24 $2.12 $522 0.85x 2Q24 $2.16 $482 0.77x 1Q24 $2.35 $508 0.84x • Changes in backlog and net bookings may not foot due
Slide 20: DSA Results – Booking Activity
DSA Results – Booking Activity ▪ Pleased that net book-to-bill improved to 1.04x in 1Q25, above 1x for first time since 2H22 ▪ Primarily the result of quarterly net booking activity which improved to $616M ̶ Represented >20% increase on both YOY and sequential basis ▪ Improvement was driven by highe
Slide 21: 2025 DSA Outlook
2025 DSA Outlook ▪ Based on booking trend, modestly increasing FY revenue guidance for DSA segment ▪ Now expect DSA organic revenue will decline in mid-single-digit range rather than prior outlook of mid- to high-single- digit decline ▪ As mentioned, expect improved 1Q25 bookings will generate incre
Slide 22: DSA Results – Operating Margin
DSA Results – Operating Margin 1Q25 1Q24 YOY Δ DSA GAAP OM% 15.9% 19.0% (310) bps DSA Non-GAAP OM% 23.9% 23.5% 40 bps ▪ YOY improvement primarily reflected cost savings generated from restructuring initiatives, as well as favorable 1Q25 study mix 22 See ir.criver.com for reconciliations of GAAP to N
Slide 23: RMS Results – Revenue
RMS Results – Revenue ($ in millions) 1Q25 1Q24 YOY Δ Revenue, reported $213.1 $220.9 (3.5)% (Favorable)/unfavorable impact of FX 1.0% Revenue growth, organic (2.5)% ▪ RMS performed in line with expectations to start the year ▪ YOY revenue decline primarily driven by timing of NHP shipments in China
Slide 24: RMS 2025 Outlook
RMS 2025 Outlook ▪ Growing concerns from academic and government clients that proposed NIH budget cuts and uncertainty in Washington could impact future funding levels ▪ Have not experienced any meaningful revenue loss related to NIH budgets to date, and 1Q25 revenue from our North American academic
Slide 25: RMS Results – Operating Margin
RMS Results – Operating Margin 1Q25 1Q24 YOY Δ RMS GAAP OM% 20.5% 19.5% 100 bps RMS Non-GAAP OM% 27.1% 27.6% (50) bps ▪ Decline was primarily a result of lower NHP revenue, partially offset by benefit of cost savings resulting from restructuring initiatives 25 See ir.criver.com for reconciliations o
Slide 26: Manufacturing Results – Revenue
Manufacturing Results – Revenue ($ in millions) 1Q25 1Q24 YOY Δ Revenue, reported $178.5 $185.2 (3.6)% (Favorable)/unfavorable impact of FX 1.4% Revenue growth, organic (2.2)% ▪ Revenue decline driven primarily by lower commercial revenue in CDMO business and a slow start for Biologics Testing ▪ But
Slide 27: Manufacturing Results – Biologics Testing & CDMO
Manufacturing Results – Biologics Testing & CDMO Biologics Testing ▪ Biologics Testing’s Q1 volumes can fluctuate based on seasonal trends ▪ Biologics Testing had a stronger start in 2024 ▪ Booking activity was solid in 1Q25, supporting our continued expectation that Biologics Testing revenue will g
Slide 28: Manufacturing Outlook – Microbial Solutions
Manufacturing Outlook – Microbial Solutions ▪ Offsetting segment headwinds, Microbial Solutions reported another quarter of solid growth across its leading portfolio of rapid manufacturing quality-control testing solutions ̶ Led by Accugenix® microbial identification services ▪ Endosafe® also perfor
Slide 29: Manufacturing Results – Operating Margin
Manufacturing Results – Operating Margin 1Q25 1Q24 YOY Δ Manufacturing GAAP OM% (4.8)% 18.2% NM Manufacturing Non-GAAP OM% 23.1% 25.3% (220) bps ▪ Non-GAAP operating margin decline due principally to lower commercial revenue in CDMO business ▪ Believe Manufacturing segment’s non-GAAP operating margi
Slide 30: CRL Actions to Enhance Value Creation
CRL Actions to Enhance Value Creation ▪ This morning, announced actions to enhance value creation opportunities at CRL, in conjunction with new shareholders, Elliott Investment Management ▪ Board Refreshment: Pleased to welcome Steven Barg, Abe Ceesay, Mark Enyedy, and Paul Graves to our Board ̶ Eac
Slide 31: 1Q25 Results
1Q25 Results ($ in millions, except per share amounts) 1Q25 1Q24 YOY Δ Organic Δ Revenue $984.2 $1,011.6 (2.7)% (1.8)% GAAP OM% 7.6% 12.5% (490) bps Non-GAAP OM% 19.1% 18.5% 60 bps GAAP EPS $0.50 $1.30 (61.5)% Non-GAAP EPS $2.34 $2.27 3.1% ▪ 1Q25 revenue and non-GAAP earnings per share exceeded our
Slide 32: Actions We Have Taken to Protect Operating Margin
Actions We Have Taken to Protect Operating Margin ▪ For the past two years, we have taken aggressive actions through our restructuring program to reduce our cost structure by >5% and align our infrastructure with current demand ̶ Savings contributed to 1Q25 non-GAAP operating margin improvement and
Slide 33: Robust Free Cash Flow and Stock Repurchases
Robust Free Cash Flow and Stock Repurchases ▪ Continuing to deploy capital in a disciplined and shareholder-focused manner ▪ As announced last quarter, we are leveraging our solid, annual free cash flow generation and completed the repurchase of $350M in common stock during 1Q25 ̶ For FY 2025, sligh
Slide 34: Cash Flow
Cash Flow FY 2025 ($ in millions) 1Q25 1Q24 GUIDANCE Free cash flow (FCF) $112.4 $50.7 $350-$390 Capex $59.3 $79.1 ~$230 Depreciation $43.4 $45.7 ~$180 Amortization (1) $76.9 $39.7 ~$230 ▪ 1Q25 FCF improvement was primarily driven by lower performance-based cash bonus payments for 2024, which are pa
Slide 35: Updated 2025 Guidance
Updated 2025 Guidance 2025 Guidance Revenue growth/(decrease), reported (5.5)%-(3.5)% Revenue growth/(decrease), organic (4.5)%-(2.5)% GAAP EPS $4.35-$4.85 Non-GAAP EPS $9.30-$9.80 ▪ FX rates have been volatile since the election, but we now expect foreign exchange will represent ~1% headwind to 202
Slide 36: 2025 Segment Revenue Outlook
2025 Segment Revenue Outlook 2025 Reported 2025 Organic Revenue Growth Revenue Growth(1) RMS Approximately flat Flat to slightly positive DSA Mid-single-digit decline Mid-single-digit decline Manufacturing Flat to slightly negative Approximately flat Consolidated (5.5)%-(3.5)% decline (4.5)%-(2.5)%
Slide 37: Unallocated Corporate Expenses
Unallocated Corporate Expenses ($ in millions) 1Q25 4Q24 1Q24 GAAP $54.3 $61.8 $65.7 Non-GAAP $52.4 $51.9 $62.7 ▪ 1Q25 non-GAAP decrease to 5.3% of revenue (from 6.2% in 1Q24) due primarily to benefits of cost-savings actions ▪ Expect 2025 non-GAAP unallocated corporate costs will be in a range of 5
Slide 38: Tax Rate
Tax Rate 1Q25 4Q24 1Q24 GAAP 28.1% 1.4% 24.8% Non-GAAP 22.7% 19.5% 23.3% ▪ 1Q25 non-GAAP tax rate slightly favorable to prior outlook due primarily to the timing of the enactment of certain Global Minimum Taxes, as well as higher R&D tax credits ▪ Continue to expect non-GAAP tax rate will be in the
Slide 39: Net Interest Expense
Net Interest Expense ($ in millions) 1Q25 4Q24 1Q24 Interest expense, net $26.5 $26.4 $32.8 ▪ Net interest expense essentially unchanged sequentially ▪ Expect net interest expense will be at the lower end of prior outlook of $112M-$117M ▪ At the end of 1Q25, outstanding debt of $2.5B with ~60% at a
Slide 40: 2025 Guidance Summary
2025 Guidance Summary GAAP Non-GAAP Revenue growth/(decrease) (5.5)%-(3.5%) reported (4.5)%-(2.5)% organic(1) Unallocated corporate 5.0%-5.5% of revenue 5.0%-5.5% of revenue Operating margin Low-double-digit OM% 20-50 bps decrease vs. 2024 Net interest expense Low end of $112M-$117M Low end of $112M
Slide 41: 2Q25 Outlook
2Q25 Outlook 2Q25 Outlook Reported revenue YOY Low- to mid-single-digit decline Organic revenue YOY Low- to mid-single-digit decline Non-GAAP EPS Mid- to high-single-digit sequential increase over $2.34 in 1Q25 41
Slide 42: Closing Remarks
Closing Remarks ▪ Pleased that 1Q25 financial performance benefitted from the disciplined implementation of the cost-saving initiatives ▪ Remain focused on continuing to evaluate additional opportunities to drive future savings and operating efficiencies ̶ Actions are important not only to align our
Slide 43: 1Q25 Regulation G Financial Reconciliations & Appendix
1Q25 Regulation G Financial Reconciliations & Appendix © 2025 Charles River Laboratories International, Inc.
Slide 44: Reconciliation of GAAP to Non-GAAP Selected Business Segment Information
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) (in thousands, except percentages) Three Months Ended March 29, 2025 March 30, 2024 Research Models and Services Revenue $ 213,073 $ 220,907 Operating income 43,605
Slide 45: Reconciliation of GAAP to Non-GAAP Selected Business Segment Information
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) (in thousands, except percentages) Three Months Ended March 29, 2025 March 30, 2024 CONTINUED FROM PREVIOUS NEXT SLIDE Unallocated Corporate Overhead $ (54,268) $ (
Slide 46: Reconciliation of GAAP Earnings to Non-GAAP Earnings
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (UNAUDITED) (1) (in thousands, except per share data) Three Months Ended March 29, 2025 March 30, 2024 Net income available to Charles River Laboratories International, Inc. common shareholders $ 25,4
Slide 47: Reconciliation of GAAP Revenue Growth to Organic Growth
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP REVENUE GROWTH (1) TO NON-GAAP REVENUE GROWTH, ORGANIC (UNAUDITED) Three Months Ended March 29, 2025 Total CRL RMS Segment DSA Segment MS Segment Revenue growth, reported (2.7)% (3.5)% (2.1)% (3.6)% (Increase) decrease due to fore
Slide 48: Reconciliation of GAAP to Non-GAAP Revenue and EPS
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP TO NON-GAAP REVENUE AND EARNINGS PER SHARE (EPS) Guidance for the Twelve Months Ended December 27, 2025E 2025 GUIDANCE CURRENT PRIOR Revenue growth/(decrease), reported (5.5)% – (3.5)% (7.0)% – (4.5)% Impact of divestitures/(acqui
Slide 49: Reconciliation of GAAP Tax Rate to Non-GAAP Tax Rate
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP TAX RATE TO NON-GAAP TAX RATE (UNAUDITED) (1) (in thousands) Three Months Ended March 29, 2025 December 28, 2024 March 30, 2024 Income (loss) before income taxes & noncontrolling interests $ 35,978 $ (216,791) $ 99,011 Add back: A
Slide 50: Gross and Net Leverage Ratio Reconciliation
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GROSS/NET LEVERAGE RATIO, INCLUDING GAAP NET INCOME TO ADJUSTED EBITDA (UNAUDITED) (1) (dollars in thousands, except for per share data) March 29, 2025 December 28, 2024 December 30, 2023 December 31, 2022 December 25, 2021 December 26
Slide 51: Reconciliation of Free Cash Flow
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF FREE CASH FLOW (NON-GAAP) (UNAUDITED)(1) (in thousands) Three Months Ended 2025 Guidance March 29, 2025 March 30, 2024 FYE December 27, 2025E Net cash provided by operating activities $ 171,697 $ 129,888 $580,000-$620,000 Less: Capital
Slide 52: Reconciliation of GAAP to Non-GAAP Selected Business Segment Information
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) (in thousands, except percentages) Three Months Ended December 28, 2024 Unallocated Corporate Overhead $ (61,764) Add back: Acquisition and integration-related adju
Slide 53: © 2025 Charles River Laboratories International, Inc.
© 2025 Charles River Laboratories International, Inc.
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