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Charles River Laboratories Announces Third-Quarter 2014 Results from Continuing Operations
– Third-Quarter Revenue of
– Third-Quarter GAAP Earnings per Share of
– Updates EPS Guidance for 2014 –
–
– Announces Management Promotions –
On a GAAP basis, net income from continuing operations for the third
quarter of 2014 was
On a non-GAAP basis, net income from continuing operations was
“We are continuing to expand our portfolio with key strategic
acquisitions, and I’m pleased to announce today that we have acquired
Third-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was
In the third quarter of 2014, the RMS segment’s GAAP operating margin was 22.6% compared to 19.2% in the third quarter of 2013. On a non-GAAP basis, the operating margin decreased slightly to 25.4% from 25.7% in the third quarter of 2013. The decrease was primarily driven by a change in sales mix for research model services, partially offset by the benefits from our global efficiency initiatives.
Discovery and Safety Assessment (DSA)
Third-quarter 2014 revenue from continuing operations for the DSA
segment was
In the third quarter of 2014, the DSA segment’s GAAP operating margin was 13.7% compared to 16.8% in the third quarter of 2013. On a non-GAAP basis, the operating margin decreased to 18.3% from 20.0% in the third quarter of 2013. The non-GAAP operating margin compared unfavorably to the third quarter of 2013, due primarily to several tax-related items that provided a larger benefit in the prior period (130 basis points in the third quarter of 2014 vs. 390 basis points in the third quarter of 2013). The decline was partially offset by a foreign exchange benefit in the third quarter of 2014 due to a weaker Canadian dollar.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was
In the third quarter of 2014, the Manufacturing segment’s GAAP operating margin was 30.7% compared to 29.2% in the third quarter of 2013. On a non-GAAP basis, the operating margin increased to 33.0% from 31.7% in the third quarter of 2013. The operating margin improvement was driven by both the Endotoxin and Microbial Detection and Biologics Testing Solutions businesses.
Acquisition of
On
The purchase price was
Management Promotions
As part of the Company’s continued efforts to streamline our organization and enhance our ability to support our clients’ outsourced integrated drug discovery programs, Charles River has integrated its Early Discovery and In Vivo Discovery operations within Charles River Discovery Services. Our clients’ drug discovery efforts are an iterative and continuous process, and one seamless discovery organization will allow us to better engage with clients at the earliest stages of drug discovery and support their complex scientific needs.
Charles River has also promoted
Mr. Foster said, “Mr. Smith and Mr. LaPlume have made significant contributions to Charles River, which have expanded the Company’s unique portfolio of essential products and services, and greatly enhanced the value that we can provide to clients. I am confident that with their leadership, we will continue to identify opportunities to enhance our position as a market leader in discovery and early-stage drug development, and drive profitable growth.”
Stock Repurchase Update
During the third quarter of 2014, the Company repurchased 380,300 shares
of its common stock for
Nine-Month Results
For the first nine months of 2014, revenue increased by 10.5% to
On a GAAP basis, net income from continuing operations for the first
nine months of 2014 was
On a non-GAAP basis, net income from continuing operations for the first
nine months of 2014 was
Research Models and Services (RMS)
For the first nine months of 2014, RMS revenue was
Discovery and Safety Assessment (DSA)
For the first nine months of 2014, DSA revenue was
Manufacturing Support (Manufacturing)
For the first nine months of 2014, Manufacturing revenue was
2014 Guidance
The Company is updating its 2014 forward-looking guidance based on continuing operations. The Company continues to expect foreign currency translation to provide only a small benefit to reported revenue. The outlook for the fourth quarter assumes normal seasonality in the RMS segment.
2014 GUIDANCE (from continuing operations) | REVISED | PRIOR | ||||||
Net revenue growth, reported | 10.0% – 11.0% | 9.0% – 11.0% | ||||||
Impact of foreign exchange | N/M | N/M | ||||||
Net revenue growth, constant currency | 10.0% - 11.0% | 9.0% - 11.0% | ||||||
GAAP EPS estimate | $2.65 - $2.70 | $2.60 - $2.70 | ||||||
Amortization of intangible assets | $0.39 | $0.36 | ||||||
Operating losses and other items (1) | $0.06 | $0.06 | ||||||
Charges related to global efficiency initiative (2) | $0.16-$0.18 | $0.16-$0.18 | ||||||
Costs associated with evaluation and integration of acquisitions | $0.07 | $0.06 | ||||||
Non-GAAP EPS estimate | $3.33 - $3.38 | $3.25 - $3.35 |
(1) These costs relate primarily to the Company’s
(2) These charges relate primarily to the consolidation of research model production operations and other efficiency initiatives. Other projects in support of the global efficiency initiative 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; 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.
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, 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; the
acquisition of ChanTest and the integration of ChanTest, Argenta and
BioFocus, and our expectations with respect to their impact on the
Company, our service offerings, strategic relationships, revenue,
revenue growth rates, and earnings; the development and performance of
our services and products, including the impact this can have on our
clients’ drug development models; 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 | Nine Months Ended | |||||||||||||||||||||
September 27, |
September 28, |
September 27, |
September 28, |
|||||||||||||||||||
Total revenue | $ | 327,567 | $ | 292,129 | $ | 968,114 | $ | 876,300 | ||||||||||||||
Cost of products sold and services provided | 209,299 | 192,203 | 615,399 | 569,593 | ||||||||||||||||||
Gross margin | 118,268 | 99,926 | 352,715 | 306,707 | ||||||||||||||||||
Selling, general and administrative | 64,476 | 54,903 | 196,999 | 167,021 | ||||||||||||||||||
Amortization of intangibles | 7,620 | 4,180 | 18,813 | 12,892 | ||||||||||||||||||
Operating income | 46,172 | 40,843 | 136,903 | 126,794 | ||||||||||||||||||
Interest income (expense) | (2,621 | ) | (2,176 | ) | (8,368 | ) | (17,667 | ) | ||||||||||||||
Other income (expense), net | 331 | 4,059 | 8,874 | 6,094 | ||||||||||||||||||
Income from continuing operations before income taxes | 43,882 | 42,726 | 137,409 | 115,221 | ||||||||||||||||||
Provision for income taxes | 11,582 | 11,390 | 36,021 | 29,331 | ||||||||||||||||||
Income from continuing operations, net of income taxes | 32,300 | 31,336 | 101,388 | 85,890 | ||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | 52 | (113 | ) | (862 | ) | (1,183 | ) | |||||||||||||||
Net income | 32,352 | 31,223 | 100,526 | 84,707 | ||||||||||||||||||
Net income attributable to noncontrolling interests | (316 | ) | (356 | ) | (994 | ) | (978 | ) | ||||||||||||||
Net income attributable to common shareowners | $ | 32,036 | $ | 30,867 | $ | 99,532 | $ | 83,729 | ||||||||||||||
Earnings per common share | ||||||||||||||||||||||
Basic: | ||||||||||||||||||||||
Continuing operations | $ | 0.70 | $ | 0.65 | $ | 2.15 | $ | 1.77 | ||||||||||||||
Discontinued operations | $ | - | $ | - | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||||||
Net | $ | 0.70 | $ | 0.64 | $ | 2.13 | $ | 1.75 | ||||||||||||||
Diluted: | ||||||||||||||||||||||
Continuing operations | $ | 0.68 | $ | 0.64 | $ | 2.11 | $ | 1.75 | ||||||||||||||
Discontinued operations | $ | - | $ | - | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||||||
Net | $ | 0.68 | $ | 0.64 | $ | 2.09 | $ | 1.72 | ||||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||
Basic | 46,016,036 | 47,910,649 | 46,682,826 | 47,950,018 | ||||||||||||||||||
Diluted | 46,877,730 | 48,441,165 | 47,565,834 | 48,654,136 | ||||||||||||||||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||
(in thousands) | |||||||||
September 27, 2014 | December 28, 2013 | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 130,747 | $ | 155,927 | |||||
Trade receivables, net | 275,024 | 220,630 | |||||||
Inventories | 92,695 | 89,396 | |||||||
Other current assets | 106,718 | 85,847 | |||||||
Current assets of discontinued businesses | 835 | 750 | |||||||
Total current assets | 606,019 | 552,550 | |||||||
Property, plant and equipment, net | 671,244 | 676,182 | |||||||
Goodwill, net | 289,356 | 230,701 | |||||||
Other intangibles, net | 167,545 | 84,537 | |||||||
Deferred tax asset | 21,215 | 23,671 | |||||||
Other assets | 83,873 | 61,964 | |||||||
Long-term assets of discontinued businesses | 3,106 | 3,151 | |||||||
Total assets | $ | 1,842,358 | $ | 1,632,756 | |||||
Liabilities and Equity | |||||||||
Current liabilities | |||||||||
Current portion of long-term debt and capital leases | $ | 31,917 | $ | 21,437 | |||||
Accounts payable | 27,547 | 31,770 | |||||||
Accrued compensation | 69,616 | 58,461 | |||||||
Deferred revenue | 66,920 | 54,177 | |||||||
Accrued liabilities | 69,516 | 56,712 | |||||||
Other current liabilities | 15,508 | 22,546 | |||||||
Current liabilities of discontinued businesses | 2,059 | 1,931 | |||||||
Total current liabilities | 283,083 | 247,034 | |||||||
Long-term debt & capital leases | 754,799 | 642,352 | |||||||
Other long-term liabilities | 98,219 | 70,632 | |||||||
Long-term liabilities of discontinued businesses | 7,876 | 8,080 | |||||||
Total liabilities | 1,143,977 | 968,098 | |||||||
Redeemable non-controlling interest | 24,550 | 20,581 | |||||||
Total shareholders' equity | 670,296 | 640,984 | |||||||
Non-controlling interest | 3,535 | 3,093 | |||||||
Total liabilities and equity | $ | 1,842,358 | $ | 1,632,756 | |||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||||||||
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 27,
2014 |
September 28,
2013 |
September 27,
2014 |
September 28,
2013 |
||||||||||||||||||||
Research Models and Services | |||||||||||||||||||||||
Revenue | $ | 124,021 | $ | 124,236 | $ | 389,636 | $ | 388,868 | |||||||||||||||
Gross margin | 45,295 | 39,127 | 149,392 | 143,603 | |||||||||||||||||||
Gross margin as a % of revenue | 36.5 | % | 31.5 | % | 38.3 | % | 36.9 | % | |||||||||||||||
Operating income | 28,056 | 23,803 | 97,734 | 97,576 | |||||||||||||||||||
Operating income as a % of revenue | 22.6 | % | 19.2 | % | 25.1 | % | 25.1 | % | |||||||||||||||
Depreciation and amortization | 7,277 | 13,548 | 20,277 | 27,642 | |||||||||||||||||||
Capital expenditures | 4,110 | 4,208 | 11,528 | 10,417 | |||||||||||||||||||
Discovery and Safety Assessment | |||||||||||||||||||||||
Revenue | $ | 140,862 | $ | 112,627 | $ | 388,614 | $ | 321,908 | |||||||||||||||
Gross margin | 39,968 | 33,061 | 105,084 | 81,112 | |||||||||||||||||||
Gross margin as a % of revenue | 28.4 | % | 29.4 | % | 27.0 | % | 25.2 | % | |||||||||||||||
Operating income | 19,329 | 18,968 | 48,840 | 38,672 | |||||||||||||||||||
Operating income as a % of revenue | 13.7 | % | 16.8 | % | 12.6 | % | 12.0 | % | |||||||||||||||
Depreciation and amortization | 13,340 | 9,486 | 33,867 | 28,269 | |||||||||||||||||||
Capital expenditures | 3,436 | 2,459 | 11,330 | 7,315 | |||||||||||||||||||
Manufacturing Support | |||||||||||||||||||||||
Revenue | $ | 62,684 | $ | 55,266 | $ | 189,864 | $ | 165,524 | |||||||||||||||
Gross margin | 33,005 | 27,738 | 98,239 | 81,992 | |||||||||||||||||||
Gross margin as a % of revenue | 52.7 | % | 50.2 | % | 51.7 | % | 49.5 | % | |||||||||||||||
Operating income | 19,220 | 16,125 | 58,091 | 46,576 | |||||||||||||||||||
Operating income as a % of revenue | 30.7 | % | 29.2 | % | 30.6 | % | 28.1 | % | |||||||||||||||
Depreciation and amortization | 3,513 | 3,881 | 10,625 | 11,424 | |||||||||||||||||||
Capital expenditures | 1,463 | 2,429 | 5,444 | 7,587 | |||||||||||||||||||
Unallocated Corporate Overhead | $ | (20,433 | ) | $ | (18,053 | ) | $ | (67,762 | ) | $ | (56,030 | ) | |||||||||||
Total | |||||||||||||||||||||||
Revenue | $ | 327,567 | $ | 292,129 | $ | 968,114 | $ | 876,300 | |||||||||||||||
Gross margin | 118,268 | 99,926 | 352,715 | 306,707 | |||||||||||||||||||
Gross margin as a % of revenue | 36.1 | % | 34.2 | % | 36.4 | % | 35.0 | % | |||||||||||||||
Operating income | 46,172 | 40,843 | 136,903 | 126,794 | |||||||||||||||||||
Operating income as a % of revenue | 14.1 | % | 14.0 | % | 14.1 | % | 14.5 | % | |||||||||||||||
Depreciation and amortization | 26,084 | 26,915 | 70,435 | 67,335 | |||||||||||||||||||
Capital expenditures | 9,402 | 9,096 | 29,907 | 25,319 | |||||||||||||||||||
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||||
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) |
||||||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 27, 2014 |
September 28, 2013 |
September 27, 2014 |
September 28, 2013 |
|||||||||||||||||||
Research Models and Services | ||||||||||||||||||||||
Revenue | $ | 124,021 | $ | 124,236 | $ | 389,636 | $ | 388,868 | ||||||||||||||
Add back government billing adjustment | - | - | - | 1,495 | ||||||||||||||||||
Non-GAAP revenue | $ | 124,021 | $ | 124,236 | $ | 389,636 | $ | 390,363 | ||||||||||||||
Operating income | 28,056 | 23,803 | 97,734 | 97,576 | ||||||||||||||||||
Operating income as a % of revenue | 22.6 | % | 19.2 | % | 25.1 | % | 25.1 | % | ||||||||||||||
Add back: | ||||||||||||||||||||||
Amortization of intangible assets related to acquisitions | 470 | 457 | 2,015 | 1,702 | ||||||||||||||||||
Severance related to cost-savings actions | 379 | 32 | 3,974 | 301 | ||||||||||||||||||
Government billing adjustment and related expenses | 214 | 321 | 294 | 2,176 | ||||||||||||||||||
Impairment and other items(2) | 2,402 | 7,238 | 5,107 | 7,238 | ||||||||||||||||||
Operating losses(3) | - | 47 | 27 | 256 | ||||||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 31,521 | $ | 31,898 | $ | 109,151 | $ | 109,249 | ||||||||||||||
Non-GAAP operating income as a % of non-GAAP revenue | 25.4 | % | 25.7 | % | 28.0 | % | 28.0 | % | ||||||||||||||
Discovery and Safety Assessment | ||||||||||||||||||||||
Revenue | $ | 140,862 | $ | 112,627 | $ | 388,614 | $ | 321,908 | ||||||||||||||
Operating income | 19,329 | 18,968 | 48,840 | 38,672 | ||||||||||||||||||
Operating income as a % of revenue | 13.7 | % | 16.8 | % | 12.6 | % | 12.0 | % | ||||||||||||||
Add back: | ||||||||||||||||||||||
Amortization of intangible assets related to acquisitions | 5,789 | 2,383 | 12,652 | 7,192 | ||||||||||||||||||
Severance related to cost-savings actions | 69 | 397 | 1,118 | 710 | ||||||||||||||||||
Operating losses(3) | 606 | 737 | 1,981 | 2,472 | ||||||||||||||||||
Costs associated with the evaluation and integration of acquisitions | (7 | ) | - | 196 | - | |||||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 25,786 | $ | 22,485 | $ | 64,787 | $ | 49,046 | ||||||||||||||
Non-GAAP operating income as a % of revenue | 18.3 | % | 20.0 | % | 16.7 | % | 15.2 | % | ||||||||||||||
Manufacturing Support | ||||||||||||||||||||||
Revenue | $ | 62,684 | $ | 55,266 | $ | 189,864 | $ | 165,524 | ||||||||||||||
Operating income | 19,220 | 16,125 | 58,091 | 46,576 | ||||||||||||||||||
Operating income as a % of revenue | 30.7 | % | 29.2 | % | 30.6 | % | 28.1 | % | ||||||||||||||
Add back: | ||||||||||||||||||||||
Amortization of intangible assets related to acquisitions | 1,361 | 1,339 | 4,146 | 3,997 | ||||||||||||||||||
Severance related to cost-savings actions | 126 | 46 | 150 | 46 | ||||||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 20,707 | $ | 17,510 | $ | 62,387 | $ | 50,619 | ||||||||||||||
Non-GAAP operating income as a % of revenue | 33.0 | % | 31.7 | % | 32.9 | % | 30.6 | % | ||||||||||||||
Unallocated Corporate Overhead | $ | (20,433 | ) | $ | (18,053 | ) | $ | (67,762 | ) | $ | (56,030 | ) | ||||||||||
Add back: | ||||||||||||||||||||||
Severance related to cost-savings actions | - | - | 121 | - | ||||||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 580 | 306 | 5,256 | 986 | ||||||||||||||||||
Convertible debt accounting | - | - | - | 107 | ||||||||||||||||||
Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (19,853 | ) | $ | (17,747 | ) | $ | (62,385 | ) | $ | (54,937 | ) | ||||||||||
Total | ||||||||||||||||||||||
Revenue | $ | 327,567 | $ | 292,129 | $ | 968,114 | $ | 876,300 | ||||||||||||||
Add back government billing adjustment | - | - | - | 1,495 | ||||||||||||||||||
Non-GAAP revenue | $ | 327,567 | $ | 292,129 | $ | 968,114 | $ | 877,795 | ||||||||||||||
Operating income | 46,172 | 40,843 | 136,903 | 126,794 | ||||||||||||||||||
Operating income as a % of revenue | 14.1 | % | 14.0 | % | 14.1 | % | 14.5 | % | ||||||||||||||
Add back: | ||||||||||||||||||||||
Amortization of intangible assets related to acquisitions | 7,620 | 4,179 | 18,813 | 12,891 | ||||||||||||||||||
Severance related to cost-savings actions | 574 | 475 | 5,363 | 1,057 | ||||||||||||||||||
Government billing adjustment and related expenses | 214 | 321 | 294 | 2,176 | ||||||||||||||||||
Impairment and other items(2) | 2,402 | 7,238 | 5,107 | 7,238 | ||||||||||||||||||
Operating losses(3) | 606 | 784 | 2,008 | 2,728 | ||||||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 573 | 306 | 5,452 | 986 | ||||||||||||||||||
Convertible debt accounting (4) | - | - | - | 107 | ||||||||||||||||||
Operating income, excluding specified charges (Non-GAAP) | $ | 58,161 | $ | 54,146 | $ | 173,940 | $ | 153,977 | ||||||||||||||
Non-GAAP operating income as a % of non-GAAP revenue | 17.8 | % | 18.5 | % | 18.0 | % | 17.6 | % | ||||||||||||||
(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 nine months ended
(3) This item includes operating losses related primarily to the
Company's
(4) The nine months ended
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 | Nine Months Ended | |||||||||||||||||||||
September 27,
2014 |
September 28,
2013 |
September 27,
2014 |
September 28,
2013 |
|||||||||||||||||||
Net income attributable to common shareholders | $ | 32,036 | $ | 30,867 | $ | 99,532 | $ | 83,729 | ||||||||||||||
Less: Discontinued operations | (52 | ) | 113 | 862 | 1,183 | |||||||||||||||||
Net income from continuing operations | 31,984 | 30,980 | 100,394 | 84,912 | ||||||||||||||||||
Add back: | ||||||||||||||||||||||
Amortization of intangible assets related to acquisitions | 7,620 | 4,179 | 18,813 | 12,891 | ||||||||||||||||||
Severance related to cost-savings actions | 574 | 475 | 5,363 | 1,057 | ||||||||||||||||||
Impairment and other items (2) | 2,402 | 7,238 | 5,107 | 7,238 | ||||||||||||||||||
Operating losses (3) | 606 | 784 | 2,008 | 2,728 | ||||||||||||||||||
Costs associated with the evaluation and integration of acquisitions | 573 | 306 | 5,452 | 986 | ||||||||||||||||||
Government billing adjustment and related expenses | 214 | 321 | 294 | 2,176 | ||||||||||||||||||
Write-off of deferred financing costs and fees related to debt refinancing | - | - | - | 645 | ||||||||||||||||||
Convertible debt accounting, net (4) | - | - | - | 6,710 | ||||||||||||||||||
Tax effect of items above | (3,553 | ) | (6,041 | ) | (11,481 | ) | (12,207 | ) | ||||||||||||||
Net income from continuing operations, excluding specified charges (Non-GAAP) | $ | 40,420 | $ | 38,242 | $ | 125,950 | $ | 107,136 | ||||||||||||||
Weighted average shares outstanding - Basic | 46,016,036 | 47,910,649 | 46,682,826 | 47,950,018 | ||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||
Stock options and contingently issued restricted stock | 861,694 | 530,516 | 883,008 | 704,118 | ||||||||||||||||||
Weighted average shares outstanding - Diluted | 46,877,730 | 48,441,165 | 47,565,834 | 48,654,136 | ||||||||||||||||||
Basic earnings per share from continuing operations | $ | 0.70 | $ | 0.65 | $ | 2.15 | $ | 1.77 | ||||||||||||||
Diluted earnings per share from continuing operations | $ | 0.68 | $ | 0.64 | $ | 2.11 | $ | 1.75 | ||||||||||||||
Basic earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.88 | $ | 0.80 | $ | 2.70 | $ | 2.23 | ||||||||||||||
Diluted earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.86 | $ | 0.79 | $ | 2.65 | $ | 2.20 | ||||||||||||||
(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 nine months ended
(3) This item includes operating losses related primarily to the
Company's
(4) The nine months ended
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 Nine Months Ended September 27, 2014 | ||||||||||||||||||||
For the three months ended September 27, 2014: | Total CRL | RMS Segment | DSA Segment | MS Segment | ||||||||||||||||
Revenue growth, reported | 12.1 | % | (0.2 | %) | 25.1 | % | 13.4 | % | ||||||||||||
Impact of foreign exchange | 0.4 | % | (0.3 | %) | 1.0 | % | 0.5 | % | ||||||||||||
Non-GAAP revenue growth, constant currency | 11.7 | % | 0.1 | % | 24.1 | % | 12.9 | % | ||||||||||||
For the nine months ended September 27, 2014: | Total CRL | RMS Segment | DSA Segment | MS Segment | ||||||||||||||||
Revenue growth, reported | 10.5 | % | 0.2 | % | 20.7 | % | 14.7 | % | ||||||||||||
Impact of foreign exchange | 0.8 | % | 0.3 | % | 0.9 | % | 1.5 | % | ||||||||||||
Impact of government billing adjustment | 0.2 | % | 0.4 | % | 0.0 | % | 0.0 | % | ||||||||||||
Non-GAAP revenue growth, constant currency | 9.5 | % | (0.5 | %) | 19.8 | % | 13.2 | % | ||||||||||||
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. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||||
(in thousands) | ||||||||||||
Nine Months Ended | ||||||||||||
September 27,
2014 |
September 28,
2013 |
|||||||||||
Cash flows relating to operating activities: | ||||||||||||
Net income | $ | 100,526 | $ | 84,707 | ||||||||
Less: Loss from discontinued operations | (862 | ) | (1,183 | ) | ||||||||
Income from continuing operations | 101,388 | 85,890 | ||||||||||
Summary of non-cash adjustments | 87,082 | 100,870 | ||||||||||
Changes in assets and liabilities | (36,187 | ) | (40,210 | ) | ||||||||
Net cash provided by operating activities | 152,283 | 146,550 | ||||||||||
Cash flows relating to investing activities: | ||||||||||||
Acquisition of businesses, net of cash acquired | (183,151 | ) | (24,218 | ) | ||||||||
Capital expenditures | (29,907 | ) | (25,319 | ) | ||||||||
Other | (4,131 | ) | (4,796 | ) | ||||||||
Net cash used in investing activities | (217,189 | ) | (54,333 | ) | ||||||||
Cash flow relating to financing activities: | ||||||||||||
Net cash used in financing activities | 44,296 | (68,330 | ) | |||||||||
Cash flows used in discontinued operations | (570 | ) | (1,533 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (4,000 | ) | (1,585 | ) | ||||||||
Net change in cash and cash equivalents | (25,180 | ) | 20,769 | |||||||||
Cash and cash equivalents, beginning of period | 155,927 | 109,685 | ||||||||||
Cash and cash equivalents, end of period | $ | 130,747 | $ | 130,454 |
Source:
Charles River Laboratories
Investor Contact:
Susan E. Hardy,
781-222-6190
Corporate Vice President, Investor Relations
susan.hardy@crl.com
or
Media
Contact:
Amy Cianciaruso, 781-222-6168
Executive Director,
Public Relations
amy.cianciaruso@crl.com