Full Press Release Details
River Laboratories Announces Third-Quarter 2016 Results from Continuing
Third-Quarter Revenue of $425.7 Million -
Third-Quarter GAAP Earnings per Share of $0.78
Non-GAAP Earnings per Share of $1.18 -
WILMINGTON, Mass.--(BUSINESS WIRE)--November 2, 2016--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported its results
for the third quarter of 2016. For the quarter, revenue from continuing
operations was $425.7 million, an increase of 21.8% from $349.5 million
in the third quarter of 2015. Foreign currency translation reduced
reported revenue growth by 1.5%. 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, Blue Stream Laboratories, Celsis, and Oncotest contributed
18.0% to consolidated third-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 was $37.4 million for the third quarter of 2016,
unchanged from the same period in 2015. Third-quarter diluted earnings
per share on a GAAP basis were $0.78, a decrease of 1.3% from $0.79 for
the third quarter of 2015. Higher revenue was offset by an increase in
acquisition and efficiency-related costs.
On a non-GAAP basis, net income from continuing operations was $56.7
million for the third quarter of 2016, an increase of 16.5% from $48.7
million for the same period in 2015. Third-quarter diluted earnings per
share on a non-GAAP basis were $1.18, an increase of 14.6% compared to
$1.03 per share in the third quarter of 2015. The increase was driven
primarily by the acquisition of new businesses, notably WIL Research, as
well as higher revenue for legacy operations.
A gain from the Company's venture capital investments contributed $0.01
per share in the third quarter of 2016, compared to a gain of $0.04 per
share for the same period in 2015.
James C. Foster, Chairman, President and Chief Executive Officer, said,
"We believe that the trends that drove revenue growth in the first half
of the year continued in the third quarter, and will continue in the
fourth quarter. As a result, we expect that reported revenue growth in
2016 will be in a range of 21% to 22%, and that growth for the legacy
businesses will be between 7% to 8%, approximately 100 basis points
higher at the midpoint than in 2015."
"The strength of our unique portfolio, the success of our strategic
acquisitions and targeted sales strategies, and our initiatives to
increase operating effectiveness and efficiency, are the foundation for
our growth in 2016 and in the future," Mr. Foster concluded.
Third-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was $120.9 million in the third quarter of
2016, an increase of 2.6% from $117.9 million in the third quarter of
2015. Foreign currency translation increased reported revenue growth by
0.5%. Revenue growth was driven primarily by higher sales of research
model services, and sales of research models also increased.
In the third quarter of 2016, the RMS segment's GAAP operating margin
declined to 25.8% from 26.7% in the third quarter of 2015. On a non-GAAP
basis, the operating margin declined slightly to 27.3% from 27.5% in the
third quarter of 2015. In both cases, the margin decline was due
primarily to the mix of products and services.
Discovery and Safety Assessment (DSA)
Revenue from continuing operations for the DSA segment was $215.8
million in the third quarter of 2016, an increase of 36.4% from $158.3
million in the third quarter of 2015. Foreign currency translation
reduced reported revenue growth by 3.4%. Growth was driven primarily by
the acquisitions of WIL Research and Oncotest, which contributed 35.0%
to DSA revenue growth. Constant-currency revenue growth was 4.8% for
legacy operations, as growth in the legacy Safety Assessment business
was partially offset by decreased revenue in the Discovery Services
business. Discovery Services revenue declined due primarily to softer
demand from global clients for Early Discovery services. Robust demand
from biotechnology clients continued to drive revenue growth in the DSA
In the third quarter of 2016, the DSA segment's GAAP operating margin
declined to 14.5% from 21.0% in the third 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 22.7%
from 24.2% in the third quarter of 2015 due primarily to the acquisition
of WIL Research. Foreign exchange benefited the DSA operating margin by
approximately 50 basis points due primarily to a weaker British pound.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $89.0 million in the third
quarter of 2016, an increase of 21.4% from $73.3 million in the third
quarter of 2015. Foreign currency translation decreased reported revenue
growth by 0.4%. Constant-currency revenue growth of 11.3% for legacy
operations was driven primarily by the Microbial Solutions and Biologics
Testing Solutions businesses. The acquisitions of Blue Stream
Laboratories, Celsis, and WIL Research's contract development and
manufacturing services contributed 10.5% to Manufacturing revenue growth
in the third quarter of 2016.
In the third quarter of 2016, the Manufacturing segment's GAAP operating
margin increased to 30.0% from 25.2% in the third quarter of 2015. The
GAAP operating margin increase was primarily driven by lower acquisition
costs related to Celsis, as well as leverage from higher revenue in the
Microbial Solutions business. On a non-GAAP basis, the operating margin
increased to 33.8% from 33.2% in the third quarter of 2015, driven by
operating margin improvement in the Microbial Solutions business 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. For the
full year, reported revenue growth is expected to be at approximately
the midpoint of the prior range. Reported revenue growth includes
approximately a 14.5%-15.5% benefit from acquisitions and approximately
a 1% reduction due to foreign exchange. The constant-currency growth
rate for legacy operations in 2016 is expected to be 7%-8%.
The Company is narrowing the guidance range for GAAP earnings per share