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Charles River Laboratories Announces Fourth-Quarter and Full-Year 2014 Results from Continuing Operations and Provides 2015 Guidance
– Fourth-Quarter Revenue of
– Fourth-Quarter GAAP Earnings per Share of
– Full-Year GAAP Earnings per Share of
– Provides 2015 Guidance for Constant Currency Revenue Growth of
6-7.5% and Reported Revenue Growth of 1-2.5%; Non-GAAP Earnings per
Share of
On a GAAP basis, net income from continuing operations for the fourth
quarter of 2014 was
On a non-GAAP basis, net income from continuing operations was
“Given our strong performance in 2014, and the fact that we believe the
company is very well positioned to win new business, we are optimistic
about the opportunities in 2015. The potential for expanding strategic
relationships, gaining market share in each of our client segments, and
implementation of new efficiency and productivity initiatives give us
confidence that we can achieve our guidance in 2015 for constant
currency revenue growth of 6.0 to 7.5% and non-GAAP EPS in a range from
Fourth-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was
In the fourth quarter of 2014, the RMS segment’s GAAP operating margin was 20.1% compared to 15.6% in the fourth quarter of 2013. On a non-GAAP basis, the operating margin increased to 23.2% from 22.9% in the fourth quarter of 2013. The increase was primarily driven by benefits from the Company’s global efficiency initiatives, partially offset by the impact of lower revenue for research model services.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was
In the fourth quarter of 2014, the DSA segment’s GAAP operating margin was 14.0% compared to 7.9% in the fourth quarter of 2013. On a non-GAAP basis, the operating margin increased to 19.4% from 16.8% in the fourth quarter of 2013. The non-GAAP operating margin improvement was driven by leverage from higher sales and a foreign exchange benefit due to a weaker Canadian dollar.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was
In the fourth quarter of 2014, the Manufacturing segment’s GAAP operating margin was 33.0% compared to 26.0% in the fourth quarter of 2013. On a non-GAAP basis, the operating margin increased to 35.0% from 32.1% in the fourth quarter of 2013. The improvement was driven by fixed-cost leverage from higher sales.
Stock Repurchase Update
During the fourth quarter of 2014, the Company did not repurchase any
shares of its common stock. For fiscal-year 2014, the Company
repurchased 2.1 million shares for a total of
Full-Year Results
For 2014, revenue increased by 11.3% to
On a GAAP basis, net income from continuing operations in 2014 was
On a non-GAAP basis, net income from continuing operations in 2014 was
Research Models and Services (RMS)
For 2014, RMS revenue was
Discovery and Safety Assessment (DSA)
For 2014, DSA revenue was
Manufacturing Support (Manufacturing)
For 2014, Manufacturing revenue was
2015 Guidance
The Company is providing the following financial guidance for 2015. Revenue growth is expected to be 6.0% to 7.5% on a constant-currency basis. Based on current rates, foreign currency translation is expected to reduce revenue growth by approximately 5%, which would result in reported revenue growth of 1.0% to 2.5%. Revenue growth in 2015 will be driven by the DSA and Manufacturing segments.
Earnings per share in 2015 are expected to benefit from higher sales and
the Company’s ongoing global productivity and efficiency initiatives.
These benefits are expected to be partially offset by foreign exchange,
which is expected to reduce 2015 earnings per share by approximately
2015 GUIDANCE (from continuing operations) | ||
GAAP EPS estimate | $3.15 - $3.25 | |
Amortization of intangible assets | $0.31 | |
Operating losses (1) | $0.04 | |
Charges related to global efficiency initiatives (2) | $0.05 | |
Non-GAAP EPS estimate | $3.55 - $3.65 |
(1) These costs relate primarily to the Company’s Shrewsbury, Massachusetts, facility. |
(2) These charges relate primarily to the Company’s planned efficiency initiatives in 2015. Other projects in support of the global productivity and efficiency initiatives are expected, but these charges reflect only the decisions that have already been finalized. |
Webcast
Non-GAAP Reconciliations/Discontinued Operations
The Company reports non-GAAP results in this press release, which exclude certain 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. In addition, the Company reports results from continuing operations, which exclude results of the Phase I clinical business that was divested in 2011. The Phase I business is reported as a discontinued operation.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude the amortization of intangible assets and other charges related to our acquisitions; expenses associated with evaluating and integrating acquisitions; charges, gains and losses attributable to businesses or properties we plan to close, consolidate or divest; severance costs associated with our efficiency initiatives; accelerated depreciation charges related to the consolidation of research model production operations; a charge related to a dispute with a large model supplier; gains related to the sales of former research model facilities; write-offs of deferred financing costs and fees related to debt refinancing; costs related to a U.S. government billing adjustment and related expenses; and the additional interest recorded as a result of the adoption in 2009 of an accounting standard related to our convertible debt accounting which increased interest and depreciation expense. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. This press release also refers to our revenue in both a GAAP and non-GAAP (constant currency) basis. There are limitations in using non-GAAP financial measures, as they are not prepared 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 in certain cases, the evaluation of such acquisitions, 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, such as business acquisitions, happen infrequently and the underlying costs associated with such activities do not recur on a regular basis. Presenting revenue on a constant currency basis allows investors to measure our revenue growth exclusive of 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 prepared 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,” “will,” “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
our projected future financial performance including revenue (on both a
reported and constant currency basis), operating margins, earnings per
share, and the expected impact of foreign exchange rates; the future
demand for drug discovery and development products and services,
including our expectations for future revenue trends; our expectations
with respect to the impact of acquisitions on the Company, our service
offerings, strategic relationships, revenue, revenue growth rates, and
earnings; the development and performance of our services and products;
market and industry conditions including the outsourcing of these
services and spending trends by our clients; the potential outcome of
and impact to our business and financial operations due to litigation
and legal proceedings, including with respect to our ongoing
investigation of inaccurate billing with respect to certain government
contracts; 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, and enhanced efficiency
initiatives. 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: the ability to successfully integrate businesses we
acquire; the ability to execute our efficiency initiatives on an
effective and timely basis (including divestitures and site closures);
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
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. | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 27,
2014 |
December 28,
2013 |
December 27,
2014 |
December 28,
2013 |
|||||||||||||||
Total revenue | $ | 329,548 | $ | 289,228 | $ | 1,297,662 | $ | 1,165,528 | ||||||||||
Cost of revenue | 209,603 | 201,033 | 825,002 | 770,626 | ||||||||||||||
Gross margin | 119,945 | 88,195 | 472,660 | 394,902 | ||||||||||||||
Selling, general and administrative | 72,034 | 58,674 | 269,033 | 225,695 | ||||||||||||||
Amortization of intangibles | 7,144 | 4,914 | 25,957 | 17,806 | ||||||||||||||
Operating income | 40,767 | 24,607 | 177,670 | 151,401 | ||||||||||||||
Interest expense, net | (2,428 | ) | (2,572 | ) | (10,796 | ) | (20,239 | ) | ||||||||||
Other income, net | 1,847 | 1,071 | 10,721 | 7,165 | ||||||||||||||
Income from continuing operations before income taxes | 40,186 | 23,106 | 177,595 | 138,327 | ||||||||||||||
Provision for income taxes | 11,650 | 3,580 | 47,671 | 32,911 | ||||||||||||||
Income from continuing operations, net of income taxes | 28,536 | 19,526 | 129,924 | 105,416 | ||||||||||||||
Loss from discontinued operations, net of income taxes | (864 | ) | (82 | ) | (1,726 | ) | (1,265 | ) | ||||||||||
Net income | 27,672 | 19,444 | 128,198 | 104,151 | ||||||||||||||
Net income attributable to noncontrolling interests | (506 | ) | (345 | ) | (1,500 | ) | (1,323 | ) | ||||||||||
Net income attributable to common shareowners | $ | 27,166 | $ | 19,099 | $ | 126,698 | $ | 102,828 | ||||||||||
Earnings per common share | ||||||||||||||||||
Basic: | ||||||||||||||||||
Continuing operations | $ | 0.60 | $ | 0.41 | $ | 2.76 | $ | 2.18 | ||||||||||
Discontinued operations | $ | (0.02 | ) | $ | - | $ | (0.04 | ) | $ | (0.03 | ) | |||||||
Net | $ | 0.58 | $ | 0.41 | $ | 2.72 | $ | 2.15 | ||||||||||
Diluted: | ||||||||||||||||||
Continuing operations | $ | 0.59 | $ | 0.40 | $ | 2.70 | $ | 2.15 | ||||||||||
Discontinued operations | $ | (0.02 | ) | $ | - | $ | (0.04 | ) | $ | (0.03 | ) | |||||||
Net | $ | 0.57 | $ | 0.40 | $ | 2.66 | $ | 2.12 | ||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||
Basic | 46,459,512 | 47,150,688 | 46,626,997 | 47,740,167 | ||||||||||||||
Diluted | 47,516,659 | 48,134,992 | 47,557,706 | 48,489,322 | ||||||||||||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
(in thousands) | ||||||||
December 27,
2014 |
December 28,
2013 |
|||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 160,023 | $ | 155,927 | ||||
Trade receivables, net | 257,991 | 220,630 | ||||||
Inventories | 89,043 | 89,396 | ||||||
Other current assets | 99,841 | 86,597 | ||||||
Total current assets | 606,898 | 552,550 | ||||||
Property, plant and equipment, net | 676,797 | 676,182 | ||||||
Goodwill, net | 321,077 | 230,701 | ||||||
Other intangibles, net | 178,875 | 84,537 | ||||||
Deferred tax asset | 23,193 | 26,822 | ||||||
Other assets | 78,352 | 61,964 | ||||||
Total assets | $ | 1,885,192 | $ | 1,632,756 | ||||
Liabilities and Equity | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt and capital leases | $ | 31,904 | $ | 21,437 | ||||
Accounts payable | 33,815 | 31,770 | ||||||
Accrued compensation | 71,569 | 58,461 | ||||||
Deferred revenue | 78,124 | 54,177 | ||||||
Accrued liabilities | 67,380 | 56,712 | ||||||
Other current liabilities | 11,079 | 22,546 | ||||||
Current liabilities of discontinued businesses | 2,299 | 1,931 | ||||||
Total current liabilities | 296,170 | 247,034 | ||||||
Long-term debt & capital leases | 745,958 | 642,352 | ||||||
Other long-term liabilities | 130,361 | 70,632 | ||||||
Long-term liabilities of discontinued businesses | 8,357 | 8,080 | ||||||
Total liabilities | 1,180,846 | 968,098 | ||||||
Redeemable non-controlling interest | 28,419 | 20,581 | ||||||
Total shareholders' equity | 672,203 | 640,984 | ||||||
Non-controlling interest | 3,724 | 3,093 | ||||||
Total liabilities, equity and noncontrolling interests | $ | 1,885,192 | $ | 1,632,756 | ||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | ||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 27,
2014 |
December 28,
2013 |
December 27,
2014 |
December 28,
2013 |
|||||||||||||||
Research Models and Services | ||||||||||||||||||
Revenue | $ | 117,691 | $ | 122,482 | $ | 507,327 | $ | 511,350 | ||||||||||
Gross margin | 40,700 | 35,890 | 190,092 | 179,493 | ||||||||||||||
Gross margin as a % of revenue | 34.6 | % | 29.3 | % | 37.5 | % | 35.1 | % | ||||||||||
Operating income | 23,642 | 19,161 | 121,376 | 116,737 | ||||||||||||||
Operating income as a % of revenue | 20.1 | % | 15.6 | % | 23.9 | % | 22.8 | % | ||||||||||
Depreciation and amortization | 7,235 | 14,195 | 27,512 | 41,837 | ||||||||||||||
Capital expenditures | 7,221 | 6,300 | 18,749 | 16,717 | ||||||||||||||
Discovery and Safety Assessment | ||||||||||||||||||
Revenue | $ | 149,604 | $ | 110,470 | $ | 538,218 | $ | 432,378 | ||||||||||
Gross margin | 45,886 | 25,654 | 150,970 | 106,766 | ||||||||||||||
Gross margin as a % of revenue | 30.7 | % | 23.2 | % | 28.0 | % | 24.7 | % | ||||||||||
Operating income | 20,909 | 8,741 | 69,749 | 47,413 | ||||||||||||||
Operating income as a % of revenue | 14.0 | % | 7.9 | % | 13.0 | % | 11.0 | % | ||||||||||
Depreciation and amortization | 13,271 | 9,451 | 47,138 | 37,720 | ||||||||||||||
Capital expenditures | 8,429 | 5,246 | 19,759 | 12,561 | ||||||||||||||
Manufacturing Support | ||||||||||||||||||
Revenue | $ | 62,253 | $ | 56,276 | $ | 252,117 | $ | 221,800 | ||||||||||
Gross margin | 33,359 | 26,651 | 131,598 | 108,643 | ||||||||||||||
Gross margin as a % of revenue | 53.6 | % | 47.4 | % | 52.2 | % | 49.0 | % | ||||||||||
Operating income | 20,529 | 14,651 | 78,620 | 61,227 | ||||||||||||||
Operating income as a % of revenue | 33.0 | % | 26.0 | % | 31.2 | % | 27.6 | % | ||||||||||
Depreciation and amortization | 3,467 | 5,655 | 14,092 | 17,079 | ||||||||||||||
Capital expenditures | 10,097 | 2,289 | 15,541 | 9,876 | ||||||||||||||
Unallocated Corporate Overhead | $ | (24,313 | ) | $ | (17,946 | ) | $ | (92,075 | ) | $ | (73,976 | ) | ||||||
Total | ||||||||||||||||||
Revenue | $ | 329,548 | $ | 289,228 | $ | 1,297,662 | $ | 1,165,528 | ||||||||||
Gross margin | 119,945 | 88,195 | 472,660 | 394,902 | ||||||||||||||
Gross margin as a % of revenue | 36.4 | % | 30.5 | % | 36.4 | % | 33.9 | % | ||||||||||
Operating income | 40,767 | 24,607 | 177,670 | 151,401 | ||||||||||||||
Operating income as a % of revenue | 12.4 | % | 8.5 | % | 13.7 | % | 13.0 | % | ||||||||||
Depreciation and amortization | 26,010 | 29,301 | 96,445 | 96,636 | ||||||||||||||
Capital expenditures | 27,018 | 13,835 | 56,925 | 39,154 | ||||||||||||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 27,
2014 |
December 28,
2013 |
December 27,
2014 |
December 28,
2013 |
|||||||||||||||
Research Models and Services | ||||||||||||||||||
Revenue | $ | 117,691 | $ | 122,482 | $ | 507,327 | $ | 511,350 | ||||||||||
Add back government billing adjustment | - | - | - | 1,495 | ||||||||||||||
Non-GAAP revenue | $ | 117,691 | $ | 122,482 | $ | 507,327 | $ | 512,845 | ||||||||||
Operating income | 23,642 | 19,161 | 121,376 | 116,737 | ||||||||||||||
Operating income as a % of revenue | 20.1 | % | 15.6 | % | 23.9 | % | 22.8 | % | ||||||||||
Add back: | ||||||||||||||||||
Amortization of intangible assets related to acquisitions | 451 | 1,076 | 2,466 | 2,778 | ||||||||||||||
Severance related to cost-savings actions | 619 | 1,123 | 4,593 | 1,424 | ||||||||||||||
Government billing adjustment and related expenses | 554 | 226 | 848 | 2,402 | ||||||||||||||
Impairment and other items(2) | 2,002 | 6,440 | 7,109 | 13,678 | ||||||||||||||
Operating losses(3) | - | 14 | 27 | 270 | ||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 27,268 | $ | 28,040 | $ | 136,419 | $ | 137,289 | ||||||||||
Non-GAAP operating income as a % of non-GAAP revenue | 23.2 | % | 22.9 | % | 26.9 | % | 26.8 | % | ||||||||||
Discovery and Safety Assessment | ||||||||||||||||||
Revenue | $ | 149,604 | $ | 110,470 | $ | 538,218 | $ | 432,378 | ||||||||||
Operating income | 20,909 | 8,741 | 69,749 | 47,413 | ||||||||||||||
Operating income as a % of revenue | 14.0 | % | 7.9 | % | 13.0 | % | 11.0 | % | ||||||||||
Add back: | ||||||||||||||||||
Amortization of intangible assets related to acquisitions | 5,458 | 2,401 | 18,110 | 9,593 | ||||||||||||||
Severance related to cost-savings actions | 1,794 | 915 | 2,912 | 1,625 | ||||||||||||||
Impairment and other items(2) | - | 5,829 | - | 5,829 | ||||||||||||||
Operating losses(3) | 619 | 629 | 2,600 | 3,101 | ||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 208 | - | 404 | - | ||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 28,988 | $ | 18,515 | $ | 93,775 | $ | 67,561 | ||||||||||
Non-GAAP operating income as a % of revenue | 19.4 | % | 16.8 | % | 17.4 | % | 15.6 | % | ||||||||||
Manufacturing Support | ||||||||||||||||||
Revenue | $ | 62,253 | $ | 56,276 | $ | 252,117 | $ | 221,800 | ||||||||||
Operating income | 20,529 | 14,651 | 78,620 | 61,227 | ||||||||||||||
Operating income as a % of revenue | 33.0 | % | 26.0 | % | 31.2 | % | 27.6 | % | ||||||||||
Add back: | ||||||||||||||||||
Amortization of intangible assets related to acquisitions | 1,235 | 1,438 | 5,381 | 5,435 | ||||||||||||||
Severance related to cost-savings actions | 16 | 123 | 166 | 169 | ||||||||||||||
Impairment and other items(2) | - | 1,874 | - | 1,874 | ||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 21,780 | $ | 18,086 | $ | 84,167 | $ | 68,705 | ||||||||||
Non-GAAP operating income as a % of revenue | 35.0 | % | 32.1 | % | 33.4 | % | 31.0 | % | ||||||||||
Unallocated Corporate Overhead | $ | (24,313 | ) | $ | (17,946 | ) | $ | (92,075 | ) | $ | (73,976 | ) | ||||||
Add back: | ||||||||||||||||||
Severance related to cost-savings actions | - | - | 121 | - | ||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 1,028 | 766 | 6,284 | 1,752 | ||||||||||||||
Convertible debt accounting | - | - | - | 107 | ||||||||||||||
Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (23,285 | ) | $ | (17,180 | ) | $ | (85,670 | ) | $ | (72,117 | ) | ||||||
Total | ||||||||||||||||||
Revenue | $ | 329,548 | $ | 289,228 | $ | 1,297,662 | $ | 1,165,528 | ||||||||||
Add back government billing adjustment | - | - | - | 1,495 | ||||||||||||||
Non-GAAP revenue | $ | 329,548 | $ | 289,228 | $ | 1,297,662 | $ | 1,167,023 | ||||||||||
Operating income | 40,767 | 24,607 | 177,670 | 151,401 | ||||||||||||||
Operating income as a % of revenue | 12.4 | % | 8.5 | % | 13.7 | % | 13.0 | % | ||||||||||
Add back: | ||||||||||||||||||
Amortization of intangible assets related to acquisitions | 7,144 | 4,915 | 25,957 | 17,806 | ||||||||||||||
Severance related to cost-savings actions | 2,429 | 2,161 | 7,792 | 3,218 | ||||||||||||||
Government billing adjustment and related expenses | 554 | 226 | 848 | 2,402 | ||||||||||||||
Impairment and other items(2) | 2,002 | 14,143 | 7,109 | 21,381 | ||||||||||||||
Operating losses(3) | 619 | 643 | 2,627 | 3,371 | ||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 1,236 | 766 | 6,688 | 1,752 | ||||||||||||||
Convertible debt accounting (4) | - | - | - | 107 | ||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 54,751 | $ | 47,461 | $ | 228,691 | $ | 201,438 | ||||||||||
Non-GAAP operating income as a % of non-GAAP revenue | 16.6 | % | 16.4 | % | 17.6 | % | 17.3 | % | ||||||||||
(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 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 GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations, and guidance. | |
(2) |
For the three and twelve months ended December 27, 2014, impairment and other items included $1.9 million and $6.5 million of asset impairments and accelerated depreciation related to the consolidation of research model production operations, respectively; $0 and $1.6 million of charges related to a dispute with a large model supplier, respectively; and a $0.1 million charge and a $1.0 million gain related to the sale of a former research model facility in France, respectively. For the three and twelve months ended December 28, 2013, impairment and other items included $6.6 million and $13.5 million of accelerated depreciation related to the consolidation of research model production operations in California, respectively; and $0.2 million and $0.6 million of impairments in Germany, respectively. In addition, for both the three and twelve months ended December 28, 2013, impairment and other items included $1.9 million of accelerated depreciation related to Biologics Testing Solutions operations; $3.8 million for an impairment charge related to the Company's Shrewsbury, Massachusetts facility; and $1.6 million for an adjustment to prior-period accrued compensated absences. |
|
(3) | This item includes operating losses related primarily to the Company's Shrewsbury, Massachusetts facility. | |
(4) | The year ended December 28, 2013 includes the impact of convertible debt accounting adopted at the beginning of 2009, which increased depreciation expense by $0.1 million. |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (1) | ||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 27,
2014 |
December 28,
2013 |
December 27,
2014 |
December 28,
2013 |
|||||||||||||||
Net income attributable to common shareholders | $ | 27,166 | $ | 19,099 | $ | 126,698 | $ | 102,828 | ||||||||||
Less: Discontinued operations | 864 | 82 | 1,726 | 1,265 | ||||||||||||||
Net income from continuing operations attributable to common shareholders | 28,030 | 19,181 | 128,424 | 104,093 | ||||||||||||||
Add back: | ||||||||||||||||||
Amortization of intangible assets related to acquisitions | 7,144 | 4,915 | 25,957 | 17,806 | ||||||||||||||
Severance related to cost-savings actions | 2,429 | 2,161 | 7,792 | 3,218 | ||||||||||||||
Government billing adjustment and related expenses | 554 | 226 | 848 | 2,402 | ||||||||||||||
Impairment and other items (2) | 2,002 | 14,143 | 7,109 | 21,381 | ||||||||||||||
Operating losses (3) | 619 | 643 | 2,627 | 3,371 | ||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 1,236 | 766 | 6,688 | 1,752 | ||||||||||||||
Convertible debt accounting, net (4) | - | - | - | 6,710 | ||||||||||||||
Write-off of deferred financing costs and fees related to debt refinancing | - | - | - | 645 | ||||||||||||||
Tax effect of items above | (3,506 | ) | (6,919 | ) | (14,987 | ) | (19,126 | ) | ||||||||||
Net income from continuing operations attributable to common shareholders, excluding specified charges (Non-GAAP) | $ | 38,508 | $ | 35,116 | $ | 164,458 | $ | 142,252 | ||||||||||
Weighted average shares outstanding - Basic | 46,459,512 | 47,150,688 | 46,626,997 | 47,740,167 | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Stock options and contingently issued restricted stock | 1,057,147 | 984,304 | 930,709 | 749,155 | ||||||||||||||
Weighted average shares outstanding - Diluted | 47,516,659 | 48,134,992 | 47,557,706 | 48,489,322 | ||||||||||||||
Basic earnings per share from continuing operations | $ | 0.60 | $ | 0.41 | $ | 2.76 | $ | 2.18 | ||||||||||
Diluted earnings per share from continuing operations | $ | 0.59 | $ | 0.40 | $ | 2.70 | $ | 2.15 | ||||||||||
Basic earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.83 | $ | 0.74 | $ | 3.53 | $ | 2.98 | ||||||||||
Diluted earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.81 | $ | 0.73 | $ | 3.46 | $ | 2.93 | ||||||||||
(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 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 GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations, and guidance. | |
(2) |
For the three and twelve months ended December 27, 2014, impairment and other items included $1.9 million and $6.5 million of asset impairments and accelerated depreciation related to the consolidation of research model production operations, respectively; $0 and $1.6 million of charges related to a dispute with a large model supplier, respectively; and a $0.1 million charge and a $1.0 million gain related to the sale of a former research model facility in France, respectively. For the three and twelve months ended December 28, 2013, impairment and other items included $6.6 million and $13.5 million of accelerated depreciation related to the consolidation of research model production operations in California, respectively; and $0.2 million and $0.6 million of impairments in Germany, respectively. In addition, for both the three and twelve months ended December 28, 2013, impairment and other items included $1.9 million of accelerated depreciation related to Biologics Testing Solutions operations; $3.8 million for an impairment charge related to the Company's Shrewsbury, Massachusetts facility; and $1.6 million for an adjustment to prior-period accrued compensated absences. |
|
(3) | This item includes operating losses related primarily to the Company's Shrewsbury, Massachusetts facility. | |
(4) | The year ended December 28, 2013 includes the impact of convertible debt accounting adopted at the beginning of 2009, which increased interest expense by $6.6 million and depreciation expense by $0.1 million. |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||
RECONCILIATION OF GAAP TO NON-GAAP REVENUE GROWTH (YEAR-OVER-YEAR) | ||||||||||
EXCLUDING THE IMPACT OF FOREIGN EXCHANGE AND A GOVERNMENT BILLING ADJUSTMENT | ||||||||||
For the Three and Twelve Months Ended December 27, 2014 | ||||||||||
For the three months ended December 27, 2014: |
Total CRL |
RMS Segment | DSA Segment | MS Segment | ||||||
Revenue growth, reported | 13.9% | (3.9%) | 35.4% | 10.6% | ||||||
Impact of foreign exchange | (2.9%) | (3.7%) | (1.5%) | (3.7%) | ||||||
Non-GAAP revenue growth, constant currency | 16.8% | (0.2%) | 36.9% | 14.3% | ||||||
For the twelve months ended December 27, 2014: | Total CRL | RMS Segment | DSA Segment | MS Segment | ||||||
Revenue growth, reported | 11.3% | (0.8%) | 24.5% | 13.7% | ||||||
Impact of foreign exchange | (0.1%) | (0.7%) | 0.3% | 0.2% | ||||||
Impact of government billing adjustment | 0.1% | 0.3% | 0.0% | 0.0% | ||||||
Non-GAAP revenue growth, constant currency | 11.3% | (0.4%) | 24.2% | 13.5% | ||||||
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 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 GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations, and guidance. |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||
(in thousands) | ||||||||||
Twelve Months Ended | ||||||||||
December 27,
2014 |
December 28,
2013 |
|||||||||
Cash flows relating to operating activities: | ||||||||||
Net income | $ | 128,198 | $ | 104,151 | ||||||
Less: Loss from discontinued operations | (1,726 | ) | (1,265 | ) | ||||||
Income from continuing operations | 129,924 | 105,416 | ||||||||
Summary of non-cash adjustments | 125,982 | 128,986 | ||||||||
Changes in assets and liabilities | (3,774 | ) | (25,357 | ) | ||||||
Net cash provided by operating activities | 252,132 | 209,045 | ||||||||
Cash flows relating to investing activities: | ||||||||||
Acquisition of businesses, net of cash acquired | (234,267 | ) | (29,218 | ) | ||||||
Capital expenditures | (56,925 | ) | (39,154 | ) | ||||||
Other | (6,798 | ) | (5,675 | ) | ||||||
Net cash used in investing activities | (297,990 | ) | (74,047 | ) | ||||||
Cash flow relating to financing activities: | ||||||||||
Net cash used in financing activities | 61,414 | (84,237 | ) | |||||||
Cash flows used in discontinued operations | (1,081 | ) | (1,906 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (10,379 | ) | (2,613 | ) | ||||||
Net change in cash and cash equivalents | 4,096 | 46,242 | ||||||||
Cash and cash equivalents, beginning of period | 155,927 | 109,685 | ||||||||
Cash and cash equivalents, end of period | $ | 160,023 | $ | 155,927 |
Source:
Charles River Laboratories International, Inc.
Investor:
Susan
E. Hardy, 781-222-6190
Corporate Vice President, Investor Relations
susan.hardy@crl.com
or
Media:
Amy
Cianciaruso, 781-222-6168
Executive Director, Public Relations
amy.cianciaruso@crl.com