Full Press Release Details
River Laboratories Announces First-Quarter 2017 Results from Continuing
First-Quarter Revenue of $445.8 Million -
First-Quarter GAAP EPS of $0.97 and Non-GAAP EPS of $1.29 -
WILMINGTON, Mass.--(BUSINESS WIRE)--May 10, 2017--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the first quarter of 2017. Revenue from continuing operations was
$445.8 million, an increase of 25.6% from $354.9 million in the first
quarter of 2016. Revenue growth was driven primarily by the Discovery
and Safety Assessment and Manufacturing Support segments. Research
Models and Services revenue also increased.
The acquisitions of WIL Research, Agilux Laboratories, and Blue Stream
Laboratories contributed 19.5% to consolidated first-quarter revenue
growth, both on a reported basis and in constant currency. The impact of
foreign currency translation reduced reported revenue growth by 2.1%.
Excluding the effect of these items, organic revenue growth was 8.2%.
On a GAAP basis, first-quarter net income from continuing operations
attributable to common shareholders was $46.8 million, an increase of
25.9% from $37.2 million for the same period in 2016. First-quarter
diluted earnings per share on a GAAP basis were $0.97, an increase of
24.4% from $0.78 for the first quarter of 2016. The divestiture of the
Contract Development and Manufacturing (CDMO) business, which was
completed on February 10, 2017, reduced GAAP earnings per share by $0.15
(net) as a result of the tax impact of the transaction, partially offset
by the gain on the sale. In addition, an excess tax benefit associated
with stock compensation contributed $0.15 to GAAP earnings per share in
the first quarter of 2017.
On a non-GAAP basis, net income from continuing operations was $62.6
million for the first quarter of 2017, an increase of 34.4% from $46.5
million for the same period in 2016. First-quarter diluted earnings per
share on a non-GAAP basis were $1.29, an increase of 31.6% from $0.98
per share for the first quarter of 2016. On a non-GAAP basis, a
favorable tax rate benefited earnings per share by $0.10 in the first
quarter of 2017, as the $0.15 excess tax benefit associated with stock
compensation was partially offset by the earnings mix.
Both the GAAP and non-GAAP earnings per share increases were driven
primarily by the acquisition of new businesses, notably WIL Research, as
well as higher revenue for legacy operations. Earnings per share in the
first quarter also included a gain from the Company's venture capital
investments, which contributed $0.05 per share compared to a $0.04 gain
for the same period in 2016.
James C. Foster, Chairman, President and Chief Executive Officer, said,
"I am very pleased to say that following an exceptional year in 2016, we
are off to a strong start in the first quarter of 2017. Demand for our
products and services is robust and we continue to win new business,
which supports our expectation for revenue growth, operating margin
expansion, and earnings per share growth in 2017. Our first-quarter
results put us on track to achieve our guidance for the year."
"We have successfully implemented our strategy to become the early-stage
CRO of choice as a result of a three-pronged approach. First, we are
continuing to expand our unique portfolio of essential products and
services, which increases our relevance to our clients' drug research,
development, and manufacturing efforts. Second, we continue to expand
and enhance our scientific expertise and depth, which we believe is
unique and unparalleled in the early-stage CRO universe, and a strong
differentiating factor. Third, we maintain an intense focus on
efficiency and responsiveness, which enables us to provide exceptional,
flexible service to clients without adding significant cost," Mr. Foster
First-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $127.2 million in the first quarter of
2017, an increase of 3.1% from $123.3 million in the first quarter of
2016. Organic revenue growth was 4.7%, driven by higher revenue for both
the Research Models and Research Model Services businesses.
In the first quarter of 2017, the RMS segment's GAAP operating margin
increased to 29.7% from 29.5% in the first quarter of 2016. On a
non-GAAP basis, the operating margin was 30.1%, unchanged on a
year-over-year basis.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was $227.8
million in the first quarter of 2017, an increase of 44.2% from $158.0
million in the first quarter of 2016. Growth was driven primarily by the
acquisitions of WIL Research and Agilux Laboratories, which contributed
41.6% to DSA revenue growth. Organic revenue growth was 5.1%, as growth
in the legacy Safety Assessment business was partially offset by lower
revenue for the legacy Discovery Services business. Revenue growth was
driven by demand from both global biopharmaceutical and mid-tier
biotechnology clients.
In the first quarter of 2017, the DSA segment's GAAP operating margin
decreased to 17.0% from 19.5% in the first quarter of 2016. The GAAP
operating margin decline was due in part to amortization of intangible
assets related to acquisitions. On a non-GAAP basis, the operating
margin decreased to 20.9% from 23.3% in the first quarter of 2016. Both
the GAAP and non-GAAP operating margins were affected by revenue mix and
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $90.8 million in the first
quarter of 2017, an increase of 23.5% from $73.5 million in the first
quarter of 2016. The acquisitions of Blue Stream Laboratories and WIL
Research's CDMO business (divested on February 10, 2017) contributed
4.9% to Manufacturing revenue growth in the first quarter of 2017.
Organic revenue increased 20.6%, driven primarily by robust growth in
the Microbial Solutions and Biologics Testing Solutions businesses.
In the first quarter of 2017, the Manufacturing segment's GAAP operating
margin increased to 29.3% from 26.7% in the first quarter of 2016. On a
non-GAAP basis, the operating margin increased to 33.2% from 31.3% in
the first quarter of 2016. Both the GAAP and non-GAAP operating margin
improvement was driven by leverage from higher revenue in the Microbial
Solutions and Biologics Testing Solutions businesses.
Stock Repurchase Update
During the first quarter of 2017, the Company reinitiated stock
repurchase activity, repurchasing 363,000 shares for a total of $32.1