Charles River Laboratories International, Inc. (NYSE:CRL) Q4 2022 Earnings Call Transcript

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Jim Foster: Yes. So I’m going to stay away from 2024. Just €“ it’s too far away, and we don’t know how this year is going to unfold in terms of access to new animals. And so the supply will be €“ yes, it’s hard to call what it will be going to next year, which, of course, is more than 10 months away. We believe based upon everything we know today and based upon our conversations with the Fish and Wildlife and others that the guidance range that we have out and now accommodates for sort of close to the best case and close to the worst case. And so we’re pretty comfortable with that. So we like our shareholder base to just sort of get in that genre. The price points for work in kind of the back half of this year and definitely for 2024 continue to escalate.

It might not be quite at the escalating point that we had last year to really cover our inflationary costs but meaningful prices. I don’t know. It feels unclear as to what we do from a pricing point of view to accommodate for this lack of demand. I think we need to be paid well for the complexity of the work we do and for the animals that we have. But we may have a small amount of pricing power only if the costs go up dramatically. But I wouldn’t think that we can make up much of this by significantly increasing the cost to our clients.

Operator: Thank you. Our next question will come from Tim Daley with Wells Fargo. Your line is open.

Tim Daley: Great. Thanks. First, I wanted to ask on RMS. So within the RMS organic growth guidance for the year, are you assuming any divergence in product versus service above or below the segment average? And then secondly, a few quick yes, no for you, Jim, on DSA. Will you be providing intra-quarter updates to investors regarding developments in the NHP dynamics? Does your guidance assume any resumption of China NHP exports to the U.S.? And just a quick follow on to Dan’s first question on the FDA Modernization Act. Where you sit today, is there any meaningful mid- to long-term risk to the Safety Assessment addressable market due to synthetic models? Thank you.

Jim Foster: Wow, four-part. So, I would say that the FDA Modernization Act is well intentioned and is pointing to alternatives to the extent that they are available and viable. And we would be the first company to own those technologies were they available and viable. I think that there’s very limited technologies right now. We try to invest in them when we see them. We bought one company in the last 25 years. It was clearly in vitro or non-animal based to replace an animal technology that the FDA required. It’s done quite well. But I remember when I made the decision to buy it many years ago, I assume by now there’d be 20 other technologies, and there simply aren’t. So while the FDA Modernization Act means well and it’s sort of pointing towards less animals, more sophisticated animal models, early or assays that are in vitro, I think some of that will happen.

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