Charles River Labs (CRL) Q3 2026 Earnings Report

The call was predominantly positive. The company reported stronger-than-expected revenue, earnings, margins, bookings, backlog, and cash flow; raised full-year revenue and EPS guidance; and described improving biopharmaceutical demand, manufacturing momentum, strategic client expansion, and progress in modernization and scientific initiatives. The main challenges were the RMS decline, continued academic and government funding pressure, limited current pricing power, higher interest expense, and the remaining recovery in early-stage biotech activity.

For 2026, Charles River expects reported revenue decline of 1.5%-2%, organic revenue growth of at least 1.5%, DSA above 2% growth, manufacturing at a mid-single-digit growth rate, and RMS at a low single-digit organic decline; operating margin expansion of approximately 120-150 basis points; non-GAAP earnings per share of $11.35-$11.55, representing 10%-12% year-over-year growth; non-GAAP tax rate of approximately 23%; net interest expense at the upper end of $103 million-$108 million; unallocated corporate costs of approximately 6% of revenue; CapEx of approximately $200 million; and free cash flow of $400 million-$420 million. For the fourth quarter, it expects DSA organic growth at mid-single-digit and manufacturing at high single-digit rates, a modest reduction in the RMS growth rate, continued sequential operating margin improvement of approximately 150 basis points, manufacturing operating margin approaching 40%, and non-GAAP earnings per share growth of approximately 30%-40% year-over-year. For 2027, it expects a gradual improvement from the organic growth rate in 2026, with revenue growth increasing to the targeted 5%-7% range starting in 2028, and operating margin improvement higher than the 75 basis point average through 2030.