Looks like we're live here. Good morning, everyone. My name's Eric Coldwell. I cover pharmaceutical services, healthcare distribution at Baird, and it's a great pleasure to have Charles River with us today. Jim and I have spent a lot of days together over many years, and we've seen the ups and downs of this space. I'm very excited always to have a good conversation with Jim. We have a lot of fun on stage, so hopefully we can keep that going. Always a pleasure. Of course, we have support from Todd here in the audience as well. Couldn't convince him to jump on stage with me today. Jim, I'm going to have to ask the obligatory, boring, bad question, which you can't answer, but you are in a strategic review. You have obviously had some news and noise this year with, let's call it, a partner on the investment side. You mentioned this yesterday. I have to ask for my audience, tell us the latest and greatest, what you're thinking on timeframe, when we might hear something. Maybe step back a little and talk about how you always are under a review, whether or not it's formal. You're always thinking about these things. We are deep in the midst of the strategic review. We are working with some urgency and at, I think, a significant pace to kind of get to a punchline, whatever that might be. We have done a very thorough financial analysis of our entire portfolio, some of the products analysis, looking to see whether there are additional ways to unlock value, which was the original thesis of this sort of new partner, as you put it. I do not want to give an exact date because we may not hit that, but we want to get that response out as soon as possible. It has been a very collaborative, positive, respectful, professional process. We have a refreshed board that I think has actually been beneficial. I think there is a fair amount of objectivity that goes into the analysis. Something that I did not anticipate is that it is quite interesting to have a large shareholder sort of inside, kind of helping you look at your portfolio with some objectivity, pretty much on behalf of everybody else to some extent. We had a situation with another group 10 or 12 years ago, which was less professional and much rougher and did not really come to much of a conclusion. This is really a collaborative endeavor. As soon as we can, I had a bunch of one-on-ones yesterday where people were sort of pushing about, is this going to be in the third quarter call or whatever? We will see. When we have what we think is an answer, we will get it out there. You're not willing or able to commit one way or the other as to whether we would hear something with 3Q results at this point. Right. Yeah, fair enough. I have to hit on DSA, the segment that seems to get most of the noise most of the time. I have a hypothetical question and really step back as if neither I nor anyone here is that familiar with the business. It's a quick burn business. Obviously, you don't need the kind of book-to-bills that, say, a clinical CRO historically would need to generate growth. Hypothetically, what would be a long-term consistent book-to-bill that you would need to be flat or generate some modicum of growth? In other words, could you grow on a 1.0 book-to-bill over time because there's stuff one and done inside of a quarter or some things that don't fully fall into bookings? Would it be possible to generate modest growth on a 1.0 book-to-bill over time? I mean, yes, it'd be better to be above one. Yeah. We will work hard to obviously drive that and to enhance our bookings. We have a small biotech demand issue related to capital markets being closed, and that's been a principal driver of our growth over the last decade, I'd say, small biotech with a lot of innovation. There is definitely some hesitancy and some concern about access to capital and their ability to do these things. We were above one in the first quarter, dropped down in the second. What we said is, for the balance of the year, that will be pretty much constant. We anticipate that. We'll stop short of talking about next year because I think it's premature. I agree on that. Your guidance, you don't imply, you don't guide, you don't promise 1.0 book-to-bill s in the back half, and it sounds like you truly anticipate something below one. I'm not going to, I don't want to put words into your mouth because sometimes there's what's built into guidance versus what you actually expect or what you think is maybe more probable, but you're not willing to go there. It sounds like you actually are anticipating book-to-bill below one in the back half. How does that translate into all else constant? How does that translate into growth? I know you're not giving guidance, but if backlog is at $1.93 billion and you're burning backlog at 10 months and backlog does in fact come in a little bit the next two quarters on a sub-1.0 book-to-bill, barring an improvement in the burn rate, it would imply revenue being flat to down next year in DSA. I'm just curious how you're thinking about this market because you have the juxtaposition of saying you're seeing green shoots and you're actually getting back to hiring. Yeah. I mean, it's a dynamic market and a lot of these studies come in relatively quickly and they're short term in nature and sometimes continue and expand and have additional bells and whistles associated with them. I think we need to see what the action's going to be for several quarters in a row. It's way premature to call 2026. There's just too much happening. I mean, you know, the good news is that our pharmaceutical base is very solid, had a very strong beginning of the year. Obviously, it's well financed and the same with mid to large biotech companies, which is kind of acting the same way as big pharma. The $64,000 question is what's the access to capital for the small guys where I think a lot of the innovation is, a lot of the work is, and there's no question they've got drugs that they've developed that they paused on. Do they have to hate that? I had a bunch of one-on-ones this morning and people saying, do you think there's some pent-up demand on their part? For sure there is. For sure there's pent-up demand, not to go and do the work, but to continue the work and, you know, get their INDs filed. That's been a very fertile ground for us. That's been the innovation driver for pharma for, I don't know, almost two decades now. 50% - 70% of the drugs are coming in from the outside, could be from NIH, but often from biotech. It used to be 700, there's maybe 400 or 500 new biotech companies created every year with no internal capacity to do anything. We're going to get a bunch of the work. We're staying very close to them right now. Last year we made the mistake, as you will recall, of predicting when the IPO market was going to open up, which was foolish because we have no idea. No predictions this year, no predictions next year, but I do think it's totally linked to that. If you went public and you thought you'd get a secondary, you're kind of stuck. If you're VC-based and you're assuming that you would get public, they've also been a bit stuck. Besides M&A for those folks, if they're still independent and in a growth phase, access to capital is everything. I think we'll have to see a couple of three quarters of that before they're comfortable that it's sustainable on a sustained basis. With the announcement that you're going to be, you are in the process of getting back to a little bit of hiring. You talked about some, look, that's a positive sign. Nobody's going to take that away from you. It does introduce a little bit of cost in the back half, about $10 million. I just want to clarify that $10 million, is that a gross cost or is that net of any incremental revenue that perhaps, I know it's early and these people will need a little time to get up to speed, but is that net of incremental revenue or is that a gross? Those people are necessary. We are functioning ahead of our operating plan and hence our guidance, which we've raised. I think people have been working very hard. In order to accommodate work that's in-house or we know is coming in-house, we need to add those jobs, which is probably a hundred folks. It's not huge. The work will be there to pay for those folks. Got it. Perfect. We had a few questions this morning about, if the demand came back quickly, can you staff up for that? That's kind of an always, always for that, right? We try to stay slightly ahead of the demand from a headcount point of view, but this will just catch us up to where we actually should be right now or need to be right now. The only thing that I think gets in the way of us continuing to take share and get business is the quality of our execution. We don't want to do anything to impair that. You've had some fits and spurts with cancellations in the segment. In some quarters, the gross awards are better, but you get a cancel. Sometimes it goes the other direction. Cancels were a little higher last quarter. Was there any, I know there was some consistency or theme behind the nature of work broadly that was canceled. I'm not sure I understand exactly why, but is there any read on that, what you're seeing in the client behavior with cancellations that you could extrapolate to drive a view of where growth or bookings or demand may be over the next year? I think not. I think there was nothing sort of structural in that or any sort of shift or change in demand by any segment of our client population. We always have cancellations as sort of part of running the business. Drugs aren't ready on time and they're not formulated on time or whatever. It's not really predictable, but we have sort of a run rate on a percentage basis. Cancellations were down in the first quarter and up again in the second. It was kind of the nature of the studies that were associated with that. More expensive, complex stuff. Studies don't sort of start and stop at the beginning or the end of quarters. I don't think that portends anything. I don't think it tells anything about the future. Let's shift to research models. You have some vagaries with timing. There's the inevitable timing of China shipments. That stuff we can look through. Overall, on an annual basis, it looks like you're going to be relatively flat year- over- year, give or take. Business seems stable. How have you managed? I think there's, at least for me and I think some of my peers, still some surprise that all of this noise, negativity in D.C., the turmoil with CDC, FDA, you name a three-letter acronym agency, it's had incredible turmoil this year. How has that not rippled into your business in any meaningful way? I think one NIH contract or maybe a couple of small ones, but a few million bucks. How have you not seen a bigger impact? By the way, you were right. You always said that would happen. How is it the case? There's a lot of speculation about what's happening or going to happen or what the ramifications are. Obviously, we watch that closely. We speak to our clients about that. We have lots of government contracts. We don't have a huge amount of work that's sort of academic and government. It's about 20% of RMS and about 6% of the total company, and straight NIH is 2%. It's kind of de minimis. We've had a lot of long-term contracts with NIH and NIA, which is aging, NIAID, which is allergies and infectious disease, and we've had them for long periods of time. What's interesting is the dialogue at NIH, where they talked about a 40% reduction and then a 15% reduction, and then the recent conversation is there'll be no reduction. I think that's probably true. Forgetting Charles River, that's a really important thing. NIH is a lot of great science is coming out of NIH and a lot of company creations and technology. I think that's really important. There's a couple of things. One is that probably has the noise, probably has an impact on if you want to buy mass specs for $500,000, maybe you pause on that and say, maybe I should wait. I think to utilize small research models for basic drug discovery, I think those tools are necessary, important, and actually not all that expensive. A lot of these contracts hold these institutes, the various institutes of NIH, in good stead. We were, I think, appropriately cautious in our dialogue. I'm trying to remember whether it was the first quarter or the second. It doesn't matter. We talked about that we had at least one contract that we had indications that that would be canceled. It was about a $3 million annual hit. While we had no evidence that there would be any others, in the eventuality that there were, we were going to be careful with the way we guided. I think it's possible that there won't be anything further, and I just think it's the nature of the work that we're doing, the importance of it, and the fact that it really has kind of a fundamental negative impact on drug discovery that's probably not fixable if you unravel some of those contracts. Some of those have been going on for really long periods of time. Obviously, we're pleased with the situation, but still watching it closely. Now that universities have kicked in the new school year, the last two to three weeks at most universities, is there any seasonal pattern there? Do you get any updated vibes early in the year? Usually not. I mean, again, our academic business is, and we sell to most of the academic institutions, but it's relatively small. Some of that money trickles down from the government, some of it doesn't. I would say no. Yeah, fair enough. One of the services that you've introduced in recent years in RMS is CRADL, Accelerated Development Labs. For people who don't know, you could maybe give a one-liner on that business, but that was another area where I felt like maybe there would be some incremental pressure as you're effectively providing lab space to the market when the market needs lab space. In a world where biotech funding's been down and some biotechs have maybe built some capacity that they don't need, there's perhaps a little extra lab space. I think maybe quite a bit of extra lab space in the market. Business hasn't blown up. The growth rate's slowed, but talk to us about where you are in the moment with CRADL, position the sizing there, and give us an update on what you think the growth rate may look like as we move into the next few years. Sure. We like that business a lot because we start with the clients in the earliest phases of R&D. We provide the facilities and the staffing for them. If the drug progresses and looks promising, there's an opportunity for us to take it into discovery and safety and all the way through to the clinic. We have multiple facilities in all the major biohubs. We did a reasonably large acquisition, I think it's three years ago, where we had incremental space. There was a little bit of duplication of space, so we shut down some of the smaller facilities. That's been a nice high-growth business for us. If you look at it on a see-through basis, all the way through, you know, to, as I said, discovery and safety, I think it has the potential to generate a lot of margins and for us to hold on to clients for a long period of time. We love the strategy. Had pretty high growth metrics before the last kind of 18 months. Has very good operating margins, even though we don't disclose them. It's kind of stable and flat this year. That is definitely a direct result of the legacy of lack of access to capital by the biotech companies. They're pausing. They're certainly not building their own facilities, which is why so much lab space is empty, but also probably reluctant to add more space with us or any space with us if they don't have it. That also should ameliorate and change fundamentally when they get access to capital. We continue to like that business a lot. We don't really have much competition there and lots of clients. The other thing that was quite interesting is that while it's very much premised on the small clients, we have a fair number of medium-sized and very big pharma clients who build a facility and not have enough space and will want incremental space. I think we're solving a lot of issues for them. Look, our whole portfolio is a way for our client base to manage their costs more effectively and get the work done as well or better than doing it themselves. I want to shift to manufacturing and three different businesses. Each have had periods of moments of glory and periods that have been a little slower. Microbial Solutions in the moment seems to be tracking very well. Biologics testing maybe still has a few struggles. It's been a little weaker in recent periods. Before I get to CDMO, I want to hit on those two. Maybe you could give us an update on Microbial Solutions and biologics testing and really what are the dynamics in those marketplaces and how are their growth rates varying, perhaps why they're varying? Sure. Two long-term businesses that were acquired probably three decades ago. Microbial business is the service that's required by law. You have to test, you have to sample manufactured injectable drugs and medical devices to make sure they didn't become contaminated. That's kind of the business that keeps on giving. We have a technology that is superior to the competition. We've had a lot of business. It's a razor-razor-blade phenomenon. We have lots of disposable revenue with exceptional margins. We've never disclosed them, but it's a very high-margin business. You've probably figured it out. It's had very good growth metrics. It's kind of high single digits, but it's been higher. It's been low double. It doesn't seem to be slowing down at all. We've been able to continually tweak the margins and have them improve. We love that business a lot. The biologics business, we bought it around the same time. One other thing, the microbial business is the classic NAMs technology. When we bought it, it was the only FDA-approved alternative to using lab animals. That still sort of is. Biologics, we bought around the same time. That's a business that's totally tied to testing large molecules, which often are derived from human proteins to make sure you don't have any negative viruses in there. We do a lot of work there. Heavy competition. During COVID, there was a ton of business. Slowed down post-COVID. Right now, the demand is still quite good. We have a few clients that have had kind of unique situations. One was bought. One had a drug that failed, whatever. They just have less volume this year. I do think that directionally, that's a business that will also have reasonable growth rates and improving operating margins. We like them both. They're somewhat related to sort of quality control, manufacturing related. The other reason we love these businesses is sort of a barbell effect with the preclinical business. Those businesses are all around the clinic and commercialization of drugs. As the money ebbs and moves back and forth, we get to play in both spheres. You're forcing me to go into a territory that I don't want to go into because I don't think you're going to be able to comment, but my view historically has been you've been in these businesses, as you said, for decades and decades. They're very unique. They're competitive, but your competitors are, for the most part, traditional, more what the market would call life science tools companies, companies that get higher multiples, maybe have a little more patina than some of the more headcount-based outsourcing models that are out there, especially in clinical, for example. Companies that get better multiples on lower growth rates historically, and you have historically had really good growth rates. Now you're mentioning the tie-ins with discovery and safety and other things that you do. There's also been this market view of strategic alternatives where perhaps Charles River could monetize these businesses and generate a bit of a one-time hit for investors. I know you can't go into this, but I think this is the crux of the whole argument with Charles River in the moment, which is these historically, those two in particular, amazing businesses and manufacturing that you didn't get enough credit for, are things you've done forever and they tie in nicely to the rest of the organization. What do you want to be for the next 30 years? Right. You can't really answer that question. This is what I think a lot of us are very much struggling with in the moment. We get that. We get that that's kind of the essence of the strategic review and looking at the portfolio today for the future. What's the connectivity amongst the pieces? Are we getting maximum value for not just the pieces, but for the whole? That keeps us in a very strong competitive posture. How else, if at all, could the business be structured? As I said, we'll get to that punchline soon. One big beautiful bill. There are some potential advantages to companies to buy things from you that are in that bill: accelerated depreciation, some tax advantages perhaps. Has it, does it, will it stimulate incremental demand for one or more of, and it could be across the organization, but I tend to, for some reason, think about that perhaps being more impactful for the manufacturing subsegment. I think it's too early to tell. I think if the pharmaceutical industry builds more in the U.S., which they say they're going to, and I think they made some verbal commitments to do that, that would be very beneficial to our whole portfolio. I think we would have more business as a result of that. I think they would want to keep the outsourcing of the services in the U.S. as well. I think that holds for some positive results. Those facilities are not going to be built overnight though. It's going to take a while. Yeah, a long while. A long while. It wasn't just a few announcements. I think we're tracking just in the last year at over $300 billion of announcements. I think it's probably a good thing for the U.S., and the service businesses that supply those companies should be beneficiary. Yeah. Let's go to CDMO. Boy, so much to ask there. You did try to strengthen your preclinical non-commercial portfolio. I think there have been some signs of life in terms of maybe not as high as what you expected when you first did the deals, but perhaps a bit of a recovery in the pre-commercial portfolio? You're nodding your head. No, I think the pre-commercial portfolio is stronger. The businesses have been a challenge. Science has been a big challenge. The methodology of production has been a huge challenge. The facilities have all been totally redone. The staff is new. The regulatory folks are new. We've had a bunch of audits by the FDA and the European regulatory authorities. I think we have a presence now that perhaps we didn't have two or three years ago. We like that. However, we have to fill the gap from the large commercial client that we lost. Is this healthy pipeline that has recently been referenced? Maybe you're not reaffirming that today. Maybe you are, but recently mentioned that the pre-commercial pipeline was actually pretty healthy. You felt better about where your operation was post the facility improvements, the staff adjustments, upgrades, maybe I could say, the regulatory approvals. You've done a lot to get that business humming. Is the strength that you're seeing because the market came back somehow off the lows, or is it because you regained commercial momentum versus other cell and gene therapy CDMOs? I think it's more the latter. Yeah. I think cell and gene therapy has not grown at the rate that we anticipated. I think the science, I don't think, I know the science has been more complex than people had anticipated. You have a lot less drugs approved than people hoped. We're probably in the first generation of cell and gene therapy, and we're going to probably go through at least one more and perhaps two more. It's a little bit of building the plane as you fly it, both for the clients and for companies like us that manufacture this stuff. By the same token, it's an important part of our client base. Business is very closely related and relying upon the biologics business, which is how we got into it in the first place. It's obviously quite dependent on whether you get large commercial clients who need you on a continuing basis. We have several of our clients who are in the late stages of the clinical trials and are talking to us about commercialization. I do think we have a better franchise now than we did when we bought them. Much better. I think the marketplace acknowledges that. We have some work to do, though. This is a business that's a commentary on the complexity of moving into an adjacency. Maybe two offshoots on that. I know I'm stepping on dangerous ice here, thin ice when I get into numbers and the long-term outlook. Once you've annualized the headwind from the commercial, the two commercial situations, one a little less, one gone, this pipeline maybe you build up, you manage the business better, you get a little bit of momentum. Could this be a profitable business in 2026 and beyond? I mean, I don't think we're there yet, but is it possible that you get back to profitability next year? I think that would be a challenge. Okay. Any final thoughts? We're at 30 seconds. I want to give you a chance to. We still think that we still know that we have a uniquely distinguishable portfolio that all of our clients, big pharma and smallest biotech company, need because they have no internal capacity. I think the quality of our science is next to, is the best in the industry. This is all very much related to our very small clients getting access to capital. The demand will invigorate when that happens. I'm looking forward to this market stabilizing and you continuing to do what you can do. Hopefully, next year when we're on stage, we're having a lot more fun and talking about moving forward away from the last few years that have been up and down and all around. We look forward to that, Eric. I do too. Thanks, Jim. Thank you. Appreciate it.