Jack Wallace: Appreciate it. Thank you.
Jim Foster: Sure.
Operator: Thank you. We’ll take our next question from Josh Waldman with Cleveland Research. Your line is open.
Josh Waldman: Hey, good morning, guys. Thanks for squeezing me in. Just one here on DSA. Jim, I guess I wondered if you could comment on any changes you’re seeing in the competitive landscape and safety assessment? Curious, whether demand fluctuations, cancellations or maybe capacity availability have resulted in any changes in recent discounting levels or the broader competitive landscape?
Jim Foster: We’re not. We are significantly larger, deeper science and a much broader footprint than our competitors. And we also have the connectivity on the other parts of our business, particularly discovery aspects of manufacturing — the manufacturing business. So we’re not seeing any fundamental changes. We have smaller competitors. I would say that without exception, they compete with us primarily and essentially on price. I think they can do an okay, general toxicology study for you, but definitely not an okay complex study for you. And some of them have very small footprints and very limited capacity. So I think we’re holding and taking share. I think we’re getting price when appropriate. I won’t tell you that we never have aggressive pricing.
We’ll get aggressive if somebody’s attacking a big client that we have or we’re bidding on new de novo business. But generally, we feel that over the last few years, we’ve got much better paid for the complexity of our work. So I don’t think the competitive dynamic is going to change. It’s probably a complex, expensive business where you have to have a lot of history for your clients. So appreciate you. So I think folks that know better tend to come to us we’re working hard to have sufficient capacity. So we don’t turn them away. And when I say capacity, I’m talking about staffing and facilities. And not just facilities in one place, but facilities all over the world. So we feel particularly good about our competitive posture in most of our businesses, but I would say particularly in safety.
Josh Waldman: Got it. Appreciate the detail.
Operator: Thank you. We’ll take our next question from Tim Daley with Wells Fargo. Your line is open.
Tim Daley: Great, thanks for fitting me here. So first, just noticed that there wasn’t really a mention this quarter on the call of the recent reorg of the large model, safety tox infrastructure, kind of like quasi-offshoring. So just curious, does that mean we’ve kind of stabilized all that set in place, no more disruptions to top line or profits? And then what was the year-to-date margin headwind from this undertaking, if we were to think about that on the DSA margins specifically?
Jim Foster: So I assume the first part of your question is about NHP disruption that we encountered at the beginning of the year and thought it might be more profound. So all that we can tell you is that we have a large international infrastructure. We have multiple sources of supply, some of which we have an ownership position, some we have JVs, and all of them we have long-term contracts. So we have sufficient numbers of NHPs. I can’t guarantee anything about the future, except to tell you that we are operating in very good harmony with local regulatory authorities. We have sufficient numbers of very high-quality healthy animals from multisources. We’ve had no disruption to and with our clients are really pleased with the way we’ve been handling it.
We will have the same assumption in terms of stability of NHP supply as we move into next year for sure, and unless something case happens in the next couple of months, which we don’t anticipate. So your question was a little was looking for some guarantees. We don’t anticipate any disruption, and we’re doing everything we can to ensure that we don’t have disruption and we had disruption at the beginning of the year as we think through no fault of our own, as our set of circumstances. But right now, things are very stable from a client support point of view. I take the second part of that question.
Flavia Pease: The second part in terms of impact to margin, I think the DSA margin, both on the quarter and on a year-to-date basis, has been strong. And so as Jim said, I think we’ve done — our teams have done a tremendous job on making sure that we navigated the situation, and there was practically no impact into the margin of any supply movement that we made to accommodate the demand.
Tim Daley : All right. Got it. That’s really helpful. And Jim, just a follow-up here. On the supply side of things, in the 2Q 10-Q filing, there was a mention of a post quarter end acquisition of the majority stake of a prior JV large animal model supplier in the DSA business. I think kind of grossing it up gets to almost $0.5 billion valuation for that entity. So could you just please provide us some detail on that? Location, plan, strategy, just some help there would be great. Thank you.
A – Jim Foster: Sure. So I can’t be too specific since it hasn’t closed yet. But the first tranche, we bought. So we own a big piece of this business. So very high-quality source of supply that we worked with for years. I quite confident that the rest of it will close, we will essentially own that site. And obviously, we will participate in running the site and hopefully, expanding it over time. And that’s just — that’s another way to ensure the availability of high quality — it’s a particularly good location. We’ll be able to give you clarity on that, hopefully, in the not-too-distant future, who it is, where it is and what the positive ramifications are.
Tim Daley: Got it. Look forward to it. Thanks.
A – Flavia Pease: I think that was probably the last question we had. Before we wrap up, I do want to go back to Derik’s question or Matt on the $3 per share of NHP pricing, as we suggested. Because that would mean that almost all of the $235 million of cumulative benefit of NHP pricing that we share with all of you over the past 3 years would have dropped down to OI and EPS. And that — it’s just not true because our costs from NHP suppliers also have gone up meaningfully over the last 3 years. And so we’re not going to provide details on how much they increase for competitive reasons, as you might imagine. But I can assure you that the costs have come up meaningfully. So the math on the $3 per share, I think, overstates that significantly.
Operator: Thank you. We have no further questions in queue. I will turn the conference back to Todd Spencer for closing remarks.
Todd Spencer: Great. Thank you for joining us on the conference call this morning. We look forward to seeing you at upcoming investor conferences and have a great day. Thank you. This concludes the call.
Operator: Thank you. That does conclude today’s Charles River Laboratories Third Quarter 2023 Earnings Call. Thank you for your participation. You may now disconnect.
