Full Press Release Details
River Laboratories Announces First-Quarter 2018 Results from Continuing
First-Quarter Revenue of $494.0 Million -
First-Quarter GAAP Earnings per Share of $1.08 and Non-GAAP Earnings per
WILMINGTON, Mass.--(BUSINESS WIRE)--May 10, 2018--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the first quarter of 2018. For the quarter, revenue from continuing
operations was $494.0 million, an increase of 10.8% from $445.8 million
in the first quarter of 2017. Revenue growth was driven primarily by the
Discovery and Safety Assessment and Manufacturing Support segments.
The impact of foreign currency translation benefited reported revenue
growth by 4.6%. The acquisitions of Brains On-Line and KWS BioTest
contributed 1.0% to consolidated first-quarter revenue growth, both on a
reported basis and in constant currency. The February 2017 divestiture
of the Contract Development and Manufacturing (CDMO) business reduced
reported revenue growth by 0.4%. Excluding the effect of these items,
organic revenue growth was 5.6%.
On a GAAP basis, first-quarter net income from continuing operations
attributable to common shareholders was $52.7 million, an increase of
12.6% from net income of $46.8 million for the same period in 2017.
First-quarter diluted earnings per share on a GAAP basis were $1.08, an
11.3% increase from earnings per share of $0.97 for the first quarter of
On a non-GAAP basis, net income from continuing operations was $67.5
million for the first quarter of 2018, an increase of 7.9% from $62.6
million for the same period in 2017. First-quarter diluted earnings per
share on a non-GAAP basis were $1.38, an increase of 7.0% from $1.29 per
share for the first quarter of 2017.
The GAAP and non-GAAP earnings per share increases were driven primarily
by a lower tax rate and a gain from the Company's venture capital
investments. The gain from the Company's venture capital investments
contributed $0.10 per share in the first quarter of 2018, compared to a
$0.05 gain for the same period in 2017.
James C. Foster, Chairman and Chief Executive Officer, said, "The year
began with robust demand for our products and services, with the revenue
growth rate improving sequentially in both the DSA and RMS segments.
Clients are increasingly choosing to partner with Charles River, for our
science, for our support, and for the breadth and depth of our
portfolio. We are continuing to expand this portfolio to strengthen our
ability to holistically support our clients' drug discovery, early
development, and manufacturing efforts, and to enhance our position as
the premier early-stage CRO."
"We remain optimistic about the opportunities for growth in 2018, which
are enhanced by the acquisition of MPI Research. The acquisition of MPI
Research is a key element of our continued ability to support our
clients' early-stage drug research efforts, to achieve our long-term
growth goals, and to enhance shareholder value," Mr. Foster concluded.
First-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $134.0 million in the first quarter of
2018, an increase of 5.3% from $127.2 million in the first quarter of
2017. Organic revenue growth was 0.2%, driven primarily by higher
revenue for research models in China and the Insourcing Solutions (IS)
and Genetically Engineered Models and Services (GEMS) businesses, offset
by softer demand for research models outside of China.
In the first quarter of 2018, the RMS segment's GAAP operating margin
decreased to 28.8% from 29.6% in the first quarter of 2017. The GAAP
operating margin decline was related primarily to charges associated
with the planned closure of the Company's research model production site
in Maryland, which was announced in November 2017. On a non-GAAP basis,
the operating margin decreased to 29.8% from 30.1% in the first quarter
of 2017. The non-GAAP operating margin decline was driven primarily by
the research models business.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was $260.0
million in the first quarter of 2018, an increase of 14.2% from $227.8
million in the first quarter of 2017. Organic revenue growth of 8.3% was
driven by both the Safety Assessment and Discovery Services businesses.
The DSA revenue increase was driven primarily by demand from
biotechnology clients, as well as higher revenue from global
biopharmaceutical clients.
In the first quarter of 2018, the DSA segment's GAAP operating margin
decreased to 15.7% from 16.8% in the first quarter of 2017. On a
non-GAAP basis, the operating margin decreased to 18.6% from 20.7% in
the first quarter of 2017. The GAAP and non-GAAP operating margin
declines were driven primarily by study mix and foreign exchange.
Foreign exchange reduced the DSA operating margin by approximately 100
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $100.0 million in the first
quarter of 2018, an increase of 10.1% from $90.8 million in the first
quarter of 2017. Organic revenue growth was 6.3%, driven primarily by
the Microbial Solutions and Avian Vaccine Services businesses.
In the first quarter of 2018, the Manufacturing segment's GAAP operating
margin decreased to 28.5% from 29.3% in the first quarter of 2017. On a
non-GAAP basis, the operating margin decreased to 31.9% from 33.2% in
the first quarter of 2017. The GAAP and non-GAAP operating margin
declines were driven primarily by lower volume in the Biologics Testing
Updates 2018 Guidance
On February 13, 2018, the Company provided 2018 financial guidance for
revenue growth and non-GAAP earnings per share, which included the
impact of the pending MPI Research acquisition. The acquisition of MPI
Research was subsequently completed on April 3, 2018.
The Company is increasing its guidance for reported revenue growth due
to a more favorable benefit from foreign exchange, which is now expected
to contribute approximately 3% to reported revenue growth, compared to
the Company's initial estimate of approximately 1%. The Company is
reaffirming its organic revenue growth guidance for 2018.
The Company is providing initial GAAP earnings per share guidance
including the acquisition of MPI Research of $4.22 to $4.37. The Company
is increasing its non-GAAP earnings per share guidance for 2018, due
primarily to a lower-than-expected tax rate, as well as an incremental
benefit from foreign exchange.