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WILMINGTON, Mass., Jul 30, 2002 (BW HealthWire) -- Charles River Laboratories International, Inc. (NYSE: CRL) achieved strong growth in sales and earnings for the second quarter of 2002. The Company's second quarter sales increased 17% over the prior year, driven by strong growth in customer demand for the Company's growing portfolio of products and services that support drug discovery and development. Sales for the second quarter were $136.5 million, a $19.7 million increase over second quarter 2001 sales of $116.8 million. Charles River's operating income for the second quarter was $30.4 million, up 24% over the prior year. The Company's operating income margin for the quarter was 22%, compared to 21% in the prior year quarter. Net income for the quarter, before an extraordinary loss of $1.1 million related to early retirement of debt, was up 64% to $17.4 million, or $0.36 per fully diluted share. The Company's EPS in the second quarter exceeded by $0.03 the high end of its guidance range, and also exceeded by $0.04 the First Call consensus EPS estimate of $0.32.
For the first six months of 2002, Charles River's sales increased over the prior year's first half by 25%, to $270.3 million, with operating income up 34%, to $58.8 million. Excluding the benefit of revenues from strategic acquisitions, the Company's sales growth for the first six months was 17%.
Commenting on these results, James C. Foster, Chairman and CEO, said: "This was another strong quarter for Charles River. It's now eight consecutive quarters of strong growth and profitability for us, since going public. Our solid and consistent financial performance reflects our strong position in the drug discovery and development market, and the leading position we hold in a number of attractive segments of that market. We experienced growth in both our products and services segments, and these businesses continue to nicely complement each other. Our outlook, both near and long-term, remains positive. We see our pharmaceutical, medical device, biotechnology and other biomedical research customers requiring increasingly more of our products and services in order to achieve their research goals. We're particularly pleased with the continued strong outsourcing trend within the research community. We're well positioned to be a key partner in the discovery and development of the many new drugs, devices, diagnostics and other medical products that will occur over the next decade, and beyond. The opportunities for growth and expansion within our market segments continue to be many. Most recently, we've added another growth platform to our services business, in Ireland, which we think will help us drive our services expansion in Europe."
Mr. Foster went on to say: "On a different but equally important front, we're delighted to add Dr. George Milne to our Board of Directors, as of August 1. Dr. Milne has a wealth of experience in the pharmaceutical research field, most recently as a senior executive within Pfizer's R&D operations, and his extraordinary capabilities will further strengthen our already independent Board. We also saw this past quarter the end of our LBO phase, as our financial sponsor, Credit Suisse First Boston, sold all of their LBO-related stock in the Company, and we retired the balance of the term debt we incurred in connection with the transaction. We are committed as a Company to strong corporate governance, conservative accounting, and management integrity and accountability."
Mr. Foster is scheduled to appear on Bloomberg's "Morning Call" television program tomorrow morning, July 31, shortly after 7:00 a.m., to discuss the Company and its second quarter financial results.
The following forward looking guidance is subject to the qualifications set forth below, and is based on current exchange rates. For the third quarter 2002, Charles River projects sales in the range of $138 to $141 million, which amounts to 12% to 14% sales growth over the third quarter of 2001. Fully diluted EPS for the third quarter of 2002 is projected to be in the range of $0.36 to $0.37. For the full year, management estimates fully diluted EPS (before any extraordinary items) in the range of $1.37 to $1.40.
Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets," the effect of which was to cease amortization of goodwill and certain indefinite-lived intangible assets, which amounted to $0.02 per fully-diluted share in the second quarter.
Charles River Laboratories, based in Wilmington, Massachusetts, is a leading provider of critical research tools and integrated support services that enable innovative and efficient drug discovery and development. The Company is the global leader in providing the animal research models required in research and development for new drugs, devices and therapies. The Company also offers a broad and growing portfolio of biomedical products and services that enable customers to reduce cost, increase speed, and enhance productivity and effectiveness in drug discovery and development. Charles River's customer base spans over 50 countries, and includes all of the major pharmaceutical and biotechnology companies, as well as many leading hospitals and academic institutions. The Company operates 78 facilities in 16 countries worldwide. For more information, visit the Company's web site as http://www.criver.com.
This document contains "forward looking statements." Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those stated or implied by the forward looking statements, including acquisition integration risks, R&D risks, special interest groups, foreign exchange, contaminations, industry trends, new displacement technologies, outsourcing trends, USDA and FDA regulation, changes in law, continued availability of products and supplies, personnel and control, and others that are described in the Risk Factors contained in Company's Annual Report on Form 10K for 2001, and as may be updated from time to time in the Company's periodic SEC filings. The Company disclaims any intent or obligation to update forward looking statements, and otherwise claims the "safe harbor" protections for forward looking statements afforded under The Private Securities Litigation Reform Act of 1995.
As previously announced, investors can access a live webcast of the second quarter earnings conference call through a link that will be posted on the investor page of the Charles River Laboratories website, http://www.criver.com. The conference call begins on Wednesday, July 31, 2002, at 8:30 a.m. Eastern Standard Time and will be available thereafter for one week for replay.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (dollars in thousands except for per share data) Three Months Ended Six Months Ended June 29, June 30, June 29, June 30, 2002 2001 2002 2001 Total Net Sales $136,501 $116,820 $270,321 $215,851 Cost of products sold and services provided 84,101 73,050 167,962 135,419 Gross margin 52,400 43,770 102,359 80,432 Selling, general and administrative 21,387 17,285 42,306 32,745 Amortization of goodwill and intangibles 631 1,993 1,261 3,821 Operating income 30,382 24,492 58,792 43,866 Interest income (expense) (2,261) (5,594) (5,653) (12,299) Other income (expense) 1,160 (122) 1,077 433 Income before taxes, minority interests, earnings from equity investments and extraordinary item 29,281 18,776 54,216 32,000 Provision for income taxes 11,419 7,659 21,144 13,214 Income before minority interests, earnings from equity investments and extraordinary item 17,862 11,117 33,072 18,786 Minority interests (619) (652) (1,381) (1,216) Earnings from equity investments 177 136 259 219 Net income before extraordinary item 17,420 10,601 31,950 17,789 Extraordinary loss, net of tax benefit (1,092) (1,583) (17,854) (1,820) Net income $16,328 $9,018 $14,096 $15,969 Earnings per common share before extraordinary item Basic $0.39 $0.26 $0.72 $0.46 Diluted $0.36 $0.24 $0.67 $0.42 Earnings per common share after extraordinary item Basic $0.37 $0.22 $0.32 $0.42 Diluted $0.34 $0.21 $0.31 $0.38 CHARLES RIVER LABORATORIES INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands) June 29, December 29, 2002 2001 Assets Current assets Cash and cash equivalents $ 84,712 $ 58,271 Trade receivables 99,829 98,478 Inventories 39,454 39,056 Other current assets 15,713 14,349 Total current assets 239,708 210,154 Property, plant and equipment, net 169,088 155,919 Goodwill, net 87,416 52,087 Other intangibles, net 19,691 38,287 Deferred tax asset 86,033 87,781 Other assets 27,944 27,134 Total assets $629,880 $571,362 Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 12,240 $ 13,868 Accrued compensation 21,874 25,736 Other current liabilities 68,262 58,928 Total current liabilities 102,376 98,532 Long-term debt 188,705 155,506 Other long-term liabilities 15,877 14,826 Total liabilities 306,958 268,864 Minority interests 13,386 12,988 Total shareholders' equity 309,536 289,510 Total liabilities and shareholders' equity $629,880 $571,362 CHARLES RIVER LABORATORIES INTERNATIONAL, INC. SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (dollars in thousands) Three Month Ended Six Months Ended June 29, June 30, June 29, June 30, 2002 2001 2002 2001 Research Models Net sales $56,544 $48,013 $113,443 $97,487 Gross margin 26,096 20,917 52,159 41,465 Gross margin as a % of sales 46.2% 43.6% 46.0% 42.5% Operating income 18,993 13,681 38,525 26,952 Operating income as a % of sales 33.6% 28.5% 34.0% 27.6% Depreciation amortization 2,326 2,331 4,541 4,736 Capital expenditures 5,083 2,479 6,539 4,392 Biomedical Products and Services Net sales $79,957 $68,807 $156,878 $118,364 Gross margin 26,304 22,853 50,200 38,967 Gross margin as a % of sales 32.9% 33.2% 32.0% 32.9% Operating income 16,317 12,476 30,438 20,956 Operating income as a % of sales 20.4% 18.1% 19.4% 17.7% Depreciation amortization 3,290 4,259 6,509 7,293 Capital expenditures 4,688 4,994 7,767 7,334 Unallocated Corporate Overhead ($4,928) ($1,665) ($10,171) ($4,042) Total Net sales $136,501 $116,820 $270,321 $215,851 Gross margin 52,400 43,770 102,359 80,432 Gross margin as a % of sales 38.4% 37.5% 37.9% 37.3% Operating income 30,382 24,492 58,792 43,866 Operating income as a % of sales 22.3% 21.0% 21.7% 20.3% Depreciation amortization 5,616 6,590 11,050 12,029 Capital expenditures 9,771 7,473 14,306 11,726CONTACT:
Charles River Laboratories International, Inc.
Dennis R. Shaughnessy, Senior Vice President
978/658-6000 ext. 1329
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