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 Second-Quarter 2021 Results

Second-Quarter Revenue of $914.6 Million

Second-Quarter GAAP Earnings per Share of $1.72 and Non-GAAP Earnings per Share of $2.61

Increases 2021 Guidance

WILMINGTON, Mass.--(BUSINESS WIRE)--Aug. 4, 2021-- Charles River Laboratories International, Inc. (NYSE: CRL) today reported its results for the second quarter of 2021. For the quarter, revenue was $914.6 million, an increase of 34.0% from $682.6 million in the second quarter of 2020.

Acquisitions contributed 6.0% to consolidated second-quarter revenue growth. The impact of foreign currency translation benefited reported revenue growth by 3.9%. Excluding the effect of these items, organic revenue growth was 24.1%, driven by contributions from all three business segments. The comparison to last year’s COVID-19-related impact increased the reported and organic revenue growth rates in the second quarter of 2021 by 8.6% and 8.0%, respectively, with the greatest impact in the Research Models and Services segment.

On a GAAP basis, second-quarter net income attributable to common shareholders was $88.4 million, an increase of 31.2% from net income of $67.4 million for the same period in 2020. Second-quarter diluted earnings per share on a GAAP basis were $1.72, an increase of 28.4% from $1.34 for the second quarter of 2020. The GAAP net income and earnings per share increases were primarily driven by higher revenue and operating margin improvement, partially offset by higher acquisition-related costs and a higher tax rate. In addition, the gain from the Company’s venture capital and other strategic investments totaled $0.14 per share in the second quarter of 2021, compared to a gain of $0.38 per share for the same period in 2020. The Company’s venture capital and other strategic investment performance has been excluded from non-GAAP results.

On a non-GAAP basis, net income was $133.8 million for the second quarter of 2021, an increase of 68.1% from $79.6 million for the same period in 2020. Second‑quarter diluted earnings per share on a non-GAAP basis were $2.61, an increase of 65.2% from $1.58 per share for the second quarter of 2020. The non-GAAP net income and earnings per share increases were primarily driven by higher revenue and operating margin improvement.

James C. Foster, Chairman, President and Chief Executive Officer, said, “The strength of our leading, non-clinical contract research and manufacturing portfolio was clearly demonstrated in our second-quarter financial performance. Robust industry fundamentals continue to drive unprecedented client demand across most of our businesses, and we are extremely well positioned to succeed in this environment.”

“Due to the sustained demand, we are intensely focused on the execution of our strategy, including strengthening our portfolio and strategically adding staff and capacity to support our clients and provide exceptional service to them. We believe the success of this strategy will enable us to achieve our increased 2021 financial guidance, as well as our longer-term strategic and financial goals,” Mr. Foster concluded.

 

Second-Quarter Segment Results

Research Models and Services (RMS)

Revenue for the RMS segment was $176.7 million in the second quarter of 2021, an increase of 51.6% from $116.5 million in the second quarter of 2020. The impact of foreign currency translation contributed 5.2%, and the acquisition of Cellero contributed 1.9% to second-quarter RMS revenue. Organic revenue growth of 44.5% was primarily driven by the year-over-year comparison to the COVID-19-related revenue impact in 2020, which contributed 35.0% on a reported basis and 33.4% on an organic basis to RMS revenue growth. Adjusted for the COVID-19 impact, RMS revenue growth was driven by robust demand for research models across all client segments and geographic regions, particularly in China, as well as higher revenue for research model services.

In the second quarter of 2021, the RMS segment’s GAAP operating margin increased to 24.1% from 3.3% in the second quarter of 2020, and on a non-GAAP basis, the operating margin increased to 27.4% from 9.1%. The GAAP and non-GAAP operating margin increases were driven primarily by operating leverage from higher sales volume of research models, due in part to the favorable comparison to last year’s COVID-19 impact.

Discovery and Safety Assessment (DSA)

Revenue for the DSA segment was $540.1 million in the second quarter of 2021, an increase of 22.0% from $442.6 million in the second quarter of 2020. The impact of foreign currency translation contributed 3.0%, and the acquisitions of Distributed Bio and Retrogenix contributed 0.9% to DSA revenue growth. Organic revenue growth of 18.1% was driven by strong demand in both the Discovery Services and Safety Assessment businesses from biotechnology and global biopharmaceutical clients, as well as a small benefit from the comparison to last year’s COVID-19 impact.

In the second quarter of 2021, the DSA segment’s GAAP operating margin increased to 19.4% from 16.3% in the second quarter of 2020, and on a non-GAAP basis, the operating margin increased to 23.5% from 23.2%. The GAAP and non-GAAP operating margin increases were driven primarily by operating leverage from higher revenue in both the Discovery Services and Safety Assessment businesses, partially offset by foreign currency translation. The impact of foreign currency translation reduced the DSA operating margin by approximately 150 basis points in the second quarter of 2021.

Manufacturing Solutions (Manufacturing)

Revenue for the Manufacturing segment was $197.8 million in the second quarter of 2021, an increase of 60.2% from $123.5 million in the second quarter of 2020. The impact of foreign currency translation contributed 5.4%, and the acquisition of Cognate BioServices (Cognate) contributed 28.2% to second-quarter Manufacturing revenue. Organic revenue growth of 26.6%, was driven primarily by robust demand in the Biologics Testing Solutions and Microbial Solutions businesses.

In the second quarter of 2021, the Manufacturing segment’s GAAP operating margin decreased to 28.7% from 34.8% in the second quarter of 2020, and on a non-GAAP basis, the operating margin decreased to 33.2% from 37.4%. The GAAP and non-GAAP operating margin decreases were driven primarily by the addition of Cognate, as well as higher production costs in the Microbial Solutions business. In addition, the GAAP operating margin declined due to higher amortization costs associated with Cognate.

 

Increases 2021 Guidance

The Company is increasing its 2021 financial guidance, which was previously provided on May 4, 2021, primarily as a result of the stronger-than-expected second-quarter financial performance and an expectation that robust client demand trends will continue for the remainder of the year.

The Company’s increased guidance for revenue growth, earnings per share, and free cash flow is as follows:

2021 GUIDANCE

CURRENT

PRIOR

Revenue growth, reported

20.5% – 22.5%

19% – 21%

Less: Contribution from acquisitions (1)

~(5.0%)

(4.5%) – (5.0%)

Unfavorable/(favorable) impact of foreign exchange

~(2.5%)

~(2.5%)

Revenue growth, organic (2)

13% – 15%

12% – 14%

GAAP EPS estimate

$6.55$6.80

$5.95$6.20

Acquisition-related amortization (3)

$1.90$2.00

$2.15$2.40

Acquisition and integration-related adjustments (4)

$0.70$0.80

$0.75$0.80

Other items (5)

$0.70$0.75

~$0.55

Venture capital and other strategic investment losses/(gains), net (6)

$0.10

$0.25

Non-GAAP EPS estimate

$10.10$10.35

$9.75$10.00

Free cash flow (7)

~$500 million

~$435 million

Footnotes to Guidance Table:

(1) The contribution from acquisitions reflects only those acquisitions that have been completed.
(2) Organic revenue growth is defined as reported revenue growth adjusted for acquisitions and foreign currency translation.
(3) Acquisition-related amortization includes an estimate of $0.05-$0.10 for the impact of the Vigene acquisition because the preliminary purchase price allocation has not been completed.
(4) These adjustments are related to the evaluation and integration of acquisitions, and primarily include transaction, advisory, and certain third-party integration costs, as well as certain costs associated with acquisition-related efficiency initiatives.
(5) These items primarily relate to charges of a) approximately $0.30 associated with U.S. and international tax legislation, and b) approximately $0.40 associated with debt extinguishment costs and the write-off of deferred financing costs related to debt refinancing.
(6) Venture capital and other strategic investment performance only includes recognized gains or losses. The Company does not forecast the future performance of these investments.
(7) Reconciliation of the current 2021 free cash flow guidance is as follows: Cash flow from operating activities of approximately $720 million, less capital expenditures of approximately $220 million, equates to free cash flow of approximately $500 million.

 

Webcast

Charles River has scheduled a live webcast on Wednesday, August 4, at 9:30 a.m. ET to discuss matters relating to this press release. To participate, please go to ir.criver.com and select the webcast link. You can also find the associated slide presentation and reconciliations of GAAP financial measures to non-GAAP financial measures on the website.

Non-GAAP Reconciliations

The Company reports non-GAAP results in this press release, which exclude often-one-time charges and other 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.

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 and divestitures, as well as fair value adjustments associated with contingent consideration; charges, gains, and losses attributable to businesses or properties we plan to close, consolidate, or divest; severance and other costs associated with our efficiency initiatives; the impact of the termination of the Company’s U.S. pension plan; the write-off of deferred financing costs and fees related to debt financing; third-party costs associated with the remediation of unauthorized access into our information systems detected in March 2019; investment gains or losses associated with our venture capital and other strategic equity investments; and adjustments related to the recognition of deferred tax assets expected to be utilized as a result of changes to the our international financing structure and the revaluation of deferred tax liabilities as a result of foreign tax legislation. This press release also refers to our revenue in both a GAAP and non-GAAP basis: “organic revenue growth,” which we define as reported revenue growth adjusted for foreign currency translation, acquisitions, and divestitures. 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 presented 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 divestitures (and in certain cases, the evaluation of such acquisitions and divestitures, 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 and their underlying associated costs, such as business acquisitions, generally occur periodically but on an unpredictable basis. We calculate non-GAAP integration costs to include third-party integration costs incurred post-acquisition. Presenting revenue on an organic basis allows investors to measure our revenue growth exclusive of acquisitions, divestitures, and 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 presented 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,” “intend,” “will,” “would,” “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 the impact of the COVID-19 pandemic; the projected future financial performance of Charles River and our specific businesses; 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 completed in 2020 and 2021 on the Company, our service offerings, client perception, strategic relationships, revenue, revenue growth rates, and earnings; the development and performance of our services and products, including our investments in our portfolio; market and industry conditions including the outsourcing of services and spending trends by our clients; and Charles River’s future performance as delineated in our revised forward-looking guidance, and particularly our expectations with respect to revenue, the impact of foreign exchange, enhanced efficiency initiatives, and the assumptions surrounding the COVID-19 pandemic that form the basis for our revised annual guidance. 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 COVID-19 pandemic, its duration, its impact on our business, results of operations, financial condition, liquidity, business practices, operations, suppliers, third party service providers, clients, employees, industry, ability to meet future performance obligations, ability to efficiently implement advisable safety precautions, and internal controls over financial reporting; the COVID-19 pandemic’s impact on client demand, the global economy and financial markets; the ability to successfully integrate businesses we acquire (including Cognate BioServices and Vigene Biosciences, and risks and uncertainties associated with Cognate’s and Vigene’s products and services, which are in areas that the Company did not previously operate); 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 FDA regulations; changes in law; the impact of Brexit; 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 17, 2021 and the Quarterly Report on Form 10-Q as filed on May 4, 2021, 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 press release except as required by law.

 

Assessment of COVID-19 Impact in 2020

In this press release, the Company has provided its assessment for the impact from the COVID-19 pandemic in 2020, including on the Company's revenue. This assessment was determined using methodologies, assumptions, and estimates that vary depending on the specific reporting segment and situation. For the Research Models and Services segment, the assessment was primarily based on comparisons to daily historical research model sales volumes prior to the COVID-19 pandemic and the subsequent reduction in research model order activity associated with our clients’ COVID-19 pandemic-related site closures and/or their reduced on-site activity, as well as our discussions with clients, particularly of our research model services and HemaCare businesses, with regard to revenue expectations and operational impacts from the COVID-19 pandemic. For the Discovery and Safety Assessment segment, the assessment was based on multiple factors including, but not limited to, discussions with clients with regard to the cause of delays to discovery projects and safety assessment studies, location-specific actions to ensure employee safety in our facilities, the impact of remote versus in-person activities and services, and supply chain delays and other resource constraints. For the Manufacturing Solutions segment, the assessment was based on multiple factors including, but not limited to, analysis of the sales impact due to the COVID-19 pandemic, assessments of idle instruments and the related revenue streams due to the inability to access clients’ sites, as well as discussions with clients with regard to their revenue expectations and operations. The estimated revenue loss related to COVID-19 was also expected to be partially offset by incremental work on clients’ COVID-19 programs. Because this assessment involves risks and uncertainties, actual events and results may differ materially from these estimates and assumptions, and Charles River assumes no obligation and expressly disclaims any duty to update them.

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.
                 
SCHEDULE 1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except for per share data)
                 
    Three Months Ended   Six Months Ended
    June 26, 2021   June 27, 2020   June 26, 2021   June 27, 2020
                 
Service revenue  

$

715,320

 

 

$

550,561

 

 

$

1,341,901

 

 

$

1,097,153

 

Product revenue  

 

199,287

 

 

 

132,023

 

 

 

397,272

 

 

 

292,490

 

Total revenue  

 

914,607

 

 

 

682,584

 

 

 

1,739,173

 

 

 

1,389,643

 

Costs and expenses:                
Cost of services provided (excluding amortization of intangible assets)  

 

476,762

 

 

 

374,938

 

 

 

900,737

 

 

 

747,762

 

Cost of products sold (excluding amortization of intangible assets)  

 

95,824

 

 

 

75,408

 

 

 

188,137

 

 

 

157,582

 

Selling, general and administrative  

 

171,501

 

 

 

127,712

 

 

 

327,234

 

 

 

257,613

 

Amortization of intangible assets  

 

32,970

 

 

 

27,758

 

 

 

61,812

 

 

 

55,637

 

Operating income  

 

137,550

 

 

 

76,768

 

 

 

261,253

 

 

 

171,049

 

Other income (expense):                
Interest income  

 

171

 

 

 

276

 

 

 

206

 

 

 

592

 

Interest expense  

 

(16,190

)

 

 

(19,352

)

 

 

(45,909

)

 

 

(34,419

)

Other income (expense), net  

 

5,965

 

 

 

26,260

 

 

 

(21,752

)

 

 

2,189

 

Income before income taxes  

 

127,496

 

 

 

83,952

 

 

 

193,798

 

 

 

139,411

 

Provision for income taxes  

 

37,580

 

 

 

16,284

 

 

 

39,947

 

 

 

20,906

 

Net income  

 

89,916

 

 

 

67,668

 

 

 

153,851

 

 

 

118,505

 

Less: Net income attributable to noncontrolling interests  

 

1,468

 

 

 

233

 

 

 

3,873

 

 

 

301

 

Net income attributable to common shareholders  

$

88,448

 

 

$

67,435

 

 

$

149,978

 

 

$

118,204

 

                 
Earnings per common share                
Net income attributable to common shareholders:                
Basic  

$

1.76

 

 

$

1.36

 

 

$

2.99

 

 

$

2.39

 

Diluted  

$

1.72

 

 

$

1.34

 

 

$

2.93

 

 

$

2.36

 

                 
Weighted-average number of common shares outstanding;                
Basic  

 

50,297

 

 

 

49,553

 

 

 

50,138

 

 

 

49,371

 

Diluted  

 

51,334

 

 

 

50,246

 

 

 

51,225

 

 

 

50,118

 

 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
         
SCHEDULE 2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)
         
    June 26, 2021   December 26, 2020
Assets        
Current assets:        
Cash and cash equivalents  

$

222,969

 

 

$

228,424

 

Trade receivables and contract assets, net of allowances for doubtful accounts of $7,538 and $6,702, respectively  

 

644,027

 

 

 

617,740

 

Inventories  

 

194,341

 

 

 

185,695

 

Prepaid assets  

 

84,610

 

 

 

96,712

 

Other current assets  

 

121,966

 

 

 

72,560

 

Total current assets  

 

1,267,913

 

 

 

1,201,131

 

Property, plant and equipment, net  

 

1,189,120

 

 

 

1,124,358

 

Operating lease right-of-use assets, net  

 

276,820

 

 

 

178,220

 

Goodwill  

 

2,540,067

 

 

 

1,809,168

 

Client relationships, net  

 

964,324

 

 

 

721,505

 

Other intangible assets, net  

 

92,451

 

 

 

66,094

 

Deferred tax assets  

 

31,863

 

 

 

37,729

 

Other assets  

 

357,794

 

 

 

352,626

 

Total assets  

$

6,720,352

 

 

$

5,490,831

 

         
Liabilities, Redeemable Noncontrolling Interests and Equity        
Current liabilities:        
Current portion of long-term debt and finance leases  

$

3,021

 

 

$

50,214

 

Accounts payable  

 

110,926

 

 

 

122,475

 

Accrued compensation  

 

223,063

 

 

 

206,823

 

Deferred revenue  

 

231,329

 

 

 

207,942

 

Accrued liabilities  

 

228,972

 

 

 

149,820

 

Other current liabilities  

 

132,299

 

 

 

102,477

 

Total current liabilities  

 

929,610

 

 

 

839,751

 

Long-term debt, net and finance leases  

 

2,727,240

 

 

 

1,929,571

 

Operating lease right-of-use liabilities  

 

239,484

 

 

 

155,595

 

Deferred tax liabilities  

 

262,562

 

 

 

217,031

 

Other long-term liabilities  

 

207,377

 

 

 

205,215

 

Total liabilities  

 

4,366,273

 

 

 

3,347,163

 

Redeemable noncontrolling interests  

 

30,799

 

 

 

25,499

 

Equity:        
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding  

 

-

 

 

 

-

 

Common stock, $0.01 par value; 120,000 shares authorized; 50,538 shares issued and 50,391 shares outstanding as of June 26, 2021, and 49,767 shares issued and outstanding as of December 26, 2020  

 

505

 

 

 

498

 

Additional paid-in capital  

 

1,690,861

 

 

 

1,627,564

 

Retained earnings  

 

775,392

 

 

 

625,414

 

Treasury stock, at cost, 147 and 0 shares, as of June 26, 2021 and December 26, 2020, respectively  

 

(40,297

)

 

 

-

 

Accumulated other comprehensive loss  

 

(108,021

)

 

 

(138,874

)

Total equity attributable to common shareholders  

 

2,318,440

 

 

 

2,114,602

 

Noncontrolling interest  

 

4,840

 

 

 

3,567

 

Total equity  

 

2,323,280

 

 

 

2,118,169

 

Total liabilities, redeemable noncontrolling interests and equity  

$

6,720,352

 

 

$

5,490,831

 

 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
         
SCHEDULE 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
         
    Six Months Ended
    June 26, 2021   June 27, 2020
Cash flows relating to operating activities        
Net income  

$

153,851

 

 

$

118,505

 

Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  

 

129,613

 

 

 

114,468

 

Stock-based compensation  

 

30,266

 

 

 

24,103

 

Debt extinguishment and financing costs  

 

27,980

 

 

 

-

 

Deferred income taxes  

 

8,891

 

 

 

148

 

Loss (gain) on venture capital and strategic equity investments, net  

 

6,910

 

 

 

(11,876

)

Other, net  

 

(475

)

 

 

10,487

 

Changes in assets and liabilities:        
Trade receivables and contract assets, net  

 

(5,224

)

 

 

(19,371

)

Inventories  

 

(7,107

)

 

 

(1,901

)

Accounts payable  

 

(13,383

)

 

 

(25,619

)

Accrued compensation  

 

13,932

 

 

 

8,728

 

Deferred revenue  

 

502

 

 

 

(3,273

)

Customer contract deposits  

 

(2,032

)

 

 

8,276

 

Other assets and liabilities, net  

 

13,095

 

 

 

8,221

 

Net cash provided by operating activities  

 

356,819

 

 

 

230,896

 

Cash flows relating to investing activities        
Acquisition of businesses and assets, net of cash acquired  

 

(1,000,505

)

 

 

(382,250

)

Capital expenditures  

 

(74,461

)

 

 

(52,521

)

Purchases of investments and contributions to venture capital investments  

 

(23,266

)

 

 

(12,064

)

Proceeds from sale of investments  

 

5,204

 

 

 

5,681

 

Other, net  

 

839

 

 

 

(1,157

)

Net cash used in investing activities  

 

(1,092,189

)

 

 

(442,311

)

Cash flows relating to financing activities        
Proceeds from long-term debt and revolving credit facility  

 

4,999,942

 

 

 

1,411,953

 

Proceeds from exercises of stock options  

 

35,298

 

 

 

36,608

 

Payments on long-term debt, revolving credit facility, and finance lease obligations  

 

(4,241,772

)

 

 

(1,045,235

)

Purchase of treasury stock  

 

(40,297

)

 

 

(23,793

)

Payment of debt extinguishment and financing costs  

 

(38,166

)

 

 

-

 

Other, net  

 

(2,330

)

 

 

(4,417

)

Net cash provided by financing activities  

 

712,675

 

 

 

375,116

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash  

 

17,066

 

 

 

295

 

Net change in cash, cash equivalents, and restricted cash  

 

(5,629

)

 

 

163,996

 

Cash, cash equivalents, and restricted cash, beginning of period  

 

233,119

 

 

 

240,046

 

Cash, cash equivalents, and restricted cash, end of period  

$

227,490

 

 

$

404,042

 

         
Supplemental cash flow information:        
Cash and cash equivalents  

$

222,969

 

 

$

402,020

 

Restricted cash included in Other current assets  

 

3,118

 

 

 

465

 

Restricted cash included in Other assets  

 

1,403

 

 

 

1,557

 

Cash, cash equivalents, and restricted cash, end of period  

$

227,490

 

 

$

404,042

 

 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
                 
SCHEDULE 4
RECONCILIATION OF GAAP TO NON-GAAP
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)(1)
(in thousands, except percentages)
                 
    Three Months Ended   Six Months Ended
    June 26, 2021   June 27, 2020   June 26, 2021   June 27, 2020
Research Models and Services                
Revenue  

$

176,694

 

 

$

116,549

 

 

$

353,604

 

 

$

262,545

 

Operating income  

 

42,580

 

 

 

3,844

 

 

 

87,515

 

 

 

31,217

 

Operating income as a % of revenue  

 

24.1

%

 

 

3.3

%

 

 

24.7

%

 

 

11.9

%

Add back:                
Amortization related to acquisitions  

 

5,346

 

 

 

5,919

 

 

 

10,685

 

 

 

11,571

 

Severance  

 

-

 

 

 

509

 

 

 

7

 

 

 

500

 

Acquisition related adjustments (2)  

 

520

 

 

 

292

 

 

 

976

 

 

 

577

 

Site consolidation costs, impairments and other items  

 

-

 

 

 

30

 

 

 

-

 

 

 

259

 

Total non-GAAP adjustments to operating income  

$

5,866

 

 

$

6,750

 

 

$

11,668

 

 

$

12,907

 

Operating income, excluding non-GAAP adjustments  

$

48,446

 

 

$

10,594

 

 

$

99,183

 

 

$

44,124

 

Non-GAAP operating income as a % of revenue  

 

27.4

%

 

 

9.1

%

 

 

28.0

%

 

 

16.8

%

                 
Depreciation and amortization  

$

9,844

 

 

$

9,126

 

 

$

19,523

 

 

$

17,878

 

Capital expenditures  

$

8,512

 

 

$

6,621

 

 

$

11,495

 

 

$

12,033

 

                 
Discovery and Safety Assessment                
Revenue  

$

540,094

 

 

$

442,564

 

 

$

1,041,272

 

 

$

881,247

 

Operating income  

 

104,514

 

 

 

72,241

 

 

 

195,463

 

 

 

144,524

 

Operating income as a % of revenue  

 

19.4

%

 

 

16.3

%

 

 

18.8

%

 

 

16.4

%

Add back:                
Amortization related to acquisitions  

 

21,176

 

 

 

23,128

 

 

 

43,824

 

 

 

46,135

 

Severance  

 

928

 

 

 

3,481

 

 

 

1,340

 

 

 

3,564

 

Acquisition related adjustments (2)  

 

404

 

 

 

1,095

 

 

 

5,674

 

 

 

2,384

 

Site consolidation costs, impairments and other items  

 

146

 

 

 

2,934

 

 

 

293

 

 

 

2,934

 

Total non-GAAP adjustments to operating income  

$

22,654

 

 

$

30,638

 

 

$

51,131

 

 

$

55,017

 

Operating income, excluding non-GAAP adjustments  

$

127,168

 

 

$

102,879

 

 

$

246,594

 

 

$

199,541

 

Non-GAAP operating income as a % of revenue  

 

23.5

%

 

 

23.2

%

 

 

23.7

%

 

 

22.6

%

                 
Depreciation and amortization  

$

43,588

 

 

$

41,101

 

 

$

88,196

 

 

$

82,431

 

Capital expenditures  

$

20,473

 

 

$

16,175

 

 

$

37,513

 

 

$

30,904

 

                 
Manufacturing Solutions                
Revenue  

$

197,819

 

 

$

123,471

 

 

$

344,297

 

 

$

245,851

 

Operating income  

 

56,717

 

 

 

42,930

 

 

 

106,154

 

 

 

84,042

 

Operating income as a % of revenue  

 

28.7

%

 

 

34.8

%

 

 

30.8

%

 

 

34.2

%

Add back:                
Amortization related to acquisitions  

 

7,812

 

 

 

2,217

 

 

 

10,026

 

 

 

4,464

 

Severance  

 

535

 

 

 

1,396

 

 

 

829

 

 

 

1,652

 

Acquisition related adjustments (2)  

 

686

 

 

 

(423

)

 

 

728

 

 

 

(421

)

Site consolidation costs, impairments and other items  

 

-

 

 

 

-

 

 

 

40

 

 

 

-

 

Total non-GAAP adjustments to operating income  

$

9,033

 

 

$

3,190

 

 

$

11,623

 

 

$

5,695

 

Operating income, excluding non-GAAP adjustments  

$

65,750

 

 

$

46,120

 

 

$

117,777

 

 

$

89,737

 

Non-GAAP operating income as a % of revenue  

 

33.2

%

 

 

37.4

%

 

 

34.2

%

 

 

36.5

%

                 
Depreciation and amortization  

$

13,952

 

 

$

6,236

 

 

$

20,521

 

 

$

12,602

 

Capital expenditures  

$

13,602

 

 

$

3,037

 

 

$

20,712

 

 

$

8,198

 

                 
Unallocated Corporate Overhead  

$

(66,261

)

 

$

(42,247

)

 

$

(127,879

)

 

$

(88,734

)

Add back:                
Severance  

 

-

 

 

 

-

 

 

 

(151

)

 

 

-

 

Acquisition related adjustments (2)  

 

15,064

 

 

 

869

 

 

 

25,624

 

 

 

7,852

 

Other items (3)  

 

-

 

 

 

(463

)

 

 

-

 

 

 

(750

)

Total non-GAAP adjustments to operating expense  

$

15,064

 

 

$

406

 

 

$

25,473

 

 

$

7,102

 

Unallocated corporate overhead, excluding non-GAAP adjustments  

$

(51,197

)

 

$

(41,841

)

 

$

(102,406

)

 

$

(81,632

)

                 
Total                
Revenue  

$

914,607

 

 

$

682,584

 

 

$

1,739,173

 

 

$

1,389,643

 

Operating income  

 

137,550

 

 

 

76,768

 

 

 

261,253

 

 

 

171,049

 

Operating income as a % of revenue  

 

15.0

%

 

 

11.2

%

 

 

15.0

%

 

 

12.3

%

Add back:                
Amortization related to acquisitions  

 

34,334

 

 

 

31,264

 

 

 

64,535

 

 

 

62,170

 

Severance  

 

1,463

 

 

 

5,386

 

 

 

2,025

 

 

 

5,716

 

Acquisition related adjustments (2)  

 

16,674

 

 

 

1,833

 

 

 

33,002

 

 

 

10,392

 

Site consolidation costs, impairments and other items (3)  

 

146

 

 

 

2,501

 

 

 

333

 

 

 

2,443

 

Total non-GAAP adjustments to operating income  

$

52,617

 

 

$

40,984

 

 

$

99,895

 

 

$

80,721

 

Operating income, excluding non-GAAP adjustments  

$

190,167

 

 

$

117,752

 

 

$

361,148

 

 

$

251,770

 

Non-GAAP operating income as a % of revenue  

 

20.8

%

 

 

17.3

%

 

 

20.8

%

 

 

18.1

%

                 
Depreciation and amortization  

$

68,106

 

 

$

57,208

 

 

$

129,613

 

 

$

114,468

 

Capital expenditures  

$

46,431

 

 

$

26,800

 

 

$

74,461

 

 

$

52,521

 

(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 often-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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(2)

  These adjustments are related to the evaluation and integration of acquisitions, which primarily include transaction, third-party integration, and certain compensation costs, and fair value adjustments associated with contingent consideration.

(3)

  Other items relate to third-party costs, net of insurance reimbursements, incurred during the three and six months ended June 27, 2020 associated with the remediation of the unauthorized access into the Company's information systems which was detected in March 2019.
 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
                 
SCHEDULE 5
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (UNAUDITED)(1)
(in thousands, except per share data)
                 
    Three Months Ended   Six Months Ended
    June 26, 2021   June 27, 2020   June 26, 2021   June 27, 2020
                 
Net income attributable to common shareholders  

$

88,448

 

 

$

67,435

 

 

$

149,978

 

 

$

118,204

 

Add back:                
Non-GAAP adjustments to operating income (Refer to previous schedule)  

 

52,617

 

 

 

40,984

 

 

 

99,895

 

 

 

80,721

 

Write-off of deferred financing costs and fees related to debt financing  

 

110

 

 

 

-

 

 

 

26,089

 

 

 

-

 

Venture capital and strategic equity investment (gains) losses, net  

 

(9,809

)

 

 

(23,911

)

 

 

6,910

 

 

 

(11,876

)

Other (2)  

 

(572

)

 

 

-

 

 

 

(2,942

)

 

 

-

 

Tax effect of non-GAAP adjustments:                
Non-cash tax provision related to international financing structure (3)  

 

1,285

 

 

 

1,113

 

 

 

2,320

 

 

 

2,186

 

Enacted tax law changes  

 

10,036

 

 

 

-

 

 

 

10,036

 

 

 

-

 

Tax effect of the remaining non-GAAP adjustments  

 

(8,316

)

 

 

(6,020

)

 

 

(29,329

)

 

 

(17,824

)

Net income attributable to common shareholders, excluding non-GAAP adjustments  

$

133,799

 

 

$

79,601

 

 

$

262,957

 

 

$

171,411

 

                 
Weighted average shares outstanding - Basic  

 

50,297

 

 

 

49,553

 

 

 

50,138

 

 

 

49,371

 

Effect of dilutive securities:                
Stock options, restricted stock units and performance share units  

 

1,037

 

 

 

693

 

 

 

1,087

 

 

 

747

 

Weighted average shares outstanding - Diluted  

 

51,334

 

 

 

50,246

 

 

 

51,225

 

 

 

50,118

 

                 
Earnings per share attributable to common shareholders:                
Basic  

$

1.76

 

 

$

1.36

 

 

$

2.99

 

 

$

2.39

 

Diluted  

$

1.72

 

 

$

1.34

 

 

$

2.93

 

 

$

2.36

 

                 
Basic, excluding non-GAAP adjustments  

$

2.66

 

 

$

1.61

 

 

$

5.24

 

 

$

3.47

 

Diluted, excluding non-GAAP adjustments  

$

2.61

 

 

$

1.58

 

 

$

5.13

 

 

$

3.42

 

(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 often-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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(2)

  Includes adjustments related to the gain on an immaterial divestiture and the finalization of the annuity purchase related to the termination of the Company's U.S. pension plan.

(3)

  This adjustment relates to the recognition of deferred tax assets expected to be utilized as a result of changes to the Company's international financing structure.
 
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

 

 

 

 

 

 

 

 

 

SCHEDULE 6

RECONCILIATION OF GAAP REVENUE GROWTH

TO NON-GAAP REVENUE GROWTH, ORGANIC (UNAUDITED) (1)

                 
                 
Three Months Ended June 26, 2021   Total CRL   RMS Segment   DSA Segment   MS Segment
                 
Revenue growth, reported  

34.0

%

 

51.6

%

 

22.0

%

 

60.2

%

Decrease (increase) due to foreign exchange  

(3.9

)%

 

(5.2

)%

 

(3.0

)%

 

(5.4

)%

Contribution from acquisitions (2)  

(6.0

)%

 

(1.9

)%

 

(0.9

)%

 

(28.2

)%

Non-GAAP revenue growth, organic (3)  

24.1

%

 

44.5

%

 

18.1

%

 

26.6

%

                 
Six Months Ended June 26, 2021   Total CRL   RMS Segment   DSA Segment   MS Segment
                 
Revenue growth, reported  

25.2

%

 

34.7

%

 

18.2

%

 

40.0

%

Decrease (increase) due to foreign exchange  

(3.4

)%

 

(4.6

)%

 

(2.7

)%

 

(4.7

)%

Contribution from acquisitions (2)  

(3.3

)%

 

(2.1

)%

 

(0.6

)%

 

(14.2

)%

Non-GAAP revenue growth, organic (3)  

18.5

%

 

28.0

%

 

14.9

%

 

21.1

%

(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 often-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 U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.

(2)

  The contribution from acquisitions reflects only completed acquisitions.

(3)

  Organic revenue growth is defined as reported revenue growth adjusted for acquisitions and foreign exchange.

 

Investors:
Todd Spencer
Corporate Vice President,
Investor Relations
781.222.6455
todd.spencer@crl.com

Media:
Amy Cianciaruso
Corporate Vice President,
Public Relations
781.222.6168
amy.cianciaruso@crl.com

Source: Charles River Laboratories International, Inc.

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