Investor Relations

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.

CR-000172

News Release

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Charles River Laboratories Announces First-Quarter 2007 Results from Continuing Operations

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  • First-Quarter Sales Increase 14.6% to $291 Million
  • First-Quarter GAAP EPS Increase 41% to $0.55
  • First-Quarter Non-GAAP EPS Increase 33.3% to $0.64
  • Reaffirms Guidance for 2007

WILMINGTON, Mass.--(BUSINESS WIRE)--May 8, 2007--Charles River Laboratories International, Inc. (NYSE: CRL) today reported first-quarter 2007 financial results. For the first quarter, net sales from continuing operations increased 14.6% to $291.2 million from $254.1 million in the first quarter of 2006. Strong sales growth in both the Research Models and Services and Preclinical Services business segments drove the increase, as pharmaceutical and biotechnology customers increased their purchases of research models and continued to outsource services. Foreign exchange contributed 2.7% to the net sales growth.

On a GAAP basis, net income from continuing operations for the first quarter of 2007 was $37.2 million, or $0.55 per diluted share, compared to $28.5 million, or $0.39 per diluted share, for the first quarter of 2006. The 40.7% increase in earnings per share resulted primarily from higher sales, as well as the benefit of cost savings initiatives implemented in 2006, a lower share count due to the Company's stock repurchase program, lower amortization of intangible assets and reduced net interest expense.

On a non-GAAP basis, net income from continuing operations was $43.2 million for the first quarter of 2007, compared to $34.8 million for the same period in 2006. First-quarter diluted earnings per share on a non-GAAP basis were $0.64, compared to $0.48 per share in the first quarter of 2006. Non-GAAP earnings per share in the first quarter of 2007 excluded $7.9 million of amortization of intangible assets and stock-based compensation related to acquisitions and a charge of $0.8 million related to the decision to accelerate the exit of the Company's Preclinical Services facility in Worcester, Massachusetts. The Company now expects to complete the transition to the new Shrewsbury, Massachusetts, facility by the end of 2007, and as a result, expects to record total related charges in 2007 of approximately $0.03 to $0.05, including the first-quarter charge.

James C. Foster, Chairman, President and Chief Executive Officer, said, "We were very pleased by the strong start to this year. The actions we took last year to focus on our core businesses and improve our operating efficiency are reflected in our stronger sales and earnings growth. The continuing robust demand for our products and services confirms our confidence in the outlook for the year, and we are reaffirming our sales and earnings guidance for 2007."

The Company reports results from continuing operations, which exclude results of the Interventional and Surgical Services (ISS) business. The Company is in the process of closing that business and as a result, reports it as discontinued operations. Historical comparisons have been reclassified accordingly. The net loss from discontinued operations was $0.5 million in the first quarter of 2007. Including discontinued operations, net income for the first quarter of 2007 was $36.8 million, or $0.54 per diluted share, compared to a consolidated net loss of $100.1 million, or $1.37 per diluted share, in the first quarter of 2006. Discontinued operations in 2006 included both ISS and the Phase II - IV clinical services business, which the Company sold in August 2006.

Research Models and Services (RMS)

Sales for the RMS segment were $143.1 million in the first quarter of 2007, an increase of 10.9% from $129.0 million in the first quarter of 2006. Sales benefited from strong demand for research models from large pharmaceutical customers in North America, increased demand for Transgenic Services, and higher sales of in vitro products. As expected, sales of large research models increased significantly as shipments which had been delayed from the fourth quarter of 2006 due to an extended quarantine were released.

In the first quarter of 2007, the RMS segment's GAAP operating margin increased to 32.9% from 31.4%, primarily due to increased Transgenic Services revenue and large research model sales. On a non-GAAP basis, which excluded charges of $0.4 million for acquisition-related amortization, the operating margin was 33.1%, compared to 31.4% for the same period in the prior year.

Preclinical Services (PCS)

First-quarter net sales for the PCS segment were $148.1 million, an increase of 18.3% from $125.2 million in the first quarter of 2006. Sales were driven by continuing strong demand for general and specialty toxicology services by pharmaceutical and biotechnology customers, and the addition on October 30, 2006, of the Northwest Kinetics Phase I clinical services business.

The PCS segment's GAAP operating margin improved to 15.8% from 11.0%, as a result of higher sales, improved operating efficiencies and lower amortization of intangible assets related to acquisitions. On a non-GAAP basis, which excludes $7.5 million of acquisition-related amortization and the $0.8 million charge for the accelerated exit from the Worcester facility, the first-quarter operating margin improved to 21.4% compared to 18.2% for the first quarter of 2006.

2007 Guidance

The Company reaffirms its forward-looking guidance based on continuing operations for 2007, which was originally provided on December 13, 2006. This forward-looking guidance is based on current foreign exchange rates. In addition to a net charge in a range of $0.03 - $0.05 per diluted share as a result of the accelerated exit from the Worcester facility, the Company expects to report a one-time gain of approximately $0.02 per diluted share on the sale of real estate in Scotland. Both of these items will be reported as non-GAAP adjustments.

2007 GUIDANCE (from continuing operations)
----------------------------------------------------------------------
Net sales growth (in %)                                   9% - 12%
Sales ($ in millions)                                 $1,160 - $1,190
GAAP EPS estimate                                      $2.11 - $2.21
Acquisition-related amortization                           $0.32
Charge to exit Worcester facility and gain on sale of
 building, net                                         $0.01 - $0.03
                                                      ----------------
Non-GAAP EPS estimate                                  $2.43 - $2.53
----------------------------------------------------------------------

Webcast

Charles River Laboratories has scheduled a live webcast on Wednesday, May 9, at 8:30 a.m. ET to discuss matters relating to this press release. To participate, please go to www.ir.criver.com and select the webcast link. You can also find the associated slide presentation and reconciliations to comparable GAAP measures on the website.

Charles River to Present at Baird Conference

James C. Foster will present at the Robert W. Baird Growth Stock Conference on Thursday, May 10, at 9:30 a.m. CT, in Chicago, Illinois. Mr. Foster will present an overview of Charles River's business and strategic focus. A live webcast of the presentation will be available through a link that will be posted on the Investor Relations section of the Charles River Laboratories website at www.ir.criver.com. A webcast replay will be accessible through the same website approximately three hours after the presentation.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share from continuing operations, which exclude amortization of intangible assets and other charges related to our acquisitions, impairments due to our accelerated exit from our Worcester Preclinical Services facility, and the potential gain on the sale of real estate in Scotland. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. 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 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 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. 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 the text of this press release, and can also be found on the Company's website at www.ir.criver.com.

Caution Concerning Forward-Looking Statements

This news 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 2007 earnings; the future demand for drug discovery and development products and services, including the outsourcing of these services; the impact of specific actions intended to improve overall operating efficiencies and profitability; expectations regarding stock repurchases; the timing of the opening of new and expanded facilities; the potential sale of real estate in Scotland; future cost reduction activities by our customers; and Charles River's future performance as delineated in our forward-looking guidance, and particularly our expectations with respect to sales growth. 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: a decrease in research and development spending, a decrease in the level of outsourced services, or other cost reduction actions by our customers; the ability to convert backlog to sales; special interest groups; contaminations; industry trends; new displacement technologies; USDA and FDA regulations; changes in law; continued availability of products and supplies; loss of key personnel; interest rate and foreign currency exchange rate fluctuations; changes in tax regulation and laws; changes in generally accepted accounting principles; and any changes in business, political, or economic conditions due to the threat of future terrorist activity in the U.S. and other parts of the world, and related U.S. military action overseas. A further description of these risks, uncertainties, and other matters can be found in the Risk Factors detailed in Charles River's Annual Report on Form 10-K as filed on February 27, 2007, as well as other filings we make with the Securities and Exchange Commission. Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by Charles River, and Charles River assumes no obligation and expressly disclaims any duty to update information contained in this news release except as required by law.

About Charles River Laboratories

Charles River Laboratories based in Wilmington, Massachusetts, partners with global pharmaceutical and biotechnology companies, government agencies and leading academic institutions to advance the drug discovery and development process, bringing drugs to market faster and more efficiently. Charles River's 8,000 employees serve clients worldwide. For more information on Charles River, visit our website at www.criver.com.

            CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
          (dollars in thousands, except for per share data)

                                               Three Months Ended
                                            -------------------------
                                             March 31,    April 1,
                                                2007         2006

Total net sales                             $   291,199  $   254,141
Cost of products sold and services provided     175,626      158,636
                                            ------------ ------------
Gross margin                                    115,573       95,505
Selling, general and administrative              53,017       42,734
Amortization of intangibles                       7,855        9,075
                                            ------------ ------------
Operating income                                 54,701       43,696
Interest income (expense)                        (2,059)      (3,016)
Other income (expense)                              149           48
                                            ------------ ------------
Income before income taxes and minority
 interests                                       52,791       40,728
Provision for income taxes                       15,310       11,811
                                            ------------ ------------
Income before minority interests                 37,481       28,917
Minority interests                                 (254)        (402)
                                            ------------ ------------
Income from continuing operations                37,227       28,515
Income (loss) from discontinued businesses,
 net of tax                                        (464)    (128,630)
                                            ------------ ------------
Net income (loss)                           $    36,763  $  (100,115)
                                            ============ ============

Earnings (loss) per common share
Basic:
Continuing operations                       $      0.56  $      0.40
Discontinued operations                     $     (0.01) $     (1.80)
Net income                                  $      0.55  $     (1.40)
Diluted:
Continuing operations                       $      0.55  $      0.39
Discontinued operations                     $     (0.01) $     (1.76)
Net income                                  $      0.54  $     (1.37)

Weighted average number of common shares
 outstanding
Basic                                        66,346,152   71,505,478
Diluted                                      67,632,780   72,890,237
            CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
          CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                        (dollars in thousands)



                                               March 31,  December 30,
                                                 2007         2006
Assets
Current assets
   Cash and cash equivalents                  $  136,537   $  175,380
   Trade receivables, net                        210,166      202,658
   Inventories                                    75,681       72,362
   Other current assets                           54,186       44,363
   Current assets of discontinued businesses       5,669        6,330
                                              ----------- ------------
      Total current assets                       482,239      501,093
Property, plant and equipment, net               566,145      534,745
Goodwill, net                                  1,119,389    1,119,309
Other intangibles, net                           159,368      160,204
Deferred tax asset                                98,599      107,498
Other assets                                     142,320      133,944
Long-term assets of discontinued businesses          334          751
                                              ----------- ------------
      Total assets                            $2,568,394   $2,557,544
                                              =========== ============

Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt             $   25,759   $   24,977
   Accounts payable                               37,256       28,223
   Accrued compensation                           29,992       41,651
Deferred income                                   88,526       93,197
Accrued liabilities                               43,986       41,991
   Other current liabilities                      20,322       25,625
   Current liabilities of discontinued
    businesses                                       449        3,667
                                              ----------- ------------
      Total current liabilities                  246,290      259,331
Long-term debt                                   527,555      547,084
Other long-term liabilities                      149,911      146,695
                                              ----------- ------------
      Total liabilities                          923,756      953,110
                                              ----------- ------------
Minority interests                                 2,420        9,223
Total shareholders' equity                     1,642,218    1,595,211
                                              ----------- ------------
Total liabilities and shareholders' equity    $2,568,394   $2,557,544
                                              =========== ============
            CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
          SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
                        (dollars in thousands)

                                              Three Months Ended
                                         ----------------------------
                                         March 31, 2007 April 1, 2006
Research Models and Services
 Net sales                                    $143,068      $128,972
 Gross margin                                   63,654        55,866
 Gross margin as a % of net sales                 44.5%         43.3%
 Operating income                               47,021        40,476
 Operating income as a % of net sales             32.9%         31.4%
 Depreciation and amortization                   5,569         5,035
 Capital expenditures                            7,084         3,566

Preclinical Services
 Net sales                                    $148,131      $125,169
 Gross margin                                   51,919        39,639
 Gross margin as a % of net sales                 35.0%         31.7%
 Operating income                               23,444        13,788
 Operating income as a % of net sales             15.8%         11.0%
 Depreciation and amortization                  14,344        14,624
 Capital expenditures                           30,840        35,821


Unallocated Corporate Overhead                $(15,764)     $(10,568)


Total
 Net sales                                    $291,199      $254,141
 Gross margin                                  115,573        95,505
 Gross margin as a % of net sales                 39.7%         37.6%
 Operating income (loss)                        54,701        43,696
 Operating income as a % of net sales             18.8%         17.2%
 Depreciation and amortization                  19,913        19,659
 Capital expenditures                           37,924        39,387
            CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
                  RECONCILIATION OF GAAP TO NON-GAAP
          SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
                        (dollars in thousands)

                                              Three Months Ended
                                         ----------------------------
                                         March 31, 2007 April 1, 2006
Research Models and Services
 Net sales                                    $143,068      $128,972
 Operating income                               47,021        40,476
 Operating income as a % of net sales             32.9%         31.4%
 Add back:
 Amortization related to acquisitions              374            83
                                         -------------- -------------
 Operating income, excluding specified
  charges (Non-GAAP)                          $ 47,395      $ 40,559
 Non-GAAP operating income as a % of net
  sales                                           33.1%         31.4%

Preclinical Services
 Net sales                                    $148,131      $125,169
 Operating income                               23,444        13,788
 Operating income as a % of net sales             15.8%         11.0%
 Add back:
 Amortization related to acquisitions            7,483         8,995
     Impairment and other charges                  819             -
                                         -------------- -------------
 Operating income, excluding specified
  charges (Non-GAAP)                          $ 31,746      $ 22,783
 Non-GAAP operating income as a % of net
  sales                                           21.4%         18.2%


Unallocated Corporate Overhead                $(15,764)     $(10,568)
 Add back:
 Stock-based compensation related to
  Inveresk acquisition                              70           285
                                         -------------- -------------
 Unallocated corporate overhead,
  excluding specified charges (Non-GAAP)      $(15,694)     $(10,283)


Total
 Net sales                                    $291,199      $254,141
 Operating income                               54,701        43,696
 Operating income as a % of net sales             18.8%         17.2%
 Add back:
 Amortization related to acquisitions            7,857         9,078
     Impairment and other charges                  819             -
 Stock-based compensation related to
  Inveresk acquisition                              70           285
                                         -------------- -------------
 Operating income, excluding specified
  charges (Non-GAAP)                          $ 63,447      $ 53,059
 Non-GAAP operating income as a % of net
  sales                                           21.8%         20.9%


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, 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 and
 regulations.
            CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
         RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS
          (dollars in thousands, except for per share data)


                                              Three Months Ended
                                         ----------------------------
                                         March 31, 2007 April 1, 2006

Net income (loss)                              $36,763     $(100,115)
Less: Discontinued operations                      464       128,630
                                         -------------- -------------
Net income from continuing operations           37,227        28,515
Add back:
Amortization related to acquisitions             7,857         9,078
Stock-based compensation related to
 Inveresk acquisition                               70           285
    Impairment and other charges                   819             -
Tax effect                                      (2,784)       (3,066)
                                         -------------- -------------
Net income from continuing operations,
 excluding specified charges (Non-GAAP)        $43,189       $34,812
                                         ============== =============


Weighted average shares outstanding -
 Basic                                      66,346,152    71,505,478
Effect of dilutive securities:
Stock options and contingently issued
 restricted stock                            1,153,912     1,239,254
Warrants                                       132,716       145,505
                                         -------------- -------------
Weighted average shares outstanding -
 Diluted                                    67,632,780    72,890,237
                                         ============== =============

Basic earnings (loss) per share                  $0.55        $(1.40)
Diluted earnings (loss) per share                $0.54        $(1.37)

Basic earnings per share, excluding
 specified charges (Non-GAAP)                    $0.65         $0.49
Diluted earnings per share, excluding
 specified charges (Non-GAAP)                    $0.64         $0.48



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, 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 and
 regulations.

CONTACT: Investor Contact:
Susan E. Hardy, 781-262-7616
Corporate Vice President, Investor Relations

SOURCE: Charles River Laboratories International, Inc.

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