1913bcbbd485ee820470fb3d93a2ad1e66f39233fc0ff750440d656b47601646

| Metric                | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Carrying Value of Inventory (USD Million) | **$20**  **[0001100682-23-000006_crl-20221231.htm:87]**  | **$20**  **[0001100682-23-000009_crl-20230401.htm:24]**  | **$20**  **[0001100682-23-000018_crl-20230701.htm:27]**  | **$20**  **[0001100682-23-000022_crl-20230930.htm:30]**  | **$27**  **[0001100682-24-000007_crl-20231230.htm:93]**  | **$27**  **[0001100682-24-000018_crl-20240330.htm:28]**  | **$27**  **[0001100682-24-000027_crl-20240629.htm:32]**  | **$27**  **[0001100682-24-000035_crl-20240928.htm:33]**  |

c1988d51b865f1de29178f1f46cc4ef9ccd5d4effeaf170a3a16a90fcb4038fc

| Metric (USD Millions) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Research Models and Services (RMS) | 196.109  **[0001157523-23-000326_a53335402_ex991.htm:12]**  | 199.8  **[0001100682-23-000009_crl-20230401.htm:14]**  | 209.9  **[0001157523-23-001294_a53513759ex99_1.htm:11]**  | 186.8  **[0001100682-23-000022_crl-20230930.htm:34]**  | 195.781  **[0001157523-24-000238_a53896037ex99_1.htm:12]**  | 220.9  **[0001100682-24-000018_crl-20240330.htm:31]**  | 206.4  **[0001100682-24-000025_crl2q24earningsrelease.htm:16]** **[0001100682-24-000027_crl-20240629.htm:36]**  | 197.8  **[0001100682-24-000035_crl-20240928.htm:37]**  |
| Discovery and Safety Assessment (DSA) | 691.677  **[0001157523-23-000326_a53335402_ex991.htm:12]**  | 662.4  **[0001100682-23-000009_crl-20230401.htm:14]**  | 663.5  **[0001157523-23-001294_a53513759ex99_1.htm:11]**  | 664.0  **[0001100682-23-000022_crl-20230930.htm:34]**  | 625.785  **[0001157523-24-000238_a53896037ex99_1.htm:12]**  | 605.5  **[0001100682-24-000018_crl-20240330.htm:31]**  | 627.4  **[0001100682-24-000025_crl2q24earningsrelease.htm:16]** **[0001100682-24-000027_crl-20240629.htm:36]**  | 615.1  **[0001100682-24-000035_crl-20240928.htm:37]**  |
| Manufacturing Solutions | 212.057  **[0001157523-23-000326_a53335402_ex991.htm:12]**  | 167.3  **[0001100682-23-000009_crl-20230401.htm:14]**  | 186.5  **[0001157523-23-001294_a53513759ex99_1.htm:11]**  | 175.7  **[0001100682-23-000022_crl-20230930.htm:34]**  | 191.910  **[0001157523-24-000238_a53896037ex99_1.htm:12]**  | 185.2  **[0001100682-24-000018_crl-20240330.htm:31]**  | 192.3  **[0001100682-24-000025_crl2q24earningsrelease.htm:16]** **[0001100682-24-000027_crl-20240629.htm:36]**  | 196.9  **[0001100682-24-000035_crl-20240928.htm:37]**  |
| Total Revenue | 1,099.843  **[0001157523-23-000326_a53335402_ex991.htm:12]**  | 1,029.4  **[0001100682-23-000009_crl-20230401.htm:14]**  | 1,059.9  **[0001157523-23-001294_a53513759ex99_1.htm:11]**  | 1,026.6  **[0001100682-23-000022_crl-20230930.htm:34]**  | 1,013.476  **[0001157523-24-000238_a53896037ex99_1.htm:12]**  | 1,011.6  **[0001100682-24-000018_crl-20240330.htm:31]**  | 1,026.1  **[0001100682-24-000025_crl2q24earningsrelease.htm:16]** **[0001100682-24-000027_crl-20240629.htm:35]**  | 1,010.0  **[0001100682-24-000035_crl-20240928.htm:37]**  |

d04fafaba22b3ac1f8a90b1797b5681b5adfca7ba433bc7d71a3eb1ce9a5aa32

DSA backlog (USD billions)

bf06210844c667a6af05e5a10402b81c38dd4818587fe93ac5be8d785f5a9a19

Adjustments for Non-Cash Items [USD]

Stock-Based Compensation [USD]

Changes in Working Capital [USD]

Capital Expenditures (CapEx) [USD]

Proceeds from Debt [USD]

Repayments of Debt [USD]

Share Repurchases [USD]

Dividend Payments [USD]

Net Change in Cash [USD]

c00cf535bfa97f838835c3a6c2a8ef3685d579da47f3ddb20629e5ff2b16a474

Charles River Laboratories International, Inc. (CRL) is a leading global partner in non-clinical drug development, offering a wide range of products and services to aid in the research, development, and manufacturing of new drugs, devices, and therapies **[0001100682-24-000007_crl-20231230.htm:123]** **[0001100682-24-000007_crl-20231230.htm:8]** **[0001100682-24-000007_crl-20231230.htm:10]** **[0001100682-24-000027_crl-20240629.htm:31]** **[0001100682-24-000007_crl-20231230.htm:88]**. The company operates through three main segments, providing research models, discovery and safety assessment services, and manufacturing solutions **[0001100682-24-000007_crl-20231230.htm:123]** **[0001100682-24-000007_crl-20231230.htm:8]** **[0001100682-24-000007_crl-20231230.htm:10]** **[0001100682-24-000027_crl-20240629.htm:31]** **[0001100682-24-000007_crl-20231230.htm:88]**. CRL's diverse portfolio helps clients streamline drug development processes, reduce costs, and accelerate time to market **[0001100682-24-000007_crl-20231230.htm:8]** **[0001100682-24-000027_crl-20240629.htm:31]** **[0001100682-24-000007_crl-20231230.htm:88]**.

1. **Discovery and Safety Assessment (DSA)** - Provides regulated and non-regulated services for drug discovery, non-clinical development, and safety testing, including therapeutic discovery, optimization, and safety assessment studies for various compounds.
2. **Research Models and Services (RMS)** - Produces and sells small and large research models, offering related services such as Insourcing Solutions, Genetically Engineered Models and Services (GEMS), and Research Animal Diagnostic Services (RADS), along with vivarium space rental through the Charles River Accelerator and Development Lab (CRADL).
3. **Manufacturing Solutions** - Includes Microbial Solutions, offering in vitro testing products, and Biologics Solutions, providing specialized testing and contract development and manufacturing services (CDMO) for biologics, including cell and gene therapies.

ad259f62a256faac66b726e6ecc25789f0e6924f9cd91424d9d72a7e5e4e1504

Carrying Value of Inventory (USD Million)

109dbb01f581a491f2a2e73e8068d022d263d9757b66b651f51b36b5df66dc51

| Metric (in thousands USD) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------------------|---------|---------|---------|---------|---------|---------|---------|
| U.S. Revenue              | 605,441  **[0001100682-23-000009_crl-20230401.htm:14]**  | 606,775  **[0001100682-23-000018_crl-20230701.htm:15]**  | 590,316  **[0001100682-23-000022_crl-20230930.htm:17]**  | N/A     | 562,317  **[0001100682-24-000018_crl-20240330.htm:16]**  | 571,427  **[0001100682-24-000027_crl-20240629.htm:19]**  | 559,277  **[0001100682-24-000035_crl-20240928.htm:19]**  |
| Europe Revenue            | 267,703  **[0001100682-23-000009_crl-20230401.htm:14]**  | 272,976  **[0001100682-23-000018_crl-20230701.htm:15]**  | 264,787  **[0001100682-23-000022_crl-20230930.htm:17]**  | N/A     | 276,319  **[0001100682-24-000018_crl-20240330.htm:16]**  | 271,377  **[0001100682-24-000027_crl-20240629.htm:19]**  | 267,123  **[0001100682-24-000035_crl-20240928.htm:19]**  |
| Canada Revenue            | 110,606  **[0001100682-23-000009_crl-20230401.htm:14]**  | 117,647  **[0001100682-23-000018_crl-20230701.htm:15]**  | 129,023  **[0001100682-23-000022_crl-20230930.htm:17]**  | N/A     | 110,401  **[0001100682-24-000018_crl-20240330.htm:16]**  | 125,244  **[0001100682-24-000027_crl-20240629.htm:19]**  | 127,088  **[0001100682-24-000035_crl-20240928.htm:19]**  |
| Asia Pacific Revenue      | 42,813  **[0001100682-23-000009_crl-20230401.htm:14]**   | 59,864  **[0001100682-23-000018_crl-20230701.htm:15]**   | 40,233  **[0001100682-23-000022_crl-20230930.htm:17]**   | N/A     | 45,772  **[0001100682-24-000018_crl-20240330.htm:16]**   | 50,387  **[0001100682-24-000027_crl-20240629.htm:19]**   | 45,009  **[0001100682-24-000035_crl-20240928.htm:19]**   |
| Other Revenue             | 2,810  **[0001100682-23-000009_crl-20230401.htm:14]**    | 2,675  **[0001100682-23-000018_crl-20230701.htm:15]**    | 2,264  **[0001100682-23-000022_crl-20230930.htm:17]**    | N/A     | 16,751  **[0001100682-24-000018_crl-20240330.htm:16]**   | 7,682  **[0001100682-24-000027_crl-20240629.htm:19]**    | 11,266  **[0001100682-24-000035_crl-20240928.htm:19]**   |
| Consolidated Total Revenue| 1,029,373  **[0001100682-23-000009_crl-20230401.htm:14]**  | 1,059,937  **[0001100682-23-000018_crl-20230701.htm:15]**  | 1,026,623  **[0001100682-23-000022_crl-20230930.htm:17]**  | N/A | 1,011,560  **[0001100682-24-000018_crl-20240330.htm:16]**  | 1,026,117  **[0001100682-24-000027_crl-20240629.htm:19]**  | 1,009,763  **[0001100682-24-000035_crl-20240928.htm:19]**  |

dec55f03cdec6114840eb4ca5ee9d598079681c4a0c3e86beb44e6d60fee0742

1. With the planned closure or consolidation of approximately **15 smaller sites**, how will you ensure that this reduction in global footprint won't limit your capacity to meet client demand when the market rebounds, and what measures are in place to prevent potential revenue loss due to these changes?  **[CRL_3406111_2]** **[CRL_3406111_30]** 

2. Given that your restructuring initiatives are expected to generate approximately **$200 million in cumulative annualized cost savings**, eliminating more than **5% of your cost structure**, is this sufficient to offset ongoing inflationary pressures and the restoration of incentive compensation, or do you anticipate additional cost-saving measures will be necessary to maintain margins in 2025?  **[CRL_3406111_2]** **[CRL_3406111_21]** 

3. Can you provide more details on the implementation of the **global business service model**, specifically how it will streamline processes across functional areas, the expected timeline, and how it will impact your operational efficiency and margins?  **[CRL_3406111_16]** **[CRL_3406111_2]** 

4. With large pharma clients continuing their cost-saving and reprioritization efforts, and demand from this segment softening in the back half of the year, what is your outlook for demand recovery in 2025, and how are you positioning the company to navigate this uncertain environment?  **[CRL_3406111_13]** 

5. In light of **Vertex signing an agreement with Lonza** for global manufacturing, does this pose a risk to your existing relationship with Vertex, and how do you plan to mitigate the impact of competitors entering agreements with key clients to ensure sustained demand for your services?  **[CRL_3406111_12]** **[CRL_3406111_29]** 

d3df79bcf1a4df445df474aa3dc9ff399f551be0af0cdf9d76147cd4569859bf

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Guidance**:
     - Full year revenue expected to decline by **2% to 3%** on a reported basis and **3% to 4%** on an organic basis  **[CRL_3406111_7]** .
     - Fourth quarter revenue expected to decline by low to mid-single-digit rates on both a reported and organic basis  **[CRL_3406111_8]** .
  2. **Non-GAAP EPS**:
     - Full year non-GAAP EPS expected to be in the range of **$10.10 to $10.30**  **[CRL_3406111_7]** .
     - Fourth quarter non-GAAP EPS expected to be in a range of approximately **$2.45 to $2.65**  **[CRL_3406111_8]** .
  3. **Segment Revenue Outlook**:
     - **RMS**: Revenue will be essentially flat on an organic basis  **[CRL_3406111_7]** .
     - **DSA**: Revenue expected to be at the more favorable end of a high single-digit organic revenue decline  **[CRL_3406111_7]** .
     - **Manufacturing**: Expected to report high single-digit organic revenue growth  **[CRL_3406111_7]** .
  4. **Operating Margin**: Expected to be slightly below last year's level  **[CRL_3406111_7]** .
  5. **Free Cash Flow**: Expected to be over **$450 million**  **[CRL_3406111_8]** .
  6. **Capital Expenditures (CapEx)**: Expected to be between **$220 million and $240 million**  **[CRL_3406111_8]** .
  7. **Unallocated Corporate Costs**: Expected to be slightly above the mid-5% range as a percent of revenue  **[CRL_3406111_8]** .
  8. **Tax Rate**: Expected to be in the range of **21.5% to 22%**  **[CRL_3406111_8]** .
  9. **Net Interest Expense**: Expected to be at the lower end of **$118 million to $122 million**  **[CRL_3406111_8]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Decline**: Expected decline of **2.5% to 4.5%** on a reported basis and **3% to 5%** on an organic basis  **[CRL_3396980_6]** .
  2. **DSA Revenue**: Expected to decline by approximately **10%** organically in the second half  **[CRL_3396980_6]** .
  3. **Operating Margin**: Expected to be slightly below last year's level  **[CRL_3396980_7]** .
  4. **Unallocated Corporate Costs**: Expected to be in the mid-**5%** range as a percent of revenue  **[CRL_3396980_7]** .
  5. **Tax Rate**: Expected to be approximately **22%**  **[CRL_3396980_7]** .
  6. **Net Interest Expense**: Expected to be in the range of **$118 million to $122 million**  **[CRL_3396980_7]** .
  7. **Capital Expenditures**: Expected to decline to approximately **$250 million**  **[CRL_3396980_7]** .
  8. **Free Cash Flow**: Expected to be in the range of **$380 million to $400 million**  **[CRL_3396980_7]** .
  9. **Non-GAAP EPS**: Expected to be in a range of **$9.90 to $10.20**  **[CRL_3396980_6]** .
  10. **RMS Organic Revenue Growth**: Expected to be flat to low single-digit growth  **[CRL_3396980_7]** .
  11. **Manufacturing Segment Revenue Growth**: Expected to be in the mid- to high single-digit range  **[CRL_3396980_4]** .
  12. **Third Quarter Revenue and Earnings**: Expected mid-single-digit decline in revenue and low double-digit decline in EPS year-over-year  **[CRL_3396980_7]** .
  13. **Restructuring Initiatives**: Expected to generate over **$150 million** in annualized cost savings  **[CRL_3396980_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Growth**:
     - Reported revenue growth expected to be **1% to 4%**.
     - Organic revenue growth expected to be flat to a **3% increase**  **[CRL_3387835_6]** .
  2. **Non-GAAP EPS**: Expected to be in the range of **$10.90 to $11.40**  **[CRL_3387835_6]** .
  3. **Operating Margin**: Expected expansion of at least **50 basis points**  **[CRL_3387835_6]** .
  4. **Unallocated Corporate Costs**: Expected to moderate to just above **5% of revenue**  **[CRL_3387835_6]** .
  5. **Tax Rate**: Expected to be in the range of **23% to 24%**  **[CRL_3387835_6]** .
  6. **Net Interest Expense**: Expected to trend slightly favorable, at the low end of **$125 million to $130 million**  **[CRL_3387835_6]** .
  7. **Free Cash Flow**: Expected to be in a range of **$400 million to $440 million**  **[CRL_3387835_6]** .
  8. **Capital Expenditures (CapEx)**: Expected to be approximately **$300 million**  **[CRL_3387835_6]** .
  9. **Second Quarter Expectations**: Revenue expected to decline at a low to mid-single-digit rate, with mid-single-digit sequential EPS growth over **$2.27**  **[CRL_3387835_7]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Organic Revenue Growth**: Expected to be flat to 3% growth  **[CRL_3373229_1]** **[CRL_3373229_8]** **[CRL_3373229_2]** .
  2. **Reported Revenue Growth**: Expected to be 1% to 4%  **[CRL_3373229_8]** .
  3. **Non-GAAP EPS**: Expected to be in the range of **$10.90 to $11.40**  **[CRL_3373229_8]** **[CRL_3373229_3]** .
  4. **Free Cash Flow**: Expected to be in the range of **$400 million to $440 million**  **[CRL_3373229_10]** .
  5. **Capital Expenditures (CapEx)**: Expected to be approximately **$300 million**  **[CRL_3373229_10]** .
  6. **Operating Margin Improvement**: Expected to improve by at least 50 basis points  **[CRL_3373229_9]** .
  7. **Tax Rate**: Expected to be in the range of **23% to 24%**  **[CRL_3373229_9]** .
  8. **Interest Expense**: Expected to be in the range of **$125 million to $130 million**  **[CRL_3373229_9]** .
  9. **Segment-Specific Guidance**:
     - **RMS Segment**: Expected flat to low single-digit organic revenue growth  **[CRL_3373229_8]** .
     - **DSA Segment**: Expected flat to low single-digit organic revenue growth  **[CRL_3373229_8]** .
     - **Manufacturing Segment**: Expected low to mid-single-digit growth  **[CRL_3373229_8]** .

5260ee461bacbaa17e2a5158adec78448cf63f7f28db59002021a3218fd5c451

4bee8d18b49b945fc320a0fd8aaa10918e7986e7ddc2ff67a53d3f74fb067a3f

- RMS Segment: Four main competitors, including one government-funded not-for-profit entity, one public company in the U.S., one privately held company in Europe, and one privately held company in the U.S.  **[0001100682-24-000007_crl-20231230.htm:31]** 
- DSA Segment (Discovery Services): Hundreds of competitors, with two main competitors being one public company in China and one public company in Europe.  **[0001100682-24-000007_crl-20231230.htm:31]** 
- DSA Segment (Safety Assessment): Dozens of competitors, with one main competitor being a division of a large public company in the U.S.  **[0001100682-24-000007_crl-20231230.htm:31]** 
- Manufacturing Segment (Microbial Solutions): Four main competitors, three of which are public companies in Europe and one is a private company in the U.S.  **[0001100682-24-000007_crl-20231230.htm:31]** 
- Manufacturing Segment (Biologics Solutions): Five main competitors, three of which are public companies in the U.S., one is a public company in Europe, and one is a public company in China.  **[0001100682-24-000007_crl-20231230.htm:31]** 

d3ee9dbfd7c9d165adffbc70c802ed99266fbc519efab8f3abd5986f412e873e

U.S.

Europe

Canada

Asia Pacific

Other Non-U.S.

Other

Total Revenue

9a213cb21d5e4393d47f5fbebbeca32a017800da55ed7da66206f0743a492ff7

- Research Models

- Research Model Services

Manufacturing

- Endotoxin and Microbial Detection

- Other Manufacturing Support

Service Revenue

Product Revenue

236492bbcd1c040e078394a7775b6f5eeedfb55d01f458c37b2b17e334a7a2e6

| Name               | Position                                                                 | Start Date | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|--------------------|--------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| James C. Foster    | Chairman, President, Chief Executive Officer                             | 1976       | James C. Foster joined Charles River Laboratories in **1976** as General Counsel. He was named President in **1991**, Chief Executive Officer in **1992**, and Chair of the Board in **2000**. Mr. Foster has been a director since **1989**  **[0001100682-24-000007_crl-20231230.htm:40]** **[0001104659-24-040854_tm242687-d2_def14a.htm:7]** **[0001104659-24-040854_tm242687-d2_def14a.htm:2]** .                                                                                 |
| Flavia H. Pease    | Corporate Executive Vice President, Chief Financial Officer              | 2022       | Flavia H. Pease joined Charles River Laboratories in **2022**. Before joining, she served as Vice President and Group Chief Financial Officer of Johnson & Johnson’s global Medical Devices businesses since **2019**  **[0001100682-24-000007_crl-20231230.htm:42]** **[0001100682-23-000006_crl-20221231.htm:41]** .                                                                                                            |
| William D. Barbo   | Corporate Executive Vice President                                       | 1982       | William D. Barbo joined Charles River Laboratories in **1982** as a laboratory technician. He was named Corporate Vice President of Research Models and Services in **2005** and Corporate Executive Vice President and Chief Commercial Officer in **October 2016**  **[0001100682-24-000007_crl-20231230.htm:40]** **[0001100682-23-000006_crl-20221231.htm:40]** .                                                             |
| Birgit Girshick    | Corporate Executive Vice President, Chief Operating Officer              | 1989       | Birgit Girshick joined Charles River Laboratories in **1989**. She was promoted to Chief Operating Officer in November **2021**, adding the Research Models and Services and Microbial Solutions businesses to her responsibilities  **[0001100682-24-000007_crl-20231230.htm:41]** **[0001100682-23-000006_crl-20221231.htm:40]** .                                                                                               |
| Joseph W. LaPlume  | Corporate Executive Vice President, Corporate Development and Strategy   | 2005       | Joseph W. LaPlume joined Charles River Laboratories in **2005** as Senior Corporate Counsel. He became Corporate Executive Vice President, Corporate Development and Strategy in January **2019**  **[0001100682-24-000007_crl-20231230.htm:41]** **[0001100682-23-000006_crl-20221231.htm:40]** .                                                                                                                               |
| Victoria Creamer   | Corporate Executive Vice President, Chief People Officer                 | 2019       | Victoria Creamer joined Charles River Laboratories in January **2019** as Senior Vice President, Chief People Officer. She was promoted to Corporate Executive Vice President in October **2020**  **[0001100682-24-000007_crl-20231230.htm:40]** **[0001100682-23-000006_crl-20221231.htm:40]** .                                                                                                                               |
| Shannon Parisotto  | Corporate Executive Vice President                                       | 2000       | Shannon Parisotto joined Charles River Laboratories in **2000**. She was promoted to Corporate Executive Vice President in October **2022**, assuming additional oversight of the Discovery Services business  **[0001100682-24-000007_crl-20231230.htm:41]** .                                                                                                                      |

0e4d543765962d0d8e2a78887d5a669fb8d9daff91289ac27d14331b9cddb5df

| Program Details          | Program 1        |
|--------------------------|------------------|
| Approval Date            | August 2, 2024  **[0001100682-24-000035_crl-20240928.htm:47]** **[0001100682-24-000035_crl-20240928.htm:54]** **[0001100682-24-000035_crl-20240928.htm:24]**  |
| End Date/Duration        | Not specified  **[0001100682-24-000035_crl-20240928.htm:47]** **[0001100682-24-000035_crl-20240928.htm:54]** **[0001100682-24-000035_crl-20240928.htm:24]**  |
| Total additional amount  | **$1 billion**  **[0001100682-24-000035_crl-20240928.htm:47]** **[0001100682-24-000035_crl-20240928.htm:54]** **[0001100682-24-000035_crl-20240928.htm:24]**  |
| Remaining authorization  | **$899.3 million**  **[0001100682-24-000035_crl-20240928.htm:47]** **[0001100682-24-000035_crl-20240928.htm:54]** **[0001100682-24-000035_crl-20240928.htm:24]**  |
| Details                  | Replaces prior authorization of $1.3 billion with $129.1 million remaining at termination  **[0001100682-24-000035_crl-20240928.htm:47]** **[0001100682-24-000035_crl-20240928.htm:54]** **[0001100682-24-000035_crl-20240928.htm:24]**  |

cdad10f17db17d30c58a8546ae51f014fa1e4b66d075bcf94efe15de8ce635fd

**Quarterly guidance for Q4 2024:**
- **Revenue**: Decline by low- to mid-single digits  **[CRL_3406111_8]**  (no prior guidance)  
- **Non-GAAP EPS**: $2.45 to $2.65  **[CRL_3406111_8]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Revenue**: Decline of 2% to 3% on a reported basis, and 3% to 4% on an organic basis  **[CRL_3406111_7]**  (raised from 2.5% to 4.5% reported and 3% to 5% organic  **[CRL_3396980_6]** )  
- **Non-GAAP EPS**: $10.10 to $10.30  **[CRL_3406111_7]**  (raised from $9.90 to $10.20  **[CRL_3396980_6]** )  
- **Operating margin**: Slightly below last year's level  **[CRL_3406111_7]**  (no change from prior guidance  **[CRL_3396980_7]** )  
- **Free cash flow**: Over $450M  **[CRL_3406111_8]**  (raised from $380M to $400M  **[CRL_3396980_7]** )  
- **Capital expenditures**: $220M to $240M  **[CRL_3406111_8]**  (lowered from $250M  **[CRL_3396980_7]** )  
- **Unallocated corporate costs**: Slightly above the mid-5% range  **[CRL_3406111_8]**  (raised from the mid-5% range  **[CRL_3396980_7]** )  
- **Tax rate**: 21.5% to 22%  **[CRL_3406111_8]**  (lowered from approximately 22%  **[CRL_3396980_7]** )  
- **Net interest expense**: At the lower end of $118M to $122M  **[CRL_3406111_8]**  (no change from prior guidance  **[CRL_3396980_7]** )  
- **RMS**: Revenue essentially flat on an organic basis  **[CRL_3406111_7]**  (lowered from flat to low single-digit growth  **[CRL_3396980_7]** )  
- **DSA**: Revenue at the more favorable end of a high single-digit organic decline  **[CRL_3406111_7]**  (raised from approximately 10% decline in the second half  **[CRL_3396980_6]** )  
- **Manufacturing**: High single-digit organic revenue growth  **[CRL_3406111_7]**  (raised from mid- to high single-digit growth  **[CRL_3396980_4]** )  

85f0457dc7a93e89b90f9eaab763a2da3db0863e80c349d9c18175fba9b82fab

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1999  **[0001100682-24-000007_crl-20231230.htm:117]**    | Present  | Current auditor   |

ce61ed22fdaf98c796467aa6cfb79eaf77c76296db1691f64e72779c920a25f5

a2436fb04a8803a67df855ad498a9090fd4e70259780de640d2a55f6073572d7

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $1,009.8 million (-2% YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:19]**   
- RMS: $197.8 million (+6% YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:37]**   
- DSA: $615.1 million (**-7%** YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:37]**   
- Manufacturing: $196.9 million (**+12%** YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:37]**   
- U.S.: $559.3 million (-5% YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:19]**   
- Asia Pacific: $45.0 million (**+12%** YoY)  **[0001100682-23-000022_crl-20230930.htm:17]** **[0001100682-24-000035_crl-20240928.htm:19]**   
- Operating Income (EBIT): $117.4 million (**-22%** YoY)  **[0001100682-23-000022_crl-20230930.htm:6]** **[0001100682-24-000035_crl-20240928.htm:6]**   
- Net Income: $70.3 million (**-16%** YoY)  **[0001100682-23-000022_crl-20230930.htm:6]** **[0001100682-24-000035_crl-20240928.htm:6]**   
- Basic EPS: $1.33 (**-22%** YoY)  **[0001100682-23-000022_crl-20230930.htm:6]** **[0001100682-24-000035_crl-20240928.htm:6]**   

5d01d3db6a3ef27dc8ef0d6fb5e6bed70dfe09cd27d3ebc81fc7ffee8a70cdcf

a49c16dd093142c3629d083765332a8dfe2fa312e1086975cc6e232b7df9c3f4

bd257ad6ad52af4c997a6b961068f3f939c6985a3ce5ffa29587bb00a076dfa3

1. **Pharma Demand Deceleration**  
   **Q:** Why is pharma demand decelerating, and how long will it last?  
   **A:** James Foster noted an unexpected and rapid deterioration in large pharma business due to the IRA legislation and an impending patent cliff, leading to profound cuts at big pharma.  **[CRL_3396980_8]**  He believes this soft demand and cutbacks are likely to persist into **2025**.  **[CRL_3396980_8]** 

2. **Outlook and Restructuring Actions**  
   **Q:** How is CRL responding to these headwinds?  
   **A:** The company is scaling back capacity by leaning out infrastructure, including staff and facilities, to align with reduced demand.  **[CRL_3396980_16]**  They have called over **$150 million** in savings, with **$100 million** impacting this year, and plan to do more next year.  **[CRL_3396980_16]** 

3. **Pricing Dynamics and Competition**  
   **Q:** How are pricing pressures impacting margins?  
   **A:** CRL is experiencing increased price competition, expecting to exit the year with a slight price decline in DSA.  **[CRL_3396980_17]**  Competitors are using price as a lever, and price pressures are anticipated to be more pronounced in the back half of the year.  **[CRL_3396980_17]** 

4. **Biotech Funding Outlook**  
   **Q:** What is the outlook for biotech funding and its impact?  
   **A:** Biotech funding was strong in Q1, okay in Q2, but **July wasn't great**, indicating a possible cooling off.  **[CRL_3396980_16]**  Despite this, CRL has seen a proliferation of proposals and some improvement in bookings, but clients remain nervous about cash availability.  **[CRL_3396980_16]** 

5. **Impact on DSA Segment**  
   **Q:** What is the impact on the DSA segment?  
   **A:** The Discovery and Safety Assessment (DSA) segment is under principal pressure due to reduced demand.  **[CRL_3396980_13]**  The company expects organic revenue decline of **minus 10%** in the second half for DSA.  **[CRL_3396980_12]** 

6. **Bonus Accrual Impact**  
   **Q:** How did bonus accrual adjustments affect earnings?  
   **A:** CRL recognized approximately **$20 million** or **$0.30** per share favorability in Q2 from bonus accrual adjustments, with additional favorability expected in the second half.  **[CRL_3396980_10]** 

7. **Segment Impact of Bonus Accruals**  
   **Q:** Which segments were affected by bonus accruals?  
   **A:** The majority of the bonus accrual impact was in the DSA segment and at the corporate level.  **[CRL_3396980_11]** 

8. **Share Repurchase Impact on Guidance**  
   **Q:** Is share repurchase included in guidance?  
   **A:** The planned share repurchase is separate from current guidance and will have a de minimis impact this year.  **[CRL_3396980_15]** 

9. **Market Share vs. Macro Pressures**  
   **Q:** Is CRL losing market share due to these issues?  
   **A:** Management believes they are not losing share, attributing declines to overall market shifts.  **[CRL_3396980_9]**  They emphasize their unique portfolio, geographic footprint, and deep science.  **[CRL_3396980_9]** 

10. **Win Rates in DSA**  
    **Q:** How have win rates in DSA trended in 2024?  
    **A:** Their win rate in Safety has been quite high and consistent.  **[CRL_3396980_27]**  They hold substantial market share, with significant proposal volumes and improving bookings, though not enough to invigorate the back half of the year.  **[CRL_3396980_27]** 

11. **Outlook for RMS Segment**  
    **Q:** How is the Research Models and Services (RMS) segment performing?  
    **A:** RMS is holding up well with modest volume declines but meaningful pricing declines.  **[CRL_3396980_13]**  China and Europe are strong, and services have been strong for a decade, though GEMS business is a bit softer.  **[CRL_3396980_13]** 

81378e541d8248399c7e69b5d512c672236937f7bd99e775af5e56a2a7fcc35b

- **Elevated cancellation rates and declining backlog in the Safety Assessment (DSA) business are causing concerns about future revenue growth**.  **[CRL_3373229_3]**  The **DSA backlog modestly declined to $2.45 billion from $2.6 billion** at the end of the third quarter  **[CRL_3373229_3]** , and the **cancellation rate increased** from third-quarter levels.  **[CRL_3373229_3]**
- **Management's expectation of a significant ramp in demand in the second half of 2024 is uncertain**.  **[CRL_3373229_11]**  **"Cancellations were higher than we would like, and that's somewhat concerning"**  **[CRL_3373229_11]** , indicating potential risk if market improvements do not materialize as anticipated.
- **Competitive pressures may lead to pricing challenges, particularly in the Safety Assessment segment**.  **[CRL_3373229_17]**  **Competitors, especially smaller ones, are competing primarily on price**  **[CRL_3373229_17]** , and there is risk of **clients shifting to lower-cost providers, including those in China**.  **[CRL_3373229_17]**

d85c6a5d6e2fe5f9fff87807ec94ff4ed77f7585c1bf39cbe7401e8ae9979c5d

- **Severe and prolonged pullback in spending by pharmaceutical clients on discovery and preclinical services is negatively impacting CRL's business, with no clear timeline for recovery.**  **[CRL_3396980_25]** ,  **[CRL_3396980_18]** ,  **[CRL_3396980_19]**
- **The company anticipates that these headwinds will likely persist into 2025, affecting their growth prospects for the coming year.**  **[CRL_3396980_18]**
- **The softness in demand from pharmaceutical clients is broad-based across all major clients, and disproportionately impacts CRL's core business areas, leading to lower revenue and profit margins.**  **[CRL_3396980_19]**

56d756e7083badf86939dfd8593632a063635226e52fa6bb4731cbc372632115

1. **DSA Margins and Pricing Outlook**  
   **Q:** How sustainable are margins in DSA given pricing pressures?  
   **A:** Management acknowledged that **DSA margins will be pressured** due to pricing headwinds next year.  **[CRL_3406111_15]**  Prices have been flat to slightly down, and are expected to decrease further by the end of the year.  **[CRL_3406111_15]**  They are working hard on cost-saving initiatives, including workforce adjustments and footprint optimization, to help protect margins.  **[CRL_3406111_15]** **[CRL_3406111_24]**  They believe that the **mid- to high 20% range for DSA margins is still achievable** in the long term, depending on market recovery.  **[CRL_3406111_24]**  However, they do not expect margins to increase next year.  **[CRL_3406111_15]** 

2. **Demand Trends in Large Pharma and Biotech**  
   **Q:** Are we at the tail end of cost reductions in large pharma, and what's the outlook for demand recovery?  
   **A:** Management believes they are **probably at the tail end of cost reductions** in large pharma.  **[CRL_3406111_13]**  Demand trends have stabilized, with biotech demand looking more stable and consistent, though not growing as fast as anticipated.  **[CRL_3406111_18]**  They feel the situation is unlikely to deteriorate further, but a full recovery will take time.  **[CRL_3406111_13]** **[CRL_3406111_18]**  The **biotech funding market had a strong September and October**, which is a positive sign.  **[CRL_3406111_18]** 

3. **Cost Savings Initiatives**  
   **Q:** How confident are you that cost cuts won't impact customers or hinder recovery?  
   **A:** Management is confident that their **surgical and thoughtful workforce reductions** won't create friction with customers.  **[CRL_3406111_14]**  They've maintained quality staff and believe they are right-sized for current demand, with the ability to add back staff if needed.  **[CRL_3406111_14]**  They continue to seek efficiencies through global business services and digitization to operate more effectively.  **[CRL_3406111_16]**  However, they acknowledge that protecting margins is challenging without volume growth and with pricing headwinds.  **[CRL_3406111_21]** 

4. **Facility Consolidation Plans**  
   **Q:** Why are you shutting down facilities, and how will it affect future capacity?  
   **A:** The company is consolidating facilities to streamline operations and improve margins.  **[CRL_3406111_30]**  They are closing smaller, less efficient sites and utilizing larger sites more fully.  **[CRL_3406111_30]**  Management assures that they are **not reducing footprint to the extent that it would limit capacity when demand returns**.  **[CRL_3406111_30]**  This consolidation is an opportunity to optimize infrastructure without impacting future growth.  **[CRL_3406111_30]** 

5. **CDMO Business Growth**  
   **Q:** How is the CDMO business performing and what are growth prospects?  
   **A:** The **CDMO business has had a very strong year**, with high-quality clients and multiple regulatory audits.  **[CRL_3406111_25]**  Significant synergies exist between the CDMO and Biologics Testing businesses, with over **50% of CDMO clients utilizing Biologics Testing**.  **[CRL_3406111_26]**  This integrated offering provides a competitive advantage, as some competitors lack internal biologics testing capabilities.  **[CRL_3406111_26]**  The company is focused on growing this franchise and expects it to remain strong.  **[CRL_3406111_25]** **[CRL_3406111_26]** 

6. **Capital Allocation and Share Buybacks**  
   **Q:** Are share repurchases indicating a change in capital strategy?  
   **A:** Management has historically bought back shares to offset dilution from options.  **[CRL_3406111_22]**  The recent share repurchases reflect their view that reintroducing buybacks is prudent given the current context, including share price and debt levels.  **[CRL_3406111_22]** **[CRL_3406111_31]**  This doesn't necessarily indicate a permanent change in strategy, but they may continue depending on circumstances.  **[CRL_3406111_22]** **[CRL_3406111_31]** 

7. **RMS Margins and NHP Sales**  
   **Q:** Why were RMS margins lower despite favorable NHP sales?  
   **A:** Lower RMS margins were due to a mix of factors.  **[CRL_3406111_17]**  While **NHP shipments were favorable**, there were headwinds from growth in China, which is a lower-margin business, and a decline in services.  **[CRL_3406111_17]**  Timing of large model shipments can also impact margins and EPS depending on when shipments occur.  **[CRL_3406111_17]** 

8. **Bookings and Cancellation Trends**  
   **Q:** Are lower cancellations and current bookings sustainable?  
   **A:** The company is experiencing a **lower rate of cancellations across the client base**, which is encouraging.  **[CRL_3406111_18]**  Biotech demand and bookings feel more stable and consistent, though not growing as fast as previously anticipated.  **[CRL_3406111_18]**  Customer behavior varies, with studies starting within a month or booked 6–9 months ahead.  **[CRL_3406111_19]**  Trends are likely to persist until factors like the IPO market opening.  **[CRL_3406111_18]** 

9. **Interest Expense and Impact of Swaps**  
   **Q:** What's the outlook for interest expense with swaps expiring?  
   **A:** The company benefited from entering interest rate swaps two years ago, locking in lower rates.  **[CRL_3406111_31]**  The swaps are expiring, but a significant portion of debt will remain fixed.  **[CRL_3406111_31]**  They are reviewing their credit facility and feel positive about the balance sheet, free cash flow, and reduced leverage.  **[CRL_3406111_31]** 

10. **Client Communication and Visibility**  
    **Q:** How is client communication improving visibility into demand?  
    **A:** Management continues to engage with clients and believes they're in contact with the right people.  **[CRL_3406111_27]**  They anticipate that discussions as clients finalize their fiscal '25 plans will help them better understand spending patterns and plan accordingly.  **[CRL_3406111_27]**  This should improve visibility into client demand and assist in building their own operating plan.  **[CRL_3406111_27]** 

97035b30d34c06101cdbefe5803d5256feb7ce08e95fcf1353f220201c96905c

1. **Pricing Strategy and Margins**  
   **Q:** Are price cuts impacting margins, and what is the outlook?  
   **A:** Management explained that they have been **modestly adjusting prices** to stay competitive due to clients' concerns about access to capital.  **[CRL_3387835_10]** **[CRL_3387835_11]**  They emphasized that price cuts are **not dramatic** but are necessary to win work responsibly.  **[CRL_3387835_11]**  Margin pressure is more due to **lower volume** than pricing reductions.  **[CRL_3387835_11]** **[CRL_3387835_12]**  They expect margins to **improve in the second half** as volumes rebound and restructuring actions are implemented.  **[CRL_3387835_11]** 

2. **Confidence in Second Half Growth**  
   **Q:** How confident are you in a ramp-up in the second half of the year?  
   **A:** Management expressed **high confidence** that business will **accelerate meaningfully** in the back half of the year.  **[CRL_3387835_9]**  This confidence is based on factors like increased **VC funding**, which was the **fourth best in biotech history last quarter**, an **increase in proposal volume**, a **modest reduction in cancellations**, and **pent-up client demand**.  **[CRL_3387835_9]** 

3. **Impact of Inflation and Pricing**  
   **Q:** How is inflation affecting margins relative to pricing adjustments?  
   **A:** Management noted that while **inflation is moderating**, lower volumes are putting pressure on margins.  **[CRL_3387835_14]**  Previously, they could offset higher costs with stronger pricing, but now the relationship between price and cost is less favorable.  **[CRL_3387835_14]**  They still anticipate **positive pricing** for the year but acknowledge it won't be as significant a tailwind as in prior years.  **[CRL_3387835_12]** 

4. **Capacity and Staffing for Increased Demand**  
   **Q:** Are you prepared to handle increased demand in the second half?  
   **A:** They stated that they have sufficient **physical capacity** to accommodate increased work, especially in **Safety Assessment**.  **[CRL_3387835_15]**  The potential bottleneck is the **availability of staff**; they will need to add personnel as business intensifies, considering the training time required.  **[CRL_3387835_15]** 

5. **Backlog and Book-to-Bill Trends**  
   **Q:** How do you view your backlog and book-to-bill ratio impacting growth?  
   **A:** The backlog stands at **10 months**, aligning with historical norms of 6 to 9 months.  **[CRL_3387835_18]**  Management anticipates that **increased proposal activity** and **reduced cancellations** will lead to higher bookings after a typical lag period.  **[CRL_3387835_13]** **[CRL_3387835_17]**  They believe they are on track for improved performance in the second half.  **[CRL_3387835_17]** 

6. **Manufacturing Segment Performance**  
   **Q:** Is there potential upside in the manufacturing segment this year?  
   **A:** Management noted that all three businesses in the **Manufacturing** segment showed strong growth in the first quarter.  **[CRL_3387835_19]**  While they are pleased, they have modestly adjusted the guidance to **mid-single-digit growth** but are cautious about projecting further upside.  **[CRL_3387835_19]** 

7. **Proposal Activity and Cancellations**  
   **Q:** Can you quantify the increase in proposal activity and improvements in cancellations?  
   **A:** While they did not provide specific percentages, management stated that **proposal activity is up** both sequentially and year-over-year.  **[CRL_3387835_17]**  **Cancellations have improved** sequentially, resulting in a smaller decrease in backlog compared to previous quarters.  **[CRL_3387835_17]** 

8. **Impact of BIOSECURE Act**  
   **Q:** Is potential legislation like the BIOSECURE Act factored into your guidance?  
   **A:** Management said they have not included any assumptions about the **BIOSECURE Act** in their guidance as it is not yet legislation.  **[CRL_3387835_13]**  They would be surprised if it doesn't benefit them but are not counting on any immediate impact.  **[CRL_3387835_13]** 

9. **Large Pharma vs. Biotech Indicators**  
   **Q:** What leading indicators are you seeing from large pharma clients?  
   **A:** Management observed that large pharma continues to **aggressively outsource** work, particularly in **Safety Assessment**.  **[CRL_3387835_18]**  Despite their strong balance sheets, there's been hesitancy to book work due to budget considerations. Overall, they haven't seen a fundamental difference in activity between pharma and biotech.  **[CRL_3387835_18]** 

10. **Discovery Business Performance**  
    **Q:** How did the Discovery segment perform relative to expectations?  
    **A:** Management noted that the **Discovery** segment has been the most affected by the economic environment and remains slow.  **[CRL_3387835_19]**  It is a relatively small part of their portfolio, and while they expect it to recover as funding improves, it will not be the first area to rebound.  **[CRL_3387835_19]** 

f87eb4bb738cfe1d38144d595aac9fbfc6c6fa65937624a3c66a1b8cc1dcb081

- **Acquisition of Noveprim enhances NHP supply chain control**, providing Charles River Laboratories (CRL) with high-quality non-human primates (NHPs) and contributing at least **$0.30 to non-GAAP earnings per share in 2024**. This strategic move strengthens CRL's competitive advantage and supports revenue and margin growth.  **[CRL_3373229_11]** ,  **[CRL_3373229_18]**
- **Anticipated significant growth ramp in the second half of 2024**, with signs of stabilizing demand and increased client activity, including **increased proposal activity in the Biologics Testing business** and expectations of decreased cancellation rates. This confidence is supported by historical patterns and improved market indicators such as biotech IPOs.  **[CRL_3373229_11]** ,  **[CRL_3373229_14]** ,  **[CRL_3373229_22]**
- **Strong relationships with large pharmaceutical clients**, leading to **long-term contracts and increased cross-portfolio sales**, driving stable revenue growth. CRL sees opportunities to **gain market share in safety, biologics, CDMO, and discovery services** due to their scale and comprehensive offerings.  **[CRL_3373229_18]** ,  **[CRL_3373229_14]**

2f339890f0e480d565f84e169e710904e6b581411c4393740ce65a7dcca66c57

- **CRL expects demand to improve** as clients resume investing in new drug development, leading to **invigorated margins** in the DSA business when space fills and pricing recovers  **[CRL_3406111_24]** .
- **Proactive cost management** through **site consolidations and headcount reductions** is enhancing efficiency and positioning CRL for future growth without sacrificing capacity for recovery  **[CRL_3406111_14]** **[CRL_3406111_30]** .
- **Synergies between CRL's CDMO and Biologics Testing businesses** provide a **competitive advantage**, with **over half of CDMO clients utilizing Biologics Testing services**, differentiating CRL from competitors lacking these capabilities  **[CRL_3406111_26]** .

d1c4992e5319548ab2cf21982311850e71cbd5b6ed3909b5e916af1781c851a8

- **Strong performance in the Manufacturing Solutions segment**, with organic revenue growth of **10.4%** in Q1, driven by the **CDMO business** and a rebound in **Biologics Testing** and **Microbial Solutions**. Management expects **continued solid double-digit growth** in the CDMO business.  **[CRL_3387835_19]** **[CRL_3387835_27]**
- **Confidence in improved demand** in the second half of the year, due to factors such as increased **biotech funding** (fourth highest quarter on record at **approximately $23 billion**), increased proposal activity, and reduced cancellations. Management expects a **meaningful acceleration** in the back half of the year.  **[CRL_3387835_9]**
- **Clients resuming purchases** and returning to core testing activities, with **destocking activities largely complete** in Microbial Solutions and improved proposal and booking activity in Biologics Testing, indicating a **reinvigoration of growth** in these businesses.  **[CRL_3387835_19]** **[CRL_3387835_27]**

73ebee5ded9e91188dd3869ff030aa4f9e351d62a323b40a905bf1e60ec96e01

- **DSA margins are under pressure due to pricing headwinds and declining demand**, with expectations that margins will not increase and may be pressured further in 2025. The company acknowledges that price is a headwind, and that DSA margins are likely to be pressured given the inability to get price increases in the current market environment.  **[CRL_3406111_24]** **[CRL_3406111_15]** **[CRL_3406111_1]**
- **Significant restructuring actions, including over 6% headcount reductions and the consolidation of approximately 15 smaller sites**, are being undertaken to manage costs in response to the challenging demand environment. These actions may impact the company's ability to scale up when demand recovers and could create operational risks.  **[CRL_3406111_14]** **[CRL_3406111_30]** **[CRL_3406111_7]** **[CRL_3406111_2]** **[CRL_3406111_1]**
- **Uncertainty regarding the timing and extent of demand recovery from both biotech and global pharmaceutical clients**, with the company expecting current trends to persist into 2025, continuing to pressure year-over-year growth rates, particularly in the DSA segment. The company is not yet through with client cost-saving and reprioritization activities, which may further impact demand.  **[CRL_3406111_1]** **[CRL_3406111_13]**

abcf3e278f926d774a87e1dcee32b867288b10b8c3720e1d31aacf280531afba

1. **Margin Outlook and Ramp**  
   **Q:** How will margins ramp throughout the year?  
   **A:** Margins are expected to improve as the year progresses, with factors like lower tax rates, seasonal business trends, and benefits from restructuring actions totaling **$60 million to $70 million** contributing to the ramp. While Q1 margins will be pressured due to higher tax rates and corporate expenses (about **$0.25** impact on EPS), we have good visibility into margin acceleration throughout the year.  **[CRL_3373229_13]** 

2. **DSA Cancellations and Demand Trends**  
   **Q:** What are you seeing with DSA cancellation rates and backlog?  
   **A:** Cancellation rates in the DSA segment were higher than we'd like in Q4, after showing signs of improvement in Q3. We anticipate cancellations will normalize as the backlog has shortened to about **12 months** from over 18 months, indicating clients are booking slots with real studies. We are optimistic that cancellation levels will recede throughout the year.  **[CRL_3373229_12]** 

3. **Noveprim Acquisition Impact**  
   **Q:** How will the Noveprim acquisition contribute to revenue and margins?  
   **A:** Noveprim is expected to add **$40 million to $50 million** in revenue and approximately **$0.30** of EPS in 2024, contributing around **50 basis points** of margin expansion. The majority of financial impact will be in the RMS segment, increasing its margin by approximately **200 basis points**.  **[CRL_3373229_16]** 

4. **Pricing Environment and Competition**  
   **Q:** Is increased price competition affecting the safety assessment market?  
   **A:** While competitors, especially smaller ones, may compete primarily on price—even reducing costs to be more competitive—we maintain our pricing by offering greater scale, quality, and a broader portfolio. Some clients may opt for lower-priced competitors, including those in China where costs are lower, but we focus on providing superior value. We haven't seen significant changes in competitive dynamics, and we believe our pricing remains rational and appropriate.  **[CRL_3373229_17]** 

5. **Pharma Demand vs. Biotech Demand**  
   **Q:** How are pharma and biotech demand trends impacting the business?  
   **A:** Pharma demand remained strong in 2023, with long-term contracts and broad purchases across our portfolio. Biotech, affected by capital markets, has been more cautious but is expected to improve as funding conditions strengthen. We are confident in our client base and anticipate increased demand as market conditions normalize.  **[CRL_3373229_14]** 

6. **Share Gain Opportunities**  
   **Q:** Are there opportunities to gain market share during the year?  
   **A:** Yes, we see significant opportunities to gain share across our services, including safety assessment, biologics, CDMO, and discovery. Legislative developments may bolster this, and our scale and portfolio depth position us well to capture additional market share as clients seek quality and integrated services.  **[CRL_3373229_14]** 

7. **Owning NHP Suppliers**  
   **Q:** What are the pros and cons of owning NHP suppliers?  
   **A:** Owning NHP suppliers like Noveprim provides control over quality, supply, and costs, with no significant cons identified. It ensures reliable access to high-quality NHPs, critical for large molecule testing, and supports our long-term growth in the NHP toxicology market.  **[CRL_3373229_18]** 

8. **Manufacturing Segment Margins**  
   **Q:** How will manufacturing margins expand, and what's driving it?  
   **A:** Margin expansion in the manufacturing segment will be driven by improved performance in the CDMO business, which is expected to see higher revenue and better margins due to contracts like the one with Vertex. While not at the originally projected levels, margins will improve significantly, contributing to overall segment growth. The microbial business is also expected to return to double-digit growth, further enhancing margins.  **[CRL_3373229_19]** 

9. **DSA Net Bookings and Cancellations**  
   **Q:** Were net bookings down sequentially in DSA, and what's the outlook?  
   **A:** Yes, DSA backlog was down approximately **$150 million** sequentially, with net bookings affected by elevated cancellations. However, gross bookings remained above **1x**, and with cancellations expected to normalize, we anticipate net book-to-bill to improve moving forward.  **[CRL_3373229_20]** 

10. **Demand Trends for Guidance**  
    **Q:** When must demand trends improve to meet your guidance?  
    **A:** We expect demand to sequentially improve throughout the year, supported by typical seasonal trends and subtle positive indicators in the market. While not specifying exact timing by segment, we are confident that demand will pick up to achieve our financial guidance, with improvements likely in the back half of the year.  **[CRL_3373229_21]** 

11. **Biotech Market Indicators**  
    **Q:** Are you seeing increased inquiries from biotech market improvements?  
    **A:** While improvements in capital markets don't translate immediately into increased activity, we expect that as biotech companies gain confidence and access to capital, they will resume spending more aggressively. We anticipate sequential growth in demand, particularly in businesses where work comes in quickly like Discovery and Biologics.  **[CRL_3373229_22]** 

12. **NHP Pricing Level for 2023**  
    **Q:** Is the $29,000 average NHP pricing still accurate for 2023?  
    **A:** Yes, the numbers shared previously regarding NHP pricing, including the **$29,000** average price, remain similar with year-end results. There have been no significant updates to these figures.  **[CRL_3373229_15]** 

647ee44f8cccef6849f34dd4cce81908cc76d90e0a5a440db12ead8e54a82107

- **The company's DSA backlog and book-to-bill ratio remain below 1**, indicating potential weakness in future demand and a decreasing backlog from prior levels.  **[CRL_3387835_28]** ,  **[CRL_3387835_18]**
- **The Discovery segment is significantly impacted by economic conditions**, being the hardest hit among all segments, with **slow performance and uncertain recovery**.  **[CRL_3387835_19]** ,  **[CRL_3387835_18]**
- **Margin pressures due to lower volumes and difficulty covering cost inflation** are impacting profitability, with the company experiencing challenges in fully absorbing inflation, leading to potential margin compression.  **[CRL_3387835_25]** ,  **[CRL_3387835_14]**

8f66a79b15aa0e1345842f6760286611bfa5598f19a22cb50359fd53c344b916

- **Charles River Laboratories has maintained a high and consistent win rate in Safety** within the Discovery and Safety Assessment (DSA) segment, indicating strong market share and competitive positioning despite market challenges.  **[CRL_3396980_27]**
- The company is well-positioned to benefit from an eventual reinvigoration of early-stage R&D investment by pharmaceutical companies, as they will need to **refocus on preclinical pipelines**, presenting longer-term growth opportunities for CRL.  **[CRL_3396980_25]** **[CRL_3396980_19]** **[CRL_3396980_18]**
- **A new stock repurchase authorization of $1 billion has been approved**, demonstrating the company's confidence in its long-term prospects and commitment to maximizing shareholder value. Repurchases are expected to commence in the third quarter.  **[CRL_3396980_15]**

dc3fb1bd0e2cd84f09a17d4c975da109ec8a4dc407794da05788e43789caadf7

Charles River Laboratories International Inc (CRL)

Financials