Charles River Laboratories (CRL) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $984.2 million, down 2.7% year-over-year, but above expectations due to strong DSA segment performance and improved bookings.

• Non-GAAP EPS rose 3.1% to $2.34, while GAAP EPS dropped to $0.50, reflecting restructuring and one-time charges; net income available to common shareholders declined to $25.5 million.

• Operating margin improved 60 bps to 19.1% on a non-GAAP basis, driven by cost savings and favorable DSA mix, while GAAP margin fell to 7.6% due to restructuring and amortization.

• Free cash flow more than doubled to $112.4 million, supporting $350 million in share repurchases in Q1 2025.

• Strategic review and board refresh launched with Elliott Investment Management to unlock additional value.

Financial highlights

• Organic revenue declined 1.8%, with low single-digit decreases across all business segments; service revenue fell 2.3% and product revenue 4.3%.

• DSA revenue was $592.6 million (down 2.1%); RMS $213.1 million (down 3.5%); Manufacturing $178.5 million (down 3.6%).

• Non-GAAP operating margin: 19.1% (up 60 bps); GAAP margin: 7.6% (down 490 bps); non-GAAP EPS: $2.34; GAAP EPS: $0.50.

• Free cash flow: $112.4 million; capex: $59.3 million; cash and cash equivalents: $229.4 million.

• Gross leverage: 2.5x; net leverage: 2.4x; debt at quarter-end: $2.5 billion.

Outlook and guidance

• 2025 organic revenue guidance improved to a 4.5%-2.5% decline; non-GAAP EPS guidance raised to $9.30–$9.80; GAAP EPS guidance $4.30–$4.85.

• DSA organic revenue expected to decline mid-single digits, improved from prior outlook.

• RMS outlook moderated to flat to slightly positive growth due to NIH funding and biotech headwinds.

• Manufacturing revenue expected to be flat organically for 2025; margin expected to rebound as volumes improve.

• Q2 revenue expected to decline low to mid-single digits year-over-year; EPS to increase sequentially.