Charles River Laboratories International, Inc 8-K, filed Feb 22, 2023

Charles River Laboratories International, Inc. (CRL)

8-K 2023-02-22 For: 2023-02-22

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Added on April 06, 2026

About this 8-K

Charles River Laboratories International, Inc filed this 8-K on February 22, 2023.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Delaware	001-15943	06-1397316
(State or Other	(Commission File Number)	(IRS Employer
Jurisdiction of Incorporation)		Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.01 par value		CRL		New York Stock Exchange

Exhibit No.		Description

99.1		Press release dated February 22, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

		CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Date: February 22, 2023	By:	/s/ Matthew L. Daniel
		Matthew L. Daniel, Corporate Senior Vice President,
		General Counsel, Corporate Secretary & Chief Compliance Officer

2023 GUIDANCE
Revenue growth, reported	1.5% – 4.5%
Impact of divestitures/(acquisitions), net	~1.5%
Impact of 53^rd week in 2022	~1.5%
Unfavorable/(favorable) impact of foreign exchange	0.0% - (0.5)%
Revenue growth, organic (1)	4.5% – 7.5%
GAAP EPS estimate (2)	$7.40 – $8.60
Acquisition-related amortization	~$2.00
Acquisition and integration-related adjustments (3)	~$0.10
Other items (4)	~$0.20
Non-GAAP EPS estimate	$9.70 – $10.90

Charles River Laboratories International, Inc 8-K, filed Feb 22, 2023

About this 8-K

Items reported

Charles River Laboratories Announces Fourth-Quarter and Full-Year 2022 Results and Provides 2023 Guidance

Contacts


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

SCHEDULE 1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except for per share data)

	Three Months Ended				Twelve Months Ended
	December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021

Service revenue	$	900,698	$	709,819	$	3,216,904	$	2,755,579
Product revenue		199,145		195,231		759,156		784,581
Total revenue		1,099,843		905,050		3,976,060		3,540,160
Costs and expenses:
Cost of services provided (excluding amortization of intangible assets)		603,125		468,091		2,143,318		1,837,487
Cost of products sold (excluding amortization of intangible assets)		97,834		89,847		370,091		368,035
Selling, general and administrative		199,640		144,112		665,098		619,919
Amortization of intangible assets		35,434		30,193		146,578		124,857
Operating income		163,810		172,807		650,975		589,862
Other income (expense):
Interest income		343		309		780		652
Interest expense		(34,779)		(11,546)		(59,291)		(73,910)
Other income (expense), net		115,547		2,072		30,523		(35,894)
Income before income taxes		244,921		163,642		622,987		480,710
Provision for income taxes		55,815		23,815		130,379		81,873
Net income		189,106		139,827		492,608		398,837
Less: Net income attributable to noncontrolling interests		1,696		2,249		6,382		7,855
Net income attributable to common shareholders	$	187,410	$	137,578	$	486,226	$	390,982

Earnings per common share
Net income attributable to common shareholders:
Basic	$	3.68	$	2.73	$	9.57	$	7.77
Diluted	$	3.65	$	2.67	$	9.48	$	7.60

Weighted-average number of common shares outstanding;
Basic		50,906		50,471		50,812		50,293
Diluted		51,377		51,555		51,301		51,425


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

SCHEDULE 2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)


	December 31, 2022		December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	233,912	$	241,214
Trade receivables and contract assets, net of allowances for credit losses of $11,278 and $7,180, respectively		752,390		642,881
Inventories		255,809		199,146
Prepaid assets		89,341		93,543
Other current assets		107,580		97,311
Total current assets		1,439,032		1,274,095
Property, plant and equipment, net		1,465,655		1,291,068
Venture capital and strategic equity investments		311,602		201,352
Operating lease right-of-use assets, net		391,762		292,941
Goodwill		2,849,903		2,711,881
Intangible assets, net		955,275		1,061,192
Deferred tax assets		41,262		40,226
Other assets		148,279		151,537
Total assets	$	7,602,770	$	7,024,292

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable		205,915		198,130
Accrued compensation		197,078		246,119
Deferred revenue		264,259		219,703
Accrued liabilities		219,758		228,797
Other current liabilities		204,575		140,436
Total current liabilities		1,091,585		1,033,185
Long-term debt, net and finance leases		2,707,531		2,663,564
Operating lease right-of-use liabilities		389,745		252,972
Deferred tax liabilities		215,582		239,720
Other long-term liabilities		174,822		242,859
Total liabilities		4,579,265		4,432,300
Redeemable noncontrolling interest		42,427		53,010
Equity:
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.01 par value; 120,000 shares authorized; 50,944 shares issued and outstanding as of December 31, 2022 and 50,480 shares issued and outstanding as of December 25, 2021		509		505
Additional paid-in capital		1,804,940		1,718,304
Retained earnings		1,432,901		980,751
Treasury stock, at cost, zero shares as of December 31, 2022 and December 25, 2021		—		—
Accumulated other comprehensive loss		(262,057)		(164,740)
Total equity attributable to common shareholders		2,976,293		2,534,820
Noncontrolling interests (nonredeemable)		4,785		4,162
Total equity		2,981,078		2,538,982
Total liabilities, redeemable noncontrolling interests and equity	$	7,602,770	$	7,024,292


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

SCHEDULE 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

		Twelve Months Ended
		December 31, 2022		December 25, 2021
	Cash flows relating to operating activities
	Net income	$	492,608	$	398,837
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization		303,870		265,540
	Stock-based compensation		73,617		71,474
	Loss on debt extinguishment and amortization of other financing costs		4,118		29,964
	Deferred income taxes		(35,884)		(24,006)
	Loss (gain) on venture capital and strategic equity investments, net		26,775		30,420
	Provision for credit losses		6,706		1,657
	Gain on divestitures, net		(123,405)		(25,026)
	Changes in fair value of contingent consideration arrangements		(3,753)		(34,303)
	Other, net		27,542		3,300
	Changes in assets and liabilities:
	Trade receivables and contract assets, net		(150,570)		(26,633)
	Inventories		(78,523)		(25,159)
	Accounts payable		(2,652)		44,901
	Accrued compensation		(42,164)		44,304
	Deferred revenue		57,658		(13,402)
	Customer contract deposits		30,457		16,925
	Other assets and liabilities, net		33,240		2,006
	Net cash provided by operating activities		619,640		760,799
	Cash flows relating to investing activities
	Acquisition of businesses and assets, net of cash acquired		(283,392)		(1,293,095)
	Capital expenditures		(324,733)		(228,772)
	Purchases of investments and contributions to venture capital investments		(158,274)		(45,555)
	Proceeds from sale of investments		4,549		6,532
	Proceeds from divestitures, net		163,275		122,694
	Other, net		(9,347)		264
	Net cash used in investing activities		(607,922)		(1,437,932)
	Cash flows relating to financing activities
	Proceeds from long-term debt and revolving credit facility		2,952,430		6,951,113
	Proceeds from exercises of stock options		25,110		45,652
	Payments on long-term debt, revolving credit facility, and finance lease obligations		(2,932,636)		(6,242,877)
	Purchase of treasury stock		(38,651)		(40,707)
	Payment of debt extinguishment and financing costs		—		(38,255)
	Payments of contingent consideration		(10,356)		(2,328)
	Purchases of additional equity interests, net		(30,533)		—
	Other, net		(7,761)		—
	Net cash (used in) provided by financing activities		(42,397)		672,598
	Effect of exchange rate changes on cash, cash equivalents, and restricted cash		25,579		17,730
	Net change in cash, cash equivalents, and restricted cash		(5,100)		13,195
	Cash, cash equivalents, and restricted cash, beginning of period		246,314		233,119
	Cash, cash equivalents, and restricted cash, end of period	$	241,214	$	246,314

	Supplemental cash flow information:
	Cash and cash equivalents	$	233,912	$	241,214
	Restricted cash included in Other current assets		6,192		4,023
	Restricted cash included in Other assets		1,110		1,077
	Cash, cash equivalents, and restricted cash, end of period	$	241,214	$	246,314

	Cash paid for income taxes	$	75,909	$	75,441
	Cash paid for interest	$	100,754	$	70,775
	Non-cash investing and financing activities:
	Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities	$	88,612	$	72,043
	Assets acquired under finance leases	$	8,179	$	1,567


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

SCHEDULE 4
RECONCILIATION OF GAAP TO NON-GAAP
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)⁽¹⁾
(in thousands, except percentages)

		Three Months Ended				Twelve Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021
Research Models and Services
	Revenue	$	196,109	$	165,575	$	739,175	$	690,437
	Operating income		37,111		40,188		160,410		166,814
	Operating income as a % of revenue		18.9 %		24.3 %		21.7 %		24.2 %
	Add back:
	Amortization related to acquisitions		5,587		4,075		20,364		20,104
	Severance		—		—		1,017		7
	Acquisition related adjustments ⁽²⁾		1,740		359		4,220		1,576
	Total non-GAAP adjustments to operating income	$	7,327	$	4,434	$	25,601	$	21,687
	Operating income, excluding non-GAAP adjustments	$	44,438	$	44,622	$	186,011	$	188,501
	Non-GAAP operating income as a % of revenue		22.7 %		26.9 %		25.2 %		27.3 %

	Depreciation and amortization	$	13,449	$	9,673	$	49,274	$	39,123
	Capital expenditures	$	10,897	$	31,667	$	44,136	$	61,188

Discovery and Safety Assessment
	Revenue	$	691,677	$	534,136	$	2,447,316	$	2,107,231
	Operating income		156,967		94,967		532,889		406,978
	Operating income as a % of revenue		22.7 %		17.8 %		21.8 %		19.3 %
	Add back:
	Amortization related to acquisitions		19,901		19,933		83,154		84,740
	Severance		—		(144)		433		1,016
	Acquisition related adjustments ⁽²⁾		3,934		8,016		(1,975)		4,374
	Site consolidation costs, impairments and other items ⁽³⁾		848		844		3,849		2,098
	Total non-GAAP adjustments to operating income	$	24,683	$	28,649	$	85,461	$	92,228
	Operating income, excluding non-GAAP adjustments	$	181,650	$	123,616	$	618,350	$	499,206
	Non-GAAP operating income as a % of revenue		26.3 %		23.1 %		25.3 %		23.7 %

	Depreciation and amortization	$	44,137	$	44,986	$	179,465	$	177,254
	Capital expenditures	$	55,655	$	40,694	$	189,563	$	101,477

Manufacturing Solutions
	Revenue	$	212,057	$	205,339	$	789,569	$	742,492
	Operating income		26,734		91,673		167,084		246,390
	Operating income as a % of revenue		12.6 %		44.6 %		21.2 %		33.2 %
	Add back:
	Amortization related to acquisitions		10,030		5,390		43,416		23,304
	Severance		958		1,278		1,577		3,622
	Acquisition related adjustments ⁽²⁾		10,004		(25,281)		5,813		(20,437)
	Site consolidation costs, impairments and other items ⁽³⁾		5,875		217		9,556		1,331
	Total non-GAAP adjustments to operating income	$	26,867	$	(18,396)	$	60,362	$	7,820
	Operating income, excluding non-GAAP adjustments	$	53,601	$	73,277	$	227,446	$	254,210
	Non-GAAP operating income as a % of revenue		25.3 %		35.7 %		28.8 %		34.2 %

	Depreciation and amortization	$	19,463	$	11,721	$	72,950	$	46,195
	Capital expenditures	$	21,688	$	24,869	$	87,084	$	58,877

Unallocated Corporate Overhead		$	(57,002)	$	(54,021)	$	(209,408)	$	(230,320)
	Add back:
	Severance		—		224		1,061		73
	Acquisition related adjustments ⁽²⁾		2,149		1,343		10,508		30,354
	Other items ⁽³⁾		—		39		—		39
	Total non-GAAP adjustments to operating expense	$	2,149	$	1,606	$	11,569	$	30,466
	Unallocated corporate overhead, excluding non-GAAP adjustments	$	(54,853)	$	(52,415)	$	(197,839)	$	(199,854)

Total
	Revenue	$	1,099,843	$	905,050	$	3,976,060	$	3,540,160
	Operating income		163,810		172,807		650,975		589,862
	Operating income as a % of revenue		14.9 %		19.1 %		16.4 %		16.7 %
	Add back:
	Amortization related to acquisitions		35,518		29,398		146,934		128,148
	Severance		958		1,358		4,088		4,718
	Acquisition related adjustments ⁽²⁾		17,827		(15,563)		18,566		15,867
	Site consolidation costs, impairments and other items ⁽³⁾		6,723		1,100		13,405		3,468
	Total non-GAAP adjustments to operating income	$	61,026	$	16,293	$	182,993	$	152,201
	Operating income, excluding non-GAAP adjustments	$	224,836	$	189,100	$	833,968	$	742,063
	Non-GAAP operating income as a % of revenue		20.4 %		20.9 %		21.0 %		21.0 %

	Depreciation and amortization	$	77,545	$	67,241	$	303,870	$	265,540
	Capital expenditures	$	89,024	$	98,775	$	324,733	$	228,772

⁽¹⁾	Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.
⁽²⁾	These adjustments are related to the evaluation and integration of acquisitions, which primarily include transaction, third-party integration, and certain compensation costs, fair value adjustments associated with contingent consideration arrangements, and an adjustment related to certain indirect tax liabilities.
⁽³⁾	Other items include certain third-party legal costs related to (a) an environmental litigation related to the Microbial business and (b) investigations by the U.S. government into the NHP supply chain applicable to our Safety Assessment business.


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

SCHEDULE 5
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (UNAUDITED)⁽¹⁾
(in thousands, except per share data)

		Three Months Ended				Twelve Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021

Net income attributable to common shareholders		$	187,410	$	137,578	$	486,226	$	390,982
Add back:
Non-GAAP adjustments to operating income (Refer to previous schedule)			61,026		16,293		182,993		152,201
Write-off of deferred financing costs and fees related to debt financing			—		—		—		26,089
Venture capital and strategic equity investment losses, net			6,707		13,142		26,775		30,419
Gain on divestitures ⁽²⁾			(123,524)		(22,656)		(123,524)		(22,656)
Other ⁽³⁾			1,080		—		5,285		(2,942)
Tax effect of non-GAAP adjustments:
Non-cash tax provision related to international financing structure ⁽⁴⁾			1,024		1,028		4,648		4,809
Enacted tax law changes			(382)		—		(382)		10,036
Tax effect of the remaining non-GAAP adjustments			19,529		(16,936)		(11,399)		(58,404)
Net income attributable to common shareholders, excluding non-GAAP adjustments		$	152,870	$	128,449	$	570,622	$	530,534

Weighted average shares outstanding - Basic			50,906		50,471		50,812		50,293
Effect of dilutive securities:
Stock options, restricted stock units and performance share units			471		1,084		489		1,132
Weighted average shares outstanding - Diluted			51,377		51,555		51,301		51,425

Earnings per share attributable to common shareholders:
Basic		$	3.68	$	2.73	$	9.57	$	7.77
Diluted		$	3.65	$	2.67	$	9.48	$	7.60

Basic, excluding non-GAAP adjustments		$	3.00	$	2.55	$	11.23	$	10.55
Diluted, excluding non-GAAP adjustments		$	2.98	$	2.49	$	11.12	$	10.32

⁽¹⁾	Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.
⁽²⁾	Adjustments included in 2022 relate to the gain on sale of our Avian business. Adjustments included in 2021 relate to the preliminary gain on sale of our RMS Japan business as well as a gain on an immaterial divestiture.
⁽³⁾	Adjustments included in 2022 primarily relate to a purchase price adjustment in connection with the 2021 divestiture of RMS Japan, a loss on the termination of a Canadian pension plan, and the reversal of an indemnification asset related to a prior acquisition. Adjustment included in 2021 relates to the finalization of an annuity purchase related to the termination of our U.S. pension plan.
⁽⁴⁾	This adjustment relates to the recognition of deferred tax assets expected to be utilized as a result of changes to the Company's international financing structure.


	CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

	SCHEDULE 6
	RECONCILIATION OF GAAP REVENUE GROWTH
	TO NON-GAAP REVENUE GROWTH, ORGANIC (UNAUDITED) ⁽¹⁾


Three Months Ended December 31, 2022		Total CRL	RMS Segment	DSA Segment	MS Segment

Revenue growth, reported		21.5%	18.4 %	29.5%	3.3%
Decrease due to foreign exchange		4.4%	5.2 %	3.9%	4.8%
Contribution from acquisitions ⁽²⁾		(1.8)%	(10.1)%	—%	—%
Impact of divestitures ⁽³⁾		0.5%	1.8%	—%	1.2%
Effect of 53^rd week in fiscal year 2022		(5.8)%	(4.5)%	(6.9)%	(4.0)%
Non-GAAP revenue growth, organic ⁽⁴⁾		18.8%	10.8%	26.5%	5.3%

Twelve Months Ended December 31, 2022		Total CRL	RMS Segment	DSA Segment	MS Segment

Revenue growth, reported		12.3%	7.1%	16.1%	6.3%
Decrease due to foreign exchange		3.5%	3.3%	3.3%	4.4%
Contribution from acquisitions ⁽²⁾		(2.6)%	(6.5)%	(0.1)%	(5.9)%
Impact of divestitures ⁽³⁾		1.7%	6.2%	—%	1.6%
Effect of 53^rd week in fiscal year 2022		(1.5)%	(1.1)%	(1.8)%	(1.1)%
Non-GAAP revenue growth, organic ⁽⁴⁾		13.4%	9.0%	17.5%	5.3%

⁽¹⁾	Charles River management believes that supplementary non-GAAP financial measures provide useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, without the effect of often-one-time charges and other items which are outside our normal operations, consistent with the manner in which management measures and forecasts the Company’s performance. The supplementary non-GAAP financial measures included are not meant to be considered superior to, or a substitute for results of operations prepared in accordance with U.S. GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance.
⁽²⁾	The contribution from acquisitions reflects only completed acquisitions.
⁽³⁾	The Company sold our Avian business on December 20, 2022. The Company sold both our RMS Japan operations and our gene therapy CDMO site in Sweden on October 12, 2021. These adjustments represent the revenue from these businesses for all applicable periods in 2022 and 2021.
⁽⁴⁾	Organic revenue growth is defined as reported revenue growth adjusted for acquisitions, divestitures, the 53^rd week, and foreign exchange.