Executive Summary

Q3 delivered modest beats: revenue $1.005B (+$14M vs S&P Global consensus) and non-GAAP EPS $2.43 (+$0.09 vs consensus), despite −0.5% reported revenue decline YoY; beats reflected RMS strength and stable DSA pricing, offset by softer Manufacturing/CDMO and higher tax rate *.
Guidance narrowed: 2025 non-GAAP EPS raised to $10.10–$10.30 (from $9.90–$10.30) and organic revenue decline tightened to (2.5)%–(1.5)% (from (3.0)%–(1.0)%); GAAP EPS lowered to $4.15–$4.35 due to higher venture investment losses .
Strategic levers: board updated strategic review—planning divestitures (~7% of revenue) with ≥$0.30 non-GAAP EPS accretion, incremental $70M cost savings in 2026 (on top of ~$225M), and refreshed $1B buyback authorization .
Demand signals: DSA book-to-bill 0.82x again, but proposal activity up and cancellations down; management sees early signs of recovery while remaining cautious (Q4 margins to face staffing/NHP sourcing headwinds) .

What Went Well and What Went Wrong

What Went Well
- RMS growth and mix lifted margins: RMS revenue +7.9% YoY to $213.5M; non-GAAP margin expanded to 25.0% on favorable large model mix and restructuring savings .
- DSA stability with improving leading indicators: Spot pricing “stable,” proposals up high single digits, cancellations down; sequential improvement in monthly book-to-bill through the quarter, backlog at $1.80B (vs $1.93B end-June) .
- Cash generation and capital allocation: Q3 free cash flow $178.2M; FY FCF outlook raised to $470–$500M; $1B new repurchase authorization; net leverage ~2.1x, ~70% fixed-rate debt .
What Went Wrong
- Manufacturing headwinds: Segment revenue −3.1% YoY on lower CDMO and Biologics Testing, driving non-GAAP margin down to 26.7% (vs 28.7%) .
- Higher non-GAAP tax rate: Q3 non-GAAP tax rate 28.3% (+700 bps YoY) amid OB-3 and global minimum tax provisions, creating a ~$0.24 EPS headwind .
- DSA book-to-bill sub-1.0x: Third straight quarter at 0.82x, with net bookings $494M and backlog down sequentially; Q4 margins to face higher staffing and third‑party NHP sourcing costs .

Financial Results

Headline metrics vs prior periods and estimates

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($B)	1.010	0.984	1.032	1.005
GAAP Diluted EPS ($)	1.33	0.50	1.06	1.10
Non-GAAP Diluted EPS ($)	2.59	2.34	3.12	2.43
GAAP Operating Margin (%)	11.6	7.6	9.7	13.3
Non-GAAP Operating Margin (%)	19.9	19.1	22.1	19.7

Actuals vs S&P Global consensus (quarterly)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue actual ($M)	984.2	1,032.1	1,004.9
Revenue consensus mean ($M)	941.9*	989.6*	990.8*
Revenue surprise ($M)	+42.3	+42.5	+14.1
Non-GAAP EPS actual ($)	2.34	3.12	2.43
EPS consensus mean ($)	2.075*	2.548*	2.340*
EPS surprise ($)	+0.27	+0.57	+0.09

Values marked with * retrieved from S&P Global.

Segment revenue and margins (Q3 YoY)

Segment	Q3 2024 Revenue ($M)	Q3 2025 Revenue ($M)	YoY Reported	Non-GAAP Op Margin Q3 2024	Non-GAAP Op Margin Q3 2025
RMS	197.8	213.5	+7.9%	21.0%	25.0%
DSA	615.1	600.7	−2.3%	27.4%	25.4%
Manufacturing	196.9	190.7	−3.1%	28.7%	26.7%
Total	1,009.8	1,004.9	−0.5%	19.9%	19.7%

Key KPIs

KPI	Q2 2025	Q3 2025
DSA net book-to-bill	0.82x	0.82x
DSA backlog ($B)	1.93 (end-June)	1.80 (end-Q3)
Net bookings (DSA, $M)	—	494
Free cash flow ($M)	—	178.2
CapEx ($M)	—	35.6
Non-GAAP tax rate	—	28.3%
Debt outstanding	$2.3B (end-Q2)	$2.2B (~70% fixed)
Net leverage	2.2x (Q2)	~2.1x (Q3)

Notes: “—” not disclosed in cited quarter.

Non-GAAP adjustments and impacts (Q3)

GAAP EPS dragged by venture/strategic investment losses of ~$0.33/share vs +$0.03 last year; non-GAAP excludes these items .
Q4 margin/earnings to be pressured by higher staffing and third‑party NHP sourcing costs (timing effects) .

Guidance Changes

Metric	Period	Previous Guidance (Aug 6)	Current Guidance (Nov 5)	Change
Revenue growth (reported)	FY 2025	(2.5)% – (0.5)%	(1.5)% – (0.5)%	Raised (narrowed higher)
FX impact	FY 2025	~ (0.5)%	~ (1.0)%	Higher headwind
Organic revenue growth	FY 2025	(3.0)% – (1.0)%	(2.5)% – (1.5)%	Tightened mid-range
GAAP EPS	FY 2025	$4.25–$4.65	$4.15–$4.35	Lowered (VC losses)
Non-GAAP EPS	FY 2025	$9.90–$10.30	$10.10–$10.30	Raised midpoint
VC/strategic investment losses	FY 2025	~ $0.17	$0.50	Higher losses
Restructuring costs	FY 2025	~ $1.40	~ $1.30	Lower
Acq.-related amort./costs	FY 2025	~ $3.60	~ $3.65	Slightly higher
Segment outlook (organic)	FY 2025	DSA: mid‑single digit decline; RMS: flat–low growth; Manufacturing: ~flat	DSA: (2.5)%–(3.5)%; RMS: flat–slightly positive; Manufacturing: flat to slightly negative	DSA better than start-of-year; Manufacturing tempered

Q4 embedded commentary: revenue flat to low single-digit decline YoY; non-GAAP EPS flat to −10% sequential vs Q3 ($2.43) .

Earnings Call Themes & Trends

Topic	Q1 2025 (prior)	Q2 2025 (prior)	Q3 2025 (current)	Trend
Demand/Bookings	DSA bookings highest in 2 years; raised DSA outlook to mid-single-digit decline; mix tailwind in H1	DSA organic −2.4%; DOJ/DOI cleared NHP shipments; mix/margins aided; guidance raised	Book-to-bill 0.82x again; proposals up; cancellations down; backlog $1.80B; cautious near-term	Stabilizing, early recovery signals
Pricing	—	—	Spot pricing stable; selective discounting used strategically	Stabilized
NHP Supply/Regulatory	—	DOJ/DOI closed NHP investigations; cleared shipments	Higher 4Q third‑party NHP sourcing costs; cases closed drive prior inventory charge reductions	Operational normalization; near-term cost
Manufacturing/CDMO	—	Microbial strong; Biologics Testing soft; CDMO commercial client wind-down	Manufacturing −3.1% YoY; Microbial strong; Biologics Testing soft; another commercial client remains	Mixed
Strategic Review/Portfolio	—	—	Divest ~7% rev; ≥$0.30 EPS accretion; $70M incremental savings; $1B buyback	Proactive optimization
Macro/Policy	—	—	More certainty around tariffs/drug pricing; biotech funding improving	Supportive backdrop forming
NAMs/Technology	—	—	SAB led by ex-FDA principal deputy; expanding in vitro/NAMs; Endosafe Trillium traction	Building capabilities

Management Commentary

Strategy and backdrop: “Positive signals are beginning to emerge… industry may be on a path towards recovery; however, sustained improvement… will take time… remaining cautious” — Jim Foster .
Strategic actions: “Divesting underperforming or non-core businesses (~7% of 2025 revenue)… expected to result in ≥$0.30 non-GAAP EPS accretion… implement initiatives… incremental net cost savings of ~$70M annually fully realized in 2026” — Jim Foster .
Capital allocation: “Board… approved a new $1 billion stock repurchase authorization… evaluate the prudent level of stock repurchases… considering valuation, growth prospects, leverage” — Jim Foster .
Outlook parameters: “For the fourth quarter… non-GAAP EPS expected to be flat to 10% below Q3’s $2.43… DSA margin pressure from staffing/NHP sourcing; RMS margin moderation due to NHP timing/seasonality” — Mike Knell .
Demand indicators: “DSA proposal activity improved… biotech proposals up high single-digit… spot pricing remained stable overall” — Jim Foster .

Q&A Highlights

DSA trajectory into 2026: Management “guardedly optimistic” if funding/proposals improvement persists; need continued trend through 4Q/1Q and client budgets to finalize before framing 2026 growth .
NAMs adoption: Clients see NAMs as complementary; alternatives still nascent; CRL investing in in vitro and regulatory strategy (SAB led by former FDA principal deputy) .
Divestitures: ~7% of revenue targeted; ≥$0.30 EPS accretion; no asset specifics provided; aim to complete by mid-2026; continuing ops accounting expected .
Pricing/win rates: Spot pricing stable; selective discounts to protect/gain share; expect pricing leverage as capacity tightens .
Capacity/staffing: Supplementary hiring in Lab Sciences within SA to meet better-than-expected demand; utilization below “optimal low-80s,” providing start capacity; new space takes 18–24 months .
NHP costs: Higher third‑party sourcing due to exceeding earlier demand expectations; not expected to be ongoing headwind if planning aligns with demand in 2026 .

Estimates Context

Q3 2025 beat S&P Global consensus: Revenue $1,004.9M vs $990.8M*; non-GAAP EPS $2.43 vs $2.340* .
Consistent YTD beats: Q1 revenue $984.2M vs $941.9M*; EPS $2.34 vs $2.075*; Q2 revenue $1,032.1M vs $989.6M*; EPS $3.12 vs $2.548* .
Estimate dispersion: 14 EPS estimates and 11 revenue estimates in Q3, indicating reasonable coverage breadth*.
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise (non-GAAP) with improving demand signals: modest Q3 beat and higher FY non-GAAP EPS midpoint reflect RMS strength, disciplined cost control, and early DSA stabilization .
Watch Q4 margin headwinds: Staffing and NHP sourcing timing to weigh on DSA/RMS margins short term; management embedded flat to down 10% sequential EPS in FY outlook .
2026 earnings setup: ≥$70M incremental cost savings (on ~$225M base) plus portfolio pruning (≥$0.30 EPS accretion) could amplify operating leverage if DSA bookings improve and Manufacturing stabilizes .
DSA recovery catalysts: Biotech funding rebound, higher proposals, declining cancellations, and stable pricing are critical leading indicators; monitor book-to-bill crossing >1.0x and backlog trajectory .
Segment mix: Microbial Solutions remains a bright spot; CDMO/ Biologics Testing softness persists; RMS benefits from NHP timing—expect normalization in 4Q .
Capital returns and balance sheet: $1B buyback authorization with rising FCF ($470–$500M FY) and ~2.1x leverage provide optionality for repurchases and bolt-ons .
Regulatory clarity: Closure of NHP investigations reduces a key overhang; near-term third‑party sourcing costs are transitory; NAMs capability build positions CRL for the long term .

Citations:

Q3 2025 press release and schedules:
8-K 2.02 and exhibits:
Q3 2025 earnings call transcript:
Strategic review press release:
Q2 2025 press release and schedules:
Q1 2025 press release and schedules:

S&P Global consensus values indicated with * and are sourced from S&P Global.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC. (CRL)·Q3 2025 Earnings Summary