Charles River Laboratories' Q1 Earnings Beat Consensus, Stock Trades Higher On Signs Of Demand Stabilization

Charles River Laboratories International Inc CRL stock is trading higher on Wednesday after the company released better than expected first-quarter 2025 earnings.

The life science tools company reported:

• Revenue of $984.2 million, a decrease of 2.7% year over year, beating the consensus of $941.97 million.
• Operating margin decreased to 7.6% from 12.5% in the first quarter of 2024, primarily due to lower revenue and higher amortization expense related to the accelerated amortization of certain CDMO client relationships.
• On an adjusted basis, the first-quarter operating margin increased to 19.1% from 18.5%, driven primarily by the benefit of cost savings resulting from restructuring initiatives, partially offset by lower revenue.
• Adjusted EPS of $2.34, up from $2.27 a year ago, surpassing the consensus estimate of $2.08.
• Revenue for the Research Models and Services (RMS) segment was $213.1 million, a decrease of 3.5% year over year.
• The impact of foreign currency translation reduced revenue by 1.0%.
• Organic revenue decreased by 2.5%, due primarily to the timing of NHP shipments in China and lower revenue for the Cell Solutions business. The decline was partially offset by higher sales of small research models across all geographic areas, principally driven by higher pricing.
• Revenue for the Discovery and Safety Assessment (DSA) segment was $592.6 million, down 2.1%.
• The impact of foreign currency translation reduced DSA revenue by 0.6%, and the divestiture of a small DSA site reduced reported revenue by 0.1%.
• Organic revenue decreased by 1.4%, driven primarily by lower revenue for discovery services.
• Manufacturing Solutions’ revenue reached $178.5 million, down 3.6%.
• The impact of foreign currency translation reduced Manufacturing revenue by 1.4%.
• Organic revenue decreased 2.2%, primarily driven by the CDMO and Biologics Testing businesses. This was partially offset by higher revenue in the Microbial Solutions business.

Also Read: What’s Going On With Charles River, Certara, Simulations Plus Stocks On Friday?

Charles River CEO James Foster cited a an improvement in DSA booking activity “to the highest level in two years.”

Guidance: Charles River raised its 2025 outlook to reflect improved net bookings in the DSA segment during the first quarter, which are expected to result in incremental DSA revenue this year, particularly during the first half.

The company expects 2025 revenue to decline between 5.5% and 3.5% compared to the prior range of 7% and 4.5% on a reported basis and organically at 4.5% and 2.5% (5.5% and 3.5% prior).

Charles River raised its fiscal year 2025 adjusted EPS guidance from $9.10-$9.60 to $9.30–$9.80 versus a consensus of $9.33.

The company also released several governance updates, including appointing four new directors to its board, reaching a cooperation agreement with Elliott Investment Management, and initiating a strategic review to enhance long-term shareholder value.

Price Action: CRL stock is up 22.9% at $141.83 at the last check Wednesday.

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