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Charles River Laboratories International (CRL) 2025 Conference Transcript
CRLCharles River(CRL)2025-05-14 16:40

Summary of Charles River Laboratories International (CRL) Conference Call Company Overview - Company: Charles River Laboratories International (CRL) - Event: 2025 Conference Call - Date: May 14, 2025 Key Points Financial Performance - CRL reported better-than-expected Q1 results, primarily driven by the DSA division [4][5] - Revenue outlook improved by 1% to a range of -4.5% to -2.5% for the year, with EPS guidance raised by 0.20toarangeof0.20 to a range of 9.3 to 9.8[5]−Netbook−to−billratioexceededoneforthefirsttimeintwoyears,indicatingapositivetrendinbookings[4][8]BookingTrends−Bookingsincreasedby209.8 [5] - Net book-to-bill ratio exceeded one for the first time in two years, indicating a positive trend in bookings [4][8] Booking Trends - Bookings increased by 20% year-over-year, mainly from global biopharma clients [9] - Short-term bookings were prevalent, indicating clients are moving forward with programs quickly [11][12] - Mid-tier biotech clients showed revenue growth, reflecting improved funding conditions [10] FDA Policy Impact - The FDA announced plans to reduce animal testing, which has implications for CRL's business model [5][15] - CRL has invested approximately 200 million in alternative methods and technologies to align with the FDA's new guidelines [18][19] - Current revenues from new approach methods (NAMS) are about 200millionannually,expectedtogrowasnewtechnologiesarevalidated[20]ManufacturingandCDMOSegment−TheCDMOsegmentexperiencedarevenuedeclineduetothelossofacommercialclient,impactingrevenueby500basispoints[32]−Despitethis,thereisastrongpipelineofinterestfromnewclients,particularlyingenetherapy[33][34]ResearchModelsandServices(RMS)−RMSdivisionhasmaintainedpricingpowerdespiteadeclineinanimalusage,withapositivemixofmorecomplexmodels[37]−Academicandgovernmentclients,whichrepresentabout20200 million annually, expected to grow as new technologies are validated [20] Manufacturing and CDMO Segment - The CDMO segment experienced a revenue decline due to the loss of a commercial client, impacting revenue by 500 basis points [32] - Despite this, there is a strong pipeline of interest from new clients, particularly in gene therapy [33][34] Research Models and Services (RMS) - RMS division has maintained pricing power despite a decline in animal usage, with a positive mix of more complex models [37] - Academic and government clients, which represent about 20% of RMS, have shown growth in Q1, with no immediate impact from NIH cuts [39][40] Non-Human Primate (NHP) Supply Chain - Concerns regarding NHP trade restrictions from Cambodia have been addressed, with CRL confident in its diversified supply chain [46][48] - Less than 30% of NHP supply comes from Cambodia, with efforts to increase capacity from Mauritius [48] Cost Savings and Efficiency - CRL aims for 175 million in annualized cost savings in 2025, increasing to $225 million in 2026 [51] - Focus areas include site consolidation and automation to improve efficiency [52][54] Market Outlook and Strategic Focus - No immediate changes in client priorities due to drug pricing policies; clients are focused on executing existing plans [56] - Potential for M&A exists, but current capital deployment is focused on share repurchases and debt repayment [60][61] Misunderstandings About CRL - CRL is primarily a drug development company, utilizing both in vivo and in vitro methods, and is committed to guiding regulatory agencies towards new technologies [63][64] Additional Insights - The transition to NAMS technologies will take time, with a focus on patient safety and scientific validation [22][28] - The company is well-positioned to adapt to changes in the regulatory landscape and market demands [22][46]