Charles River Laboratories International, Inc. (CRL) Earnings Call Transcript & Summary

Great. Good morning, everyone. I'm Todd Spencer, Corporate Vice President of Investor Relations at Charles River. I've been at the company for 20 years, including the last 8 as Head of IR. And I've had the opportunity to meet many of you here and work with you. So on behalf of the company, I would like to -- I am thrilled to welcome you all to Charles River Laboratories 2026 Investor Day. Before we begin, I'd like to go over a few housekeeping items. First, today's slide presentation can be found on the Investor Relations section of our website at ir.criver.com. The webcast will also be available on the same website for replay. Next, I'd like to remind you of the safe harbor statement and the use of forward-looking statements as well as that we'll be speaking primarily to non-GAAP financial measures covered under Regulation G. You can find additional information on these disclosures in the slide presentation or on our Investor Relations website. We have a great lineup here for you today. focused on providing insights about our strategic vision, industry trends and actions to drive long-term shareholder value creation. And we will also update our long-term financial targets. We are pleased to have members of our senior management team here today to outline this for you, led by our CEO, Birgit Girshick. There is biography information that can be found on the Investor Relations section of our website and in the appendix of today's slide presentation. Birgit will begin by highlighting our refreshed strategic framework pathway to purpose. She will then be followed by Dr. Namandje Bumpus, our Chief Scientific and Innovation Officer, who will provide an overview of our innovative scientific capabilities and how we will continue to lead the future of integrated drug development. Our Chief Information Officer and Head of Global Shared Services, Mark Mintz, will then detail our efforts to modernize the company and generate greater productivity and efficiency and drive scalable growth. We will then have our first of 2 question-and-answer sessions. After a short break, our CFO, Glenn Coleman, will provide a financial overview and review our financial targets in detail. And then we'll hear from each of our business unit leaders about their respective growth strategies. Shannon Parisotto will provide an overview of our DSA segment; Kerstin Dolph will then discuss our Manufacturing Solutions segment; and Dr. Colin Dunn will provide an update of our RMS segment. We will then have our final question-and-answer session. I will ask that you try to save your questions on our financial targets and our respective business unit trends until this portion of the agenda. We will also have a showcase in product demo in the back of the room, highlighting our digital capabilities in microbial solutions testing platform. Aaron, Laura and Carolyn will guide you through that experience. So please feel free to stop by during the break or after the event concludes, they will be available until approximately 1:00 p.m. In addition, our senior management team, in addition to our senior management team, I would also like to welcome our Board of Directors here today, including our Chair, Dr. Martin Mackay. Please use the QR code at the bottom of this slide for a direct link to our Investor Day microsite and slide presentation, and the WiFi information is also listed for those joining us in person today. If you need anything else, please look for me, Jess, Nancy or Tara who can provide any assistance that you need. And finally, I am pleased to announce that in lieu of giveaways today -- at today's event we have made a donation to a long-term charitable partner who provides assistance to children in foster care, including educational and veterinary scholarships named Foster Love. Before Birgit Girshick begins, we would like to share with you a short video that truly highlights the importance of the critical work that we do and for the patients whose lives we strive to improve. This is our motivation, our pathway to purpose. Thank you. [Presentation]

Good morning, and thanks for being here for the Charles River Investor Day. We wanted to start with the voice of our clients because that is the reason Charles River exists. This video is a powerful reminder that our work matters. Our clients' goals are our goals. The mission is our mission and their success is our success, but more importantly, benefits the patients. We are not just a service provider. We are a scientific partner. We're deeply involved in their work. You heard our clients describe our work is critical, a science at the highest standards that we do work for them that they don't have internally. These kind of client relationships are the reason Charles River continues to evolve and continues to differentiate itself. Science is becoming increasingly more complex and our clients need partners with high science, rigor and speed, and that is Charles River. If I have not met you yet, my name is Birgit Girshick, I'm the CEO of Charles River. I've spent nearly my entire career at this company for great reasons. And I know our strengths but I also know where we need to move faster and be sharper. My focus as CEO is clear. I want to simplify the company, invest where we can win and translate this into revenue growth, margin expansion and long-term shareholder value creation. There are 4 things I want you to take away from today. First, we are scientifically driven industry leader, and that position matters. And I think you just heard that from our clients. Second, drug development is evolving, and Charles River is evolving with it. names and AI are very exciting. And they are technologies that allow us to differentiate ourselves even further. Third, we are actively modernizing our company. We're doing this in a very disciplined manner, allocating capital to opportunities where we can win and have attractive returns. And fourth, most importantly, I have an exceptional team, and that team is highly focused on executing on our strategy pathway to purpose. Over the next 25 minutes or so, I will outline where we've gone and why I believe that a way to purpose will accelerate shareholder value creation. But let me start with something basic, and that is who we are and why our position matters. We are the scientific partner of choice for early-stage research through clinical development. And simply put, we help our clients move faster reduce complexity and ultimately bring therapies to the patients more efficiently. Of all the slides, I think this is my favorite one. It shows our scale. We have currently approximately 18,000 employees, 2,000 of which are scientific professionals with advanced degrees. That is talent at scale. Our footprint with approximately over 100 sites in approximately 20 countries allows us to work with our clients where they want us to work with them or need us to work with them. And we support approximately 1,500 INDs a year. That is not just relevance, that shows criticality. We are diversified across clients, geographies, end markets and capabilities, and we operate in an attractive addressable market. That provides us with an incredible resilient business model. The real message here is what the scale enables and that is patient outcomes. We have supported over 80% of FDA-approved drugs over recent years that shows our depth of our role in drug development and the confidence our clients place in us. It translates into long-standing relationships with the world's leading biopharmaceutical innovators. This slide here shows how our segments work together and create something that is really difficult to replicate. I believe our biggest advantage is the breadth of our scientific platform. We have 3 segments that support our clients for research through regulated development into drug commercialization. I believe we support our clients at the highest value, highest dependency points. And because of our portfolio, reduce handoffs for our clients. Our Research Models and Services, our RMS division, is approximately 21% of revenue. The research models we provide enable discovery and development of new molecules. Our Discovery and Safety Assessment organization, or DSA is 60% of revenue, and it's the core growth engine of Charles River. We help clients advance molecules into the clinic. Our Manufacturing Solutions business is roughly 19% of revenue and provides mission-critical testing to support clinical and commercial manufacturing and is an interesting segment for us because of its highly reoccurring revenue streams. What's also important to you point out is that 60% of our revenues are generated from early stage of pre-IND work and approximately 40% from post-IND work. This widespread revenue exposure provides resiliency, and I will get back to this point in a little bit. What you see here is depth and breadth and shows to continually we provide to our clients, which allows us to deepen client relationships and earn the right to do more with our clients every single day being recognized as the scientific partner of choice didn't just happen by accident. We have taken deliberate actions to strengthen our global capabilities. Today, we are focused on being more streamlined, simpler and a fast-growing company. We're doing this by optimizing our portfolio. As you know, we already divested 2 of our businesses this year and by investing in higher growth opportunities. We're also modernizing the company to improve client experience and to improve also our long-term earnings potential. Mark Mintz will provide you more details on the modernization efforts, which we named create the future. Create the future is a very focused top-down let bottom-up executed initiative. Our priorities are straightforward. We're strengthening our competitive foundation by reinforcing scientific leadership, expanding client relationships and leading with integrity. We are striving for the higher standards of regulatory compliance and animal welfare, both are nonnegotiable. We're modernizing how we operate by executing on create the future. We're doing this through automation, AI, digital workflows, all to improve client experience and margins. We invest in higher growth areas. And you will hear about bioanalysis, but also about differentiated scientific capabilities such as NAND. And you -- and for example, the past request acquisitions we completed earlier this year. These capabilities, this enhanced portfolio will make us even more valuable to our clients. This allows us to deliver sustainable long-term shareholder value by being a stronger and disciplined company. This slide shows why I have confidence in our long-term outlook. We are already seeing attractive industry tailwinds. And as we know, the industry backdrop matters. But I believe that the direction that it's going particularly favors Charles River. Biopharma funding shows strong signals of stabilization and recovery. Outsourcing continues to be the norm and favors our comprehensive portfolio. More complexity in drug development through advanced modalities requires more testing, and that is more opportunity for us. Also complexity rewards scientific depth and that is Charles River. We will continue to differentiate ourselves by investing in science and new technologies, including AI and new approach methodologies or names and will shape how these tools are integrated responsibly into the drug development process by combining them with our deep biological understanding and our regulatory credibility. We are turning these industry shifts into competitive advantage. This is another slide I really like because all the arrows are going up. These positive trends on these slides are already taking shape across our industry. Biotech improved from the lows, pharmaceutical R&D investments are healthy and development activity, as seen here in FDA IND filings, are rebuilding. We are not assuming a straight-line recovery. We're for sure not assuming a hockey stick but estimated returns, Charles River is positioned to win because of our scale, our breadth and our science. We are operating in a $20 billion addressable market, which provides significant opportunities for growth. This growth opportunity is supported by several key drivers, some of which I already touched on. To summarize the increasingly favorable in environment, more demand for services because of complex modalities. And this increasing complexity favoring our specialty leadership, and new technologies like AI names that will allow additional differentiation of Charles River. We're going to continue to strengthen Charles River by executing on our strategic framework pathway to purpose. This is the bridge of where we are today and where we are headed. Pathway to Purpose allows us to make sharper choices aligning our organization behind what needs to be done and holding us accountable. Pathway to Purpose has 3 pillars: modernize the company and industry; strengthen world-class scientific portfolio; and grow through a customized sign-centric approach. Today, you will hear how we are building a faster digitally enhanced Charles River. You will hear how and where we invest in higher growth capabilities and how we leverage AI and make a difference using NIMs. Pathway to Purpose allows us to execute on our vision to create a future where our purpose and our scientific courage defines the next standard of health, develops the next therapy, the next drug and not just today but for generations to come. But let me dig deeper and let's start with modernizing our business, specifically our Create the Future initiative. We are already executing on becoming a simpler, faster and easier to work with company internally and externally. Creative the Future is the most important initiative to unlock value from our current platform, from our current business. It's about automation, AI and digital tools to increase speed. It's about simplifying how we work by improving workflows and reducing complexity, and it's about optimizing our organization, including our support functions and how we utilize our staff. Create the Future will help us unlock approximately $300 million of incremental savings between $27 million and $30 million and that is in addition to the $300 million cost savings we implemented in recent years, primarily through restructuring efforts. But this is not just about cost. It is also building a more competitive company. A simpler Charles River is a faster Charles River, a fast to Charles River is a better partner and a better partner for our clients translates into revenue growth. When we talk about modernizing, we cannot address AI if that was English. A topic that is on everybody's mind arguable AI is the biggest change in our industry and an exciting tailwind. We agree with many industry participants that AI will improve productivity and lower the cost of drug development. Lower cost will lead to reinvestment in more programs. And more programs creates a bigger pipeline for us because the validation of this program still requires testing in a regulatory process. Additionally, through internal efforts, we're leveraging the benefits from AI to improve our productivity, our science and competitiveness. The team will provide examples throughout the day, we also have a couple of examples in the other room on showcase. So please feel free to check it out. Let me talk a little bit about strengthening the portfolio, which was the second pillar. An example of strengthening the portfolio is the effort to expand our bioanalysis platform. Bioanalysis is one of the clearest growth opportunities in front of us. If you're not familiar with bioanalysis, bioanalysis is required lab testing of biological samples required throughout discovery, preclinical and in the clinical phase. Currently, we provide bioanalysis, mostly in the preclinical stage. We believe there is more [indiscernible] for bioanalysis because as complex modalities grow, more specialized analytical capabilities are required and more endpoints are being tested. We're already seeing that. We also have clients who seek continuity. They're looking for one bioanalysis partner from early stage through the clinic. And that is a real opportunity for Charles River. So we are currently expanding our capabilities and scale organically, and we might potentially through M&A. What does bioanalysis do for our business if we expand it? It improves the business mix. As we move with our clients doing testing of their samples into the clinical stage. And I just want to be clear, not clinical trials, but clinical sample testing, we anticipate in longer-duration clinical programs. We also are able to retain clients towards commercialization. And we are seeing synergies between our DSA and Manufacturing Solutions business, both of which are offering biological capabilities for different reasons. And we are meeting client requests for high science bioanalysis at scale. Also importantly, we're building out our later-stage revenue exposure. So as I said earlier, post IND, and with that, we balance out our reliance on early-stage funding and further improve the resiliency of our business. Earlier today, a couple of minutes ago, I said that we are generating 60% of revenue pre-IND and 40% post-IND. As we move more into the clinical phase, again, clinical testing, not clinical trials, we moved this percentage from a 60-40 to an approximately 50% and 50% pre and post mix. These reasons, plus an attractive growth outlook make bioanalysis an attractive area for investment. Shannon Parisotto will talk more about bioanalysis in her session later today. I all want to address your questions regarding China. Geographic expansion allows an increase in our addressable market. So certainly a benefit. We are interested in the Chinese market and specifically providing preclinical services to Chinese ecosystem participant. The market is of interest because of accelerating aviation, there is now a growing market of $1.2 billion to $1.5 billion for preclinical services. Charles River already has a meaningful presence in China, primarily through our RMS business, and we're serving the same clients that need of safety assessment capabilities. So this would be a natural extension for us. To support preclinical service in China, we would require local capabilities. We are evaluating opportunities if and when can to the market while preserving strategic flexibility. We're taking a thoughtful and disciplined approach. If the right opportunity emerges, we will be ready. But in the meantime, we balance this opportunity with a broader geopolitical risk, the competitive environment in China and other investment options that come our way. NAMs is another exciting area. It is the right ethical and scientific direction and one that Charles River is committed to lead. What it is not, it is not one tool replacing another tool. It is the integration of in vitro, in silico and in vivo to create stronger evidence and make better decisions. Today, drug development is ungrounded in traditional in vivo approaches, which has many benefits and remains essential. NAMs, as they become available and useful, we believe will generate earlier and more predictive insight, so beneficial to everybody. Dr. Namandje Bumpus will discuss how we help the industry to navigate this transition. We believe that NAMs will provide us with further scientific differentiation, stronger client relationships and incremental revenue. I also want to talk about our growth strategy. Part of our growth strategy, we are redesigning the commercial journey from prospecting through expansion. Historically, our processes have been a little bit manual, a bit fragmented, maybe a bit transactional, and that has to change. We are building a data-driven personalized scientific engagement model, as outlined on this slide. The goal is simple. Create and deepen client relationships because we're easier to work with. But none of this works without our people and our culture. But this is what the company is built on. We're modernizing our company by putting emphasis on bringing our talent along. We're assuring that our scientific leaders today and in the future are adequately supported and we're providing differentiated experiences for our people so we can better retain them. Our culture is a culture of care, and that is reflected in how we support our talent, how we conduct science, how we see compliance and animal welfare. For our talent, we are showing our teams and people feel supported. For science, we assure reproducibility of scientific outcomes. For compliance, we're maintaining the highest standards and animal welfare is our top priority. This culture is also reflected in our leadership team. Many of them are here in this room, and many of them, you will see the expertise in action today. I just want to say this. This is a team with IPs, a team with accountability, and a team with real operating experience. Together, we have 400 years of industry experience and 250 years or more of experience at Charles River. I'm extremely proud of this team. And because of them, I'm confident in our ability to execute. We also have a really experienced board that ensures that we are taking the right long-term views. They have expertise across the board. To name a few, they have expertise across biopharma innovation finance, governance and technology. Their perspective is extremely important to me as we execute on our strategy and maintain discipline in governance and capital allocation. Many of them are here today, some are calling in virtually, and I want to thank them for their continued support and guidance. So everything that we just covered is connected to value creation. The financial goals between now and 2030 are clear. Returned to stronger growth with an expected CAGR of 5% to 7%, expand margins to approximately 24% and improve EPS at a low double-digit CAGR. Glenn Coleman, our CFO, will walk you through the financial framework and the assumptions. But the headline is simple. We have confidence in these targets, we know where the value is. We know what we need to do, and we are already executing on it. Let me close why I'm confident in Charles River and confident in growing shareholder value. Our advantage is not one product, not one capability or on trend. It is the combination of scientific and regulatory expertise, having an integrated platform, being a trusted mission-critical partner and having an ability to provide our clients with the utmost reliability. I believe we stand alone as a trusted partner with a unique combination of data expertise and global scale. And we operate in an industry with high barriers to entry. Now I will turn it over to the team, who will discuss with you how we are putting our strategy into action. Dr. Namandje Bumpus, our Chief Scientific and Innovation Officer, is up first to discuss how NAMs are shaping the future. Thank you.

Thanks. I probably could have waited a few seconds before I came up, but it's good to be here and be with all of you. So as was mentioned, I'm Namandje Bumpus, I'm the Chief Scientific and Innovation Officer. Before joining Charles River, I was at the FDA. So first, I was Chief Scientist at FDA reporting directly to the commissioner. I had responsibility frost cutting regulatory science as well as other related areas. And then subsequently, I became the Principal Deputy Commission of FDA, which is the #2 role. So the deputy to the FDA Commissioner working with the commissioner to lead the agency day to day, doing everything to advance the public health mission of the agency through operational leadership and leadership or strategic initiatives. And before joining FDA, I was on the faculty at Johns Hopkins Medicine for 12 years. Ultimately, I was an endowed Professor and Chair of the Department of Pharmacology Molecular Sciences. I also spent time as the Associate Dean for basic research. I'm a molecular pharmacologist and bioanalytical chemists. So my lab did everything from very early nonclinical pharmacology toxicology through leading clinical studies and then bioanalysis. So it's been exciting to bring all of that experience together in full service of our work here at Charles River. So what brought me to Charles River? Well, when I was at FDA, one of the programs I led that was very important to me was our cross-cutting NAMs program. So we're going to introduce new approach methodologies in NAMs. So responsibly for that cross-cutting agency-wide NAMs program at FDA. And what became clear to me -- so if we were going to move NAMs from discussion and concept in use cases to a reality where they were truly and fully embedded across the drug development workflow that required leadership and leadership that really embodied both multidisciplinary scientific expertise in the relevant areas of science and understanding and expertise of the regulatory landscape. And that's Charles River. So we are uniquely positioned to lead this next phase, this next frontier in nonclinical science, where the biology, the understanding of biology is increasingly complex more intricate, more layered and with the products being developed themselves are more and more complex. And so with that in mind, we are bringing to bear the full strength of our scientific portfolio and our expertise into an integrated platform that we're going to introduce, and that's what we'll talk about today. So just a few high-level things I want to highlight upfront. So one is that at the foundation of this, which many people may not know, but when you think about NAMs and the in vitro and in silico approaches that one might call a NAM. We have an industry-leading portfolio of in vitro and silicon approaches. So we have a broad range of in vitro and silicon approaches across organ systems. It really enables us to take this integrated approach where we're taking those data, those insights and integrating them with our in vivo studies to generate the opportunity for more robust decision-making for our clients and for regulators to make regulatory decisions. So that means that what we're really centering in this approach is not one method alone or not one approach alone, what's really an understanding of what is the evidence we need, what is the insight that we need? What information does someone need to make a decision? And how can we bring forward the most leading-edge scientific approaches to answer those questions? That is truly a differentiator for us, that integrated approach. And as we present this to clients, we're hearing really positive enthusiastic feedback. For instance, we talked about this approach. We presented our capabilities and a leader in nonclinical research said to me, this is music to our ears, it's exactly where we need to go. So that's where we're going. So what's the backdrop here? Well, a few things going on. I mentioned we have the complexity, obviously. And scientific understanding and innovation around products. But there's also increasing demand, of course, for new tools, new tools in drug development, how can we be more predictive. And with that, there's growing interest in vitro approaches, of course, AI, we're hearing a lot about predictive analytics. And then at the same time, you have regulatory agencies globally in the discussion and really sharing perspectives and it's evolving. So this is an opportune time for us to really move forward and make an impact to this approach. So how are we executing it? Well, we're taking a multipronged approach to it, that's both internal innovation and external thought leadership. So I want to touch on those points. In 2024, we launched AMAP. So this is really the umbrella that houses all of this work that we're doing around alternatives. So this is something we've been working on for a while, and we're continuing to build and develop. 2025, we launched the Scientific Advisory Board. So this is a group of scientific leaders from across Charles River, working together, shoulder to shoulder across business units to really advance our work to set our strategy around NAMs and now this integrated approach. Within that group, in connection with many of our scientists across the organization, we are constantly evaluating technologies externally, really keeping our finger on the pulse of the landscape. And because of our expertise in vivo science, we're in a really great position to understand and think about which of these technologies are ready to go, which are ready to make an impact. So we're spending time on that. And of course, we have our internal innovation we do as well. Now another thing that we're doing, I mentioned that external thought leadership. Because of all the experience we have, we have an opportunity, and I also leave a responsibility to ensure that there is external understanding, among public, among policymakers, among lawmakers of the science around drug development of NAMs, the challenges, opportunities and where we see things going. So we're involved with policy groups and health policy, think tanks, we'll work with global regulators giving them briefings on NAMs, sharing our technologies with them, frequently now answering their questions around NAMs, giving them feedback on draft regulations, similarly working with other government agencies to think even about legislative proposals and weighing in there. So with that combination of scientific innovation and that policy and regulatory and legislative insight that we're giving as well and that collaboration there, we really are the leading company, and it comes to NAMs space as far as our influence and influential nature on the overall NAMs discussion. So what does this integrated approach really mean or look like? So I mentioned it's bringing together in vivo, in vitro and in silico, understanding that in vivo work remains foundational and essential to drug development. We need to understand the whole body context. We need to know, for instance, what a drug, an ingredient can do to the body and then what the body can do to the drug. So an example would be, for instance, developing a drug, you want to know where it might distribute in the body. That's important. Does it accumulate in an organ because that can foreshadow, say, an adverse event. So say we do that in vivo study. The drug accumulates in the thyroid. We know that only because of the in vivo context and organ on a chip cannot give us that insight. Now we can use a cell-based model, in vitro model in order to ship safe thyroid cells. We can treat them with that drug. Now this experiment can tell us the drug got into the cells, but it doesn't tell us what the levels were relative to the rest of the body. So we don't know if it accumulates there. But it can tell us that it got in. We can learn maybe what does it do to the cells when it's there, how does it get in? It gives us the mechanistic detail. So that's the integration, where the in vivo part tells us what's happening. And then the in vitro piece can give us more of that why and how and what's going on, maybe even bringing in silico to help you then deconvolute those data and understand it more. So this is the integration. And the power of it is that we maintain the rigor, we maintain the data that we need to really understand the product, understand an ingredient, but we can bring it to a level that gives more robust information and more potential for translation to that human situation, we're thinking about a first-in-human study, for instance because we're bringing more of these data to bear and understanding from a whole animal to the more detailed cellular level. So functionally, I mentioned to you that we have an existing in-hand broad portfolio that we've built and we continue to build around in vitro and in silico approaches. So it turns out we have over 220 of these assays and methods up and running. And we're already using in various studies, and we're thinking about how do we continue to leverage and more fully leverage these approaches. These applications span a range of areas. So we have cell-based tests. We have virtual control groups that we'll talk about more. And also we have demoed here. We have our Retrogenix platform. That's a really powerful approach to understanding, for instance, what off-target binding might be. We also have things that we're working through that are more emerging, but still they're being leveraged, organ-on-chip, organoid technologies, AI-enabled predictive models. So this is what we have and where we're going and what we've been building. And of course, there are future applications that are further off scientifically the scientific community in general, but where we still are looking and lending expertise and thinking them through and collaborating and those are areas like whole-body-on-a-chip systems, for instance, that create future opportunities potentially scientifically. But if we take these 220 methods that we already have across major organ systems and think about how do we use them in the most powerful way. What we've done is instead of thinking about each of them as individual tests. People often talk about NAMs to think about individual tests, individual approaches. What we've thought about is that maybe these approaches when used in concert and put together actually are synergistic and provide data far greater than you could with any of them alone. So we're designing test batteries. So these are batteries of in vitro, in silico tests being used in combination to address a specific area of biology. We choose those areas of biology because they're important to drug development, but we also think the science is advanced enough that we actually could put together in battery that would give decisional data. So that's the key. We want to soon to be able to be made based on these data, programmatic as well as regulatory. So this continues to expand. And we have more areas in this, but I wanted to give you an example on a sampling of where we are. So we have developmental reproductive toxicology, for instance, is an area and we'll double-click on it in the next slide where we have a range of assays that we can bring together that we think can give very useful information that can speed up getting insight into this process and really help our clients make decisions faster around this specific area. There are others at carcinogenicity which is, of course, very important to understand. We have in vitro assays again that can give data more quickly than in vivo study to help making some decisions and informing potentially how you design your in vivo study. Cardiotoxicity, skin safety, similarly we have batteries of tests that when combined, can answer questions in those spaces, and these are again areas of increasing importance in understanding of product, understanding ingredients. So the way this looks for -- with development on reproductive tox as an example. I know there's a lot on this slide to walk through it and there are a couple of take-home messages. So there are in vivo studies that you would do to look for development and reproductive tox. And you're thinking about things from gate formation, presentation all the way through, obviously, development. So on this slide, we're showing is kind of a breakdown of the biology of that. So all of the things listed here that we have embryogenesis, lactation milk production, et cetera are all spaces in the biology where a drug and ingredient a chemical, whatever you're looking at could have an effect. So these are all endpoints to measure. So we have designed batteries around measuring these components. So for instance, we're thinking about endocrine disruption, so hormones, how they might be regulated and impact fertility, for instance. We have a combination of 6 in vitro and in silico approaches that we think can give you really detailed information there to begin to generate that evidence to make some decisions around your product. And similarly, for each of these areas, we have them are continuing to build. So this would be a test battery in a specific biological area and an example of our existing capabilities that our clients can leverage to move forward the decision-making and do this in conjunction with in vivo studies they may do to get even more mechanistic insight into the why. Why you see a certain outcome in vivo? These data can help you understand that and get some early data, again, you can potentially move forward with in your program. So in addition to those tools, of course, another thing in our toolkit is the abundance of data that we have. and also our expertise. So having these data but really the expertise both in the science and the regulatory to be able to fully leverage it. So this is something that's a differentiator for us, and we're leveraging it in various ways. And one way is through our work on virtual control groups. So virtual control groups is another area where we lead. So essentially, this is leveraging historical control data that we have from our in vivo animal studies and using a machine learning approach to curate those data and then use those data as a control for in vivo study that we're doing. So we still would have live controlled animals, but we're able to reduce that number of control animals through leveraging these data. And we performed some studies to validate this approach and shown that use these virtual controls, you get concordance with the results you get based on live control. So this is a really powerful example of utilizing data, using advanced in silico approaches to really bring ourselves to something that is in the NAM space. So we'll continue to build this out. But it gives an example of, again, how we're bringing together all of this ability that we have in all of our expertise to really lead and advance the science and move things forward. And we've been doing a lot of briefing of regulators on this approach and seeing a lot of interest from them in understanding more about it and hearing from us. So I hope that what you take away from this is that we really are leading when it comes to this space. We have the capabilities in vitro, the in silico, the in vivo, and we can bring it all together in a way that no one else is positioned to do in the way that we are. And we're not only leading as far as that innovation, but we're coupling it with [indiscernible] ensure that we're really shaping public understanding policy and lawmaker understanding around the capabilities of these approaches and the power of that. So taking a holistic approach to advancing NAMs and advancing this integrated platform. This brings a real competitive advantage. It's a differentiator for us. It creates opportunity for new touch points with clients, new areas to work together through this integrated approach and so it deepens our relationships there, it certainly strengthens our interaction of scientific partners. So with that, I will pass to my colleague, Mark Mintz and yes, very glad he will talk about this. Thank you.

Thank you, Namandje. Good morning, everyone. I'm Mark Mintz. I joined Charles River in 2021 and today serve as Executive Vice President, Chief Information Officer and Head of Global Shared Services. I've spent 30-plus years delivering technology-enabled solutions and large-scale transformation programs, including as a founding member of McKinsey's digital labs and a leader of its enterprise architecture practice. At Charles River, I'm responsible for technology and shared functional and operational services that enable us to execute our strategy more effectively. Today, I'd like to spend the next 10 minutes or so discussing how we are modernizing our operating model to support scalable growth and bring the modernized pillar of our pathway to purpose strategy to life. I joined Charles River to lead our digital transformation, and it's very exciting for me to evolve that into a full modernization of the company. There are 4 key messages I would like to highlight. First, we're modernizing our operating model to improve scalability, agility and client experience. Second, we're creating a simpler, faster and more connected experience that deepens client relationships and helps make Charles River the preferred partner for our clients. Third, we're leveraging AI and digitization to improve execution and accelerate operational efficiencies. And finally, through the recently introduced Create the Future program, we have been and will continue to implement initiatives to drive sustainable productivity, positive operating leverage and margin expansion. Together, and what I find most exciting about this is that these actions are creating a more agile and scalable Charles River that is easier for our clients to work with and better positioned for long-term growth. As Birgit discussed earlier, create the future is the most important program we are executing to unlock the value across our portfolio and modernization is a core element of our pathway to purpose strategy. We've already established a strong foundation and create the future represents the next chapter of modernization and our efficiency journey. Our objective is to modernize the enterprise by increasing integration and standardization while simplifying operations and reducing complexity. In doing so, we're creating a more scalable operating model, improving productivity and operating efficiency and building the digital foundation for future innovation. Most importantly, we expect these initiatives to deliver measurable results. We have been working on the implementation of many of our Create the Future initiatives for several months and are pleased with the progress that we've made and are encouraged by the future benefits that it will unlock. From 2027 through 2030, we are targeting at least $300 million of cumulative incremental savings. This is not simply a onetime cost program. It is a structural transformation designed to improve how work gets done and support sustainable growth and margin expansion over time. By combining a more modern operating model with clear financial accountability, we can create meaningful operating leverage across Charles River. Create the Future is organized around 3 primary focus areas. The first is AI digitization and automation, where we're accelerating productivity through AI-driven, digitized and automated processes. I'll double-click into this on the next slide. The second, workflow simplification is where we're reimagining and standardizing enterprise workflows. And the third is enterprise optimization where we're optimizing support functions through standardization and centralization to improve resource allocation and increase scalability. An important point to note is this is an enterprise-wide effort. As the charts show, we expect savings to be generated across businesses and corporate functions through a combination of labor utilization, asset rationalization and procurement totaling, as I said before, at least $300 million of incremental future savings by the year 2030. The diversity of savings is important because our opportunity is not dependent on any single action or function. We are in process of optimizing utilization and use of key resources including capacity and people, streamlining processes and automating and digitizing many of the functions that haven't been already. This reflects a broad portfolio of initiatives designed to create durable improvements while maintaining the quality, compliance and client service standards that are foundational to Charles River. Let me bring this to life by showing how we're transforming workflows and systems across the enterprise. Our work is centered on 3 areas: AI enabling and automating processes, digitizing enterprise workflows and connecting systems and data. Within AI-enabling and auditing processes, we're using AI to continuously improve on how we work across businesses and support functions. This includes things like AI-assisted scientific reporting and study design, AI-enabled commercial and financial processes and end-to-end AI-assisted IT project delivery based on reimagined workflows. We're also streamlining critical systems and data sources and harmonizing and standardizing our data to enable better decision support across functions the AI-enabled and automated processes, along with our improved data assets are being made accessible by digitizing high-value workflows, expanding on our investments into Apollo, our digital client engagement platform that we launched several years ago, transforming study start-up, execution and reporting and automating lab and manufacturing operations. Importantly, this is not technology for technology's sake. It is about redesigning work to improve speed, consistency, productivity and the client experience. We've identified more than 15 core business processes for simplification, expect more than 33% of the transformation value to be enabled through digital investment and have more than 50 AI-enabled projects to drive the transformation. Together, these initiatives create a stronger digital and operational foundation that we can scale across Charles River Apollo is a tangible example of how digitization can improve both the client experience and our operating model. I encourage you all to stop by the demo booth to see Apollo firsthand. I'm hopeful you'll see for yourselves why often we hear from clients that the Apollo platform is a true differentiator and a strong consideration of why they choose to work with Charles River. Today, Apollo supports multiple points across the client journey. Clients can purchase research models through e-commerce, manage their cradle end-to-end vivarium operations, access real-time DSA studies progress and data insights. And for biologics testing, submit and track samples and testing milestones all the way to receiving their reports digitally. We have strong engagement on Apollo with 18,000-plus client users benefiting from the platform, a Net Promoter Score of 55 compared with benchmarks of industry benchmarks of 30 and approximately 92% of users that could use Apollo, do use Apollo. And today's capabilities are only the beginning. Over time, we intend to expand Apollo into a connected digital access point across the entire client journey. That includes the productivity-driven AI and automation like the AI-assisted reporting and commercial workflows I previously mentioned, scientific AI to support scientific applications, insights and decision-making and all controlled with strong AI governance to address security, controls, data privacy and regulatory considerations. Why does this matter? Because a more connected digital experience powered by our investments in AI and Apollo make Charles River easier to work with, improves transparency and enables clients to access more of our capabilities through a single trusted partner. Quite simply, Apollo helps translate the breadth of our scientific platform into a simpler and more integrated client experience. This DSA case study shows the benefits of modernization in practice at a detailed level. It's also a great example of how we are combining the key areas of focus to create modern and simplified experiences as it touches on how we are applying AI, digitization and workflow simplification, 2 of the 3 key focus areas I discussed earlier. Historically, paper-based processes required repeated data entry and verification while multiple handoffs limited visibility and created unnecessary complexity. We are replacing that with that experience with one single connected digital interface from study design through final reporting. Clients can benefit from customized protocols, real-time study visibility and a more streamlined review process. Behind the scenes, connected systems eliminate manual handoffs and duplicate data entry. While digital data capture and automated quality checks can reduce errors and cycle times. As I mentioned previously, we're also creating AI assisted and automated reporting and send processes, which improves scalability and efficiency while maintaining the quality and regulatory rigor our clients expect. Send is the standard format required for certain nonclinical data submissions to the FDA. So digitizing that process is especially important for both efficiency and compliance. Importantly, these tools enable our scientists to spend more time on scientific interpretation and less time on administrative work. For clients, that means a faster, more transparent and more connected study experience. For Charles River, it creates scientific -- greater scientific and operating leverage. This is exactly the type of modernization we expect to improve quality, strengthen client relationships and support sustainable growth and margin expansion. Let me wrap up by returning to the 4 messages I shared at the outset. We are modernizing our operating model to improve scalability, agility and client experience. We're creating simpler, faster and more connected experiences for our clients. We're leveraging AI and digitization to improve execution and operational efficiency. And through Create the Future, we're translating those capabilities into sustainable productivity, operating leverage and margin expansion. This is an ongoing transformation, but we have a committed road map, measurable objectives and a strong foundation from which to execute. We are building a more modern and scalable Charles River that is better positioned to serve clients and deliver long-term shareholder value. With that, I'd like to invite Birgit, Glenn Coleman and Namandje back to the stage to join me for Q&A, after which Glenn will dive deeper into a financial overview. Thank you.

Great. Thank you, Mark. As Mark said, we'll now start our Q&A session. If you could just state your name and firm for everybody on the webcast, that would be appreciated and wait until you have 1 of the 2 mics before asking a question. Thank you.

Ann Hynes with Mizuho Securities. During your presentation, you talked about a few inorganic opportunities related to China related to bioanalysis. Can you just go into deep like the type of opportunities that are out there, maybe valuations size that you're thinking of? Any more detail on the inorganic opportunities would be great?

Yes. So let me start with the bioanalysis. So we're currently executing on 5 organic expansions. And these are ongoing and they will be executed on over the next couple of years. As I said, we would be interested in a potential acquisition in this space. It's too early to tell on what the size of a potential target is, what valuations are. We're obviously looking at the market, but it's always difficult to determine when those targets are available and when we could execute on those. What I can tell you is that we are looking for high science complex modality players in the field that complement our capabilities and our scale. But as I said, too early to tell exactly where -- what the valuations are and the size of it. The same with China, as I said earlier in my remarks, is we are evaluating what are the opportunities, what are potential entry points. But at this point, we're taking kind of a measured approach on looking at opportunities and really making sure that we're taking a disciplined approach, maintaining strategic flexibility and weighing that with other opportunities that we have, such as bioanalysis. So again, a bit too early to tell.

Justin Bowers from Deutsche Bank. Thank you for hosting us. In terms of the operating model transformation and the $300 million of targeted savings from that, can you help us think through the timing and the pacing of that? Is that ratable or more front half, second half loaded via the 2030 targets. And then how do you think about harvesting that savings versus reinvesting in the business?

Right. So Glenn will have a whole session on that. Do you want to say anything upfront?

I would just say that the way we've sequenced the savings is pretty even and linear throughout the plan. A lot of the low-hanging fruit around the previous cost savings efforts that have taken place is no longer with us. So we're dealing with now implementing AI, automation, investments required to generate the savings. So it will take us a little bit longer to get to some of these savings, but I would just say, think of it more in a linear fashion. We may be able to get a little bit more savings in the front half of our 5-year plan, but I'll cover more of that in just a few minutes.

Charles Rhyee with TD Cowen. Maybe a question for Dr. Bumpus. You showed examples of sort of an integrated approach between in vivo, vitro and silicon and that can provide more information than maybe anyone met by itself. There's clearly been discussions, a potential move to sort of 0 annual studies in the future. Just curious -- and also in your longer-term opportunities on that slide, you listed sort of whole body on chip and AI-based virtual and human trial simulations. Maybe can you talk about what you think that future state looks like? And is there a time when we can completely away from at studies? And certainly, how you think the agency is sort of approaching this currently. I know there's potential pilots going to be launched. Any comments there would be helpful.

Yes. So I can certainly speak kind of from my expertise and experience. And what I always tell people quite frankly, is I don't see us being able to move away from animal testing and vivo testing in my lifetime, which I hope will be quite longer. Because there's really a need, again, to understand that whole body context, and we cannot currently replicate that and sell based model. So often, I'll try not to get too much of my [indiscernible] actually talk about. But often, people talk about, say, organ-on-a-chip, say, we're talking about liver-on-a-chip. Now there's an issue with, for instance, cell source and where you get the cells. So you get them from someone kind of post-mortem or you get them from a livery section, someone had cancer, there's resection. So you're getting those cells. The issue becomes with prediction that you're either dealing with cells from someone that has died or tissue that maybe is unhealthy, you harvest those cells. They're actually dying now in culture. All that I have to say it makes it difficult for these methods to be fully predictive. And then even still, you're looking at what's happening in those cells at that moment, it's not telling you how something that's made in those cells might travel to another organ and have an impact because we know in these organs, drugs can metabolize their change. So you need that interplay. And we just don't have a way to do that other than an in vivo model with whole body on chip or even people are connecting chips to kind of flow to each other, but that's simulation. And again, where do the cells come from, what stress have they already been under. They already have some die, some toxicity that's going to then skew your results. So they're just not fully predictive and we can extrapolate it to a whole body context. So I think this hybrid approach that we've talked about is really what we're going to continue doing in the future. We want to advance the in vivo, in silico approaches to give us more insight, I think, into the in vivo more of the detail, but we need these in vivo models. But certainly, we're doing things like reducing the controls as much of the 3Rs approaches we can take while upholding the rigor of the science.

I think I'm next Dave Windley with Jefferies. I was a father of an alum. I feel like I'm an investor in Hopkins. So go hop. Dr. Bumpus, I have a follow-up question for you on that. So 3Rs have been around for a while. I'm sure in your career, you've seen the evolution my curiosity, I guess, is in light of a couple of decades of efforts to reduce animals and studies that have had some impact and some success? How are NAMs accelerating or not -- are they just extending that line? Are they accelerating that line? And what are you seeing as you're now in a position to talk to sponsors and clients from a commercial standpoint? How do you think your former boss and that regime have accelerated the adoption of NAMs? So that's my first question, please.

I think that this integrated approach we're taking is going to help us get that acceleration. The issue becomes when you focus on which much of the discussion has been this idea of a NAM, it's going to suddenly replace something and we can get all the data and endpoints we need. I think that's what's limiting because it's not reflective of the science. And as I was trying to hint to again, even though we may be more sign of detail than to share, the models themselves, the in vitro models themselves have flows because, again, it's where are we generating the material where we get material. So that's an impact. And then you think about in silico in AI, while it's is only as good as the data we put in. And still, there are so many things that we don't know, we don't understand. We don't have data around certain end points. And of course, you have even quality and reproducibility issues around those lines. So we can't use AI to fully predict and reproduce this. So we need the in vivo part. I do think that there are places where you see traction tox models. We have very good data there. There are opportunities, certainly, things I mentioned like the Retrogenix platform, that currently is being used in lieu of animal studies in several instances to look at that off-target potential binding and virtual control groups. Another way to think about how do we even though we're doing animal studies reduce that control group to as minimal as possible as we can scientifically. So I think those are the key opportunities. The other quick thing I'll say, I know that this discussion has really been roaring for a little more than a year, but this has been going on a long time. I mean FDA even before my time was talking about NAMs, and trying to advance NAMs. So it's something that's been ongoing and that we have not seen fully take over as the science and it's going to evolve slowly, but this is not new. It's been happening and evolving, and we're going to continue to try to push it forward.

Great. Appreciate that emphasis. Birgit, this one is for you. It seems like there's a natural tension between as you become a bigger organization and trying to standardize operations while still being nimble to the customer. So kind of avoiding the creation of our way or the highway type standardized structures. How do you manage through that tension as you're trying to standardize the business?

Yes. Great question, David. And this is really the heart of Create the Future. So what we're looking for is taking complexity out of our processes, making the processes more flexible using technologies like AI that allow us, so take, for example, report writing, we struggled with automating this for a decade now because we have 6,000 clients and everybody wants their mannerisms in a report. But now with the AI technology, we are actually able to be as flexible as the clients want to because we can use those kind of tools to really customize how we are approaching the client. So our third pillar is growing through a client-centric approach and client centricity is all about flexibility, working with them in how they need us to work. So -- and then it's eventually less about how our process works, and it's more about how we feed our process into their processes. It becomes more about the data feed right in their data lakes, into their cloud systems and less about a report and more about the insights. So this is the heart of the question that we ask ourselves every single day. And if you're so choose to and you go out to the showcase, we have some people out there who work with our clients every single day to design those processes, design the digital tools with their feedback. So it's literally in step with our clients.

Christine Rains from William Blair. As we've seen and you've spoken to today, there is obviously not going to be an overnight substitution for NAMs. But have you seen or do you expect to see a near-term shift towards shorter duration of NHP or other animal studies? And if so, net-net, do you think the NAMs Charles River currently offers could offset the impact of this headwind on the bottom line?

Yes. Just to summarize what Namandje said before, and you can chime in then afterwards. So this has been ongoing for 3 decades. It's 3Rs. Right now, NAMs is a bit of a buzz word. We are the leading edge bringing those technologies in. They have to be part of a regulated process. Otherwise, they cannot function on its own. So any technology that is out there that can help the client make better insights is something that is on our radar screen. So as we bring those in, yes, there could eventually be further reductions of animals, that's the goal. That's the right second scientific direction. But you saw on the slide that Namandje showed, the dark slide, how many technologies it takes, how many assets it takes, how much insight it takes. So as we bring those along, these multitude of variety of technologies that we will bring in, we believe, will offset or maybe even add to the revenue that we're generating. But again, we're far away from tests being really material. So -- but we're committed to lead this, and we are working on this every single day.

Elizabeth Anderson from Evercore. Could you talk a little bit about more about your interest in China? Obviously, you do have a business in there a little bit more focused on models. So are there -- are you looking to serve Chinese biopharma? Is it for international companies that are working in China? Are there certain areas that are more or less appealing? Could you maybe go into that in a little bit more detail?

Yes, happy to. So our interest is to build on our research models business in China. That is serving the Chinese ecosystem, meaning anybody located in China, biotech, Chinese pharmaceutical companies, even global pharmaceutical companies located in China. So it would be providing preclinical services to this customer segment. As I said before, we are evaluating. We will take a really disciplined approach. That will take some time. There's nothing imminent. But if there's a target that we feel is the right target for us, we will be ready for it. In the meantime, we will balance that with other investment opportunities.

Great. Luke Sergott with Barclays. Just want to talk a little bit about the LRP and the 5% to 7% you guys talked about. The market has been growing, I'd say, probably mid-single-digit plus right now. It's on pace for that. You have upside from more biotech funding, more investment there. you guys are leaning further into some of the higher growth aspects of bio analysis. You guys are talking about that. You have NAMs coming on. So talk about, I guess, where the conservatism is baked in to get to that range where it's, okay, this could go wrong here or there and gets to the bottom end.

Yes. Luke, can I ask you to wait until the next Q&A because Glenn has a spectacular session about that? So I don't want to take anything away from that right now.

All right. I guess and -- if I can get another one in then. In the spirit of everybody asking about the NAMs. I think one of the big questions is, everybody is trying to figure out like, oh, my god, this is how much of the wet lab is going away? Or this is how much of their business is going away? But you guys have arguably the largest NAMs portfolio in the world, right, 220 capabilities. So maybe give us some context of when those projects and capabilities come online, and how much of the work was cannibalized or how much has actually turned into more supplemental work and creating more work for yourselves? .

Yes. So let me frame it a little bit differently. NAMs is not a separate business model. It's not a separate business of Charles River. It is an integration into our safety assessment studies. So as of today, those 200 something assays that Namandje showed on a slide, are in use, and they are part of our Safety Assessment revenue. So as we will bring in more names, they will become part of that same safety assessment revenue that you're currently seeing. We believe, because there's a lot of validation, a lot of hybrid studies that there actually might be some revenue opportunities, but we don't think this is going to change the trajectory of Charles River over the short term. So just let us continue to be the leader, take science first, implement them. It's part of the Safety Assessment business and actually also part of our manufacturing solutions business, as you know, we acquired PathoQuest, which is a typical, a great NAMs technology that is helping our manufacturing solutions, providing our clients with options there. And we will continue to integrate that. And as we see a material impact, positive or negative, we obviously will provide that information. But at this stage, we see this as an add-on will add some revenue generation because it's assays that we do in addition, but it will be part of that Safety Assessment business. Thank you.

Do we have any other questions? Sounds great. So now it's time for about a 15-minute break. And just a reminder, feel free to check out the showcase and product demo in the back, and we'll be back in about 15 minutes. Thank you. [Break]

Good morning. Welcome back from the break. It looks like most people made their way back to the receipts. It's very good news because we have a very exciting session coming up, where the business leaders are going to be taking you through their growth plans, how they're going to be improving their financial performance. But first, I'm going to go through a financial overview of our long-range plans. Before I do that, I want to introduce myself to many of you I have not met and reintroduce to those I've already met. My name is Glenn Coleman, I'm Chief Financial Officer at Charles River Labs. I've been with the company now for a little over 5 months. I joined Charles River because his strong leadership position in both the preclinical and nonclinical space. The breadth and depth of our portfolio, differentiated scientific capabilities and really wanting to be part of an exciting chapter in the company as we go through this next phase of transformation which should lead to meaningful long-term shareholder value creation. I bring over 35 years of financial and operational experience, working largely in global health care companies. Previously, I spent 10 years as a public company CFO at Integra LifeSciences, Premier and Dentsply Sirona, all of which are in the healthcare space. I also have operational experience and spent 3 years as Chief Operating Officer at Integra LifeSciences, we're a little the commercial manufacturing and clinical functions. In my various roles, I've also led numerous transformations have been part of many transactions, including completing over 20 acquisitions, supported several divestitures and completed 2 public company spin-outs. I wanted to start with 4 key messages and takeaways from my presentation. First, we expect to accelerate our growth and profitability by executing on our pathway to purpose strategy. I'll provide more details on our long-range financial targets in a few minutes. But we believe that Charles River is at an inflection point for accelerated growth and profitability, starting in the second half of 2026. Second, a key way we plan on accelerating our growth and profitability is investing in high-return opportunities both organically and through acquisition, that are focused on bioanalysis, geographic expansion, especially outside the U.S. and Europe. And you saw earlier from Birgit's chart, we only have 7% of our sales coming from rest of world. So that represents a great opportunity for us. And then areas where we can differentiate with innovation through our scientific capabilities. Third, we have plans to significantly expand operating margins through productivity improvements, automation, modernization, leveraging AI and centralizing and standardizing certain corporate functions. These plans are expected to reduce costs by at least $300 million over the next 4 years, which will allow us to not only generate margin improvement but also reinvest for faster top line growth. Fourth, we will continue to be disciplined with our capital allocation strategy. Our primary focus will be on organic growth opportunities while at the same time, maintaining a strong, flexible balance sheet for strategic and accretive M&A. This is all enabled by strong free cash flow generation by the business, access to low-cost capital and maintaining a low leverage ratio, which currently sits around 2.5x net debt to EBITDA. Listed here are my top 3 priorities as CFO and the framework for our operating and capital decisions. It starts with strengthening and building on our financial discipline, and have a clear financial transparency, accountability and execution of our long-range plans. A large part of that discipline is driving the next phase of our transformation, which I previously mentioned and that's largely through automation in the DSA segment and centralization of certain functions across the company. And lastly, deploying capital to high-return investment areas such as bioanalysis, regulated testing, NAMs, topics you're going to hear about throughout the morning. These areas should allow us to advance towards our long-term sales CAGR targets. Well, this is clearly one of my favorite charts for obvious reasons. It highlights the outstanding record and history of delivering exceptional results over the long term at Charles River. This slide shows the financial performance over the last 10 years from 2015 through 2025 with double-digit CAGRs for revenue, operating income and non-GAAP earnings per share. And you can see here, this led to these financial numbers tripling in size over that 10-year period. You can also see we've got a very healthy cash flow CAGR of 9%. A point of note though is our revenue CAGR of 11%. It was largely driven by organic growth, which grew 7% over this 10-year period, and that was complemented with about 4 points of growth come from acquisitions. I mentioned this because during time periods where we've seen a favorable industry and macro backdrop, we've shown the ability to grow organically in the mid- to high single-digit range. We are confident that we have sustainable revenue growth, largely driven by 4 factors: market recovery, investments in higher growth opportunities, commercial excellence and geographic expansion. Starting with market recovery. We're seeing improving biopharma and biotech funding trends as evidenced by our net book-to-bill ratio that's been greater than 1 for the last 3 quarters. And in fact, in our most recent quarter in Q2, we had the highest net book-to-bill ratio in nearly 4 years at 1.19x. Biotech funding over the last 12 months reached $100 billion and that was just shy of the peak that we saw during the pandemic. We're also seeing stronger proposal volumes over multiple quarters. We've now had 3 sequential quarters of proposal volume increases. Most recent quarter, a double-digit increase year-over-year. And obviously, that's a very positive trend. But what also is positive is we're seeing our capture rates being stable or even going up a bit, which means we are winning more in the market. Investments in faster-growing areas should also provide a framework for faster growth. This includes complex modalities and large molecules, which should lead to higher value studies in the DSA segment. In addition, the expansion plans for our bioanalysis business should enable us to increase our scale and faster growth preclinical and clinical applications. The Manufacturing segment should also see a benefit from the rollout of our next-generation quality control testing solutions. Our commercial go-to-market strategy will also help support sustainable growth as we implement a more disciplined pricing model, leading to modest price increases in the future, while at the same time increasing our share of wallet as we leverage our scientific leadership and differentiated capabilities. We will selectively expand our footprint in attractive markets, so we could be in places that support our clients when and where they need us. I think Birgit also mentioned that earlier. That is really important. All this leads to a more durable, faster-growing portfolio shifting towards higher-value capabilities. Listed on the next slide are the structural actions we're taking to improve our operating margins and our earnings power. I'm not going to go into each of these in a great level of detail, but there is one I wanted to highlight. AI and automation are areas that we expect to drive meaningful cost reduction and efficiency of the organization. The largest impact areas will include report writing, scheduling, workforce planning and digital pathology. Shannon is going to get into this in much more detail when she talks about modernizing the DSA segment. But this not only has a benefit for us in terms of productivity and efficiency. This also has a huge benefit for our clients in that it reduces the cycle time for drug development. Moving to the balance sheet. Our strong balance sheet and free cash flow generation helps support our long-term strategy and provide us the flexibility we need to invest organically and also grow through acquisitions. We currently have a $2 billion credit facility that can be upsized to $2.5 billion, if needed, with an accordion feature. And at the end of June, we've drawn approximately $1.1 billion on our senior secured credit facility. We also maintain about $1.5 billion of senior notes with maturities starting in 2028, bringing our total debt to roughly $2.6 billion. Our weighted average interest rate on our total debt is just above 4%. We currently have available liquidity of about $1.1 billion consisting of cash on hand and the available borrowings under our credit facility. In terms of leverage, which we find as net debt to EBITDA, we are in a very good place. Our current leverage ratio is 2.5x, right at the midpoint of our targeted long-term range of 2 to 3x. That being said, there may be temporary periods where we exceed 3x for certain strategic investment opportunities, but we would work to quickly delever with our strong free cash flow generation. We have minimal debt coming due in the next 2 years. But we will likely begin to look into refinancing some of our senior notes probably within the next 6 to 12 months, depending upon acquisition activity and if there are favorable conditions in the capital markets. It is likely that this refinancing will be a headwind to earnings per share of about $0.20 to $0.25, assuming that we finance in a similar like-for-like fashion. So that assumes that we would refinance with another senior note to take out the current senior note. And obviously, that's due to higher interest rates. And we've considered this impact in our long-term earnings per share targets that I'll share in just a moment. So let me shift gears and discuss our capital allocation priorities. Historically, if you look back over the last 4 years between 2022 and 2025, we've generated over $1.7 billion of free cash flow. Our capital allocation has been very balanced with 36% used for CapEx, 26% used for M&A and strategic partnerships, 20% used to pay debt with the remainder returned to shareholders in the form of share repurchases. Having said that, we saw a much higher concentration of share repurchases in the past few years as we booked back $750 million of stock between 2024 through 2026, which includes approximately $300 million in the first 6 months of 2026 under our previously Board approved $1 billion share organization program. In 2026, we also spent over $500 million on the acquisitions of K.F. Cambodia and PathoQuest. Looking forward, our capital allocation will continue to be largely focused on accretive M&A and strategic partnerships in the fastest-growing areas that were mentioned earlier. In addition, we expect to invest in CapEx at a rate of 5% to 6% of sales, and that includes supporting the automation and digital transformation savings that we referenced earlier. The largest majority of the spend, about 2/3 should be supporting growth initiatives such as our Bio A lab expansions. Birgit mentioned earlier, we're doing currently 5 expansions in the Bio A business. And then we should have about 1/3 supporting maintenance and life cycle management. We will also be opportunistic around our share repurchases while managing our debt levels to ensure we have adequate liquidity and a net leverage to support our long-term plans. Since M&A is a top priority, let me just spend a few minutes on the criteria we use in evaluating acquisitions. We look at companies or targets that strengthen our leadership in attractive growth areas. In many cases, this gives us more scale, so we could be more competitive. Companies that add differentiated regulated testing capabilities such as bioanalysis or in vitro or in silico technologies. Expanding into priority end markets and geographies where we can profitably grow and then enhancing our scientific depth. The key financial metrics and hurdles we assess, including achieving a return on invested capital above our weighted average cost of capital, before year 5, and you can think of that as above 10% today. The deal should be neutral to accretive to non-GAAP earnings per share in the first full year and in line or accretive to our long-term organic sales growth targets. Ideally, the acquisition targets meets all these criteria, but that may not be the case in all situations depending upon the strategic importance of a deal or timing of integration activities, which in certain deals may have more back-end loading of synergy savings. Charles River has an M&A strategy that we believe will enhance shareholder value through a seasoned and experienced M&A team that is deep industry and financial expertise. This team is led by Joe LaPlume, I know many of you know Joe, and he's been the head of our corporate development and strategy team since 2014 and done a remarkable job on helping the company build through M&A and positively influencing our strategy. We've acquired approximately 20 companies under the -- over this past decade under Joe's leadership, including several safety assessment acquisitions that have contributed to us becoming the leader in preclinical drug development. I wanted to highlight 3 of our more recent acquisitions. Our recent acquisitions of our 2 nonhuman primate suppliers in Cambodia and Mauritius as well as PathoQuest demonstrate that we're focused on strengthening our portfolio, particularly as it relates to our core competencies. The acquisitions of K.F. Cambodia and Noveprim do just this, they support the growth of our DSA segment and also give us a unique competitive advantage in the marketplace as we have operational control over this critical supply source that will only grow in importance as drug development and demand continues to trend towards biologics and complex modalities. The transactions are also providing a meaningful margin benefit as we capture more of the profit from low sourcing costs. It's interesting that earlier this year when we announced the acquisition of K.F., we also announced that we acquired a long-term strategic partner, PathoQuest, a next-generation sequencing our NAMs approach to manufacturing quality control testing. While our clients' reliance on traditional drug development methods have not changed. We will continue to invest in our scientific depth and innovation capabilities and will do so in a disciplined manner. So we're committed to this. Deploying capital using a disciplined results-oriented framework and creating long-term shareholder value through our M&A strategy. Before I get to our long-term financial targets, let me just update you on our 2026 guidance. We issued a press release this morning, and we reaffirmed our 2026 full year guidance for revenue, operating margin and non-GAAP earnings per share. However, we indicate that we expect to be at the upper end of our guidance range for both revenue and non-GAAP EPS. This comes on the heels of our full year guidance raise on our second quarter earnings call last month, where we increased the guidance for organic revenue growth by about 150 basis points or $60 million, increased our non-GAAP EPS by $0.25 at the midpoint and also increased our free cash flows by $25 million due to the operational outperformance year-to-date and expectations of an improving demand environment for the second half of the year. Earlier, I had mentioned that we expect to see an inflection point in the second half of the year. Organic sales declined in the first half of the year by 0.7%. However, we expect organic growth in the low single digits or maybe even slightly better in the second half of the year to arrive at our full year revenue guidance of about 1% organic growth. The second half of the year run rate is more indicative of what we would expect for the full year 2027. And now, we're going to introduce our long-term financial targets. We've established these new long-term targets that take us through the year 2030, which we believe will drive long-term shareholder value with successful execution. Let me just give you though some context on how we set these targets. First, we believe these are very reasonable. They are achievable. They are all things that we're currently executing on, and I'll use a football analogy, there are no Hail Maries in these numbers. There are no moonshots in these numbers. In fact, I would tell you there are certain potential tailwinds and upside that could drive us to the higher end of the range or even above that we've not included in these targets. So what would be a couple of those items. Well, we heard earlier about AI early discovery investments in AI, driving cost down, driving more programs through the drug development cycle, driving more filings of INDs, all things that will benefit Charles Rivers business. Now we haven't included these in the targets because we're not seeing it yet in our business. But we would certainly expect this to be a structural tailwind for us over the 5-year plan. Another area of potential upside could be pricing. We've only built in modest price increases in our long-range plans. If we continue to see the strong demand that we've seen over the last couple of quarters, we continue to see capacity go up in our facilities, if we continue to see supply constraints, that would all lead to potentially more significant price increases, and we have not included those in our plan. acquisitions, also another potential area of upside. Obviously, acquisitions themselves are not included in our organic plans, but some of the assets we were looking at like in the bioanalysis space, our faster-growing assets and could be accretive to these numbers once they become part of our organic business, which is 12 months post acquisition. With that being said, let's now move to our 2030 finance targets that are highlighted by a 5% to 7% organic growth CAGR, largely driven by improvements in end market demand and continued strong commercial execution. We expect a gradual improvement in 2027 from the growth rates in 2026, with our expectation that we will see revenue growth in this range starting in 2028, assuming the underlying positive market trends continue. Non-GAAP operating margin, which includes the cost savings initiatives mentioned earlier, is expected to be approximately 24% in 2030, representing, on average, a 75 basis point improvement each year. Non-GAAP earnings per share is expected to have a low double-digit CAGR over the 2027 to 2030 period, and that includes an assumption of a slightly higher tax rate. and also higher interest costs due to the expected refinancing of our senior notes that I mentioned earlier. A further breakdown of our revenues and non-GAAP operating margin by segment are shown on this slide. Starting with DSA. We expect the revenue growth CAGR to be pretty much in line with the overall company average at 5% to 7% with non-GAAP operating margins of at least 27% by 2030. The fastest-growing area, no surprise is bioanalysis, but most of the volume growth in DSA is expected to come from our core toxicology business. Non-GAAP operating margin improvement of over 100 basis points compared to our 2026 projected results is largely expected to be driven by lower sourcing costs of nonhuman primates driven by our recent acquisition of K.F. Cambodia, modest pricing improvements and cost reductions driven by automation. Manufacturing is expected to be the fastest-growing segment with a 7% to 9% sales CAGR and operating margins greater than 40% by 2030. Revenue growth from the core businesses should see high single-digit growth due to microbial next-generation product launches and continued growth in recurring revenue from cartridge sales, while biologics testing revenue growth led by increases in large complex modalities. The expected non-GAAP operating margin improvement is over 400 basis points compared to our projected 2026 margins with the CDMO divestiture representing over half of that improvement. RMS has a 2% to 4% targeted revenue growth CAGR with a stable non-GAAP operating margins in the mid-20% range through 2030. Consistent with historical trends, we're assuming a mid-single-digit volume decline in North America, with price increases in favorable mix expected to offset these declines. The targeted revenue growth is expected to come from continued strong growth in China and an improvement in our government academia and our cradle businesses. Unallocated corporate costs are expected to be about 5% of revenue in 2030, and that's a decline of about 100 basis points from where we expect to land in 2026. This slide shows the impact of key drivers of organic revenue growth from our current 2026 revenue guidance. The majority in over half of the overall company improvement is expected to come from the DSA segment with the drivers outlined, including a continued improvement in biopharma and biotech demand. We also expect manufacturing to be a key contributor to overall company growth post the CDMO divestiture since it's a segment that is expected to have the highest organic revenue growth with strong contributions from both our microbial and biologics testing businesses. And then the RMS growth will largely be driven by continued improvements in China, along with the recovery in the government academia and CRADL's businesses. I would just say most of that recovery is planned in the outer years of our plan. Moving to margin expansion. As I referenced earlier, we expect to see an improvement in margins of about 75 basis points on average over the next 4 years, which drive our margins to be around 24% by 2030. In 2027, we expect the operating margin improvement to be higher than the average over the period largely due to top line leverage, new cost savings initiatives and the full year benefit of acquisitions and divestitures completed in 2026. The key to generating an approximate 300 basis point improvement in operating margin by 2030 is achieving our revenue goals as we anticipate both price and volume leverage to be meaningful contributors to our margin expansion. We also expect the improving demand environment to lead to modest price increases over the next 4 years, which will be a larger driver of margin improvement than volume since pricing primarily dropped straight through to margin. In addition, we plan on executing the next phase of transformation savings, which should largely offset the annual headwinds we see for inflation and merit increases. We've also assumed additional investments needed to support our growth plans, largely in support of our commercial organization as well as our DSA segment. All these lead and should lead to a faster-growing company with margin expansion. In summary, we believe that Charles River is well positioned to create long-term shareholder value. We are positioned to win with our scale differentiated scientific capabilities, strong commercial execution and a broad and comprehensive portfolio, all of which driven by a leadership team that is focused on execution. We have an attractive and improving financial profile that is supported by recent favorable macro and industry trends that we expect will lead to accelerated growth and profitability with targeted goals by 2030, a 5% to 7% sales CAGR, about 24% operating margins and consistent double-digit earnings per share growth. This will be supported by investments in core high-return areas and delivering on the next phase of transformation, that is expected to yield over $300 million of savings over the next 4 years and be a key catalyst to our margin expansion. These future plans are all supported by a strong balance sheet and a business that generates very healthy free cash flows. We will also continue to be very focused on having a disciplined capital allocation strategy. Thank you very much. And now I have the pleasure of introducing our next speaker. Shannon Parisotto, Executive Vice President of our Discovery and Safety Assessment business. Shannon?

I agree we should start walking back there a little bit, making our way up here. So thank you, Glenn, and good morning, everyone. I'm Shannon Parisotto and I've been with Charles River for more than 25 years in leadership roles that include both finance and in operations. Today, I lead the Global Discovery and Safety Assessment business, with a unique perspective on how we have evolved and the exciting opportunities we have ahead of us. I'd like to spend the next 15 minutes or so, highlighting what DSA supports with regards to the broader strategy that Birgit laid out earlier. There are 4 key messages that I would highlight. First, we're extending our unmatched breadth, depth and scientific expertise to increase our leadership in Safety Assessment. Second, we're helping clients accelerate development time lines and enabling faster decision-making. Third, we're leveraging our global scale to provide enhanced client support and mitigate risks. And finally, we're deepening our client relationships through more integrated solutions that accelerate more drug development. Together, these advantages provide a strong foundation for the next phase of DSA's growth. Let me start with the foundation of DSA, which is our leadership and outsourced safety assessment. We are the global leader in this market with approximately 33% of the share of outsourced in vivo safety assessment. We have comprehensive GLP and non-GLP capabilities. Each year, we support approximately 1,500 IND programs across a broad range of therapeutic areas and modalities. Our scale gives clients access to deep scientific expertise, flexible capacity across our global network and the experience that comes from supporting a significant number of development programs every year. That's important because as drug development becomes increasingly complex, clients need partners that can combine specialized science with reliable education of scale. Overall, our unmatched breadth and global scale is a significant competitive advantage for us. Our 2025 revenue is comprised of 40%, which occurs during the clinical phase of development and 60% during the preclinical phase. With investments, we intend to shift this to a 50-50 split. I want to emphasize, as Birgit did, this is not clinical trial work, but work in support of that is. Our client segment is over 50% biotechs and over 30% large biopharma. And our revenue is spread across Europe, Canada and the United States. Our leadership position provides a strong foundation for long-term growth that we see in DSA. From 2027 through 2030, we're targeting 5% to 7% organic revenue growth with non-GAAP operating margins above 27%. Before anyone asks, although you will still ask, we need roughly a 1.1 net book to bill to achieve this target. Although there are other factors that can influence the timing of revenue growth, such as conversion rates, delays, change orders, et cetera. But we expect to see an improving biopharma funding environment that supports this growth. But our opportunity is not dependent on the market recovery alone. We have meaningful growth levels that are within our control. We can improve capacity utilization across our network. We can expand our bioanalysis capabilities, strengthen our supply chain oversight and further utilize AI automation and digital tools to increase productivity and accelerate IND-enabling time lines. Together, these actions support our long-term objectives for both the revenue growth and the margin expansion. And we are well positioned to achieve our targets and benefit from the evolving client requirements right now. Several long-term trends are changing what clients need from their development partners. Programs are becoming more complex as biologics, cell and gene therapies and other advanced modalities become a larger portion of the pipeline. With development time lines accelerating, demand for faster and a more integrated scientific decision-making is needed. AI and other technologies are creating opportunities to improve how development progresses. And clients increasingly want a strategic outsourced partner that can provide specialized expertise at scale. All these trends play directly to our strengths and create a meaningful opportunity across approximately a $13 billion addressable market. Our breadth of scientific expertise, our integrated capabilities, investments in new technologies and global scale position us to help clients manage greater complexity while advancing their programs more efficiently. That creates an opportunity to meet demand through deeper client partnerships. As Birgit discussed, our pathway to purpose strategy is organized around 3 priorities: modernize, strengthen and grow. Within DSA, modernize is about improving speed productivity, quality and the client experience; strengthen is about directing investments towards differentiated science and attractive higher-growth opportunities; and grow is about utilizing those capabilities to deepen the client relationships and expand our participation across the development life cycle. Let me show you how each of these priorities looks in practice, and I'll begin with modernized. We are modernizing DSA across 3 primary areas: scientific workflows digital capabilities and our operations. Within scientific workflows, we're benefiting from AI and automation to accelerate activities such as toxicology reviews, pathology, reporting and scheduling. We're also digitizing the scientific and client experience with Apollo, which hopefully, you guys have had a chance to see or at the end of this can go out and take a look at it. And our digital pathology work and standardized data and across our global network, we're improving utilization, strengthening our critical processes and standardizing how all the work gets done. Importantly, modernization isn't about just the reduction of costs. It's about improving speed, improving quality, productivity and capacity while also creating better experiences for our clients. And we're already beginning to see tangible examples of that in practice now. AI and machine learning is an important part of the modernization effort in DSA. We're applying AI and machine learning capabilities today in specific workflows where they can create tangible benefits. Virtual control groups, which you've heard several times now, is a great example of this, where we are using curated historical control data and have demonstrated the potential to reduce the number of control animals while maintaining our scientific rigor. AI-assisted reporting can automate report preparation and reduce activities that we're taking hours down to minutes. And our AI-enabled digital pathology is helping us accelerate review time lines and improve the workflow efficiencies in this area. When we combine these tools with our scientific depth and our integrated execution, we can translate all of this into a better client experience and additional revenue opportunity for us. So modernization is about making the business we have today better. Strengthen is about where we invest to extend our scientific leadership and improve our growth profile. One of our larger opportunities, as you have heard, is bioanalysis, where we're extending further into the clinical post-IND programs. This will ahead and extend our leadership in the complex modalities. We're also investing in emerging scientific approaches, including advanced cell models, AI-enabled applications, complementary in vitro capabilities and areas like their virtual control groups. At the same time, we're strengthening the portfolio by constant training investments in categories where we believe we can lead and reallocating resources away from lower priority offerings. And where it makes strategic and financial sense, disciplined M&A can accelerate our entry into attractive capabilities or geographies. Collectively, these investments are shifting DSA towards a higher growth, higher value opportunity. Another important example of strengthening the business is our approach to nonhuman primate sourcing. Our acquisitions in Cambodia and Mauritius increased our internal capacity, improved model availability and strengthened operational control of our supply chain. Today, we have reached our long-term target of approximately 80% of the nonhuman primate supply is being internally sourced at Charles River. That provides greater control, scale and reliability while strengthening the model quality, biosecurity and regulatory oversight in this area. It also reduces our dependency on external supply. We have improved reliability and control supply for our clients while supporting better economics for ourselves. Let me spend a little bit more time on bioanalysis because as you've heard, we believe this to be one of our most attractive long growth -- long-term growth opportunities. As Birgit discussed earlier, demand is increasing as biologics and complex modalities become a larger part of development pipelines and the testing associated with this extends into clinical development. We already have deep scientific expertise and very strong client relationships across the nonclinical development, giving us an attractive foundation that our clients are asking us to extend into clinical. Our strategy has sub components. We're expanding our physical footprint to support continued growth in both nonclinical and clinical. We're deepening our scientific expertise. And in addition to our organic investment, we have a disciplined M&A strategy to add capabilities and capacity. By increasing our capacity in clinical programs, we can support clients further along the development life cycle. We expect these actions to grow the bioanalysis revenue organically from approximately $300 million in 2025 to $450 million in 2030. By extending further into clinical development, we can stay with our clients' programs longer. We can increase our share of the wallet and shift DSA towards a higher growth, higher value revenue stream. Now third pillar brings these investments back to the client. We see opportunities to expand further deepen relationships with leading biopharma companies across increasingly complex development programs. We're also tailoring our approach for emerging biotechs. And we have solutions such as Fast Track that can accelerate IND readiness for our clients. At the same time, we're investing in capacity and readiness to give clients greater confidence in study initiation time lines. And we're connecting capabilities across the development life cycle to provide more integrated solutions for our customers. Ultimately, our goal is very simple: make Charles River easy to work with. That means greater visibility, faster execution and access to more of the scientific capabilities our clients need from a single trusted partner. Let me wrap up with why I believe -- we believe that DSA is uniquely positioned to win. Our advantage is not based on any single capability. It is a combination of deep scientific and regulatory expertise, unmatched depth and breadth of capabilities, global scale and infrastructure speed and execution and long-standing client relationships. Those advantages are very difficult to replicate and they become increasingly valuable as drug development is becoming more complex. Very important is, we're now combining that strong foundation with a more modern operating model and focusing our investments in higher-growth science. We believe that positions us to strengthen our leadership in safety assessment, expand our participation about -- throughout the drug development time line and deepen our client relationships, so that we can deliver sustainable growth and improved profitability over time. We're excited about the opportunity ahead and confident in the role that DSA will play in Charles River's next phase of growth. With that, I'll turn it over to Kerstin Dolph to discuss our Manufacturing Solutions segment. Thank you.

Thank you, Shannon, and good morning, everyone. For those of you I haven't met, I'm Kerstin Dolph, and I lead our Manufacturing Solutions business. I've been with Charles River for 25 years. And during this time, I had the opportunity to view our business from a variety of different perspectives. I started my cave in finance with Charter, Germany and moved from there into operational leadership positions with research models and services, biologics testing and across manufacturing. Today, I will walk you through why we believe this business is positioned for durable growth and most importantly, increasing value for our clients and shareholders. We will discuss how we're leveraging our leadership positions to capitalize on secular growth drivers, like the increased number of biologics and the attractive development pipeline. We've sharpened our portfolio, and I will explain how that increased our focus on top line growth and operating margin. We've also been working on expanding our client relationships, which will increase our share of wallet across Charles River. And as we are executing our pathway to purpose strategy, manufacturing solutions allows our business to be more balanced as we are expanding our role from discovery and preclinical more towards clinical and commercial. So all of this combined gives us high confidence in the long-term financial targets that Glenn shared earlier. Manufacturing Solutions includes 2 highly complementary businesses, Microbial Solutions and Biologics testing, which make up our comprehensive manufacturing, quality control testing portfolio. Microbial Solutions provides mission-critical quality control testing products for the pharma manufacturing market and to a smaller extent for other markets like consumer care. In terms of lines of businesses, Endosafe supports endotoxin testing, which are essentially bacterial fragments that can contaminate the manufacturing process. Accugenix provides microbial identification and strain typing services, which can be helpful when determining the root cause of a contamination. And Celsis enables rapid combination detection for in process testing and product release. The common threat across both of these businesses is that they are embedded in regulatory workflows. Once a method is qualified and instrument is installed or a manufacturing process is fully validated, it becomes quite expensive, difficult and risky to switch. With biologics testing, we're one of the few providers who can offer all different aspects of lot release testing, including part characterization, biosafety testing and potency assessment. All of this combined drives high client retention and recurring revenue streams. As an example, about 65% of our microbial business comes from recurring consumables. I will not spend a lot of time on this slide here, but the main takeaway is that we're quite balanced from a client segment perspective. And we have meaningful growth and presence in APAC and rest of world that we are working on expanding further. From my perspective, this is probably the most important slide in my presentation, as our manufacturing business today looks significantly different from what we had 5 years ago. The CDM odiestiture didn't just simplify our portfolio, it reveals the strength of 2 exceptional businesses that were previously embedded in broader operation. So today, we're more focused. We're growing faster with generating stronger operating margins, and we're building deeper client connections. Since the CDMO divestiture we have been able to significantly improve our financial growth and margin targets. We've been working on increasing our share of wallet with our existing clients, but we're also leveraging DSAs leadership position to generate additional testing opportunities. Shannon talked earlier about bioanalysis and that represents a direct connection back to manufacturing solutions. Once the method is established in a GLP type setting, certain information can be transferred into GMP method development for commercial product release. and that provides a client with a more seamless solution and approach, and it keeps the relationship within Charles River. Manufacturing Solutions also allows us to shift our focus more towards clinical and commercial programs. where historically, revenue streams have been more durable and less cyclical. So about 90% of our revenue comes from clinical and commercial programs. We have high confidence in achieving our long-term financial targets, 7% to 9% organic top line growth from 2027 to 2030. And exceeding 40% non-GAAP operating margin by 2030. There's 4 key growth drivers that I would like to walk you through. First, we will continue to focus on core markets and as clients expand their commercial programs, the need for testing is going to increase, in particular for the biologic manufacturing. We will participate in next-generation biologics, including ADCs and biosimilars. A lot of therapies are moving or coming off patent. And so there's an increased focus right now on biosimilars, particularly in APAC. From a geo opportunity perspective, we have the ability to add additional capabilities at our existing APAC locations in a very cost-effective way. We're focusing here on key modalities, including biosimilars. And we also believe that we will see a significant benefit from the increased investment in the U.S. manufacturing market for onshoring by the Pharmaceutical segment. And then lastly, we will continue to push for growth and client conversion towards our existing instrument and equipment platforms, which will lead to that recurring downstream consumables revenue. Our pathway to purpose strategy provides a framework to convert our market position and to shareholder value. We modernized to increase productivity, we strengthen by expanding our scientific portfolio and we grow by making it easier for our clients to do business across Charles River. We continue to invest in digitization and automation of our existing laboratory operations, which positions us to reduce our turnover times further elevate service levels and increase efficiencies. We strengthened by expanding our world-class scientific portfolio by providing our clients with more optionality and greater flexibility. And whenever required, also with custom solutions, especially around the new and more complex modalities that are entering the space. When it comes to names and manufacturing, that represents a differentiator for us as we're offering the new and innovative technologies in addition to the more traditional testing approaches. In a regulated environment, any sort of transition requires a robust set of comparability data. And so we are uniquely positioned here to support our clients through this journey. Our clients are also looking for a more integrated approach. And an example here would be that with the increased investment in U.S. manufacturing expansion, any new manufacturing spaces that are being commissioned that require EMPQ testing. And that is the service that is being provided by our Accugenix lab. So we're talking to the client very early on, and then we're able to support them later down the road with microbial equipment services and biologics testing. The biggest opportunity in front of us is productivity, while a lot of other life sciences businesses require significant expansion in physical capacity in order to grow we have the ability to unlock meaningful capacity by modernizing the way we work. We will continue to invest in our instrument platforms, including the Nexus 200. And I would like to point also to our demo area here because we have a video there, and you can see the instrument there at least virtually. And we also -- I hope you saw that we also recently announced with a press release, the launch of our fully automated cartridge manufacturing line at the Charleston facility. And that is a significant milestone for the microbial business as it will increase productivity further, and it will also improve product quality through greater batch-to-batch consistency. Digitization is something the market and our clients have been demanding for a while, and we have been working on that since years. We continue to evolve with the end vision to entirely remove paper from our workflows. I think the benefits here are clear, but just picture and written quality record, depending on someone's in writing that can be quite challenging. And having data available in a digital form makes it obviously easier for us to make it accessible for clients through our manufacturing Apollo platform. Currently, we're shifting our focus a little bit more towards e-commerce for microbial. And the nice thing here is that we're going to be able to build on what has been developed for research models and services. And Colin is going to talk about that in a little bit. And then lastly, operational discipline. So this is all about network harmonization and providing clients with greater flexibility. We also believe that AI scheduling is going to be a game changer for us as it will add additional capacity. So all of these initiatives are being executed under the create the future framework that Mark introduced this morning. They're designed to increase the throughput in our facilities while elevating service level and responsiveness, and without the need to significantly invest into physical footprint expansion. So this will be a very important contributor to operating lever over time for us. Strengthening our portfolio does not mean that we have to develop every single technology ourselves. We're taking here a very diligent approach and we're making decisions based on what has the highest payback and return for Charles River. When it comes to internal development, there's 2 different avenues, internal R&D as well as life cycle management. And so life cycle management is everything associated with our Endosafe instrument platform. It's about launching next-generation versions, applying technological advancements and software enhancements. When it comes to internal R&D, an example would be a client coming to us with a program that involves a new therapy or a new modality. And we're often asked to develop a message here that is going to be then used for commercial product release. And then new and emerging technologies. We like to -- or we have frequently applied strategic partnerships. Solutions often already exist, just not at the required scale or they don't meet regulatory requirements. And that's where our expertise and our client connections can contribute largely. I think our showcase scenario for a strategic partnership is PathoQuest. It started once upon as such. And then we recently announced the M&A transaction. It's really -- Birgit already mentioned it earlier. It adds next-gen sequencing services to our portfolio, which represents an animal-free alternative to certain in vivo testing. And just like we discussed because we provide the in vivo testing as well as election sequencing services, we have the ability to support our clients through the transition. We have done a lot of research in the field and we published several papers and we have the regulatory expertise to be a true partner. The increased need for speed is something that comes up in almost every single client conversation. We talked about the more seamless and integrated approach, but making data easily accessible is just as important, and that's where our manufacturing Apollo platform comes into play. We have an 80% adoption rate, which is quite high. And clients use it for things like sample submissions, sample tracking and results review. The -- we have very positive feedback, and we will continue to evolve and add additional functionality over time. The most important takeaway from this slide is that despite the major changes that are currently happening in the manufacturing market, we see increasing value from our existing capabilities. New and emerging therapies, including biologics and cell gene therapies will continue to enter the space and require custom solutions. And having until very recently been in the CDMO space, I think we're positioned here uniquely as a solution provider. We know exactly the challenges our clients are facing because we have been in issues until very recently. And these newer and more complex modalities also have a higher regulatory rigor. We have an exceptional regulatory track record, and we're getting frequently inspected by regulatory authorities like FDA, [indiscernible], other global agencies. And then we talked about names and that representing a differentiator and opportunity for us in manufacturing solutions. So with $766 million in annual revenue last year and a $5 billion addressable market, we have some meaningful headroom to grow beyond the actual market growth. And by leveraging our #1 position in endotoxin testing and our robust and comprehensive portfolio across manufacturing as well as Charles River, we are well positioned here to aggressively penetrate this market and take additional share. The Nexus 200. So again, in the demo area, virtually the video. So that has been developed is our first commercially available fully automated on the endotoxin testing platform. And this instrument brings together a lot of the themes that I talked about today. When in operation, it does not require any human interaction. So there is tangible value on the Charles River side as well as for our clients. The savings are estimated by about 9 weeks per analyst per year, and clients also reported a reduction in valid rate from 4.5% to 1.5%. The reason I'm sharing this case study with you is not just about the instrument. It is about our innovation model. So we're identifying bottlenecks on the client side, we're developing innovative differentiated solutions. We're driving the adoption and end up with the recurring consumables revenue later down the road. And to bring it all together, we operate in a mission-critical regulated environment with high client retention and recurring revenue streams. We have several different avenues to increase our share of wallet as clients expand their commercial programs. And with our focus on digitization, automation and operational diligence, we will see productivity increase along the way. While all of this is going on, the increased investment in biopharma manufacturing market in the U.S., the newer, more complex modalities that are entering the space and requiring custom solutions and names representing a differentiator for us. So we have significant opportunities right in front of us. We have high confidence in our long-term financial targets, 7% to 9% organic top line growth from 2027 to 2030 and exceeding 40% non-GAAP operating margin by 2030. But most importantly, manufacturing allows Charles River to truly differentiate from other CROs as we're expanding our relevance beyond preciinical more towards commercial manufacturing, and we're unlocking this additional value stream across the drug development life cycle. And with that, I thank you for your attention, and I hand it off to Colin. Thank you.

Thank you, Kerstin, and good morning, everyone. I'm Colin Dunn, and a leader in Global Research Models and Services business. I originally joined Charles River in 1998 before leaving to work for a major pharmaceutical company. And I returned in 2008 to lead business in Europe, eventually in Asia and then globally. Originally trained and practiced as a veterinarian, I earned a PhD in virology, I conducted postdoctoral work. And during that period, I became familiar as a user of Charles River research models. And as well, I became very familiar with the needs of the scientists and their demands in the workplace. So I've directly experienced our research models have been used and how that has evolved over the past 30 years. RMS has evolved alongside those needs. We combine an industry-leading research model portfolio, a broad range of specialized scientific services. We have a global infrastructure and increasing digital capabilities that let the clients conduct the research more efficiently. And today, I'd really like to discuss how we're building on that foundation to drive durable growth and attractive returns. So there's 4 main things that I'd like to be able to highlight here. And RMS has been the market leader for some decades. That was built out of tremendous competencies and expertise in production under discipline in operations. We are now leveraging a differentiated global footprint to drive proximity and access to clients wherever they conduct their research. Notable in this are our capabilities to partner with biopharma. And especially in that is how we have the cradles and the specialized turnkey vivaria space across the key biohubs globally. This ensures start-ups and biotech are able to access specialized vivarium services or indeed for the larger global biopharma players to operate with much more improved efficiency. And finally, we have driven our client-centric focus with several digital tools and an e-commerce platform that Aaron as our digital experience Vice President is able to demonstrate outside so that we're easier to work with. These advantages position us as a critical partner in biomedical research. So why is RMS business essential for our clients? Well, at its core, RMS provides a foundation that enables researchers to discover and develop new medicines using both large and small research models. This is a bridge that goes from fundamental discoveries about jeans through the high dose and code and how they work as targets in drug discovery, on drug development. We're the global leader in this endeavor. Close to 50% of RMS revenue is not in an array of services. These range from the CRADL vivaria through to jams that allows researchers to validate what these new targets and the research actually do. In RADs, we allow veterinarians to understand their Colony Health and bus security. And in insourcing solutions, we are able to support clients to manage their vivarium space more efficiently. Our RMS business is actually at a value crossroads the crossroads where the foundational academics are able to spin out their biotech and where that biotech is able to validate the value of its assets to global pharma. No one plant, no competitor, no government is able to replicate all of this. It forms the foundation of our strategy, and we'll talk about that in a moment. But first, I'll mention our revenue breakdown. Some of the critical revenue metrics demonstrate quite a lot about our business and the market we operate in. Our research models remain about 50% or just over 50% of our revenue but the strength of the services illustrates where more of our expertise is demanded around specialized models. Our client segment mix has always been diverse. But no, 40% of it is from the public sector, and that reflects the very core use of research models in the very fundamental type of research that only governments with academics conduct. And then not the spread of the revenue and its global nature, which highlights the mission-critical nature of what we do wherever it is in the world. And very importantly, that also reflects the strength of RMS in China. We've always taken a disciplined approach to plan for what is happening in the market whenever it comes to our strat plan and really trying to understand what's going on with the demand curve. This has enabled us to grow the total value of the business by continually rightsizing our footprint in our operations and upskilling in everything we do around operational excellence. At the same time, we have significantly invested and expanded in China. And for more than a decade, our team has enhanced the reputation there. Globally, we continue to invest further in services, particularly on, for example, CRADL, and ensured the more penetration, the higher value research models, which help the mix of our portfolio are able to be used by those biotechs. Such actions have ensured resilience in our recurring revenue base kept up with our cash flow while bringing strategic value across the total portfolio, thanks to the access of critical models for DSA and for manufacturing. So the research landscape continues to change, but re-retain the trust of our clients as a mission-critical partner. That track record of trust enables us to have confidence in the long-term financial framework that we're presenting today. From 2027 through to 2030, we're targeting 2% to 4% organic revenue growth while maintaining the non-GAAP operating margin in the mid-20s range. The several assumptions underlying that, that Glenn has already highlighted. First of all, China is a key growth driver, and we will continue to expand there. And also our cradle with the [indiscernible] business, we anticipate continued improvements. Thirdly, we will have disciplined pricing for the research model portfolio that helps overcome the structural changes that impact the total volumes in that business. And then mixed with that is also the product mix, the higher value models driving the value. And also then with create the future, we are continuing to drive the productivity and offset all of this volume headwind maintaining profitability. Internet mix, as Shannon has illustrated with the nonimprimates, more of that inventory is going into DSA, meaning a few of it is available for commercial sale in RMS. Importantly, taken together, the targets reflect our ability to take actions within our portfolio in response to all the market changes, and we are continuing to improve our productivity but also we can focus our growth in those areas of the portfolio where we see the greatest opportunity. So Mark and Birgit and others have highlighted the pathway to purpose strategy. And I think in RMS, modernized is very focused on our digital capabilities behind automation our ability to leverage our data to help our productivity and with all the tremendous improvements with the client experience. Again, you can see there with the demonstration of the e-commerce platform and Apollo for CRADL. Strength is all about our ability to improve our scientific portfolio through the specialized models and services to support [ Vixantis ] in increasing complex research. And grow is about deepening those client and scientific relationships through the tailored services that we offer wherever that may be in the world. So all of these efforts synergize they help differentiate us and bring value across all the client relationships. So taking a think about some of where the modernization and taking it down the client center lens, Much of this effort has been solved on solving the buyer journey for the research models. That started by solving how we digitize our inventory for those users. That created a connection back to Charles River because we made a desert order, easier to understand the availability and simplified and took away some of their administrative steps. Internally, we've been continually improving our operational efficiency by being able to digitize data entry, whether that is at the bench or actually high side. Furthermore, we have been able to scale that across regions by making better use of our global infrastructure. And finally, we're enabling future innovation through stronger data foundation, better use of the enterprise data is creating opportunities to apply AI and analytics to support decision-making and just improve our operational performance. So our proximity to the clients goes beyond the physical, it goes into the digital space as well. The client requirements continue to evolve. We see that all the time with expectations, for example, bought welfare, the ethical business of what we do, the complexity of the models, how they wish to work on a global basis. All of this aligns with the investments we're making. The specialized services and the focus of that in CRADL and GEMS or expertise with veterinarians and the level and quality of animal care and the biosecurity standards, and that's no gathered under the digital umbrella of Apollo, which enables automation and acceleration. Our leadership is the strong foundation to deepen these client relationships and to capture growth as the requirements continue to evolve. So let me bring the digital journey to life with some real examples. Historically, ordering research models was a very manual process involving is on animals and often lots of telephone calls. We need huge strides to fix that through digitizing the inventory to account for aging a normal biological variation. Today, we've now digitized the experience for the users by enabling them to access all the model specifications through the e-commerce tool that operates 24/7. Their ability to access those specifications is also lined up with their scheduled delivery days. So whenever they put enter an order in the system, 90% of such submitted orders are automated and order confirmations come out just about instantaneously and that includes their bespoke pricing and it builds up their order history. So this makes the e-commerce software more than simply a storefront to browse. This enables the scientist to schedule and plan their work are not focused on administrative steps. I believe that makes their stickiness to our ordering processes, much improved and also, it puts us front and center to gain a greater share of their wallet. Our ICM tools for the GEMS business offer something similar. They get to see the milestones in breathing projects and they get to understand when the cohorts of animals they need are eventually available from those specialist breathing programs. And then in Apollo for CRADL, the clients are able to do their training in advance and also to get their protocols to run the animal work into that system before day 1 of their occupancy, so they're ready to go right away. So let me wrap up by saying why we believe RMS remains uniquely positioned to continue to win our advantage lies with our market leadership, the broad and the deep research model portfolio, the array of services to the clients that no other plant in this demand would be able to match and that covers a global footprint that includes the global biohubs. Our expertise in operations and welfare is now underpinned by a strong digital progress for the benefit of those end users. These factors make our success extremely difficult to replicate. This ensures our durable growth, the strong margin profile and cash generation going into the future. In turn, the clients can remain confident that we will sustain the investment that they need to continue to do the work that is so critical for the future of research. So with that, I invite all of today's speakers on the -- back on the stage for the Q&A, and thank you for listening.

Great. Thanks, everyone. We'll now have our final Q&A session. We'll just wait for the speakers to get back up on stage. I think we're going to -- since we ask Luke to delay this question to the second Q&A. I think we're going to start here with him.

Really to agile, if I switch. So I'm going to stay with that first one. I guess on the LRP, as you guys walked through the different business segments, we see plenty of opportunity there. to drive the upside. Just talk about some of the investments you guys need to make to get there, but also where the conservatism is baked in for the different segments of the overall business or out on the macro to get you to that lower end because it feels like we're quickly moving to the upper end in the out years.

Glenn, do you want to take that?