Charles River Laboratories International Inc CRL reported third-quarter 2024 revenue of $1.01 billion on Wednesday, a decrease of 1.6% year over year, beating the consensus of $976.02 million.
The impact of foreign currency translation benefited reported revenue by 0.4%, and an acquisition contributed 0.9% to consolidated third-quarter revenue.
A divestiture of a small Safety Assessment site reduced reported revenue by 0.2%. Organic revenue decreased by 2.7%.
In the third quarter of 2024, the operating margin decreased to 11.6% from 14.8% a year ago, primarily driven by costs associated with the company's restructuring initiatives.
The company says the adjusted operating margin improved in all three segments; however, the improvements were more than offset by higher unallocated corporate costs, which resulted in the third-quarter operating margin decreasing to 19.9% from 20.5%.
The company reported adjusted EPS of $2.59, down from $2.72 a year ago, surpassing the consensus estimate of $2.43.
James Foster, Chair, President and CEO, said, "Forward-looking demand indicators were relatively stable in the third quarter, contributing to third-quarter financial performance which exceeded our prior outlook. We are continuing to navigate through a challenging period as global biopharmaceutical clients reduce spending in conjunction with major restructuring and pipeline reprioritization activities, but overall demand trends do not appear to have deteriorated further. In addition, biotech funding has improved in 2024, and demand appears to be demonstrating early signs of stabilization. These factors resulted in a slight, sequential improvement in net book-to-bill and the cancellation rate in the Safety Assessment business."
Revenue for the Discovery and Safety Assessment segment was $615.1 million, down 7.4%. Organic revenue decreased by 7.4%, driven primarily by lower sales volume in the Discovery Services and Safety Assessment businesses.
Research Models and Services sales increased 5.9% to $197.8 million.
Guidance: Charles River Laboratories expects 2024 revenue to decline 3.0%-2.0% on a reported basis and 4.0%–3.0% organically, compared to prior decline guidance of 4.5%–2.5% and 5.0%–3.0%, respectively.
The company expects 2024 adjusted EPS of $10.10–$10.30 compared to prior guidance of $9.90–$10.20 and the consensus of $10.
Price Action: At last check on Wednesday, CRL stock was up 14% at $215.10.
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