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CHARLES RIVER LABORATORIES INTERNATIONAL, INC. (CRL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $984.2M, down 2.7% year over year, but above internal expectations; non-GAAP EPS was $2.34 (+3.1% y/y), and the company raised full-year 2025 guidance on stronger DSA bookings .
  • Versus S&P Global consensus, CRL delivered a beat: revenue $984.2M vs $941.9M*, EPS $2.34 vs $2.07*, and EBITDA $218.9M vs $215.8M*; the beat was driven by improved DSA mix and cost savings; GAAP EPS was $0.50 reflecting accelerated CDMO amortization and venture losses .
  • DSA net bookings rose to $616M (+20% y/y and sequential), net book-to-bill improved to 1.04x (first time above 1x since 2H22), and backlog increased to $1.99B, supporting a modest guidance raise; management remains cautious about 2H visibility and mix normalization .
  • Segment dynamics: DSA margins expanded on a non-GAAP basis (23.9% vs 23.5% y/y), RMS non-GAAP margins declined on lower NHP revenue (27.1% vs 27.6%), and Manufacturing non-GAAP margins fell (23.1% vs 25.3%) due to CDMO pressures and accelerated amortization (GAAP margin -4.8%) .
  • Potential stock catalysts: raised FY25 EPS and revenue guidance, disclosure of improved DSA bookings, $350M buyback in Q1, and governance/strategic review cooperation agreement with Elliott Investment Management .

What Went Well and What Went Wrong

What Went Well

  • “Notable improvement in DSA booking activity to the highest level in two years,” with net book-to-bill at 1.04x and net bookings of $616M (+20% y/y and sequential), supporting a guidance raise .
  • Non-GAAP operating margin improved to 19.1% (+60 bps y/y) on restructuring savings and favorable DSA mix; non-GAAP EPS rose to $2.34 (+3.1% y/y) aided by lower tax, interest, and share count .
  • Microbial Solutions continued to grow solidly; Endosafe consumables and prior instrument placements contributed to cartridge demand, providing stability within Manufacturing .

What Went Wrong

  • Manufacturing GAAP operating margin fell to -4.8% due to lower CDMO commercial revenue and accelerated amortization of client relationships ($35.5M accelerated; remaining $38.0M amortized over ~3 months in FY25) .
  • RMS non-GAAP margin declined to 27.1% (vs 27.6% y/y) on lower NHP revenue and Cell Solutions softness; academic/government funding uncertainty (NIH) is a watch item .
  • Discovery Services within DSA remained weak; management does not assume bookings tailwinds persist into 2H and flags spot pricing as stable but not improving materially .

Financial Results

Core P&L and Margins vs prior quarters and year

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,009.8 $1,002.5 $984.2
GAAP EPS ($)$1.33 $(4.22) $0.50
Non-GAAP EPS ($)$2.59 $2.66 $2.34
GAAP Operating Margin (%)11.6% (16.7)% 7.6%
Non-GAAP Operating Margin (%)19.9% 19.9% 19.1%

Year-over-Year vs Estimates (Q1 2025)

MetricQ1 2024Q1 2025 ActualConsensus*Beat/(Miss)
Revenue ($USD Millions)$1,011.6 $984.2 $941.9*+$42.3M
GAAP EPS ($)$1.30 $0.50 n/an/a
Non-GAAP EPS ($)$2.27 $2.34 $2.07*+$0.27
EBITDA ($USD Millions)n/a$218.9 $215.8*+$3.1

Values with asterisk are retrieved from S&P Global.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentRevenue Q1 2024 ($M)Revenue Q1 2025 ($M)Organic Growth (%) Q1 2025GAAP Op Margin Q1 2024 (%)GAAP Op Margin Q1 2025 (%)Non-GAAP Op Margin Q1 2024 (%)Non-GAAP Op Margin Q1 2025 (%)
RMS$220.9 $213.1 (2.5)% 19.5 20.5 27.6 27.1
DSA$605.5 $592.6 (1.4)% 19.0 15.9 23.5 23.9
Manufacturing$185.2 $178.5 (2.2)% 18.2 (4.8) 25.3 23.1

KPIs (Q1 2025)

KPIQ1 2025
DSA Backlog ($B)$1.99
DSA Net Book-to-Bill (x)1.04
DSA Net Bookings ($M)$616
Free Cash Flow ($M)$112.4
CapEx ($M)$59.3

Guidance Changes

MetricPeriodPrevious Guidance (2/19/25)Current Guidance (5/7/25)Change
Revenue growth/(decrease), reportedFY 2025(7.0)% – (4.5)% (5.5)% – (3.5)% Raised
FX impact (reported rev)FY 20251.0% – 1.5% ~1.0% Favorable
Organic revenue growth/(decrease)FY 2025(5.5)% – (3.5)% (4.5)% – (2.5)% Raised
GAAP EPS ($)FY 2025$4.30 – $4.80 $4.35 – $4.85 Raised
Non-GAAP EPS ($)FY 2025$9.10 – $9.60 $9.30 – $9.80 Raised
Acquisition-related amortization & integration ($/share)FY 2025~ $3.50 ~ $3.50 Maintained
Restructuring costs ($/share)FY 2025~ $1.00 ~ $1.00 Maintained
Venture/strategic investment losses ($/share)FY 2025— ~ $0.15 New item
Other items ($/share)FY 2025~ $0.30 ~ $0.30 Maintained
Segment outlook – DSA organicFY 2025Mid- to high single-digit decline (company commentary) Mid-single-digit decline (improved) Raised
Segment outlook – RMS organicFY 2025Low single-digit growth Flat to slightly positive (moderated) Lowered
Segment outlook – Manufacturing organicFY 2025Essentially flat Essentially flat Maintained
Unallocated corporate costs (% of rev)FY 2025~5%–5.5% ~5%–5.5% Maintained
Non-GAAP tax rate (%)FY 202522.5%–23.5% 22.5%–23.5% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
DSA demand/bookingsStable demand, DSA organic down; cancellation rate improved Net book-to-bill stable below 1x; 2025 DSA organic decline driven by pricing and steady volume Net book-to-bill 1.04x; $616M net bookings (+20% y/y/seq); backlog $1.99B Improving near term, cautious 2H
Pricing environment (DSA)Non-GAAP margins supported by cost savings Spot pricing stepped down once, then plateau; selective discounting; pricing headwind in 2025 Spot pricing stable; mix drove slight price improvement in Q1; headwind persists through backlog Stabilizing
NAMs/regulatory (FDA)n/aCITES deferral on Cambodian NHP trade; supply diversification FDA NAMs pilot on monoclonal antibodies; ~$50M revenue exposed; no immediate impact; hybrid approaches emphasized Strategic engagement
NHP supply chainn/aBacklog dynamics, NHP inventory write-down in Q4; diversify supply (Mauritius/Noveprim) Legal costs in DSA for NHP investigations; backlog up; NIH/academic uncertainty monitored Managed risk
CDMO performanceManufacturing margins expanded in Q3; broad growth Loss of two commercial clients; FY25 ~100 bps revenue headwind; rightsizing; FDA Form 43 engagement Manufacturing non-GAAP margin 23.1%; commercial CDMO headwinds continue Under pressure, improving ops
Microbial SolutionsRobust growth; margin expansion Strong year-end; continued margin support Solid growth; Endosafe consumables strength Consistently strong
Governance/Strategic reviewn/an/aNew directors; cooperation agreement with Elliott; comprehensive strategic review initiated New catalyst

Management Commentary

  • CEO on demand stabilization and bookings: “The first quarter demonstrated continued signs of demand stabilization, highlighted by a notable improvement in DSA booking activity to the highest level in two years.”
  • CFO on margin protection/cost actions: “We remain on track to deliver annualized cost savings of over $175 million in 2025 and approximately $225 million in 2026.”
  • CEO on NAMs: “NAMs are beginning to offer exciting opportunities for the future, but they are not capable of fully replacing animal studies… we believe a hybrid model… will prove to be the best approach.”
  • CFO on FY25 outlook specifics: “We now expect full year reported revenue will decline 3.5% to 5.5% and organic revenue will decline 2.5% to 4.5%… Non-GAAP EPS… $9.30 to $9.80.”
  • Strategic review: “The Strategic Planning and Capital Allocation Committee… will undertake a comprehensive strategic review of our business to evaluate initiatives to unlock additional value.”

Q&A Highlights

  • NAMs adoption and impact: Management expects limited near-term impact focused on monoclonal antibodies (~$50M revenue exposed) and emphasizes a hybrid approach with animal studies to ensure patient safety .
  • DSA bookings cadence: “Quicker start” studies aided Q1 revenue; visibility suggests benefit across H1 but not assumed to persist into H2 .
  • Pricing: Spot pricing characterized as stable; Q1 price/mix favorable due to longer duration specialty studies; broader environment remains cautious .
  • CDMO update: Rightsizing actions continue; contractual offsets included in guidance; FDA engagement ongoing; pipeline of biotech clients intact despite commercial loss .
  • Tariffs/NIH funding: Direct tariff impact modest and largely passed through; NIH direct exposure ~2% of company; broader academic/government exposure in RMS monitored .

Estimates Context

  • Consensus vs actual (Q1 2025): Revenue $941.9M* vs $984.2M (beat); EPS $2.07* vs $2.34 (beat); EBITDA $215.8M* vs $218.9M (beat). Beats driven by improved DSA mix, cost savings, lower tax and interest, and reduced diluted shares .
  • Estimate implications: Given net book-to-bill >1x and improved bookings, models may raise near-term DSA revenue/margin assumptions for H1; however, management’s caution on 2H mix/pricing supports tempered full-year revisions .

Values with asterisk are retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term momentum in DSA (book-to-bill >1x, bookings +20% y/y/seq) alongside restructuring savings underpins raised FY25 EPS and revenue guidance; treat Q1 mix tailwinds as transitory per management .
  • Manufacturing headwinds are concentrated in CDMO; accelerated amortization depresses GAAP results in H1, but non-GAAP margin should improve as Biologics Testing volumes rebound and rightsizing proceeds .
  • Pricing stability and longer-duration study mix helped Q1; expect pricing headwinds to work through backlog during 2025, limiting margin expansion until demand tightens .
  • Strategic review and cooperation with Elliott introduce optionality (portfolio actions, capital allocation, cost enhancements), adding a new catalyst beyond operating execution .
  • Watch macro/regulatory: NIH funding and tariff headlines are monitored but currently modest direct impact; NAMs pilot is focused and unlikely to materially affect near-term safety assessment volumes .
  • Capital returns: $350M buyback executed in Q1; average diluted shares expected slightly below 50M for FY25, supporting EPS leverage .
  • Trading view: Consider pairing raised guidance and DSA KPI improvement against management’s cautious 2H stance; near-term strength may favor tactical positioning into H1 with vigilance on CDMO and pricing signals .