Charles River Laboratories International, Inc. CRL reported fourth-quarter 2024 adjusted earnings per share (EPS) of $2.66, which rose 8.1% year over year. The figure surpassed the Zacks Consensus Estimate by 6.4%.

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On a GAAP basis, the company reported a loss of $4.22 per share against the year-ago quarter’s earnings of $3.62 per share. 

The company reported full-year 2024 EPS of $10.32, which decreased 3.3% from the prior-year level. The figure, however, surpassed the Zacks Consensus Estimate by 1.6%.

Following the earnings announcement, CRL stock rose 1% in pre-market trading today. 

CRL’s Revenues

Revenues totaled $1.00 billion, which beat the Zacks Consensus Estimate by 2.7%. However, the top line declined 1.1% from the year-ago quarter’s level (down 1.8% organically, excluding the impact of acquisition, divestiture and foreign currency translation).

The company reported full-year 2024 revenues of $4.05 billion, which decreased 1.9% from the prior-year level. The figure surpassed the Zacks Consensus Estimate by 0.7%. 

CRL’s Segments in Detail

The company reports under three segments — Research Models and Services (“RMS”), Discovery and Safety Assessment (“DSA”), and Manufacturing Solutions.

RMS’ revenues in the fourth quarter totaled $204.3 million, up 4.3% year over year (down 0.4% organically). The organic decline in revenues was primarily due to lower revenues from research model services and the Cell Solutions business, as well as lower sales from non-human primates (NHPs) in China. This was partially offset by higher sales of small research models. Our model estimated RMS business revenues to be $203 million in the fourth quarter.

DSA’s revenues in the fourth quarter amounted to $603.3 million, down 3.6% year over year and 3.5% organically. The organic decline in revenues can be attributed to lower sales volume and slightly lower pricing. Our model projected revenues of $563.1 million for this segment.

Manufacturing Solutions’ revenues in the fourth quarter totaled $194.9 million, up 1.6% year over year (up 2.1% organically). The Microbial Solutions business drives organic revenue growth. Our model projected revenues to be $204.7 million for the fourth quarter.

Margins

The gross profit in the reported quarter was $284.2 million, down 21.9% from the prior-year quarter’s level. The gross margin of 28.4% contracted 757 basis points (bps) year over year due to a 10.6% rise in the total cost of the company.

Selling, general & administrative expenses declined 0.7% year over year to $195.7 million. Adjusted operating income totaled $88.5 million, reflecting a 47% decline from the prior-year quarter’s level. The adjusted operating margin contracted 764 bps to 8.8%.

Liquidity and Cash Position

Charles River exited 2024 with cash and cash equivalents of $194.6 million compared with $276.8 million at the end of 2023.

Cumulative net cash provided by operating activities at the end of the fourth quarter was $734.6 million compared with $683.9 million a year ago.

2025 Guidance

Charles River has provided its 2025 financial guidance.

Charles River Laboratories International, Inc. Price, Consensus and EPS Surprise

Charles River Laboratories International, Inc. price-consensus-eps-surprise-chart | Charles River Laboratories International, Inc. Quote

It expects total revenues to decline in the range of 4.5-7.0% on a reported basis. The Zacks Consensus Estimate for 2025 revenues is pegged at $3.89 billion, implying a reported decline of 3.4%. Organically, revenues are expected to decline in the range of 3.5-5.5%.

Adjusted EPS for 2025 is expected to be in the range of $9.10-$9.60. The Zacks Consensus Estimate for the metric is pegged at $9.93.

Our Take

Charles River exited fourth-quarter 2024 with better-than-expected results, wherein both earnings and revenues beat estimates. However, the company registered a year-over-year decline in the top line.

Both RMS and Manufacturing Solutions registered growth year over year. However, the company’s largest operating segment, DSA, recorded a significant year-over-year decline due to lower sales volume in Discovery Services and Safety Assessment businesses. Overall, organic revenue growth in the Manufacturing Solutions segment was more than offset by lower revenues from the DSA and RMS segments.

Contraction of both margins does not bode well for the company.

Additionally, CRL expects biopharmaceutical demand to be demonstrating early signs of stabilization. The company is currently focused on innovation, enhancing its portfolio to support clients from target discovery to non-clinical development and delivering flexible solutions to respond to changing industry and client needs.

Zacks Rank and Key Picks

Charles River currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Quest Diagnostics DGX, ResMed RMD and Cardinal Health CAH. 

Quest Diagnostics reported fourth-quarter 2024 adjusted EPS of $2.23, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.62 billion beat the Zacks Consensus Estimate by 1.9%. 

DGX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DGX has an earnings yield of 5.9% compared with the industry’s 4.1%. It beat on earnings in each of the trailing four quarters, the average surprise being 3.8%.

ResMed, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $2.43, which beat the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion beat the Zacks Consensus Estimate by 1.6%.

RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Cardinal Health, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $1.93, which topped the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion outpaced the Zacks Consensus Estimate by 0.7%.

CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

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