Full Press Release Details
River Laboratories Announces Fourth-Quarter and Full-Year 2017 Results
from Continuing Operations and Provides 2018 Guidance
Fourth-Quarter Revenue of $478.5 Million and Full-Year 2017 Revenue of
Fourth-Quarter GAAP Loss per Share of $0.63 and Non-GAAP Earnings per
Full-Year GAAP Earnings per Share of $2.54 and Non-GAAP Earnings per
Provides 2018 Guidance -
ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE MPI RESEARCH -
WILMINGTON, Mass--(BUSINESS WIRE)--February 13, 2018--Charles River
Laboratories International, Inc. (NYSE:CRL) today reported its results
for the fourth-quarter and full-year 2017 and provided guidance for
2018. For the quarter, revenue from continuing operations was $478.5
million, an increase of 2.5% from $466.8 million in the fourth quarter
of 2016. Revenue growth was driven by the Discovery and Safety
Assessment and Manufacturing Support segments.
The addition of a 53rd week at the end of 2016, which is
periodically required to align to a December 31st calendar
year end, reduced reported fourth-quarter revenue growth by 5.1%. The
February 2017 divestiture of the Contract Development and Manufacturing
(CDMO) business reduced reported revenue growth by 1.1%. The impact of
foreign currency translation benefited reported revenue growth by 2.4%.
The acquisition of Brains On-Line contributed 0.7% to consolidated
fourth-quarter revenue growth, both on a reported basis and in constant
currency. Excluding the effect of these items, organic revenue growth
On a GAAP basis, the fourth-quarter net loss from continuing operations
attributable to common shareholders was $29.8 million, a decrease from
net income of $44.7 million for the same period in 2016. The
fourth-quarter diluted loss per share on a GAAP basis was $0.63, a
decrease from earnings per share of $0.93 for the fourth quarter of
2016. The GAAP loss per share resulted from one-time expenses related to
U.S. tax reform in the fourth quarter of 2017, which reduced earnings by
$78.5 million, or $1.66 per share.
On a non-GAAP basis, net income from continuing operations was $68.2
million for the fourth quarter of 2017, an increase of 16.9% from $58.3
million for the same period in 2016. Fourth-
quarter diluted earnings per share on a non-GAAP basis were $1.40, an
increase of 15.7% from $1.21 per share for the fourth quarter of 2016.
The non-GAAP earnings per share increase was driven primarily by a gain
from the Company's venture capital investments, as well as higher
revenue and operating income.
On both a GAAP and non-GAAP basis, the gain from the Company's venture
capital investments contributed $0.14 per share in the fourth quarter of
2017, compared to a $0.02 gain for the same period in 2016. An excess
tax benefit associated with stock compensation contributed $0.03 per
James C. Foster, Chairman and Chief Executive Officer, said, "Our strong
performance in 2017 reflects robust client demand across our broad
portfolio of essential, early-stage drug research and manufacturing
support products and services, as well as disciplined investments in
staffing and infrastructure we are making to support our continuing
"We are continuing to strategically expand our portfolio with the
intended acquisition of MPI Research, which will enhance our
capabilities and provide capacity for growth in the Discovery and Safety
Assessment segment. The continuing expansion of our unique portfolio
enhances the value we can provide to clients, which is the basis for our
expected growth in 2018 and over the longer term," Mr. Foster concluded.
Fourth-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $120.4 million in the fourth quarter of
2017, a decrease of 3.4% from $124.7 million in the fourth quarter of
2016. Organic revenue declined by 1.4%, driven primarily by lower
revenue for research models outside of China and the Research Animal
Diagnostic Services (RADS) business. The decline was partially offset by
higher revenue for research models in China, and the Insourcing
Solutions and Genetically Engineered Models and Services (GEMS)
In the fourth quarter of 2017, the RMS segment's GAAP operating margin
decreased to 10.5% from 26.7% in the fourth quarter of 2016. The GAAP
operating margin decline was related primarily to an asset impairment
and related 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
26.0% from 27.3% in the fourth quarter of 2016. 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 $253.2
million in the fourth quarter of 2017, an increase of 4.8% from $241.7
million in the fourth quarter of 2016. Organic revenue growth of 6.8%
was driven by both the Discovery Services and Safety Assessment
businesses. The DSA revenue increase was driven primarily by demand from
biotechnology clients.
In the fourth quarter of 2017, the DSA segment's GAAP operating margin
increased to 18.6% from 18.1% in the fourth quarter of 2016. The GAAP
operating margin increase was due primarily to higher site consolidation
costs in the fourth quarter of 2016, associated with the Company's
ongoing efficiency initiatives. On a non-GAAP basis, the operating
margin decreased to 22.0% from 23.8% in the fourth quarter of 2016. The
non-GAAP operating margin decline was driven primarily by study mix and
higher staffing costs to support growth. In addition, foreign exchange
reduced the DSA operating margin by approximately 80 basis points.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $104.8 million in the fourth
quarter of 2017, an increase of 4.5% from $100.3 million in the fourth
quarter of 2016. Organic revenue growth was 11.8%, driven by strong
performances from the Microbial Solutions and Biologics Testing
Solutions businesses.
In fourth quarter of 2017, the Manufacturing segment's GAAP operating
margin increased to 34.7% from 31.0% in the fourth quarter of 2016. On a
non-GAAP basis, the operating margin increased to 37.6% from 34.2% in
the fourth quarter of 2016. The GAAP and non-GAAP operating margin
improvements were driven primarily by enhanced manufacturing efficiency
and volume leverage from higher revenue in the Microbial Solutions
For 2017, revenue increased by 10.5% to $1.86 billion from $1.68 billion