Charles River Laboratories (CRL) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $982.7M, down 2.2% reported but up 4.7% organically; organic growth continued for a second consecutive quarter and exceeded prior expectations.

• Non-GAAP EPS rose 27.2% to $3.09; Q3 revenue and non-GAAP EPS beat prior outlook, prompting higher FY26 guidance.

• Improving biopharma demand and higher DSA bookings supported a return to mid-single-digit organic growth in DSA and total revenue.

Financial highlights

• Non-GAAP operating margin was 23.0%, up 330 bps YoY and 250 bps sequentially; non-GAAP operating income was $225.8M versus $197.7M.

• GAAP operating income was $202.6M versus $133.8M; GAAP diluted EPS was $6.86 versus $1.10, including a substantial tax-reserve reversal benefit.

• Free cash flow was $207.3M versus $178.2M, largely due to working-capital timing; Q3 CapEx was $46.8M versus $35.6M.

• Nine-month revenue declined 1.3% to $2.983B; operating income increased 43.4% to $442.4M and operating margin rose 460 bps to 14.8%.

Outlook and guidance

• FY26 organic revenue growth guidance increased to at least 1.5% from 0%-1%; reported revenue is expected to decline 1.5%-2.0%, primarily due to divestitures.

• FY26 non-GAAP EPS guidance rose to $11.35-$11.55 from $11.15-$11.45; non-GAAP operating margin expansion remains 120-150 bps.

• FY26 GAAP EPS guidance is $8.15-$8.35, raised mainly for the acquired tax-reserve reversal; GAAP operating margin outlook rose to mid-teens.

• Q4 organic growth is expected at mid-single digits for DSA and high-single digits for Manufacturing; RMS growth is expected to moderate. Manufacturing margin is expected to approach 40%.

• Organic growth is expected to improve gradually in 2027; 5%-7% revenue growth is targeted from 2028 if favorable trends continue. 2027 margin improvement is expected to exceed the 75 bps annual average through 2030.