CHARLES RIVER LABORATORIES INTERNATIONAL, INC. Q4 FY2024 earnings call

• Market environment: Biopharmaceutical demand remains consistent, with DSA demand KPIs stable. Global biopharmaceutical clients continue restructuring, while small and midsize biotechs benefit from better funding. - Segment outlooks: DSA expected to decline mid to high single-digit organic in 2025; RMS expected low single-digit growth in 2025; Manufacturing expected margin expansion. - Cost-saving initiatives: Restructuring initiatives to yield ~$225M annualized savings by 2026, ~$175M in 2025. - Stock repurchases: Under $1B authorization, intend to repurchase ~$350M in 2025.

DSA: Q4 2024 revenue was $603.3 million, a 3.5% organic decline. DSA operating margin was 24.7% in Q4 2024 (130 basis points decrease from Q4 2023) and 25.7% for full-year 2024 (180 basis points decline year over year). RMS: Q4 2024 revenue was $204.3 million, a 0.4% organic decline. Full-year RMS revenue was essentially flat with a 0.1% organic decline. Manufacturing: Q4 2024 revenue was $194.9 million, 2.1% organic growth. Full-year organic growth rate was 6.8%. Manufacturing segment operating margin increased 330 basis points to 28.7% in Q4 2024 and 560 basis points to 27.4% for full-year 2024.

• Reported revenue decline expected 4.5%-7% in 2025, organic decline 3.5%-5.5%. - Non-GAAP EPS expected $9.10-$9.60 in 2025. - CapEx expected ~$230M in 2025, essentially flat from 2024. - Stock repurchases: Intend to repurchase ~$350M in 2025 under $1B authorization.

• Biopharmaceutical demand constraints with continued client spending constraints. - NHP supply risks related to potential CITES decisions. - Foreign exchange headwinds due to US dollar strength.

Q: Elizabeth Anderson asked about bookings and book-to-bill.

A: Flavia Pease said net book-to-bill was stable sequentially. James Foster added about first-quarter trends and demand stability.

Q: Matt Sykes asked about RMS and NIH exposure.

A: James Foster said direct NIH exposure is <2% of total revenue, academic and government are ~40% of RMS.

Q: Matt Sykes asked about large pharma demand.

A: James Foster said large pharma demand is stable, no immediate recovery expected in 2025.

Q: Tejas Savant asked about CDMO business.

A: Flavia Pease said manufacturing margin expansion expected, with CDMO rightsizing and microbial business helping.

Q: Tejas Savant asked about CITES and NHP supply.

A: James Foster said will proactively de-risk supply chain by sourcing from multiple regions.

Q: Dave Windley asked about DSA pricing.

A: James Foster said pricing is a continuation of prior trends, with strategic pricing used to gain share.

Q: Ann Hynes asked about biotech growth.

A: James Foster said biotech growth expected to be modest, embedded in guidance.

Q: Justin Bowers asked about DSA book-to-bill.

A: Flavia Pease said book-to-bill was stable sequentially; James Foster discussed DSA dynamics and price impact.

Q: Lucas Sergott asked about manufacturing margin expansion.

A: Flavia Pease said cost savings and rightsizing across segments benefit margin expansion.

Q: Michael Ryskin asked about margins and pricing.

A: James Foster and Flavia Pease discussed margin trends and future pricing stability potential.

Q: Max Smock asked about biologics test business impairment.

A: Flavia Pease said goodwill impairment related to CDMO business, not biologics testing.

Q: Jacob Johnson asked about CDMO.

A: James Foster and Flavia Pease discussed guidance impact of lost commercial customers and business development.