CRL · 10-Q · 2026Q2 · Full report
Operating Margin Drivers
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. · 2026-08-05 · Importance 64 · Surprise 56 · Contradicted
Six-month operating income increased 37.2% to $239.8 million and operating margin expanded 330 basis points to 12.0% from 8.7%. Second-quarter operating income increased 19.7% to $119.9 million and operating margin expanded 220 basis points to 11.9% from 9.7%. Six-month RMS margin increased 200 basis points to 20.6%, DSA margin increased 110 basis points to 19.0%, and Manufacturing margin increased 2,880 basis points to 29.7%. Margin improvement was driven by the $38.5 million Wilmington sale-leaseback gain, lower amortization, lower legal and restructuring costs, and the CDMO divestiture benefit, partly offset by lower revenue and higher acquisition, integration, and divestiture costs.
Key facts
- Collective cost savings initiatives expected to generate approximately $300 million in cumulative, annualized cost savings by the end of 2026. source
- Other expense, net for the six months ended June 27, 2026 was $(161,540) thousand compared to $(12,057) thousand in the prior-year period, due principally to the $181.7 million loss on the CDMO and Cell Solutions Divestiture; partially offset by a $16.9 million gain in fair value of life insurance policies and $10.0 million of venture capital and strategic equity investment gains, net of impairments in 2026. source
- Manufacturing operating income for the six months ended June 27, 2026: $112,445 thousand, an increase of $109,004 thousand compared to $3,441 thousand in the prior-year period; Manufacturing operating income % of revenue was 29.7% vs 0.9% prior-year. source
- Manufacturing operating income for the three months ended June 27, 2026: $65,606 thousand, an increase of $53,545 thousand or 444.0% compared to $12,061 thousand in the prior-year period; Manufacturing operating income % of revenue was 34.9% vs 6.0% prior-year. source
- For the six months ended June 27, 2026, operating income was $239.8 million and operating income as a percentage of revenue was 12.0%, compared to $174.8 million and 8.7% respectively in the corresponding period of 2025. source
- For the three months ended June 27, 2026, operating income was $119.9 million and operating income as a percentage of revenue was 11.9%, compared to $100.1 million and 9.7% respectively in the corresponding period of 2025. source
- More than $175 million of the expected cost savings benefitted fiscal year 2025. source
- During the three and six months ended June 27, 2026, Charles River recorded a loss on the CDMO and Cell Solutions Divestiture of $63.7 million and $181.7 million, respectively, within Other (expense) income, net. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | negative | realized | -18.1% | Other expense, net for the six months ended June 27, 2026 was $(161,540) thousand compared to $(12,057) thousand in the prior-year period,… |
| operating_income | positive | probable | +14.9% | Collective cost savings initiatives expected to generate approximately $300 million in cumulative, annualized cost savings by the end of… |
| operating_income | positive | realized | +10.9% | Manufacturing operating income for the six months ended June 27, 2026: $112,445 thousand, an increase of $109,004 thousand compared to… |
| operating_income | positive | realized | +6.5% | For the six months ended June 27, 2026, operating income was $239.8 million and operating income as a percentage of revenue was 12.0%,… |
| net_income | negative | realized | -6.3% | During the three and six months ended June 27, 2026, Charles River recorded a loss on the CDMO and Cell Solutions Divestiture of $63.7… |
| operating_income | positive | realized | +5.3% | Manufacturing operating income for the three months ended June 27, 2026: $65,606 thousand, an increase of $53,545 thousand or 444.0%… |
| operating_income | positive | realized | +2.0% | For the three months ended June 27, 2026, operating income was $119.9 million and operating income as a percentage of revenue was 11.9%,… |
| net_income | positive | realized | +1.7% | Other expense, net for the six months ended June 27, 2026 was $(161,540) thousand compared to $(12,057) thousand in the prior-year period,… |
| operating_income | positive | realized | +1.1% | DSA operating income for the six months ended June 27, 2026: $228,274 thousand, an increase of $11,541 thousand or 5.3% compared to… |
| net_income | positive | realized | +1.0% | Other expense, net for the six months ended June 27, 2026 was $(161,540) thousand compared to $(12,057) thousand in the prior-year period,… |