Charles River Laboratories Announces Strong Fourth-Quarter and Full-Year 2002 Results and Provides Positive Outlook for 2003
Monday February 3, 5:05 pm ET
WILMINGTON, Mass.--(BUSINESS WIRE)--Feb. 3, 2003--Charles River Laboratories International, Inc. (NYSE:CRL - News) today reported fourth-quarter 2002 income before extraordinary item of $17.5 million, a 58.3% increase over the $11.1 million reported in the fourth quarter of 2001. Earnings per share before extraordinary item rose 50.0% to $0.36 per diluted share from $0.24 per diluted share reported last year. Net income for the fourth quarter was $17.5 million, or $0.36 per diluted share, compared to $8.9 million, or $0.19 per diluted share, in the fourth quarter of 2001. Last year's fourth quarter included an extraordinary loss, net of tax benefit, of $2.1 million for early retirement of debt. Net sales in the fourth quarter were $142.9 million compared to $126.1 million reported in 2001, an increase of 13.4%.
Operating income in the fourth quarter of 2002 rose 38.2% to $31.0 million from $22.4 million in the same period in 2001. The Company's operating margin rose to 21.7% compared to 17.8% achieved in the fourth quarter of last year, reflecting higher sales in both the Research Models and Biomedical Products and Services segments and operating efficiencies resulting from the increased volume.
For 2002, net sales increased 19.1% to $554.6 million from $465.6 million in 2001. Significantly higher sales yielded a gross margin of 37.7% compared to 35.9% last year. Higher sales, operating efficiencies, and the January 1, 2002, implementation of SFAS 142, "Goodwill and Other Intangible Assets," resulted in operating income of $122.3 million, a 35.4% increase over the $90.3 million reported in 2001 and a 22.0% operating margin compared to 19.4% in 2001. Income before extraordinary items was $68.4 million, a 68.2% increase over the $40.7 million reported in 2001 and diluted earnings per share before extraordinary item were $1.42, a gain of 54.3% from the $0.92 per diluted share in 2001.
James C. Foster, Chairman, President and Chief Executive Officer said, "For the fourth quarter and full year 2002, Charles River has again delivered substantial growth in sales, margins, and earnings per share. Our solid and consistent financial performance reflects the leading share position we hold in a number of attractive markets and the strength of the growing drug discovery and development market."
Mr. Foster continued, "We view 2002 as a very positive year, one which has further strengthened the Company and positioned us for continued growth on many fronts. The April 2002 opening of our new Transgenic Services building in Wilmington, Massachusetts, reinforced our position as the world's largest provider of these services, and the building is 50% utilized. Our acquisitions of BioLabs in June and Springborn Laboratories in October added both geographic and customer depth to our drug discovery and development services offerings, and both acquisitions have performed well and in line with our expectations. The proteomics joint venture begun in October added a novel service to our growing portfolio of businesses. The platform is now in place and we expect to begin generating sales in the second quarter of 2003."
Fourth-quarter 2002 net sales for the Research Models segment of the business were $53.6 million compared to $49.4 million last year. The 8.5% gain reflected increased customer demand for animal research models and higher sales of specialty models for pre-clinical drug discovery and development work. Higher sales yielded a gross margin of 39.9% compared to 36.6% in the fourth quarter of last year. The sales increase also generated operating efficiencies which resulted in a 32.0% increase in operating income, to $13.8 million in the fourth quarter with an operating margin of 25.8%, compared to last year's $10.5 million and 21.2%.
Net sales for the Biomedical Products and Services segment rose 16.5% in the fourth quarter, to $89.4 million from $76.7 million in the same period last year. The Company's discovery services business, which includes transgenic, laboratory testing, and contract staffing services, had significant sales growth in the quarter, led by transgenic services. Sales for the development services business, which includes the entire range of pre-clinical drug testing services, also increased due principally to the acquisitions of BioLabs and Springborn Laboratories. Both in vitro products and vaccine support services also reported robust sales growth.
The fourth-quarter 2002 gross margin for the Biomedical Products and Services segment was 35.6% compared to 33.3% achieved in last year's fourth quarter. Operating income for this segment rose 49.4% to $18.4 million from $12.3 million last year and the operating margin increased to 20.5% from 16.0%.
Net interest expense for the fourth quarter was $1.6 million compared to $3.9 million in the fourth quarter of 2001.
Effective January 1, 2002, the Company adopted SFAS 142, the effect of which amounted to $0.02 per diluted share on the Company's fourth-quarter 2002 results and $0.09 per diluted share for the full year.
2002 Results
For 2002, net sales for the Research Models segment of the business were $223.8 million compared to $197.5 million last year. The 13.3% gain reflected increased customer demand for animal research models and higher sales of specialty models for pre-clinical drug discovery and development work. Higher sales yielded a gross margin of 44.2% compared to 40.5% last year. The sales increase also generated operating efficiencies which resulted in a 39.4% increase in operating income to $70.9 million with an operating margin of 31.7%, compared to last year's $50.9 million and 25.8%.
Net sales for the Biomedical Products and Services segment rose 23.4% for the year, to $330.9 million from $268.1 million last year. The Company's discovery services business had significant sales growth, led by transgenic services and contract staffing. Sales for the development services business also increased due principally to the acquisitions of BioLabs and Springborn Laboratories and growth of in vitro products and vaccine support services.
The 2002 gross margin for the Biomedical Products and Services segment was 33.3% compared to 32.5% achieved last year. Segment operating income rose 41.3% to $65.9 million from $46.6 million last year and the operating margin increased to 19.9% from 17.4%.
2003 Outlook
The following forward-looking guidance may be affected by an uncertain economic and political environment in 2003. Guidance is based on current exchange rates and is exclusive of any acquisitions which may occur in 2003.
The Company anticipates that for 2003, net sales will increase by 15% to 17%, due to continued growth in both the Research Models and Biomedical Products and Services segments. The Research Model segment is expected to grow between 12% and 14 % and the Biomedical Products and Services segment is expected to grow between 17% and 19%.
Diluted earnings per share are expected to be in a range of $1.67 to $1.70, reflecting higher sales and operating efficiencies.
For the first quarter of 2003, the Company expects net sales to increase between 13% and 16% due to higher sales in both the Research Models and Biomedical Products and Services business segments. Based on higher net sales and operating efficiencies, consolidated earnings per diluted share are expected to be in a range of $0.39 to $0.41.
(snip) |
