– Fourth-Quarter Revenue of $791.0 Million
and Full-Year Revenue of $2.92 Billion –
– Fourth-Quarter GAAP Earnings per Share of
$2.81 and Non-GAAP Earnings per Share of $2.39 –
– Full-Year GAAP Earnings per Share of $7.20
and Non-GAAP Earnings per Share of $8.13 –
– Provides 2021 Guidance –
– Announces Definitive Agreement to Acquire
Cognate BioServices, A Premier, Cell and Gene Therapy CDMO
–
Charles River Laboratories International, Inc. (NYSE: CRL) today
reported its results for the fourth-quarter and full-year 2020 and
provided guidance for 2021. For the quarter, revenue was $791.0
million, an increase of 14.4% from $691.1 million in the fourth
quarter of 2019.
Acquisitions contributed 2.1% to consolidated fourth-quarter
revenue growth. The impact of foreign currency translation
benefited reported revenue growth by 2.0%. Excluding the effect of
these items, organic revenue growth of 10.3% was driven by
contributions from all three business segments.
On a GAAP basis, fourth-quarter net income attributable to
common shareholders was $143.2 million, an increase of 78.2% from
net income of $80.3 million for the same period in 2019.
Fourth-quarter diluted earnings per share on a GAAP basis were
$2.81, an increase of 74.5% from $1.61 for the fourth quarter of
2019. The increases in GAAP net income and earnings per share were
driven primarily by higher revenue, operating income, and venture
capital investment gains. GAAP earnings per share included a gain
from the Company’s venture capital and other strategic investments
of $1.01 per share in the fourth quarter of 2020, compared to $0.22
per share for the same period in 2019. The Company’s venture
capital and other strategic investment performance has been
excluded from non-GAAP results.
On a non-GAAP basis, net income from continuing operations was
$122.1 million for the fourth quarter of 2020, an increase of 22.0%
from $100.1 million for the same period in 2019. Fourth‑quarter
diluted earnings per share on a non-GAAP basis were $2.39, an
increase of 18.9% from $2.01 per share for the fourth quarter of
2019. The non-GAAP net income and earnings per share increases were
driven primarily by higher revenue and operating income, as well as
a benefit from non-operating items, including a lower tax rate.
James C. Foster, Chairman, President and Chief Executive
Officer, said, “2020 was an extraordinary year, in which we were
able to successfully navigate the challenges of the COVID-19
pandemic and reinforce our position as the leading, non-clinical
CRO. Our strong financial performance reflects the resilience of
our business model and the robust demand environment, which was
driven by clients intensifying their use of strategic outsourcing
and partnering with us to move their critical research programs
forward. Our focus on enhancing the value that we provide to
clients has made us a trusted partner, and we expect that the
robust demand trends will continue. As a result, we believe we are
well positioned for an excellent start in 2021.”
Mr. Foster continued, “We are pleased to be expanding our
early-stage research and manufacturing support portfolio into the
complementary, high-growth cell and gene therapy CDMO sector. The
planned acquisition of Cognate BioServices will create a premier
scientific partner for cell and gene therapy development, testing,
and manufacturing, providing clients with an integrated solution
from basic research through CGMP production. We believe this
strategic expansion of our portfolio will be highly synergistic
with our existing capabilities, particularly for biologics testing.
It will enhance our ability to achieve our long-term financial
goals and deliver greater value to both clients and
shareholders.”
Fourth-Quarter Segment
Results
Research Models and Services (RMS)
Revenue for the RMS segment was $156.7 million in the fourth
quarter of 2020, an increase of 19.3% from $131.3 million in the
fourth quarter of 2019. The HemaCare and Cellero acquisitions
completed in 2020 contributed 11.2% to fourth-quarter RMS revenue.
Organic revenue growth of 5.2% was driven by higher revenue for
research models services, particularly Genetically Engineered
Models and Services (GEMS), as well as higher sales volume for
research models due to accelerated demand in all geographic
regions, particularly in China. Global demand for research models
improved both on a year-over-year and sequential basis, as clients
returned to normalized order activity in all geographic regions
following COVID-19-related disruptions earlier in the year,
principally in the second quarter.
In the fourth quarter of 2020, the RMS segment’s GAAP operating
margin decreased to 21.9% from 23.0% in the fourth quarter of 2019,
primarily due to acquisition-related amortization costs associated
with HemaCare and Cellero. On a non-GAAP basis, the operating
margin increased to 25.1% from 24.6% in the fourth quarter of 2019.
The non-GAAP operating margin increased primarily due to operating
leverage from higher sales volume in the research models business,
as well as the benefit of operating efficiency initiatives.
Discovery and Safety Assessment (DSA)
Revenue for the DSA segment was $495.0 million in the fourth
quarter of 2020, an increase of 12.7% from $439.2 million in the
fourth quarter of 2019. Organic revenue growth of 11.3% was
primarily driven by robust demand from global biopharmaceutical and
biotechnology clients in both the Discovery Services and Safety
Assessment businesses.
In the fourth quarter of 2020, the DSA segment’s GAAP operating
margin decreased to 18.4% from 19.1% in the fourth quarter of 2019.
On a non-GAAP basis, the operating margin decreased to 23.2% from
25.6% in the fourth quarter of 2019. The GAAP and non-GAAP
operating margin decreases were driven primarily by increased costs
due in part to higher performance-based compensation expense, as
well as the study mix in the Safety Assessment business.
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was $139.3 million in the
fourth quarter of 2020, an increase of 15.5% from $120.6 million in
the fourth quarter of 2019. Organic revenue growth of 12.4% was led
by robust demand in the Biologics Testing Solutions (Biologics)
business. Both the Microbial Solutions and Avian Vaccine businesses
were also significant contributors to fourth-quarter revenue
growth.
In the fourth quarter of 2020, the Manufacturing segment’s GAAP
operating margin increased to 35.3% from 34.4% in the fourth
quarter of 2019. On a non-GAAP basis, the operating margin
increased to 37.3% from 37.2% in the fourth quarter of 2019. The
GAAP and non-GAAP operating margin increases were driven primarily
by operating leverage from higher revenue in the Biologics and
Avian Vaccine businesses.
Full-Year Results
For 2020, revenue increased by 11.5% to $2.92 billion from $2.62
billion in 2019. Organic revenue growth was 7.0%.
On a GAAP basis, net income attributable to common shareholders
was $364.3 million in 2020, an increase of 44.6% from $252.0
million in 2019. Diluted earnings per share on a GAAP basis in 2020
were $7.20, an increase of 42.0% from $5.07 in 2019. On a GAAP
basis, the Company recorded a gain from venture capital and other
strategic investments totaling $1.50 per share in 2020, compared to
a gain of $0.30 in 2019.
On a non-GAAP basis, net income from continuing operations was
$411.5 million in 2020, an increase of 23.1% from $334.4 million in
2019. Diluted earnings per share on a non-GAAP basis in 2020 were
$8.13, an increase of 20.8% from $6.73 in 2019.
Research Models and Services (RMS)
For 2020, RMS revenue was $571.2 million, an increase of 6.3%
from $537.1 million in 2019. Organic revenue growth declined by
3.3%, principally due to the impact of the COVID-19 pandemic.
On a GAAP basis, the RMS segment operating margin decreased to
18.0% in 2020 from 24.9% in 2019. On a non-GAAP basis, the
operating margin decreased to 22.0% in 2020 from 26.2% in 2019.
Discovery and Safety Assessment (DSA)
For 2020, DSA revenue was $1.84 billion, an increase of 13.5%
from $1.62 billion in 2019. Organic revenue growth was 9.4%.
On a GAAP basis, the DSA segment operating margin increased to
17.7% in 2020 from 16.0% in 2019. On a non-GAAP basis, the
operating margin increased to 23.4% in 2020 from 22.0% in 2019.
Manufacturing Support (Manufacturing)
For 2020, Manufacturing revenue was $515.4 million, an increase
of 10.8% from $465.1 million in 2019. Organic revenue growth was
10.4%.
On a GAAP basis, the Manufacturing segment operating margin
increased to 35.2% in 2020 from 31.3% in 2019. On a non-GAAP basis,
the operating margin increased to 37.4% in 2020 from 33.9% in
2019.
Planned Acquisition of Cognate
BioServices
In a separate press release today, Charles River announced that
it has signed a definitive agreement to acquire Cognate
BioServices, Inc. for approximately $875 million in cash, subject
to customary closing adjustments.
Cognate is a premier, cell and gene therapy CDMO offering
comprehensive manufacturing solutions for cell therapies, as well
as for production of plasmid DNA and other inputs in the CDMO value
chain. The planned acquisition of Cognate will establish Charles
River as a premier scientific partner for cell and gene therapy
development, testing, and manufacturing, providing clients with an
integrated solution from basic research through CGMP
production.
Cognate is expected to generate annual revenue of approximately
$140 million in 2021. By expanding into this high-growth sector,
Cognate is expected to enhance Charles River’s growth potential by
generating at least 25% compound annual revenue growth over the
next five years. Cognate will be reported as part of Charles
River’s Manufacturing Solutions segment.
2021 Guidance Excluding Cognate
BioServices
The Company is providing the following revenue, earnings per
share, and free cash flow guidance for 2021 excluding the financial
impact of the planned acquisition of Cognate. The 2021 revenue
growth outlook reflects a continuation of robust client demand
trends, as well as a favorable comparison to last year’s revenue
impact from the COVID-19 pandemic. Earnings per share in 2021 are
expected to benefit from higher revenue and modest operating margin
improvement, partially offset by a higher tax rate.
2021 GUIDANCE EXCLUDING COGNATE
Revenue growth, reported
12% – 14%
Less: Contribution from acquisitions
(1)
(0.5%) – (1.0%)
Unfavorable/(favorable) impact of foreign
exchange
(2.0%) – (2.5%)
Revenue growth, organic (2)
9% – 11%
GAAP EPS estimate (3)
$7.10 – $7.35
Acquisition-related amortization
$1.65 – $1.70
Acquisition-related adjustments (4)
$0.10 – $0.15
Other items (5)
~$0.10
Non-GAAP EPS estimate
$9.00 – $9.25
Free cash flow (6)
$415 – $435 million
Footnotes to Guidance Table:
(1) The contribution from acquisitions reflects only those
acquisitions that have been completed.
(2) Organic revenue growth is defined as reported revenue growth
adjusted for acquisitions and foreign currency translation.
(3) GAAP EPS guidance does not include an estimate for future
gains or losses from venture capital and other strategic
investments. Potential gains or losses are expected in 2021, but
the Company does not forecast the future performance of these
investments. Any future gains or losses would be excluded from
non-GAAP results.
(4) These adjustments are related to the evaluation and
integration of acquisitions, and primarily include transaction,
advisory, and certain third-party integration costs, as well as
certain costs associated with acquisition-related efficiency
initiatives.
(5) These items primarily relate to charges of approximately
$0.10 associated with U.S. and international tax legislation that
necessitated changes to the Company’s international financing
structure.
(6) Reconciliation of the current 2021 free cash flow guidance
is as follows: Cash flow from operating activities of $595-$615
million, less capital expenditures of approximately $180 million,
equates to free cash flow of $415-$435 million.
2021 Financial Impact of Cognate
Acquisition
Based on the anticipated completion of the acquisition by the
end of the first quarter of 2021, Cognate is expected to add
approximately $110 million to Charles River’s 2021 consolidated
revenue for the partial year. With this contribution from Cognate,
Charles River’s reported revenue growth guidance is expected to
increase to 16% to 18% for 2021.
The transaction is expected to be neutral to non-GAAP earnings
per share in 2021, and therefore, is not expected to have a
meaningful impact on the Company’s non-GAAP earnings per share
guidance. Items excluded from non-GAAP earnings per share are
expected to include all acquisition-related costs, which primarily
include amortization of intangible assets, advisory fees, certain
costs associated with efficiency initiatives, and certain
third-party integration costs.
Webcast
Charles River has scheduled a live webcast on Wednesday,
February 17th, 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 GAAP financial measures to
non-GAAP financial measures on the website.
Non-GAAP Reconciliations
The Company reports non-GAAP results in this press release,
which exclude often-one-time charges and other items that are
outside of normal operations. A reconciliation of GAAP to non-GAAP
results is provided in the schedules at the end of this press
release.
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 and integrating
acquisitions and divestitures, as well as fair value adjustments
associated with contingent consideration; charges, gains, and
losses attributable to businesses or properties we plan to close,
consolidate, or divest; severance and other costs associated with
our efficiency initiatives; executive transition costs; the
write-off of deferred financing costs and fees related to debt
financing; third-party costs associated with the remediation of
unauthorized access into our information systems detected in March
2019; the non-cash tax benefit related to our international
financing structure; charges related to the settlement of our U.S.
pension plan; charges recorded in connection with the modification
of our option to purchase equity in one of our joint ventures;
investment gains or losses associated with our venture capital and
other strategic equity investments; and adjustments related to the
recognition of deferred tax assets expected to be utilized as a
result of changes to the our international financing structure.
This press release also refers to our revenue in both a GAAP and
non-GAAP basis: “organic revenue growth,” which we define as
reported revenue growth adjusted for foreign currency translation,
acquisitions, and divestitures. We exclude these items from the
non-GAAP financial measures because they are outside our normal
operations. Commencing in the first quarter of 2019, we exclude the
performance of our venture capital and other strategic investments
due to the determination that such investment gains or losses are
not core to our overall operations. There are limitations in using
non-GAAP financial measures, as they are not presented 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 divestitures (and
in certain cases, the evaluation of such acquisitions and
divestitures, 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 and their underlying
associated costs, such as business acquisitions, generally occur
periodically but on an unpredictable basis. We calculate non-GAAP
integration costs to include third-party integration costs incurred
post-acquisition. Presenting revenue on an organic basis allows
investors to measure our revenue growth exclusive of acquisitions,
divestitures, and foreign currency exchange fluctuations more
clearly. 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 presented 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 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,” “intend,” “will,”
“would,” “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 the impact of the
COVID-19 pandemic; the projected future financial performance of
Charles River and our specific businesses; the future demand for
drug discovery and development products and services, including our
expectations for future revenue trends; our expectations with
respect to the impact of acquisitions, including the acquisition of
HemaCare, Cellero, Distributed Bio, and Cognate BioServices on the
Company, our service offerings, client perception, strategic
relationships, revenue, revenue growth rates, and earnings; the
development and performance of our services and products, including
our investments in our portfolio; market and industry conditions
including the outsourcing of services and spending trends by our
clients; and Charles River’s future performance as delineated in
our revised forward-looking guidance, and particularly our
expectations with respect to revenue, the impact of foreign
exchange, enhanced efficiency initiatives, and the assumptions
surrounding the COVID-19 pandemic that form the basis for our
revised annual guidance. 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 COVID-19
pandemic, its duration, its impact on our business, results of
operations, financial condition, liquidity, business practices,
operations, suppliers, third party service providers, clients,
employees, industry, ability to meet future performance
obligations, ability to efficiently implement advisable safety
precautions, and internal controls over financial reporting; the
COVID-19 pandemic’s impact on client demand, the global economy and
financial markets; the ability to successfully integrate businesses
we acquire; 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 clients; the ability to convert backlog to revenue;
special interest groups; contaminations; industry trends; new
displacement technologies; USDA and FDA regulations; changes in
law; the impact of Brexit; 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 11, 2020 and the Quarterly Report
on Form 10-Q as filed on October 29, 2020, 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 press release except as required by law.
About Charles River
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.
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 26, 2020 December
28, 2019 December 26, 2020 December 28,
2019 Service revenue
$
618,229
$
549,380
$
2,296,156
$
2,029,371
Product revenue
172,761
141,758
627,777
591,855
Total revenue
790,990
691,138
2,923,933
2,621,226
Costs and expenses: Cost of services provided
(excluding amortization of intangible assets)
408,242
357,636
1,533,230
1,371,699
Cost of products sold (excluding amortization of intangible assets)
82,780
71,188
317,162
291,216
Selling, general and administrative
143,033
129,598
528,935
517,622
Amortization of intangible assets
28,008
23,927
111,877
89,538
Operating income
128,927
108,789
432,729
351,151
Other income (expense): Interest income
63
684
834
1,522
Interest expense
(33,147
)
(24,362
)
(86,433
)
(60,882
)
Other income, net
76,584
20,454
99,984
12,293
Income from operations, before income taxes
172,427
105,565
447,114
304,084
Provision for income taxes
28,237
25,053
81,808
50,023
Net income
144,190
80,512
365,306
254,061
Less: Net income attributable to noncontrolling interests
999
164
1,002
2,042
Net income attributable to common shareholders
$
143,191
$
80,348
$
364,304
$
252,019
Earnings per common share
Net income attributable to common shareholders:
Basic
$
2.88
$
1.64
$
7.35
$
5.17
Diluted
$
2.81
$
1.61
$
7.20
$
5.07
Weighted-average number of common shares
outstanding: Basic
49,754
48,875
49,550
48,730
Diluted
51,028
49,867
50,611
49,693
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. SCHEDULE
2 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)
December 26, 2020 December 28,
2019 Assets Current assets:
Cash and cash equivalents
$
228,424
$
238,014
Trade receivables, net of allowances for doubtful accounts of
$6,702 and$3,664, respectively
617,740
514,033
Inventories
185,695
160,660
Prepaid assets
96,712
52,588
Other current assets
72,560
56,030
Total current assets
1,201,131
1,021,325
Property, plant and equipment, net
1,124,358
1,044,128
Operating lease right-of-use assets, net
178,220
140,085
Goodwill
1,809,168
1,540,565
Client relationships, net
721,505
613,573
Other intangible assets, net
66,094
75,840
Deferred tax assets
37,729
44,659
Other assets
352,626
212,615
Total assets
$
5,490,831
$
4,692,790
Liabilities, Redeemable Noncontrolling
Interests and Equity Current liabilities: Current
portion of long-term debt and finance leases
$
50,214
$
38,545
Accounts payable
122,475
111,498
Accrued compensation
206,823
158,617
Deferred revenue
207,942
171,805
Accrued liabilities
149,820
139,118
Other current liabilities
102,477
90,598
Total current liabilities
839,751
710,181
Long-term debt, net and finance leases
1,929,571
1,849,666
Operating lease right-of-use liabilities
155,595
116,252
Deferred tax liabilities
217,031
167,283
Other long-term liabilities
205,215
182,933
Total liabilities
3,347,163
3,026,315
Redeemable noncontrolling interests
25,499
28,647
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; 49,767
sharesissued and outstanding as of December 26, 2020 and
48,936 shares issued andoutstanding as of December 28, 2019
498
489
Additional paid-in capital
1,627,564
1,531,785
Retained earnings
625,414
280,329
Treasury stock, at cost, 0 shares as of December 26, 2020 and
December 28, 2019
-
-
Accumulated other comprehensive loss
(138,874
)
(178,019
)
Total equity attributable to common shareholders
2,114,602
1,634,584
Noncontrolling interest
3,567
3,244
Total equity
2,118,169
1,637,828
Total liabilities, redeemable noncontrolling interests and equity
$
5,490,831
$
4,692,790
CHARLES RIVER LABORATORIES
INTERNATIONAL, INC.
SCHEDULE 3
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Twelve Months Ended December 26, 2020
December 28, 2019 Cash flows
relating to operating activities Net income
$
365,306
$
254,061
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
234,924
198,095
Stock-based compensation
56,341
57,271
Deferred income taxes
(133
)
(21,895
)
Gain on venture capital and strategic equity investments, net
(100,861
)
(20,706
)
Other, net
17,273
7,931
Changes in assets and liabilities: Trade
receivables, net
(85,627
)
(8,323
)
Inventories
(18,379
)
(21,399
)
Accounts payable
748
29,775
Accrued compensation
40,481
3,394
Deferred revenue
28,647
(3,620
)
Customer contract deposits
8,955
(10,898
)
Other assets and liabilities, net
(1,100
)
17,250
Net cash provided by operating activities
546,575
480,936
Cash flows relating to investing activities
Acquisition of businesses and assets, net of cash acquired
(418,628
)
(515,701
)
Capital expenditures
(166,560
)
(140,514
)
Purchases of investments and contributions to venture capital
investments
(26,692
)
(22,341
)
Proceeds from sale of investments
11,401
942
Other, net
(1,065
)
(3,888
)
Net cash used in investing activities
(601,544
)
(681,502
)
Cash flows relating to financing activities
Proceeds from long-term debt and revolving credit facility
2,230,988
3,358,461
Proceeds from exercises of stock options
46,586
34,546
Payments on long-term debt, revolving credit facility, and finance
lease obligations
(2,200,400
)
(3,124,588
)
Payments on debt financing costs
-
(6,593
)
Purchase of treasury stock
(23,979
)
(18,087
)
Other, net
(5,947
)
(11,802
)
Net cash provided by financing activities
47,248
231,937
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
794
11,357
Net change in cash, cash equivalents, and restricted cash
(6,927
)
42,728
Cash, cash equivalents, and restricted cash, beginning of period
240,046
197,318
Cash, cash equivalents, and restricted cash, end of period
$
233,119
$
240,046
Supplemental cash flow information:
$
228,424
$
238,014
Cash and cash equivalents
3,074
431
Restricted cash included in Other current assets
1,621
1,601
Restricted cash included in Other assets
$
233,119
$
240,046
Cash, cash equivalents, and restricted cash, end of period
Cash paid for income taxes
$
60,059
$
54,060
Cash paid for interest
$
72,461
$
67,813
Non-cash investing and financing activities:
Additions to property, plant and equipment, net
$
25,614
$
21,447
Assets acquired under finance leases
$
1,571
$
4,819
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 26,
2020 December 28, 2019 December 26,
2020 December 28, 2019 Research Models and
Services Revenue
$
156,697
$
131,317
$
571,152
$
537,089
Operating income
34,381
30,183
102,706
133,912
Operating income as a % of revenue
21.9
%
23.0
%
18.0
%
24.9
%
Add back: Amortization related to acquisitions
3,975
339
19,556
1,381
Severance
118
1,000
645
2,106
Acquisition related adjustments (2)(3)
876
-
2,375
2,201
Site consolidation costs, impairments and other items
-
786
200
1,043
Total non-GAAP adjustments to operating income
$
4,969
$
2,125
$
22,776
$
6,731
Operating income, excluding non-GAAP adjustments
$
39,350
$
32,308
$
125,482
$
140,643
Non-GAAP operating income as a % of revenue
25.1
%
24.6
%
22.0
%
26.2
%
Depreciation and amortization
$
9,747
$
4,999
$
37,080
$
19,197
Capital expenditures
$
13,902
$
12,010
$
29,487
$
26,989
Discovery and Safety Assessment Revenue
$
495,004
$
439,202
$
1,837,428
$
1,618,995
Operating income
91,087
83,689
325,959
258,903
Operating income as a % of revenue
18.4
%
19.1
%
17.7
%
16.0
%
Add back: Amortization related to acquisitions
21,978
22,357
90,304
80,424
Severance
130
4,778
4,117
7,311
Acquisition related adjustments (3)
828
1,614
3,673
10,130
Site consolidation costs, impairments and other items
726
-
6,598
(207
)
Total non-GAAP adjustments to operating income
$
23,662
$
28,749
$
104,692
$
97,658
Operating income, excluding non-GAAP adjustments
$
114,749
$
112,438
$
430,651
$
356,561
Non-GAAP operating income as a % of revenue
23.2
%
25.6
%
23.4
%
22.0
%
Depreciation and amortization
$
43,784
$
39,908
$
168,922
$
151,139
Capital expenditures
$
59,217
$
41,713
$
105,653
$
86,843
Manufacturing Support Revenue
$
139,289
$
120,619
$
515,353
$
465,142
Operating income
49,206
41,527
181,494
145,420
Operating income as a % of revenue
35.3
%
34.4
%
35.2
%
31.3
%
Add back: Amortization related to acquisitions
2,144
2,260
8,758
9,062
Severance
428
1,102
2,413
1,651
Acquisition related adjustments (3)
-
68
(421
)
286
Site consolidation costs, impairments and other items
151
(103
)
320
1,382
Total non-GAAP adjustments to operating income
$
2,723
$
3,327
$
11,070
$
12,381
Operating income, excluding non-GAAP adjustments
$
51,929
$
44,854
$
192,564
$
157,801
Non-GAAP operating income as a % of revenue
37.3
%
37.2
%
37.4
%
33.9
%
Depreciation and amortization
$
6,647
$
6,007
$
25,904
$
23,584
Capital expenditures
$
12,302
$
9,318
$
26,287
$
23,617
Unallocated Corporate Overhead
$
(45,747
)
$
(46,610
)
$
(177,430
)
$
(187,084
)
Add back: Severance and executive transition costs
375
390
411
390
Acquisition related adjustments (3)
4,020
3,634
13,996
26,822
Other items (4)
-
657
(661
)
2,065
Total non-GAAP adjustments to operating expense
$
4,395
$
4,681
$
13,746
$
29,277
Unallocated corporate overhead, excluding non-GAAP adjustments
$
(41,352
)
$
(41,929
)
$
(163,684
)
$
(157,807
)
Total Revenue
$
790,990
$
691,138
$
2,923,933
$
2,621,226
Operating income
128,927
108,789
432,729
351,151
Operating income as a % of revenue
16.3
%
15.7
%
14.8
%
13.4
%
Add back: Amortization related to acquisitions
28,097
24,956
118,618
90,867
Severance and executive transition costs
1,051
7,270
7,586
11,458
Acquisition related adjustments (2)(3)
5,724
5,316
19,623
39,439
Site consolidation costs, impairments and other items (4)
877
1,340
6,457
4,283
Total non-GAAP adjustments to operating income
$
35,749
$
38,882
$
152,284
$
146,047
Operating income, excluding non-GAAP adjustments
$
164,676
$
147,671
$
585,013
$
497,198
Non-GAAP operating income as a % of revenue
20.8
%
21.4
%
20.0
%
19.0
%
Depreciation and amortization
$
60,876
$
51,833
$
234,924
$
198,095
Capital expenditures
$
87,854
$
63,839
$
166,560
$
140,514
(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)
This amount represents a $2.2 million charge recorded during
fiscal 2019 in connection with the modification of the option to
purchase the remaining 8% equity interest in Vital River.
(3)
These adjustments are related to the evaluation and
integration of acquisitions, which primarily include transaction,
third-party integration, and certain compensation costs, and fair
value adjustments associated with contingent consideration.
(4)
This amount relates to third-party costs, net of insurance
reimbursements, associated with the remediation of the unauthorized
access into the Company's information systems which was detected in
March 2019.
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 26, 2020 December 28, 2019
December 26, 2020 December 28, 2019
Net income attributable to common shareholders
$
143,191
$
80,348
$
364,304
$
252,019
Add back: Non-GAAP adjustments to operating income (Refer to
previous schedule)
35,749
38,882
152,284
146,047
Write-off of deferred financing costs and fees related to debt
financing
-
1,605
-
1,605
Venture capital and strategic equity investment (gains) losses, net
(68,635
)
(14,983
)
(100,861
)
(20,707
)
Loss due to U.S. Pension termination
10,283
-
10,283
-
Tax effect of non-GAAP adjustments: Non-cash tax provision
(benefit) related to international financing structure (2)
1,454
581
4,444
(19,787
)
Tax effect of the remaining non-GAAP adjustments
87
(6,368
)
(18,953
)
(24,811
)
Net income attributable to common shareholders, excluding non-GAAP
adjustments
$
122,129
$
100,065
$
411,501
$
334,366
Weighted average shares outstanding -
Basic
49,754
48,875
49,550
48,730
Effect of dilutive securities: Stock options, restricted stock
units and performance share units
1,274
992
1,061
963
Weighted average shares outstanding - Diluted
51,028
49,867
50,611
49,693
Earnings per share attributable to
common shareholders: Basic
$
2.88
$
1.64
$
7.35
$
5.17
Diluted
$
2.81
$
1.61
$
7.20
$
5.07
Basic, excluding non-GAAP adjustments
$
2.45
$
2.05
$
8.30
$
6.86
Diluted, excluding non-GAAP adjustments
$
2.39
$
2.01
$
8.13
$
6.73
(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)
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) For the three
months ended December 26, 2020 Total CRL RMS
Segment DSA Segment MS Segment
Revenue growth, reported
14.4 %
19.3 %
12.7 %
15.5 %
Decrease (increase) due to foreign exchange
(2.0)%
(2.9)%
(1.4)%
(3.1)%
Contribution from acquisitions (2)
(2.1)%
(11.2)%
- %
- %
Non-GAAP revenue growth, organic (3)
10.3 %
5.2 %
11.3 %
12.4 %
For the twelve months ended December
26, 2020 Total CRL RMS Segment DSA Segment
MS Segment Revenue growth,
reported
11.5 %
6.3 %
13.5 %
10.8 %
Decrease (increase) due to foreign exchange
(0.4)%
(0.6)%
(0.4)%
(0.4)%
Contribution from acquisitions (2)
(4.1)%
(9.0)%
(3.7)%
- %
Non-GAAP revenue growth, organic (3)
7.0 %
(3.3)%
9.4 %
10.4 %
(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)
Organic revenue growth is defined as reported revenue growth
adjusted for acquisitions and foreign exchange.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210217005517/en/
Investors: Todd Spencer Corporate Vice President, Investor
Relations 781.222.6455 todd.spencer@crl.com Media: Amy Cianciaruso
Corporate Vice President, Public Relations 781.222.6168
amy.cianciaruso@crl.com
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