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Charles River Labs Q3 Profit Down, Beats Estimates; Revises FY22 View; To Sell Avian Vaccine Unit

Charles River Laboratories International, Inc. (CRL) reported Wednesday that its third-quarter net income attributable to common shareholders was $96.5 million, a decrease of 6.7 percent from last year's $103.4 million.

Earnings per share were $1.88, a decrease of 6.5 percent from $2.01 a year ago.

Adjusted net income was $134.7 million or $2.63 per share, compared to $139.1 million or $2.70 per share for the same period in 2021.

On average, 13 analysts polled by Thomson Reuters expected earnings of $2.49 per share for the quarter. Analysts' estimates typically exclude special items.

For the quarter, revenue was $989.2 million, an increase of 10.4 percent from $895.9 million a year ago.

Analysts estimated revenues of $970.44 million for the quarter.

Outlook

Further, the company updated its fiscal 2022 financial guidance.

Revenue growth and adjusted earnings per share guidance are being narrowed to the upper end of the prior ranges, reflecting the solid, third-quarter performance.

The company now projects revenue growth of 10 percent to 11 percent, compared to previous outlook of 9 percent to 11 percent.

Organic revenue growth is now expected to be 11 percent to 12 percent, compared to previous outlook of 10 percent to 12 percent.

Adjusted earnings per share is now expected to be $10.80 to $10.95, compared to previous estimate of $10.70 to $10.95. Analysts estimate earnings of $10.80 per share for the year.

Meanwhile, reported earnings per share guidance is being narrowed to the low end of the prior range, primarily as a result of contingent consideration adjustments related to the CDMO Sweden divestiture.

Earnings per share is now expected to be $7.90 to $8.05, compared to previous estimate of $7.90 to $8.15.

Acquisition

The company also announced that it has signed a definitive agreement to divest its Avian Vaccine business for around $170 million in cash. The deal also includes potential contingent payments of up to an additional $30 million, subject to certain closing adjustments.

The Avian Vaccine business, which is part of Charles River's Manufacturing Solutions segment, produces specific-pathogen-free or SPF chicken eggs and associated products and services, principally for avian vaccine manufacturers and researchers. It has approximately 250 employees.

The transaction is expected to close by the end of the year, and will not have a meaningful impact on 2022 results.

In 2023, the divestiture is expected to reduce annual revenue by approximately $80 million and adjusted earnings per share by approximately $0.35.

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