CRL Stock Down Despite Q4 Earnings & Revenue Beat, Margins Rise

Core Insights - Charles River Laboratories International, Inc. (CRL) reported fourth-quarter 2025 adjusted earnings per share (EPS) of $2.39, a decrease of 10.2% year over year, but exceeded the Zacks Consensus Estimate by 2.51% [1] - On a GAAP basis, the company reported a loss of $5.62 per share compared to a loss of $4.22 in the same quarter last year [1] - Full-year 2025 EPS was $10.28, down 0.4% from the previous year, but surpassed the Zacks Consensus Estimate by 0.6% [1] Revenue Performance - Revenues for the fourth quarter totaled $994.2 million, beating the Zacks Consensus Estimate by 0.84%, but fell 0.8% from the previous year [2] - Full-year 2025 revenues were $4.02 billion, a decrease of 0.9% from the prior year, yet exceeded the Zacks Consensus Estimate by 0.2% [2] Segment Performance - Research Models and Services (RMS) revenues were $206.3 million, up 1% year over year, but down 0.9% organically [4] - Discovery and Safety Assessment (DSA) revenues amounted to $591.6 million, down 2% year over year and 3.3% organically [5] - Manufacturing Solutions revenues totaled $196.4 million, up 0.7% year over year, but down 2.1% organically [5] Margin Performance - Gross profit for the quarter was $414.4 million, an increase of 8.8% from the prior year, with a gross margin of 41.7%, up 368 basis points year over year [7] - Adjusted operating profit was $218.3 million, reflecting a 17.8% increase from the previous year, with an adjusted operating margin of 22%, up 347 basis points [7] Liquidity Position - At the end of the fourth quarter, cash and cash equivalents were $213.8 million, up from $194.6 million at the end of 2024 [10] - Cumulative net cash provided by operating activities was $737.6 million, compared to $734.6 million a year ago [10] 2026 Guidance - The company expects total revenues for 2026 to be at least flat to 1.5% growth, with the Zacks Consensus Estimate for 2025 revenues at $4.07 billion, implying 1.6% growth [11] - Adjusted EPS for 2026 is projected to be in the range of $10.70-$11.20, with the Zacks Consensus Estimate at $10.59 [11] Overall Assessment - CRL's fourth-quarter results showed earnings and revenues beating estimates, with significant improvement in DSA net bookings, indicating stabilization in biopharmaceutical demand [12] - The expansion of both gross and adjusted operating margins is viewed positively, and management is cautiously optimistic about continued positive demand trends in 2026 [12]