Charles River(CRL) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record quarterly revenue of $1.1 billion in Q4 2022, marking a 21.5$3.98 billion, with a reported growth rate of 12.3% and an organic growth rate of 13.4% [63] - Earnings per share (EPS) for Q4 2022 were $2.98, a 19.7$2.49 in Q4 2021, while full-year EPS was $11.12, a 7.8$212.1 million in Q4, with a 5.3% organic growth rate, consistent with the mid-single-digit outlook for 2022 [71] - Research Model Services (RMS) revenue increased by 10.8% on an organic basis in Q4, driven by strong growth in North America and China [96] Market Data and Key Metrics Changes - The company noted that the current NHP supply situation may restrict revenue growth and margin expansion in 2023, with an expected organic revenue growth guidance of 4.5% to 7.5% [86] - North America continued to generate strong revenue growth, while China experienced a double-digit increase despite a modest impact from COVID cases [69] Company Strategy and Development Direction - The company aims to position itself as the non-clinical drug development partner of choice, focusing on early-stage research and strategic outsourcing [64] - The integration of acquired companies and expansion of capabilities through partnerships and M&A are key strategies to enhance service offerings [95] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying business trends remaining intact in 2023 despite macroeconomic pressures [64] - The company is actively working to resolve the NHP supply situation, which is critical for the pharmaceutical industry and patient needs [58][84] Other Important Information - The company has voluntarily suspended planned future shipments of Cambodian NHPs until new procedures are developed to ensure compliance [57] - The investigation into NHP imports from Cambodia is expected to impact study timelines and revenue growth [56][86] Q&A Session Summary Question: What are your customers doing in the biotech space regarding studies? - Management indicated that the NHP supply issue is an industry-wide concern, affecting all vendors and potentially delaying drug development [112] Question: How closely are FDA and Fish and Wildlife working together? - Management confirmed that Fish and Wildlife understands the critical nature of NHPs and is engaged in discussions to resolve the supply issue [115] Question: Can you provide details on supply expansion beyond Cambodia? - Management mentioned ongoing efforts to audit and expand supply sources, ensuring compliance and quality from alternative suppliers [120]