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, 21,000 employees, and serves over 2,000 clients, mainly in biopharma.

• Holds leading market positions in research models, safety assessment, and microbial solutions, supporting over 80% of FDA-approved drugs in the past five years.

• Revenue is diversified geographically and by client, with no single client exceeding 3.5% of revenue; 69% of revenue from North America, 26% Europe, 5% Rest of World, and 70% from biopharma clients.

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

• 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.

Financial Performance and Guidance

• Achieved a ~12% revenue and EPS CAGR over the past five years, with a 9% free cash flow CAGR and 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

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

• DSA: Largest global partner for outsourced drug discovery and safety testing; leveraging M&A, technology partnerships, and digital tools for client engagement.

• Manufacturing Solutions: Focuses on biologics, cell and gene therapy, and microbial solutions, with synergies across businesses and recent regulatory approvals; 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.

• DSA demand normalized in 2023, with backlog at 10% and expectations for accelerated growth in H2 2024 due to improved biotech funding.