Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. The following discussion contains forward-looking statements. Actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in Item 1A, “Risk Factors” included elsewhere within this Form 10-Q. Certain percentage changes may not recalculate due to rounding.

Overview

We are a leading, full service, non-clinical global drug development partner. For over 75 years, we have been in the business of providing the research models required in the research and development of new drugs, devices, and therapies. Over this time, we have built upon our original core competency of laboratory animal medicine and science (research model technologies) to develop a diverse portfolio of discovery and safety assessment services, both Good Laboratory Practice (GLP) and non-GLP, that supports our clients from target identification through non-clinical development. We also provide a suite of products and services to support our clients’ manufacturing activities. Utilizing our broad portfolio of products and services enables our clients to create a more efficient and flexible drug development model, which reduces their costs, enhances their productivity and effectiveness, and increases speed to market.

Our client base includes major global pharmaceutical companies, many biotechnology companies; agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies; contract research and contract manufacturing organizations; and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world.

Segment Reporting

Our three reportable segments are Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing).

Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell Solutions which provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

Our DSA segment is comprised of Discovery and Safety Assessment services. We provide regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, including in vitro (non-animal) and in vivo (in research models) studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development.

Our Manufacturing reportable segment includes Microbial Solutions, which provides in vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO).

Fiscal Quarters

Our fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end.

U.S. Government Investigations into the Non-Human Primate Supply Chain

On February 17, 2023, we received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into our conduct regarding several shipments of non-human primates from Cambodia. That investigation remains ongoing and we are continuing to cooperate with the investigation. As also previously disclosed, a parallel civil investigation is being undertaken by the DOJ and USFWS. We are also cooperating with that investigation, and although we continue to dispute the merits of certain positions taken by the DOJ

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

and USFWS in the civil investigation, we have discussed a potential resolution of that matter with the DOJ and USFWS. Those discussions are ongoing. Although we maintain a global supplier onboarding and oversight program incorporating risk-based due diligence, auditing, and monitoring practices to help ensure the quality of our supplier relationships and compliance with applicable U.S. and international laws and regulations, including the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), in connection with the civil investigation, we have voluntarily suspended future shipments of non-human primates from Cambodia to the United States until such time that we and USFWS can agree upon and implement additional procedures to reasonably ensure that non-human primates imported from Cambodia are purpose-bred. We continue to care for the Cambodia-sourced non-human primates from certain shipments in the United States. Due to a number of factors, including the age of these NHP’s, during the fourth quarter of fiscal year 2024, we recorded a charge of $27 million to costs of products sold to reflect the reduction in carrying value of this inventory to zero. On May 16, 2023, we received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting us to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and we are cooperating with the requests. Our Audit Committee has retained counsel to conduct an independent investigation into certain issues raised in the investigations, and that work is ongoing. We are not able to predict what action, if any, might be taken in the future by the DOJ, USFWS, SEC or other governmental authorities. None of the DOJ, USFWS or SEC has provided us with any specific timeline or indication as to when these investigations or, specific to the DOJ and USFWS, discussions regarding resolution and future processes and procedures, will be concluded or resolved. We cannot predict the timing, outcome or possible impact of the investigations, including without limitation any potential fines, penalties or liabilities.

Recent Government Actions

In February 2025 the U.S. government announced plans to enact increased tariffs on Canada, China and Mexico, later broadening the increase to various countries within Europe, Africa and Asia. Subsequently, in April 2025, the U.S. formalized actions to delay the effective date of certain tariffs. As of the date of this report, a number of new tariffs remain in effect, including tariffs between the U.S., and countries from which we obtain significant supply, such as Vietnam, Mauritius and China. The extent and duration of these tariffs and the resulting impact on macroeconomic conditions and our business are uncertain and may depend on various factors including, but not limited to, negotiations between the U.S. and affected countries, reciprocal or retaliatory actions imposed by other countries, tariff exemptions, negative sentiment toward U.S. companies and products, and the availability of lower cost inputs that may be sourced domestically. While we plan to offset most of the estimated tariffs by passing along these higher costs, we will continue to evaluate the nature and extent of the impacts to our business and our operating results.

In April 2025, the U.S. Food and Drug Administration (FDA) announced plans to launch a pilot program to reduce animal testing in preclinical safety studies with scientifically validated cell-based and new approach methodologies (NAMs), such as organ-on-a-chip systems, computational modeling, and advanced in vitro assays. We support the FDA’s announcement as we believe the program aligns with the vision previously outlined in the FDA Modernization Act 2.0 and aims to develop a clearer regulatory pathway to streamline the drug development process and safely advance innovative technologies, including alternatives to the current animal based development process. As a leader in preclinical drug development, this vision is consistent with our long-standing mission to drive greater efficiency in the drug development process, enhance scientific innovation, and promote the responsible use of animals in biomedical research. We are continuously evaluating innovative approaches in drug development and have invested in virtual control groups for safety assessment studies and partnerships utilizing AI technologies to reduce animal use. Further, in April 2024, we launched our own Alternative Methods Advancement Project (AMAP), which is an initiative dedicated to developing alternatives to the use of animal testing within the drug development process. We remain committed to continuing to collaborate with regulatory agencies, including the FDA, the biopharmaceutical industry and other stakeholders, to help develop, validate, and implement an efficient process for our clients’ regulatory submissions that support the use of new, non-animal based technologies.

Global Market Environment

We are continuing to see a cautious spending environment from our client base, principally within our DSA segment related to our global biopharmaceutical and biotechnology clients, as they reassess their budgets, reprioritize their drug pipelines, and manage their cost structures. Despite these challenges in the current macroeconomic environment, DSA backlog remained steady at $2.0 billion as of March 29, 2025 and December 28, 2024, respectively.

In response to recent trends observed across each of our businesses in the global market environment, we have undertaken and will continue to implement restructuring actions at various locations across North America, Europe and Asia. This includes workforce right-sizing actions, resulting in severance and transition costs; and costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the company, resulting in asset impairment, accelerated depreciation, and other site consolidation charges. During fiscal year 2023, we began taking restructuring actions as a result of these emerging business trends. We incurred restructuring charges of $23.8 million during the three months ended March 29, 2025 and $107.0 million and $29.7 million during fiscal 2024 and fiscal 2023, respectively. We expect that these

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

effectuated actions, as well as other upcoming planned actions designed to optimize our global footprint to drive greater operating efficiency, will result in approximately $225 million of cost savings on an annualized basis, of which approximately $175 million will impact fiscal year 2025.

Results of Operations

Consolidated Results of Operations and Liquidity

Revenue for three months ended March 29, 2025 decreased $27.4 million, or 2.7%, to $984.2 million compared to $1,011.6 million in the corresponding period in 2024. The decrease in revenue was primarily due to our DSA business, which experienced lower volume driven by continued cautious client spending as a result of the biopharmaceutical demand environment, and to a lesser extent driven by declines in both RMS and Manufacturing, when compared to the corresponding periods in 2024.

For the three months ended March 29, 2025, our operating income and operating income as a percentage of revenue were $74.7 million and 7.6% respectively, compared to $126.0 million and 12.5% respectively, in the corresponding period of 2024. The decreases in operating income and operating income as a percentage of revenue for the three months ended March 29, 2025 were primarily due to the revenue impacts described above coupled with accelerated amortization expense recognized as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers, restructuring activities, including asset impairments, and other site consolidation costs, and third-party legal costs in our DSA reportable segment.

Net income available to Charles River Laboratories International, Inc., common shareholders decreased to $25.5 million in the three months ended March 29, 2025, from $67.3 million in the corresponding period of 2024. The decreases in net income available to common shareholders were due principally to the decreases in operating income described above.

During the three months ended March 29, 2025, our cash flows from operations were $171.7 million compared with $129.9 million for the same period in 2024. The increase was primarily driven by lower payments of variable compensation and favorable timing of payments to our suppliers and vendors, partially offset by higher purchases of inventory to support our DSA reportable segment.

Three Months Ended March 29, 2025 Compared to Three Months Ended March 30, 2024

Revenue and Operating Income

The following tables present consolidated revenue by type and by reportable segment:

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change
			(in thousands, except percentages)
Service revenue			$	797,923					$	816,862					$	(18,939)					(2.3)		%
Product revenue			186,245						194,698						(8,453)						(4.3)		%
Total revenue			$	984,168					$	1,011,560					$	(27,392)					(2.7)		%

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
RMS			$	213,073					$	220,907					$	(7,834)					(3.5)		%				(1.0)		%
DSA			592,609						605,452						(12,843)						(2.1)		%				(0.6)		%
Manufacturing			178,486						185,201						(6,715)						(3.6)		%				(1.4)		%
Total revenue			$	984,168					$	1,011,560					$	(27,392)					(2.7)		%				(0.9)		%

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

The following table presents operating income by reportable segment:

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
RMS			$	43,605					$	43,149					$	456					1.1		%				(2.0)		%
DSA			93,952						114,839						(20,887)						(18.2)		%				2.8		%
Manufacturing			(8,620)						33,681						(42,301)						(125.6)		%				(1.2)		%
Unallocated corporate			(54,268)						(65,692)						11,424						(17.4)		%				(0.4)		%
Total operating income			$	74,669					$	125,977					$	(51,308)					(40.7)		%				1.8		%
Operating income % of revenue			7.6		%				12.5		%										(490) bps

The following presents and discusses our consolidated financial results by each of our reportable segments:

RMS

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
Revenue			$	213,073					$	220,907					$	(7,834)					(3.5)		%				(1.0)		%
Cost of revenue (excluding amortization of intangible assets)			139,296						140,925						(1,629)						(1.2)		%
Selling, general and administrative			24,206						30,893						(6,687)						(21.6)		%
Amortization of intangible assets			5,966						5,940						26						0.4		%
Operating income			$	43,605					$	43,149					$	456					1.1		%				(2.0)		%
Operating income % of revenue			20.5		%				19.5		%										100 bps

RMS revenue decreased $7.8 million primarily driven by a decrease in large research model product revenue due to timing of sales, lower Cell Solutions product revenue, and the effect of changes in foreign currency exchange rates; partially offset by an increase in small research models product revenues across all geographic areas principally due to price.

RMS operating income increased $0.5 million compared to the corresponding period in 2024. RMS operating income as a percentage of revenue for the three months ended March 29, 2025 was 20.5%, an increase of 100 bps from 19.5% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue increased primarily due to lower charges related to restructuring activities, including severance, asset impairments, and site consolidation charges; partially offset by the impacts of the RMS revenue drivers described above compared to the corresponding period in 2024.

DSA

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
Revenue			$	592,609					$	605,452					$	(12,843)					(2.1)		%				(0.6)		%
Cost of revenue (excluding amortization of intangible assets)			420,143						417,912						2,231						0.5		%
Selling, general and administrative			65,293						56,859						8,434						14.8		%
Amortization of intangible assets			13,221						15,842						(2,621)						(16.5)		%
Operating income			$	93,952					$	114,839					$	(20,887)					(18.2)		%				2.8		%
Operating income % of revenue			15.9		%				19.0		%										(310) bps

DSA revenue decreased $12.8 million primarily due to lower volume driven by continued cautious client spending as a result of the current demand environment and the effect of changes in foreign currency exchange rates.

DSA operating income decreased $20.9 million compared to the corresponding period in 2024. DSA operating income as a percentage of revenue for the three months ended March 29, 2025 was 15.9%, a decrease of 310 bps from 19.0% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, restructuring activities, including asset impairments and site consolidation charges, and certain third-party legal costs incurred in connection with the investigations by the U.S. government into the non-human primate supply chain compared to the corresponding period in 2024.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Manufacturing

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
Revenue			$	178,486					$	185,201					$	(6,715)					(3.6)		%				(1.4)		%
Cost of revenue (excluding amortization of intangible assets)			106,997						107,880						(883)						(0.8)		%
Selling, general and administrative			34,032						32,847						1,185						3.6		%
Amortization of intangible assets			46,077						10,793						35,284						326.9		%
Operating income (loss)			$	(8,620)					$	33,681					$	(42,301)					(125.6)		%				(1.2)		%
Operating income (loss) % of revenue			(4.8)		%				18.2		%										(2,300) bps

Manufacturing revenue decreased $6.7 million primarily due to decreased revenue in our Biologics Solutions business, driven by decreased demand for CDMO services and Biologics Testing, and the effect of changes in foreign currency exchange rates; partially offset by an increase in our Microbial Solutions business driven by higher product revenue associated with endotoxin product revenue and identification services revenue.

Manufacturing operating income decreased $42.3 million compared to the corresponding period in 2024. Manufacturing operating income as a percentage of revenue for the three months ended March 29, 2025 was (4.8)%, a decrease of 2300 bps from 18.2% for the corresponding period in 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, accelerated amortization expense as a result of a decrease in the remaining useful life of certain client relationships due to a loss of key customers within the CDMO business, and restructuring activities, including severance and site consolidation charges, compared to the corresponding period in 2024.

Unallocated Corporate

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change						Impact of FX
			(in thousands, except percentages)
Unallocated corporate			$	54,268					$	65,692					$	(11,424)					(17.4)		%				(0.4)		%
Unallocated corporate % of revenue			5.5		%				6.5		%										(100) bps

Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The decrease in unallocated corporate costs of $11.4 million, or 17.4%, compared to the corresponding period in 2024 is primarily due to lower employee compensation and benefits related costs compared to the corresponding period in 2024. Costs as a percentage of revenue for the three months ended March 29, 2025 were 5.5%, a decrease of 100 bps from 6.5% for the corresponding period in 2024.

Other Income (Expense)

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change
			(in thousands, except percentages)
Other income (expense):
Interest income			$	1,404					$	2,202					$	(798)					(36.2)		%
Interest expense			(27,884)						(35,001)						7,117						(20.3)		%
Other income (expense), net			(12,211)						5,833						(18,044)						(309.3)		%
Total other expense, net			$	(38,691)					$	(26,966)					$	(11,725)					43.5		%

Interest income for the three months ended March 29, 2025 was $1.4 million, a decrease of $0.8 million, or 36.2%, primarily due to higher interest earned on term deposits that matured in 2024.

Interest expense for the three months ended March 29, 2025 was $27.9 million, a decrease of $7.1 million, or 20.3%, compared to $35.0 million in the corresponding period in 2024. The decrease was due primarily to lower average debt balances as we continue to pay down our revolving credit facility.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Other expense, net for the three months ended March 29, 2025 was $12.2 million compared to Other income, net of $5.8 million for the corresponding period in 2024 due primarily to venture capital investment losses of $8.6 million as compared to gains of $8.2 million in the corresponding period in 2024.

Income Taxes

			Three Months Ended
			March 29, 2025						March 30, 2024						$ change						% change
			(in thousands, except percentages)
Provision for income taxes			$	10,100					$	24,529					$	(14,429)					(58.8)		%
Effective tax rate			28.1		%				24.8		%										330 bps

Income tax expense for the three months ended March 29, 2025 was $10.1 million, a decrease of $14.4 million compared to $24.5 million for the corresponding period in 2024. Our effective tax rate was 28.1% for the three months ended March 29, 2025 compared to 24.8% for the corresponding period in 2024. The increase in our effective tax rate in the three months ended March 29, 2025 compared to the corresponding period in 2024 was primarily attributable to tax impact of jurisdictional mix of income.

Liquidity and Capital Resources

Liquidity and Cash Flows

In general we require cash to fund our working capital needs, capital expansion, acquisitions, debt payments, lease payments, venture capital investment, restructuring initiatives, and pension obligations. Our principal sources of liquidity have been our cash flows from operations supplemented by long-term borrowings. Based on our current business plan, we believe that our existing funds, when combined with cash generated from operations and our access to financing resources, are sufficient to fund our operations for the foreseeable future.

The following table presents our cash, cash equivalents and short-term investments:

			March 29, 2025						December 28, 2024
			(in thousands)
Cash and cash equivalents:
Held in U.S. entities			$	2,382					$	4,219
Held in non-U.S. entities			226,974						190,387
Total cash and cash equivalents			229,356						194,606
Short-term investments:
Held in non-U.S. entities			63						62
Total cash, cash equivalents and short-term investments			$	229,419					$	194,668

The following table presents our net cash provided by operating activities:

			Three Months Ended
			March 29, 2025						March 30, 2024
			(in thousands)
Net income			$	25,878					$	74,482
Adjustments to reconcile net income to net cash provided by operating activities			144,532						103,498
Changes in assets and liabilities			1,287						(48,092)
Net cash provided by operating activities			$	171,697					$	129,888

Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment, debt financing costs, deferred income taxes, long-lived asset impairment changes, gains and/or losses on venture capital and strategic equity investments, gains and/or losses on divestitures, changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

For the three months ended March 29, 2025, compared to corresponding period in 2024, the increase in net cash provided by operating activities was primarily driven by lower payments of variable compensation and favorable timing of payments to our suppliers and vendors, partially offset by higher purchases of inventory to support our DSA reportable segment.

The following table presents our net cash used in investing activities:

			Three Months Ended
			March 29, 2025						March 30, 2024
			(in thousands)
Capital expenditures			$	(59,324)					$	(79,144)
Investments, net			(3,700)						(6,365)
Proceeds from sale of businesses and assets, net			17,441						—
Other, net			104						(283)
Net cash used in investing activities			$	(45,479)					$	(85,792)

Investing activities primarily consist of cash used to fund capital expenditures to support the growth of our business, purchases and sales of investments related to our venture capital and strategic equity investment portfolios, and asset and business acquisitions, periodically offset by cash from divestitures.

For the three months ended March 29, 2025, cash used in investing activities was primarily driven by capital expenditures partially offset by proceeds from divestitures of certain site and business assets. Capital expenditures decreased for the three months ended March 29, 2025 as compared to the same period in 2024, as a result of disciplined spend management in light of the global economic environment.

For the three months ended March 30, 2024, cash used in investing activities was primarily driven by capital expenditures to support the growth of the business.

The following table presents our net cash (used in) provided by financing activities:

			Three Months Ended
			March 29, 2025						March 30, 2024
			(in thousands)
Proceeds from long-term debt and revolving credit facility			$	416,341					$	300,882
Payments on long-term debt, revolving credit facility, and finance lease obligations			(149,394)						(292,482)
Proceeds from exercises of stock options			—						21,505
Purchase of treasury stock			(353,132)						(9,351)
Purchase of remaining equity interest of other redeemable noncontrolling interest			(19,140)						—
Other, net			—						(2,208)
Net cash (used in) provided by financing activities			$	(105,325)					$	18,346

Financing activities primarily consist of the proceeds and repayments of debt and certain equity related transactions including treasury stock purchases and employee stock option exercises.

For the three months ended March 29, 2025, net cash used in financing activities was primarily driven by the following activity:

• Net proceeds of $267.5 million from our Credit Facility

• Treasury stock purchases of $350.0 million associated with our stock repurchase program and $3.1 million due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements

• Payment of $19.1 million for the remaining 8% equity interest in Vital River

For the three months ended March 30, 2024, net cash provided by financing activities was primarily driven by the following activity:

• Net proceeds of $4.3 million from our Credit Facility

• Net proceeds from exercises of employee stock options of $21.5 million

• Treasury stock purchases of $9.4 million made due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements

• Dividend payments to noncontrolling interest holders of $2.2 million

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Financing and Market Risk

We are exposed to market risk from changes in interest rates and currency exchange rates, which could affect our future results of operations and financial condition. We manage our exposure to these risks through our regular operating and financing activities.

Amounts outstanding under our Credit Facility and our Senior Notes were as follows:

			March 29, 2025						December 28, 2024
			(in thousands)
Revolving facility			$	984,650					$	714,948
4.25% Senior Notes due 2028			500,000						500,000
3.75% Senior Notes due 2029			500,000						500,000
4.00% Senior Notes due 2031			500,000						500,000
Total			$	2,484,650					$	2,214,948

The Credit Facility provides for up to $2.0 billion of multi-currency revolving credit and has a maturity date of December 2029, with no required scheduled payment before that date. The interest rates applicable to the revolving facility are equal to (A) for revolving loans denominated in U.S. dollars, at our option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon our leverage ratio.

Our off-balance sheet commitments related to our outstanding letters of credit as of March 29, 2025 and December 28, 2024 were $22.1 million and $22.4 million, respectively.

Foreign Currency Exchange Rate Risk

We operate on a global basis and have exposure to foreign currency exchange rate fluctuations for our financial position, results of operations, and cash flows.

While the financial results of our global activities are reported in U.S. dollars, our foreign subsidiaries typically conduct their operations in their respective local currency. The principal functional currencies of our foreign subsidiaries are the Euro, British Pound, Canadian Dollar, Chinese Yuan Renminbi, and Mauritian Rupee. During the three months ended March 29, 2025, the most significant drivers of foreign currency translation adjustment we recorded as part of Other comprehensive income (loss) were the Euro, British Pound, Mauritian Rupee, Hungarian Forint, and Canadian Dollar.

Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our financial position, results of operations, and cash flows. As the U.S. dollar strengthens against other currencies, the value of our non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally decline when reported in U.S. dollars. The impact to net income as a result of a U.S. dollar strengthening will be partially mitigated by the value of non-U.S. expenses, which will decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenue, expenses, assets, liabilities, and cash flows will generally increase when reported in U.S. dollars. For the three months ended March 29, 2025, our revenue would have increased by $31.7 million, and our operating income would have increased by $0.4 million, if the U.S. dollar exchange rate had strengthened by 10%, with all other variables held constant.

We attempt to minimize this exposure by using certain financial instruments in accordance with our overall risk management and our hedge policy. We do not enter into speculative derivative agreements.

Repurchases of Common Stock

On August 2, 2024, our Board of Directors approved a stock repurchase authorization of $1 billion. During the three months ended March 29, 2025, we repurchased 2.1 million shares of common stock for $350.0 million under the new stock repurchase program. As of March 29, 2025, we had $549.3 million remaining on the current authorized stock repurchase program.

Additionally, our stock-based compensation plans permit the netting of common stock upon vesting of restricted stock, restricted stock units, and performance share units in order to satisfy individual statutory tax withholding requirements. During the three months ended March 29, 2025, we acquired less than 0.1 million shares for $3.1 million through such netting.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reported periods, and the related disclosures. These estimates and

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

assumptions are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on our historical experience, trends in the industry, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.

We believe that the application of our accounting policies, each of which require significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for fiscal year 2024 as filed with the SEC on February 19, 2025. There have been no changes in the Company’s critical accounting policies during the three months ended March 29, 2025.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note 1, “Basis of Presentation,” in this Quarterly Report on Form 10-Q. Other than as discussed in Note 1, “Basis of Presentation,” we did not adopt any other new accounting pronouncements during the three months ended March 29, 2025 that had a significant effect on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.