Full Press Release Details
River Laboratories Announces Second-Quarter 2016 Results from Continuing
Second-Quarter Revenue of $434.1 Million -
Second-Quarter GAAP Earnings per Share of $0.73
Non-GAAP Earnings per Share of $1.20 -
WILMINGTON, Mass.--(BUSINESS WIRE)--August 3, 2016--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the second quarter of 2016. For the quarter, revenue from continuing
operations was $434.1 million, an increase of 27.8% from $339.6 million
in the second quarter of 2016. Foreign currency translation reduced
reported revenue growth by 0.4%. 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, Celsis, Oncotest, and Sunrise Farms contributed 19.4% to
consolidated second-quarter revenue growth, both on a reported basis and
in constant currency.
On a GAAP basis, net income from continuing operations attributable to
common shareholders for the second quarter of 2016 was $35.2 million, or
$0.73 per diluted share, compared to $48.5 million, or $1.02 per diluted
share, for the second quarter of 2015. The decline in net income and
earnings per share was due primarily to costs associated with the
evaluation and integration of acquisitions, including amortization of
intangible assets, as well as a bargain purchase gain resulting from the
acquisition of Sunrise Farms in the second quarter of 2015.
On a non-GAAP basis, net income from continuing operations was $57.4
million for the second quarter of 2016, an increase of 25.3% from $45.8
million for the same period in 2015. Second-quarter diluted earnings per
share on a non-GAAP basis were $1.20, an increase of 25.0% compared to
$0.96 per share in the second quarter of 2015. The increase was driven
primarily by higher revenue as a result of the performance of the legacy
operations and the acquisition of new businesses, notably WIL Research.
A gain from the Company's venture capital investments contributed $0.06
per share in the second quarter of 2016, compared to a loss of $0.01 per
share for the same period in 2015.
James C. Foster, Chairman, President and Chief Executive Officer, said,
"I am very pleased to say that the strong financial performance we
experienced in the first quarter continued in the second quarter of
2016. All three business segments reported revenue gains, which
demonstrates continued solid execution of our business strategy, the
successful initial integration of WIL Research, and our ongoing focus on
exceptional client service. As a result, clients continue to choose to
partner with Charles River for our science, our support, and the
increasing breadth of our portfolio, which provides wider opportunities
for them to leverage our expertise to achieve their goal of faster, more
efficient and productive drug research."
"The strength of our second-quarter results and our expectations for the
second half of the year support our confidence that we will achieve our
updated full-year guidance," Mr. Foster concluded.
Second-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $125.1 million in the second quarter of
2016, an increase of 4.8% from $119.3 million in the second quarter of
2015. Foreign currency translation increased reported revenue growth by
0.8%. Revenue growth was driven primarily by higher sales of research
In the second quarter of 2016, the RMS segment's GAAP operating margin
was 28.3% compared to 27.9% in the second quarter of 2015. The GAAP
operating margin improvement was primarily attributable to higher
revenue, as well as the net benefit from the Company's global efficiency
initiatives. On a non-GAAP basis, the operating margin declined to 28.9%
from 29.1% in the second quarter of 2015, due primarily to the mix of
products and services.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was $221.1
million in the second quarter of 2016, an increase of 44.1% from $153.4
million in the second quarter of 2015. Foreign currency translation
reduced reported revenue growth by 1.5%. In total, acquisitions
contributed 35.0% to DSA revenue growth, and revenue growth was 10.6%
for legacy operations. Revenue growth was driven primarily by the
acquisition of WIL Research and continued strong growth in the legacy
Safety Assessment business. The Discovery Services business also
reported higher revenue in the second quarter, due primarily to the
acquisition of Oncotest. Sales to biotechnology clients continued to be
In the second quarter of 2016, the DSA segment's GAAP operating margin
was 14.6% compared to 18.4% in the second quarter of 2015. The margin
decline was due primarily to costs associated with the evaluation and
integration of acquisitions, including amortization of intangible
assets. On a non-GAAP basis, the operating margin decreased to 21.2%
from 21.6% in the second quarter of 2015. The non-GAAP operating margin
decline was primarily driven by the acquisition of WIL Research. Foreign
exchange benefited the DSA operating margin by approximately 70 basis
points, due primarily to a weaker Canadian dollar.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $87.9 million in the second
quarter of 2016, an increase of 31.4% from $66.9 million in the second
quarter of 2015. Foreign currency translation increased reported revenue
growth by 0.1%. Revenue growth was driven by the Microbial Solutions and
Biologics Testing Solutions (Biologics) businesses. The acquisitions of
Celsis, Sunrise Farms, and WIL Research's contract development and
manufacturing services contributed 18.4% to Manufacturing revenue growth
in the second quarter of 2016. In the second quarter, revenue growth was
12.9% for legacy operations.
In the second quarter of 2016, the Manufacturing segment's GAAP
operating margin was 30.8%, unchanged from the second quarter of 2015.
On a non-GAAP basis, the operating margin increased to 35.4% from 33.5%
in the second quarter of 2015, primarily driven by operating margin
improvement in the Microbial Solutions and Biologics businesses as a
result of higher revenue and the benefit of efficiency initiatives.
Updates 2016 Guidance
The Company is updating its forward-looking guidance for 2016.
As a result of robust revenue growth in the first half of 2016, the
revenue guidance range has been raised by 1%. GAAP earnings per share