Charles River Laboratories International, Inc., Q4 2088 Earnings Call Transcript

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2009-02-10 09:53:06.0

Tags: Call Transcript, William Blair Co., Earnings, Charles River Laboratories International Inc., Strategy, Management, Seeking Alpha

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And we will go to line of John Kreger with William Blair. Please go ahead.

John Kreger - William Blair

Thanks very much. Jim, you mentioned in your remarks that of your outbred rat business was down giving its tide of the toxicology business. Could you just expand upon that a bit and give us a sense of your model business? What percentage is generally tied to a toxicology work versus other uses?

Jim Foster

It's probably close to half, John, it could be a little bit less than that. That isn’t consistent necessarily from year-to-year, but I think over the long-term we are seeing about half the animals used for discovery and half used to serve development purposes. Obviously, it has an impact, it correlates pretty closely. You should get some relative really indicator, confirmatory indicator that tox is firming up as we see research model purchases strengthen, perhaps quarter in advance or so. And we will get a sense of that for the whole industry. So, it’s a very good guideline for us.

John Kreger - William Blair

Great. And I think, you also said that you were seeing some signs recently in the last few weeks firming up your business. Can you just elaborate a bit, is that coming in, in the form of better orders, fewer delays or perhaps commentary from those client meetings you mentioned?

Jim Foster

Combination of all including levels have been extremely low in the past recent two quarters maybe three quarter’s. And they became increasingly so. And so, it started the quarter slow as well as several of our preclinical locations. We are beginning to see inquiry levels increase substantially or meaningfully at many of our locations. The second quarter as we said in the prepared remarks certainly looks stronger. That's a very good sign. What we don’t know of course, is will that continue to be steady slippage as we saw very much through much of '08, where now that we have inquiry levels so we had booked orders and they continue to slide sometimes from months-to-months and sometimes quarter-to-quarter.

So increase they were up substantially as we were able to close that business and hold on to it. That will serve the combining metric for us. And again given the fact that there are large number of preclinical molecules awaiting development given the fact that the drug industry does for a leaving and given the fact that they didn’t do it much of that in '08 as perhaps they would have liked to or should have, its not yet. They are going to get back to developing them, it's when we believe we are seeing some really strengthening signs that they will do that.

 

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