Charles River Laboratories (CRL) The 44th Annual William Blair Growth Stock Conference summary

Company Overview and Market Position

• Operates globally with 150 locations in over 20 countries and 21,000 employees, including 2,600 scientific professionals with advanced degrees.

• Supported over 80% of FDA-approved novel drugs from 2019–2023, with a $4.1B revenue in FY 2023 and a >$25B addressable market opportunity.

• Revenue is diversified: 69% from North America, 26% from Europe, 5% from Rest of World; no client accounts for more than 3.5% of revenue.

• Client base spans biopharma, academia, governments, and CDMOs, with 70% of revenue from biopharma clients.

Financial Performance and Guidance

• Achieved ~12% revenue and non-GAAP EPS CAGR from 2019–2023, with a 9% CAGR in free cash flow and a 21% operating margin.

• FY 2023 revenue reached $4.13B; 1Q24 revenue was $1.01B, down 1.7% year-over-year, and non-GAAP EPS was $2.27, down 18.3%.

• 2024 guidance: reported revenue growth of 1–4%, organic growth of 0–3%, non-GAAP EPS of $10.90–$11.40, and free cash flow of $400M–$440M.

• Targeting at least 50 basis points improvement in non-GAAP operating margin over 2023’s 20.3%.

• Segment performance in 1Q24: RMS up 10.6%, DSA down 8.6%, Manufacturing up 10.7% (all reported).

Business Segments and Growth Drivers

• Three main segments: Research Models & Services (RMS), Discovery & Safety Assessment (DSA), and Manufacturing Solutions, each with distinct growth drivers.

• RMS: Global leader with ~40% market share, expanding CRADL vivarium rental and digital enablement; 2024 growth driven by price increases.

• DSA: Largest global partner for outsourced drug discovery and safety testing; M&A and digital transformation (Apollo) enhance scale and client connectivity.

• Manufacturing: Leading QC testing and C&GT CDMO; Memphis site approved for manufacturing first gene-edited therapy for SCD.

• Biologics Testing and Microbial Solutions expected to rebound in 2024 as destocking winds down.