Sign In  |  Register  |  About Mill Valley  |  Contact Us

Mill Valley, CA
September 01, 2020 1:29pm
7-Day Forecast | Traffic
  • Search Hotels in Mill Valley

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Charles River Laboratories Announces Fourth-Quarter and Full-Year 2022 Results and Provides 2023 Guidance

– Fourth-Quarter Revenue of $1.10 Billion and Full-Year Revenue of $3.98 Billion –

– Fourth-Quarter GAAP Earnings per Share of $3.65 and Non-GAAP Earnings per Share of $2.98 –

– Full-Year GAAP Earnings per Share of $9.48 and Non-GAAP Earnings per Share of $11.12 –

– Provides 2023 Guidance –

Charles River Laboratories International, Inc. (NYSE: CRL) today reported its results for the fourth-quarter and full-year 2022 and provided guidance for 2023. For the quarter, revenue was $1.10 billion, an increase of 21.5% from $905.1 million in the fourth quarter of 2021.

The addition of a 53rd week at the end of 2022, which is periodically required to align to a December 31st calendar year end, contributed approximately 5.8% to reported fourth-quarter revenue growth. The acquisition of Explora BioLabs in April 2022 contributed 1.8% to consolidated fourth-quarter revenue growth, and the divestitures of the Research Models and Services operations in Japan (RMS Japan) and the CDMO site in Sweden (CDMO Sweden) in October 2021, and the Avian Vaccine business in December 2022, reduced reported revenue growth by 0.5%. The impact of foreign currency translation reduced reported revenue growth by 4.4%. Excluding the effect of these items, organic revenue growth was 18.8%, driven by contributions from all three business segments, primarily the Discovery and Safety Assessment (DSA) business segment.

On a GAAP basis, fourth-quarter net income attributable to common shareholders was $187.4 million, an increase of 36.2% from $137.6 million for the same period in 2021. Fourth-quarter diluted earnings per share on a GAAP basis were $3.65, an increase of 36.7% from $2.67 for the fourth quarter of 2021. The increases in GAAP net income and earnings per share were primarily driven by a gain on the sale of the Avian Vaccine business.

On a non-GAAP basis, net income was $152.9 million for the fourth quarter of 2022, an increase of 19.0% from $128.4 million for the same period in 2021. Fourth-quarter diluted earnings per share on a non-GAAP basis were $2.98, an increase of 19.7% from $2.49 per share for the fourth quarter of 2021. The increases in non-GAAP net income and earnings per share were primarily driven by higher revenue and operating income.

James C. Foster, Chairman, President and Chief Executive Officer, said, “We are pleased with the outstanding finish to the year. We exceeded our expectations due primarily to another robust performance in the DSA segment, and quarterly revenue exceeded $1 billion for the first time. We believe our 2022 performance demonstrates the strength of our business – including our leading market position, unique non-clinical focus, and the resilience of our large, diversified client base – as we meet the sustained pace of client demand despite the macroeconomic environment.”

“At Charles River, we are committed to conducting ethical, regulatory-compliant business practices, to being good corporate citizens, and to the humane treatment of the research models under our care. 2023 presents challenges with respect to NHP supply that we will proactively manage; however, our business fundamentals remain solid and we will continue to benefit from the sustainable, long-term growth trends that are inherent in our business. We are focused on continuing to execute our strategy, drive growth and generate greater efficiency, and enhance our position as the scientific partner of choice to accelerate biomedical research and therapeutic innovation,” Mr. Foster concluded.

Fourth-Quarter Segment Results

Research Models and Services (RMS)

Revenue for the RMS segment was $196.1 million in the fourth quarter of 2022, an increase of 18.4% from $165.6 million in the fourth quarter of 2021. The Explora BioLabs acquisition and the addition of the 53rd week contributed 10.1% and 4.5%, respectively, to RMS revenue growth in the quarter. The impact of foreign currency translation reduced revenue by 5.2%, and the impact of the RMS Japan divestiture reduced revenue by 1.8%. Organic revenue growth of 10.8% was primarily driven by robust demand for research model services, particularly the Insourcing Solutions (IS) business, as well as higher revenue for small research models in North America and China.

In the fourth quarter of 2022, the RMS segment’s GAAP operating margin decreased to 18.9% from 24.3% in the fourth quarter of 2021, and on a non-GAAP basis, the operating margin decreased to 22.7% from 26.9%. The GAAP and non-GAAP operating margin decreases were driven primarily by the addition of the 53rd week, lower revenue in the Cell Solutions business, and a modest COVID-related impact in China.

Discovery and Safety Assessment (DSA)

Revenue for the DSA segment was $691.7 million in the fourth quarter of 2022, an increase of 29.5% from $534.1 million in the fourth quarter of 2021. The addition of the 53rd week contributed 6.9% to reported DSA revenue growth, and the impact of foreign currency translation reduced revenue by 3.9%. Organic revenue growth of 26.5% was driven principally by broad-based growth in the Safety Assessment business, resulting from higher study volume and meaningful price increases, both on a year-over-year and sequential basis. The Discovery Services revenue growth rate also increased on both a year-over-year and sequential basis.

In the fourth quarter of 2022, the DSA segment’s GAAP operating margin increased to 22.7% from 17.8% in the fourth quarter of 2021, and on a non-GAAP basis, the operating margin increased to 26.3% from 23.1%. The GAAP and non-GAAP operating margin increases were driven primarily by higher revenue in the Safety Assessment business.

Manufacturing Solutions (Manufacturing)

Revenue for the Manufacturing segment was $212.1 million in the fourth quarter of 2022, an increase of 3.3% from $205.3 million in the fourth quarter of 2021. The addition of the 53rd week contributed 4.0% to reported Manufacturing revenue growth. The impact of foreign currency translation reduced revenue by 4.8%, and the impact of the CDMO Sweden and Avian Vaccine divestitures reduced revenue by 1.2%. Organic revenue growth of 5.3% was driven primarily by robust demand in the Biologics Testing Solutions and Microbial Solutions businesses, partially offset by a revenue decline in the CDMO business.

In the fourth quarter of 2022, the Manufacturing segment’s GAAP operating margin decreased to 12.6% from 44.6% in the fourth quarter of 2021, and on a non-GAAP basis, the operating margin decreased to 25.3% from 35.7% in the fourth quarter of 2021. The GAAP and non-GAAP operating margins primarily declined as a result of lower revenue in the CDMO businesses. The GAAP operating margin also decreased due to an acquisition-related adjustment in the fourth quarter of 2021 associated with a contingent consideration arrangement.

Full-Year Results

For 2022, revenue increased by 12.3% to $3.98 billion from $3.54 billion in 2021. Organic revenue growth was 13.4%.

On a GAAP basis, net income attributable to common shareholders was $486.2 million in 2022, an increase of 24.4% from $391.0 million in 2021. Diluted earnings per share on a GAAP basis in 2022 were $9.48, an increase of 24.7% from $7.60 in 2021.

On a non-GAAP basis, net income was $570.6 million in 2022, an increase of 7.6% from $530.5 million in 2021. Diluted earnings per share on a non-GAAP basis in 2022 were $11.12, an increase of 7.8% from $10.32 in 2021.

Research Models and Services (RMS)

For 2022, RMS revenue was $739.2 million, an increase of 7.1% from $690.4 million in 2021. Organic revenue growth increased 9.0%.

On a GAAP basis, the RMS segment operating margin decreased to 21.7% in 2022 from 24.2% in 2021. On a non-GAAP basis, the operating margin decreased to 25.2% in 2022 from 27.3% in 2021.

Discovery and Safety Assessment (DSA)

For 2022, DSA revenue was $2.45 billion, an increase of 16.1% from $2.11 billion in 2021. Organic revenue growth was 17.5%.

On a GAAP basis, the DSA segment operating margin increased to 21.8% in 2022 from 19.3% in 2021. On a non-GAAP basis, the operating margin increased to 25.3% in 2022 from 23.7% in 2021.

Manufacturing Solutions (Manufacturing)

For 2022, Manufacturing revenue was $789.6 million, an increase of 6.3% from $742.5 million in 2021. Organic revenue growth was 5.3%.

On a GAAP basis, the Manufacturing segment operating margin decreased to 21.2% in 2022 from 33.2% in 2021. On a non-GAAP basis, the operating margin decreased to 28.8% in 2022 from 34.2% in 2021.

U.S. Department of Justice Investigation into Non-Human Primate Supply Chain

On February 17th, the Company received a subpoena from the U.S. Department of Justice relating to an investigation into the Cambodian non-human primate (NHP) supply chain. The Company has been informed that this investigation relates specifically to several shipments of NHPs received by Charles River from its Cambodian supplier. Charles River intends to fully cooperate with the U.S. government as part of their investigation. Due to ongoing investigations and the heightened focus on the Cambodian NHP supply chain in recent months, Charles River has voluntarily suspended NHP shipments from Cambodia at this time.

2023 Guidance

The Company is providing financial guidance for 2023. The 2023 revenue growth outlook reflects the impact of NHP supply constraints, which is expected to reduce our consolidated revenue growth forecast by approximately 200 to 400 basis points this year. This will pressure the DSA segment’s revenue growth rate in 2023, while the Company expects higher growth in the Manufacturing segment as the actions to improve the performance of its CDMO business gain traction.

Earnings per share in 2023 will be affected by the impact of NHP supply constraints. In addition, a higher tax rate, increased interest expense, and the impact of the divestiture of the Avian Vaccine business will reduce earnings per share by approximately $2.30 to $2.50 on a GAAP basis (including the gain on the sale of the Avian Vaccine business) and by approximately $1.20 to $1.40 on a non-GAAP basis in 2023. This will be partially offset by foreign exchange, which is projected to benefit reported revenue growth by up to 50 basis points and earnings per share by up to $0.25 in 2023 due to the recent weakening of the U.S. dollar.

The Company’s 2023 guidance for revenue growth and earnings per share is as follows:

2023 GUIDANCE

 

Revenue growth, reported

1.5% – 4.5%

Impact of divestitures/(acquisitions), net

~1.5%

Impact of 53rd week in 2022

~1.5%

Unfavorable/(favorable) impact of foreign exchange

0.0% - (0.5)%

Revenue growth, organic (1)

4.5% – 7.5%

GAAP EPS estimate (2)

$7.40 – $8.60

Acquisition-related amortization

~$2.00

Acquisition and integration-related adjustments (3)

~$0.10

Other items (4)

~$0.20

Non-GAAP EPS estimate

$9.70 – $10.90

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) GAAP earnings per share does not include third-party legal costs and other costs related to investigations by the U.S. Department of Justice into the Cambodian NHP supply chain because these costs are impractical to estimate at this time. Certain costs related to this investigation are expected to be excluded from non-GAAP results.

(3) 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.

(4) These items primarily relate to charges associated with U.S. and international tax legislation that necessitated changes to the Company’s international financing structure; certain third-party legal costs related to (a) environmental litigation related to the Microbial Solutions business and (b) investigations by the U.S. government into the NHP supply chain applicable to our Safety Assessment business; and severance and other costs related to the Company’s efficiency initiatives.

Webcast

Charles River has scheduled a live webcast on Wednesday, February 22nd, 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.

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 U.S. government investigations into the NHP supply chain; and adjustments related to the recognition of deferred tax assets expected to be utilized as a result of changes to the our international financing structure and the revaluation of deferred tax liabilities as a result of foreign tax legislation. This press release also refers to our revenue on both a GAAP and non-GAAP basis: “organic revenue growth,” which we define as reported revenue growth adjusted for foreign currency translation, acquisitions, divestitures, and the impact of the 53rd week in 2022. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not presented in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company's performance, especially when comparing such results to prior periods or forecasts. We believe that the financial impact of our acquisitions and divestitures (and in certain cases, the evaluation of such acquisitions and divestitures, whether or not ultimately consummated) is often large relative to our overall financial performance, which can adversely affect the comparability of our results on a period-to-period basis. In addition, certain activities and their underlying associated costs, such as business acquisitions, generally occur periodically but on an unpredictable basis. We calculate non-GAAP integration costs to include third-party integration costs incurred post-acquisition. Presenting revenue on an organic basis allows investors to measure our revenue growth exclusive of acquisitions, divestitures, the 53rd week in 2022, and foreign currency exchange fluctuations more clearly. Non-GAAP results also allow investors to compare the Company’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations presented in accordance with GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules and regulations. Reconciliations of the non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures are set forth in this press release, and can also be found on the Company’s website at ir.criver.com.

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 Cambodia-sourced NHPs; the impact of the investigations by the U.S. Department of Justice into the Cambodia NHP supply chain, including but not limited to Charles River’s ability to cooperate fully with the U.S. government; Charles River’s ability to effectively manage any Cambodia NHP supply impact; the projected future financial performance of Charles River and our specific businesses, including our expectations with respect to the impact of NHP supply constraints; earnings per share; client demand, particularly the future demand for drug discovery and development products and services, including our expectations for future revenue trends; our expectations with respect to pricing of our products and services; our expectations with respect to future tax rates and the impact of such tax rates on our business; our expectations with respect to the impact of acquisitions and divestitures completed in 2021 and 2022 on the Company, our service offerings, client perception, strategic relationships, revenue, revenue growth rates, revenue growth drivers, and earnings; the development and performance of our services and products, including our investments in our portfolio; market and industry conditions including the outsourcing of services and spending trends by our clients; and Charles River’s future performance as delineated in our forward-looking guidance, and particularly our expectations with respect to revenue, the impact of foreign exchange, interest rates, enhanced efficiency initiatives, and the assumptions surrounding the impact of the COVID-19 pandemic that form the basis for our annual guidance. Forward-looking statements are based on Charles River’s current expectations and beliefs, and involve a number of risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from those stated or implied by the forward-looking statements. Those risks and uncertainties include, but are not limited to: NHP supply constraints and the investigations by the U.S. Department of Justice, including the impact on our projected future financial performance, the timing of the resumption of Cambodia NHP imports, our ability to manage supply impact, and anticipated study delays in our Safety Assessment business attributable to NHP supply constraints; the COVID-19 pandemic, its duration, its impact on our business, results of operations, financial condition, liquidity, business practices, operations, suppliers, third party service providers, clients, employees, industry, ability to meet future performance obligations, ability to efficiently implement advisable safety precautions, and internal controls over financial reporting; changes and uncertainties in the global economy and financial markets; the ability to successfully integrate businesses we acquire; the timing and magnitude of our share repurchases; negative trends in research and development spending, negative trends in the level of outsourced services, or other cost reduction actions by our clients; the ability to convert backlog to revenue; special interest groups; contaminations; industry trends; new displacement technologies; USDA and FDA regulations; changes in law; continued availability of products and supplies; loss of key personnel; interest rate and foreign currency exchange rate fluctuations; changes in tax regulation and laws; changes in generally accepted accounting principles; disruptions in the global economy caused by the ongoing conflict between the Russian federation and Ukraine; and any changes in business, political, or economic conditions due to the threat of future terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas. A further description of these risks, uncertainties, and other matters can be found in the Risk Factors detailed in Charles River's Annual Report on Form 10-K as filed on February 22, 2023, as well as other filings we make with the Securities and Exchange Commission. Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by Charles River, and Charles River assumes no obligation and expressly disclaims any duty to update information contained in this press release except as required by law.

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 Twelve Months Ended
December 31, 2022 December 25, 2021 December 31, 2022 December 25, 2021
 
Service revenue

$

900,698

$

709,819

$

3,216,904

$

2,755,579

Product revenue

 

199,145

 

195,231

 

759,156

 

784,581

Total revenue

 

1,099,843

 

905,050

 

3,976,060

 

3,540,160

Costs and expenses:
Cost of services provided (excluding amortization of intangible assets)

 

603,125

 

468,091

 

2,143,318

 

1,837,487

Cost of products sold (excluding amortization of intangible assets)

 

97,834

 

89,847

 

370,091

 

368,035

Selling, general and administrative

 

199,640

 

144,112

 

665,098

 

619,919

Amortization of intangible assets

 

35,434

 

30,193

 

146,578

 

124,857

Operating income

 

163,810

 

172,807

 

650,975

 

589,862

Other income (expense):
Interest income

 

343

 

309

 

780

 

652

Interest expense

 

(34,779)

 

(11,546)

 

(59,291)

 

(73,910)

Other income (expense), net

 

115,547

 

2,072

 

30,523

 

(35,894)

Income before income taxes

 

244,921

 

163,642

 

622,987

 

480,710

Provision for income taxes

 

55,815

 

23,815

 

130,379

 

81,873

Net income

 

189,106

 

139,827

 

492,608

 

398,837

Less: Net income attributable to noncontrolling interests

 

1,696

 

2,249

 

6,382

 

7,855

Net income attributable to common shareholders

$

187,410

$

137,578

$

486,226

$

390,982

 
Earnings per common share
Net income attributable to common shareholders:
Basic

$

3.68

$

2.73

$

9.57

$

7.77

Diluted

$

3.65

$

2.67

$

9.48

$

7.60

 
Weighted-average number of common shares outstanding;
Basic

 

50,906

 

50,471

 

50,812

 

50,293

Diluted

 

51,377

 

51,555

 

51,301

 

51,425

 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
SCHEDULE 2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)
 
 
December 31, 2022 December 25, 2021
Assets
Current assets:
Cash and cash equivalents

$

233,912

$

241,214

Trade receivables and contract assets, net of allowances for credit losses of $11,278 and $7,180, respectively

 

752,390

 

642,881

Inventories

 

255,809

 

199,146

Prepaid assets

 

89,341

 

93,543

Other current assets

 

107,580

 

97,311

Total current assets

 

1,439,032

 

1,274,095

Property, plant and equipment, net

 

1,465,655

 

1,291,068

Venture capital and strategic equity investments

 

311,602

 

201,352

Operating lease right-of-use assets, net

 

391,762

 

292,941

Goodwill

 

2,849,903

 

2,711,881

Intangible assets, net

 

955,275

 

1,061,192

Deferred tax assets

 

41,262

 

40,226

Other assets

 

148,279

 

151,537

Total assets

$

7,602,770

$

7,024,292

 
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable

 

205,915

 

198,130

Accrued compensation

 

197,078

 

246,119

Deferred revenue

 

264,259

 

219,703

Accrued liabilities

 

219,758

 

228,797

Other current liabilities

 

204,575

 

140,436

Total current liabilities

 

1,091,585

 

1,033,185

Long-term debt, net and finance leases

 

2,707,531

 

2,663,564

Operating lease right-of-use liabilities

 

389,745

 

252,972

Deferred tax liabilities

 

215,582

 

239,720

Other long-term liabilities

 

174,822

 

242,859

Total liabilities

 

4,579,265

 

4,432,300

Redeemable noncontrolling interest

 

42,427

 

53,010

Equity:
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding

 

 

Common stock, $0.01 par value; 120,000 shares authorized; 50,944 shares issued and outstanding as of December 31, 2022 and 50,480 shares issued and outstanding as of December 25, 2021

 

509

 

505

Additional paid-in capital

 

1,804,940

 

1,718,304

Retained earnings

 

1,432,901

 

980,751

Treasury stock, at cost, zero shares as of December 31, 2022 and December 25, 2021

 

 

Accumulated other comprehensive loss

 

(262,057)

 

(164,740)

Total equity attributable to common shareholders

 

2,976,293

 

2,534,820

Noncontrolling interests (nonredeemable)

 

4,785

 

4,162

Total equity

 

2,981,078

 

2,538,982

Total liabilities, redeemable noncontrolling interests and equity

$

7,602,770

$

7,024,292

 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
 
SCHEDULE 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 
Twelve Months Ended
December 31, 2022 December 25, 2021
Cash flows relating to operating activities
Net income

$

492,608

$

398,837

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

 

303,870

 

265,540

Stock-based compensation

 

73,617

 

71,474

Loss on debt extinguishment and amortization of other financing costs

 

4,118

 

29,964

Deferred income taxes

 

(35,884)

 

(24,006)

Loss (gain) on venture capital and strategic equity investments, net

 

26,775

 

30,420

Provision for credit losses

 

6,706

 

1,657

Gain on divestitures, net

 

(123,405)

 

(25,026)

Changes in fair value of contingent consideration arrangements

 

(3,753)

 

(34,303)

Other, net

 

27,542

 

3,300

Changes in assets and liabilities:
Trade receivables and contract assets, net

 

(150,570)

 

(26,633)

Inventories

 

(78,523)

 

(25,159)

Accounts payable

 

(2,652)

 

44,901

Accrued compensation

 

(42,164)

 

44,304

Deferred revenue

 

57,658

 

(13,402)

Customer contract deposits

 

30,457

 

16,925

Other assets and liabilities, net

 

33,240

 

2,006

Net cash provided by operating activities

 

619,640

 

760,799

Cash flows relating to investing activities
Acquisition of businesses and assets, net of cash acquired

 

(283,392)

 

(1,293,095)

Capital expenditures

 

(324,733)

 

(228,772)

Purchases of investments and contributions to venture capital investments

 

(158,274)

 

(45,555)

Proceeds from sale of investments

 

4,549

 

6,532

Proceeds from divestitures, net

 

163,275

 

122,694

Other, net

 

(9,347)

 

264

Net cash used in investing activities

 

(607,922)

 

(1,437,932)

Cash flows relating to financing activities
Proceeds from long-term debt and revolving credit facility

 

2,952,430

 

6,951,113

Proceeds from exercises of stock options

 

25,110

 

45,652

Payments on long-term debt, revolving credit facility, and finance lease obligations

 

(2,932,636)

 

(6,242,877)

Purchase of treasury stock

 

(38,651)

 

(40,707)

Payment of debt extinguishment and financing costs

 

 

(38,255)

Payments of contingent consideration

 

(10,356)

 

(2,328)

Purchases of additional equity interests, net

 

(30,533)

 

Other, net

 

(7,761)

 

Net cash (used in) provided by financing activities

 

(42,397)

 

672,598

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

25,579

 

17,730

Net change in cash, cash equivalents, and restricted cash

 

(5,100)

 

13,195

Cash, cash equivalents, and restricted cash, beginning of period

 

246,314

 

233,119

Cash, cash equivalents, and restricted cash, end of period

$

241,214

$

246,314

 
Supplemental cash flow information:
Cash and cash equivalents

$

233,912

$

241,214

Restricted cash included in Other current assets

 

6,192

 

4,023

Restricted cash included in Other assets

 

1,110

 

1,077

Cash, cash equivalents, and restricted cash, end of period

$

241,214

$

246,314

 
Cash paid for income taxes

$

75,909

$

75,441

Cash paid for interest

$

100,754

$

70,775

Non-cash investing and financing activities:
Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities

$

88,612

$

72,043

Assets acquired under finance leases

$

8,179

$

1,567

 
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 Twelve Months Ended
December 31, 2022 December 25, 2021 December 31, 2022 December 25, 2021
Research Models and Services
Revenue

$

196,109

$

165,575

$

739,175

$

690,437

Operating income

 

37,111

 

40,188

 

160,410

 

166,814

Operating income as a % of revenue

 

18.9 %

 

24.3 %

 

21.7 %

 

24.2 %

Add back:
Amortization related to acquisitions

 

5,587

 

4,075

 

20,364

 

20,104

Severance

 

 

 

1,017

 

7

Acquisition related adjustments (2)

 

1,740

 

359

 

4,220

 

1,576

Total non-GAAP adjustments to operating income

$

7,327

$

4,434

$

25,601

$

21,687

Operating income, excluding non-GAAP adjustments

$

44,438

$

44,622

$

186,011

$

188,501

Non-GAAP operating income as a % of revenue

 

22.7 %

 

26.9 %

 

25.2 %

 

27.3 %

 
Depreciation and amortization

$

13,449

$

9,673

$

49,274

$

39,123

Capital expenditures

$

10,897

$

31,667

$

44,136

$

61,188

 
Discovery and Safety Assessment
Revenue

$

691,677

$

534,136

$

2,447,316

$

2,107,231

Operating income

 

156,967

 

94,967

 

532,889

 

406,978

Operating income as a % of revenue

 

22.7 %

 

17.8 %

 

21.8 %

 

19.3 %

Add back:
Amortization related to acquisitions

 

19,901

 

19,933

 

83,154

 

84,740

Severance

 

 

(144)

 

433

 

1,016

Acquisition related adjustments (2)

 

3,934

 

8,016

 

(1,975)

 

4,374

Site consolidation costs, impairments and other items (3)

 

848

 

844

 

3,849

 

2,098

Total non-GAAP adjustments to operating income

$

24,683

$

28,649

$

85,461

$

92,228

Operating income, excluding non-GAAP adjustments

$

181,650

$

123,616

$

618,350

$

499,206

Non-GAAP operating income as a % of revenue

 

26.3 %

 

23.1 %

 

25.3 %

 

23.7 %

 
Depreciation and amortization

$

44,137

$

44,986

$

179,465

$

177,254

Capital expenditures

$

55,655

$

40,694

$

189,563

$

101,477

 
Manufacturing Solutions
Revenue

$

212,057

$

205,339

$

789,569

$

742,492

Operating income

 

26,734

 

91,673

 

167,084

 

246,390

Operating income as a % of revenue

 

12.6 %

 

44.6 %

 

21.2 %

 

33.2 %

Add back:
Amortization related to acquisitions

 

10,030

 

5,390

 

43,416

 

23,304

Severance

 

958

 

1,278

 

1,577

 

3,622

Acquisition related adjustments (2)

 

10,004

 

(25,281)

 

5,813

 

(20,437)

Site consolidation costs, impairments and other items (3)

 

5,875

 

217

 

9,556

 

1,331

Total non-GAAP adjustments to operating income

$

26,867

$

(18,396)

$

60,362

$

7,820

Operating income, excluding non-GAAP adjustments

$

53,601

$

73,277

$

227,446

$

254,210

Non-GAAP operating income as a % of revenue

 

25.3 %

 

35.7 %

 

28.8 %

 

34.2 %

 
Depreciation and amortization

$

19,463

$

11,721

$

72,950

$

46,195

Capital expenditures

$

21,688

$

24,869

$

87,084

$

58,877

 
Unallocated Corporate Overhead

$

(57,002)

$

(54,021)

$

(209,408)

$

(230,320)

Add back:
Severance

 

 

224

 

1,061

 

73

Acquisition related adjustments (2)

 

2,149

 

1,343

 

10,508

 

30,354

Other items (3)

 

 

39

 

 

39

Total non-GAAP adjustments to operating expense

$

2,149

$

1,606

$

11,569

$

30,466

Unallocated corporate overhead, excluding non-GAAP adjustments

$

(54,853)

$

(52,415)

$

(197,839)

$

(199,854)

 
Total
Revenue

$

1,099,843

$

905,050

$

3,976,060

$

3,540,160

Operating income

 

163,810

 

172,807

 

650,975

 

589,862

Operating income as a % of revenue

 

14.9 %

 

19.1 %

 

16.4 %

 

16.7 %

Add back:
Amortization related to acquisitions

 

35,518

 

29,398

 

146,934

 

128,148

Severance

 

958

 

1,358

 

4,088

 

4,718

Acquisition related adjustments (2)

 

17,827

 

(15,563)

 

18,566

 

15,867

Site consolidation costs, impairments and other items (3)

 

6,723

 

1,100

 

13,405

 

3,468

Total non-GAAP adjustments to operating income

$

61,026

$

16,293

$

182,993

$

152,201

Operating income, excluding non-GAAP adjustments

$

224,836

$

189,100

$

833,968

$

742,063

Non-GAAP operating income as a % of revenue

 

20.4 %

 

20.9 %

 

21.0 %

 

21.0 %

 
Depreciation and amortization

$

77,545

$

67,241

$

303,870

$

265,540

Capital expenditures

$

89,024

$

98,775

$

324,733

$

228,772

 

(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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(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 U.S. government into the NHP supply chain applicable to our Safety Assessment business.
   
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 Twelve Months Ended
December 31, 2022 December 25, 2021 December 31, 2022 December 25, 2021
 
Net income attributable to common shareholders

$

187,410

$

137,578

$

486,226

$

390,982

Add back:
Non-GAAP adjustments to operating income (Refer to previous schedule)

 

61,026

 

16,293

 

182,993

 

152,201

Write-off of deferred financing costs and fees related to debt financing

 

 

 

 

26,089

Venture capital and strategic equity investment losses, net

 

6,707

 

13,142

 

26,775

 

30,419

Gain on divestitures (2)

 

(123,524)

 

(22,656)

 

(123,524)

 

(22,656)

Other (3)

 

1,080

 

 

5,285

 

(2,942)

Tax effect of non-GAAP adjustments:
Non-cash tax provision related to international financing structure (4)

 

1,024

 

1,028

 

4,648

 

4,809

Enacted tax law changes

 

(382)

 

 

(382)

 

10,036

Tax effect of the remaining non-GAAP adjustments

 

19,529

 

(16,936)

 

(11,399)

 

(58,404)

Net income attributable to common shareholders, excluding non-GAAP adjustments

$

152,870

$

128,449

$

570,622

$

530,534

 
Weighted average shares outstanding - Basic

 

50,906

 

50,471

 

50,812

 

50,293

Effect of dilutive securities:
Stock options, restricted stock units and performance share units

 

471

 

1,084

 

489

 

1,132

Weighted average shares outstanding - Diluted

 

51,377

 

51,555

 

51,301

 

51,425

 
Earnings per share attributable to common shareholders:
Basic

$

3.68

$

2.73

$

9.57

$

7.77

Diluted

$

3.65

$

2.67

$

9.48

$

7.60

 
Basic, excluding non-GAAP adjustments

$

3.00

$

2.55

$

11.23

$

10.55

Diluted, excluding non-GAAP adjustments

$

2.98

$

2.49

$

11.12

$

10.32

 

(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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(2)

Adjustments included in 2022 relate to the gain on sale of our Avian business. Adjustments included in 2021 relate to the preliminary gain on sale of our RMS Japan business as well as a gain on an immaterial divestiture.

(3)

Adjustments included in 2022 primarily relate to a purchase price adjustment in connection with the 2021 divestiture of RMS Japan, a loss on the termination of a Canadian pension plan, and the reversal of an indemnification asset related to a prior acquisition. Adjustment included in 2021 relates to the finalization of an annuity purchase related to the termination of our U.S. pension plan.

(4)

This adjustment 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 December 31, 2022 Total CRL RMS Segment DSA Segment MS Segment
 
Revenue growth, reported

21.5%

18.4 %

29.5%

3.3%

Decrease due to foreign exchange

4.4%

5.2 %

3.9%

4.8%

Contribution from acquisitions (2)

(1.8)%

(10.1)%

—%

—%

Impact of divestitures (3)

0.5%

1.8%

—%

1.2%

Effect of 53rd week in fiscal year 2022

(5.8)%

(4.5)%

(6.9)%

(4.0)%

Non-GAAP revenue growth, organic (4)

18.8%

10.8%

26.5%

5.3%

 
Twelve Months Ended December 31, 2022 Total CRL RMS Segment DSA Segment MS Segment
 
Revenue growth, reported

12.3%

7.1%

16.1%

6.3%

Decrease due to foreign exchange

3.5%

3.3%

3.3%

4.4%

Contribution from acquisitions (2)

(2.6)%

(6.5)%

(0.1)%

(5.9)%

Impact of divestitures (3)

1.7%

6.2%

—%

1.6%

Effect of 53rd week in fiscal year 2022

(1.5)%

(1.1)%

(1.8)%

(1.1)%

Non-GAAP revenue growth, organic (4)

13.4%

9.0%

17.5%

5.3%

 

(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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(2)

The contribution from acquisitions reflects only completed acquisitions.

(3)

The Company sold our Avian business on December 20, 2022. The Company sold both our RMS Japan operations and our gene therapy CDMO site in Sweden on October 12, 2021. These adjustments represent the revenue from these businesses for all applicable periods in 2022 and 2021.

(4)

Organic revenue growth is defined as reported revenue growth adjusted for acquisitions, divestitures, the 53rd week, and foreign exchange.

 

Contacts

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

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 MillValley.com & California Media Partners, LLC. All rights reserved.