Full Press Release Details
River Laboratories Announces Second-Quarter 2018 Results from Continuing
Second-Quarter Revenue of $585.3 Million -
Second-Quarter GAAP Earnings per Share of $1.06 and Non-GAAP Earnings
per Share of $1.62 -
Increases 2018 Revenue Growth and Earnings per Share Guidance -
WILMINGTON, Mass.--(BUSINESS WIRE)--August 8, 2018--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the second quarter of 2018. For the quarter, revenue from continuing
operations was $585.3 million, an increase of 24.8% from $469.1 million
in the second quarter of 2017. Revenue growth was driven by all three
business segments, particularly the Discovery and Safety Assessment
The acquisitions of MPI Research, Brains On-Line, and KWS BioTest
contributed 15.1% to consolidated second-quarter revenue growth. The
impact of foreign currency translation benefited reported revenue growth
by 2.6%. Excluding the effect of these items, organic revenue growth was
On a GAAP basis, second-quarter net income from continuing operations
attributable to common shareholders was $52.2 million, a decrease of
3.4% from net income of $54.0 million for the same period in 2017.
Second-quarter diluted earnings per share on a GAAP basis were $1.06, a
decrease of 5.4% from $1.12 for the second quarter of 2017. The lower
GAAP net income and earnings per share were driven primarily by
acquisition and integration costs, including amortization of intangible
assets, primarily related to MPI Research.
On a non-GAAP basis, net income from continuing operations was $79.3
million for the second quarter of 2018, an increase of 27.2% from $62.4
million for the same period in 2017. Second-quarter diluted earnings per
share on a non-GAAP basis were $1.62, an increase of 25.6% from $1.29
per share for the second quarter of 2017. The non-GAAP net income and
earnings per share increases were driven primarily by the contribution
from the MPI acquisition, as well as gains on the Company's venture
capital investments and a lower tax rate. The gains on the Company's
venture capital investments were $0.17 per share in the second quarter
of 2018, compared to gains of $0.03 for the same period in 2017.
James C. Foster, Chairman, President and Chief Executive Officer, said,
"We believe our robust second-quarter revenue growth is indicative of an
extremely healthy market environment, and our position as the premier,
early-stage CRO with a unique ability to support our clients from target
discovery through non-clinical development. Our clients, both large and
small, are intensifying investments in their pipelines, which is
creating new business opportunities for Charles River. At this critical
time, we believe that it is incumbent upon us to invest in our
portfolio, our people, and our infrastructure to solidify our position
as our clients' early-stage partner of choice, and to enhance
shareholder value. We are pleased with our second-quarter performance,
and optimistic about the opportunities for growth in 2018 and beyond. As
a result, we are increasing our revenue and earnings per share guidance
Second-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $130.4 million in the second quarter of
2018, an increase of 5.2% from $124.0 million in the second quarter of
2017. Organic revenue growth was 2.0%, driven primarily by increased
demand for research models in China, as well as higher revenue for
research model services.
In the second quarter of 2018, the RMS segment's GAAP operating margin
decreased to 26.3% from 27.1% in the second quarter of 2017. On a
non-GAAP basis, the operating margin decreased to 26.8% from 27.4% in
the second quarter of 2017. The non-GAAP operating margin decline was
driven primarily by research model services.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was $346.4
million in the second quarter of 2018, an increase of 37.4% from $252.1
million in the second quarter of 2017. Acquisitions contributed 28.1% to
DSA revenue growth, due primarily to the revenue contribution from MPI
Research. Organic revenue growth of 7.3% 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 both
biotechnology and global biopharmaceutical clients.
In the second quarter of 2018, the DSA segment's GAAP operating margin
decreased to 16.3% from 20.4% in the second quarter of 2017. The GAAP
operating margin decline was driven primarily by acquisition and
integration costs, principally amortization of intangible assets related
to MPI Research. On a non-GAAP basis, the operating margin decreased to
21.5% from 23.5% in the second 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 60 basis points.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $108.5 million in the second
quarter of 2018, an increase of 16.6% from $93.0 million in the second
quarter of 2017. Organic revenue growth was 13.1%, driven primarily by
robust demand across all businesses: Microbial Solutions, Biologics
Testing Solutions, and Avian Vaccine Services.
In the second quarter of 2018, the Manufacturing segment's GAAP
operating margin increased to 31.5% from 31.2% in the second quarter of
2017. On a non-GAAP basis, the operating margin decreased to 33.6% from
34.2% in the second quarter of 2017. The non-GAAP operating margin
decline was driven primarily by cost associated with capacity
expansions, principally in the Biologics Testing Solutions business.
Increases 2018 Guidance
The Company is updating its 2018 financial guidance, which was
previously provided on May 10, 2018.
The Company is increasing its guidance for both reported and organic
revenue growth, due primarily to its belief that the strong demand
trends in the second quarter are expected to continue in the second half
of the year. Foreign exchange is now expected to contribute
approximately 2% to reported revenue growth, compared to the Company's
prior outlook of an approximate 3% benefit.
The Company is increasing its guidance for GAAP and non-GAAP earnings
per share, due primarily to higher-than-expected gains from venture
capital investments. The Company has not included any venture capital