Charles River Laboratories Reports 2.7% Revenue Decline in Q1 Fiscal 2025

Charles River Laboratories International, Inc. reported a decline in financial performance for the first quarter of fiscal 2025, with total revenue decreasing by 2.7% to $984.2 million, down from $1.01 billion in the same period last year. The decrease was primarily attributed to lower demand in the Discovery and Safety Assessment (DSA) segment, which saw a revenue drop of 2.1% to $592.6 million. Service revenue also fell by 2.3% to $797.9 million, while product revenue decreased by 4.3% to $186.2 million. The company's operating income was $74.7 million, representing a significant decline from $126 million in the prior year, resulting in an operating margin of 7.6%, down from 12.5%.

In terms of profitability, net income attributable to Charles River Laboratories decreased to $25.5 million, or $0.50 per diluted share, compared to $67.3 million, or $1.30 per diluted share, in the previous year. The decline in net income was largely due to reduced operating income and increased costs associated with restructuring activities, including asset impairments and legal expenses related to ongoing investigations. The company also reported a comprehensive income of $77.6 million, significantly higher than the $19.5 million reported in the same quarter last year, primarily due to favorable foreign currency translation adjustments.

Operationally, Charles River Laboratories has been undergoing restructuring efforts to optimize its global footprint and improve efficiency, incurring restructuring costs of $23.8 million in the quarter. The company reported a steady DSA backlog of $2 billion, indicating stable demand despite the cautious spending environment from clients. The company’s cash flow from operations improved to $171.7 million, up from $129.9 million in the prior year, driven by lower variable compensation payments and favorable timing of supplier payments.

Looking ahead, Charles River Laboratories remains focused on navigating the current macroeconomic challenges, including ongoing investigations by the U.S. Department of Justice and the U.S. Fish and Wildlife Service regarding its non-human primate supply chain. The company has suspended shipments of non-human primates from Cambodia until new procedures are established. Additionally, the company is committed to enhancing its operational efficiency and expects to achieve approximately $225 million in annualized cost savings from its restructuring initiatives. The management anticipates that these strategic actions will position the company for improved performance in the future, although uncertainties related to market conditions and regulatory changes remain.