Charles River Laboratories International Inc CRL
Q4 2011 Earnings Call Transcript

Operator: John Kreger, William Blair.

Roberto Fatta - William Blair & Company: This is Robbie Fatta in for John today. The first question, I had was on the status of some of your strategic relationships. Would you say they're trending in line with your expectations and how do these relationships compare to the demand that you're expecting from non-strategic partners that are of similar size in 2012? In other words, are these guys expecting to grow their business more with you?

Susan E. Hardy - Corporate Vice President, IR: Robbie, for some reason that cut out, could you repeat the question please?

Roberto Fatta - William Blair & Company: Sure. It was on the status of your strategic deals. Are they basically trending in line with your expectations and how did demand trends in 2012 from these clients compare to some of the other large biopharma clients that are not strategic partners?

James C. Foster - Chairman, President and CEO: So, we – as you know, we signed a large deal in November. This has generated lots of other conversations about similar types of transactions with services across the entire portfolio with some emphasis on the early discovery work. It's hard to call a trend, it's just that there is clearly some interest in clients who are – some are aggressively reducing infrastructure obviously; some have already done that and others are contemplating it at the current time. So, it appears that many of the large drug companies are directionally interested in large strategic transactions. That makes sense from a value proposition point of view. I think that's true for some of the smaller clients as well, some of the sort of 1st tier and even 2nd tier biotech clients are getting larger and have expensive drug development projects, and even though they've always been outsourcers, they're trending towards outsourcing on a more comprehensive basis. So, directionally it seems that that's the way the industry is moving. I think, it's early days, but we do have several conversations going on right now which would, sort of, underscore the focus on these types of deals.

Roberto Fatta - William Blair & Company: Got it. Thanks. The second question is on your comfort level with your footprint at this point. Are you comfortable with your capacity right now, and given that it sounds like demand is improving slightly, what would you say the capacity utilization that's baked into guidance at this point is?

Thomas F. Ackerman - Corporate EVP and CFO: So, yes, we like our footprint in several ways. We like the geographic footprint we have, and we like the types of services we do with the specific businesses, and so that seems to be working well in terms of supporting clients, some of whom are interested in proximity. We certainly have enough capacity to take on additional large strategic deals should that happen. I think, on our last call we commented that we could do two or three of those with our current footprint, and then we would simply have to open some building that were constructed but never opened. And we also have some space that was constructed but never caged. So, we have a good amount of space for the foreseeable future, certainly three plus years I would say. That capacity utilization, while we don't give a number, improved during 2011. It's not been improved to level that we would like it to be as per optimal margin contribution, but all the work that we're doing, sort of a stable regulated talks activity, but also increasing amounts of non-GLP discovery work should continue to fill up the space dramatically. That will obviously improve the margins as that happens, but we should have sufficient space to take on the type of work that we're talking to clients about now.