Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Bank of America Merrill Lynch Health Care Conference 2010
22 slides from Charles River Laboratories International's conference presentation, May 12, 2010
Slide 1: Charles River and WuXi PharmaTech: The First Global Early-Stage CRO
Bank of America Merrill Lynch Health Care Conference Charles River and WuXi PharmaTech: The First Global Early-Stage CRO Thomas F. Ackerman Executive Vice President and CFO May 12, 2010 Charles River [C] 2010 Charles River Laboratories International, Inc.
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 "projec
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 11, 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 26(th) [] The combination creates the first early-stage contract research organization (CRO) * Offers a full range of products and services from molecule creation
Slide 5: Charles River Today
Charles River Today [] 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 [] Continuo
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 ch
Slide 7: The New CRL: Global Integrated Services
The New CRL: Global Integrated Services Discovery Target Assay Hit/Lead Identification/ Compound Development/ Identification/ Validation Synthesis Screening Optimization Preclinical Process Discovery Pharma- Safety Scale-up/ and Imaging cology Assessment Research Services Manufacture Research Models
Slide 8: 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 * Fastest-growing business segment as pharmas increasingly choose to outsource * Significant growth opportunity for WuXi's new downstrea
Slide 9: 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. Charles River 9
Slide 10: 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 11: 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
Slide 12: 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 ha
Slide 13: Very Favorable Client Response
Very Favorable Client Response [] Senior management of CRL contacted top 20 major pharmaceutical and biotechnology clients within 24 hours of announcement [] Viewed the acquisition as strategic fit with CRL's in vivo business, offering clients the opportunity for larger relationships with CRL * Clie
Slide 14: 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
Slide 15: 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) [] Expec
Slide 16: 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 share-based compe
Slide 17: 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 18: 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 o $11.25 in cash (~53%) plus o $10.00 of CRL common stock (~47%) determined by exchange ratio Exchange Ratio $10.00 divided by 20-da
Slide 19: Integration Planning
Integration Planning [] Integration team leaders have already met (week of 5/3) * CRL: Dave Johst, EVP, Human Resources, General Counsel and CAO * WX: Edward Hu, COO [] Forming integration sub-teams and identifying key objectives * Goal: "Hit the ground running" after close 19
Slide 20: 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 S
Slide 21: 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 22: Accelerating Drug Development. Exactly.
Accelerating Drug Development. Exactly. CRL LISTED NYSE [C] 2010 Charles River Laboratories International, Inc.