I would now like to turn the conference over to your host, Todd Spencer, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Charles River Laboratory's fourth quarter and full year 2025 earnings and 2026 guidance conference call and webcast. This morning, I am joined by Jim Foster, Chair, President, and Chief Executive Officer, Birgit Gershik, Executive Vice President and Chief Operating Officer, and Mike Nall, Senior Vice President, Interim Chief Financial Officer, and Chief Accounting Officer. They will comment on our results for the fourth quarter of 2025, as well as our financial guidance for 2026. Following the presentation, they will respond to questions. There is a slide presentation associated with today's remarks, which we posted on the Investor Relations section of our website at ir.criver.com. A webcast replay of this call will be available beginning approximately two hours after the call today and can also be accessed on our Investor Relations website. The replay will be available through next quarter's conference call. I'd like to remind you of our safe harbor. All remarks that we make about future expectations, plans, and prospects for the company constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated. During the call, we will primarily discuss non-GAAP financial measures, which we believe help investors gain a meaningful understanding of our core operating results and guidance. The non-GAAP financial measures are not meant to be considered superior to, or a substitute for, results of operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations on our investor relations section of our website. I will now turn the call over to Jim Foster.

Thank you and good morning. As Todd mentioned, I'm pleased to be joined today by Birgit Gershik, who will become our next CEO when I retire in May, as well as our interim CFO, Mike Nell. Birgit will provide an overview of our 2026 guidance and the key drivers behind our outlook. But before I hand the call over to her, I will provide details on our fourth quarter and full-year 2025 financial results, as well as an update on our latest developments and market trends. We were pleased that our 2025 financial results were at the upper ends of the revenue and non-GAAP earnings per share ranges that we provided in November. Beyond our financial results, the fourth quarter capped a year that was marked by the stabilization of the biopharma demand environment, including substantial improvements in DSA net bookings, particularly during the first and fourth quarters. We also advanced several strategic initiatives that will enable the company to better capitalize on future growth opportunities and renewed our focus on scientific innovation that will reinforce our position as the leader in preclinical drug development. At different points during 2025, demand from both global biopharmaceutical clients and small and mid-sized biotechnology clients showed signs of improvement. Many of our global biopharma clients progressed through their restructuring and pipeline reprioritization activities, and after holding back spending in 2024, moved their programs forward with more urgency when new budgets were released in early 2025, which led to strong DSA bookings at the start of last year. The biotech funding environment slowed in the first half of 2025, and we subsequently experienced softer demand trends from our small and mid-sized biotech clients during the summer months. However, with a reinvigorated funding environment in the second half of the year, including a record level of $28 billion in the fourth quarter, biotech clients were the primary driver behind a steady sequential increase in the DSA net book to bill in each month during the second half of the year. As we disclosed at an investor conference last month, the DSA net book to bill improved to 1.1 times in the fourth quarter. Taking these factors into account, we are cautiously optimistic that the favorable DSA demand trends will continue in 2026 and result in a return to organic revenue growth in the second half of the year for both the DSA segment and the overall company. We've also made substantial progress on the strategic actions that we outlined in November to unlock long-term shareholder value, including strengthening and refining our portfolio, driving greater efficiency, and maintaining a balanced yet disciplined approach to capital deployment. To strengthen our portfolio, in January, we announced the planned acquisitions of the assets of KF Cambodia and Path of Quest. Both of these acquisitions are squarely aligned with our core competencies and are the result of lengthy, successful partnerships. KF, the acquisition of which has already closed, has been our longtime NHP supplier in Cambodia and will further strengthen and secure our DSA supply chain. We expect it will generate meaningful operating margin improvement starting later this year through significant cost savings on NHP sourcing. Between CAF and Novaprim, we expect to own and internally source most of our future annual NHP supply requirements for the DSA segment. We continue to advance our NAMS capabilities with the planned acquisition of PathoQuest, which is expected to close within the next month. The company has been a partner of our biologics testing business since 2016 and provides an in vitro approach to manufacturing quality control testing for biologics. The KF and Path Request acquisitions are excellent examples of capital deployment in core areas that will enhance our financial profile and advance our scientific capabilities as we endeavor to capture a greater share of wallet from our clients. We will continue to evaluate additional M&A, including in the areas of bioanalysis and geographic expansion, in order to support our clients as they seek to drive greater efficiency and success in their drug development programs. We are also focused on continuing to build our NAMS portfolio or new approach methodologies in areas that are most relevant to clients and their scientific needs. We believe we have already established a solid foundation of NAMS capabilities, including our retrogenic cell microarray platform for off-target screening and toxicity, Our development of virtual control groups for safety assessment studies that utilize machine learning and other techniques, and most recently, Path Request's innovative next-gen sequencing platform. We are excited about current and future applications for NAMS and related innovations, including AI, and we view these as enabling technologies to support the work that we do and is complementary to it. NAMS, including AI, has promise, but it still has challenges with data availability and proof of concept, so it will be a gradual, longer-term evolution led by science and the validation of new capabilities over time, particularly in a regulated safety assessment environment where patient safety is paramount. Since we began to discuss NAMS in more detail last spring, there have not been any significant technological changes in drug development and we have not experienced any notable changes in client behavior other than more frequent conversations about NAMS. We also continue to make progress on our plan to divest businesses totaling approximately 7% of 2025 annual revenue. These processes and negotiations with potential buyers are ongoing and we continue to expect the plan divestitures will be complete completed by middle of 2026. Assuming all transactions are completed, the expected non-GAAP earnings per share accretion of $0.30 on an annualized basis from the planned divestitures will be less for the partial year of 2026, or closer to $0.10 per share, because of expected improvements in the operating performance of these businesses throughout the year. Now I will recap our fourth quarter and full-year consolidated performance. We reported revenue of $994.2 million in the fourth quarter of 2025, a 2.6% decline on an organic basis from the previous year, with revenue declines in all three business segments. For the full year, we reported revenue of $4.02 billion, with an organic revenue decrease of 1.6%, driven primarily by lower revenue in the DSA and manufacturing segments. By client segments, sales to both the global biopharma and small and mid-sized biotech client segments declined modestly for the full year. In the fourth quarter, sales to global biopharma clients rebounded meaningfully versus the prior year, as these clients got back to work after pulling back on spending at the end of 2024. Sales to small and mid-sized biotech clients decreased modestly in the fourth quarter, largely reflecting softer DSA bookings during the summer months. As a reminder, there's a natural lag between when DSA studies are booked and when they start and begin to generate revenue. Therefore, it will take one to two quarters to see the benefit of the stronger fourth quarter bookings. The operating margin decreased 180 basis points year over year to 18.1% in the fourth quarter principally driven by three anticipated factors, lower revenue, higher staffing and NHP sourcing costs in the DSA segment, and the timing of NHP shipments in the RMS segment. For the full year, the operating margin declined by just 10 basis points to 19.8% as the cost savings from restructuring and efficiency initiatives helped to protect the operating margin, which has been our stated goal. Earnings per share were $2.39 in the fourth quarter, a decrease of 10.2 percent from $2.66 in the fourth quarter of 2024. In addition to the lower operating margin, the tax rate was also a meaningful year-over-year headwind in the fourth quarter. For 2025, earnings per share were nearly flat at $10.28 compared to $10.32 in 2024, as lower revenue was largely offset by the benefit of the cost saving initiative. Below the line items largely netted out with the higher tax rate in 2025 primarily offset by lower interest expense and a lower share count in stock repurchases earlier in the year. I will now provide additional details on the segment performance. DSA revenue in the fourth for it was $591.6 million, a decrease of 3.3% on an organic basis. The decline reflected lower study volume, particularly for discovery services, while DSA pricing and mix were relatively stable. For the year, DSA revenue decreased 2.6% on an organic basis. As a result of client demand, we experienced a meaningful increase in revenue from NHP studies, resulting in an increase in the number of NHPs used in these studies in 2025 for which additional information can be found in the appendix of our slide presentation. These trends reflect our clients' continued reliance on traditional in vivo methods to help ensure drug safety, even as we and our broader industry continue to evaluate applicable uses for NAMs and further expand our capabilities. We experienced a higher number of NHP study starts in the fourth quarter, and this trend is expected to continue into the first quarter. As we mentioned in November, the higher-than-expected NHP study demand led to increased NHP sourcing costs in the fourth quarter, and will again in the first quarter. However, due in part to the acquisition of CAF, we expect NHP sourcing costs will normalize over the course of the year. As we previously disclosed, DSA demand KPIs improved in the fourth quarter, led by net book to bill of 1.12 times on net bookings of $665 million, representing a meaningful increase from 0.82 times in the third quarter. The sequential improvement was principally driven by small and mid-sized biotech clients, while global biopharma clients also contributed with both sequential and year-over-year bookings increases. Proposal value continued to be stable to improve in the fourth quarter, as it was for most of the year, and cancellations remained at lower levels, consistent with the third quarter. At the year end, the DSA backlog modestly improved to $1.86 billion from $1.80 billion at the end of the third quarter. Collectively, these trends lead us to believe that the favorable DSA demand environment will continue in 2026. However, it is important to note that this improvement may not be linear as demonstrated in 2025, and also that fourth quarter and more recent bookings activity will not more fully benefit DSA revenue growth until the second quarter due to the normal lag between booking and study start. The DSA operating margin was 20.1% in the fourth quarter, a 460 basis point decreased from the fourth quarter of 2024, and it was 24.2% for the full year, representing 150 basis point decline year over year. Both the fourth quarter and full year declines were driven by lower revenue and higher costs related to increased NHP sourcing costs, and study starts in the fourth quarter, as well as higher staffing costs as we had previously anticipated. RMS revenue in the fourth quarter was $206.3 million, a decrease of 0.9% on an organic basis. For the year, RMS revenue increased 1.2% on an organic basis. The fourth quarter decline was primarily driven by two factors, lower NHP revenue and lower sales volume from small models in North America. NHP revenue was impacted by the timing of certain shipments, which, as previously noted, had been accelerated to earlier in the year. In the small research models business, lower sales volume in North America reflected that in-house research activity by a large farmer and mid-sized biotech clients has not fully recovered. Revenue from academic and government accounts remained very stable, but the growth rate has slowed compared to prior year, due in part to the government uncertainty, including with NIH budgets. Small model pricing in North America and Europe continue to be a positive contributor to RMS revenue, and in Europe is offsetting the expected volume declines. In China, small model unit volume continue to grow nicely. Revenue from research model services increased in the fourth quarter, but occupancy for our cradle sites remain pressured by the early-stage biotech market environment. The RMS operating margin decreased by 90 basis points year-over-year to 21.9 percent in the fourth quarter, but increased by 110 basis points to 24.8 percent for the full year. The fourth quarter margin was primarily impacted by lower revenue for small models in North America and an unfavorable revenue mix due to the timing of NHP shipments. For the year, the operating margin improvement was primarily due to a favorable mix related to higher NHP revenue, as well as cost savings related to our restructuring initiatives. Manufacturing solutions revenue was $196.4 million for the fourth quarter, a decrease of 2.1% on an organic basis, and full-year revenue declined 1.6% organically. The lower fourth quarter and full-year growth rates were primarily driven by lower CDMO revenue, principally the result of the loss of one commercial cell therapy client whose revenue declined by nearly $25 million in 2025. Microbial Solutions had a strong year with growth across all three testing platforms, EndoSafe, Celsus, and Acugenics. However, year-end client ordering patterns were not quite as robust as last year, which caused the fourth quarter growth rate to slow. We were pleased to see the performance of the biologics testing business modestly improve and return to growth in the fourth quarter after a year that was impacted by lowest sample volumes from several large clients due to project delays or regulatory challenges. The manufacturing segment's operating margin increased by 340 basis points to 32.1% in the fourth quarter and by 140 basis points to 28.8% for the full year. We were pleased that the segment's operating margin continued to improve and move closer to the 30% level in 2025, driven principally by a solid performance from the microbial solutions business, as well as restructuring actions to generate incremental cost savings, including in the CDMO business. Before I hand the call over to Birgit to discuss our 2026 guidance, I'd like to take a moment to reflect on my long and fulfilling career at Charles River. As many of you know, in January, I announced my planned retirement, effective at the conclusion of our annual meeting of shareholders on May 5th, but I am pleased to remain on our board. Leading the extraordinary team at Charles River as CEO for more than 30 years has been a profound experience and one of the greatest privileges of my life. Together, we built an industry leader with a culture shaped by our remarkable people, a strong and supportive workplace, and world-class science, all of which has enabled us to deliver meaningful outcomes for our clients and patients who rely on us. While I'm proud of our accomplishments from taking the company public on the New York Stock Exchange to transforming Charles River into a global leader in preclinical drug development services and then becoming a respected member of the S&P 500, I am most proud and appreciative of the relationships that I have built over the last five decades with my colleagues, our clients, and all of you, our shareholders and analysts. I sincerely thank you. We have made tremendous progress over the last 12 months, ranging from NAMS and NHP supply to the biopharma demand environment and our strategic review, making this the right time to transition the company into its next chapter. I'm delighted that Birgit Birshik will become our next CEO, and it will be in her capable hands to drive forward Charles River's strategic direction, future growth, and operational excellence for many years to come. Birgit has played an instrumental role as COO for nearly five years, leading our global businesses, guiding our digital evolution, and most recently, driving our strategic vision. I have worked closely with Birgit for many years and have the utmost confidence in her leadership abilities, and I will continue to work closely with her in the coming months to ensure a seamless transition. As I sign off on my final learnings call, I'd like to thank our employees profoundly for their exceptional work and commitment. It is their dedication to explicit science and exceptional client service that has distinguished us as the preeminent provider of preclinical services. And always, I thank our clients and shareholders for their support over the years. Now I'll introduce our next CEO, Birgit Gershik, who will provide details on our 2026 financial guidance.

Good morning, everyone. First, I want to sincerely thank you, Jim, for the tremendous mentorship and close partnership you have provided over the years to prepare me for this incredible opportunity and also for your significant contributions to build the company into the industry leader that we are today. I also want to thank and acknowledge our board of directors for the trust that they have placed in me. I'm deeply honored to become Charles River's next CEO and am committed to building upon the solid foundation that Jim has established. With a talented team at Charles River, we will continue to work tirelessly to lead the industry, to accelerate the progress we have made in scientific innovation, to advance drug development through our best-in-class science and client service, and by continuing to focus on ensuring the company remains leading edge with world-class processes, a client-centric service offering, and technology enablement. I am very excited to lead Charles Rivers' next phase of growth. I will now provide details on our 2026 financial guidance and the improving trends that we we expect organic revenue in 2026 is expected to range from down 1% to at least flat compared to a 1.6% decline in 2025 we expect the operating margin will improve by 20 to 50 basis points from 19.8% in 2025, driven principally by the benefit from the acquisition of the assets of KF Cambodia. This is expected to translate into non-GAAP earnings per share in a range from $10.70 to $11.20, representing growth of approximately four to nine percent we continue to expect that the acquisition will add approximately 25 cents to earnings per share this year which has been embedded in this guidance by segment we expect RMS revenue to decline at a low to mid single digit on an organic basis in 2026 there are two primary factors driving the decline first nhb revenue is expected to be below 2025 levels and represents an approximate 200 basis point headwind to the rms growth rate this is primarily due to the timing of shipments which favor 2025 and will have a particularly significant impact on the year-over-year comparison in the first quarter of 2026 a reduction in nhp volume commitments to certain third-party clients will also affect the growth rate the other meaningful rms headwind in 2026 will be cradle occupancy levels which are expected to continue to be constrained as demand from early stage biotech clients remain subdued global revenue for small research models is expected to be flat to slightly higher in 2026 as unit volumes declines particularly in north america and will continue to be offset by favorable pricing we expect dsa revenue will be in a range between slightly positive and a low single digit decrease on an organic basis in 2026 As Jim discussed, we are cautiously optimistic that the favorable DSA demand trends will continue in 2026, supported by the recent improvement in biotech funding. We believe the strong bookings performance at the end of 2025 and a continuation of favorable trends this year will result in a return to DSA organic revenue growth in the second half of 2026. In order to achieve the top end of our DSA revenue outlook for the year, it would require continuous momentum in the bookings environment, resulting in the net book-to-bill average and above one times for the year. This does not mean that every quarter will be above one times, as our business isn't linear, and factors like backlog conversion and the timing of bookings or study starts also heavily influence the DSA growth potential. For the manufacturing segment, we expect the organic revenue growth rate will rebound to a low single-digit increase this year. This favorable outlook compared to a 1.6% organic decline last year principally reflects the anniversary of the loss of a commercial cell therapy client whose program generated about 20 million dollars in cdmo revenue during the first half of 2025. Microbial solutions is expected to report a growth rate in the mid single digits similar to its 2025 levels and we expect that some of the client-specific challenges that impacted the biologics testing growth rate last year will be alleviated resulting in a slightly better performance in 2026. Moving on to operating margin. We expect that the DSA segment will be the primary driver of the 20 to 50 basis points of consolidated margin improvement in 2026. As previously mentioned, the margin expansion will largely be driven by the acquisition of CAAS as lower sourcing costs to procure NHPs to support DSA studies will generate meaningful margin improvement in the second half of the year once the model source post acquisition begin to be placed on studies. For the year we expect KF acquisition will benefit the operating margin by more than 50 basis points on a consolidated basis and by more than 100 basis points in the DSA segment. We expect the RMS and manufacturing operating margins will be stable in 2026. From an earnings perspective, we expect most of the earnings per share improvement in 2026 will be generated from operations driven by margin expansion. We expect to generate at least $100 million in incremental cost savings above the 2025 level to help protect the operating margin because revenue growth will not offset the level of annual cost inflation this year. As we discussed in November, the incremental savings will be primarily driven by initiatives designed to drive greater operating efficiencies through process improvement, procurement synergies, and implementation of an integrated global business services approach. As a reminder, we are now expected to generate a cumulative total of over $300 million dollars in cost savings on an annualized basis based on actions that we implemented over the last three years. I have personally led many of the company's efforts to reduce costs through restructuring and efficiency initiatives designed to keep cost structure aligned with the pace of demand and to drive process improvement. I will continue to focus on streamlining our processes and ensuring we operate a nimble, responsive, and technology-enabled organization going forward. In addition to significant card savings and the $0.25 per share benefit from the KF acquisition this year, below-the-line items are expected to contribute more than a $0.30 benefit at midpoint to 2026 earnings per share, principally driven by a lower tax rate. We expect the first quarter operating margin will be in the mid-teens, pressured by a few discrete factors, including an unfavorable mix from the timing of NHB shipments in the RMS segment, the acceleration of stock compensation expense to do the CEO transition, and higher DSA costs primarily related to NHB sourcing and staffing. These factors are not expected to be a meaningful headwind after the first quarter, and we expect the operating margin will improve significantly thereafter. Mike will provide additional details on our first quarter outlook as well as the below the line items shortly. Before I conclude, I'm pleased to announce that we will be adding two experienced senior leaders to our team this spring. Glenn Coleman will join us on April 6th as Executive Vice President and Chief Financial Officer. Glenn is a seasoned financial leader and operationally oriented CFO with over a decade of experience in the healthcare industry. Glenn has over 30 years of strong financial and operational management experience and has been CFO for multiple public companies, as well as a chief operating officer with experience managing clinical, R&D, and manufacturing teams. I also would like to thank Mike Nell for his leadership of our finance organization during the CFO search. Mike will continue in his current position as senior vice president and chief accounting officer and will play an instrumental role in the success of our organization. I'm grateful for his dedication and commitment to Charles River. We are also pleased to have Kerry Daly join us on March 30th as Senior Vice President and Chief Legal Officer. Kerry brings 25 years of sophisticated legal experience to Charles River and is an experienced leader that has been focused on advising multinational life science companies across complex regulatory environments. We are pleased that you will enable us to proactively manage our highly regulated science-led organization by combining our legal, compliance, communications, government relations, security, and ESG initiatives under one leader. I look forward to welcoming and partnering with both Glenn and Kerry in the coming months. I would also like to reiterate my appreciation for being named Charles Rivers next CEO. It is an honor that I'm proud to accept. I am firm in my commitment to drive forward the company's strategic direction and growth imperatives, including the actions that we outlined in November to enhance long-term shareholder value. Over the past five years and more, I've had the pleasure of meeting many of you at various investor conferences and related events. These interactions have provided valuable opportunities to exchange ideas and insights, which I look forward to continuing. I'm eager to reconnect with those of you I have met previously, and for those whom I have not yet had the chance to meet, I look forward to doing so in the coming months. I'm committed to maintaining open and transparent communication with our investor community and welcome the opportunity to introduce myself and discuss our vision for the future of Charles River. Now, I will turn the call over to our interim CFO, Mike Noun. Thank you.

Good morning, and thank you, Birgit. It's been an honor to lead our talented finance team for the last several months, and I look forward to continuing to work closely with them and our new CFO to drive our future success. I would also like to thank you, Jim, and the board for the opportunity to be interim CFO before I begin may I remind you that I will be speaking primarily to non-GAAP results which exclude amortization and other acquisition related adjustments impairments costs related primarily to restructuring initiatives gains or losses from certain venture capital and other strategic investments and certain other items many of my comments will also refer to organic revenue growth which excludes the impact of acquisitions divestitures and foreign currency translation let me start by providing some additional details on our 2026 guidance beer get highlighted our organic revenue growth and non-gap earnings per share outlooks on a reported basis we expect revenue will be between at least flat and 1.5 percent growth FX is expected to be a tailwind as the US dollar has continued to weaken and is expected to benefit reported revenue by 1 to 1.5 percent. We also expect a small revenue benefit from PathoQuest once the acquisition closes later this quarter. We have provided additional information on FX rates and our currency exposure in the appendix of our slide presentation. On slide 31 we have also provided the segment outlook for 2026 which includes reported and organic revenue expectations as beer get mentioned we expect several headwinds to impact the first quarter operating margin and earnings per share our outlook for the first quarter of 2026 assumes revenue will be essentially flat to slightly negative on a reported basis and will decline at a low single-digit rate on an organic basis by segment the RMF growth rate will be negatively impacted by lower NHP revenue due primarily to the timing of shipments, which will have a nearly $10 million impact on first quarter RMS revenue. The manufacturing segment's growth rate will reflect the difficult year-over-year comparison with regard to commercial revenue in the CDMO business, which also has an approximately $10 million impact on first quarter manufacturing revenue. We expect the DSA rate of decline will improve slightly from second half 2025 levels, but as a reminder, the benefit from strong bookings activity in the fourth quarter will not yet be evident in DSA revenue in the first quarter. From a first quarter earnings perspective, we expect non-GAAP earnings per share will decline at a high teens rate year-over-year. As Birgit mentioned, there are several discrete factors that will impact the operating margin in the first quarter resulting in an operating margin in the mid teens the two primary factors are the timing of NHP shipments and higher stock compensation costs due largely to an acceleration of the expense related to the CEO transition stock compensation is expected to approximate a 15 cent headwind to EPS in the first quarter in addition the DSA margin will continue to be pressured at in the first quarter as it was in the fourth quarter by higher NHP sourcing costs due to higher than anticipated demand for these studies, as well as increased staffing costs, but these DSA headwinds are expected to dissipate after the first quarter. Normalizing NHP study-related costs due in part to the KF acquisition, improving demand trends, and the strong year-end bookings are expected to benefit revenue and generate sequential improvements in the DSA operating margin as the year progresses. I will now provide details on non-operating items. Unallocated corporate costs in 2026 are expected to be similar to the 5.5% of total revenue reported in 2025. We expect unallocated corporate costs in the first quarter to be elevated due to the timing of stock compensation expense related to the CEO transition, but this does not have a meaningful impact on the full year. For the remainder of the year, we expect unallocated corporate costs to trend favorably because of the benefit from prior cost-saving initiatives, and performance-based bonus accruals are expected to be lower as targets are reset for the new year. The non-GAAP tax rate for 2026 is expected to be in the range of 22% to 23%, a decrease from 24.6% in 2025. The anticipated decrease in the tax rate is primarily driven by the 2026 tax rate benefits related to the enactment of the One Big Beautiful Bill Act, or OB-3, and a favorable geographic mix. In 2025, we lowered our net interest expense by shifting debt to lower interest rate geographies and by repaying debt borrowed for stock repurchases earlier in the year. At the end of the fourth quarter, we had outstanding debt of $2.1 billion with approximately 70% at a fixed interest rate compared to $2.2 billion at the end of 2024. This equated to a gross leverage ratio of 2.1 times and a net leverage ratio of 2.0 times at the end of the fourth quarter. We expect gross and net leverage ratios will remain below three times after funding the KF and PathoQuest acquisitions. Total adjusted net interest expense in 2026 is expected to be in a range of $95 to $100 million, compared to $102.1 million last year. We expect higher average debt balances in 2026 as a result of the KF and PathoQuest acquisitions but the decrease in net interest expense reflects the full year benefit of 2025 interest rate reductions in the favorable geographic interest rate mix as we discussed in November we will continue to take a disciplined approach to capital deployment and plan to regularly evaluate the optimal balance between acquisitions debt repayment stock repurchases and other uses of cash. For 2026, with the deployment of over $500 million in capital for the KF and PathoQuest acquisitions, we currently intend to focus more on debt repayment and maintaining dry powder as we continue to evaluate potential M&A opportunities. We will also continue to regularly evaluate all uses of capital throughout the year, including stock repurchases. However, we currently expect the average diluted share count will be slightly higher in 2026 for 2026 we expect free cash flow will be in a range of 375 to 400 million dollars representing a decrease from 518.5 million dollars in 2025 the decrease primarily reflects two main drivers higher performance based cash bonus payments due to the 2025 outperformance which are paid in the first quarter of 2026, and deferred compensation payments related to the planned CEO retirement. Capital expenditures for 2026 are expected to be approximately $200 million, or approximately 5% of total revenue, and a slight reduction from the 2025 level of $219.2 million. This outlook reflects our disciplined approach to managing capital investments while continuing to invest strategically in areas to support client demand a summary of our 2026 financial guidance can be found on slide 39 in conclusion we remain encouraged by the recent demand trends and by the potential to return to organic revenue growth in the second half of the year we are laser focused on driving our strategy forward including through selective and strategic M&A that aligns with our core competencies, taking decisive actions to deliver continued benefits to drive efficiency and process improvements that will strengthen our organization and enhance our flexibility as demand rebounds, and through maintaining a disciplined capital allocation approach. These actions position us well to drive long-term shareholder value creation. Finally, I want to thank Jim for his tremendous leadership and many contributions during my time at Charles River and throughout his career, and we look forward to continuing to execute on our strategy under Birgit's leadership. Thank you.

That concludes our comments. We will now take your questions.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2.

We can ask that you please limit yourself to one question once again that is star one to ask a question and we'll go first to Eric Holdwell with Baird your line is open please go ahead thanks very much I wanted to dig into the broader topic of NHPs there seemed to be some I don't know dichotomy in the outlook and results here between RMS and DSA hoping you can just walk us through this and help clear it up so RMS is facing material headwind from lower NHP volume. We've also heard lower sales from one of your competitors. But at the same time, DSA is facing a material headwind from higher NHP sourcing costs and strong demand for NHP studies.

So I'm just hoping you can walk us through some of these dynamics, the nuances between what's happening in RMS and what's happening in DSA, and then talk about you know some of the drivers of the higher sourcing costs that are impacting you in the near term thanks very much you guys want to take that yeah happy to take it hi Eric so let me start with the RMS volume so the RMS volumes and an impact in Q4 is primarily timing so looking for the full year the The shipments have shifted, and with that, Q4 was lighter than the year before. Looking forward, we talked about RMS volumes being a driver of less revenue in Q1. That is both timing as well as a little bit lower volumes. For our DSA business, we talked about higher sourcing costs, particularly in Q4, having some impact in Q1. We had more NHP studies coming in than we had expected in 2025 and early 26. So with that, we had to go to the open market and buy some NHPs at a higher price, which will have an impact on our OI. Part of the disconnect or what you're seeing here is also the fact that we always have two sources, so an Asian source as well as a Mauritian source, and they don't always connect perfectly of what we have available and internally from our own farms versus what we have to buy on the open market. So it's really mostly timing as well as timing between the RMS business shipments when they're coming in, but also what kind of source we are needing, how quickly we're needing them, and that we have to source from the open market, if that makes sense.

It does, and if I could just ask a follow-up, what is the – you provide in your appendix the NHP utilization for 24, and you gave an update for 25, which was pretty notable growth. Is it too early, or would you care to share your thoughts on the full year for internal demand compared to that data point provided in 25?

For 2026? Yeah, it's a little bit too early. We're really just starting the year. But for 2025 compared to 2024, what you're seeing here is a higher number of NHP studies coming through, which is a little bit of mix, but also substantiate the need for this very important research model, and that this research model is here to stay for a long time, which also required us to ascertain our supply chain and, therefore, the KF Cambodia acquisition.

Thanks very much. Thanks, Eric.

We'll go next to Luke Circuit with Barclays. Your line is open. Please go ahead.

Thanks for the question, guys. so i just kind of want to talk about the you know it's a backlog here and the the dsa bookings they're starting to ramp the continued strength there but you guys also hired ahead of what was expected to be that demand so as bookings environment you know baked within your guide continue to improve can you talk about your hiring needs as you continue to ramp whatever you're going to do on the dsa to exit the year do you guys have enough or should we expect some type of pickup there just trying to right-size with cost outs plus the capacity utilization and and your hiring needs of what's going forward we

from a capacity point of view we have sort of two issues we have physical capacity which is in pretty good shape right now so we're not optimally using our facilities which obviously that's a goal of ours but still as the hopefully the demand increases, we'll be able to utilize space that's already built and be able to fill that. We've been really careful for years, actually, but really careful the last two or three years to get our headcount in sync with demand and with our revenue. Obviously, this is a people business, and it's more than half of our costs. And last year, in 2025, we added some incremental people in our lab sciences building business and to fill vacant spots. So I think we're in good shape. Senior scientific staff and study directors and people like that are in particularly good shape. And principally, we're looking at direct labor. We need to bring direct labor on probably a quarter before we actually need them because there's some training associated with that. But we're quite confident we'll be able to do that in a measured fashion to both accommodate the work and not be a drag on our operating margins.

And kind of related to that, and this is kind of overall with the AI fears baked within the market and particularly within your business, you kind of gave the number there from an FTE perspective of percentage of cost. But, you know, as you guys continue to restructure, get more efficient, talk about, you know, I don't think that there's AI risk, but clearly the market doesn't agree with me. So kind of walk us through the bull case on why you aren't going to be impacted by any AI coming through, considering how much wet lab work you guys need to do.

Thanks for that. So we were, frankly, surprised at the sort of violent share price reaction to the AMI-AI conversation that's been going on across multiple industries, actually, for the last couple of weeks. So it is what it is. We got caught up in that. And so, you know, there's several things that, you know, we'd like to say about that. AI is a NAMS, and we're focused on NAMS to the extent that the science is beneficial, the science is additive, and we view AI as an enabling technology to support our work over a long term and to complement it, but we don't see it as a disruptor. AI and discovery has been around for a while by many of our large clients, so that's not new. The conversations really haven't changed at all. And so, you know, for us, AI and NAMS is sort of a broader, longer-term evolution rather than something that's immediate. it, we continue to see ourselves as an essential and logical partner to help validate NAMs, including AI, if and when they become beneficial and additive, as I said. And so we hope to be able to run interference in a positive way for both our clients and the regulatory agencies to validate these technologies, you know, if they're beneficial. So, the NAMs are basically crude right now. AI is really early. You know, it is a promise of AI that we think could be beneficial to discovery, and we don't quite see it in safety. You know, we've had some investments in AI to virtual control groups, which we talked about in our prepared remarks. some of our scientific report writing, our sales effectiveness. We have data scientists that are working on this. So we're embracing, I guess the bottom line for us is we're embracing alternative technologies sort of strategically, but the science will prevail. So the extent to which these technologies are beneficial, we think we'll use them more, we, the whole industry, in discovery to help our clients get to a lead compound faster. Hopefully, that will have more molecules moving through preclinical talks and more molecules moving into the clinic, and hopefully more molecules are being approved. So, we acknowledge it. We embrace it. We're participating in it. We actually don't see it as a threat to the company. and if these technologies are better in any way besides just being augmented, they'll be embraced by the whole industry. Definitely nothing's imminent.

Great. Thanks.

Thank you. We'll go next to Max Smock with William Blair. Please go ahead.

Hi. It's Christine Raines on for Max. Congratulations to both Jim and Birgit on what lies ahead. And for our question, just hoping you can give some context on DSA cancellations in the quarter. I think you said they were consistent with last quarter levels, but curious if they were within your normal range and if you could remind us what your normal range of cancellations is. And also if the distribution of cancellations due to client funding versus clinical and other competitive reasons. We're in line with expectations in the quarter. Thanks.

So cancellations and slippage, as we call it, are sort of elements of our business. So slippage is when studies don't start, when we anticipate they would start, or when the clients initially anticipate. And things just cancel because, I don't know, priorities change therapeutic area focuses changes or the drug just isn't performing well before we even get a hold of it the clients just can't get it to a dosage that won't be harmful to the patient so we have cancellations all the time and always will you know we have penalties for cancellations with insufficient notice, which, you know, tends to cover whatever costs we've been impacted by up to that point. And with a decent backlog, we manage this really well. There's very little variability without a slippage or cancellation. So we've never given the actual percentage or dollar amount or whatever, nor will we. But we're definitely back to sort of normal, expected, anticipated cancellations, and we can manage that really well, again, without the volatility in our business model, and to be able to accommodate clients across the board, you know, both large pharma and biotech. And just to go back to the sort of nine-month backlog we had, we like that. It gives us a really great line of sight. If a study cancels or slips, we can almost always, not always, but almost always be able to slot something in the queue into, you know, real-time revenue-generating work to replace whatever has slipped and canceled. So, as you know, because you asked the question, cancellations had gotten a couple of years ago much higher than we would have liked until we had seen historically improved last year and is now sort of back to normal levels. impossible to predict, but we wouldn't anticipate, given the sort of market dynamics, cash coming into biotech, pharma companies finishing sort of skimming down their portfolios, that they would increase again in any significant way.

Great. Thank you. Thank you. We'll go next to Dave Windley with Jeffries. Please go ahead.

Hi. Good morning. Thanks for taking my questions. Congrats, Jim. It's been a nice ride. I looked back at my initiation. I think this is 100 conference calls with you. So thanks for the ride.

It's been a pleasure. It's been a pleasure, Dave.

Thank you. My question for you is basically a temperature check on on demand or urgency of clients last year you entered into 25 with some clients you know kind of booking some fast burn wanted to start quickly type studies your demand booked a bill in the fourth quarter certainly was strong it sounds like month to month continued to improve just interested in any color you can provide about how that has continued into the early part of 26 knowing that you often remind us that it's not linear in January sometimes get off gets off to a slow start but just kind of comparisons to maybe this time last year and and continuation out of the fourth quarter be great thank you so I'll start maybe maybe Birgit wants to we want to elaborate.

Demand is improving from a whole host of factors. So significant inflows of cash into the biotech coffers, pharma companies sort of finishing some of their bloodletting and shrinking down their infrastructures, and just tariff stuff being sort of over, and whatever pricing situation is going on between Washington and the pharma companies, we think that sort of past them. So demand seems to be improving. We, as I said a moment ago, we liked the backlog situation. You'll recall, Dave, two or three years ago, the backlog got to about 18 months, and we loved it until we hated it. It was just way too long, and clients got to the point of canceling studies because they just booked slots without a study. So last couple of years, we've seen a lot of post-IND work. We'll always have both, both pre and post. We're seeing more sort of general talks now, which is earlier than the post stuff, so that's good. We're moving towards a greater balance, so that would indicate clients are anxious to start their studies and would want to do that earlier, which obviously is a good thing for us. And while we do get some late-stage work sometimes we don't do the early stage work that's typically we like we like both and get those so if if we get the early work and the drug is progressing nicely we'll typically get the post-ind work as well so sort of a balanced demand quotient right now maybe bigger wants to add to that yeah happy Hi, Dave.

So maybe just to add that the environment feels a lot more stable than last year. So discussions with global biopharma is all about how they can increase the number of candidates in the upcoming year and upcoming years. So they're definitely ready back to work. They have their programs lined up. from a biotech, small and mid-sized biotech, a lot more positivity in the marketplace that we are hearing about. Certainly, there's still some uncertainty in pockets. Certainly, we're happy about our netbook to bill above one in Q4. And so we're hoping that demand trends will continue and get us back to growth in the second half of the year.

Great. If I could follow up real quickly. Relative to that, better environment, continuing improvement, the book to bill that you just posted in the fourth quarter, your comments about achieving the higher end of your revenue guidance range requires a 1.0 book to bill, again, with the caveat that things aren't linear, but that strikes me as a relatively conservative bar compared to what you just did. Perhaps add some perspective to that, please.

Yeah, I'm happy to start and then just let me come in. So as you outlined, we need a book to bill above 1, and it's not going to be linear. So the quarters are not all going to be above 1, most likely. And the reason for our outlook and looking at age 2 for growth on the top end is really that there's other factors in there. start time. So bookings are still one to two quarters out before they can actually start. The conversion of the backlog, the timing for that. And just then overall, the study starts from the book, when we're getting the booking, to when we actually can start starting and get it done in there.

So just a lot of different factors that are playing into it, but certainly very positive of those trends continuing okay thank you thank you we'll go next to Charles Rhee with TD Cowan please go ahead oh yeah thanks for taking the question hey maybe offers off you know Jim and Berga congratulations to the both of you and and Jim good luck for the future and Berga looking forward to meeting you soon maybe if I could just ask about sort of the guide for coming up here, understanding the headwinds that you kind of laid out, particularly for the first quarter, and when you talk about sort of this material improvement in margins going forward, it sounds like you're saying that obviously some of these kind of reverse as we exit the quarter. Can you kind of lay out which ones fully exit or which ones might carry through, or should we really kind of assume sort of a big step function in margins into the second quarter and then it kind of flattens out there, or should we be modeling more of a gradual ramp back in margins as we think through the course of the year?

Mike, why don't you take that?

Yeah, hey, Charles, thank you. So when I think about the sequential improvement in the operating margin, there's really three main drivers for that. The first one, we're going to get continued benefit from the cost savings and our efficiency initiatives as we go throughout the year. And then second one is the lower sourcing related to the KF acquisition. So we're going to, you know, we've solidified that supply chain. And I think, you know, the headwind that we're seeing in Q1 of having more bookings and have to go out to the open market to purchase those is really dissipated by the fact that we have such a majority-owned portion of that supply chain. So that will go away. And then our cautious optimism that the demand is going to continue to improve over the course of the year. So that strong book-to-bill that you saw in Q4, that's going to materialize into revenue as we progress into 2026.

And maybe just a follow-up then, does that the extra sourcing cost where you kind of had, because of the greater than normal number of study starts, so you had to kind of go outside, more demand than the slides you had, is it that you expect that kind of level of sourcing required and that KF then offsets that? Or is it that you expect sort of that kind of bolus of study starts to maybe subside and so you don't need to tap the market outside of your existing supply?

Yeah, I think it's a little bit of both, right? You're going to get the impact of the KF in the second half of the year. We've had obviously more time to plan for the increased demand in the second quarter. The other pieces of Q1 are the NHP timing. So that is just a function of when the models are ready to be used and shipped and when the demand is, and that's simply timing in Q1. And then, of course, in Q1, you've got the stock comp, right? That's just the accounting rules of how you have to accelerate the expense over the service period. So with the retirement and the succession, we're going to get a pretty heavy headwind in Q1 on the stock comp. That improves throughout the year, too. It's not a headwind on the year.

All right, great. I really appreciate the comments. Thank you, guys.

Yeah, you bet.

Thank you. We'll go next to Elizabeth Anderson with Evercore. Your line is open. Please go ahead.

Hi, guys. Good morning, and thanks for the question. Congrats, Jim and Birgit, on your new rules. I think that will be a good transition. Maybe just digging into the outlook here, can you talk about the demand environment in China right now, particularly in regards to RMS, but anything else you're seeing there? And then anything you would chalk up the improvement in biologics that you mentioned for the fourth quarter?

So our China business continues to perform well. You know, it's all RMS, as you know. And it's an important market for us. And, you know, we feel that we've elevated the craft of producing really high quality, pristine animals and sort of taught the industry the benefit of utilizing those in terms of the quality of the work that they do. And China is becoming a more sophisticated, innovative locale, for sure, a lot of investment by the government. And you didn't specifically ask this, but I'm just going to throw this in there, that we're looking closely at China with regard to what additionally we can do there besides RMS, given that it's obviously a big patient population. Drugs developed in China have to be tested in China. And so, you know, except for the research model part, which we're thrilled with, you know, we're not accessing any of the service revenue associated with that. So China may become a bigger part of our own portfolio going forward. Biologics has been a really good business for us for a long time. It had sort of a complicated 25 due to some lower sample volumes from a couple of large clients, due principally to project delays and regulatory challenges. But the business returned to growth in the fourth quarter of 25 due to higher demand, and princely from Europe, and we would expect some of those client-specific challenges, those are behind us as we move into 26. So an important business, obviously only testing large molecules. At least half of the drugs that are approved are large molecules going forward. So a business that we think we have a strong position in. It has had years of very nice growth and escalating operating margins. So it's beginning to sort of come back. It was a business that was very much benefited by COVID, and things sort of slowed down, and now we're beginning to see them ramp up again.

Thank you. We'll take our next question from Michael Riskin with Bank of America. Please go ahead.

Thanks for taking the question. I'll just do one given the time. Just following up on your earlier comments on, you know, DSA demand environment, you know, what you saw in 4Q expectations for the coming year, I kind of want to go back to 2025. You had a pretty strong start to the year, then a little bit of a lull over the summer months in terms of demand and then a pickup again in the recent months. Just wondering, you know, that volatility, that uncertainty, those fluctuations, would you attribute that more to the macro environment, the geopolitical environment, rates environment? What I'm getting at is what gives you confidence that we wouldn't see something similar this year or the, you know, 4Q, the strength you saw in 4Q25 isn't a little bit of a red herring and we take a step back. Just what makes you think that last year was an outlier in that regard?

I mean, the big impact from us was overall soft demand from our client base, both large and small companies, both new and old companies, who were really working on – the biotech companies were really concerned about access to capital and whether they had enough funding to work on a whole range of drugs. So it's quite clear to us that they paused some drugs before they filed their INDs. So we think they're going to get back to that. And big pharma is facing another patent cliff, which we saw this, I don't know, 12, 13, 14 years ago. They begin to pull back on their cost structure. By the way, one of the things we do is help them alleviate or reduce some of their internal costs because the work that we do in safety assessment is as fast, if not fast, to a lower price point and probably in most cases better science. So we're being cautious. We said that. We're trying not to over-call it because it's not linear, and one quarter doesn't necessarily portend the next. but what is beginning to change is the massive amount of funding that went into the biotech companies, $28 billion in the fourth quarter, was quite significant. And so if that continues, January was a good month as well, but if that continues, that should generate incremental demand going forward. There's usually a lag time between cash coming in and then booking studies, so we're going to see that in the second quarter, but more pronounced in the back half of the year. The fact that book-to-bill was above one times and much higher than that in December is obviously a very important point, and that's also going to benefit the second quarter and the second half of the year. So we're trying not to over-call it, but what we have been looking for and what we've been hearing from our clients just in terms of funding and access to continued funding is beginning to happen. And since the preponderance of our revenue, we have really big market shares in big farming, but the preponderance of our revenue and the growth rate for the last decade has been principally from hundreds and hundreds and hundreds of biotech companies, none of whom have the internal capacity to do anything that we do for them so they must outsource they don't have to outsource to Charles River but most of them do so they must outsource and so just given the the number and diversity of new modalities to to treat or cure diseases these folks have to get back to work and that should generate additional volume for us and you know we're obviously comfortable with the guidance we've just given today and, again, we're being cautiously optimistic is really a good way to put it.

I appreciate all that, Jim. Thank you.

We'll go next to Casey Woodring with J.P. Morgan. Please go ahead.

Thank you for taking my questions. And, yeah, Jim, again, congratulations on retirement, and, Birgit, looking forward to working with you in the new role. Yeah, maybe just sticking to one. On the capital deployment comments, So you talked about maintaining dry powder for M&A. How should we think about that in relation to some of the comments you made about the opportunity in China? And then how do we balance that versus repos this year? You know, you mentioned the violent share price movement of late. And then also curious if you're looking at other deals like KF that could potentially alleviate some NHP sourcing costs, you know, some of the headwinds that you've seen in DSA to start the year. Thank you. Yes.

So our NHP sourcing volume is in really good shape now, given that Novaprim and the deal that we just did with KF. So it's highly unlikely that we'll need to source anything further or buy anything further. We already had plans to increase the Mauritian operation, and if the demand continues, we can increase both of them. And so we feel that just in terms of quality of the NHPs, price point, just the quality of the farms that they're bred on, we're really, really comfortable in that. Capital deployment for us is pretty straightforward. We like to keep our leverage below three turns, and we've been able to buy many, many businesses over the years. And, you know, we lever up to high twos, occasionally over three, and we usually delever within 12 months. And so we feel really good about that. Our balance sheet is in really strong shape pre-these deals. And even after these deals, our leverage is just in the high twos, and we'll continue to work it down. So we have a committee of the board that I sit on, and we objectively look at uses of capital every single quarter in tandem with our board meetings. And, you know, paying down debt, share buybacks, M&A is always on the table. So we're certainly continuing to look at M&A in some of the areas that we've talked about. Bioanalysis is probably top of our list. And as I said, we're beginning to look closely at China way too early to predict that. but buying back stock is totally dependent on what else do we have a better use and what does the share price look like, and we continue to pay down our debt. So, you know, I think we have a lot of flexibility right now. We just had a board meeting last week where we talked about all these things, have another one in May, and we'll continue to stay on it. But there's definitely some areas that we'd like to continue to fill in the portfolio from M&A, And every once in a while, we may come across one of our businesses where we don't think it has long-term value for us. And so we would take a look at divesting those as well. Great. Thank you.

Thank you. Our next question comes from Justin Bowers with Deutsche Bank. Please go ahead.

Hi, good morning, everyone, and congratulations, Jim and Birgit. So I want to sort of follow up on Luke's earlier question, and hopefully you can educate us a little bit more on dams. If I recall, it's about 20% of DSA revenue. Can you provide us with a sense of how the client base is using these methods? And the gist of the question is, are these technologies being platformed by a high-end full of clients or more concentrated, or is adoption and uptake fairly diverse across a large number of clients that are using those technologies perhaps to validate existing in vivo methods?

So we're seeing NAMS across a big swath of our client base. We would say that Big Pharma has been looking at utilizing in-vitro or non-animal technologies sort of forever. Lots of that's proprietary to each company, and some of it's just sort of standard stuff. It's definitely more pronounced in discovery, as we've been saying now, as we've been talking about this more through the last year. and everybody hopes that some of these technologies albeit somewhat anecdotal help the process of accelerating our clients getting to a lead compound and spending less time on drugs that have a low probability of getting into the clinic and more time on drugs that have a higher probability. Of course we get paid either way whether the drug advances to the clinic or not so we're there to help them and if the technology helps us make a determination with and for the client, we're certainly happy to do that. You know, as we've said before, there's, you know, our path to quest deal that we just talked about on this call is a non-animal technology next-generation sequencing that literally is replacing some of the animal-based work that we do in our biologics business. And that's a really good name that, you know, we're happy to provide that service, and our clients are demanding it, and it gives better answers faster. We also have another business we talked about in the call, Retrogenics, where we're looking at off-target effects of drugs, which is really, really important. So, there are some NAMs now that are beneficial and utilizable. There are some that are sort of, you know, hopeful, but still early days, and we believe we're only going to see it in safety in a sort of narrow monoclonal antibody swath that the FDA has talked about and too much of a safety risk to be focusing on these as replacements, but likely to be augmentative to some of the wet lab work, particularly in the early phases. So we'll continue to license in technologies and periodically buy something that we think is really beneficial for our clients and will generate decent revenue and margin. We'll work with our clients in validation. But this is a long-term marathon and not something that's going to be done quickly or overnight.

Thank you. And if I may, with just a quick follow-up, since this is so topical, I was speaking with Top 10 Pharma last week, and we're talking about AI and how that would you know potentially impact early stage and they said well you know maybe we could see a scenario where we start with you know 20,000 targets instead of 10 at the top of the funnel can you can you help us understand how that would sort of flow through your business and if that would be accretive dilutive neutral yeah I yep more targets would be, if you can screen through more targets at the same pace or faster, that's obviously

really beneficial for our clients and should be beneficial for us as well. As I said, if they can go, just using your numbers, if they can screen through 20,000 potential drugs that hit the target and then they can focus on the ones that have the highest probability of actually working and being tolerated by patients and get into the clinic, That should generate incremental work for us, and it should also have a higher hit rate for the drug companies. It's sort of shocking, I would say, that all of the U.S. pharmaceutical and biotech companies in the aggregate, we only have between 40 and 50 new drugs a year, right? So if that could be 100 or 200 or 500, that obviously would be better for society. That obviously would be better for human health. It definitely would be better for Charles River. It would be better for our clients. So the extent to which AI can get its arms, speaking to it as if it's a person, get its arms around more data earlier and have a bigger funnel, I think that would be beneficial for all of us.

Thank you.

Thank you. We'll go next to Patrick Donnelly with Citi. Your line is open. Please go ahead.

Hey, guys.

Thanks for the questions.

Maybe this one, obviously covered a lot of ground here, maybe the vestiture process. Jim, can you just update us where we are there? It sounds like negotiations are still going with the buyers. What hurdles are left? It sounds like it will be done by mid-year when that capital comes in the door. Is that deployed relatively quickly? Just a quick update on that process would be helpful.

The process is ongoing. We have sophisticated investment banks working on these divestitures. We have interested parties. um uh the comment that we that we made at our last quarter call um still seems reasonable that you know we hope to close uh close these investitures sometime in the first half of this year and and uh perhaps and hopefully we can sign something sooner but it's it's um it's difficult to to tell i mean the the these deals aren't signed till they're signed and they're not closed till they're done. So we're very committed to finalizing the process. We think we have some interested folks and should be a good result. In terms of what we do with the proceeds, again, it's sort of what we do with any of our cash as we look at M&A, debt repayment, share purchases, all of the above, or just one of the above. And it's always contextual and depends on what's going on with market demand, what the rest of our M&A portfolio looks like, what the share price looks like. And we do that, I think, very well, very objectively, very thoughtfully every quarter. We don't have any sort of preordained feelings about that. So when we bring these deals to closure, we'll see what the world looks like at that time in terms of what we do with the assets.

Okay. And then maybe one last quick one on the NHPs. You know, obviously, KF is a nice impact this year. As you look out, you know, beyond this year, is it almost a compounding effect on the NHP side where, you know, you benefit more on the savings as you insource more in 27 from Novaprim and KF both being on board there?

I take that, Mike.

Yeah, absolutely. So, yeah, we said that there would be a 25-cent benefit this year. And then even next year would be even further. We think that there's approximately $0.60 accretion from KF as we go into 2027.

Thank you. We have no further questions in queue. I will now turn the conference back to Todd Spencer for closing remarks.

Great. Thank you for joining us on the conference call this morning. We look forward to seeing you at upcoming investor conferences in March. This concludes the call. Thanks again.

Thank you. That does conclude today's Charles River Laboratory's fourth quarter and full year 2025 earnings call. Thank you for your participation, and you may now disconnect.