Charles River Laboratories Posts Mixed Q3 Results; Updates 2023 Outlook
Charles River Laboratories International Inc (NYSE:CRL) reports a 3.8% increase in Q3 revenue, reaching $1.03 billion.
GAAP earnings per share decreased by 10.1% to $1.69, while non-GAAP earnings per share increased by 3.4% to $2.72.
Company updates 2023 guidance, narrowing its revenue growth and non-GAAP earnings per share ranges.
On November 8, 2023, Charles River Laboratories International Inc (NYSE:CRL) released its third-quarter earnings, revealing a revenue increase to $1.03 billion, up 3.8% from the same period last year. The company's GAAP earnings per share fell to $1.69, a decrease of 10.1%, primarily due to site consolidation costs and increased interest expense. However, non-GAAP earnings per share saw a 3.4% rise to $2.72, driven by higher revenue and operating income.
Performance and Challenges
Organic revenue growth of 4.1% was primarily attributed to the Discovery and Safety Assessment (DSA) and the Research Models and Services (RMS) business segments. The divestiture of the Avian Vaccine business and the impact of foreign currency translation also influenced the financial results. Despite the positive revenue trends, CRL faced challenges from current client spending patterns, particularly affecting the RMS segment and the Microbial Solutions business.
Segment Highlights
The RMS segment reported a revenue increase of 3.7% to $186.8 million, while the DSA segment saw a 7.2% increase to $664.0 million. However, the Manufacturing segment experienced a 7.3% decrease in revenue to $175.7 million. Operating margins across the segments were affected by various factors, including revenue mix, operating leverage, and site consolidation costs.
Updated 2023 Guidance
CRL has updated its 2023 financial guidance, narrowing its revenue growth range to 2.5% - 3.5% and adjusting its non-GAAP EPS estimate to $10.50 - $10.70. These updates reflect a shift in the gating of financial results in the second half of the year, with the third-quarter performance exceeding the company's prior expectations.
Financial Tables Summary
The condensed consolidated statements of income show a slight decrease in net income attributable to common shareholders for the nine months ended September 30, 2023, compared to the same period in 2022. The balance sheet reflects a stable financial position, with total assets and total liabilities, redeemable noncontrolling interests, and equity closely matching the previous year's figures. The cash flow statement indicates a healthy cash flow from operating activities, although there is a net change in cash, cash equivalents, and restricted cash due to investing and financing activities.
Management Commentary
"We were pleased that our third-quarter financial results exceeded our expectations, and that some early signs of more favorable demand trends began to emerge," said James C. Foster, Chairman, President, and Chief Executive Officer. He also noted the resilience of the business model and the company's focus on market share and operating efficiencies in the current market environment.
Investor and Media Information
Investors and media can access the webcast discussing the Q3 results and find additional financial details on the company's website. Non-GAAP financial measures are reconciled in the provided schedules, offering a clear understanding of the core operating results.
For more detailed information on Charles River Laboratories International Inc's third-quarter earnings and updated 2023 guidance, please visit ir.criver.com.
Explore the complete 8-K earnings release (here) from Charles River Laboratories International Inc for further details.
This article first appeared on GuruFocus.
