Charles River Laboratories
) reported fourth quarter 2012 earnings (excluding special items)
of 64 cents per share, beating the Zacks Consensus Estimate of 60
cents. Earnings declined 7.2% from the year-ago earnings of 69
cents due to lower revenues.
Charles River's net sales of $280.1 million decreased 3.7%
year over year in the fourth quarter of 2012.
Net sales missed the Zacks Consensus Estimate of $283 million.
The fourth quarter of 2011 had an additional week, which reduced
reported sales growth by approximately 4.3% in the fourth quarter
Foreign currency movements negatively impacted sales by 0.7%
in the fourth quarter of 2012.
For 2012, earnings (excluding special items) came in at $2.74
per share, up from $2.56 in 2011 and easily beating the Zacks
Consensus Estimate of $2.70 per share. Net sales decreased 1.1%
to $1.129 billion in 2012, marginally missing the Zacks Consensus
Estimate of $1.134 billion.
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Quarter in Detail
Charles River operates through two segments - Research Models
& Services (RMS) and Preclinical Services (PCS).
Revenues from the RMS segment were $171.8 million in the fourth
quarter, down 5.8% from the prior-year period. As mentioned
above, an additional week in the fourth quarter of 2011 reduced
sales growth in this segment by approximately 4.1% and foreign
currency movements reduced it by an additional 1.4% in the fourth
quarter of 2012.
Excluding these two factors, RMS segment revenues declined 0.3%
year over year. The decrease in RMS segment was due to lower
sales of research models, which was partially offset by stronger
sales for the Endotoxin and Microbial Detection (EMD) business,
which included the acquisition of Accugenix.
Revenues from the PCS segment were $108.3 million in the fourth
quarter, flat year over year. An additional week in the fourth
quarter of 2011 reduced sales growth in this segment by
approximately 4.6% while foreign currency movements increased
sales growth by 0.4% in the fourth quarter of 2012. Excluding
these two factors, PCS segment revenues increased 4.0% year over
year driven by increased sales to strategic relationship clients
and mid-tier clients.
During the fourth quarter of 2012, Charles River repurchased
shares worth $18.6 million (approximately 483,000 shares)
subsequent to which the company has $54.8 million remaining under
its $750 million repurchase program.
Outlook for 2013
Charles River updated its guidance for 2013. The company
continues to expect adjusted earnings per share between $2.80 and
$2.90 per share. This guidance excludes extraordinary charges
primarily related to the company's PCS facility in Massachusetts.
The Zacks Consensus Estimate of $2.88 per share is towards the
upper end of the company's guidance range.
Charles River upped its 2013 net sales guidance. The company will
no longer be affected by foreign exchange translations. Hence,
sales growth is now expected to be around 4.0% - 6.0% (previous
projection: 3.5% - 5.5%).
Currently, Charles River carries a Zacks Rank #3 (Hold). Right
Parexel International Corporation
) look better placed with a Zacks Rank #2 (Buy).