Hi, everybody. I am Elizabeth Anderson. I'm the Healthcare Technology and Distribution Analyst here at Evercore. I'm very pleased to be joined by Jim Foster, who I'm sure many of you know, and CEO of Charles River, and Todd Spencer, who does IR. Thank you very much for joining us today. Happy to have you. Maybe just to start off, I know, you know, hot topic as always is sort of the current demand environment across, you know, many different businesses and tools and others in the Clinical side of CROs. Maybe just talking through a couple of the different points in your business, how do you sort of think about sort of the lay of the land in terms of RMS? We've heard about, you know, some of the comments on China, but maybe sort of differentiate between sort of the environment in China, and then ex-China. So our demand in RMS continues to be solid. We get, I think we'll always get price in that business. We've got, in addition to biotechs, we've got a lot of, a lot of work with pharma- Yep. Actually G overnment and Academics, which in some ways buttresses that part of our business from any concerns that Biotech Companies have about spending. Yep. So that's, that's been good. So U.S. and Europe, revenues, have generally been, strong. The service businesses have been really particularly interesting in that business over the last few years and, and continue to be so. So we have this, reasonably large genetically engineered model business, but in particular, we have this Insourcing Solutions business that we made an acquisition in last year. Yep. We had these CRADLs. I can never remember the acronym. I shouldn't even say it. Anyway, we had these facilities that clients- Yep. We thought they would all be small, but they're all different sized companies. Mm-hmm. You know, they use a room to do their basic research. We staff it. We do sometimes a little bit of the services. We hope to do more, and it's a great lead-in. If you look at that business on a see-through basis, it's really a great lead-in to discovery and ultimately to safety. So, like that business a lot. We've made a bunch of investments in new facilities, East and West Coast of the U.S., some stuff in Europe and China, as well. So research model business feels good. Mm-hmm. Margins are good. The Chinese market's funky. Demand is slower than we would have anticipated. You know, I don't know how long that will last. Having said that, that business continues to perform comparatively well to other competitors in China, so it's still a reasonably high-growth business. We've been investing nicely in facilities, but it also has a service component. I'd say the whole business is slower than usual because there's less investment right now, Government Investment, in China. So, I would think that was transitory. Yeah. But it's probably the slowest piece of RMS at the moment, but that business feels solid and strong. Got it. Okay, that's very helpful. Maybe digging into a couple of things you said there. I think you talked about continuing to get pricing in the models business. How do we think about it? You know, we think about, you know, the recent sort of inflation that we've been through, and that sort of providing a boost potentially to pricing. Is it sort of a... How has the pricing out in sort of the models business been versus what we think of sort of consumer pricing and the spike and sort of now the comedown? Is that sort of something that's been more consistent? Are you sort of seeing less inflation, pricing on that, like, this year versus maybe last year? How do we think about that? I mean, we've always gotten a meaningful amount of price in that business, given the fact that clients don't produce their own research models. Yep. Just given the size and scale of our business, we only have a very large market share. So price is always an important part of what we do. We're obviously paying our people more. We have investments in facilities and benefits. You continue to evolve the models, and yeah. We do. So, I guess it's quasi inflation related. We don't actually sit down and say, "What's inflation? Okay. Price above it. Yep. That would be a nice thing to do. It's difficult to do. Got you. Obviously. But, we're pricing sufficiently to cover things like wage increases and the ability to continue to retain our people is really the biggest issue. But, it's a business that, even when it goes the other way, when there's no inflation, we've been able to get price. So I don't remember a year where price is not one of the levers that we're able to pull. Got it. And then maybe what you were saying about the services business and the sort of, demand there from sort of clients across the size spectrum, what is it about CRADL that sort of makes it an attractive offering? You know, I can, I can understand, obviously, if you don't have the facilities or, you know, that kind of thing, but, like, maybe on some of the mid or larger-sized customers, like, why, why are they using you guys? It's a really good question, and as I said, you know, when we put this business together, we thought it would be very small startup, virtual biotech companies that had limited amount of cash, no space, no desire to have space, and there's a lot of those. Yep. They can rent a rack of cages, a room full, and, you know, they're doing basic R&D, so they may not even get any traction. Mm-hmm. So we have a lot of those. The surprise has been that we have a lot of big pharma and some who have just finished space or and have moved into it and don't have enough space. Mm. And so we're seeing mid-sized and very large clients who take a reasonable amount of space for relatively long periods of time. Often they do it while they're building a facility. Mm. Then they finish the facility, and they use it all, and they often still need us. So it's been a great lever. In this economy, well, it actually cuts both ways, but I would say as a general proposition, in this economy, it's even a better business. So everybody's really nervous about spending their money. Little biotech companies can't afford it, and big companies aren't gonna wanna build another building if they don't have to. The flip side, of course, is that some of their R&D expenditures are down, so. Yes. So it kind of cuts both ways. But we think it's a great lever. It's a good-sized business now. It's been growing nicely. Has great margins, and we don't talk about it enough, so we will start to. It's, I think, very much about the flow-through from that business, particularly into discovery and then into safety, because as if and as the drug gets traction. Mm-hmm. That's what they're gonna wanna do, and obviously, we have the best opportunity to say, "Well, great, so, you know, we can do this discovery work, we do this pharmacology work for you, and then if the drug continues, we can get you into non-GLP and then ultimately GLP safety." So if you look at it on a holistic basis, it's a great feeder for our clients. And, you know, our strategy has always been to start with the clients as early as possible. Yep. That's as early as you can get. Yeah. No, that, that certainly makes sense. It seems like obviously, besides, you know, the flexibility and sort of the overflow on that, do you also, like, do you have a sense of like what your average, how much you're saving, like a, like a large, you know, pharma company having it versus them building their own facility, or you think it's more about the, like, flexibility component of that? It's probably less about the cost for the big guys. Okay. Definitely about the cost, for everybody else. Got it. Okay. And then the geographic proximity to where they're located, so Cambridge, Mass., and San Francisco, two obviously huge Biotech hubs, but lots of others. Yep. So to have the ability to utilize the space and not pay for it, you know, I think it resonates pretty much with clients large and small. Got it. And that to your sense, like, I think one of the things investors worry about with the macro sensitivity is just having excess capacity and sort of the negative drop-through on margins. So some of what you're saying seems like that could help to offset that sort of cyclicalness that we saw maybe in sort of the financial crisis type timeframe. Yeah, I mean, in some ways, it should be the most recession-proof thing that we're doing. Yeah. Right? you know, it, it provides an opportunity for clients who are worried about their cash or, or just simply don't have the time to build facilities, to get in them quickly- Yep. to utilize them and move their work along at a reasonable price point, notwithstanding the fact that we still have great margins. So we, Y ou know, I think to them, the price points are reasonable. Yep. The setup cost to do that on their own would be significant. Yeah. No, that makes sense. Okay, maybe switching away from RMS, maybe towards DSA. I'm sure what your favorite topic, NHP is. So, you know, obviously, thank you for the additional disclosure that you guys provided in the 3Q. That was, that was very helpful. Maybe talking about the NHP services revenue, if not, versus, like, the NHPs themselves, is that like what's the biggest drive? Is that a function of the number of NHPs being used in a given year? Is that sort of, like, the right way to think about it? And how do we think about the level of inflation in that services component? Obviously, we have spoken practically ad nauseam about NHP pricing itself. You have to look at the whole NHP activity kind of holistically as part of study design and kind of the totality of our studies. Okay. So we don't think of it as we're doing NHP work or we're doing rodent work, because both are required, and it sort of depends on what stage we're in and whether the drug's in the clinic or not. And so, as a, you know, as a general proposition, we're interested in making sure that we have a sufficient number of NHPs, but that the study design is such that we can accommodate the client. Yep. So capacity is important, location of capacity is important, as well. So, this year, for instance, the sheer number of NHPs is down- Yep. a meaningful amount, and it's not a manifestation of lack of being able to find them or their price point, which has been hideously high, but it's actually not related to that. It has to do with the phase of Drug Development that they're in. Got it. Our discovery business is very slow right now because a lot of our clients are spending less money in discovery right now. Mm. That by definition has to be a short-term phenomenon, because if they do that for too long, they won't have anything later. Right. But putting that aside for a moment, there's a fair amount of work in getting your IND filed, but even more work these days in post-IND work, so that would be something like carcinogenicity studies, which are long-term. Mm. Don't use NHPs. Yep. Obviously required by law, and your drug's not getting to the market. You know, that's. Those studies are done contemporaneously with a drug in the clinic, often in phase ll. So you're using less or no NHPs there. Yep. The price points for those studies is quite high, and the margins are terrific. So on a kind of a balanced portfolio basis, we're doing lots of small and large animal work. But just the general economic malaise has caused slower growth rates in the DSA businesses. And so as a result, one of the results of that is using less NHP. So it's less about the price, because whatever the price is, we. Right. We pay it and we pass it along. Right. Less about the volume. It's because it's actually substantial amounts of volume right now, so there's plenty, there's plenty of NHPs. So you think that, you know, obviously we saw that step down based on the phase. You think that maybe could go back up next year, sort of be... Would you expect the number of NHPs to be higher? The volume? The volume. I mean, it totally depends on the demand. Okay. I wouldn't want to speculate. Yep. It's all tied to the economy and the amount of approvals and what's in the clinic and what's about to go into the clinic. Yeah. And we'd have to look at a composite, so tough, tough to tell. Okay. Maybe just one more on NHPs. What are sort of current backlogs looking like? I know there are always backlogs, but how are you sort of thinking about that in terms of top, number of months at this point? Yeah, it keeps shortening. It keeps shortening, which is probably a good thing. You know, so the backlogs were up to sort of 17 or 18 months, probably longer. When was that, would you- Probably at one point, I don't know. It was probably- Last year? Yeah. Yes. It's probably a year now. Okay. I think we were saying at the beginning of this year it was 16 months, something like that. So it's probably a year. So that's, that's plenty of time to, to plan, to, to have predictability about your revenue model, to have sufficient numbers of animals and staff, and, and capacity. Then the other thing that was happening is we had an increased amount of cancellations, and that was tied to the fact that clients were nervous about not being able to get a slot to do their work. Is that particular to NHPs or the broader business you're talking about? I'd say both. Okay. So they book studies out. They're like, "I don't know. You know, I've got all these drugs and I need a slot. I don't even know which drug I'm going to work on 18 months from now." So they book a slot, and then when they get to 16 months, they're like, "You know, we just didn't have anything," so they cancel. There's a cancellation fee, but that's just very disruptive. Yeah. If it's an NHP study, since they're very expensive and the housing and the feeding and the caring is a big deal, when you allocate those animals to go on study, you want to use them, and you don't necessarily have a replacement study of the same scale in your backlog. You could. Yeah. You almost always have a small animal study in the backlog, so we don't have much volatility or variability there. Yep. That's really been the situation. I don't know if it'll get less than 12 months. You know, we've had backlogs years ago that were six or nine. 12 feels better than 16 in some ways. Cancellation rates are dropping. Mm-hmm. It's a really good thing. Nice. Also, study slippage is kind of balanced out, and so the model is less volatile, and we're able to start studies more when the clients want, want us to, which is why they don't have to flail around and start studies, you know, a year, a year out. So it's probably a better, it's probably a better business model, and it's perfectly fine in terms of planning for utilizing NHPs. Got it. And then any kind of update in terms of I know we spent some of the beginning part of this year talking about like, new testing and libraries of, you know, farmed monkey. Like, is there anything that sort of moved on that front or that's still sort of out there, still pending, but not really much momentum on that? Still, still under conversation. We have the capability to do that in multiple places. You know, we're going to do a big update on the whole NHP situation in terms of diversity of supply, in terms of testing, in terms of where we'll do the work, in terms of numbers, in terms of pricing next year. So we'll, we'll get into that. Sort of over the course of the year? Yeah. That's sort of what guided into your- We'll do that relatively early. Okay. We'll talk about all of those things, including, I hope, some progress. Yeah. I can't speak for the government. Including some progress with testing, 'cause that's for sure something that, forgetting the whole government things, for sure, something that we'll want to do long term. Yeah. Just for ourselves. Yes. No, that, that seems to make sense. I know one of, sort of the, the persistent concerns is, you know, and I understand obviously what you've said, that NHPs are pass-through. People are sort of nervous, like if we start to see, you know, pricing come down, that's going to have like a major negative effect on DSA margins as we think about sort of the out years. Obviously, you've given long-term guidance, but what do you sort of say to people who are worried about the stability of sort of those DSA margins over the next couple of years? It's contributed to incremental revenue in a meaningful way and probably in a small way to incremental margins. Mm-hmm. but if you take the dramatic increase in price out- Yep. -which we passed along, that's a business that still would have, is growing, would have grown at high single digits. So since it's a pass-through, it's been relatively insignificant on the margin front. You know, we price the study, and, you know, the totality of the study, which is time and staff and capacity and the cost of the drug and all of that, and obviously the animal price is in there. But as they've gone crazy, you know, from $5,000, whatever it was 5 years ago, to, you know, 40 or 50. We just passed that along. So we don't look at that as a great source of margin accretion, and I actually hope it comes down. I mean, I just think it's a much more rational business model for everybody. So we'll pay less, we'll pass along less. But, you know, the margins in that business have been, the DSA business, particularly the SA part, quite good and have been increasing nicely. It's partially manifestation of volume, but also efficiency initiatives, particularly a lot of the, you know, the IT things that we're doing. Things like Apollo, which is this interface between the clients and us, in terms of being able to get their data. That saves time and money and staffing. So, definitely still additional margin to be had. Also, probably a small amount of margin to be had in the discovery business. Got it. Is Apollo rolled out across your whole customer base, or? Yeah, in safety it is. In safety it is. Okay. And then how do you think about sort of the plans to roll that out through the rest of. Or are there plans to. We're in the midst of doing that. Okay, so- Clients, clients love it. I mean, it's. So, you know, the goal is for clients to find a slot, book a study, get a price, sign the study online, and get their data without ever talking to anybody. So you can imagine that that dramatically accelerates the velocity with which the drug can get into the clinic, which is one of the things we can do for them. It reduces the amount of PhDs we have to have available to talk to them about this, about their studies. We only want people to talk to us if they have equivocal result, results and they question them, or they have wonderful results, and they question them. But not, you know, "When can I start my study?" They shouldn't have to talk to anybody to do that, and they should be able to get the data real-time, all the time- Yeah. Through some sort of confidential methodology. So it's been working great. Clients love it. It has accelerated things. And we are rolling it out to the rest of the portfolio. And how do you think about that? That totally makes sense in terms of the visibility and the answering basic question, the kind of things like, How do you think of that versus sort of the relationship and sort of being able to sort of bring the whole Charles River to an organization? Like, how do you think about kind of the balance between those two things? I think it's extremely helpful to all of that. Look, our principal overriding goal and strategy is to have the clients be utilizing our products and services across the entire portfolio. Right. I think to some extent, we do that really well, and to some extent, we can still do that better. Yeah. Spending a lot of time right now thinking about ways to do that better in the short term. Obviously, if the IT connection facilitates that across the whole portfolio, so they have the data in a central place, and they can move a drug from discovery into safety- Mm-hmm. easily, that's really powerful, and I think it's a dramatic competitive edge that we have. Yeah. No, that, that makes sense. I think you've mentioned this in terms of talking about discovery and passing in one of the other questions, but can you help us tease apart the demand trends in discovery between sort of biotech and pharma right now? Yeah, I was going to say there's not much of a difference. I'm sure there's a difference, but I think, I think it's, it's less about the client base. Okay. Because, for a while, I was asking, well... Well, two things have happened. Number one, the pharma business has been stronger than biotech. Mm-hmm. Much stronger in the second quarter, for instance. So that's, that's just a manifestation, probably some concern about spending on the part of biotechs. But interestingly, the big pharma companies that have, if nothing else, they have tons of cash. Mm-hmm. Still have budgets, and they still have shareholders, and they still have guidance, and so they're watching their spending a bit more carefully than we've seen in other time frames. And the biotech folks are doing that even more carefully. So as I said earlier, there definitely have been historical periods where there's been slow spending in discovery to the detriment of discovery and safety and work in the clinic have been stronger and vice versa. And then there have been lots of years, like the last five or six- Yeah. the go-go years, where we've had kind of balanced spending between discovery and safety. So, discovery spending is certainly significantly below where we would like it. I don't think that has anything to do with Charles River. I I think that's just a spending phenomenon and this mania to get stuff into the clinic and then the post clinic work that we're doing. The good news is that the studies are quite short term. Mm-hmm. There isn't necessarily a lot of planning before we get them, so they come in fast, they're short term in duration, and they go out fast. So it could and will turn on a dime. I don't want to predict when- That was going to be my next question. How long did you say? How long did you say? Yeah, I have, I have, you know, I have no idea. I just don't think that, I would say that as soon as you see either a moderation or flattening out of rates, and as soon as you see the IPO market really opening up, I would be surprised if we don't almost immediately see significant increased spending and discovery. Well, across the whole portfolio, but discovery in particular. So I think that's the concern, and so if I have some hot drugs and I have a high degree of confidence that they'll get into and through the clinic and into the market. Mm-hmm. I have to spend my money on that. Yep. There's also a patent cliff, small, smaller one than we had years ago, but there's another patent cliff coming. Yep. So they're all cognizant of that as well. But you're not gonna have drugs, whatever, X number of years from now, to get into the clinic if you don't get back to discovery. So it's not, it's not, it's not if at all, it's just when. Right. Maybe sort of just one more on discovery. Like, if we think about more, like, broadly and sort of like on a secular trend basis, like, you know, safety, obviously, the outsourcing penetration has really moved up over the years. Discovery has been a little slower on that front. Like, where, how do you sort of think about, like, you know, is that sort of that slower trend, like, you sort of think that's kind of the right go forward rate to think about that? Is there anything you think that would shift that? And then, how do we think about sort of how you're tracking, like, the crossover work trends between sort of doing discovery for someone and then moving on to doing their safety studies? Obviously, discovery is different than safety- Yep. In as much as, the drug companies think that's what they do. I think that's what they do well. Yeah. I think biotech probably does it better than pharma, but putting that aside for a moment. So it's a larger market than safety. Yep. So safety is probably 60% outsourced, and maybe it's a $4 billion-$5 billion market. Mm-hmm. Discovery is probably $1 billion, at least $1 billion more, but it's only 30% outsourced. The pure discovery, although we do some, you know, we've discovered about 100 targets that our clients couldn't discover on their own, and a bunch of those they've made drugs against, and they're in the clinic. So we do that periodically. You know, our discovery activity is more comes after the earliest discovery. I would call it kind of more early development, actually. We're doing a whole bunch of things to kind of move the drug along, and we're doing it better, faster, and cheaper than any of the clients, particularly the big clients, could. We have a good portfolio. It has enough scale right now. The science is deep, it's internationally dispersed. There's great connectivity with our safety business. We get about half of the discovery clients moving into safety. I think it should be more. Hopefully, it will be more. And so increased spending, knowledge that they don't have to do it all. You know, there's often a little bit of, I know when I talk to clients about discovery, the knee-jerk reaction is, "Why would we do discovery with you? This is what we do." And I say, "Well, let me explain what facet or aspect of discovery we do." And I think once they understand that, it's relatively easy to get the buy-in. So again, just going back to what I said earlier, we wanna engage with the clients as early as possible. Mm-hmm. That is early, you know, as early in the discovery process as possible, and as long as they have a drug that is promising and is moving positively through toxicology and into the clinic, and efficacy and safety look promising, they want, we want them to stay with us. So discovery is not a surprise. I mean, it's disappointing because it was that business a couple of years ago had extremely high growth- Mm-hmm. -and extremely high margins. And that's because there was more money available in the system, and there were... So if they had five drugs to prosecute, they'd work on all five, and maybe today they work on two or three. So, you know, the dynamic was different, but our capacity and portfolio is the same. And so when it comes back, we should be able to re-engage with them relatively quickly. That makes sense. Okay, maybe switching over to microbial, I think that was sort of a sort of maybe a little bit of a surprise for some of us in the third quarter. Is the right way to think about that business maybe similar to other, like, life science tools companies in terms of, you know, who are selling a bit more of equipment and sort of the, that's the right way to think about that? Or there are sort of factors in the microbial business, so you think that, you know, following other tool company commentary is probably not the right way to think about that? Probably yes and no. So, tool companies. So if I'm a client and I have to spend money to move my drug forward, or spend whatever, $500,000 on an expensive medical device, I'm probably gonna delay that spending from a cash point of view, so. Mm-hmm. I haven't looked at what the mass spec is. Yeah, I realize that's a little bit of an unfair question, too, but I was just- I mean, I would imagine, because, you know, we have a ton, we do a ton of mass spec work ourselves. Yeah. Yeah. If we can wait another year to spend $500,000 or we will. In that way, I would say no. I'd say several things are happening with microbial. Number one, clients overstocked our products and the disposables that go with them. That's just COVID? Absolutely. COVID. Okay. We had crazy, call it overstocking, the end of last year and the end of the year before. We also did some COVID work ourselves. Sure. But so, you know, they're working down the backlog, number one. Number two, while our equipment is not nearly as expensive as mass specs, it still costs something. And so, I just had a business review with these guys recently. So while we've sold lots of equipment this year, there's still clients just saying, "I think I'll wait till next year's budget. Mm-hmm. You know, "I just don't, just don't have the budget to spend." And since there are less QC work that they're doing now on a smaller portfolio, we're definitely seeing less razor blades for the cartridges being used. Sure. You know, this is a business we've had for 25 years. It's grown at double digits for all 25 years. Yeah. It's growing more slowly right now. Yeah. I think that's transitory, too. It's very much connected to the general economy. Our Technology is fabulous. I think it's way ahead of the competition. It actually saves the clients lots of time in terms of releasing their products to be sold into the marketplace. The margins are still stunning in that business, and we continue to work on new generations of product. But it's really those things. And then the last thing I would say is, we have a small but not immaterial business in China. Yep. The demand there has been way off. Yep. Okay, and that's just sort of similar to the- Yeah spending slowdown that you were talking about earlier. Okay. What's a typical replacement cycle to you know, microbial boxes? Replacement cycle for the? Not for the, like, you know, the equipment itself. It's kind of like- For the cartridges? Yeah. Not for the cartridges. Well, I assume the cartridges you're just using as they come- Throwing out. And throwing out. But, like, in terms of the equipment side, is it, like, every 5-7 years? More quickly than that? Hard to say. It's hard to say because we keep coming out with new versions, and some people will switch to get the new versions. Okay. So it's more upgrade cycle driven. Some people won't. Yeah, I would say, I would say it's very much related to new Software and new capabilities. Yep. Entirely driven by our clients. Okay. Is still sort of the rapid testing portion of it still sort of outgrowing the sort of more traditional parts of the market, and that's sort of a key sort of driver, or sort of use cases increasing for that? Or is that maybe not less of a factor than it has been? I mean, we're converting folks to the rapid technology as quickly as we can. Okay. It's expensive and time-consuming to switch. That's probably something else that's going on now. Yeah. It's more expensive on a per-test basis when they switch, but it's much faster. So if you've got, I don't know, $50 million worth of drug that you just manufactured, and it's sitting somewhere to be released, and you can release it in a few hours as opposed to several days, you'll, you'll spend more money on the test. So it's still a very powerful technology. Got it. Okay, that's very helpful. Okay, what about biologics demand? How do you sort of think about where we are with demand in that business and how that will sort of play out for the next little bit? So has had a similar, not quite as deep a trough, but similar, situation as discovery this year. But, it will come back faster. So you know, the biologic testing is obviously, all large molecule, and we're testing before the drugs go into the clinic and when they're about to be approved. So there's been a huge, steady stream of work there for a long time. It's been a very good business for us. And again, a couple of years ago, very high growth and exploding operating margins. We just built a bunch of new space, and it has been filling up nicely. Our technology is terrific, and we've got sites in the U.S. and in Germany and Ireland, so our geographic footprint is quite good. Again, it's simply a manifestation of the overall economy. Less drugs being tested overall, less drugs getting to the clinic overall, and just sort of a slowdown and a pullback by clients large and small. That will come back faster than discovery. Why, why does that come back faster? We've seen that begin to improve, by the way, in the back office. Oh. Why will it come back faster? Because so much of the emphasis is to get drugs into the clinic, and you can't get it into the clinic without doing this testing. And you're looking for human viruses, for instance. Yep. So that will come back. I don't know when it will get back to where it was, you know, two or three years ago. But, you know, when we have more of a balanced spending and a larger portfolio to work on, I think that business will be very strong. Again, it has nice margins, and so we're optimistic about it. Again, not unlike discovery, that work comes in with virtually no warning, which is a good thing. Comes in very fast. Studies are very fast and goes out quickly. Yeah. We'll see that turn quickly. We will see the discovery business turn quickly as well. I think that the biologics business will turn first. Okay, that makes sense. You said you're starting to see that sort of pick up again? Yeah, I mean, it's improving somewhat. Somewhat. Okay, got it. And then obviously, having improving volumes, you know, is helpful to the margins in that business. And then also, I was going to ask, like, on the facilities and sort of the new fill up of those new facilities, that should be sort of a longer-term driver of that too, but it's mostly a function of the new volumes coming back, right? Is the way to think about the margin- Right. -trajectory in the business. Okay, got it. Maybe turning to some of the businesses, what do you think, now that you've had the sort of cell and gene therapy CDMO business for a couple of years, like, how would you, what would you say is Charles River's competitive advantage in that business? It's been a really tough couple of years. That's a result of a whole bunch of things that we've said before. Yeah. Just to repeat a couple of them very, very quickly, we bought a bunch of businesses at the same time. Yep. In an adjacency that's scientifically complex and scientifically new. So I would say that we are all kind of learning as we go, including the clients and the regulators. So it's been. Interesting. It's been a yes, it's been interesting. Those businesses are in really good shape right now, so I've just visited all of them. We have new general management in all of them. We have new sales in all of them. We have new regulatory folks. We have added capacity, which actually had started before we bought them, but the capacity has been finished. In our gene-modified cell therapy business, which is the largest one, that's the one in Memphis, we've had multiple regulatory audits successfully and a couple of European regulatory audits for clients who, one, has a commercial product that we're making, and the other one is on its way. Okay. So we're seeing lots of things develop there. We're seeing the plasmid DNA business improve nicely. Viral vector business, probably a little bit behind that, but also improving well. So I think we understand the business very well. We understand our competitive dynamic. We understand the pricing, appropriate pricing strategy, and versus the competition, just to go back to your question, we have, we have a couple of big competitors in this space that don't produce plasmids, and they don't produce viral vectors. But even more importantly than that, you know, the principal instigator of us going to this business was the fact that we had this big biologics business, so those are closely tied together. Yep. Safety. So the, you know, you're not going to get—you're not going to be able to do this work unless you can prove the safety of these compounds. So I would say that our overall portfolio is a huge competitive advantage in this space. We feel really good about this business right now. I think we can be the, the largest player in cell therapy manufacturing only. Yep. And I think the totality of our portfolio really buttresses that, and, you know, and strengthens our ability to engage with the clients at different places in the drug development sort of paradigm. Mm-hmm. It feels like it's in a very good place as we go into next year. Got it. I've heard from some people that there was some, you know, a lot of companies were doing some of that internally in terms of the manufacturing side, and maybe they built up some capacity and then post-COVID, maybe some excess capacity. Is that something you sort of, like, encountered on your side, or maybe somebody was talking about a very specific situation that we shouldn't probably broadly generalize? Yeah. Some of the very large pharma companies, because they can afford it and because they were concerned that maybe the overall capacity of all of us was not sufficient- Mm-hmm. We were still building it or whatever, and I know several big pharma companies that have built their own. No biotech company is ever going to build their own. Yep. I can categorically say that. You know, the preponderance of the clients, I think, will be small, very focused, cell and gene therapy, biotech companies. I mean, you'll obviously have some pharma. Mm-hmm. So, you know, I think that is what it is. That's not a major issue for us from a scale point of view or from a client interaction point of view. Got it. I think you sort of mentioned, the viral vectors may be coming back a little bit more slowly. Is that just a function of sort of like therapeutic needs? Is that something specific to you guys? Like, how... What's the right way to think of it? The business is doing well. You know, we went back and recapitulated. We used to do the viral vectors and the plasmids at a couple of places, and then we selected one site to do one and one site to do the other. It's just kind of the time frame associated with getting those- Okay. to a significant commercial scale. Okay. Is there anything else you need in terms of, like, capacity or sort of technical things in that broader space in the CDMO business? Or you feel like, you know, inside the past two years, you're just in a good spot, continue to grow this, and you kind of have the right portfolio? There's probably some small, subtle things. I certainly wouldn't do any more M&A in this space until and unless these businesses are really rocking. Okay. -and really growing at the rate that we wanted them to, generating the margins that we wanted them to, capacity full and people banging on our door. I mean, there are some other acquisitions out there. They're relatively small, and there's a few nuances on the service side, but I'd say it's a good portfolio right now. Okay. And maybe just to... You sort of touched on it tangentially in that answer, like, are there any-- What sort of areas are you looking at in terms of potential M&A now? And, you know, has the current macro volatility sort of helped on the valuation front? I wish and hope. We have several conversations going on right now. I wouldn't say that any of them have seriously gotten to the point where we're talking about price, but the inference from the sellers are that they, you know, they're stuck remembering what the multiples were, you know? They're just like, "Yeah, twice. Three years ago, or some competitor that was bought, or some competitor that went public. Yeah. I think that's foolishness, but that may be the way it is. But- So, don't know yet. Okay. There's a bunch of things available that, as I said, we're looking at. We always, we always have several things going on, but certainly things in discovery, certainly things in several therapeutic areas, certainly things in our broader laboratory portfolio capabilities, which I think is a really important part of our business. Actually, a couple of things in the research models business, and a couple of things geographically, which would expand the kind of portfolio that we have. So, they're all private equity owned, except for one company that's owned by an individual that started them. Okay. None of them are huge. I'd say they're all, except for one, that's sort of modest in size. One's a little bit bigger, and of course, none of them may happen. Okay. Yeah, no, then that's similar to what you have said for many years. Yeah, yeah, yeah. Right. I said I was going to ask you about sort of private equity valuations, but it seems like the comments that you made versus sort of founders, but it sounds like that what you said was sort of applicable for both of those groups. I don't think the private equity guys are in the business of selling their assets for lower price points. We'll see. Not a good business model for them. No, I mean, it's not. You know, we try to incentivize them to pull the deals forward, because I do think it's important to get to monetize these, monetize some of these deals within a particular year or a particular fund. Yeah. We've been quite successful in doing that. We have one conversation going on right now, trying to talk them into accelerating, but I, I'm not sure how the capital are going to be. Okay. And then how do you think about, on the spending side, balancing some of the longer-term investment needs and what are clearly, like, very nicely growing, like, secular business, you know, growth businesses with sort of the, some of the shorter term demand environment? Yeah, I think we've done a very good job for at least a decade now, matching our CapEx, in particular, with our current and anticipated growth rate. Because you got to build this stuff 18-24 months in advance, so you really have to call it relatively early. Yep. Our capacity right now, across all of our businesses, is well utilized. It's not dragging our margins down really anywhere, even the businesses that are slow growers. Mm-hmm. So you should expect CapEx to moderate. You know, we used to be at 6%, we got up to 9%, probably moderates to 7% or 8%. And we'll build more capacity in advance of when we think we need it, only in the businesses that are growing significantly. And, so, so there's no need to do that. We're also driving efficiency in lots of our businesses, so I think we will be able, particularly in safety, we'll be able to get more revenue out of a similar amount of capacity by using them more flexibly. And new space that we build will be more flexible. In other words, the rooms will be able to be larger or smaller. Yep. Use multiple species in that, and that's really quite powerful, because some of the older facilities, you can only use them for certain type of work. So, you know, I'm positive about the spend that we'll have, both operationally and from a CapEx point of view. Got it. Well, we only have 40 seconds left, so maybe there's one last question. What do you think is the least well-understood thing about Charles River by investors? That the NHP situation is largely behind us- Mm-hmm. and we have sufficient numbers and clients. We didn't delay studies. Clients are happy, and it's really something that's pretty much in the rearview mirror. When do you think is the next time you'll go to conference and have someone not ask you about it? I hope soon. Sounds good. Well, thank you very much. It was a pleasure, Jim. Thanks, Elizabeth