Hi there, good afternoon. Welcome to the Charles River presentation session for our Jefferies London Healthcare Conference. Pleased that you are here. Thanks for your attendance and support. Also want to thank the Charles River representatives for being here and supporting the conference. Flavia Pease is the company's Executive Vice President, CFO, and Todd Spencer, the company's Head of Investor Relations. Thank you very much for being here and making the trip. I wanted to start off with just a kind of typical down-the-middle-of-the-fairway demand question. We talked about this a little bit this morning, but worthwhile for us to revisit on the fireside chat here. By way of background, your last several quarters have seen backlog kind of resetting to a post-COVID level, post-COVID normalized level, and that has meant that book- to- bills have been in the kind of 0.7-0.8 range until this most recent quarter at 0.9, 0.93, I think exactly. So maybe talk about how the demand reset picture looks like and specifically what happened in the Q3 to improve that and how you're seeing the rest of the year progress or what you expect to see for the rest of the year. Thanks. Thanks, David. It's great to be here. Great attendance at the Jefferies Conference. You guys really have been expanding over the last several years. We obviously were disappointed to have to re-baseline the demand and the outlook in the Q2, but I think the, if you will, good news is we think we did that appropriately and we called the trends, the demand trends in both our client base, both small and mid-size biotech as well as pharma appropriately. The Q3 was encouraging in a sense where the demand, the leading indicator demand trend, especially for the global pharmaceutical clients, they rebound a little bit. They were sequentially better in Q3 versus the Q2, which drove the beat in the Q3 versus the consensus, and that was driven sort of across the board in that client segment. There wasn't a particular company that drove that. And it was both an improvement of bookings as well as cancellations sequentially. So the net book- to- bill improved sequentially. Important that it was only one quarter, right? But encouraging that it didn't continue to erode. And so that, as I said, makes us happy that we called that outlook correctly. I think if you also talk a little bit about the biotech leading indicators and demand outlook, what you saw was a stable environment in the Q3 versus the Q2 in terms of those leading indicators. So not a sort of we're out of the woods yet improvement, but all throughout this year, biotech has been better than last year, but that recovery has been pretty gradual. That is the thing that I think will continue to put a bit of pressure on the outlook for the next several quarters, however many quarters that looks like, where you're going to have pharma still a little bit on the sidelines post this reprioritization of their pipelines and right-sizing, and then biotech recovering, but at a gradual pace. So I think we remain appropriately measured. And I think to your point, net book- to- bill is still below one, and we really need to see it being above one and being above one for several quarters for us to be more constructive on the demand environment and kind of returning to growth. Got it. And in this context, maybe the answer will be that it's still early, but in light of the change in administration and some of the proposed appointments, has that had any influence on customer discussions at this point? No. I think it has had influence on the capital markets and the capital markets' view of how those changes may impact clients, but not at all in terms of different dialogue or different choices or different actions. I think there's a lot of speculation at this point, which is natural because there's some uncertainty from a policy perspective, from the appointments to your point, but it's more of a capital market dynamic than a client demand being impacted dynamic, which I wouldn't expect in a different way. One, because I think especially large pharma, they have dealt with very different administrations with different policy agendas. Drug pricing is sort of an easy target for whichever side of the aisle you're on. And the reality is, and I give credit to pharma as an industry to continue to adapt and adjust and continue to find life-saving therapies and be able to be viable even as policy changes over time. I think for biotech, it's less on the appointments. The question I think would be more on to the extent that tariffs can have a negative impact or negative read-through on inflation, that might have a chilling effect into how quickly the Fed continues to lower interest rates, and that would be more detrimental to biotech. So again, not a policy, but more of a kind of macroeconomic. Now, sort of the good news, if there is anything, is biotech has been dealing with that for the last two or three years, right? So they kind of learn how to navigate. The IPO market hasn't been super open for many years. And so while it probably, if it does translate in higher inflation, interest rates not coming down as quickly, that means that they're going to continue being thoughtful with their cash burns and their purse strings, but that's what they've been doing for the last two, three years. Great. That's helpful. Thanks. I figured the answer would probably be it's still early. The pricing dynamic is something that you've, as demand is moderated, as we just discussed, you've highlighted that pricing and bookings had started to turn a little negative a quarter or two ago. You're still in the Q3 kind of recognizing the benefits of higher pricing two or three quarters ago in the bookings. And the revenue should now start to feel some of those lower prices in the backlog. Can you help us understand that continuum, that progression? And then how would you frame out order of magnitude of the difference in kind of the average pricing and the revenue you've seen year to date versus what you're about to see? I think you framed it very well in terms of the dynamics of that timing and lagging effect and also why we sort of signal earlier in the year that in this market with supply being more available and demand being more constrained, the pricing dynamic becomes more of a headwind than a tailwind. So pricing power was very strong sort of during COVID and post-COVID years, and that dynamic has changed. But to your point, it takes some time for what we call spot price, right? What we are booking now to actually translate into revenue, there's two- to three-quarter lag. And to your point, we still saw positive pricing in the first half of 2024. In Q3, pricing was flattish, and then we now already signaled that we expected to go negative in Q4 and into next year. And by the way, when I'm talking about pricing and these dynamics, it's really DSA pricing that we're talking about. And so that will continue being a headwind for us into 2025 until your anniversary, those discounts that you started having in 2024, anniversary in 2025. I think we're not seeing a continuation of discounting throughout the year. It's sort of like a recalibration, and it has stayed modestly stable at that lower level. The other thing that we talked a little bit about this morning as well was it depends within DSA what you're talking about. General toxicology is a little bit more price sensitive because there's more competition, more capacity. In specialty tox, the work is more complex. There's less providers that can do that complex work, so we have a little bit more pricing power or less pressure. So I think we're going to see what we talked about and guided to in Q4 continuing through some period of time in 2025 as that dynamic of the anniversary happens. In our follow-up on the Q3, so thinking more about the cost side of things, you had, well, in the quarter, in the remarks, you talked about a $200 million restructuring cost savings plan. $100 million of that will have been harvested by the end of 2024, $50 million more in 2025. I think you said that $50 million is reasonably equivalent to what will be the reinstatement of your incentive comp accrual. I think the answer is going to be yes, but should we think about these pricing factors and other regular cost inflation as essentially direct impacts on P&L? Yeah. I think if you look at that equation, right, it's really hard to drive margin expansion, not to mention protect margin if you have a top line that is going to continue to be challenged, and especially going into a period of time that you're going to have negative pricing and to your point where you have your cost base increasing, so I think we recognize that, but we believe we were appropriately fast and diligent in adjusting our cost base to try as best as we can to protect margin. We guided to a revenue decline this year. Our updated guidance is -3% to -4%, and we talked about the actions that we were taking resulting in over 6% of our staffing being rationalized and over 5% of our cost structure being reduced. Obviously, it takes some time. As you said, it's $100, $50, and then $50 more in 2026. That variable compensation is probably in the $30-$40 million range, so the extra $50 is a little bit better than what we have to overcome from that one-time benefit, and we're going to continue looking at other areas that we can make our operation more efficient, whether it is leveraging some of the digitization initiatives and efforts to make us more scalable, hopefully when the volume comes back, or the way we operate and drive standardization and efficiencies across our businesses. These take a little bit more time to implement rather than I'm flexing my technician and kind of direct labor staffing to the demand that we can act on more quickly, but there's ways of operating that we're going to continue looking at to try to drive efficiencies. In that context and thinking about other cost opportunities, you've acquired Noveprim as a way to control more of your NHP supply chain, and that has certainly been a volatile cost item for the last several years. Is the control of more of your NHP supply a factor that can lower your cost, or is that something that doesn't really benefit you until the contracts roll off and further into the future? Yeah, I think it's more of the latter. As we talked about when we did the Noveprim acquisition, the play there is to vertically integrate our supply and drive more control of that supply chain, which tends to have a lot of factors, some of them outside of our control, negatively impact over the last several years. Having said that, Noveprim was already a supplier to Charles River. We already had a minority interest in the company. Now we acquired a majority interest, but they still had, to your point, some other third-party agreements that we have to sort of cycle through and let them come up for renewal. And when that time comes, our intent is to try to use more of that supply for ourselves as opposed to renewing them in the sense that strategically we're not in the business, in the market of selling large models. We see this as well as even the Hainan acquisition, which was another farm in China. It was always with the intent of integrating that supply chain for our own utilization, and so we'll continue looking at that. It will eventually help with margin, but it's something that is going to help happen over the years as that third-party business goes down. Got it. Let's shift to the Manufacturing Solutions business, which has stabilized and improved pretty nicely. Your margins, I think, in the biologics testing and microbial businesses, you've talked about being basically back to pretty normal levels, which has then implied that the CDMO business was the one that had the opportunity, that that was the difference between getting the full segment back to your target margin levels as well. You've had some commercial success in that CDMO business. Talk about the stability of the revenue, and then what is the path needed to get the CDMO part of manufacturing to your target margins? Yeah, I think just one slight clarification. I don't think the CDMO business, even when we acquired, we always said that it would be accretive to the top line growth, but dilutive to margin. Sort of structurally, the CDMO margins will never be comparable to what we have in the legacy manufacturing solutions business, especially because even though we have not disclosed the breakdown between microbial and biologics testing, we've always said that the microbial business is a very high margin business, right? So the legacy manufacturing solutions margin was one that we are never going to get to be able to increase in CDMO to get the margin of that business be what historically it was. Having said that, to your point, I think over the last couple of years, not only we had some challenges as we integrated the CDMO business and it has taken us longer and been more costly than we had anticipated. I think the good news is a lot of those investments are behind us. The personnel, the facilities, the regulatory readiness is all now sort of in the base. And so the opportunity now for us to drive margin is to continue to add scale in those sites and leverage that fixed cost, if you will. And I think we're well on our way to continue doing that and doing that successfully. Not only do we have the right skill set, whether it's technical skill set, but also commercially, we have now three commercial products that have gained approval that we are supporting. That's always helpful as you are trying to attract new clients because they tend to want to start with somebody and stay with them all the way to their hopeful commercialization. I think also what differentiates us and was part of the hypothesis during the time of the acquisition was we are unique that we can offer a more integrated capability between both the manufacturing part of the process as well as testing. We're seeing that actually happen with 50% of the CDMO clients also using our biologics testing capabilities for their testing needs. I think we're encouraged. It's been a little bit of a bumpy road, if you will, but I think that business is in good shape for the future. I was wondering on the point that you ended on conveniently, the cross-sell opportunity from CDMO into your biologics testing as you're describing. So CDMO customers, 50% of those using biologics testing. Is there a reverse cross-sell that you're pursuing where you're because I'm assuming the biologics testing customer base is a bigger one, and can you fill the funnel of your CDMO that way? Absolutely. And that's also something we're working hard, not just to make biologics clients aware of our CDMO capabilities. And we do think there's opportunity, especially in the more complex programs where you have programs that are both gene and cell therapy. We can definitely sort of bring them into the funnel. What does happen is it tends to take a little bit of time because if you started with a certain CDMO manufacturer for your clinical demand, you're not going to change midstream. So even though we might be doing the biologics testing for a client, it would be hard for them to stop and transition from whoever they're using to come into our CDMO facilities. But for new programs that haven't sort of started with their clinical materials, that's definitely an opportunity. Got it. And then maybe in the time we have remaining, let's switch over to RMS. So the question we talked about earlier this morning was just in thinking about the relationship of demand for models to what you're seeing in DSA. And so maybe help us to understand the mix of business. You had mentioned academic is a little higher in RMS, but the correlation between strength or weakness in demand in DSA and model sales. Yeah. And I think the RMS and especially the small model revenue and demand in RMS is absolutely not immune to the dynamics that we are seeing in DSA in terms of biotech and pharma clients rationalizing their pipelines and going through restructures that are affecting their budgets. But I think there are a couple of other differences in RMS that make that business more resilient. To your point, and you already talked about the client base, RMS has 40% of their sales from government and academia, which is not the case in DSA. I think the second factor is RMS has more pricing power. Over the many, many years, we actually saw volume in RMS come down. So if you think about supply and demand, even though demand was coming down, we were still able to take price. And we did that this year, and we expect to continue to do that in years to come. Whereas DSA, the supply and demand equation is driving less pricing power. And then the last aspect is for the research models portion, we also have a presence in China, which we don't in the DSA space. And that business actually has held up nicely for us. I know in some of the tools and life science companies, they really had some challenging years in China. But given the nature of what we're selling, which is small, cost-effective research models, we really didn't see, I mean, it didn't grow as robustly as it had in good years, but it's still a nice source of growth for us. And so that also helps the math make the RMS business a little bit more resilient than DSA, but again, not immune to the demand environment factors that are negatively impacting DSA. Got it. And I think on the Q3 Call, there was some discussion about moving parts in the services part of RMS. GEMS is a part of that portfolio, Insourcing Solutions part of that portfolio. Which were the areas of callout? I think it was more Insourcing Solutions and maybe CRADL. And could you talk about what the moving parts are there? Yeah, and you're correct. I think we did see to the point that we were just making while I said that the small research models are a little bit more insulated. The services business in RMS are experiencing the same headwinds that we talked about from a biotech and pharma demand impact. And what we saw was particularly in CRADL's, a bit lower occupancy, some clients as a result of them prioritizing and rationalizing their pipelines requiring either less space, less services. And so that is what we saw in the services business in RMS, sort of the same dynamics that we saw in DSA. And was that, so I guess two questions on that is you've consolidated some capacity. You had some overlap in South San Francisco from the Explora acquisition. You're consolidating capacity. How much can you continue to do that? So I think, and I think the comment about consolidating capacity. We now have from the peak of 150 sites. We have announced since the end of last year consolidation of about seven sites. Some of those were the CRADL sites that you were alluding to in South San Francisco where there was some overlap. And now we announced another 15 sites, some of which are already now in execution and some that are going to take over 12-18 months to actually finalize. And there's some additional CRADL footprint in that 15 additional sites is mostly small DSA sites and some CRADLs. And then also in the cell solution, cell supply business, we consolidated our footprint in our California location where we used to have a couple of additional locations. In CRADL, while we're doing that in some locations, we are actually still opening new sites as we speak. But when we do that, we have an anchor client, right? Somebody that is taking sort of 50%-60% of the capacity. So there's still opportunity and the CRADL model is still resonating with clients, but it's about how we're going about it now, less of the, not that we ever did, we'll build and they'll come, but now we need a little bit more assurance on that occupancy upfront. Got it. And it's blinking at me back there, but on this topic to finish up, was that CRADL occupancy issue also the item that was basically responsible for the margin difference in RMS? RMS has a lot of puts and takes, and it's hard because also the NHP, the timing of NHP shipments, can have a pretty meaningful impact quarter to quarter. So there's lots of factors that will drive that, the margin, quarter to quarter. So, short answer, no. Got it. Thank you for your attention. We'll bring it to a close here. Thanks for your support of Jefferies Healthcare Conference. Hope you enjoy the rest of the day and a half we have left. Thanks a lot. Thanks, Dave.