Charles River Laboratories ( NYSE: CRL ) stock fell ~9% on Aug. 3 after the company reduced its FY22 outlook citing headwinds associated with CDMO business, foreign exchange, and interest expense due to the rising interest rate environment.
Q2 non-GAAP EPS rose +6.1% Y/Y to $2.77, beating analysts' estimates, but revenue missed expectations despite rising +6.4% Y/Y to $973.1M.
The company said acquisitions contributed 2.3% to Q2 revenue growth. Meanwhile, divestitures of the Research Models and Services (RMS) operations in Japan (RMS Japan) and CDMO site in Sweden (CDMO Sweden) in October 2021 reduced reported revenue growth by 2.0%.
Revenue for RMS segment increased +5.5% Y/Y to $186.4M; while, revenue from Discovery and Safety Assessment (DSA) segment grew +9.6% Y/Y to $591.9M.
Revenue for Manufacturing segment decreased -1.5% Y/Y to $194.8M.
Outlook :
"However, these robust trends were offset by headwinds from our CDMO business, as well as unfavorable changes in foreign exchange and interest rates, which have significantly intensified over the past two months. We have revised our financial outlook for 2022 to account for these escalating headwinds, resulting in lower revenue growth and earnings per share guidance for the year," said Chairman, President and CEO James Foster.
The company expects 2022 Revenue growth of 9.0% – 11.0%, prior estimate of 13.5% – 15.5%, on reported basis.
Non-GAAP EPS is expected between $10.70 and $10.95, prior estimate of $11.50 – $11.75. Consensus EPS Estimate for 2022 is $11.52.
CRL expects GAAP EPS to be between $7.90 and $8.15, prior estimate range $8.70 – $8.95.
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Charles River stock sinks after FY22 outlook cut on CDMO business, forex, rate hike impacts