Charles River Laboratories International, Inc. (NYSE: CRL) today
provided guidance for 2012 and updated guidance for 2011.
James C. Foster, Chairman, President and Chief Executive
Officer, said, “We made significant progress in 2011 on our four
key initiatives, which include operating margin expansion, improved
free cash flow, disciplined investment in existing growth
businesses, and returning value to shareholders. In 2012, we will
maintain our focus on these initiatives and on stimulating sales
growth.”
“Our large biopharmaceutical clients are fundamentally
rethinking their research processes; eliminating non-viable
molecules earlier and focusing only on the most promising
molecules. To further improve the efficiency and cost effectiveness
of their research, they are increasingly choosing to outsource,
particularly in the area of discovery services. Because of our
expertise in in vivo biology, this is a significant opportunity for
us, one on which we intend to capitalize.”
“We believe market conditions have stabilized, and visibility is
improving. As a result, we view 2012 as a more stable year in which
sales growth begins to strengthen in a range of 1% to 3% on a
constant currency basis, and non-GAAP earnings per share increase
between 7% and 11%, or in a range of $2.60 to $2.70.”
2012 Guidance
2012 SALES GUIDANCE (from continuing
operations) Net sales growth, reported 0 –
2% Impact of foreign exchange approximately 1% Net sales
growth, constant currency 1% - 3% Impact of 53rd week in 2011
approximately 1% Net sales growth, adjusted 2% - 4%
A reconciliation of GAAP to non-GAAP earnings per share is as
follows:
2012 EPS GUIDANCE (from continuing
operations) GAAP EPS estimate $2.10 -
$2.20 Amortization of intangible assets $0.25 Operating losses (1)
$0.05 Convertible debt accounting $0.20 Non-GAAP EPS
estimate $2.60 - $2.70
(1) These costs relate primarily to the Company’s PCS facility
in Massachusetts.
2011 Guidance
The Company is reaffirming its forward-looking sales and
non-GAAP earnings per share guidance for 2011, which was previously
provided on November 2, 2011:
2011 GUIDANCE (from
continuing operations) REVISED
PRIOR Net sales growth Slightly Higher
Slightly Higher GAAP EPS estimate $2.11-$2.16
$2.03-$2.08 Amortization of intangible assets $0.29
$0.29 Severance costs, operating losses and other (1) $0.12
$0.20 Impairment and other items (2) $0.02
$0.02 Convertible debt accounting $0.18 $0.18 Gain on
settlement of life insurance policy ($0.14) ($0.14)
Write-off of deferred financing costs related to amended credit
agreement $0.03 $0.03 Tax benefit related to
disposition of Phase I clinical business ($0.21)
($0.21) Non-GAAP EPS estimate $2.40-$2.45 $2.40-$2.45
(1) These items include severance costs associated with the
Company’s fourth-quarter 2010 and 2011 actions, operating losses
primarily attributable to the suspension of operations at its PCS
facility in Massachusetts and the closure of its PCS facility in
China, as well as a gain on the sale of the PCS facility in
China.
(2) These items were related primarily to: (i) an asset
impairment associated with the Company’s RMS large model
operations; (ii) costs associated with corporate legal entity
restructuring; (iii) exiting a defined benefit plan in RMS Japan;
(iv) an adjustment of contingent consideration related to
acquisitions; (v) costs associated with evaluation of acquisitions;
(vi) gains related to the dispositions of RMS facilities in
Michigan and Europe; and (vii) costs to exit a corporate leased
facility.
Webcast
Charles River Laboratories has scheduled a live webcast on
Wednesday, December 14, at 8:30 a.m. ET to discuss matters relating
to this press release. To participate, please go to ir.criver.com
and select the webcast link. You can also find the associated slide
presentation and reconciliations of non-GAAP financial measures to
comparable GAAP financial measures on the website.
Use of Non-GAAP Financial
Measures
This press release contains non-GAAP financial measures, such as
non-GAAP earnings per diluted share, which exclude the amortization
of intangible assets and other charges related to our acquisitions,
expenses associated with evaluating acquisitions, charges and
operating losses attributable to our businesses we close or divest
(or plan to), severance costs associated with our cost-savings
actions, taxes associated with the disposition of our Phase I
clinical business, adjustments related to contingent consideration
related to our acquisitions, a gain recognized upon the settlement
of a life insurance policy of a former officer, fees and taxes
associated with corporate subsidiary restructuring and
repatriation, and the additional interest recorded as a result of
the adoption in 2009 of an accounting standard related to our
convertible debt accounting which increased interest and
depreciation expense. We exclude these items from the non-GAAP
financial measures because they are outside our normal operations.
There are limitations in using non-GAAP financial measures, as they
are not prepared in accordance with generally accepted accounting
principles, and may be different than non-GAAP financial measures
used by other companies. In particular, we believe that the
inclusion of supplementary non-GAAP financial measures in this
press release helps investors to gain a meaningful understanding of
our core operating results and future prospects without the effect
of these often-one-time charges, and is consistent with how
management measures and forecasts the Company's performance,
especially when comparing such results to prior periods or
forecasts. We believe that the financial impact of our acquisitions
(and in certain cases, the evaluation of such acquisitions, whether
or not ultimately consummated) is often large relative to our
overall financial performance, which can adversely affect the
comparability of our results on a period-to-period basis. In
addition, certain activities, such as business acquisitions, happen
infrequently and the underlying costs associated with such
activities do not recur on a regular basis. Non-GAAP results also
allow investors to compare the Company’s operations against the
financial results of other companies in the industry who similarly
provide non-GAAP results. The non-GAAP financial measures included
in this press release are not meant to be considered superior to or
a substitute for results of operations prepared in accordance with
GAAP. The Company intends to continue to assess the potential value
of reporting non-GAAP results consistent with applicable rules and
regulations. Reconciliations of the non-GAAP financial measures
used in this press release to the most directly comparable GAAP
financial measures are set forth in the text of this press release,
and can also be found on the Company’s website at
ir.criver.com.
Caution Concerning Forward-Looking
Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements may be identified by the use of
words such as “anticipate,” “believe,” “expect,” “will,” “may,”
“estimate,” “plan,” “outlook,” and “project” and other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These statements
also include statements regarding our projected 2011 and 2012
financial performance including sales, operating income, and
earnings per share; the pursuit of our initiatives to optimize
returns for shareholders, including efforts to improve our
operating margins, improve free cash flow, invest in growth
businesses, and return value to shareholders; the future demand for
drug discovery and development products and services (particularly
in light of the challenging economic environment); our expectations
regarding stock repurchases, the number of shares to be
repurchased, expected timing and duration, the amount of capital
that may be expended and the treatment of repurchased shares; the
development and performance of our services and products; market
and industry conditions including the outsourcing of these services
and spending trends by our customers; the impact of specific
actions intended to more accurately align our infrastructure to the
current operating environment, and to improve overall operating
efficiencies and profitability; and Charles River’s future
performance as otherwise delineated in our forward-looking
guidance, and particularly our expectations with respect to sales
and foreign exchange impact. Forward-looking statements are based
on Charles River’s current expectations and beliefs, and involve a
number of risks and uncertainties that are difficult to predict and
that could cause actual results to differ materially from those
stated or implied by the forward-looking statements. Those risks
and uncertainties include, but are not limited to: the ability to
successfully integrate businesses we acquire; the ability to
execute our cost-savings actions on an effective and timely basis
(including divestitures and site closures); the timing and
magnitude of our share repurchases; negative trends in research and
development spending, negative trends in the level of outsourced
services, or other cost reduction actions by our customers; the
ability to convert backlog to sales; special interest groups;
contaminations; industry trends; new displacement technologies;
USDA and FDA regulations; changes in law; continued availability of
products and supplies; loss of key personnel; interest rate and
foreign currency exchange rate fluctuations; changes in tax
regulation and laws; changes in generally accepted accounting
principles; and any changes in business, political, or economic
conditions due to the threat of future terrorist activity in the
U.S. and other parts of the world, and related U.S. military action
overseas. A further description of these risks, uncertainties, and
other matters can be found in the Risk Factors detailed in Charles
River's Annual Report on Form 10-K as filed on February 23, 2011,
as well as other filings we make with the Securities and Exchange
Commission. Because forward-looking statements involve risks and
uncertainties, actual results and events may differ materially from
results and events currently expected by Charles River, and Charles
River assumes no obligation and expressly disclaims any duty to
update information contained in this news release except as
required by law.
About Charles River
Accelerating Drug Development. Exactly. Charles River provides
essential products and services to help pharmaceutical and
biotechnology companies, government agencies and leading academic
institutions around the globe accelerate their research and drug
development efforts. Our dedicated employees are focused on
providing clients with exactly what they need to improve and
expedite the discovery, early-stage development and safe
manufacture of new therapies for the patients who need them. To
learn more about our unique portfolio and breadth of services,
visit www.criver.com.
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