Full Press Release Details
River Laboratories Announces First-Quarter 2019 Results
First-Quarter Revenue of $604.6 Million -
First-Quarter GAAP Earnings per Share of $1.11 and Non-GAAP Earnings per
Reaffirms 2019 Guidance Including Citoxlab -
WILMINGTON, Mass.--(BUSINESS WIRE)--May 7, 2019--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the first quarter of 2019. For the quarter, revenue was $604.6
million, an increase of 22.4% from $494.0 million in the first quarter
of 2018. Revenue growth was driven by all three business segments,
particularly Discovery and Safety Assessment and Manufacturing Support.
Acquisitions, principally MPI Research, contributed 14.4% to
consolidated first-quarter revenue growth. The impact of foreign
currency translation reduced reported revenue growth by 2.8%. Excluding
the effect of these items, organic revenue growth was 10.8%.
On a GAAP basis, first-quarter net income from continuing operations
attributable to common shareholders was $55.1 million, an increase of
4.7% from net income of $52.7 million for the same period in 2018.
First-quarter diluted earnings per share on a GAAP basis were $1.11, an
increase of 2.8% from $1.08 for the first quarter of 2018. GAAP earnings
per share included a gain from the Company's venture capital investments
of $0.16 per share in the first quarter of 2019, compared to a $0.10
gain for the same period in 2018. As previously disclosed, the Company's
venture capital investment performance has been excluded from non-GAAP
On a non-GAAP basis, net income from continuing operations was $69.4
million for the first quarter of 2019, an increase of 10.5% from $62.8
million for the same period in 2018. First-quarter diluted earnings per
share on a non-GAAP basis were $1.40, an increase of 8.5% from $1.29 per
share for the first quarter of 2018.
The GAAP and non-GAAP earnings per share increases were driven primarily
by higher revenue, including the contribution from the MPI acquisition.
James C. Foster, Chairman, President and Chief Executive Officer, said,
"In the first quarter, we saw a continuation of the robust business
trends that we experienced throughout the second half of last year.
Revenue growth was above 10% on both an organic and reported basis.
Demand from our biotechnology clients continued to drive growth, the
result of a robust funding environment and our targeted sales strategies
that continued to resonate with this thriving client base. As the
leading, early-stage CRO, we continue to differentiate ourselves from
the competition through our science, our broad, early-stage portfolio
from target discovery through non-clinical development, and the flexible
relationships that we can offer clients."
"Coupled with our first-quarter performance, we believe the continued
execution of our business strategy and strong industry fundamentals
firmly support our growth prospects for 2019 and beyond, which are
enhanced by last week's acquisition of Citoxlab. Citoxlab's
complementary service offering and geographic footprint are an excellent
strategic fit, reinforcing our position as the partner of choice for
early-stage drug research. Including the impact of the Citoxlab
acquisition, we are reaffirming our 2019 financial guidance," Mr. Foster
First-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $137.2 million in the first quarter of
2019, an increase of 2.4% from $134.0 million in the first quarter of
2018. Organic revenue growth was 5.4%, driven primarily by higher
revenue for research model services, as well as increased demand for
research models in China. Research model services benefited from a large
government contract in the Insourcing Solutions (IS) business, which
commenced in September 2018, and strong client demand for the
Genetically Engineered Models and Services business. The revenue
increase was partially offset by lower sales volume for research models
outside of China, particularly to large biopharmaceutical clients.
In the first quarter of 2019, the RMS segment's GAAP operating margin
decreased to 27.6% from 28.8% in the first quarter of 2018. On a
non-GAAP basis, the operating margin decreased to 28.1% from 29.8% in
the first quarter of 2018. The GAAP and non-GAAP operating margin
decreases were driven primarily by the large IS government contract and
lower sales volume for research models outside of China.
Discovery and Safety Assessment (DSA)
Revenue for the DSA segment was $354.2 million in the first quarter of
2019, an increase of 36.2% from $260.0 million in the first quarter of
2018. Acquisitions, principally MPI Research, contributed 27.2% to DSA
revenue growth. Organic revenue growth of 11.2% was driven by both the
Safety Assessment and Discovery Services businesses. By client segment,
the DSA revenue increase was driven primarily by robust demand from
biotechnology clients.
In the first quarter of 2019, the DSA segment's GAAP operating margin
decreased to 13.2% from 15.7% in the first quarter of 2018. The GAAP
operating margin decline was driven primarily by amortization of
intangible assets related to the acquisition of MPI Research. On a
non-GAAP basis, the operating margin was 18.6%, which was unchanged
compared to the prior year.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $113.2 million in the first
quarter of 2019, an increase of 13.2% from $100.0 million in the first
quarter of 2018. Organic revenue growth was 17.2%, driven primarily by
robust demand in the Microbial Solutions and Biologics Testing Solutions
In the first quarter of 2019, the Manufacturing segment's GAAP operating
margin decreased to 27.8% from 28.5% in the first quarter of 2018. On a
non-GAAP basis, the operating margin decreased to 31.0% from 31.9% in
the first quarter of 2018. The GAAP and non-GAAP operating margin
declines were driven primarily by costs associated with capacity
expansions, principally in the Biologics Testing Solutions business.
On February 13, 2019, the Company provided 2019 financial guidance for
revenue growth and non-GAAP earnings per share, which included the
impact of the Citoxlab acquisition. The acquisition of Citoxlab was
subsequently completed on April 29, 2019.
The Company is reaffirming its revenue growth and non-GAAP earnings per
share guidance for 2019 including the acquisition of Citoxlab. In
addition, the Company is providing initial GAAP earnings per share
guidance including the acquisition of Citoxlab of $4.75 to $4.90. The