[10-Q] Charles River Laboratories International, Inc. Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Charles River Laboratories (CRL) Q2-25 10-Q highlights: Revenue was essentially flat at $1.03 bn (+0.6% YoY). Service revenue slipped 0.2% to $840.8 mn while product revenue rose 4.4% to $191.3 mn.
Profitability compressed sharply. Operating income dropped 34% to $100.1 mn as amortization of intangibles more than doubled (to $65.4 mn) due to accelerated write-offs of CDMO client relationships. Net income attributable to CRL fell 44% to $52.3 mn; diluted EPS declined to $1.06 from $1.74.
Segment trends:
- RMS: revenue +3.3% to $213.3 mn; operating margin expanded to 16.8% (+180 bp).
- DSA: revenue -1.5% to $618.0 mn; operating margin contracted 160 bp to 19.9%.
- Manufacturing: revenue +4.4% to $200.8 mn but operating income collapsed 68% to $12.1 mn, mainly from higher amortization.
Cash & capital: Operating cash flow strengthened to $376.3 mn (+16% YoY) while capex fell 20% to $94.6 mn, yielding improved free cash flow. The company repurchased $360.5 mn of shares (2.1 mn shares) and now has $549.3 mn remaining under its $1 bn authorization. Cash stood at $182.8 mn and gross debt at $2.35 bn; net leverage ticked up.
Balance sheet changes: Goodwill rose $89 mn on FX; intangibles fell $121 mn from accelerated amortization. Treasury stock of $363.3 mn reflects recent buybacks.
Other items: Effective tax rate rose to 26.2% (vs. 21.2%). Restructuring charges totaled $32.2 mn in the quarter. Management flags supply-chain, SEC investigation into NHP sourcing, and multiple lawsuits as continuing uncertainties.
Charles River Laboratories (CRL) risultati del Q2-25 secondo il modulo 10-Q: Il fatturato è rimasto sostanzialmente stabile a 1,03 miliardi di dollari (+0,6% su base annua). I ricavi dai servizi sono diminuiti dello 0,2% a 840,8 milioni di dollari, mentre quelli dai prodotti sono cresciuti del 4,4% arrivando a 191,3 milioni di dollari.
La redditività si è ridotta drasticamente. Il reddito operativo è calato del 34% a 100,1 milioni di dollari, a causa del raddoppio dell’ammortamento degli intangibili (65,4 milioni di dollari) dovuto a una più rapida svalutazione delle relazioni con i clienti CDMO. L’utile netto attribuibile a CRL è sceso del 44% a 52,3 milioni di dollari; l’utile per azione diluito è diminuito da 1,74 a 1,06 dollari.
Andamento dei segmenti:
- RMS: ricavi +3,3% a 213,3 milioni di dollari; margine operativo aumentato a 16,8% (+180 punti base).
- DSA: ricavi -1,5% a 618,0 milioni di dollari; margine operativo sceso di 160 punti base a 19,9%.
- Produzione: ricavi +4,4% a 200,8 milioni di dollari, ma reddito operativo crollato del 68% a 12,1 milioni di dollari, principalmente per l’aumento dell’ammortamento.
Liquidità e capitale: Il flusso di cassa operativo è aumentato a 376,3 milioni di dollari (+16% annuo), mentre gli investimenti in capitale sono diminuiti del 20% a 94,6 milioni, migliorando il flusso di cassa libero. L’azienda ha riacquistato azioni per 360,5 milioni di dollari (2,1 milioni di azioni) e dispone ora di 549,3 milioni residui nell’autorizzazione da 1 miliardo. La liquidità è pari a 182,8 milioni e il debito lordo a 2,35 miliardi; la leva finanziaria netta è leggermente aumentata.
Variazioni di bilancio: L’avviamento è aumentato di 89 milioni per effetto del cambio; gli intangibili sono diminuiti di 121 milioni per ammortamenti accelerati. Le azioni proprie in portafoglio, per 363,3 milioni, riflettono i recenti riacquisti.
Altri aspetti: L’aliquota fiscale effettiva è salita al 26,2% (dal 21,2%). Le spese di ristrutturazione nel trimestre sono state pari a 32,2 milioni. La direzione segnala incertezze persistenti legate alla catena di approvvigionamento, all’indagine SEC sull’approvvigionamento di NHP e a numerose cause legali.
Aspectos destacados del 10-Q del Q2-25 de Charles River Laboratories (CRL): Los ingresos se mantuvieron prácticamente estables en 1,03 mil millones de dólares (+0,6% interanual). Los ingresos por servicios bajaron un 0,2% hasta 840,8 millones de dólares, mientras que los ingresos por productos aumentaron un 4,4% hasta 191,3 millones de dólares.
La rentabilidad se comprimió notablemente. El ingreso operativo cayó un 34% hasta 100,1 millones de dólares debido a que la amortización de intangibles más que se duplicó (65,4 millones) por la aceleración de las bajas por relaciones con clientes CDMO. La utilidad neta atribuible a CRL disminuyó un 44% hasta 52,3 millones; las ganancias diluidas por acción bajaron de 1,74 a 1,06 dólares.
Tendencias por segmento:
- RMS: ingresos +3,3% a 213,3 millones; margen operativo aumentó a 16,8% (+180 puntos básicos).
- DSA: ingresos -1,5% a 618,0 millones; margen operativo se redujo 160 puntos básicos a 19,9%.
- Manufactura: ingresos +4,4% a 200,8 millones, pero ingreso operativo se desplomó 68% a 12,1 millones, principalmente por mayor amortización.
Flujo de caja y capital: El flujo de caja operativo mejoró a 376,3 millones (+16% anual) mientras que el gasto de capital bajó 20% a 94,6 millones, mejorando el flujo de caja libre. La compañía recompró acciones por 360,5 millones (2,1 millones de acciones) y ahora dispone de 549,3 millones restantes bajo su autorización de 1 mil millones. El efectivo fue de 182,8 millones y la deuda bruta de 2,35 mil millones; el apalancamiento neto aumentó ligeramente.
Cambios en el balance: La plusvalía aumentó 89 millones por efecto cambio; los intangibles bajaron 121 millones por amortización acelerada. Las acciones en tesorería por 363,3 millones reflejan recompras recientes.
Otros aspectos: La tasa impositiva efectiva subió a 26,2% (desde 21,2%). Los cargos por reestructuración sumaron 32,2 millones en el trimestre. La gerencia señala incertidumbres continuas relacionadas con la cadena de suministro, la investigación de la SEC sobre la obtención de NHP y múltiples demandas legales.
찰스 리버 래버러토리스(CRL) 2025년 2분기 10-Q 주요 내용: 매출은 전년 대비 0.6% 증가한 10억 3천만 달러로 거의 변동이 없었습니다. 서비스 매출은 0.2% 감소한 8억 4,080만 달러였고, 제품 매출은 4.4% 증가한 1억 9,130만 달러였습니다.
수익성이 크게 악화되었습니다. 무형자산 상각비가 CDMO 고객 관계의 조기 상각으로 인해 6,540만 달러로 두 배 이상 증가하면서 영업이익은 34% 감소한 1억 10만 달러에 그쳤습니다. CRL 귀속 순이익은 44% 감소한 5,230만 달러였으며, 희석 주당순이익(EPS)은 1.74달러에서 1.06달러로 하락했습니다.
사업 부문 동향:
- RMS: 매출 3.3% 증가한 2억 1,330만 달러; 영업이익률은 16.8%로 180bp 상승.
- DSA: 매출 1.5% 감소한 6억 1,800만 달러; 영업이익률은 19.9%로 160bp 하락.
- 제조 부문: 매출 4.4% 증가한 2억 80만 달러, 하지만 상각비 증가로 영업이익은 68% 급감한 1,210만 달러.
현금 및 자본 상황: 영업 현금 흐름은 전년 대비 16% 증가한 3억 7,630만 달러로 강화되었고, 자본 지출은 20% 감소한 9,460만 달러로 자유 현금 흐름이 개선되었습니다. 회사는 3억 6,050만 달러(210만 주) 규모의 자사주를 매입했으며, 10억 달러 한도 중 5억 4,930만 달러가 남아 있습니다. 현금은 1억 8,280만 달러, 총 부채는 23억 5천만 달러였으며 순부채 비율은 소폭 상승했습니다.
재무제표 변동: 환율 영향으로 영업권이 8,900만 달러 증가했고, 무형자산은 조기 상각으로 1억 2,100만 달러 감소했습니다. 3억 6,330만 달러 규모의 자사주는 최근 자사주 매입을 반영합니다.
기타 사항: 유효 세율은 21.2%에서 26.2%로 상승했습니다. 분기 중 구조조정 비용은 3,220만 달러였습니다. 경영진은 공급망 문제, NHP 소싱 관련 SEC 조사, 다수의 소송을 지속적인 불확실성 요인으로 지적했습니다.
Points clés du 10-Q du T2-25 de Charles River Laboratories (CRL) : Le chiffre d'affaires est resté quasiment stable à 1,03 milliard de dollars (+0,6% en glissement annuel). Les revenus de services ont légèrement baissé de 0,2% à 840,8 millions de dollars, tandis que les revenus produits ont augmenté de 4,4% à 191,3 millions de dollars.
La rentabilité s’est fortement contractée. Le résultat opérationnel a chuté de 34% à 100,1 millions de dollars, l’amortissement des actifs incorporels ayant plus que doublé (65,4 millions) en raison d’une dépréciation accélérée des relations clients CDMO. Le résultat net attribuable à CRL a diminué de 44% à 52,3 millions ; le BPA dilué est passé de 1,74 à 1,06 dollar.
Tendances par segment :
- RMS : chiffre d’affaires en hausse de 3,3% à 213,3 millions ; la marge opérationnelle s’est élargie à 16,8% (+180 points de base).
- DSA : chiffre d’affaires en baisse de 1,5% à 618,0 millions ; la marge opérationnelle a reculé de 160 points de base à 19,9%.
- Fabrication : chiffre d’affaires en hausse de 4,4% à 200,8 millions, mais le résultat opérationnel s’est effondré de 68% à 12,1 millions, principalement en raison d’une hausse des amortissements.
Trésorerie et capital : Les flux de trésorerie opérationnels ont augmenté de 16% à 376,3 millions, tandis que les dépenses d’investissement ont diminué de 20% à 94,6 millions, améliorant ainsi la trésorerie disponible. La société a racheté 360,5 millions de dollars d’actions (2,1 millions d’actions) et dispose désormais de 549,3 millions restants sur son autorisation d’un milliard. La trésorerie s’élève à 182,8 millions et la dette brute à 2,35 milliards ; l’endettement net a légèrement augmenté.
Évolutions du bilan : Le goodwill a augmenté de 89 millions en raison des variations de change ; les actifs incorporels ont diminué de 121 millions du fait d’amortissements accélérés. Les actions propres pour 363,3 millions reflètent les rachats récents.
Autres éléments : Le taux d’imposition effectif est passé à 26,2% (contre 21,2%). Les charges de restructuration se sont élevées à 32,2 millions au cours du trimestre. La direction souligne des incertitudes persistantes liées à la chaîne d’approvisionnement, à l’enquête de la SEC sur les sources NHP et à plusieurs litiges.
Charles River Laboratories (CRL) Q2-25 10-Q Highlights: Der Umsatz blieb mit 1,03 Mrd. USD im Wesentlichen stabil (+0,6% gegenüber dem Vorjahr). Die Serviceerlöse sanken um 0,2% auf 840,8 Mio. USD, während die Produkterlöse um 4,4% auf 191,3 Mio. USD stiegen.
Die Profitabilität schrumpfte deutlich. Das operative Ergebnis fiel um 34% auf 100,1 Mio. USD, da die Abschreibungen auf immaterielle Vermögenswerte aufgrund beschleunigter Abschreibungen von CDMO-Kundenbeziehungen mehr als doppelt so hoch ausfielen (65,4 Mio. USD). Der dem Konzern zurechenbare Nettogewinn sank um 44% auf 52,3 Mio. USD; das verwässerte Ergebnis je Aktie fiel von 1,74 auf 1,06 USD.
Segmenttrends:
- RMS: Umsatz +3,3% auf 213,3 Mio. USD; operative Marge stieg auf 16,8% (+180 Basispunkte).
- DSA: Umsatz -1,5% auf 618,0 Mio. USD; operative Marge sank um 160 Basispunkte auf 19,9%.
- Fertigung: Umsatz +4,4% auf 200,8 Mio. USD, aber operatives Ergebnis brach um 68% auf 12,1 Mio. USD ein, hauptsächlich wegen höherer Abschreibungen.
Barmittel & Kapital: Der operative Cashflow stieg um 16% auf 376,3 Mio. USD, während die Investitionen um 20% auf 94,6 Mio. USD sanken, was den freien Cashflow verbesserte. Das Unternehmen kaufte Aktien im Wert von 360,5 Mio. USD (2,1 Mio. Aktien) zurück und verfügt nun noch über 549,3 Mio. USD aus seiner 1-Milliarde-USD-Autorisierung. Die liquiden Mittel betrugen 182,8 Mio. USD, die Bruttoverschuldung 2,35 Mrd. USD; die Nettoverschuldung stieg leicht an.
Bilanzveränderungen: Der Firmenwert stieg aufgrund von Wechselkurseffekten um 89 Mio. USD; immaterielle Vermögenswerte fielen aufgrund beschleunigter Abschreibungen um 121 Mio. USD. Der Bestand an eigenen Aktien in Höhe von 363,3 Mio. USD spiegelt die jüngsten Rückkäufe wider.
Sonstige Punkte: Der effektive Steuersatz stieg auf 26,2% (vorher 21,2%). Restrukturierungskosten beliefen sich im Quartal auf 32,2 Mio. USD. Das Management weist auf anhaltende Unsicherheiten aufgrund von Lieferkettenproblemen, SEC-Ermittlungen zur NHP-Beschaffung und mehreren Rechtsstreitigkeiten hin.
Positive
- Operating cash flow grew 16% YoY to $376 mn, boosting free cash flow despite profit decline.
- RMS segment delivered 3.3% revenue growth and margin expansion, indicating steady model demand.
- Share repurchases of 2.1 mn shares signal confidence and provide EPS support; $549 mn authorization remains.
- Capex discipline (-20% YoY) helps preserve liquidity.
Negative
- Net income fell 44% YoY; diluted EPS down to $1.06 from $1.74.
- Operating margin contracted 510 bp to 9.7% due to doubled amortization and higher SG&A.
- Manufacturing segment operating income collapsed 68%, reflecting CDMO customer losses.
- Leverage increased as debt rose to finance buybacks; net cash declined $12 mn since YE.
- Regulatory & legal overhang: SEC NHP investigation and multiple lawsuits remain unresolved.
Insights
TL;DR – Flat revenue but margins crater; cash flow solid; watch elevated amortization & litigation risk.
Revenue stability masks significant profit erosion driven by a 103% jump in intangible amortization and higher SG&A. Manufacturing’s 480 bp margin compression is particularly concerning, signaling continued CDMO weakness. Cash flow performance and disciplined capex temper the blow, yet leverage has crept higher as buybacks outstrip earnings. Litigation (SEC NHP probe, class-action, derivatives) remains an overhang and could limit multiple expansion. Guidance was not reiterated in the filing; investors should expect consensus EPS downgrades.
TL;DR – Core demand steady; restructuring & amortization are transitory, offering a long entry for patient holders.
The flat top-line and resilient RMS growth suggest end-market demand is intact despite biotech funding pressures. Accelerated amortization is non-cash and front-loads CDMO pain, potentially clearing the deck for FY-26 margin recovery. Operating cash flow covers capex and a sizable portion of buybacks, indicating balance-sheet flexibility. However, with leverage >2.5× EBITDA and regulatory uncertainty, position sizing is key. A re-rating hinges on DSA margin stabilization and resolution of NHP supply issues.
Charles River Laboratories (CRL) risultati del Q2-25 secondo il modulo 10-Q: Il fatturato è rimasto sostanzialmente stabile a 1,03 miliardi di dollari (+0,6% su base annua). I ricavi dai servizi sono diminuiti dello 0,2% a 840,8 milioni di dollari, mentre quelli dai prodotti sono cresciuti del 4,4% arrivando a 191,3 milioni di dollari.
La redditività si è ridotta drasticamente. Il reddito operativo è calato del 34% a 100,1 milioni di dollari, a causa del raddoppio dell’ammortamento degli intangibili (65,4 milioni di dollari) dovuto a una più rapida svalutazione delle relazioni con i clienti CDMO. L’utile netto attribuibile a CRL è sceso del 44% a 52,3 milioni di dollari; l’utile per azione diluito è diminuito da 1,74 a 1,06 dollari.
Andamento dei segmenti:
- RMS: ricavi +3,3% a 213,3 milioni di dollari; margine operativo aumentato a 16,8% (+180 punti base).
- DSA: ricavi -1,5% a 618,0 milioni di dollari; margine operativo sceso di 160 punti base a 19,9%.
- Produzione: ricavi +4,4% a 200,8 milioni di dollari, ma reddito operativo crollato del 68% a 12,1 milioni di dollari, principalmente per l’aumento dell’ammortamento.
Liquidità e capitale: Il flusso di cassa operativo è aumentato a 376,3 milioni di dollari (+16% annuo), mentre gli investimenti in capitale sono diminuiti del 20% a 94,6 milioni, migliorando il flusso di cassa libero. L’azienda ha riacquistato azioni per 360,5 milioni di dollari (2,1 milioni di azioni) e dispone ora di 549,3 milioni residui nell’autorizzazione da 1 miliardo. La liquidità è pari a 182,8 milioni e il debito lordo a 2,35 miliardi; la leva finanziaria netta è leggermente aumentata.
Variazioni di bilancio: L’avviamento è aumentato di 89 milioni per effetto del cambio; gli intangibili sono diminuiti di 121 milioni per ammortamenti accelerati. Le azioni proprie in portafoglio, per 363,3 milioni, riflettono i recenti riacquisti.
Altri aspetti: L’aliquota fiscale effettiva è salita al 26,2% (dal 21,2%). Le spese di ristrutturazione nel trimestre sono state pari a 32,2 milioni. La direzione segnala incertezze persistenti legate alla catena di approvvigionamento, all’indagine SEC sull’approvvigionamento di NHP e a numerose cause legali.
Aspectos destacados del 10-Q del Q2-25 de Charles River Laboratories (CRL): Los ingresos se mantuvieron prácticamente estables en 1,03 mil millones de dólares (+0,6% interanual). Los ingresos por servicios bajaron un 0,2% hasta 840,8 millones de dólares, mientras que los ingresos por productos aumentaron un 4,4% hasta 191,3 millones de dólares.
La rentabilidad se comprimió notablemente. El ingreso operativo cayó un 34% hasta 100,1 millones de dólares debido a que la amortización de intangibles más que se duplicó (65,4 millones) por la aceleración de las bajas por relaciones con clientes CDMO. La utilidad neta atribuible a CRL disminuyó un 44% hasta 52,3 millones; las ganancias diluidas por acción bajaron de 1,74 a 1,06 dólares.
Tendencias por segmento:
- RMS: ingresos +3,3% a 213,3 millones; margen operativo aumentó a 16,8% (+180 puntos básicos).
- DSA: ingresos -1,5% a 618,0 millones; margen operativo se redujo 160 puntos básicos a 19,9%.
- Manufactura: ingresos +4,4% a 200,8 millones, pero ingreso operativo se desplomó 68% a 12,1 millones, principalmente por mayor amortización.
Flujo de caja y capital: El flujo de caja operativo mejoró a 376,3 millones (+16% anual) mientras que el gasto de capital bajó 20% a 94,6 millones, mejorando el flujo de caja libre. La compañía recompró acciones por 360,5 millones (2,1 millones de acciones) y ahora dispone de 549,3 millones restantes bajo su autorización de 1 mil millones. El efectivo fue de 182,8 millones y la deuda bruta de 2,35 mil millones; el apalancamiento neto aumentó ligeramente.
Cambios en el balance: La plusvalía aumentó 89 millones por efecto cambio; los intangibles bajaron 121 millones por amortización acelerada. Las acciones en tesorería por 363,3 millones reflejan recompras recientes.
Otros aspectos: La tasa impositiva efectiva subió a 26,2% (desde 21,2%). Los cargos por reestructuración sumaron 32,2 millones en el trimestre. La gerencia señala incertidumbres continuas relacionadas con la cadena de suministro, la investigación de la SEC sobre la obtención de NHP y múltiples demandas legales.
찰스 리버 래버러토리스(CRL) 2025년 2분기 10-Q 주요 내용: 매출은 전년 대비 0.6% 증가한 10억 3천만 달러로 거의 변동이 없었습니다. 서비스 매출은 0.2% 감소한 8억 4,080만 달러였고, 제품 매출은 4.4% 증가한 1억 9,130만 달러였습니다.
수익성이 크게 악화되었습니다. 무형자산 상각비가 CDMO 고객 관계의 조기 상각으로 인해 6,540만 달러로 두 배 이상 증가하면서 영업이익은 34% 감소한 1억 10만 달러에 그쳤습니다. CRL 귀속 순이익은 44% 감소한 5,230만 달러였으며, 희석 주당순이익(EPS)은 1.74달러에서 1.06달러로 하락했습니다.
사업 부문 동향:
- RMS: 매출 3.3% 증가한 2억 1,330만 달러; 영업이익률은 16.8%로 180bp 상승.
- DSA: 매출 1.5% 감소한 6억 1,800만 달러; 영업이익률은 19.9%로 160bp 하락.
- 제조 부문: 매출 4.4% 증가한 2억 80만 달러, 하지만 상각비 증가로 영업이익은 68% 급감한 1,210만 달러.
현금 및 자본 상황: 영업 현금 흐름은 전년 대비 16% 증가한 3억 7,630만 달러로 강화되었고, 자본 지출은 20% 감소한 9,460만 달러로 자유 현금 흐름이 개선되었습니다. 회사는 3억 6,050만 달러(210만 주) 규모의 자사주를 매입했으며, 10억 달러 한도 중 5억 4,930만 달러가 남아 있습니다. 현금은 1억 8,280만 달러, 총 부채는 23억 5천만 달러였으며 순부채 비율은 소폭 상승했습니다.
재무제표 변동: 환율 영향으로 영업권이 8,900만 달러 증가했고, 무형자산은 조기 상각으로 1억 2,100만 달러 감소했습니다. 3억 6,330만 달러 규모의 자사주는 최근 자사주 매입을 반영합니다.
기타 사항: 유효 세율은 21.2%에서 26.2%로 상승했습니다. 분기 중 구조조정 비용은 3,220만 달러였습니다. 경영진은 공급망 문제, NHP 소싱 관련 SEC 조사, 다수의 소송을 지속적인 불확실성 요인으로 지적했습니다.
Points clés du 10-Q du T2-25 de Charles River Laboratories (CRL) : Le chiffre d'affaires est resté quasiment stable à 1,03 milliard de dollars (+0,6% en glissement annuel). Les revenus de services ont légèrement baissé de 0,2% à 840,8 millions de dollars, tandis que les revenus produits ont augmenté de 4,4% à 191,3 millions de dollars.
La rentabilité s’est fortement contractée. Le résultat opérationnel a chuté de 34% à 100,1 millions de dollars, l’amortissement des actifs incorporels ayant plus que doublé (65,4 millions) en raison d’une dépréciation accélérée des relations clients CDMO. Le résultat net attribuable à CRL a diminué de 44% à 52,3 millions ; le BPA dilué est passé de 1,74 à 1,06 dollar.
Tendances par segment :
- RMS : chiffre d’affaires en hausse de 3,3% à 213,3 millions ; la marge opérationnelle s’est élargie à 16,8% (+180 points de base).
- DSA : chiffre d’affaires en baisse de 1,5% à 618,0 millions ; la marge opérationnelle a reculé de 160 points de base à 19,9%.
- Fabrication : chiffre d’affaires en hausse de 4,4% à 200,8 millions, mais le résultat opérationnel s’est effondré de 68% à 12,1 millions, principalement en raison d’une hausse des amortissements.
Trésorerie et capital : Les flux de trésorerie opérationnels ont augmenté de 16% à 376,3 millions, tandis que les dépenses d’investissement ont diminué de 20% à 94,6 millions, améliorant ainsi la trésorerie disponible. La société a racheté 360,5 millions de dollars d’actions (2,1 millions d’actions) et dispose désormais de 549,3 millions restants sur son autorisation d’un milliard. La trésorerie s’élève à 182,8 millions et la dette brute à 2,35 milliards ; l’endettement net a légèrement augmenté.
Évolutions du bilan : Le goodwill a augmenté de 89 millions en raison des variations de change ; les actifs incorporels ont diminué de 121 millions du fait d’amortissements accélérés. Les actions propres pour 363,3 millions reflètent les rachats récents.
Autres éléments : Le taux d’imposition effectif est passé à 26,2% (contre 21,2%). Les charges de restructuration se sont élevées à 32,2 millions au cours du trimestre. La direction souligne des incertitudes persistantes liées à la chaîne d’approvisionnement, à l’enquête de la SEC sur les sources NHP et à plusieurs litiges.
Charles River Laboratories (CRL) Q2-25 10-Q Highlights: Der Umsatz blieb mit 1,03 Mrd. USD im Wesentlichen stabil (+0,6% gegenüber dem Vorjahr). Die Serviceerlöse sanken um 0,2% auf 840,8 Mio. USD, während die Produkterlöse um 4,4% auf 191,3 Mio. USD stiegen.
Die Profitabilität schrumpfte deutlich. Das operative Ergebnis fiel um 34% auf 100,1 Mio. USD, da die Abschreibungen auf immaterielle Vermögenswerte aufgrund beschleunigter Abschreibungen von CDMO-Kundenbeziehungen mehr als doppelt so hoch ausfielen (65,4 Mio. USD). Der dem Konzern zurechenbare Nettogewinn sank um 44% auf 52,3 Mio. USD; das verwässerte Ergebnis je Aktie fiel von 1,74 auf 1,06 USD.
Segmenttrends:
- RMS: Umsatz +3,3% auf 213,3 Mio. USD; operative Marge stieg auf 16,8% (+180 Basispunkte).
- DSA: Umsatz -1,5% auf 618,0 Mio. USD; operative Marge sank um 160 Basispunkte auf 19,9%.
- Fertigung: Umsatz +4,4% auf 200,8 Mio. USD, aber operatives Ergebnis brach um 68% auf 12,1 Mio. USD ein, hauptsächlich wegen höherer Abschreibungen.
Barmittel & Kapital: Der operative Cashflow stieg um 16% auf 376,3 Mio. USD, während die Investitionen um 20% auf 94,6 Mio. USD sanken, was den freien Cashflow verbesserte. Das Unternehmen kaufte Aktien im Wert von 360,5 Mio. USD (2,1 Mio. Aktien) zurück und verfügt nun noch über 549,3 Mio. USD aus seiner 1-Milliarde-USD-Autorisierung. Die liquiden Mittel betrugen 182,8 Mio. USD, die Bruttoverschuldung 2,35 Mrd. USD; die Nettoverschuldung stieg leicht an.
Bilanzveränderungen: Der Firmenwert stieg aufgrund von Wechselkurseffekten um 89 Mio. USD; immaterielle Vermögenswerte fielen aufgrund beschleunigter Abschreibungen um 121 Mio. USD. Der Bestand an eigenen Aktien in Höhe von 363,3 Mio. USD spiegelt die jüngsten Rückkäufe wider.
Sonstige Punkte: Der effektive Steuersatz stieg auf 26,2% (vorher 21,2%). Restrukturierungskosten beliefen sich im Quartal auf 32,2 Mio. USD. Das Management weist auf anhaltende Unsicherheiten aufgrund von Lieferkettenproblemen, SEC-Ermittlungen zur NHP-Beschaffung und mehreren Rechtsstreitigkeiten hin.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM | |||||
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
FOR THE QUARTERLY PERIOD ENDED June 28, 2025
| OR | |||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| FOR THE TRANSITION PERIOD FROM TO | |||||
Commission File No. 001-15943
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(Registrant’s telephone number, including area code): (781 ) 222-6000
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of July 26, 2025, there were 49,214,178 shares of the Registrant’s common stock outstanding.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 28, 2025
TABLE OF CONTENTS
| Item | Page | |||||||
| PART I - FINANCIAL INFORMATION | ||||||||
| 1 | Financial Statements | |||||||
Condensed Consolidated Statements of Income (Unaudited) for the three and six months ended June 28, 2025 and June 29, 2024 | 3 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 28, 2025 and June 29, 2024 | 4 | |||||||
Condensed Consolidated Balance Sheets (Unaudited) as of June 28, 2025 and December 28, 2024 | 5 | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 28, 2025 and June 29, 2024 | 6 | |||||||
Condensed Consolidated Statements of Changes in Equity and Redeemable Noncontrolling Interests (Unaudited) for the three and six months ended June 28, 2025 and June 29, 2024 | 7 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 9 | |||||||
| 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||||
| Overview | 26 | |||||||
| Results of Operations | 28 | |||||||
| Liquidity and Capital Resources | 34 | |||||||
| Critical Accounting Policies and Estimates | 37 | |||||||
| Recent Accounting Pronouncements | 38 | |||||||
| 3 | Quantitative and Qualitative Disclosure About Market Risk | 38 | ||||||
| 4 | Controls and Procedures | 38 | ||||||
| PART II - OTHER INFORMATION | ||||||||
| 1 | Legal Proceedings | 39 | ||||||
| 1A | Risk Factors | 39 | ||||||
| 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 42 | ||||||
| 5 | Other Information | 42 | ||||||
| 6 | Exhibits | 43 | ||||||
| Signatures | 44 | |||||||
1
Special Note on Factors Affecting Future Results
This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and the future results of Charles River Laboratories International, Inc. that are based on our current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “likely,” “may,” “designed,” “would,” “future,” “can,” “could,” and other similar expressions which are predictions of, indicate future events and trends or which do not relate to historical matters, are intended to identify such forward-looking statements. These statements are based on our current expectations and beliefs and involve a number of risks, uncertainties and assumptions that are difficult to predict.
For example, we may use forward-looking statements when addressing topics such as: our expectations regarding the availability of NHPs and our ability to diversify our non-human primate (NHP) supply chain; the outcome of (1) the U.S. Securities and Exchange Commission (SEC)’s investigation and inquiry related to the NHP supply chain (including shipments of non-human primates from Cambodia received by the Company), (2) the putative securities class action lawsuit filed against us and certain current/former officers on May 19, 2023, (3) the derivative lawsuit filed against members of the Board of Directors and certain current/former officers on November 8, 2023, and (4) the derivative lawsuit filed against certain current/former members of the Board of Directors and certain current/former officers on August 2, 2024; the timing and impact of the development and implementation of enhanced procedures to reasonably ensure that non-human primates we source are purpose-bred; changes and uncertainties in the global economy and financial markets; client demand, particularly future demand for drug discovery and development products and services, including the outsourcing of these services; our expectations with respect to our ability to meet financial targets; our expectations regarding stock repurchases, including 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; our ability to successfully execute our business strategy; our ability to timely build infrastructure to satisfy capacity needs and support business growth, our ability to fund our operations for the foreseeable future; the impact of unauthorized access into our information systems, including the timing and effectiveness of any enhanced security and monitoring present spending trends and other cost reduction activities by our clients; future actions by our management; the outcome of contingencies; changes in our business strategy, business practices and methods of generating revenue; the development and performance of our services and products; market and industry conditions, including competitive and pricing trends and the impact of those conditions, including on our allowances for credit losses; our strategic relationships with leading pharmaceutical and biotechnology companies, venture capital investments, and opportunities for future similar arrangements; our cost structure; our expectations regarding our acquisitions and divestitures, including their impact and projected timing; our expectations with respect to revenue growth and operating synergies (including the impact of specific actions intended to cause related improvements); the nature, timing and impact of specific actions intended to improve overall operating efficiencies and profitability (and our ability to accommodate future demand with our infrastructure), including actions to optimize our global footprint, and gains and losses attributable to businesses we plan to close, consolidate, divest or repurpose and the impact of operations and restructuring actions (including as estimated on an annualized basis); our expectations with respect to study cancellation rates and the impact of such cancellations; our expectations with respect to tax rates and benefits, including the impact of tax legislation on our operations; changes in our expectations regarding future stock option, restricted stock, performance share units and other equity grants to employees and directors; expectations with respect to foreign currency exchange; assessing (or changing our assessment of) our tax positions for financial statement purposes; our liquidity; and the impact of litigation, including our ability to successfully defend litigation against us. In addition, these statements include the impact of economic and market conditions on us and our clients, the effects of our cost-saving actions and the steps to optimize returns to shareholders on an effective and timely basis; and our ability to withstand the current market conditions.
Forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document, or in the case of statements incorporated by reference, on the date of the document incorporated by reference. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 28, 2024, under the sections entitled “Our Strategy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in this Quarterly Report on Form 10-Q, under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors,” in our press releases, and other financial filings with the Securities and Exchange Commission. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or risks. New information, future events, or risks may cause the forward-looking events we discuss in this report not to occur.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Service revenue | $ | $ | $ | $ | |||||||||||||||||||
| Product revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Cost of services provided (excluding amortization of intangible assets) | |||||||||||||||||||||||
| Cost of products sold (excluding amortization of intangible assets) | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to Charles River Laboratories International, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Calculation of net income per share attributable to Charles River Laboratories International, Inc. common shareholders | |||||||||||||||||||||||
| Net income attributable to Charles River Laboratories International, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Less: Adjustment of redeemable noncontrolling interests | |||||||||||||||||||||||
| Less: Incremental dividends attributed to noncontrolling interest holders | |||||||||||||||||||||||
| Net income available to Charles River Laboratories International, Inc. common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average number of common shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||
3
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||
| Amortization of net loss, settlement losses, and prior service benefit included in total cost for pension and other post-retirement benefit plans | |||||||||||||||||||||||
| Unrealized gains (losses) on hedging instruments | ( | ||||||||||||||||||||||
Other comprehensive income (loss), before income taxes | ( | ( | |||||||||||||||||||||
| Less: Income tax expense (benefit) related to items of other comprehensive income | ( | ( | |||||||||||||||||||||
| Comprehensive income, net of income taxes | |||||||||||||||||||||||
Less: Comprehensive gain (loss) related to noncontrolling interests, net of income taxes | ( | ||||||||||||||||||||||
Comprehensive income attributable to Charles River Laboratories International, Inc., net of income taxes | $ | $ | $ | $ | |||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | |||||||||||||||||||||||
4
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)
| June 28, 2025 | December 28, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Trade receivables and contract assets, net of allowances for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid assets | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Venture capital and strategic equity investments | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities, Redeemable Noncontrolling Interests and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation | |||||||||||
| Deferred revenue | |||||||||||
| Accrued liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net and finance leases | |||||||||||
| Operating lease right-of-use liabilities | |||||||||||
| Deferred tax liabilities | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Notes 10, 12, and 14) | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
| Equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
Treasury stock, at cost, | ( | ||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Charles River Laboratories International, Inc. equity | |||||||||||
| Nonredeemable noncontrolling interest | |||||||||||
| Total equity | |||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | $ | |||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | |||||||||||
5
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| Cash flows relating to operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Long-lived asset impairments | |||||||||||
| Stock-based compensation | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Write down of inventories | |||||||||||
| (Gain) loss on venture capital and strategic equity investments, net | ( | ||||||||||
| Provision for credit losses | |||||||||||
| (Gain) loss on divestitures, net | ( | ||||||||||
| Other, net | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Trade receivables and contract assets, net | ( | ||||||||||
| Inventories | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued compensation | ( | ||||||||||
| Deferred revenue | |||||||||||
| Customer contract deposits | |||||||||||
| Other assets and liabilities, net | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows relating to investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Purchases of investments and contributions to venture capital investments | ( | ( | |||||||||
| Proceeds from sale of investments | |||||||||||
| Proceeds from sale of businesses and assets, net | |||||||||||
| Acquisition of businesses and assets, net of cash acquired | ( | ||||||||||
| Other, net | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows relating to financing activities | |||||||||||
| Proceeds from long-term debt and revolving credit facility | |||||||||||
| Payments on long-term debt, revolving credit facility, and finance lease obligations | ( | ( | |||||||||
| Proceeds from exercises of stock options | |||||||||||
| Purchase of treasury stock | ( | ( | |||||||||
| Payments of contingent consideration | ( | ||||||||||
| Purchase of remaining equity interest of other redeemable noncontrolling interests | ( | ( | |||||||||
| Other, net | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
| Net change in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | |||||||||||
6
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (UNAUDITED)
(in thousands)
Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Charles River Laboratories, Inc. Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 28, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | ( | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interests to redemption value | — | — | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock under employee compensation plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share repurchase excise tax | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 29, 2025 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption value | — | — | ( | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends to noncontrolling interests | ( | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock under employee compensation plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 28, 2025 | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7
Redeemable Noncontrolling Interests | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Charles River Laboratories, Inc. Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 30, 2023 | $ | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | ( | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interests to redemption value | — | — | ( | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared to noncontrolling interests | ( | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock under employee compensation plans | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ( | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interests to redemption value | — | — | ( | ( | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared to noncontrolling interests | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of remaining equity interest of other redeemable noncontrolling interest | ( | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of purchase price of Noveprim redeemable noncontrolling interest | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock under employee compensation plans | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 29, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited and have been prepared by Charles River Laboratories International, Inc. (the Company) in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. Certain reclassifications of prior year amounts have been made to conform to the current year presentation. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
Newly Issued Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40)” which requires enhanced disclosure of income statement expense categories to improve transparency and provide financial statement users with more detailed information about the nature, amount and timing of expenses impacting financial performance. This new guidance is effective for the Company for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU may be adopted using the prospective or retrospective methods. The Company is currently evaluating the method of adoption and the impact this new standard will have on the related disclosures in the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures (Topic 740)”. ASU 2023-09 requires enhanced disclosures on income taxes paid, adds disaggregation of continuing operations before income taxes between foreign and domestic earnings and defines specific categories for the reconciliation of jurisdictional tax rate to effective tax rate. This ASU is effective for fiscal years beginning after December 15, 2024, and can be applied on a prospective basis. The Company is currently evaluating the method of adoption and the impact this new standard will have on the related disclosures on the consolidated financial statements.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025.
Consolidation
The Company’s unaudited condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its unaudited condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Redeemable noncontrolling interests, where the noncontrolling interest holders have the ability to require the Company to purchase the remaining interests, are classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. Intercompany balances and transactions are eliminated in consolidation.
The Company’s fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end.
Segment Reporting
The Company reports its results in three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing).
9
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company’s RMS reportable segment includes products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of clients’ research operations (including recruitment, training, staffing, and management services) within the clients’ facilities and utilizing the Charles River Accelerator and Development Lab (CRADL™) offerings, which provide vivarium space to clients, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models, and Cell Solutions which supplies controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.
The Company’s DSA reportable segment includes discovery and safety assessment services. The Company provides regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, including in vitro (non-animal) and in vivo (in research models) studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development.
The Company’s Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO).
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following table disaggregates the Company’s revenue by reportable segment and timing of transfer of products or services:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Timing of Revenue Recognition: | |||||||||||||||||||||||
| RMS | |||||||||||||||||||||||
| Services and products transferred over time | $ | $ | $ | $ | |||||||||||||||||||
| Services and products transferred at a point in time | |||||||||||||||||||||||
| Total RMS revenue | |||||||||||||||||||||||
| DSA | |||||||||||||||||||||||
| Services and products transferred over time | |||||||||||||||||||||||
| Services and products transferred at a point in time | |||||||||||||||||||||||
| Total DSA revenue | |||||||||||||||||||||||
| Manufacturing | |||||||||||||||||||||||
| Services and products transferred over time | |||||||||||||||||||||||
| Services and products transferred at a point in time | |||||||||||||||||||||||
| Total Manufacturing revenue | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
10
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Contract Balances from Contracts with Customers
The following table provides information about client receivables, contract assets, and contract liabilities from contracts with customers:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
Assets from contracts with customers | |||||||||||
| Client receivables | $ | $ | |||||||||
| Unbilled revenue | |||||||||||
| Total | |||||||||||
| Less: Allowance for credit losses | ( | ( | |||||||||
| Trade receivables and contract assets, net | $ | $ | |||||||||
| Liabilities from contracts with customers | |||||||||||
| Current deferred revenue | $ | $ | |||||||||
| Long-term deferred revenue (included in Other long-term liabilities) | |||||||||||
| Customer contract deposits (included in Other current liabilities) | |||||||||||
Approximately 85 % of unbilled revenue as of December 28, 2024, which was $212 million, was billed during the six months ended June 28, 2025. Approximately 85 % of unbilled revenue as of December 30, 2023, which was $228 million, was billed during the six months ended June 29, 2024.
Approximately 70 % of contract liabilities as of December 28, 2024, which was $283 million, were recognized as revenue during the six months ended June 28, 2025. Approximately 70 % of contract liabilities as of December 30, 2023, which was $273 million, were recognized as revenue during the six months ended June 29, 2024.
When the Company does not have the unconditional right to advanced billings, both advanced client payments and unpaid advanced client billings are excluded from deferred revenue, with the advanced billings also being excluded from client receivables. The Company excluded approximately $34 million and $38 million of unpaid advanced client billings from both client receivables and deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of June 28, 2025 and December 28, 2024, respectively.
Allowance for Credit Losses
The following is a summary of the activity of the Company’s allowance for credit losses:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Provisions | |||||||||||
| Reductions | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
Net provision expenses were $1.0 million and $4.1 million during the six months ended June 28, 2025 and June 29, 2024, respectively and include recoveries of balances previously written off, which are excluded from the table above.
Transaction Price Allocated to Future Performance Obligations
The Company discloses the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of June 28, 2025. Excluded from the disclosure is the value of unsatisfied performance obligations for contracts with an original expected length of one year or less, contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed, and service revenue recognized in accordance with ASC 842, “Leases”. The aggregate amount of transaction price allocated to the remaining performance obligations for all open customer contracts as of June 28, 2025 was $727.3 million. The Company will recognize revenues for these performance obligations as they are satisfied, approximately 50 % of which is expected to occur within the next twelve months and the remainder recognized thereafter during the remaining contract term.
11
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Performance Obligations
As part of the Company’s service offerings, the Company has identified performance obligations related to leasing Company owned assets. In certain arrangements, customers obtain substantially all of the economic benefits of the identified assets, which may include manufacturing suites and related equipment, and have the right to direct the assets’ use over the term of the contract. The associated revenue is recognized on a straight-line basis over the term of the lease, which is generally less than one year, and recorded within service revenue. The Company recognized $12.1 million and $16.7 million in lease revenue during the three months ended June 28, 2025 and June 29, 2024. The Company recognized $23.6 million and $37.7 million in lease revenue during the six months ended June 28, 2025 and June 29, 2024. Due to the nature of these arrangements and timing of the contractual lease term, the remaining revenue to be recognized related to these lease performance obligations is not material to the unaudited condensed consolidated financial statements.
12
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in three reportable segments: RMS, DSA, and Manufacturing. The reportable segments comprise the structure used by the Company’s Chief Executive Officer, who is the Chief Operating Decision Maker (CODM), to make key operating decisions and assess performance. These segments are strategic business units with differing products and services.
The Company’s CODM evaluates the segments operating performance based on operating income. Operating income is the measure of profit or loss regularly provided to and used by the CODM to assess performance and allocate resources. Operating income is defined as revenue less costs of revenue; selling, general, and administrative expenses; and amortization of intangible assets. For each segment, the CODM uses operating income in the annual budgeting and quarterly forecasting process when comparing to actual results. Asset information on a reportable segment basis is not disclosed as this information is not separately identified and internally reported to the Company’s CODM. The following table presents the results of operations by reportable segment:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| RMS | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||
| DSA | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||
| Manufacturing | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||
Unallocated Corporate (1) | |||||||||||||||||||||||
| Selling, general and administrative | $ | $ | $ | $ | |||||||||||||||||||
| Operating loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(1) Operating income for unallocated corporate consists of costs associated with departments such as senior executives, corporate accounting, legal, tax, human resources, treasury, and investor relations. | |||||||||||||||||||||||
13
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| RMS | $ | $ | $ | $ | |||||||||||||||||||
| DSA | |||||||||||||||||||||||
| Manufacturing | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||
| RMS | $ | $ | $ | $ | |||||||||||||||||||
| DSA | |||||||||||||||||||||||
| Manufacturing | |||||||||||||||||||||||
| Segment operating income | |||||||||||||||||||||||
| Unallocated Corporate | ( | ( | ( | ( | |||||||||||||||||||
| Operating income | $ | $ | $ | $ | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||
| Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
Capital expenditures and depreciation and amortization (related to both intangible assets and certain assets acquired in business combinations) by reportable segment are as follows:
| RMS | DSA | Manufacturing | Unallocated Corporate | Consolidated | |||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Capital Expenditures | |||||||||||||||||||||||||||||
| Three Months Ended: | |||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||
| Six Months Ended: | |||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||
Depreciation and amortization (1) | |||||||||||||||||||||||||||||
| Three Months Ended: | |||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||
| Six Months Ended: | |||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||
(1) Depreciation and amortization includes both inventory step up amortization expense and biological assets amortization expense. | |||||||||||||||||||||||||||||
14
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenue represents sales originating in entities physically located in the identified geographic area. Revenue by geographic area is as follows:
| U.S. | Europe | Canada | Asia Pacific | Other (1) | Consolidated | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Three Months Ended: | |||||||||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||||||||
| Six Months Ended: | |||||||||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| June 29, 2024 | |||||||||||||||||||||||||||||||||||
(1) The Other category represents operations located in Brazil, Israel, and Mauritius. | |||||||||||||||||||||||||||||||||||
Long-lived assets consist of property, plant, and equipment, net. Long-lived assets by geographic area are as follows:
| U.S. | Europe | Canada | Asia Pacific | Other | Consolidated | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Long-lived assets | |||||||||||||||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| December 28, 2024 | |||||||||||||||||||||||||||||||||||
4. SUPPLEMENTAL CASH FLOW INFORMATION
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Non-cash investing activities: | |||||||||||
| Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities | $ | $ | |||||||||
| Assets acquired under finance leases | |||||||||||
Cash, cash equivalents and restricted cash is included in the accompanying unaudited condensed consolidated balance sheets as follows:
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Supplemental cash flow information: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash included in Other current assets | |||||||||||
| Restricted cash included in Other assets | |||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
5. INVENTORY
Inventories
The composition of inventories is as follows:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Raw materials and supplies | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished products | |||||||||||
| Inventories | $ | $ | |||||||||
15
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Inventory step up amortization expense for the three months ended June 28, 2025 and June 29, 2024 was $4.2 million and $3.5 million, respectively. Inventory step up amortization expense for the six months ended June 28, 2025 and June 29, 2024 was $10.4 million and $10.6 million, respectively.
6. PROPERTY, PLANT AND EQUIPMENT, NET
The composition of property, plant and equipment, net is as follows:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Land | $ | $ | |||||||||
Buildings (1) | |||||||||||
Machinery and equipment (1) | |||||||||||
| Leasehold improvements | |||||||||||
| Furniture and fixtures | |||||||||||
Computer hardware and software (1) | |||||||||||
Vehicles (1) | |||||||||||
| Construction in progress | |||||||||||
| Total | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
(1) These balances include assets under finance leases. | |||||||||||
As of June 28, 2025, the Company included approximately $20 million of certain property, plant and equipment primarily related to corporate assets as held for sale within other assets on the unaudited condensed consolidated balance sheets.
Depreciation expense in the three months ended June 28, 2025 and June 29, 2024 was $44.3 million and $47.6 million, respectively. Depreciation expense in the six months ended June 28, 2025 and June 29, 2024 was $87.7 million and $93.3 million, respectively.
Change in estimated useful lives
In accordance with its policy, the Company reviews the estimated useful lives of its property, plant and equipment on an ongoing basis. This review indicated that the actual lives of certain assets were longer than the estimated useful lives used for depreciation purposes in the Company’s financial reporting. As a result, effective December 29, 2024, the first day of fiscal 2025, the Company changed certain estimates of the useful lives to better reflect the estimated periods during which these assets will remain in service. The estimated useful lives of machinery and equipment, which was previously 5 years increased to 7 years, and building improvements that was previously 10 years increased to 15 years. The effect of this change in estimate during the three and six months ended June 28, 2025 reduced depreciation expense by $4.5 million and $9.0 million, increased net income available to Charles River Laboratories International, Inc. common shareholders by $3.4 million and $6.9 million and increased basic and diluted earnings per share by approximately $0.07 0.14
7. VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS
Venture capital investments are summarized below:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Capital contributions | |||||||||||
| Distributions | ( | ( | |||||||||
Gains (losses) | ( | ||||||||||
| Foreign currency translation | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
16
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company also invests, with minority positions, directly in equity of predominantly privately held companies. Strategic investments are summarized below:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Purchase of investments | |||||||||||
Gain (loss) | ( | ( | |||||||||
| Foreign currency translation | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
8. FAIR VALUE
Assets and liabilities measured at fair value on a recurring basis are summarized below:
| June 28, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
Other assets measured at fair value: | |||||||||||||||||||||||
| Life insurance policies | $ | $ | $ | $ | |||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Accrued liabilities measured at fair value: | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the six months ended June 28, 2025, there were no transfers between levels.
| December 28, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Current assets measured at fair value: | (in thousands) | ||||||||||||||||||||||
| Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Other assets: | |||||||||||||||||||||||
| Life insurance policies | |||||||||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
| Accrued liabilities measured at fair value: | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
| Other long-term liabilities measured at fair value | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | |||||||||||||||||||
During the year ended December 28, 2024, there were no transfers between levels.
17
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Contingent Consideration
The following table provides a rollforward of the contingent consideration related to the Company’s acquisitions.
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Beginning balance | $ | $ | |||||||||
| Payments | ( | ||||||||||
| Adjustment of previously recorded contingent liability | |||||||||||
| Ending balance | $ | $ | |||||||||
The Company estimates the fair value of contingent consideration obligations through valuation models, such as probability-weighted and option pricing models, which incorporate probability adjusted assumptions and simulations related to the achievement of the milestones and the likelihood of making related payments. The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain financial targets, forecasted results or targets, volatility, and discount rates. The remaining maximum potential payments are approximately $30.0 million, of which the value accrued as of June 28, 2025 is $26.1 million as the probability of achieving the maximum target is estimated to be 87 %. The volatility and weighted average cost of capital is approximately 20 % and 8 %, respectively. Increases or decreases in these assumptions may result in a higher or lower fair value measurement, respectively.
Debt Instruments
The book value of the Company’s revolving loans are variable rate loans carried at amortized cost which approximates the fair value. The fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2 within the fair value hierarchy.
The book value of the Company’s Senior Notes are fixed rate obligations carried at amortized cost. Fair value is based on quoted market prices as well as borrowing rates available to the Company. As the fair value is based on significant other observable outputs, it is deemed to be Level 2 within the fair value hierarchy. The book value, excluding issuance costs, and fair value of the Company’s Senior Notes is summarized below:
| June 28, 2025 | December 28, 2024 | ||||||||||||||||||||||
| Book Value | Fair Value | Book Value | Fair Value | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The following table provides a rollforward of the Company’s goodwill:
| RMS | DSA (1) | Manufacturing (2) | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| December 28, 2024 | $ | $ | $ | $ | |||||||||||||||||||
| Divestitures | ( | ( | |||||||||||||||||||||
| Foreign exchange | |||||||||||||||||||||||
| June 28, 2025 | $ | $ | $ | $ | |||||||||||||||||||
(1) DSA includes accumulated impairment losses of $ | |||||||||||||||||||||||
(2) Manufacturing includes an accumulated impairment loss of $ | |||||||||||||||||||||||
As of the beginning of fiscal 2025, the Company has combined the Discovery Services and Safety Assessment reporting units into a single reporting unit consistent with recent changes to the DSA integrated operating structure.
The increase in goodwill during the six months ended June 28, 2025 is primarily related to the effect of foreign exchange; partially offset by a divestiture of a site in the DSA reportable segment.
18
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Intangible Assets, Net
The following table displays intangible assets, net by major class:
| June 28, 2025 | December 28, 2024 | ||||||||||||||||||||||||||||||||||
| Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Client relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Technology | ( | ( | |||||||||||||||||||||||||||||||||
| Trademarks and trade names | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The decrease in intangible assets for the six months ended June 28, 2025 related primarily to the accelerated amortization of certain CDMO client relationships in the Biologics Solutions reporting unit, normal amortization over the useful lives, and a divestiture of a site in the DSA reportable segment.
Amortization expense of definite-lived intangible assets for three months ended June 28, 2025 and June 29, 2024 was $65.4 million and $32.3 million, respectively. Amortization expense of definite-lived intangible assets for six months ended June 28, 2025 and June 29, 2024 was $130.6 million and $64.8 million, respectively. Amortization expense for the three and six months ended June 28, 2025 includes $35.5 million and $71.0 million, respectively, of accelerated amortization expense as a result of a decrease in the remaining useful life of certain client relationships due to a loss of key customers in 2025 which was identified in fiscal year 2024.
10. DEBT AND OTHER FINANCING ARRANGEMENTS
Long-term debt, net and finance leases consists of the following:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Revolving facility | $ | $ | |||||||||
| Other debt | |||||||||||
| Finance leases | |||||||||||
| Total debt and finance leases | |||||||||||
| Less: | |||||||||||
| Current portion of long-term debt | |||||||||||
| Current portion of finance leases | |||||||||||
| Current portion of long-term debt and finance leases | |||||||||||
| Long-term debt and finance leases | |||||||||||
| Debt discount and debt issuance costs | ( | ( | |||||||||
| Long-term debt, net and finance leases | $ | $ | |||||||||
As of June 28, 2025 and December 28, 2024, the weighted average interest rate on the Company’s debt was 4.13 % and 4.48 %, respectively.
Revolving Credit Facility
The Company has a revolving credit facility “Credit Facility” that provides for up to $2.0 billion of multi-currency revolving credit. The Credit Facility has a maturity date of December 2029, with no required scheduled payment before that date. The interest rates applicable to the revolving facility are equal to (A) for revolving loans denominated in U.S. dollars, at the Company’s option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50 %, or (3) the one-month adjusted SOFR rate plus 1.0 %) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon the Company’s leverage ratio.
19
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Letters of Credit
11. EQUITY AND NONCONTROLLING INTERESTS
Earnings Per Share
The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to Charles River Laboratories International, Inc. | |||||||||||||||||||||||
| Calculation of net income per share attributable to Charles River Laboratories International, Inc. common shareholders | |||||||||||||||||||||||
| Net income attributable to Charles River Laboratories International, Inc. | $ | $ | $ | $ | |||||||||||||||||||
Less: Adjustment of redeemable noncontrolling interest (1) | |||||||||||||||||||||||
Less: Incremental dividends attributable to noncontrolling interest holders (2) | |||||||||||||||||||||||
| Net income available to Charles River Laboratories International, Inc. common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares outstanding - Basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock options, restricted stock units and performance share units | |||||||||||||||||||||||
| Weighted-average shares outstanding - Diluted | |||||||||||||||||||||||
Anti-dilutive common stock equivalents (3)(4) | |||||||||||||||||||||||
(1) Represents adjustments of redeemable noncontrolling interest that impact retained earnings. | |||||||||||||||||||||||
(2) Represents incremental declared and undeclared dividends attributable to Noveprim noncontrolling interest holders who are entitled to preferential dividends for fiscal year 2024. | |||||||||||||||||||||||
(3) Anti-dilutive common stock equivalents represent amounts outstanding related to employee stock options, RSUs and PSUs for all periods presented. | |||||||||||||||||||||||
(4) These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect. | |||||||||||||||||||||||
Treasury Shares
On August 2, 2024, the Company’s Board of Directors approved a stock repurchase authorization of $1.0 billion. During the six months ended June 28, 2025, the Company repurchased 2.1 million shares of common stock for $350.0 million under the stock repurchase program. As of June 28, 2025, the Company had $549.3 million remaining on the current authorized stock repurchase program.
The Company’s stock-based compensation plans permit the netting of common stock upon vesting of RSUs and PSUs in order to satisfy individual statutory tax withholding requirements. The Company acquired 0.1 million during the six months ended June 28, 2025 and 0.1 million in the six months ended June 29, 2024, for $9.9 million and $18.3 million, respectively, from such netting.
20
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Accumulated Other Comprehensive Income (Loss)
Changes to each component of accumulated other comprehensive income (loss), net of income taxes, are as follows:
| Foreign Currency Translation Adjustment and Other | Pension and Other Post-Retirement Benefit Plans | Total | |||||||||||||||
| (in thousands) | |||||||||||||||||
| December 28, 2024 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income before reclassifications | |||||||||||||||||
Net current period other comprehensive income | |||||||||||||||||
| Income tax expense | |||||||||||||||||
| June 28, 2025 | $ | ( | $ | ( | $ | ( | |||||||||||
Redeemable Noncontrolling Interests
The Company has held and continues to hold redeemable noncontrolling interests. Since the Company has the right to purchase, and the noncontrolling interest holders have the right to require the Company to purchase the remaining interest, which represents a derivative embedded within the equity instrument, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities.
The redeemable noncontrolling interests are measured at the greater of (i) the redemption amount or (ii) the historical value resulting from the original acquisition date fair value, increased or decreased for the noncontrolling interest’s share of net income (loss), equity capital contributions and distributions. The fair value of the redeemable noncontrolling interest is determined using the income approach, with key assumptions being projected cash flows and discount rates based on market participant’s weighted average cost of capital. To the extent redemption value exceeds carrying value, adjustments are recorded to additional paid-in capital, with any cumulative excess of redemption value over fair value recorded in retained earnings, which impacts net income available to common shareholders used in the calculation of earnings per common share.
Noveprim
The Company holds a 90 % ownership interest in Noveprim. The Company has the right to purchase, and the noncontrolling interest holders have the right to sell, the remaining 10 % equity interest at a fixed redemption value that ranges from $47.0 million to $54.0 million depending on when exercised. The Company has the call option right to purchase the remaining 10 % equity up until one month after the sixth anniversary of closing the 41 % equity stake (December 2029). On the first anniversary of the expiration of the call option (December 2030), a 12-month put option will be triggered giving the seller the right to require the Company to acquire the remaining shares of the seller for $54.0 million. Additionally, during fiscal year 2024 the 10 % noncontrolling interest holders were eligible to receive a dividend disproportionate to their equity ownership, of which the fair value of $8.0 million as of the acquisition date was recorded within the redeemable noncontrolling interest. The redemption value is accreted to the put purchase price of $54.0 million using the interest method through December 2030. As of June 28, 2025, the redemption value of $40.0 million exceeded the carrying value, resulting in an adjustment to additional paid in capital of $3.7 million for the six months ended June 28, 2025. As of June 29, 2024, the redemption value of $46.1 million exceeded both the carrying value and fair value, resulting in both an adjustment to additional paid in capital of $1.8 million and an adjustment to retained earnings of $0.7 million, respectively.
Other redeemable noncontrolling interest
In 2019, the Company acquired an 80 % equity interest in a subsidiary, which included a 20 % redeemable noncontrolling interest. In June 2022, the Company purchased an additional 10 % interest in the subsidiary for $15.0 million, resulting in a remaining noncontrolling interest of 10 %. Beginning in 2024, the Company had the right to purchase, and the noncontrolling interest holders had the right to sell, the remaining 10 % equity interest at its appraised value. The redemption value was measured at the greater of the appraised value or a predetermined floor. The amount that the Company could be required to pay to purchase the remaining 10 % equity interest was not limited. As of March 30, 2024, the redemption value of $12.0 million exceeded the carrying value, resulting in an adjustment to additional paid in capital of $2.8 million. During the second quarter of fiscal 2024, the Company acquired the remaining 10 % for $12.0 million.
21
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Vital River
The Company held a 92 % ownership interest in Vital River, a commercial provider of research models and related services in China as of December 31, 2022. The Company had the right to purchase, and the noncontrolling interest holders had the right to sell, the remaining 8 % equity interest at a contractually defined redemption value, subject to a redemption floor. The amount that the Company could be required to pay to purchase the remaining 8 % equity interest was not limited. During fiscal year 2023, the Company acquired the remaining 8 % for a total sale amount of $24.4 million. The remaining purchase price payable of $19.1 million was included in Accrued liabilities within the Company’s consolidated balance sheet as of December 28, 2024 and was paid during the first quarter of fiscal 2025.
Nonredeemable Noncontrolling Interest
12. INCOME TAXES
The Company’s effective tax rates for the three months ended June 28, 2025 and June 29, 2024 were 26.2 % and 21.2 %, respectively. The Company’s effective tax rates for the six months ended June 28, 2025 and June 29, 2024 were 26.8 % and 22.8 %, respectively. The increase in the effective tax rate for both the three and six months ended June 28, 2025 compared to the corresponding prior year periods were primarily attributable to the tax effects from stock-based compensation deductions, as well as non-taxable remeasurement gains on a previous equity investment in Noveprim during the three months ended June 29, 2024.
For the three months ended June 28, 2025, the Company’s unrecognized tax benefits increased by $1.9 million to $29.2 million, primarily due to increases in research and development tax credit reserves, as well as unfavorable foreign exchange movement. For the three months ended June 28, 2025, the amount of unrecognized income tax benefits that would impact the effective tax rate increased by $1.3 million to $24.2 million for the same reasons discussed above. The accrued interest on unrecognized tax benefits was $2.4 million as of June 28, 2025. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $8.3 million over the next twelve-month period, primarily due to audit settlements and expiring statutes of limitations.
The Company’s prepaid and accrued tax positions are as follows:
| June 28, 2025 | December 28, 2024 | Affected Line Item in the Unaudited Condensed Consolidated Balance Sheets | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Prepaid income tax | $ | $ | Other current assets | ||||||||||||||
| Accrued income taxes | Other current liabilities | ||||||||||||||||
The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2021.
On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act ("OBBBA"), which includes several changes to U.S. federal income tax law, including accelerated tax depreciation, expensing of research and development, and the U.S. international inclusions. The Company is assessing these impacts on its consolidated financial statements, but anticipates an impact to our deferred tax and cash tax positions relating to bonus depreciation and full expensing of domestic research and experimental expenditures. While the Company continues to assess the impact of the tax provisions of the OBBBA on its consolidated financial statements, the Company currently believes that the tax provisions of the legislation are not expected to have a material impact on the Company’s statement of operations.
The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, France, Ireland, and India. The Company does not anticipate resolution of these audits will have a material impact on its unaudited condensed consolidated financial statements.
13. RESTRUCTURING AND ASSET IMPAIRMENTS
The Company has undertaken restructuring actions impacting the reportable segments at various locations across North America, Europe and Asia to manage the Company through the current demand environment, including appropriately right-sizing the Company’s infrastructure, optimizing operations, and driving efficiency. This includes workforce right-sizing actions resulting in severance and transition costs; and costs related to the consolidation of facilities resulting in long-lived asset
22
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
impairments (principally property, plant, and equipment and right-of-use assets), accelerated depreciation charges, and certain other costs. Generally, these actions are in response to recent macroeconomic impacts on the Company.
The following table presents restructuring costs by reportable segment:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| RMS | $ | $ | $ | $ | |||||||||||||||||||
| DSA | |||||||||||||||||||||||
| Manufacturing | |||||||||||||||||||||||
| Unallocated corporate | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The following table presents restructuring costs as included within the Company’s unaudited condensed consolidated statements of income:
| June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||||||||||||||
| Severance and Transition Costs | Asset Impairments and Other Costs | Total | Severance and Transition Costs | Asset Impairments and Other Costs | Total | ||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| Cost of services provided (excluding amortization of intangible assets) | $ | ( | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Cost of products sold (excluding amortization of intangible assets) | ( | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||||||||
| Total restructuring costs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| Cost of services provided (excluding amortization of intangible assets) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Cost of products sold (excluding amortization of intangible assets) | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||||||||||||||
| Total restructuring costs | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
23
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Rollforward of Restructuring Activities
The following table provides a rollforward for the Company’s accrued restructuring costs related to all restructuring activities:
| Severance and Transition Costs | Asset Impairments | Other Costs | Total | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Six Months Ended June 28, 2025 | |||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
Expense | |||||||||||||||||||||||
Payments / utilization | ( | ( | ( | ||||||||||||||||||||
Other non-cash adjustments | ( | ( | ( | ||||||||||||||||||||
Foreign currency adjustments | |||||||||||||||||||||||
Ending Balance | $ | $ | $ | $ | |||||||||||||||||||
| Six Months Ended June 29, 2024 | |||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
Expense | |||||||||||||||||||||||
Payments / utilization | ( | ( | ( | ||||||||||||||||||||
Other non-cash adjustments | ( | ( | ( | ||||||||||||||||||||
Foreign currency adjustments | ( | ( | |||||||||||||||||||||
Ending Balance | $ | $ | $ | $ | |||||||||||||||||||
14. COMMITMENTS AND CONTINGENCIES
Litigation
On February 17, 2023, the Company received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into the Company’s conduct regarding several shipments of non-human primates from Cambodia in late 2022 and early 2023 (the NHP Shipments). The DOJ also undertook a parallel civil investigation related to the NHP Shipments. As previously disclosed, the Company continued to care for the NHP Shipments during the pendency of the DOJ investigations. In July 2025, the Company was informed that USFWS had determined to clear the NHP Shipments for legal entry into the United States. Furthermore, in recent weeks the Company has been advised by the DOJ that both the grand jury investigation and the parallel civil investigation had been closed.
On May 16, 2023, the Company received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting it to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and the Company is cooperating with the requests. The Company’s Audit Committee has retained counsel to conduct an independent investigation into certain issues raised in the investigations, and that work is ongoing. The Company is not able to predict what action, if any, might be taken in the future by the SEC. The SEC has not provided the Company with any specific timeline or indication as to when the investigation will be concluded or resolved. The Company cannot predict the timing, outcome or possible impact of the investigation, including without limitation any potential fines, penalties or liabilities.
A putative securities class action (Securities Class Action) was filed on May 19, 2023 against the Company and a number of its current/former officers in the United States District Court for the District of Massachusetts. On August 31, 2023, the court appointed the State Teachers Retirement System of Ohio as lead plaintiff. An amended complaint was filed on November 14, 2023 that, among other things, included only James Foster, the Chief Executive Officer and David R. Smith, the former Chief Financial Officer as defendants along with the Company. The amended complaint asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) on behalf of a putative class of purchasers of Company securities from May 5, 2020 through February 21, 2023, alleging that certain of the Company’s disclosures about its practices with respect to the importation of non-human primates made during the putative class period were materially false or misleading. On July 1, 2024, the court dismissed the complaint, denied the plaintiff’s informal request for leave to amend, and entered judgment for defendants. On July 30, the plaintiff filed a notice of appeal in the United States Court of Appeals for the First Circuit. Oral arguments took place on May 5, 2025. While the Company cannot predict the final outcome of this matter, it believes the class action to be without merit and plans to vigorously defend against it. The Company cannot reasonably estimate the maximum
24
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
potential exposure or the range of possible loss in association with this matter.
On November 8, 2023, a stockholder filed a derivative lawsuit in the U.S. District Court of the District of Delaware asserting claims on the Company’s behalf against the members of the Company’s Board of Directors and certain of the Company’s current/former officers (James Foster, the Chief Executive Officer; David R. Smith, the former Chief Financial Officer; and Flavia Pease, the current Chief Financial Officer). The complaint alleges that the defendants breached their fiduciary duties to the Company and its stockholders because certain of the Company’s disclosures about its practices with respect to the importation of non-human primates were materially false or misleading. The complaint also alleges that the defendants breached their fiduciary duties by causing the Company to fail to maintain adequate internal controls over securities disclosure and compliance with applicable law and by failing to comply with the company’s Code of Business Conduct and Ethics. On August 2, 2024, a different stockholder filed a lawsuit in the U.S. District Court of Delaware asserting similar derivative claims on the Company’s behalf against members of the Company’s current and former Board of Directors and the same current/former officers based on similar allegations of purportedly misleading disclosures and non-compliance with legal rules and ethics standards in respect of the importation of non-human primates, as well as insider-trading claims against certain of the defendants. Both of these lawsuits are currently stayed by agreement of the parties pending further developments in the Securities Class Action pending in the United States Court of Appeals for the First Circuit. While the Company cannot predict the outcome of these matters, it believes the derivative lawsuits to be without merit and plans to vigorously defend against them. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with these matters.
Aside from the matters above, the Company believes there are no other matters pending against the Company that could have a material impact on the Company’s business, financial condition, or results of operations.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. The following discussion contains forward-looking statements. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in Item 1A, “Risk Factors” included elsewhere within this Form 10-Q. Certain percentage changes may not recalculate due to rounding.
Overview
We are a leading, full service, non-clinical global drug development partner. For over 75 years, we have been in the business of providing the research models required in the research and development of new drugs, devices, and therapies. Over this time, we have built upon our original core competency of laboratory animal medicine and science (research model technologies) to develop a diverse portfolio of discovery and safety assessment services, both Good Laboratory Practice (GLP) and non-GLP, that supports our clients from target identification through non-clinical development. We also provide a suite of products and services to support our clients’ manufacturing activities. Utilizing our broad portfolio of products and services enables our clients to create a more efficient and flexible drug development model, which reduces their costs, enhances their productivity and effectiveness, and increases speed to market.
Our client base includes major global pharmaceutical companies, many biotechnology companies; agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies; contract research and contract manufacturing organizations; and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world.
Segment Reporting
Our three reportable segments are Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing).
Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell Solutions which provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.
Our DSA segment is comprised of Discovery and Safety Assessment services. We provide regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, including in vitro (non-animal) and in vivo (in research models) studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development.
Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO).
Fiscal Quarters
Our fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end.
U.S. Government Investigations into the Non-Human Primate Supply Chain
On February 17, 2023, we received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into our conduct regarding several shipments of non-human primates from Cambodia in late 2022 and early 2023 (the NHP Shipments). The DOJ also undertook a parallel civil investigation related to the NHP Shipments. As previously disclosed, we continued to care for the NHP Shipments during the pendency of the DOJ investigations. In July 2025, we were informed that USFWS had determined to clear the NHP Shipments
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
for legal entry into the United States. Furthermore, in recent weeks we have been advised by the DOJ that both the grand jury investigation and the parallel civil investigation had been closed.
On May 16, 2023, we received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting us to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and we are cooperating with the requests. Our Audit Committee has retained counsel to conduct an independent investigation into certain issues raised in the investigations, and that work is ongoing. We are not able to predict what action, if any, might be taken in the future by the SEC. The SEC has not provided us with any specific timeline or indication as to when the investigation will be concluded or resolved. We cannot predict the timing, outcome or possible impact of the investigation, including without limitation any potential fines, penalties or liabilities.
Recent Government Actions
On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”), which includes changes to a broad range of tax reform provisions including accelerated tax depreciation, expensing of research and development, and the U.S. international inclusions. As a result of the enactment of the OBBBA, we anticipate an impact to our deferred tax and cash tax positions relating to bonus depreciation and full expensing of domestic research and experimental expenditures. We do not expect any material change to our ongoing effective tax rate as a result of this legislation.
In February 2025 the U.S. government announced plans to enact increased tariffs on Canada, China and Mexico, later broadening the increase to various countries within Europe, Africa and Asia. Subsequently, in April 2025, the U.S. formalized actions to delay the effective date of certain tariffs. As of the date of this report, a number of new tariffs remain in effect, including tariffs between the U.S., and countries from which we obtain significant supply, such as Vietnam, Mauritius and China. The extent and duration of these tariffs and the resulting impact on macroeconomic conditions and our business are uncertain and may depend on various factors including, but not limited to, negotiations between the U.S. and affected countries, reciprocal or retaliatory actions imposed by other countries, tariff exemptions, negative sentiment toward U.S. companies and products, and the availability of lower cost inputs that may be sourced domestically. While we plan to offset most of the estimated tariffs by passing along these higher costs, we will continue to evaluate the nature and extent of the impacts to our business and our operating results.
In April 2025, the U.S. Food and Drug Administration (FDA) announced plans to launch a pilot program to reduce animal testing in preclinical safety studies with scientifically validated cell-based and new approach methodologies (NAMs), such as organ-on-a-chip systems, computational modeling, and advanced in vitro assays. We support the FDA’s announcement as we believe the program aligns with the vision previously outlined in the FDA Modernization Act 2.0 and aims to develop a clearer regulatory pathway to streamline the drug development process and safely advance innovative technologies, including alternatives to the current animal based development process. As a leader in preclinical drug development, this vision is consistent with our long-standing mission to drive greater efficiency in the drug development process, enhance scientific innovation, and promote the responsible use of animals in biomedical research. We are continuously evaluating innovative approaches in drug development and have invested in virtual control groups for safety assessment studies and partnerships utilizing AI technologies to reduce animal use. Further, in April 2024, we launched our own Alternative Methods Advancement Project (AMAP), which is an initiative dedicated to developing alternatives to the use of animal testing within the drug development process. We remain committed to continuing to collaborate with regulatory agencies, including the FDA, the biopharmaceutical industry and other stakeholders, to help develop, validate, and implement an efficient process for our clients’ regulatory submissions that support the use of new, non-animal based technologies.
Global Market Environment
We are continuing to see a cautious spending environment from our client base, principally within our DSA segment related to our global biopharmaceutical and biotechnology clients, as they reassess their budgets, reprioritize their drug pipelines, and manage their cost structures. As we continue to navigate these challenges in the current macroeconomic environment, DSA backlog declined slightly to $1.9 billion as of June 28, 2025 from $2.0 billion as of December 28, 2024.
In response to recent trends observed across each of our businesses in the global market environment, we have undertaken and will continue to implement restructuring actions at various locations across North America, Europe and Asia. This includes workforce right-sizing actions, resulting in severance and transition costs; and costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the company, resulting in asset impairment, accelerated depreciation, and other site consolidation charges. During fiscal year 2023, we began taking restructuring actions as a result of these emerging business trends. We incurred restructuring charges of $32.2 million and $56.0 million, during the three and six months ended June 28, 2025, respectively, and $107.0 million and $29.7 million during fiscal 2024 and fiscal 2023, respectively. We expect that these effectuated actions, as well as other upcoming planned actions designed to optimize our global footprint to drive greater operating efficiency, will result in approximately $225 million of cost savings on an annualized basis, of which approximately $175 million will impact fiscal year 2025.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Results of Operations
Consolidated Results of Operations and Liquidity
Revenue for three months ended June 28, 2025 increased $6.0 million, or 0.6%, to $1,032.1 million compared to $1,026.1 million in the corresponding period in 2024. Revenue for six months ended June 28, 2025 decreased $21.4 million, or 1.0%, to $2,016.3 million compared to $2,037.7 million in the corresponding period in 2024. The increase in revenue for the three months ended June 28, 2025 was primarily attributable to our Manufacturing and RMS businesses driven by demand, partially offset by declines in our DSA business, which experienced lower volume driven by continued cautious client spending as a result of the demand environment when compared to the corresponding period in 2024. The decrease in revenue for the six months ended June 28, 2025 was driven by declines in our DSA business driven by the same market dynamics discussed above when compared to the corresponding period in 2024.
For the three months ended June 28, 2025, our operating income and operating income as a percentage of revenue were $100.1 million and 9.7% respectively, compared to $151.7 million and 14.8% respectively, in the corresponding period of 2024. For the six months ended June 28, 2025, our operating income and operating income as a percentage of revenue were $174.8 million and 8.7% respectively, compared to $277.6 million and 13.6% respectively, in the corresponding period of 2024. The decreases in operating income and operating income as a percentage of revenue for the three and six months ended June 28, 2025 were primarily driven by the acceleration of amortization expense recognized as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers, restructuring activities, including higher asset impairments and site consolidation charges, and higher third-party legal costs and advisory costs when compared to the corresponding period in 2024.
Net income available to Charles River Laboratories International, Inc., common shareholders decreased to $52.3 million in the three months ended June 28, 2025, from $90.0 million in the corresponding period of 2024. Net income available to Charles River Laboratories International, Inc., common shareholders decreased to $77.8 million in the six months ended June 28, 2025, from $157.3 million in the corresponding period of 2024. The decreases in net income available to common shareholders were due principally to the decreases in operating income described above.
During the six months ended June 28, 2025, our cash flows from operations were $376.3 million compared with $323.4 million for the same period in 2024. The increase was primarily driven by lower payments of variable compensation and favorable timing of payments to our suppliers and vendors, partially offset by higher purchases of inventory to support our DSA reportable segment.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Three Months Ended June 28, 2025 Compared to the Three Months Ended June 29, 2024
Revenue and Operating Income
The following tables present consolidated revenue by type and by reportable segment:
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Service revenue | $ | 840,836 | $ | 842,900 | $ | (2,064) | (0.2) | % | |||||||||||||||||||||
| Product revenue | 191,299 | 183,217 | 8,082 | 4.4 | % | ||||||||||||||||||||||||
| Total revenue | $ | 1,032,135 | $ | 1,026,117 | $ | 6,018 | 0.6 | % | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 213,271 | $ | 206,389 | $ | 6,882 | 3.3 | % | 1.0 | % | |||||||||||||||||||
| DSA | 618,029 | 627,419 | (9,390) | (1.5) | % | 1.1 | % | ||||||||||||||||||||||
| Manufacturing | 200,835 | 192,309 | 8,526 | 4.4 | % | 1.5 | % | ||||||||||||||||||||||
| Total revenue | $ | 1,032,135 | $ | 1,026,117 | $ | 6,018 | 0.6 | % | 1.2 | % | |||||||||||||||||||
The following table presents operating income by reportable segment:
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 35,786 | $ | 29,948 | $ | 5,838 | 19.5 | % | 2.5 | % | |||||||||||||||||||
| DSA | 122,781 | 138,376 | (15,595) | (11.3) | % | 1.1 | % | ||||||||||||||||||||||
| Manufacturing | 12,061 | 37,230 | (25,169) | (67.6) | % | 0.5 | % | ||||||||||||||||||||||
| Unallocated corporate | (70,494) | (53,902) | (16,592) | 30.8 | % | 0.7 | % | ||||||||||||||||||||||
| Total operating income | $ | 100,134 | $ | 151,652 | $ | (51,518) | (34.0) | % | 1.3 | % | |||||||||||||||||||
| Operating income % of revenue | 9.7 | % | 14.8 | % | (510) bps | ||||||||||||||||||||||||
The following presents and discusses our consolidated financial results by each of our reportable segments:
RMS
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 213,271 | $ | 206,389 | $ | 6,882 | 3.3 | % | 1.0 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 143,135 | 142,942 | 193 | 0.1 | % | ||||||||||||||||||||||||
| Selling, general and administrative | 28,369 | 27,597 | 772 | 2.8 | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 5,981 | 5,902 | 79 | 1.3 | % | ||||||||||||||||||||||||
| Operating income | $ | 35,786 | $ | 29,948 | $ | 5,838 | 19.5 | % | 2.5 | % | |||||||||||||||||||
| Operating income % of revenue | 16.8 | % | 14.5 | % | 230 bps | ||||||||||||||||||||||||
RMS revenue increased $6.9 million primarily driven by an increase in large research model product revenue, notably within China and from Noveprim, an increase in Insourcing Solutions and GEMS service revenue, and the effect of changes in foreign currency exchange rates; partially offset by a decline in Cell Solutions product revenue.
RMS operating income increased $5.8 million compared to the corresponding period in 2024. RMS operating income as a percentage of revenue for the three months ended June 28, 2025 was 16.8%, an increase of 230 bps from 14.5% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue increased primarily due to the increase in revenue described above coupled with lower asset impairment charges related to recent restructuring activities compared to the corresponding period in 2024.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
DSA
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 618,029 | $ | 627,419 | $ | (9,390) | (1.5) | % | 1.1 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 421,907 | 418,964 | 2,943 | 0.7 | % | ||||||||||||||||||||||||
| Selling, general and administrative | 60,270 | 54,479 | 5,791 | 10.6 | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 13,071 | 15,600 | (2,529) | (16.2) | % | ||||||||||||||||||||||||
| Operating income | $ | 122,781 | $ | 138,376 | $ | (15,595) | (11.3) | % | 1.1 | % | |||||||||||||||||||
| Operating income % of revenue | 19.9 | % | 22.1 | % | (220) bps | ||||||||||||||||||||||||
DSA revenue decreased $9.4 million primarily due to lower volume driven by continued cautious client spending as a result of the current demand environment; partially offset by increases in pricing of offerings and the effect of changes in foreign currency exchange rates compared to the corresponding period in 2024.
DSA operating income decreased $15.6 million during the three months ended June 28, 2025 compared to the corresponding period in 2024. DSA operating income as a percentage of revenue for the three months ended June 28, 2025 was 19.9%, a decrease of 220 bps from 22.1% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, restructuring activities including site consolidation and asset impairment charges, and certain third-party legal and advisory costs incurred in connection with the investigations by the U.S. government into the non-human primate supply chain, compared to the corresponding period in 2024.
Manufacturing
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 200,835 | $ | 192,309 | $ | 8,526 | 4.4 | % | 1.5 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 110,026 | 110,498 | (472) | (0.4) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 32,416 | 33,813 | (1,397) | (4.1) | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 46,332 | 10,768 | 35,564 | 330.3 | % | ||||||||||||||||||||||||
| Operating income | $ | 12,061 | $ | 37,230 | $ | (25,169) | (67.6) | % | 0.5% | ||||||||||||||||||||
| Operating income % of revenue | 6.0 | % | 19.4 | % | (1,340) bps | ||||||||||||||||||||||||
Manufacturing revenue increased $8.5 million primarily due to increased revenue in our Microbial Solutions business, driven by an increase in identification services revenue and endotoxin product revenue and the effect of changes in foreign currency exchange rate; partially offset by lower revenue for Biologics Testing services.
Manufacturing operating income decreased $25.2 million during the three months ended June 28, 2025 compared to the corresponding period in 2024. Manufacturing operating income as a percentage of revenue for the three months ended June 28, 2025 was 6.0%, a decrease of (1,340) bps from 19.4% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to accelerated amortization expense as a result of a decrease in the remaining useful life of certain client relationships due to a loss of key customers within the CDMO business, and restructuring activities, including asset impairments and site consolidation charges, compared to the corresponding period in 2024; partially offset by the higher revenue described above.
Unallocated Corporate
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Unallocated corporate | $ | 70,494 | $ | 53,902 | $ | 16,592 | 30.8 | % | 0.7 | % | |||||||||||||||||||
| Unallocated corporate % of revenue | 6.8 | % | 5.3 | % | 150 bps | ||||||||||||||||||||||||
Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $16.6 million, or 30.8%, compared to the corresponding
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
period in 2024 is primarily due to higher third-party legal and advisory costs incurred in connection with execution of a Cooperation Agreement entered into with a shareholder earlier this year and higher variable compensation costs. Costs as a percentage of revenue for the three months ended June 28, 2025 was 6.8%, an increase of 150 bps from 5.3% for the corresponding period in 2024.
Other Income (Expense)
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||
| Interest income | $ | 1,097 | $ | 3,010 | $ | (1,913) | (63.6) | % | |||||||||||||||||||||
| Interest expense | (29,967) | (32,769) | 2,802 | (8.6) | % | ||||||||||||||||||||||||
| Other income (expense), net | 154 | (2,240) | 2,394 | (106.9) | % | ||||||||||||||||||||||||
| Total other expense, net | $ | (28,716) | $ | (31,999) | $ | 3,283 | (10.3) | % | |||||||||||||||||||||
Interest income for the three months ended June 28, 2025 was $1.1 million, a decrease of $1.9 million, or 63.6%, driven primarily from lower interest rates and interest earning asset balances.
Interest expense for the three months ended June 28, 2025 was $30.0 million, a decrease of $2.8 million, or 8.6%, compared to $32.8 million in the corresponding period in 2024 due primarily to lower average debt balances.
Other income, net for the three months ended June 28, 2025 was $0.2 million compared to Other expense, net of $2.2 million for the corresponding period in 2024 due primarily to higher net gains on our life insurance contracts coupled with lower net losses on our investments compared to the corresponding period in 2024.
Income Taxes
| Three Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Provision for income taxes | $ | 18,725 | $ | 25,392 | $ | (6,667) | (26.3) | % | |||||||||||||||||||||
| Effective tax rate | 26.2 | % | 21.2 | % | 500 bps | ||||||||||||||||||||||||
Income tax expense for the three months ended June 28, 2025 was $18.7 million, a decrease of $6.7 million compared to $25.4 million for the corresponding period in 2024. Our effective tax rate was 26.2% for the three months ended June 28, 2025 compared to 21.2% for the corresponding period in 2024. The tax rate increase was primarily attributable to the tax effects from stock-based compensation deductions, as well as non-taxable remeasurement gains on a previous equity investment in Noveprim during the three months ended June 29, 2024.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Six Months Ended June 28, 2025 Compared to Six Months Ended June 29, 2024
Revenue and Operating Income
The following tables present consolidated revenue by type and by reportable segment:
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Service revenue | $ | 1,638,759 | $ | 1,659,762 | $ | (21,003) | (1.3) | % | |||||||||||||||||||||
| Product revenue | 377,544 | 377,915 | (371) | (0.1) | % | ||||||||||||||||||||||||
Total revenue | $ | 2,016,303 | $ | 2,037,677 | $ | (21,374) | (1.0) | % | |||||||||||||||||||||
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 426,344 | $ | 427,296 | $ | (952) | (0.2) | % | — | % | |||||||||||||||||||
| DSA | 1,210,638 | 1,232,871 | (22,233) | (1.8) | % | 0.2 | % | ||||||||||||||||||||||
| Manufacturing | 379,321 | 377,510 | 1,811 | 0.5 | % | 0.1 | % | ||||||||||||||||||||||
| Total revenue | $ | 2,016,303 | $ | 2,037,677 | $ | (21,374) | (1.0) | % | 0.2 | % | |||||||||||||||||||
The following table presents operating income by reportable segment:
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| RMS | $ | 79,391 | $ | 73,097 | $ | 6,294 | 8.6 | % | (0.2) | % | |||||||||||||||||||
| DSA | 216,733 | 253,215 | (36,482) | (14.4) | % | 1.9 | % | ||||||||||||||||||||||
| Manufacturing | 3,441 | 70,911 | (67,470) | (95.1) | % | (0.3) | % | ||||||||||||||||||||||
| Unallocated corporate | (124,762) | (119,594) | (5,168) | 4.3 | % | 0.1 | % | ||||||||||||||||||||||
| Total operating income | $ | 174,803 | $ | 277,629 | $ | (102,826) | (37.0) | % | 1.6 | % | |||||||||||||||||||
| Operating income % of revenue | 8.7 | % | 13.6 | % | (490) bps | ||||||||||||||||||||||||
The following presents and discusses our consolidated financial results by each of our reportable segments:
RMS
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 426,344 | $ | 427,296 | $ | (952) | (0.2) | % | — | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 282,431 | 283,867 | (1,436) | (0.5) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 52,575 | 58,490 | (5,915) | (10.1) | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 11,947 | 11,842 | 105 | 0.9 | % | ||||||||||||||||||||||||
| Operating income | $ | 79,391 | $ | 73,097 | $ | 6,294 | 8.6 | % | (0.2) | % | |||||||||||||||||||
| Operating income % of revenue | 18.6 | % | 17.1 | % | 150 bps | ||||||||||||||||||||||||
RMS revenue decreased $1.0 million primarily driven by lower Cell Solutions product revenue and large research model product revenue due to timing of sales; partially offset by an increase in small research models product revenues principally due to price.
RMS operating income increased $6.3 million compared to the corresponding period in 2024. RMS operating income as a percentage of revenue for the six months ended June 28, 2025 was 18.6%, an increase of 150 bps from 17.1% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue increased primarily due to lower charges related to restructuring activities, including asset impairments and site consolidation charges; partially offset by higher amortization related to acquisitions and the impacts of the RMS revenue drivers described above compared to the corresponding period in 2024.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
DSA
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 1,210,638 | $ | 1,232,871 | $ | (22,233) | (1.8) | % | 0.2 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 842,050 | 836,876 | 5,174 | 0.6 | % | ||||||||||||||||||||||||
| Selling, general and administrative | 125,563 | 111,338 | 14,225 | 12.8 | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 26,292 | 31,442 | (5,150) | (16.4) | % | ||||||||||||||||||||||||
| Operating income | $ | 216,733 | $ | 253,215 | $ | (36,482) | (14.4) | % | 1.9 | % | |||||||||||||||||||
| Operating income % of revenue | 17.9 | % | 20.5 | % | (260) bps | ||||||||||||||||||||||||
DSA revenue decreased $22.2 million primarily due to lower volume driven by continued cautious client spending as a result of the current demand environment, partially offset by the effect of changes in foreign currency exchange rates.
DSA operating income decreased $36.5 million compared to the corresponding period in 2024. DSA operating income as a percentage of revenue for the six months ended June 28, 2025 was 17.9%, a decrease of 260 bps from 20.5% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, restructuring activities, including asset impairments and site consolidation charges, and certain third-party legal costs incurred in connection with the investigations by the U.S. government into the non-human primate supply chain compared to the corresponding period in 2024.
Manufacturing
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Revenue | $ | 379,321 | $ | 377,510 | $ | 1,811 | 0.5 | % | 0.1 | % | |||||||||||||||||||
| Cost of revenue (excluding amortization of intangible assets) | 217,023 | 218,378 | (1,355) | (0.6) | % | ||||||||||||||||||||||||
| Selling, general and administrative | 66,448 | 66,660 | (212) | (0.3) | % | ||||||||||||||||||||||||
| Amortization of intangible assets | 92,409 | 21,561 | 70,848 | 328.6 | % | ||||||||||||||||||||||||
Operating income | $ | 3,441 | $ | 70,911 | $ | (67,470) | (95.1) | % | (0.3) | % | |||||||||||||||||||
Operating income % of revenue | 0.9 | % | 18.8 | % | (1,790) bps | ||||||||||||||||||||||||
Manufacturing revenue increased $1.8 million primarily due to an increase in our Microbial Solutions business driven by higher product revenue associated with endotoxin product revenue and identification services revenue and the effect of changes in foreign currency exchange rate; partially offset by decreased revenue in our Biologics Solutions business, driven by decreased demand for CDMO and Biologics Testing services.
Manufacturing operating income decreased $67.5 million compared to the corresponding period in 2024. Manufacturing operating income as a percentage of revenue for the six months ended June 28, 2025 was 0.9%, a decrease of 1790 bps from 18.8% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to accelerated amortization expense as a result of a decrease in the remaining useful life of certain client relationships due to a loss of key customers within the CDMO business and restructuring activities, including asset impairments and site consolidation charges, compared to the corresponding period in 2024; partially offset by the higher revenue described above.
Unallocated Corporate
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | Impact of FX | |||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Unallocated corporate | $ | 124,762 | $ | 119,594 | $ | 5,168 | 4.3 | % | 0.1 | % | |||||||||||||||||||
| Unallocated corporate % of revenue | 6.2 | % | 5.9 | % | 30 bps | ||||||||||||||||||||||||
Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $5.2 million, or 4.3%, compared to the corresponding
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
period in 2024 is primarily due to higher third-party legal and advisory costs incurred in connection with execution of the Cooperation Agreement. Costs as a percentage of revenue for the six months ended June 28, 2025 were 6.2%, an increase of 30 bps from 5.9% for the corresponding period in 2024.
Other Income (Expense)
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||
| Interest income | $ | 2,501 | $ | 5,212 | $ | (2,711) | (52.0) | % | |||||||||||||||||||||
| Interest expense | (57,851) | (67,770) | 9,919 | (14.6) | % | ||||||||||||||||||||||||
| Other income (expense), net | (12,057) | 3,593 | (15,650) | (435.6) | % | ||||||||||||||||||||||||
| Total other expense, net | $ | (67,407) | $ | (58,965) | $ | (8,442) | 14.3 | % | |||||||||||||||||||||
Interest income for the six months ended June 28, 2025 was $2.5 million, a decrease of $2.7 million, or 52.0%, driven primarily from lower interest rates and interest earning asset balances.
Interest expense for the six months ended June 28, 2025 was $57.9 million, a decrease of $9.9 million, or 14.6%, compared to $67.8 million in the corresponding period in 2024 due primarily to lower average debt balances.
Other expense, net for the six months ended June 28, 2025 was $12.1 million compared to Other income, net of $3.6 million for the corresponding period in 2024 due primarily to venture capital investment losses of $9.0 million as compared to gains of $1.8 million in the corresponding period in 2024.
Income Taxes
| Six Months Ended | |||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | $ change | % change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||
| Provision for income taxes | $ | 28,825 | $ | 49,921 | $ | (21,096) | (42.3) | % | |||||||||||||||||||||
| Effective tax rate | 26.8 | % | 22.8 | % | 400 bps | ||||||||||||||||||||||||
Income tax expense for the six months ended June 28, 2025 was $28.8 million, a decrease of $21.1 million compared to $49.9 million for the corresponding period in 2024. Our effective tax rate was 26.8% for the six months ended June 28, 2025 compared to 22.8% for the corresponding period in 2024. The increase in our effective tax rate in the six months ended June 28, 2025 compared to the corresponding period in 2024 was primarily attributable to the tax effects from stock-based compensation deductions, as well as non-taxable remeasurement gains on a previous equity investment in Noveprim during the six months ended June 29, 2024.
Liquidity and Capital Resources
Liquidity and Cash Flows
In general we require cash to fund our working capital needs, capital expansion, acquisitions, debt payments, lease payments, venture capital investment, restructuring initiatives, and pension obligations. Our principal sources of liquidity have been our cash flows from operations supplemented by long-term borrowings. Based on our current business plan, we believe that our existing funds, when combined with cash generated from operations and our access to financing resources, are sufficient to fund our operations for the foreseeable future.
The following table presents our cash, cash equivalents and short-term investments:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Cash and cash equivalents: | |||||||||||
| Held in U.S. entities | $ | 2,072 | $ | 4,219 | |||||||
| Held in non-U.S. entities | 180,752 | 190,387 | |||||||||
| Total cash and cash equivalents | 182,824 | 194,606 | |||||||||
Short-term investments: | |||||||||||
| Held in non-U.S. entities | 65 | 62 | |||||||||
| Total cash, cash equivalents and short-term investments | $ | 182,889 | $ | 194,668 | |||||||
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
The following table presents our net cash provided by operating activities:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net income | $ | 78,571 | $ | 168,743 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | 285,275 | 214,104 | |||||||||
| Changes in assets and liabilities | 12,454 | (59,424) | |||||||||
| Net cash provided by operating activities | $ | 376,300 | $ | 323,423 | |||||||
Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment, debt financing costs, deferred income taxes, write downs of inventories, provisions of credit losses, long-lived asset impairment changes, gains and/or losses on venture capital and strategic equity investments, gains and/or losses on divestitures, changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.
During the six months ended June 28, 2025, our cash flows from operations were $376.3 million compared with $323.4 million for the same period in 2024. The increase was primarily driven by lower payments of variable compensation and favorable timing of payments to our suppliers and vendors, partially offset by higher purchases of inventory to support our DSA reportable segment.
The following table presents our net cash used in investing activities:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Capital expenditures | $ | (94,622) | $ | (118,630) | |||||||
| Investments, net | (5,984) | (23,179) | |||||||||
| Proceeds from sale of businesses and assets, net | 17,441 | — | |||||||||
| Acquisition of businesses and assets, net of cash acquired | $ | — | $ | (5,479) | |||||||
| Other, net | 347 | (370) | |||||||||
| Net cash used in investing activities | $ | (82,818) | $ | (147,658) | |||||||
Investing activities primarily consist of cash used to fund capital expenditures to support the growth of our business, purchases and sales of investments related to our venture capital and strategic equity investment portfolios, and asset and business acquisitions, periodically offset by cash from divestitures.
For the six months ended June 28, 2025, cash used in investing activities was primarily driven by capital expenditures partially offset by proceeds from divestitures of certain site and business assets. Capital expenditures decreased for the six months ended June 28, 2025 as compared to the same period in 2024, as a result of disciplined spend management in light of the global economic environment.
For the six months ended June 29, 2024, cash used in investing activities was primarily driven by capital expenditures to support the growth of the business, an immaterial asset acquisition, and investments in certain venture capital and strategic equity investments.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
The following table presents our net cash (used in) provided by financing activities:
| Six Months Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Proceeds from long-term debt and revolving credit facility | $ | 963,363 | $ | 741,200 | |||||||
Payments on long-term debt, revolving credit facility, and finance lease obligations | (887,706) | (987,344) | |||||||||
| Proceeds from exercises of stock options | 1 | 22,331 | |||||||||
| Purchase of treasury stock | (360,484) | (18,265) | |||||||||
| Payment of contingent considerations | (21,822) | — | |||||||||
| Purchase of remaining equity interest of other redeemable noncontrolling interest | (19,140) | (12,000) | |||||||||
| Other, net | (6,458) | (13,434) | |||||||||
| Net cash used in financing activities | $ | (332,246) | $ | (267,512) | |||||||
Financing activities primarily consist of the proceeds and repayments of debt and certain equity related transactions including treasury stock purchases and employee stock option exercises.
For the six months ended June 28, 2025, net cash used in financing activities was primarily driven by the following activity:
•Net proceeds of $85.7 million from our Credit Facility
•Treasury stock purchases of $350.0 million associated with our stock repurchase program and $9.9 million due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements
•Payment of $21.8 million associated with contingent consideration related to the acquisition of Noveprim
•Payment of $19.1 million for the remaining 8% equity interest in Vital River
For the six months ended June 29, 2024, net cash provided by financing activities was primarily driven by the following activity:
•Net repayments of $252.4 million from our Credit Facility
•Net proceeds from exercises of employee stock options of $22.3 million
•Treasury stock purchases of $18.3 million made due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements
•Payment of $12.0 million for the remaining 10% equity interest in an other redeemable noncontrolling interest
Financing and Market Risk
We are exposed to market risk from changes in interest rates and currency exchange rates, which could affect our future results of operations and financial condition. We manage our exposure to these risks through our regular operating and financing activities.
Amounts outstanding under our Credit Facility and our Senior Notes were as follows:
| June 28, 2025 | December 28, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Revolving facility | $ | 813,002 | $ | 714,948 | |||||||
| 4.25% Senior Notes due 2028 | 500,000 | 500,000 | |||||||||
| 3.75% Senior Notes due 2029 | 500,000 | 500,000 | |||||||||
| 4.00% Senior Notes due 2031 | 500,000 | 500,000 | |||||||||
| Total | $ | 2,313,002 | $ | 2,214,948 | |||||||
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
The Credit Facility provides for up to $2.0 billion of multi-currency revolving credit and has a maturity date of December 2029, with no required scheduled payment before that date. The interest rates applicable to the revolving facility are equal to (A) for revolving loans denominated in U.S. dollars, at our option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon our leverage ratio.
Our off-balance sheet commitments related to our outstanding letters of credit as of June 28, 2025 and December 28, 2024 were $22.0 million and $22.4 million, respectively.
Foreign Currency Exchange Rate Risk
We operate on a global basis and have exposure to foreign currency exchange rate fluctuations for our financial position, results of operations, and cash flows.
While the financial results of our global activities are reported in U.S. dollars, our foreign subsidiaries typically conduct their operations in their respective local currency. The principal functional currencies of our foreign subsidiaries are the Euro, British Pound, Canadian Dollar, Chinese Yuan Renminbi, and Mauritian Rupee. During the six months ended June 28, 2025, the most significant drivers of foreign currency translation adjustment we recorded as part of Other comprehensive income (loss) were the Euro, British Pound, Canadian Dollar, Mauritian Rupee, and Hungarian Forint.
Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our financial position, results of operations, and cash flows. As the U.S. dollar strengthens against other currencies, the value of our non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally decline when reported in U.S. dollars. The impact to net income as a result of a U.S. dollar strengthening will be partially mitigated by the value of non-U.S. expenses, which will decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally increase when reported in U.S. dollars. For the six months ended June 28, 2025, our revenue would have decreased by $65.5 million, and our operating income would have decreased by $1.7 million, if the U.S. dollar exchange rate had strengthened by 10%, with all other variables held constant.
We attempt to minimize this exposure by using certain financial instruments in accordance with our overall risk management and our hedge policy. We do not enter into speculative derivative agreements.
Repurchases of Common Stock
On August 2, 2024, our Board of Directors approved a stock repurchase authorization of $1 billion. During the six months ended June 28, 2025, we repurchased 2.1 million shares of common stock for $350.0 million under the new stock repurchase program. As of June 28, 2025, we had $549.3 million remaining on the current authorized stock repurchase program.
Additionally, our stock-based compensation plans permit the netting of common stock upon vesting of restricted stock, restricted stock units, and performance share units in order to satisfy individual statutory tax withholding requirements. During the six months ended June 28, 2025, we acquired 0.1 million shares for $9.9 million through such netting.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reported periods, and the related disclosures. These estimates and assumptions are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on our historical experience, trends in the industry, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
We believe that the application of our accounting policies, each of which require significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. There have been no changes in the Company’s critical accounting policies during the six months ended June 28, 2025.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements please refer to Note 1, “Basis of Presentation,” in this Quarterly Report on Form 10-Q. Other than as discussed in Note 1, “Basis of Presentation,” we did not adopt any other new accounting pronouncements during the six months ended June 28, 2025 that had a significant effect on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company’s exposure to market risk from changes in interest rates and currency exchange rates has not changed materially from its exposure discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024 as filed with the SEC on February 19, 2025. Our interest rate and currency exchange rate risks are fully described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of our Annual Report on Form 10-K for fiscal year 2024 and in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” herein.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Based on their evaluation, required by paragraph (b) of Rules 13a-15 or 15d-15, promulgated by the Securities Exchange Act of 1934, as amended (Exchange Act), the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, are effective, at a reasonable assurance level, as of June 28, 2025, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgement in evaluating the benefits of our controls and procedures relative to their costs.
(b) Changes in Internal Controls Over Financial Reporting
There were no material changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of the Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June 28, 2025 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On February 17, 2023, the Company received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into the Company’s conduct regarding several shipments of non-human primates from Cambodia in late 2022 and early 2023 (the NHP Shipments). The DOJ also undertook a parallel civil investigation related to the NHP Shipments. As previously disclosed, the Company continued to care for the NHP Shipments during the pendency of the DOJ investigations. In July 2025, the Company was informed that USFWS had determined to clear the NHP Shipments for legal entry into the United States. Furthermore, in recent weeks the Company has been advised by the DOJ that both the grand jury investigation and the parallel civil investigation had been closed.
On May 16, 2023, the Company received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting it to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and the Company is cooperating with the requests. The Company’s Audit Committee has retained counsel to conduct an independent investigation into certain issues raised in the investigations, and that work is ongoing. We are not able to predict what action, if any, might be taken in the future by the SEC. The SEC has not provided the Company with any specific timeline or indication as to when the investigation will be concluded or resolved. The Company cannot predict the timing, outcome or possible impact of the investigation, including without limitation any potential fines, penalties or liabilities.
A putative securities class action (Securities Class Action) was filed on May 19, 2023 against the Company and a number of its current/former officers in the United States District Court for the District of Massachusetts. On August 31, 2023, the court appointed the State Teachers Retirement System of Ohio as lead plaintiff. An amended complaint was filed on November 14, 2023 that, among other things, included only James Foster, the Chief Executive Officer and David R. Smith, the former Chief Financial Officer as defendants along with the Company. The amended complaint asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) on behalf of a putative class of purchasers of Company securities from May 5, 2020 through February 21, 2023, alleging that certain of the Company’s disclosures about its practices with respect to the importation of non-human primates made during the putative class period were materially false or misleading. On July 1, 2024, the court dismissed the complaint, denied the plaintiff’s informal request for leave to amend, and entered judgment for defendants. On July 30, the plaintiff filed a notice of appeal in the United States Court of Appeals for the First Circuit. Oral arguments took place on May 5, 2025. While the Company cannot predict the final outcome of this matter, it believes the class action to be without merit and plans to vigorously defend against it. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with this matter.
On November 8, 2023, a stockholder filed a derivative lawsuit in the U.S. District Court of the District of Delaware asserting claims on the Company’s behalf against the members of the Company’s Board of Directors and certain of the Company’s current/former officers (James Foster, the Chief Executive Officer; David R. Smith, the former Chief Financial Officer; and Flavia Pease, the current Chief Financial Officer). The complaint alleges that the defendants breached their fiduciary duties to the Company and its stockholders because certain of the Company’s disclosures about its practices with respect to the importation of non-human primates were materially false or misleading. The complaint also alleges that the defendants breached their fiduciary duties by causing the Company to fail to maintain adequate internal controls over securities disclosure and compliance with applicable law and by failing to comply with the company’s Code of Business Conduct and Ethics. On August 2, 2024, a different stockholder filed a lawsuit in the U.S. District Court of Delaware asserting similar derivative claims on the Company’s behalf against members of the Company’s current and former Board of Directors and the same current/former officers based on similar allegations of purportedly misleading disclosures and non-compliance with legal rules and ethics standards in respect of the importation of non-human primates, as well as insider-trading claims against certain of the defendants. Both of these lawsuits are currently stayed by agreement of the parties pending further developments in the Securities Class Action pending in the United States Court of Appeals for the First Circuit. While the Company cannot predict the outcome of these matters, it believes the derivative lawsuits to be without merit and plans to vigorously defend against them. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with these matters.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for fiscal year 2024, which could materially affect our business, financial condition, and/or future results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025, except as disclosed below.
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CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.
Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition, including laws and policies in areas such as trade, manufacturing, government purchasing, healthcare, intellectual property, regulatory enforcement and investment/development, can adversely affect our business and financial statements. The U.S. has experienced a rapid increase in new government regulations, including tariffs and proposed tariffs on imports from a wide range of markets and geographies, including some in which we operate. These tariffs/proposed tariffs have prompted retaliatory tariffs by a number of countries and a cycle of retaliatory tariffs by both the U.S. and other countries. In early April 2025, actions were taken by the U.S. and certain other countries to delay the effective date of certain of these tariffs, but as of the date of this report a number of new tariffs remain in effect, including significant tariffs between the U.S. and countries from which we obtain significant supply, such as Vietnam, Mauritius, and China. Collectively, this may adversely impact our operating margin and results of operations, for example, our costs and expenses related to our business activities and those of our customers and suppliers; demand for our products and our competitive positioning; the availability to us of certain products in certain countries; and our supply chain operations. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of the impact of these tariffs. Though the risks identified above in certain cases have already adversely impacted part of our business, the full impact of these tariffs and other actions on the Company and on our business partners remains highly uncertain and subject to rapid change.
A reduction or delay in government funding of R&D may adversely affect our business.
A portion of revenue, predominantly in our RMS segment, is derived from clients at academic institutions and research laboratories whose funding is partially dependent on both the level and timing of funding from government sources such as the U.S. National Institutes of Health (NIH) and similar domestic and international agencies, which can be difficult to forecast. We also sell directly to the NIH and these other agencies. Government funding of R&D is subject to the political process, which is inherently fluid and unpredictable. For example, the NIH announced on February 7, 2025, a policy significantly reducing research grants by limiting payments for indirect overhead. While, as of the date of this filing, the order is subject to a preliminary injunction, there can be no assurance that a permanent injunction will be granted or that other adverse actions will not be taken. Our revenue may be adversely affected if our clients delay purchases as a result of uncertainties surrounding the approval of government budget proposals, included reduced allocations to government agencies that fund R&D activities. Government proposals to reduce or eliminate budgetary deficits have sometimes included reduced allocations to the NIH and other government agencies that fund R&D activities, or NIH funding may not be directed towards projects and studies that require the use of our products and services, both of which could adversely affect our business and our financial results.
Changes in government regulation or in practices relating to the pharmaceutical or biotechnology industries, including potential healthcare reform, could decrease the need for the services we provide.
Governmental agencies throughout the world strictly regulate the drug development process. Our business involves helping our customers navigate these regulatory processes. Accordingly, many regulations, and often new regulations, are expected to result in higher regulatory standards and often additional revenues for companies that service these industries. However, some changes in regulations, such as a relaxation in regulatory requirements or the introduction of streamlined or expedited drug approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.
For example: in December 2022, the FDA Modernization Act 2.0 was passed, which clarifies methods manufacturers and sponsors can use to investigate the safety and efficacy of a drug; and in April 2025 the FDA announced its intention to reduce animal testing in preclinical safety studies with scientifically validated cell-based and new approach methodologies (NAMs), such as organ-on-a-chip systems, computational modeling, and advanced in vitro assays. Eliminating the use of animals in research may have material adverse effects on our business, results of operations, or financial condition. While there have been significant advancements in the development of alternative methods, the complete elimination of animals in research will be a gradual process that may take many years to achieve. While we are committed to working with the industry to support development and to provide the best translational models to supplement or replace traditional models as part of our Replacement, Reduction, and Refinement (3Rs) initiative and our Alternative Methods Advancement Project (AMAP), the use of animals in research is highly regulated and proposed changes to current regulations will need to be carefully evaluated to ensure that they do not compromise the safety and efficacy of new drugs and medical treatments.
Although we believe we are currently in compliance in all material respects with applicable national, regional and local laws, as well as other accepted guidance used by oversight bodies (including the USDA, the standards set by the International Air Transport Association, the Convention on International Trade in Endangered Species of Wild Fauna and Flora, USFWS, The Centers for Disease Control, the Department of Transportation, the Department of State, the office of Laboratory Animal Welfare of NIH, the Drug Enforcement Agency, as well as numerous other oversight agencies in the jurisdictions in which we operate), failure to comply could subject us to denial of the right to conduct business, fines, criminal penalties and other
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enforcement actions. For additional discussion of the factors specifically affecting our non-human primates including related oversight trade compliance agencies, please see the sections entitled “Item 1A. Risk Factors – Industry Risk Factors - Several of our product and service offerings, including our non-human primate supply, are dependent on a limited source of supply that, when interrupted, adversely affects our business”, included within our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025 and “Item 1. Legal Proceedings” above. In addition, if regulatory authorities were to mandate a significant reduction in safety assessment procedures that utilize research animals (as has been advocated by certain groups), certain segments of our business could be materially adversely affected.
Implementation of healthcare reform legislation, such as certain provisions of the Inflation Reduction Act, may have certain benefits, but also may contain costs that could limit the profits that can be made from the development of new drugs. This could adversely affect R&D expenditures by pharmaceutical and biotechnology companies, which could in turn decrease the business opportunities available to us both in the U.S. and abroad. In addition, new laws or regulations may create a risk of liability, increase our costs or limit our service offerings. Furthermore, if health insurers were to change their practices with respect to reimbursements for pharmaceutical products, our clients may spend less or reduce their growth in spending on R&D.
While it is not possible to predict whether and when any such changes will occur, changes at the local, state or federal level, or in laws and regulations in effect in foreign jurisdictions in which we operate or have business relationships, may significantly impact our domestic and foreign businesses and/or those of our clients. Furthermore, modifications to international trade policy, public company reporting requirements, environmental regulation and antitrust enforcement may have a materially adverse impact on us, our suppliers or our clients.
New technologies may be developed, validated and increasingly used in biomedical research, which could reduce demand for some of our products and services.
The scientific community continues to develop NAMs, which do not involve working with animal models and are designed to increase the translation from findings in early-stage discovery and pre-clinical studies to human studies, and vice-versa. As these methods continue to advance, they may supplement, and in some cases possibly replace or supplant methodologies that are currently in use, such as the use of traditional living animals in biomedical research. For example, in April 2025, the FDA announced its intention to reduce animal testing in preclinical safety studies with NAMs, such as organ-on-a-chip systems, computational modeling, and advanced in vitro assays. In addition, technological improvements, such as imaging and other translational biomarker technologies, could impact demand for animal research models. Further, manufacturers, including Charles River, have recently introduced recombinant versions of LAL, which has been historically derived from live animals. It is our strategy to explore new technologies to refine and potentially reduce the use of animal models and animal derived products as new in vitro and in silico methods become available and synthetically-manufactured products become validated with sufficient data to ensure public safety. For information regarding our efforts to support development and to provide the best translational models to supplement or replace traditional models, see “Our Strategy” included within our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. However, we may not be able to develop new products, inputs or processes effectively or in a timely manner to replace any lost sales. Lastly, other companies or entities may develop research models, inputs or processes with characteristics different from those that we produce, and that may be viewed as more desirable by some of our clients.
Our quarterly operating results may vary, which could negatively affect the market price of our common stock.
Our results of operations in any quarter may vary from quarter to quarter and are influenced by the risks discussed above, as well as: changes in the general global economy; changes in the mix of our products and services; changes in government regulation or in practices related to the pharmaceutical or biotechnology industries, including with respect to the use of NAMs; cyclical buying patterns of our clients; the financial performance of our strategic and venture capital investments; certain acquisition-related adjustments, including change in fair value of contingent payments both receivable from or payable to counterparties; and the occasional extra week (“53rd week”) that we recognize in a fiscal year (and fourth fiscal quarter thereof), including 2022, due to our fiscal year ending on the last Saturday in December. We believe that operating results for any particular quarter are not necessarily a meaningful indication of future results. Nonetheless, fluctuations in our quarterly operating results could negatively affect the market price of our common stock.
Our review of potential strategic alternatives may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or the outcome could adversely affect our business.
On May 6, 2025, in connection with a Cooperation Agreement entered into with a large shareholder of the Company, we agreed, among other things, to have the Strategic Partnership and Capital Allocation Committee of our Board of Directors oversee and direct a comprehensive strategic review and evaluation of the Company’s business and prospects, including an examination of various alternatives to enhance long-term stockholder value. There is no assurance that the process will result in the approval or completion of any specific transaction or outcome. Further, there is no guarantee that any transaction resulting from the strategic review will ultimately benefit our stockholders.
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The process of reviewing potential strategic and operational alternatives is time consuming and costly and may divert management’s attention. It may also be disruptive to our business operations and long-term planning, which may cause concern to our current or potential investors, customers, employees, strategic partners, vendors and other stakeholders and may have a material impact on our operating results or result in increased volatility in our stock price.
Any potential transaction or other strategic alternative would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, regulatory approvals, and the availability of financing for a potential transaction on favorable terms. There can be no assurance that any potential transaction or other strategic alternative will be successfully implemented, achieve the intended benefits or provide greater value to our stockholders than that reflected in the current price of our common stock. Until the review process is concluded, perceived uncertainties related to our future may result in the loss of potential business opportunities, volatility in the market price of our common stock and difficulty attracting and retaining qualified talent and business partners.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the purchases of shares of our common stock during the three months ended June 28, 2025.
| Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| March 30, 2025 to April 26, 2025 | — | $ | — | — | $ | 549,285 | |||||||||||||||||
| April 27, 2025 to May 24, 2025 | 926 | 116.96 | — | 549,285 | |||||||||||||||||||
| May 25, 2025 to June 28, 2025 | 48,782 | 136.47 | — | 549,285 | |||||||||||||||||||
| Total | 49,708 | — | |||||||||||||||||||||
On August 2, 2024, our Board of Directors has authorized, in aggregate, a stock repurchase authorization of $1 billion. During the three months ended June 28, 2025, we did not repurchase any shares of common stock under our stock repurchase program or in open market trading. As of June 28, 2025, we had $549.3 million remaining on the authorized stock repurchase program.
Additionally, our stock-based compensation plans permit the netting of common stock upon vesting of restricted stock units, and performance share units in order to satisfy individual statutory tax withholding requirements.
Item 5. Other Information
During the quarter ended June 28, 2025, none of our officers or directors adopted terminated
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Item 6. Exhibits
| (a) Exhibits | Description of Exhibits | Filed with this Form 10-Q | Incorporation by Reference | ||||||||||||||
Form | Filing Date | Exhibit No. | |||||||||||||||
| 10.1+ | Amendment to the Amended and Restated Employment Agreement by and between James C. Foster and Charles River International, Inc., dated May 20, 2025 | X | |||||||||||||||
10.2 | Cooperation Agreement, by and among the Company and Elliott Investment Management L.P., Elliott Associates, L.P. and Elliott International, L.P., dated as of May 6, 2025 | 8-K | May 7, 2025 | 10.1 | |||||||||||||
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | X | |||||||||||||||
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | X | |||||||||||||||
| 32.1+ | Certification of the Principal Executive Officer and the Principal Financial Officer required by Rule 13a-14(a) of 15d-14(a) of the Exchange Act | X | |||||||||||||||
| 101.INS | eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X | |||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | |||||||||||||||
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document | X | |||||||||||||||
| 101.DEF | XBRL Taxonomy Definition Linkbase Document | X | |||||||||||||||
| 101.LAB | XBRL Taxonomy Label Linkbase Document | X | |||||||||||||||
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document | X | |||||||||||||||
| + Furnished herein. | |||||||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||
| August 6, 2025 | /s/ JAMES C. FOSTER | ||||||||||
James C. Foster Chairman, President and Chief Executive Officer | |||||||||||
| August 6, 2025 | /s/ FLAVIA H. PEASE | ||||||||||
Flavia H. Pease Corporate Executive Vice President and Chief Financial Officer | |||||||||||
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FAQ
How did CRL’s Q2-25 revenue compare with the prior year?
Total revenue was $1.03 bn, up 0.6% from $1.026 bn in Q2-24, with flat services and 4% higher product sales.
Why did Charles River’s earnings decline in Q2-25?
Profit fell mainly due to a $33 mn YoY increase in intangible amortization and higher SG&A, reducing operating margin.
What happened to the Manufacturing segment’s profitability?
Operating income dropped 68% to $12 mn as CDMO client-relationship intangibles were accelerated for amortization.
How much stock did CRL repurchase and what authorization remains?
CRL bought 2.1 mn shares for $360 mn; $549 mn of the $1 bn program is still available.
What is the status of CRL’s debt and cash balances?
As of June 28 2025, cash was $183 mn; gross debt stood at $2.35 bn, lifting net leverage modestly.
Are there significant legal or regulatory risks disclosed?
Yes. CRL is facing an SEC investigation into its non-human primate supply chain plus several class-action and derivative lawsuits.
Charles Riv Labs Intl Inc
NYSE:CRL
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8.23B
48.60M
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Diagnostics & Research
Services-commercial Physical & Biological Research
United States
WILMINGTON