Charles River Laboratories International (CRL) 22 Feb 232022 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Charles River Laboratories Fourth Quarter and Full Year 2022 Earnings Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

to Vice conference President like host, to now Spencer, Todd of would turn over the our I Investor Relations. sir. ahead, go Please

Thank Officer. Jim year Flavia President and fourth morning, webcast. Officer; This guidance you, and Charles am and President and Laboratories joined and and I River Executive by conference welcome call Vice quarter Chairman, earnings Chief Pease, XXXX to full Executive morning, Financial and Foster, XXXX and good Chief

the for fourth of will comment results They financial XXXX. our well as for our quarter as on XXXX guidance

available they is website the our presentation, today remarks, approximately the call. Investor quarter’s associated the which on beginning after will The will accessed also slide today’s of section next be at Following and be respond ir.criver.com. to There with Investor available hours on call Relations our website. conference be Relations a A replay questions. will two call webcast this the can posted through be of presentation replay will

I’d for Actual remind about from and Act Securities XXXX. that Reform plans remarks differ future may forward-looking expectations, Safe we prospects our like Litigation Harbor. those you company under the indicated. make constitute of statements Private to materially results the All of

Relations considered for The will our guidance. During non-GAAP results a believe help and financial the with measures a section operations meaningful financial comparable are this substitute investors call, primarily accordance find Investor Regulation with website. and measures, on measures to superior can In we the meant of reconciliations in you gain or operating core understanding of prepared accordance non-GAAP G, GAAP. discuss GAAP which be to results we of not the

to turn the now will over Jim I Foster. call

morning. Good

primate results, NHP about speak fourth strong non-human situation. an provide I Before update supply on the I want or quarter to our

of into a you Justice aware, from from the has February investigation NHP received Department we As U.S. NHP been subpoena an supply the investigation an industry-wide into many of XX, there imports Cambodian related On to ongoing are Cambodia. chain.

specifically related fully shipments that Cambodian by with concerns we supplier. are without River We Justice Charles have intend Department merit. to find the from with U.S. NHPs it respect the received believe to its investigation, of will cooperate concludes investigation any to Charles informed been our government. Once of this We River

committed relationships As we applicable we laws and have to laws, international of quality all maintain our audit of are including practices management regulations. we the we stated diligence, with and And before, fully compliance ensuring NHPs are compliant help operations to supplier ensure our the supplier and status due and of import. risk-based U.S. the

supply Fish investigations can in U.S. ongoing procedures unknown. to recent Cambodia in heightened and This are Wildlife current purpose-bred. shipments in in will the on Safety have time from NHP take investigation is reinforce of which voluntarily Cambodian that the new The planned business. result implement such develop we chain, that focus confidence supply the and our to Based NHP duration Cambodia of NHPs the and implement situation suspended on delays import Assessment study future until time we will months, we a NHPs Service and and

high for the Biologic of mandated drugs the testing biologic given years, NHPs. agencies. of be And regulatory regulatory commercial drugs NHPs development in the required for relevant biologics without international of model recent other been demand. way scientifically NHPs most background, proliferation use and activity have as By the large are safety cannot FDA drug approved in by

the development. for Cambodia Charles and to XX% drug for to have the and been approximately of developed all States in sourced of example, NHPs Europe and States the an recent COVID-XX years, NHPs research vaccines United utilized the In River responsible supplied As NHPs. United from

supply, to with situation that this we collaborate resolve industry U.S. we treatments the the While new all there NHP U.S. actively our supply to It’s supply agencies of the to supply diversify work is counting the to no restore are the other important diligently and are NHP Service, critical government, source continuing work replace near-term chain. need pharmaceutical and us. U.S. because patients chain who Wildlife including life Fish the and saving on global to

basis business NHP to expected guidance growth of approximately basis corresponding year, X.X% forecast our and to by points revenue the revenue The X.X% the company. Cambodian to current in constraints resulting organic our total points are consolidated supply impact reduce Safety XXX XXX growth to for this Assessment

$XX.XX in of to Cambodian a The be to per with year. scenarios of of NHP are related earnings to the encompassing a timing resumption $X.XX range this XXXX imports number of share in the non-GAAP expected the ranges wider

The we in of case, the will remainder In our quarter. anticipate whereas XXXX. begin have constraints to impact assumes of Cambodian for of second available NHP supply a we fourth experience for guidance NHPs our either in top end we expect studies that end guidance NHP Cambodian the will more have the ranges no imports quarter, to meaningful bottom the from that

Avian to completed December. share the business, rate comparison items which the earnings higher including XXXX, supply, NHP Vaccine in year-over-year non-operating addition in per and higher a interest tax several In are was affecting divestiture of expense, significantly our

from these a of by generate shortly. to in XXXX, partially $X.XX will up detail Flavia per in exchange. offset items combined benefit $X.XX a headwind will more items to foreign share earnings These $X.XX discuss

about of of robust year you reported with for the demonstrates accelerate enhance as biomedical position growth to the River. therapeutic XXXX, to our finish escalating partner XX.X% our macroeconomic pressures. and Charles choice us outstanding of innovation. research scientific speak highlighted another the We performance an revenue performance strong in by to strategy, organic enables operating backdrop continued execution I’ll which Now against XXXX

full of and exceeding basis. the on increase representing the reported you quarter year give mark fourth fourth and of a billion quarterly for performance. XX.X% first organic reported time the billion the an me Let $X.X of an of – We record quarter highlights revenue our in XXXX, $X on

revenue due performance robust growth the second increases growth we forecast of the in was Assessment we that DSA driven XX.X% XX.X% the significant rose by had year. Safety three another the most DSA acceleration from business growth as since the to exceeded half, from contribution business. segments rate second the of organic In all Organic half with to segment beginning last

our revenue Assessment exceeded with businesses. of a outperformance reported rate revenue primarily For $X.XX top organic XXXX, by guidance driven the The in an and was end and by range billion growth growth Discovery of both XXX growth XX.X% basis Safety XX.X%. rate points the of rate

year-over-year Manufacturing and RMS XX by fourth the in was driven primarily operating XX.X% decrease The margin points the of segments. quarter, a basis

the was full XX%. year, the unchanged For operating margin at

We business year in are in Earnings operating pleased significant inflation quarter cost to fourth from the were CDMO of margin of the share a XX.X% per $X.XX have pressure. increase the $X.XX margin XXXX. and generated substantial fourth the in an held steady quarter, with

were our the For increase last due range year, per robust earnings over guidance primarily X.X% the DSA to full to year. growth, of $XX.XX, the $XX.XX We segment. share a $XX.XX fourth exceeded particularly in revenue the prior quarter

our Charles clients of drug successful demonstrated development performance strategy partner choice valued well macroeconomic We these pace for execution headwinds. clients position demand sustained to believe our our the as non-clinical as as River from of despite the the thoroughly of XXXX

XXXX. Our base business underlying client many in that exceptional give of trends us our the remain confidence market position, unique diversified intact early-stage will focus large and

XX.X% you substantial I’d our million for details DSA $XXX.X like segment XXXX results. in on increase was to an basis. provide and beginning performance quarter the with a DSA or our organic quarter additional fourth revenue fourth with expectations segment’s the on

revenue DSA The business driver from with continued NHP contributions Safety pricing order Assessment and the to of volume, in growth of magnitude. principal study pass-throughs significant be

linear. of often have to a case, growth record well DSA the constraints, combination was driven when we quarter including the as robust and experienced business In the pricing quarter revenue is fourth as As mentioned, some staffing. the comparison of current the business XXXX this resource fourth environment our demand not by

the The Business growth rate improved Discovery in quarter. Services also

our growth XX.X%, also outlook. full For a organic was DSA year, revenue record the exceeding midterm

billion. during because backlog backlog stabilized DSA years. XX% robust a growth in year of year-end, XXXX also expected increased to after the support continues remained in the prior and $X.XX long The duration and runway has elongating the substantially normalized to as As year-over-year backlog

growth in business The expansion margin of current with adequate and demand. have but We see sustained demand our Assessment situation client NHP supply Safety and supply the models. client the demand across and supply and have we these staffing resilience once pricing this XXXX, opportunities afford restrict we the environment are situation as large broad-based rate resolved continuing NHP the to and should accommodate DSO is healthy to growth may an capacity of and underlying us revenue strength

proposal clients’ expand our technology through needs, discovery lengthened to revenue activity with our programs from the we Services with our business early-stage a support and the continue research third start a as to M&A. support of In growth our quarter growth our through also who order projects as booking clients new their the had strengthen begin in Many XXXX. quarter Discovery single-source timeframes Discovery profile forward move a healthy improvement partnership good previously and quarter. to fourth the partner we to The level. position in rate capabilities strategy

screening mass were with achieved We their we SAMDI in able spectrometry with We partnership we Tech both January. in and Tech, our clients. for initial validate which label-free, an technology established SAMDI proprietary high-throughput with acquired XXXX, to

During their we required and SAMDI candidate cutting-edge make clients the technology costs timeline lead a earlier. partnership, decisions go/no-go reduce accelerate drug determined Tech was by increasingly identify critical that the to favored to and

have we River. As mutually partnership, agreed a SAMDI of Charles to result successful Tech the join

for of and to to or manner Partnerships needs. ongoing for single advance integrated an cutting-edge toolkit and scientific with us discovery clients adding novel work our to program our flexible capabilities in outsourcing by to tailored a discovery a project expertise our acquisitions strengthen therapeutics on like specific their enable build efforts this the

the XX.X% fourth XXX in basis DSA increase a quarter, operating from margin the fourth The was of quarter XXXX. point

For higher operating with Both business. points the increased DSA Assessment operating year, XX.X%. were revenue the meaningfully in associated primarily basis by leverage XXX by Safety driven margin increases to the the

in $XXX.X revenue increase the quarter on an RMS an million, of was basis. XX.X% organic fourth

China, For X%, drove revenue of quarter fourth America models RMS and Research growth XXXX. growth Model particularly and year. in single-digit CRADL squarely research Accelerating initiative RMS the outlook revenue for North growth with full was the in rates line for exceptional organic the growth high year, in our and Services, our

price to benefit offset inflationary pressures. We part increases, also implemented which continue cost were in to from meaningful

similar expect again will growth high single-digit We trends organic drive in XXXX.

Research growth. research China, of expansion The Model shipping and COVID This the North new set although increase, a strong And robust models. already reporting well, to cases each continued operational western increase regions America an share. in southern fourth continue gain modest impact central, to and business, us a two of China growth quarter. with experienced in the from generate double-digit market are double-digit the revenue China generate progressing will enable and is In during additional sites to

Research Model primarily was fourth driven to Insourcing well Services continued Accelerator broad-based the River for last or including Solutions also across growth and Growth Insourcing operations and year’s quarter GEMS Charles Labs, CRADL and Explora in year. acquisition. the by Solutions with Development perform

and without to CRADL turnkey invest Clients space to to very connect vivarium of Charles CRADL are to continue broader footprint advance and the with in increasingly square earlier new to adopting Explora perform pathway continued in in capabilities infrastructure. a and with totaling us to research clients in enabling XX over and stages, provide feet this clients encompasses capacity. infrastructure, well, flexible now vivarium to invest internal facilities a preferring model research. their leverage River’s unique these combined not access Explora to rental XXX,XXX having

in by week, a basis has primarily the operating RMS declined in the RMS points on greater XXX in factors that XXXX, Explora and resulting XXrd these operating will RMS to or CRADL to basis RMS operations in in be and impact an quarter The in of XXX XXXX. each attributable to the the improvement anticipate new and declines generate margin. in from either We impact less and also The fourth COVID points segment, sites China our impact eliminated headwinds margin XX.X% of by of XX.X% China. year-over-year expansions were a which modest

in was growth The business. clients. year growth have the revenue in and gain feedback compressed by initiatives our X.X%, segment CDMO growth outlook million of XXXX mid-single-digit revenue the X.X% improve from lower The our business of Solutions rate the rate performance CDMO was continue implemented we that to for with earn in full to an $XXX.X was XXXX. organic basis. the a rate on quarter, also in organic And fourth line Manufacturing positive traction

Our interest. creation with business of are the in our focus coupled on therapies, received. investing plasmids development efforts client readiness new commercial centers of well has of our excellence viral vectors and CDMO and cell we And for generating operations, been

of in the Memphis. targeted a over returns two stronger over thirds more million CDMO XX and We of business than has world-class our the have for won therapy gradual $XXX operations performance are new in as which projects the We in past funnel helped CDMO to XXXX sales its improvement believe that during rates. cell a growth months

businesses robust We expect the to fourth These to both Microbial other Testing well for principally segment rebound XXXX. growth a business demand in biologic The in drugs, performed control will legacy biologics. the in from prospects complex cell in in organic very demand and by digits quality Biologics segment Manufacturing gene rate client Solutions continue will therapies including the Manufacturing strong. benefiting low drive remain CDMO as double driven for Solutions and the these be the and growth total quarter, manufacturing businesses the businesses

Solutions its quarter testing Endosafe year, Microbial Endotoxin testing full had across growth Accugenix identification a benefiting microbial platforms. and from strong broad-based and

demand to continues be the revenue provides XXXX. expansion Solutions’ continued control a which to drives and including We our the of installed and platform. XX%, cartridges reagents, to for continuing convert base of are reliable marketplace The efficient Microbial stream. potential quality approximately consumable recurring healthy We the believe long-term growth in testing more instruments

continue quarter despite the the be gene XXXX. Robust of vaccine year for The an an services primary Biologics as testing and therapy Testing testing had year. as excellent business And moderation excellent growth business and biologics. to reported cell well factor revenue full fourth traditional during demand COVID the

continue biologics. we services maintaining gaining portfolio gene of significant successfully successful of support been and cell have over therapies of We growth safe have manufacture the to believe be in and the to We will our because – been term. drivers business longer extensive

the operating full respectively. fourth XX.X%, meaningfully declined in XX.X% both year segment’s growth Manufacturing and The to quarter and

has to As CDMO underperformance margin business, will of the above driven decline in by was for improve manufacturing we believe business. been expectations the the meaningfully the level. case the the our year, all XXXX entirely almost Based on CDMO operating the XX%

there know, leverage inherent in businesses. you As operating our is

So improve in expect as the profile business, project the margin we CDMO volumes follow. will

River’s Charles XXth we In anniversary. XXXX, celebrated our

drug the a to lead billion small model We’re $X company revolutionary partner, drug helping revenue have discovery generating nonclinical evolved development delighted development a and to in from annual nearly research the essential overlooking and efforts. River Charles leading global to biopharmaceutical industry’s

we funding to for in continue clients’ As market. scientific of our innovation, speed we XXXX, to strategic use renaissance efficiency outsourcing resilient their look to of enhanced see continued and age environment increasing need and golden to a the

our Our tailored preclinical even trends our core firm knowledge our the supply competencies, proactively to and our on business and us and to we including model and our precisely the an indispensable advance of care. extensive reinforce practices partner focus assure will commitment make are humane to therapies. R&D, clients’ I NHP scientific research ethical regulatory manage these life-saving compliant to treatment under to that the continue you more conducting

I’d our like employees for our exceptional shareholders their conclude, support. commitment thank their and work To and and for clients to

Now additional like to guidance. our details financial I’d performance Flavia and you on XXXX give

you, good morning. Jim, Thank and

amortization exclude business items. the costs efficiency sale speaking results, our global remind from certain I or may begin, investments, gain I gains that be to which our and strategic venture to a other the non-GAAP Avian and primarily primarily related capital adjustments, acquisition-related other Vaccine losses you I’ll on of and Before other initiatives,

the translation this revenue discussion refer acquisitions, divestitures, the comments growth, to of my on will primarily Many of and in week also which for My excludes currency focus financial XXXX. organic XXrd our foreign morning impact will guidance XXXX.

share pleased results, previous for our which per the billion outperformed quarterly guidance, fourth revenue very with quarter revenue included We’re earnings first the our exceeding time. and that including $X level

the NHP reported X.X% to scenarios impact constraint, businesses Notwithstanding environment. a situation, NHP multiple Jim in in our to expected guidance Our XXXX. the of X.X% our estimated regards revenue funding is to underlying with growth and trends to most of the and of in outlined, which X.X% reflects outlook ranges reflect of sustained growth from the revenue organic impact as XXXX supply X.X% result supply resilient

headwinds per $XX.XX, between earnings meaningful non-operating with both non-GAAP and expect We share reflecting associated and NHP $X.XX supply items.

I covered will comments more supply not impact provide many the too on NHP Jim it. since

divestiture, the headwinds, of a include Vaccine tax So, which comments I’ll other on and higher Avian rate focus expense. impact increased my the interest the

share of $X.XX year, XX% to nearly in In growth an to by benefit share offset These earnings earnings by reduce reduce combination, $X.XX will the to XXXX. approximately headwinds these FX for per per $X.XX earnings will partially items non-operating by at up midpoint. share per

items in additional our three we non-operating I’d generate for like XXXX. headwinds expect will provide to on the details some performance that financial

First, as we we $X.XX XXXX the earnings $XX repay since approximately of share revenue will December interest million approximately in non-GAAP used by divestiture net expense per to completed the Avian by transaction expected. reduce proceeds and Vaccine The debt. the benefit

non-GAAP to growth price to to XXXX $X.XX tax midpoint. the XXX generate compensation year-over-year and by at tax reduce points will at discrete move is higher not XX.X%. to The over related representing XXXX XXXX expected to The earnings year. of nearly XXX the year in stock by XX.X% earnings benefits point compared expected expected reoccur less of reduction rate to this driven excess basis a a XX.X% stock top midpoint per rate to rate to be rate to in as XX% our compared the increase long-term to lower in well tax $X.XX will primarily of tax XXXX as tax the is prior the range Second, increase a basis benefit share low as in a the benefit by XXXX, are that

Finally, $XXX $XXX total compared $XXX XXXX to adjusted million to increase is range to to last expected million net interest of in expense million a year.

by offset result We debt. be actions, partially expect the variable of will Reserve’s year-over-year higher as interest driven of a Federal rates repayment increase by primarily

basis the higher least and share earnings expense by $X.XX an interest We anticipate $X.XX growth will per to create reduce XXX the at rate earnings of headwind points.

At at of last locking our into agreement rate year-end, the As two will for near we swap Federal We years approximately XXX our rate. entered million XXXX additional and mentioned credit announced in three-quarters effectively quarter, rate term, $XXX of an was on accommodates increase billion Reserve increase beyond a in point fixed believe debt facility. recently a rates interest we the our $X.X increase. rates basis revolving the fixed in outlook an in February

capital a At to our from the and Avian priorities fourth in X.X greatest third is We to the deploy end gain of will continuously respectively. leverage quarter, always, approximately the were on net cash meaningful the a capital the X.X our and areas This that and ratios decline quarter we times, returns. as gross evaluate part to divestiture. believe the times intend generate due

Our approximately of count XX.X shares million million outstanding share XX to outlook diluted assumes an average XXXX. in

research segment a DSA demand Similar impact achieve outlook single-digit growth, revenue the associated to From robust supply services. offset result demand year, XXXX the RMS is in growth prior models high segment. and the client by sustained the our trends, segment continued for of revenue perspective, expected organic to the reflects NHP

situation large these the our Safety not are Cambodian supply operation. used reminder, to impact does models as and an RMS sourced support a our segment have As Assessment NHP on

by on increase the rate DSA NHP segment, generate digits our of from expect to timing the rebound expected low rate growth the around For driven of in the is The will between to assumptions mid-single imports. XXXX year. CDMO expected be the low organic supply segment based resumption the growth double-digit the organic the principally revenue during the performance growth Manufacturing with we

line a foreign XXXX, in FX of $X.XX result is exchange near the to and meaningful XXX-basis current earnings since up to slight largely point to was down to November of XX to weakening While the generate will dollar per growth a share in benefit drop a expected up revenue dollar. to headwind basis due is foreign the projected exchange assuming in to to benefit movements points U.S. a in XXXX, the bottom This Canadian contribution rates. more

essentially may current You our of all we most recall, dollars, of Canada, in our in U.S. but revenue Canadian in are costs invoiced dollars.

XXXX currency we assuming that presentation. XXXX provided the in revenue for exchange rates have and slide by We our information on are our foreign

NHP For depending operating expected the points we XXXX on this the in supply margin, an the XXX to expect resumption to the we operating be of generate margin given NHP moderate to down But improvement timing margin meaningful flat headwind, basis would have XXXX impact. shipment. Cambodia of without

continuing believe from drive improvement we Longer still higher our to business of in is that there efficiency. margin pricing inherent leverage is combination operating term, from a volume, and

We or that will supply this at impact on these metrics not is the expenditure vary provide flow time based NHP could capital because outlooks level free cash of incurred.

robust For due XXXX, year. accommodate free well CapEx was cash million added of to as decrease our $XXX below compared cash to flow flow million The capital our we free the the totaled working prior being the outlook. as for as to unfavorable contributed timing which movements, to prior capacity demand $XXX.X higher

the the for XXXX $XXX.X increased most with of driven by Capital business. increase by Safety capacity needs of million Assessment $XX continued million the to expenditures

keep we for with remains forecast. sustained targeted this at approximately Longer expect year. NHP current pace X% our revenue reassess level in to support a long-term environment will situation, capacity the in and needs as supply demand Given term, underlying order our growth for continue to to of capital we invest CapEx the

shows next financial The our summary a XXXX slide of guidance.

or at the XXXX, the basis. revenue quarter an expect first organic will level of high above year-over-year single-digit that in on growth reported basis be we on at the range a XX% Looking and

of growth throughout both comparisons as year stronger to first the gating the accelerated the XXXX, as growth last when year We’re half expecting impact. in of the to revenue due NHP the well supply

to large in related study. place to in models the impact first quarter are NHP only start We because small these expect supply scheduled a already the

first at earnings first the of in the $X.XX share mid-single-digit year. will a rate to quarter compared last in decline expect per quarter We

the will have greater the of In addition earnings to headwinds divestiture, quarter. a per first the share Avian impact in to the non-operating impact

Specifically, tax and increased interest higher the rate expense.

previously the the from is first impact benefit to be the quarter. tax XXXX in mentioned, greatest expected As with lower compensation in stock

more will in first interest headwind These result approximately also Reserve expected anniversary share. increases have $X.XX rate Federal the aggressive items quarter. in We now earnings per two last of combined year’s are to a

This a In COVID in readiness addition, quarter versus the quarter. lower regards these segment business. of growth the commercial of second in rate Manufacturing will Biologics Each revenue in with the year, milestones improve result first comparison faces year in throughout segment the to difficult first last the will and the beginning for CDMO Testing in a testing business Manufacturing the quarter. headwinds the

we’re manage XXXX and XXXX. the conclusion, performance, proactively very we’ll in pleased financial In with challenges our

generate We’re by growing flow. revenue, value our confident for ability in earnings to our consistently shareholders cash and

continuing robust for XX% the and necessary share, make free and revenue investments achieved our XX% support growth we earnings flow Over of generating the while last compound business. of per annual five growth have for operating to cash years, to

preclinical as We’re our our through from Thank life-saving and manufacture growth, focused partner, continuing leading global our development executing clients development their of discovery enhancing safe to working drug on strategy position the with drive nonclinical the you. therapies. and

Spencer Todd

our comments. That concludes

your take questions. will We now

will America. question first Bank from And [Operator of with Instructions] our Derik Bruin De come

is open. line Your

better Basically, other business – are of having delays to some is of to their risk in customers the have your Thanks of the that in vendors losing you morning. and what doing at taking good studies? similar are I elsewhere access space vendors issues? because terms curious, biotech Jim, systems? Hi, I’m other – for model on – question. are mean, some my just

say all XX% competition, the United the in least Number and of we foreclosed overarching different from, to be, Cambodia, one, and would the come at animals studies would But wider new States. capabilities. temporarily in my regard from bringing a I utilizing them we on different comment scale. that Tough to much comment have are sources supply on animals number with where are we I guess Derik. two,

a So not to you an because are relatively and and one preclinical going drugs tested Biologics the going say into move to is want this to issue, extrapolate through this industry on large move aren’t clinic. unless they’re profound

and be animals, has NHP. it’s to

Wildlife be which – we collaborative of and here. is we Fish but parentage, to agreement So we’re work going execute they’re and the that of our to underlying in a is to assay sort are come we and sort developing, to methodology large to laboratory can with population now with do able cross focus some It’s a issue that up animals. have be show with, that quickly of to

table the The that for competition, – for on us. comment I just to assume reset the you, the is is irony demand really I can’t significant but similarly.

is So exceptional. demand

piece we or And a and Fish with parentage. speed this We Wildlife. terms Capacity’s we own actually have We’re well have either enough supply that concerned staffed. good saying unanticipated they’re place. long-term contract. relationships animal bump that a a have in suppliers in we’ve of our with hit They’re about where various the

a and past move can’t do through competition don’t to we been support this of I extent, guarantee don’t both we, to I anything. that’s is preclinical – situation patients. share. how and I the some River and Charles about losing concerned situation So get a that so this drugs we’ve It’s – we can to the think clients

forward. that’ll be of pretty – going our that’s much focus XXX% And

will we able been that optimistic that’s – We’re be a request.

will animals and meet resolved we’ll request. we the exactly exactly when that it determine that will be when difficult to get optimistic a It’s into U.S. to able be bit little We’re

guide, all for industry that be the would about Worst course, and best the case And Cambodia of utilization large. case. for QX. either the open both of as it’s XX% third sized River doesn’t Charles of source, said supply for the at We’ve fiscal up prepared in XXXX. at in That the quarter to have would our remarks, late be in we animals of kind sort

and So it’s for how really say and ourselves. patients our know it, to fix fix – to else not for I don’t this. for It’s it clients that have we optional

that we work we authorities that through do as NHPs think with And they’ll U.S. the resolution. the play. we’re I the government work and closely work us of the the role understand hoping criticality

was Wildlife any sort together? this this how what Fish Great. of what And the an would on and and see? working – closely timing And you that is? this are is FDA on did I of next importance be to or one all-in when follow-up milestone do my we they like there get the clearly understand suggest resolved of sort need mean, is

agencies that absolutely we because I only various that they’re I mean, know nature prove and are have the token, of is with hundreds resolution. going hard world been in critical understand of drugs the one lens. Fish and Wildlife through the that pretty development the them. how much a it’s of the and essential these parentage. used be consistent move same the animals different have for a we drug clients timing to outlook to government another By But conversation forward on

that. So we’re working off on

tests, running. used situation collaborate these We’ll the yes, we with we’re whole up the this going open well being research. about And this they that this wild our deep intentioned take reality basis to up that And with others dialogue that’s some it’s on which off an we to of provide Wildlife own. We’re prevent time and Fish have need. running, and – to have and get of get with some biomedical explain science to animals to what exactly in to them we’ll but

you. Thank

Sure.

you. Thank

from come Coldwell will Baird. question next Eric with Our

open. Your line is

Thanks very much.

$XXX the revenue details the you what they guidance. timing headwind subpoena, million XX%? the And receipt, on DOJ the perhaps this? On XX% think, in can margin confirm provide have of to you might $XX would that embedded to any additional what’s drive the come can is incremental million about on then That’s the rough that across there are

third, to the Is could then would And provide anything say, increases let’s let be scenario about expansion – countries new of origin, expansion there non-Cambodian to know us could you’ve to you worst-case extent you’ve the doesn’t with Cambodia if, on you outcome existing ultimate suppliers, reopen? share might suppliers? what achieve can to any be talk additional supply what able Cambodia? willing Is supply you there beyond detail – been

Sure. from And a relatively Eric. want us. Subpoena that recent, get here, subject we’re to they information is meaning

That’s supplier Cambodian to back another that we not that Just in with. work was somebody invited up, November.

the take competitors with, to our of and methodology. we so that questioning and to for started And work a whole the couple prove

one all suppliers looking we at our of get in are of they monkeys so from. Cambodia, the whom And now

guess, just there and sort I that, were government audited the We without thinks. say, I weighing in should what on of

we well. a a view, of farm. of a a view, it’s view, believe point professionally from counsel nutritional and And that they our point of it’s think a veterinary from from housing from advice big of doesn’t run view. And take operation a point really point shipment So

we that and have So them. we feel some auditing point with some end capability

conclude any U.S. continues, that that they’ll don’t believe are we they To concerns believe laws. Charles have contrary, we international this did confident We merit. comply without investigation River anything with We the as that regard and we’re always DOJ with to fully wrong.

So transparent. we’ll them. collaborative. We’ll work closely We’ll with be be

that us solution great. a coming and terms will in of We with probably work the high providers will up for which them, other works works and for is competition, for take road

out We it frustrating. COVID I probably years it closed and now, they their after is, a China won’t The It’s is suppliers. last, over have through have hard XXXX are, Eric. we I of four but go is sources. particularly And I’d in what supply really maybe multiple supply multiplicity worked three say, to what are thing so the where – years, mean, names

work. starting number And a this the year with of so do more sufficient we than to were monkeys

into last hopefully, way earlier, into I on some incremental as top we XXXX and And have some XXXX said back that. of year You the and we staff had of know orders space. and half

we last – of year. half extraordinary heading an and we’re second this had into So

been really So optimistic this heading sources. about supply our year we’ve into

that for Charles through industry. not acceptable just I’m say That’s into to which your through tell of So be multiple I would for – opens up, would to tolerable situation. this answer is an question with of lens. the have we you situation River preclinical getting never in the drugs an insufficient specific there monkeys not if a number drug for will for That’s supply whole do work health sources, the And the Cambodia that clinic. I development, great. patients, not saying

What by the those to They an clear dialogue track with parentage to mothers So and say they’ve that of a quite just that to them really that you – is mean the just can been we listing. find was that, have and we and have accommodation. by open, part you to are show operation. offspring mothers purpose-bred

that. up So at some we believe believe open can Cambodia We that do will point. that we

quarter we be industry the Flavia drill animals with of can’t because I if sort case best gave And let end-ish down fourth of third hopeful We’re the financial will what it’s to that our dilemma of in guidance. the in a big it impact on become happen. will just that

our prepared mentioned on different our Thanks, at prefer drops the guidance fairly a specifics. rate and Obviously, revenue we high initially. comment remarks. down scenarios assumes Eric. EPS to good Yes, loss not But in morning the obviously Jim as I’ll

right. All Thank you.

Sandy Draper from come will Guggenheim. question next with Our

Your line open. is

Hey We Sandy, mute? hear you on are can’t you.

Todd. Thanks, Yes.

and you – from Or understand are Wildlife this your waiting sure call? and so quick are a business. from then tied? But FDA NHP things just I follow-up hands I sure supplier stop. ordered you the taking to So or want you resolved? primates correctly, to signals the make And decided, were my it to the is on But think just Jim, to and understand you’re once make clear, this that. Food So on on bigger from stop I to can the the basically you’ve CDMO questions make

on bigger the signs question on the then in is CDMO your just guidance. And encouraging clearly

of you’ve pocket? that of actually sort you Going back to just that through sort time rebuilding XX just gone months that and XXXX, this had the a of gotten air the demand has in the better? Or that pipeline Thanks. of is function miss

Yes.

there on doing was Fish this invited was about was after Wildlife farm all and situation, so in Cambodia contradictory erroneous November. first back information So probably the sorts of what and

was was true. So believe just was that ever the Cambodian government don’t exports, we the closed which ruling down initial

indeed we for saying, have animals, and yet bring their is use we’ll ones government that until – open purpose-bred. sort is Cambodia And of that you the in in work end, you you ensure them we provide country, some from have yet. is The the they paperwork. So can’t in and business. country, can’t are the We’d like U.S. to out shift

no. So

we don’t the ahead then mean, animal. that one just has get So I we I go canceled, there’s site you – so can I want. think always don’t they and they it’s and permitting. do when – can utilize think – what There these permits to are

trying are guess tied, look your them get we’re positively that So I just our that hands to prevalence, but within at our control to it’s untied.

to They’re they’re to can how prove of sort make on us wait purpose-bred. just going we for a proposal

faster that’s do So like obviously, the XXX% And right now as one. said, our an our in we animals. utilize is will the the to us allow focus of it, control. interesting faster I CDMO they business

et to to senior spoken we for integration and from all while, has management, really re-staff we cetera. companies sales, complicated. been new. bottom, top And of kind regulatory, major we’ve the As consistently complicated to bought that a science is the The of quite had now three companies,

the I think Board. the great demand been across has

The cycle sales long. is

when that clear weren’t commitments So we the us firm. wasn’t some company length or the we we of sure clients crystal the plus was to firm felt so had clear bought I’m totally to and not us that

And remarks $XXX So business in force our with a understand last come million sales the science job I done great people new explain have year. commentary think in that we’ve can the where prepared we a new of it well.

big this Memphis bunch operation, cell of right there’s either new scale system. own feel in that space are I biotech pharma therapy big companies facility, that but particularly numbers of companies clients, there’s and companies, including in never or a Our mean, solid manufacturing who don’t By cell big don’t therapy now are a kind their of heard of sufficient small that, and of, gene-modified just have that space of is you’ve bunch terms a there’s the clients. really sounds of which

almost few We confident X And talking have we least that there’s to several at we’re to that us about expertise, – produce commercial don’t of, we will I that year, either and actually talking know, would one really are which be finished because manufactured. client quantities. who products or commercial it have are a just commercial Phase who clients quantities for still terms being fiscal them capability in this reputation, obviously doing fabulous there’s

our better therapy safety. stronger, we So understanding integration business and I the better, are, say and also cell gene demand, and of in better between between amongst business, companies who and biologics particular, and gene cell would client better therapy feels and the

over major facilities added have that good we the the to have of been three big the been year. all very Secondarily, – three of have on past facilities

attractive sell new It’s staffed. incremental lots of area. got space, we’ve So gene and want people very in pretty that therapy. well to a space and There’s work

positive I think potential. capability there’s and our buzz bit a little a around of

in So in those we rates should have nice XXXX. growth fiscal businesses

prior be The want distinctly near they will the but them anywhere we better margins than won’t to year. be, be

CRL’s accretive the similarly line. be And top also. manufacturing top the and extent bottom obviously, should to denominator, but a for of CDMO to So similarly, given lesser and sort bottom line

we’ve So as we year. this those entered about fiscal businesses good feel

update, the for Thanks Jim.

Pleasure.

Thank you.

Elizabeth Anderson will with Our Evercore. from question come next

is line open. Your

could you NHPs wondering that question. on based was you Hi on like you the so get year that the and gave least for supply thanks fourth guys, at domestically I comment, much the Cambodia between if probably this sort guidance enough full quarter have you for you supply. seems to the to non-Cambodian of it

on. that’s something if could So you comment

of about XXXX And impact that maybe the accounted seems secondarily, the than then that is NHPs? more you XXXX? that maybe after talk guys you. in something is for would follow-on like work have Or can something impact Thank that potentially It guidance? you

Yes.

sure, for So we have supply, Elizabeth. some

of U.S., lot work I – that mentioned a have – have we suppliers European the we we but So do other operations. we do also in NHP for Europe

at countries, had of have back moment, bit. which suppliers the And a sufficient which in finely, aren’t it a other U.S. begins that tied our while, of don’t then and too monkeys want I little think some it some the but peel but for supply for we have We to I a tied. wind hands are to our We hands

with need really what our they conversations try to to done about NHPs. their their and going availability to and to with their priorities quickly drug development space be clients the just of and have of match cadence priorities and pipelines We’re have

we’ve our some hopefully, and we that year. extent, to some supply. we’ll extent, prepared the And off running indicated And of numbers have we’ll be today the yes, in our remarks back So as the in guidance half to in in sufficient won’t. and

We’re XXXX. continuing to into what on take comment I is to certainly orders want and impact don’t in book the XXXX. orders

because will this first XXXX figure and Fish our agencies so. problem it if quarter the the the given in of Service And work, just have importance regulatory to resolve have the other be say early use the we us to them hope to and let We’re Wildlife supply would we except U.S. of that sufficient out.

will understand We’re They confident that they importance. listen. the

NHPs did, We’re as they also competitors, our And have limited And confident can’t of options. but they Very NHPs they they the if perfectly to toxicology and clients few of have lot they even limited have capable internal get either. capacity. we don’t a infrastructures, well. have access have

want and our to we’re with scientific have given faith good solution come prominence, in expectations hopeful demands. everything a to and that we understand work satisfies everybody’s just scale will and it. up resolve So And doing that that people us with we’re and

you. Thank

will question Jacob Johnson Stephens. with next come Our from

open. is line Your

Good morning. Mac This on for Jacob. is

environment perhaps one Just a or me. areas actually quick areas? think one any CRADL where funding the for is of additional I of outsourcing? these Are there demand business drives your

measure. the might use our moment space, of just range on Yes. and I on amounts to outsourcing relatively it don’t the – small least large a to everyone space capital want it. space, quite in a add I’d de small who people countries. be of say build to current from – novo the a hold small measure CRADL’s going of to was we for for overstate it’s pure-play at CRADL thought interesting, us, only recession-proof to for It’s at whole want move but kind companies. not or sure. and business It’s the either

think I going that well. business really is

that Look, of Charles River the – with thesis outsourcing bargain we our can your partner. the mean is whole basis whole be I

technology that market the You of shouldn’t if whatever, efficacy. our our We’ll people your and into into as you drug at capacity of because and in own. lack invest get of levels toxicity it least get high market or they’re you space consistently. or the tell use your We’ll help

all Model I what that are Services think do, of Research the outsourcing. So of pure so we much

and discovery our work outsourcing. pure of safety is All

so And is biologics the work.

tell added and decades a so providing everything us please – and last me, drug to give been portfolio two over file through say, about somebody large to that the this market. we’ve get cohesive has a And decade literally M&A my or so even can thing IND – and

of somewhat correlated cash. it’s availability the to obviously, So

spend that would I biotech they and way the about say thoughtful money. our in judicious clients, particular, are very

and at hearing capital concept. So they from think to about they impair access And our of and unless proof demands to about money slowdown how tend least would very not to to we’re us ability actually that have concern clients move forward from or spend. they little the get both drug and to enough into clinic their still minimally the

of our yes, top we kind think have of is for they’re and the CRADL just if agree And articulating those quite concerns, is I I list. our not – So them. the that portfolio it, think would and yes, they helpful

Thank my taking question. you for

Sure.

Thank you.

will Donnelly come question with next Our from Patrick Citi.

Your line is open.

few wasn’t to got a was it mixed obviously, think late the days there talk And of just X-K, you guys, the later. reports. taking questions. timeline mean, Hey days And it this down, were how ago. maybe can sorry. mid for shut you all out few then was subpoena Jim, through a this thank the Cambodia the you obviously, just put December, you I then out? November, played guys I

you how this of sense played be real just you when out talk a started internally trying prepare could going realize, you about and can might you. how So Thank terms a and guys helpful. to would to shut this be this down just disruption, for it hey, to get just quickly is in and

Cambodia in information Cambodia. the about November anything was the about about indictment first that time – Sure. any came in know supplier concern When a the we of public

that wide those Just our point. then China, in exports our scale animals, coming percentage government favor to from supply remind those of down and keeping from until We agreements up country. you all this pretty monkeys the probably were of NHPs closed Chinese around had China the in same

And type genetic same same we animals pivoted to Cambodia, background. has and competitors the which essentially the or our of

that also fine knew have research a community we would the be with really them. didn’t similar it’s background. They So But choice.

from with requirements quite we’ve point them, validate what visiting working were pleased view. kind quite monkeys. an sources We’ve been operational of them pleased of We’ve our our by the been hard by So with been to supply them. quality telling of

As year price way gains. for fiscal the and had not best we really a X.X company’s I points out we in the probably, Assessment escalating had history best strong earlier, XXXX, – said in our demand probably market the share and years Safety or year business

out And very blue. our coming so locking operating good were and plan, as into literally feeling we this down up this of were year we the came

then to And it’s closed, but tough the but what as no and not put you a not until prove we it’s on Great, of are closed. can determine government you closed, care, purpose-bred. is we then can’t is use that us animals you than you said. point say, rumor I don’t sorts them verify. got Cambodia U.S. can’t to finer All it But

relatively So short it’s to just it November a of time. that’s is decades, which – period like now, feels

are will not and it’s finally opened cooperate, be who conversations the upon think have to DOJ problem. Fish with solving us our we scale Wildlife, only this to leaders incumbent channels up and We I both given in we obviously, and but have

for We and we up animals base. be By come to have – tests animals done client indeed I we necessary that have can that which will are this that, purpose-bred, with quickly mean, to solve the the that. determine to do the

So we particularly Cambodia, we the one in do that we’ll just on we use enhance we’ll own stay be what to principal And our advice and suppliers our the can it. internal show to with their we that close think – efficient or testing they’ll on methodology end. need provide of hopefully, that all and wildlife pleased additionally one they such counsel data,

and notice. of extraordinary – something the had and hint certainly And of information that, we’ve government not said, the nowhere, and literally XXXX, or with no advanced as this – sort to kind concern of we a sudden to kind as previously. frustrating straightforward And of as an spoken And severity it out sort of I as of was fiscal what the just about for them so looking or investigation conversation. the as it’s never seem of even it’s come

Jim. Thanks, helpful. That’s

Sure.

you. Thank

from Our Max next with come question will Smock William Blair.

is line open. Your

Hi, on thank for you CDMO for taking our questions. Maybe one me the business.

from wondering You if really there’s over funnel mentioned of some in you the of seeing cell to you terms part market and strength you can has of around sales larger potential guess, grown terms it I in or And a sales differentiated detail this has quarters competitors and the be broadly? in of share last company. space. here, funnel more any your won stronger those in gene how you’re the just what more you. the couple then that the for opportunities you therapy far, so differentiates And you’ve Thank would helpful what think hear the what of

cell that and and then market need success and has gene of remained The be either to is discovered strong. failure. strong plethora had quote a therapy to or There’s developed drugs Sure.

So we’re the I busy. said We’ve, earlier, organization. very, very going as sales retooled be to

and manufacturing cell expertise and the understand both So the the both frame. to therapy we’ve science in and great gene got with processes people for time

longer had the we is As frame than time said I anticipated. earlier,

and pleased they with to plans to up might us the share the the with way openness we’ve small, signing really have. drugs size wheel what been we’re think So the large clients, their anticipated market

clients saying of on doesn’t will filing I’m verge moved and As of I a said are earlier, regulatory verge a and the one finished mean will from several the just to drugs having be get zone. has commercial market, into have are but point view that of the commercialization. we that It clinicals on

preclinical it’s should varied terms probably So companies. we gene we’ll development, obviously, we time, meaningful a of work cell were number pretty two-thirds last scale quantified we therapy the and the said on. get And we – in probably – about solid, but they these of to funnel update, domain. it which portion feels market consistent, the of the of drugs the some when in and were The sales itself, in persistent X,XXX

reason it’s is we few having CDMO this crowded us an space for niche. from factor kind ago differentiating the kind of because that and years went of is a kind The a of fleet into space interesting

is the manufacture have other differentiating good but needs in the We is The a we them, just couple which of feature players what fine. drug. a space, market don’t that very

you know to for have the Testing business, negotiating into is do We someone develop back that molecule us. ended We of prices, us can’t which our you able out to find maybe pivoting tolerate be We trust. the the of of speed how is some like or because kind were Biologics and give sending this for we it saying we you clients up space us. manufacturer to don’t essence. We’d

and test – the development. it the of can can it goes you before molecule it’s the think say can We then do it some goes safe, into discovery to commercialization. before do it we it the work if can goes we all and manufacture as So that into clinic clinic then about molecule, the toxicology into sorry, test now then test we it,

comprehensive but We than we significant competitive – if companies CDMO, bigger competition. we larger gene just and much even they’re if have And pretty So that do a for have and just not distinct and therapy have, have think everything I that broader they holds gives pull-through they’re think this have us we advantage. being portfolio. the us the for true they do. reputation and even portfolio have We a it don’t a bigger than a and don’t cell a

you. Thank

Sure.

Thank you.

will question Suisse. Leonard come with next Credit Our from Dan

line Your is open.

are do customers follow-ups I a How taking with doing to NHP And for dogs? many Derik’s pivoting start there demand the happens, their they actively clients constraints. biopharma to heightened business NHP or concern line question. that you the being in question the about like models recent are the at on any couple clients NHP that NHPs use Thank And to have pigs different what guidance? are FDA of what you. reduces the discriminating supply for with River’s more if NHP as does reconsider Thank that long-term opportunity? finally, needs? is chance, Jim, from Charles And then

Yes. Very easy question. smart answer. to and sophisticated an Not one

way, It’s NHP been always more by because sheer days complex. all it’s given of the complexity species just think the an particularly that complex availability these that the – was I numbers. If and yes. alternative we of there was

with start pig Let’s question. your

you domestically, mostly to we for produce opposed and problem The right could cardiovascular do – one they get have is fair them You and now, amount litters dermatology significant and work. as swine of could and way, by work numbers. a offspring, the

I number just have companies that very at not one it’s a that’s too there of big. sort stage, drug, problems are you is Several bad model. is a classic amount. amount several is small not But And too extraordinary which big, enough is two Number drug and size swine which by use made either. mean, if one, of farm the

to put animals. in they’d So small like it

you a well. using small quite small that as So plus it and it’s that’s the And and And drug. rats, obviously of mice of put use monkeys if in amount years we or years data are years NHP.

undertake FDA theoretically I corner. our the world. and required small It lots is organizations – NHPs and but of that. So which massive we long-term the not operation, done usually utilization just of around and elevation clients, solution, a animal comparable around rat, by then is a it’s would FDA accepted by The the model, to would the swine have a that breeding a work say by you’d have

change. to unlikely that’s So

you really available, that the essence they’re if the think And but is of safety. not I question your well, the of what as the what happens. protector FDA interesting, know public that’s

they So or complicated and mentioned won’t artificial anything human do to I safety, proteins of human biologics impair drugs proteins.

you that really want closely something is as aligned human so with being possible. And a

significant – the would you demand? animals of opens that of That reduce out I it up. don’t the Cambodia a that never question to FDA per And mean, let’s host couldn’t study be Probably accept would beg pivot that. if drug? approve the to that. they significantly accept case enough so not. would pivot don’t overnight And model. animal – do data the the than They know they see would have did to of numbers take I that, worst now. answer if Maybe. enough to another give significant I them smaller So

them in there initial not because it’s not think animals and logged breed countries, really the So animals about use are world to And of high are call, in again, the pests aren’t. where I whole there oversight. are this think There it’s animals typically we the been literally animals question, these and and demand The are as enough and back And good your think stock. provided like are well-run available. test, farm, the available we quality. enough to to through get have on they take the we it’s These that have satisfy to use, like this go animals farm I’ve in, just – they available. we we then

wild. they’re So

then generation, occasionally second but And second sell generation. usually the we the the first,

genetic viral their So are clean, you bacteriological to – the were it profiles animals and an be. as as we’ve to want opportunity it are and ensure had and

I support the at that And trust now. know our frame, we short-term are how say, responsibility over the how needs we we it, would next doesn’t that of satisfy about talk be, happen daily would – go don’t time let’s alternative the me, five – right So may what any But our models, we clients. years.

that animals think we’re in seriously the quite these and hopeful do the it we NIH that support like weigh us how about analysis, do. I – will FDA So are, important final work and organizations the

animals ensure basis, so available. are long-term these in a And

I’d better better follow-up, more you be a isn’t but test. Thank to And parentage that this that, help perspective. than can It’s Ames that. the if showing you could able to for just quick I NHPs? love Presumably, understand of ask for complicated a me complexity XXXX understand

It’s – Yes. think complicated. don’t that all I it’s

of genetics. animals It’s just depending velocity many the quickly do is more scale business. your you that You enough And how are doesn’t want how The actual on proving actually they assays genetic tested. of available. speed, so are scale you’re trivial. just issue that the of sort impede enough And a also – large it there do the on

So we’re hopeful.

We’re speaking now. organizations a right few to

We’re we technology enhance hopeful be the it do faster. can able that to to

be issue just good for want And that’s be with would speed that of clients. They the it. good I that think – us, is So folks. regulatory for would an our proof

that Thank perspective. Appreciate you.

Sure.

Thank you.

Our JPMorgan. Woodring next with question Casey come will from

Your open. line is

Hi, thanks for question. taking my

downside guess, the for any available? your maybe booked include that only year just last then in you and through you you’d So pre-supply to that do have existing supply follow-up, that any impact renegotiate more of laid XXXX? way pricing as to your supply curious, that there out entering XXXX run offset? a with is will this downside go crunch your range how from think much for Thank headwind that price had work NHPs? there’s table max Or does to I XX% XXXX? back Is just of be And year? assume Does NHP case you. you

Yes.

I’m away XXXX. to stay going So from

and to Just this of don’t unfold in new year to animals. terms – access away, is how know going it’s too far we

to the based which, be going Fish months for range of And know the believe away. conversations than what our case. upon worst XX course, today the so it with the upon hard to others everything to close of that will based – and it’s close yes, will guidance and and supply is and call We more accommodates year, have to next we the best case Wildlife we and that out now be sort

pretty we’re that. with so And comfortable

that definitely just we year what to do as escalating in inflationary this unclear It points the sort a last this and our year of price like costs kind quite cover be really point in base of might genre. half feels not we to demand. meaningful point I work of for to accommodate back of for continue but lack to don’t of It know. had at get that view XXXX we So shareholder to our The escalate. pricing from the prices. for

to think much But the power we for only But be wouldn’t I significantly increasing may costs paid that go and animals by our of do think we have the can we small I have. the of pricing the cost the if we a up well we dramatically. amount to for clients. complexity need this of work that make up

you. Thank

Our Tim Fargo. next from Daley will with come Wells question

is Your open. line

Thanks. Great.

First, RMS. on ask I wanted to

any So for guidance are providing for secondly, updates or of a any average? the you, no intra-quarter service Jim, your investors exports Does in resumption to developments dynamics? on DSA. divergence the above guidance yes, below few be within NHP the then China the you organic assuming quick RMS regarding growth versus U.S.? And Will segment assume you NHP in product the to year,

the Safety just follow Where sit meaningful there Dan’s a first you. due mid- synthetic is to models? Assessment to Modernization market on And to any quick FDA question risk to today, Act. you addressable the on long-term Thank

Wow, four-part.

are is and we they the first to they the available to the that were extent available Modernization intentioned and own So, I And Act to that would would be and say pointing alternatives viable. well company those is FDA technologies viable.

limited in It’s XX well. when the see we bought was last them. the that or to I We technology one clearly there’s It quite done invest non-animal vitro now. replace think in based to company We animal very an them right try technologies years. in required. that FDA

the decision aren’t. it to XX But assume ago, years I remember technologies, made there I when now other there’d by many and I be simply buy

of means well or will happen. less animals, and So animal Act assays I towards vitro, FDA more sophisticated it’s early the pointing that of sort Modernization that while think in models, are some

to to the of new early toxicology. in going an decide one used machine an you’re AI phase trials don’t you whether and drug the potentially work and I how to to and as – old in more the is give see think well know learning data likely indication utilization minimally as I discovery

ignore believe for hear I I is the we’re don’t hear it, We opening We it. up again don’t hearing know why it. totally that month by and way. saying – who’s exports. it. month China don’t know I every every I

know, is Europe animals of would them, at to It’s any lots hard have give odds would China but potentially edge, probably be monkeys. up imagine the again. what at but scenario open access They they U.S. that with more So might that least and don’t I the now. right to

and our assumptions we’re and available for have certainly that them guidance we of us. So, assuming plan for don’t all

would question can’t another imagine I updates give – DSA. on had You oh, that we inter-quarter

into X% leave long business really since is digits China business, for would And really that’s laughing We’ve been high I’m right I years it’s It’s it’s We So, got fiscal been it single a on time. now. that’s well. America well. best That’s doing happened. in moved of that. got the rocking the did We’ve of XXXX. sort RMS North a only doing up because at genre. this kind

So as it happened XXXX and well. XXXX we imagine

well. business business, doing with we model year made genetically doing well acquisition CRADL This is last particularly particularly the engineered also it’s

And of provides price do. It’s happily we services are own a those us. dependent – see so get level we always Clients animals their really that opportunity pretty in on much been produces We businesses. good take nobody the or to share.

stronger which So the business continually geographies in participate. much all the pretty we of in feels

particularly having to work I competitors, time, of through our infrastructure had because Some don’t of COVID. rough know, a COVID, enough

business. financial Research issues been they’ve Model I some had are the think in – and well as them of some only

had pressure of think on they’ve I lot a So, them.

good really feel we So,

potential in how rate margin growth business, good operating it up its and about feel potential about that its and really ended XXXX.

Great. Thanks.

the And multi there. sorry part for

All right.

Thank you.

next Windley Our will question with come Jefferies. from Dave

Your line is open.

taking I questions. Hi to of one for my Jim, ask good morning. Thanks availability. wanted on kind

framing a need us You you of are to kind test and you earlier you touched a give it that starting if from this area? about to your assay the could Or but validate of as I wondered of it in repurpose kind test. in the answers exists, the whether one you is think scratch?

facilities of research NHPs. I opportunity access NIH, to for leverage And primate that those think kind U.S. used with primates? terms establishing availability consideration then in more are colonies what for you and/or of have wonder I to working broadly, mostly to there any of given domestic is longer-term but

colony And a it. we’ve is good many know we discussed I domestic really did Dave. Yes. I one, think that tell you once. question times how The can’t it you

The cash brutal of proof we up out. got Dave, the monkeys hurricane, luck long had hurricane of the domestic a a bad – which a over the Southern bunch So, like bunch for It’s grew in have was closures really ago, It’s this built just extraordinarily was negative – time at it the I though of a a having we [ph] a significant set remember drop. flow was expense project actually and time even colony in Florida. facility decade. the of

with it. crazy it’s So you have expensive One two problems is now.

a the question could was, us federal underlying think your I they this? can and critical go you to government It help say, you resource. is with national would. probably And

of So out of take would take financial it, forever. the some sting but it would that still

talking We’re the it end this what and about And can do forever. we just of between now would be year.

just practical it’s not it’s a So – approach.

both. to large not be set it’s question can are a is on tests think both. utilized I There test, are that current but the scale. On answer very The your up

partner So, them or scale scale a we up have up. to find them to

to can we really their So quality is so way obviously, that got have minimally unequivocal that And more for, that with own our talk or sophisticated faster is and do results. one of test we’ll science us with help two they refine particularly labs. of do a hoping began the we’re can you that more, throughput the collaborators to in the What that. we better

our in Dave, around know, the have labs world you all As facilities. we big

capacity know this capable just really really people that good We to would do and of have ahead work. get how we So it. like would to

So a work as of it’s progress we kind literally speak. in

We’re be working have and of even and much yet minimally that potentially something something on. will standard we new than kind better that’s not I’m as so speed new care something that would – confident the accuracy. relatively about cost and

and And meaningful and partner, progress share you have an we’ll update that as with we appropriate folks is. what base, well. relevance over our that’s we to So, all the shareholder that, if on the we’ll we’re you our if partners of think

to and to primary needs the understand I the scale be effort. it breadth mentioned an solve you to for kind apply of the to the mean I U.S. Cambodia up if parentage up with industry Do get Certainly opposed of your just with validate all the thing makes And But great. to could comfortable of kind supplier the, of your is you on are kind – That’s Cambodia? to I problem. KF of sense your see follow collaborative guess, that. to this you industry as purposes, whole Or kind in government in needing case? of

call certainly even certainly think we – and I an our it’s industry the you can if for eventually, you clients, if good mean, do could they industry an industry. are for I what

use ones big would if the Cambodian couple the it think are similar offsprings. players a some show who whole moms I are and be a could source, smaller if to who good really of they the and and then there are methodology

successful, be we’re about it. selfish if won’t So we

were now, we’re the we work think the we landscape our anybody to scale I unlikely besides because and advice them they so and really like with really principal again, take well. know counsel at just which well. We they our the see supplier right way

quite are we us. with So, that work confident

I Wildlife XXX% with competition. start that then that with We the we share what with We’ll maybe share show share. supplier. accomplished. We don’t We’ll that. work to so edge. our care. we’ve And them. And can We’ll nice be have can and will don’t our Fish offer

here resourced just want we industry to the So and companies well access biopharmaceutical that be to have

well can for do work them. the

Chinese between given view. of much be future, – U.S. sort and genetic the it’s data are the think similarity quite ones. Cambodian just – of for and So that the the background reliant And will for monkeys just better do point the the research I quite Cambodia on foreseeable providers

that It’s how that’s we So even care. don’t see get similar. competition maybe unfolding. they there possible our will I it do something first. And

with of just think, deal the viewpoints we scale I going way and just because not a and capabilities we have working to think, suppliers them spend the and We’re I a different, time, lot government. and with

other’s And So to to quickly. may we support, to think I quite have do it talk alone. while do get them have think and this I each we we

Good that. with And the luck Understood. right. All perspective. for thanks

Sure, Dave.

this Thank and Call. today’s gentlemen, disconnect. may for our Charles allotted Quarter time Year Thank now for have and reached Earnings you. XXXX and River Ladies Full does conclude Laboratories you we Fourth your and participation, you questions,