Charles River Laboratories (CRL) investor relations material

Executive summary

• Second-quarter 2026 revenue was $1.00 billion, down 2.7% year-over-year, but organic revenue grew 0.1%, the first increase since Q3 2023, exceeding expectations and driven by improved DSA and Manufacturing performance.

• Non-GAAP EPS reached $3.02, up 47% sequentially, while GAAP loss per share was $(0.03) due to a $63.7 million divestiture loss.

• Strategic divestitures, portfolio refinement, and technology investments, including AI-enabled digital pathology and collaborations with Eli Lilly and Arovella Therapeutics, improved efficiency and margins.

• $100 million in stock repurchased in Q2 2026, totaling $300 million year-to-date, with $700 million remaining authorized.

• Cash flow from operations for the first half of 2026 was $220.8 million, down from $376.3 million in the prior year, reflecting higher compensation and acquisition-related payments.

Financial highlights

• Q2 2026 revenue: $1,004.1 million (down 2.7% YoY), with organic revenue up 0.1%.

• Non-GAAP operating margin rose 420 basis points sequentially to 20.5%; GAAP operating margin was 11.9%, up from 9.7% YoY.

• Non-GAAP EPS of $3.02, up 47% sequentially, surpassing guidance; GAAP EPS was $(0.03).

• Free cash flow for Q2 was $149 million; full-year projection raised to $400–$420 million.

• Net leverage improved to 2.5x; cash and cash equivalents at quarter-end were $192.0 million.

Outlook and guidance

• Full-year organic revenue growth outlook raised to flat to 1% increase; reported revenue to decline 2.5–3.5% due to divestitures.

• Non-GAAP EPS guidance raised to $11.15–$11.45, representing 8–11% growth; GAAP EPS guidance lowered due to divestiture losses.

• Q3 organic revenue growth expected at 1–3% year-over-year; non-GAAP EPS guidance: $2.90–$3.00.

• Cost savings initiatives expected to generate $300 million in annualized savings by end of 2026.

• Management expects sufficient liquidity to fund operations for the foreseeable future.