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Charles River Laboratories International Inc (CRL -4.85%)
Q3Â 2019 Earnings Call
Nov 6, 2019, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen thank you for standing by. Welcome to the Charles River Laboratories Third Quarter 2019 Earnings Conference Call. [Operator Instructions]
I'd now like to turn the conference over to Corporate Vice President of Investor Relations, Mr. Todd Spencer. Please go ahead.
Todd Spencer -- Corporate Vice President of Investor Relations
Thank you. Good morning and welcome to Charles River Laboratories' Third Quarter 2019 Earnings Conference Call and Webcast. This morning Jim Foster Chairman President and Chief Executive Officer; and David Smith Executive Vice President and Chief Financial Officer will comment on our results for the third quarter of 2019. Following the presentation, they will respond to questions. There is a slide presentation associated with today's remarks which are posted on the Investor Relations section of our website at ir.criver.com. A replay will be -- of this call will be available beginning at noon today and can be accessed by calling (800) 475-6701. The international access number is (320) 365-3844. The access code, in either case, is 472865. The replay will be available through November 20.
You may also access an archived version of the webcast on our Investor Relations website. I'd like to remind you of our safe harbor. Any remarks that we make about future expectations plans and prospects for the company constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by any forward-looking statements. During the call, we will primarily discuss results from continuing operations and non-GAAP financial measures which we believe helps investors gain a meaningful understanding of our core operating results and future prospects. The non-GAAP financial measures are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations on the Investor Relations section of our website through the Financial Information link.
I will now turn the call over to Jim Foster.
James C. Foster -- Chairman, President and Chief Executive Officer
Good morning. I'm pleased, with our overall third quarter results which were highlighted by high single-digit organic revenue growth consistent with our long-term target and operating margin expansion that represented a positive step toward achieving our 20% target in 2021. Market demand for our leading early stage portfolio has remained strong throughout the year while biotech funding levels and the number of molecules approved by the FDA may end the year slightly below peak levels. Industry fundamentals and scientific innovation remain as robust as we have ever seen. And outsourcing is key to our clients' success. This is promising to be another solid year for the biopharmaceutical industry as clients discover solutions for previously unmet medical needs using new technologies like cell and gene therapy and immunotherapies and rely on CROs, like Charles River [Technical Issues] to support the research programs. We have no indication that the relationships with our clients or their spending levels have been affected by the geopolitical rhetoric involving the trade war and drug pricing. And we firmly believe that our clients will continue to partner with Charles River in order to bring new drugs to market faster and more efficiently for the patients that need them. Let me give you the highlights of our third quarter performance. As you know we issued preliminary third quarter results on October 21 in conjunction with our successful issuance of $500 million of senior notes about which David will provide more details shortly. Our actual third quarter results were at the higher end of the preliminary ranges that we have provided.
We recorded revenue of $668 million in the third quarter of 2019 a 14.1% increase over last year. Organic revenue growth was 7.9% with each of our business segments contributing meaningfully. From a client, perspective biotech continued to drive revenue growth. While acknowledging that third quarter revenue growth was slightly below the outlook that we initially provided in late July we were pleased with the high single-digit organic growth rate which is consistent with our long-term target. I will provide more details on each of the business drivers shortly. The operating margin was 19.4% a 60 basis point increase year-over-year and above our prior outlook. This improvement was driven by the Manufacturing Support and RMS segments and more than offset headwinds from the Citoxlab acquisition the biologics capacity expansion and a large insourcing solutions contract. We believe that the third quarter margin expansion demonstrates our ability to leverage the investments that we have made in staff capacity and infrastructure to accommodate the robust growth in a more scalable and efficient manner and provides a line of sight to our 2-year goal of 20%. With the significant investments largely behind us coupled with our continued focus on driving greater efficiency, we expect the operating margin in the second half of the year will be higher than the first half resulting in a full year operating margin that is approaching last year's level of 18.8%. Earnings per share were $1.69 in the third quarter an increase of 16.6% from $1.45 in the third quarter of '18.
The increase was due primarily to higher revenue and operating margin improvement. From a guidance perspective, we now expect organic revenue growth for 2019 to be in a range from 8.25% to 8.75%. his has been moderated from our prior outlook but still well in the high single digit range. You organic growth outlooks for each of the business segments are being narrow but remain within the previous ranges for the year. We do not believe in our narrowing of our organic growth range demonstrates any diminishing in market conditions. As we believe our market demand and our fundamental business trends remain robust. We continue to be well positioned for organic revenue growth in 2019 to be near the 8.7% reported last year at the highest level in a decade and consistent with our long-term growth target in the high single digits. As a result of the third quarter operating performance non-GAAP earnings per share guidance for the year is being narrowed to the upper end of the prior range to $6.50 to $6.60. This represents 12% to 14% growth from $5.80 last year. I'd now like to provide you details on the third quarter segment performance beginning with the DSA segment. The DSA revenue in the third quarter was $420.1 million a 7.9% increase on an organic basis with both the Discovery Services and Safety Assessment businesses contributing. We believe that high single-digit organic growth in DSA segment will continue to be driven by demand for our outsourced services as global biopharmaceutical clients choose to partner with Charles River rather than build and maintain capacity in-house and biotech clients leverage our expertise because they have limited or no internal capabilities.
To meet our clients' needs we have focused our business on unmatched scientific expertise rapid turnaround times flexible creative solutions and the ability to accommodate the increasing complexity of our clients' research programs. Our business model has made us an attractive partner for large pharma biotech academic institutions governmental agencies and NGOs but it is clear that we have become the principal partner of choice for biotech clients of all sizes. Biotechs are a demanding clientele focusing on exquisite science and speed. Our unique portfolio and client-focused business approach have made Charles River an indispensable research partner tailor-made for this expanding client segment. The Discovery business had an excellent quarter as we continue to distinguish ourselves through the breadth of our portfolio and the synergies between our Discovery and Safety Assessment businesses. The third quarter performance was driven by broad-based growth across oncology Early Discovery and CNS services. Our clients' programs often begin with the target identification capabilities of our Early Discovery business and encompass multiple DSA sites and services as the programs advance. We have successfully demonstrated to clients that working with us through a broader portion of the early stage drug research process enhances the value we provide them both from a scientific and cost-effectiveness perspective.
Our efforts to strengthen our Discovery toolkit and expand our footprint continue to resonate with clients both large and small. We continue to evaluate new opportunities to add innovative discovery capabilities to our portfolio as we believe creating a comprehensive solution at the earliest stage of drug research will enhance client retention as their programs progress through the pipeline. Our recent partnership with Distributed Bio is progressing nicely. Distributed Bio's large molecule discovery capabilities have generated considerable client interest and we believe this relationship and our broader partnership strategy will create additional opportunities to work with clients on their integrated programs. Client utilization of our expanded South San Francisco Discovery site also continues to increase. The site offers a wide range of capabilities from CNS to DMPK and bioanalytical services to the fast-growing West Coast biotech client base. And we expect to expand the services offered there. Whether by internal investment partnership or acquisition we intend to continue to build our discovery portfolio to reinforce our position as the premier single-source provider for a comprehensive range of Discovery Services. Revenue growth for Safety Assessment was consistent with both our full year and long-term expectations for the overall DSA segment. The business continued to perform well driven by robust demand from biotech clients and increased pricing.
Bookings and backlog improved year-over-year supporting our Safety Assessment outlook for the remainder of the year and into 2020. As you know Safety Assessment growth is not linear and will modestly fluctuate from quarter-to-quarter because the balance between price volume mix and the timing of study starts is not always uniform. The integration of CiTox remains on track and its financial performance is in line with the acquisition plan. As anticipated it is a complex integration across multiple sites in multiple countries but the collaborative efforts and hard work of Citoxlabs talented staff and Charles River colleagues have resulted in the successful first six months together. With Citoxlab to date and MPI and WIL beforehand we have done an excellent job on the integrations achieving our goals of adding and retaining hundreds of new clients enhancing the work experience for our employees expanding our capabilities both geographically and scientifically and driving operational synergies and greater efficiencies. The DSA operating margin declined 50 basis points to 22.1% in the third quarter due entirely to an 80 basis point headwind from the Citoxlab acquisition. As we said at the time of the acquisition Citoxlab has a lower operating margin than the legacy Safety Assessment business but we believe it will reach the 20% level within approximately two years of the transaction driven by acquisition synergies and continued growth.
We have built a global DSA footprint with unparalleled breadth and depth by adding capabilities capacity and staff through acquisitions and internal investments and as a result, have become the partner of choice for a broad range of clients. We have invested significantly in the last few years to achieve appropriate staffing levels so that we could accommodate growing client demand in the Safety Assessment business and believe we have achieved this goal. With the appropriate head count going forward continued modest capacity additions and a focus on operational excellence the DSA segment is well positioned to achieve a mid-20% operating margin over the next two years. RMS segment revenue was $132.5 million an increase of 5.8% on an organic basis over the third quarter of last year. Our research model business in China delivered another excellent performance and Insourcing Solutions also continued to perform very well. As we mentioned at Investor Day there are abundant opportunities to expand into new regions in China to support the substantial growth in its rapidly emerging biomedical research market. In addition to our current footprint in the major R&D hubs of Beijing and Shanghai, we have plans to open a new site in Central China in 2020. Expanding our presence supports our goals of market leadership and achieving a market share in China similar to that in Western markets. Because the research model markets outside of China are mature volume growth continues to be limited.
In Western markets, we expect a continuation of the research model trends that have been largely present for many years: declining demand from large biopharma increasing demand from biotechs and consistent price increases. From a services perspective, Insourcing Solutions or IS continues to perform very well as clients increasingly adopt flexible models to enhance the operational efficiency of their vivarium management and research efforts. The NIAID contract contributed approximately 350 basis points to RMS revenue growth in the third quarter. We anniversaried this contract in mid-September so the year-over-year contribution to revenue growth and the corresponding operating margin headwind will normalize beginning in the fourth quarter. As a result, we expect the RMS growth rate to moderate to a low single-digit rate in the fourth quarter. The IS business continues to be a flexible option for academic and government institutions which have historically been IS's primary client base. Insourcing Solutions is also gaining traction with new biopharma clients particularly through the success of our CRADL initiative. CRADL or Charles River Accelerator and Development Labs provides both small and large biopharmaceutical clients with turnkey research capacity in the Boston/Cambridge biohub and beginning early next year in the South San Francisco biohub. Through both unique models like CRADL and more traditional in-source staffing arrangements, the IS business has become an important partner for clients who need this type of support for their research programs.
In the third quarter, the RMS operating margin increased by 60 basis points to 26.5% due primarily to the research model's business as well as our ongoing efficiency initiatives. The improvement was partially offset by the lower-margin NIAID contract which reduced the RMS operating margin by approximately 50 basis points in the quarter. Our goal is to maintain the RMS operating margin above 25% through our continuing efforts to enhance operating efficiency. Revenue for the Manufacturing Support segment was $115.3 million a 10.6% increase on an organic basis over the third quarter of last year. The increase was driven by strong demand across both Biologics Testing Solutions and the Microbial Solutions businesses. The Microbial Solutions had a good quarter with broad-based growth across all three of its major testing platforms: Endosafe endotoxin testing Celsis bioburden and sterility testing and Accugenix microbial identification services. The primary driver of third quarter revenue growth was demand for our Endosafe rapid testing systems and cartridges. We saw significantly more Endosafe instruments over the prior year which in turn will drive greater demand for cartridges. Endosafe improves the efficiency of our clients' manufacturing and lot release testing processes.
And because there's no competitive alternative to our rapid testing systems we are continuing to convert the marketplace to our more efficient and reliable testing platform. The continued expansion of the installed base of instruments drives demand for the consumable cartridges which provides a healthy recurring revenue stream. In addition investments and process improvements that we discussed last quarter are already beginning to result in improved operating leverage. We're very pleased to see that as expected biologics revenue growth rebounded well above the 10% level in the third quarter. We are adding capacity globally to accommodate the robust growth in a number of biologics in the pipeline and on the market and the demand for our services. The largest global expansion is taking place in Pennsylvania. Our new site in Wayne Pennsylvania which we have been transitioning into for the past year will provide the required scale in the U.S. to support growth in the next three to five years. The site has been registered with the FDA and we are working with clients on their validation activities at the new site which are expected to be substantially complete by the end of the year. In addition to building scale, we also continue to enhance our biologics testing capabilities to accommodate more of our clients' process development and quality control needs.
Cell and gene therapies continue to be the fastest-growing area for our biologics business and we are developing new assays to provide a more comprehensive portfolio of these services. The Manufacturing segment's third quarter operating margin was 36.4% a 300 basis point improvement year-over-year. The increase was due primarily to enhanced operating efficiency in the Microbial Solutions business and operating leverage from robust revenue growth in Biologics Testing Solutions business. We were very pleased that the Manufacturing segment's operating margin rebounded to the mid-30% level in the third quarter which is consistent with our 2-year target for this business. At our recent Investor Day we highlighted the manner in which we have executed our strategy and continue to do so: to become the early stage CRO partner of choice for our clients' drug research development and manufacturing support efforts to build our extensive scientific expertise which we believe is unique and unparalleled in the early stage CRO universe and to invest in our people technology and infrastructure to create a more efficient and responsive organization that provide flexible customized solutions to our clients. As we look to the future it's imperative that we continue to expand our portfolio of essential products and services to enhance our ability to comprehensively support our clients' drug research efforts. We intend to do so through strategic acquisitions which is always our preferred use of capital.
Our pipeline of M&A candidates remains robust and we continue to evaluate a number of opportunities ranging from unique research tools to discovery capabilities to manufacturing support activities. We also must stay current with new technologies and modalities such as cell and gene therapies. To do so we are increasingly utilizing a partnership strategy such as our relationship with Distributed Bio to add innovative capabilities and cutting-edge technologies with limited upfront risk. Our partnering activities extend beyond the Discovery business as we have signed several of these relationships to date encompassing most of our businesses and intend to sign more. These partnerships allow us to assess breakthrough technologies typically with a small upfront investment and has the potential to result in longer-term collaboration agreement or can be a precursor to acquiring the company. We look to add at least $1 billion in annual revenue through acquisitions and partnerships over the next five years. And the transactions with which we choose to move forward will not only fit our strategic rationale but also meet our disciplined investment criteria in order to generate greater shareholder returns. We have spent the past several years investing internally in capacity and staffing to levels that are commensurate with growing demand while striving to enhance the scalability of the business. While we will need to continue to invest we believe that we have achieved an appropriate balance.
We now have an enhanced ability to leverage top line growth and drive greater efficiency which will enable us to achieve the 2-year financial targets that we provided at Investor Day including an aggressive but realistic 20% operating margin in 2021. As we also mentioned at Investor Day as we work toward our business and financial goals we are maintaining an intense focus on sustainability. We are committed to environmental social and corporate governance initiatives and believe that this commitment will enable us to minimize our impact on the environment as we implement sustainable practices enhance our corporate citizenship by focusing on improving the quality of people's lives including patients clients employees and our communities and operate our business with integrity and accountability as we have always done. We were pleased to welcome Gina Wilson to our Board last month. Gina's diverse experience across multiple industries will enhance the financial acumen of Charles River's Board and its ability to oversee our broader strategy and focus on driving profitable growth.
Gina brings highly valuable knowledge and experience in managing the finance organizations of growing businesses strategically allocating capital and driving operating efficiency which will complement the combined skills and experience of our current directors. We will continue to evaluate adding new members to our Board to further enhance its diversity of skills experience and perspectives. We are pleased with the performance of the collective portfolio in the third quarter. And over the longer term, we expect to deliver high single-digit organic revenue growth earnings-per-share growth at lease in the low double digits and strong free cash flow. In conclusion, I'd like to thank our clients and shareholders for their support and our employees for their exceptional work and commitment.
I'll ask David to give you additional details on our third quarter results and updated 2019 guidance.
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Thank you, Jim, and good morning. Before I begin may I remind you that I'll be speaking primarily to non-GAAP results from continuing operations which exclude amortization and other acquisition-related charges costs related primarily to our global efficiency initiatives a discrete tax benefit related to our international financing structure and certain other items. Many of my comments will also refer to organic revenue growth which excludes the impact of acquisitions and foreign currency translation. We are pleased with our results for the third quarter which included high single-digit organic revenue growth mid-teens earnings-per-share growth and both sequential and year-over-year improvement in the operating margin. The third quarter results demonstrate our progress toward achieving the 2-year financial targets that we provided at our Investor Day in September which included high single-digit organic revenue growth at least low double-digit non-GAAP earnings-per-share growth and a non-GAAP operating margin of 20% in 2021. I will now provide more detail on two recent accomplishments: the third quarter operating margin expansion and the enhancements to our capital structure. As you are aware operating margin improvement is a priority for the company.
We are very pleased with the collective efforts that have enabled us to leverage revenue growth and drive greater operating efficiency. Operating margin of 19.4% for the third quarter represented a 60 basis point year-over-year increase and a 90 basis point sequential increase. This was well above prior expectation which was that the operating margin would be similar to the second quarter level. The outperformance was driven largely by the fact that we are benefiting from the scalable investments that we have made in staff capacity and infrastructure as well as our continuing focus on operational excellence and cost management. The margin improvement was driven by the Manufacturing and the RMS segments as well as leverage of unallocated corporate costs. We also anniversaried the year-over-year headwind from the compensation structure adjustment at the beginning of the third quarter. Unallocated corporate costs for the third quarter were $40.2 million or 6% of total revenue a 40 basis point decline from 6.4% last year. At 6% year-to-date we continue to expect unallocated corporate costs to be at or slightly below 6% of total revenue for the year. We are particularly pleased with the margin performance because we continued to be impacted by headwinds from the large government contract in the RMS segment the biologics capacity expansion in the manufacturing segment and the acquisition of Citoxlab in the DSA segment.
As you may recall Citoxlab had a mid-teens operating margin when we acquired it which is well below that of the legacy Safety Assessment business. Citoxlab's operating margin will improve over time through the attainment of deal synergies. We believe that the third quarter operating margin performance reflects our ability to leverage the investments that we have made and our focus on increasing efficiency to drive profitable growth. For the full year, we continue to expect the operating margin to be approaching the 2018 level of 18.8%. The other important accomplishment was the issuance of $500 million of senior notes due in 2028 at a 4.25% coupon rate. We believe that this fixed rate debt enhances our capital structure by locking in a favorable interest rate and staggering the maturity of our long-term debt. We also upsized our revolver by $500 million which will provide additional long-term borrowing capacity to support our M&A strategy. During the quarter we reduced our outstanding debt by $158 million to $1.9 billion at the end of the quarter compared to $2.1 billion at the end of the second quarter.
Our gross leverage ratio at the end of the third quarter was 2.96x and our net leverage ratio was 2.7x. Through our capital management strategy, we were able to reduce our leverage to less than 3x within six months of the Citoxlab acquisition which was ahead of our initial outlook of 12 months. The sub-3x leverage ratio generates interest savings on our variable rate debt reducing the rate by 25 basis points to LIBOR plus 125 basis points. We continuously evaluate our capital priorities and intend to deploy capital to the areas that we believe will generate the greatest returns. Strategic acquisitions remain our top priority for capital allocation followed by debt repayment. We are comfortable with the gross leverage ratio below 3x and absent any acquisitions we continue to repay debt. Year-to-date we have not repurchased any shares and do not intend to in the fourth quarter.
Operator
Ladies and gentlemen, please stand by the host line has disconnected please continue to hold.
[Technical Issues]
Todd Spencer -- Corporate Vice President of Investor Relations
Stacy, are we back on the conference?
Operator
Yes, you are.
Todd Spencer -- Corporate Vice President of Investor Relations
All right. Sorry for the technical difficulties. We will restart the, David's prepared remarks. Thank you.
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Okay, OK. Good. We'll just work at where we cut off from. So I'll continue from that point. So we continuously evaluate our capital priorities and intend to put capital to the areas that we believe will generate the greatest returns. Strategic acquisitions remain out to our priority for capital allocation followed by debt repayment. We are comfortable with the gross leverage ratio below 3x and absent any acquisitions we will continue to repeat that. Year-to-date we have not repurchased our shares and do not intend to in the fourth quarter. Total adjusted net interest expense was relatively stable at $17.4 million in the third quarter and increase of $0.4 million year-over-year and $0.6 million sequentially. For the year we expect adjusted net interest expense to be at the low end of the previous range of $68 million to $71 million. This change is due to lower rates resulting from our sub-3x leverage ratio and the Federal Reserve's rate reductions partially offset by higher interest expense associated with our new $500 million senior notes. As a reminder adjusted net interest expense is calculated as the net of interest expense -- interest income and an FX adjustment related to forward FX contracts recorded in other income. Our third quarter non-GAAP tax rate was 23.6% essentially unchanged from 23.5% in the third quarter of last year.
Since we are trending to the low end of the range of our previous guidance we are reducing our full year non-GAAP tax rate outlook by approximately 50 basis points to a range of 22% to 23%. The GAAP tax rate for the third quarter was more favorable than the prior year due primarily to a noncash discrete tax benefit of $20.4 million related to our international financing structure. Free cash flow increased 27.3% to $120.7 million from $94.8 million last year. The increase reflected our continued focus on working capital management and the third quarter operating performance. Our free cash flow guidance for the year remains unchanged at $310 million to $320 million. capex was $35.2 million in the third quarter an increase from $22.4 million over the prior year. At $77 million year-to-date we now expect to invest approximately $140 million in capex for the full year. This is $30 million below our prior outlook due primarily to the timing of projects some of which have shifted into 2020. With respect to 2019 guidance, we are moderating our revenue growth outlook to a range of 15% to 15.5% on a reported basis and organic revenue growth of 8.25% to 8.75% reflecting the third quarter performance and foreign exchange which is expected to be a greater headwind than previously anticipated. FX is now expected to reduce reported revenue growth by 1.5% to 2% compared to our prior outlook of 1% to 1.5%.
In light of the strong third quarter operating performance, we are also narrowing our full year non-GAAP earnings per share guidance to the higher end of the previous outlook to a range of $6.50 to $6.60. Although we narrowed our outlook for organic revenue growth for the full year our expectations for segment revenue growth on an organic basis remain within the previous ranges which were mid-single digits for the RMS segment high single digits for the DSA segment and low double digits for the Manufacturing segment. Including the unfavorable foreign exchange rates and the Citoxlab contribution in the DSA segment reported revenue growth is expected to be in the low to mid-single digits for RMS low 20% range for DSA and just under 10% for Manufacturing Support. A detailed summary of our financial guidance can be found on slide 40. With one quarter left in the year our fourth quarter outlook is effectively embedded in our guidance for the full year.
We expect fourth quarter organic growth to be at or slightly below the third quarter level primarily because the anniversary of the NIAID contract in September will reduce the RMS growth rate by more than 300 basis points. As we mentioned at Investor Day we continue to expand our second half operating margin to be above 19% this year. The non-GAAP earnings per share our full year range equates to a robust 12% to 18% growth in the fourth quarter from $1.59 last year. In conclusion, we are pleased with our overall third quarter performance which included consistent revenue and earnings-per-share growth and meaningful operating margin improvement. The demand environment for our unique early stage portfolio continue to be encouraging and we are on track to achieve our full year target. Thank you.
Todd Spencer -- Corporate Vice President of Investor Relations
That concludes our comments. Operator, we will now take questions.
Questions and Answers:
Operator
Thank you. [Operator Instructions] And we will go to Tycho Peterson with JPMorgan. Please go ahead.
Tycho Peterson -- JPMorgan -- Analyst
Hi thanks, Jim just maybe starting with dynamics in the quarter and the reduced outlook. Can you talk a little bit about where things slowed relative to expectations? And what are you tempering exactly in the outlook?
James C. Foster -- Chairman, President and Chief Executive Officer
Yes. It's our usual commentary Tycho, which is that we have a nonlinear business, particularly in the services particularly in safety. We do the best we can to cull it on a quarterly basis what we do I think a very good job culling it on an annual basis. We're actually quite pleased with the results for the quarter. I think our forecast is a little optimistic. That probably can happen from time to time but we are pleased with the results. We're pleased with where we are on track for the fourth quarter. We're pleased with the fact that we are going to have comparable results in DSA to the prior year which was the best year in a decade. Demand remains quite strong across pretty much the entire portfolio of clients particularly biotech who is very very much dependent on us. We think our international footprint is working very well to support a whole range of clients increasingly with respect to proximity to them. So really nothing fundamentally changed. We have a modest diminution in what our expectations were. But again feel very good about the tack that we are on for the year and that's consistent with I think how we have been in the last four or five years.
Tycho Peterson -- JPMorgan -- Analyst
Okay. And then, a follow-up on margins. How much of the margin upside was driven by delayed investments in cyber etc. versus the benefit of the comp structure adjustment and NIAID contract dropping out? And I guess going forward as we think about margins for manufacturing obviously you're expanding capacity. So how much of the margin expansion manufacturing in 3Q do you think is sustainable given the ongoing expansion?
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
So, in respect to cyber, that's not been a huge drag at all. So that's not a dynamic that portrays into the expansion of our margins this year. I mean we are good. It's an operational beat in the earnings per share and driven by the enhanced margin. DSA we just signaled that we got a sequential improvement. We were anticipating the sequential improvement. We got 100 basis points higher despite an 80 point drag on Citoxlab. So I wouldn't characterize that that's a surprise. We had signaled that DSA would be improving in the second half of the year as it is. Manufacturing was a surprise a positive surprise. We said when we spoke at the end of Q2 that we would be approaching mid-30s by Q4. We've done that already. So we are pleased with the speed with which that's rebounded and expect that to bleed nicely into the future. RMS was up sequentially as well by 100 basis points despite the NIAID drag.
The drag, of course, is a part quarter drag because we anniversaried mid-September. So the way that we are looking at the margins if you look at the year-to-date, year-to-date we are 18.1%. That's pretty much sitting on where we were year-to-date last year of 18.2% despite the fact that we have meaningful drags this year namely from the NIAID which is, of course, made sort of 18.5 month drag compared to last year. Citoxlab is a drag. I mean MPI, yes but it's not -- MPI was not the drag that we are getting from Citoxlab. And of course, we have had biologics this year as well. So we are very pleased with the fact that our margins are tracking the same as last year year-to-date notwithstanding the drag that we have had. So that puts us in a good position for next year. Do feel positive about getting to the 21 -- 20% by 2021. So we will say more about that in February.
Tycho Peterson -- JPMorgan -- Analyst
Okay, thank you.
Operator
We'll go to David Windley with Jefferies. Please go ahead.
David Windley -- Jefferies -- Analyst
thanks. I just toggled over so I apologize if this has been covered. But on margins, it sounds like you're just answering a little bit about margin. But looking at the overall as we back into the math it looks like your fourth quarter to get to the approaching the -- flat with year-over-year fourth quarter would be up about 50 basis points. I don't mean to over-interpret the words but been using the words approaching I'm interpreting that you don't expect it to quite get there. And so a 50 basis point increase in year-over-year margin in the fourth quarter would be kind of the ceiling of what you expect the performance to be. I just wanted to see if you could comment on that if you believe that's accurate.
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
So, in order to get to the 18.8%, which is the margin we had last year we would need to be at the top end of the guidance that we have given you. So we would need to have something of the order of 20-point -- give it 20.5%, ZIP code. Or another way of putting it the same sort of ZIP code as Q4 last year. Now that is possible. And in fact, when we met in New York I said that it was possible that we could be doing that in Q4. We're certainly in the hunt but we have got a range for a reason. It's not guaranteed that Q4 will be a strong quarter or a very strong quarter. Q4 tends to be funky. It depends on how I guess some clients want to use up some of their R&D budgets. And we are expecting a strong quarter for Q4 but we would need a very strong quarter in order to get to the same level as last year. Now as I said it could be done. Don't be overly surprised if we achieve it but we are guiding to approaching the 18.8% for reasons that we can't quite call exactly where Q4 will fall.
David Windley -- Jefferies -- Analyst
Understood, thank you for the answer.
Operator
And we will go to Erin Wright with Credit Suisse. Please go ahead.
Erin Wright -- Credit Suisse -- Analyst
Great thanks. I guess in Safety Assessment in general. I guess can you talk about the capacity utilization study mix and pricing across that business as it stands today? And then I have a follow-up as well.
James C. Foster -- Chairman, President and Chief Executive Officer
So our capacity utilization is in good shape. We have sufficient capacity to grow at our current growth rate which is high single digits. We made modest enhancements and increases in capacity in multiple geographies and we will always do that for proximity reasons. You'll recall when we bought MPI that's the large building that's a strategic benefit for us to have additional capacity but that operates with incremental capacity and still terrific operating margin. So that provides us with great operating leverage given the demand curve. There's a little bit of capacity in some of the CiTox sites which is a positive as well. So capacity is in a good place as we end the year and we go into next year. We'll be able to accommodate the growth rate comparable to maybe slightly higher than we are now. Mix is pretty comparable. It tends to run sort of 50-50 general and specialty tox. We don't give an update on that quarterly so probably going to stay away from that. We do a lot of specialty work. We picked up additional specialty capacity with these new acquisitions. So we like that balance from a margin and growth point of view. And while we don't give specific guidance or information on our pricing for competitive reasons we are actually very pleased with the pricing that we have gotten this year. We get price when possible and when appropriate. The studies have become increasingly more complex and they need to be priced accordingly. So I'd say it's a pretty good mix right now of the mix of price and sufficient capacity to do the work both now and for the foreseeable future.
Erin Wright -- Credit Suisse -- Analyst
Okay great. And then can you speak to the runway for growth across China and RMS? Has there been any sort of meaningful changes in the competitive landscape in China? If you could give an update there that would be great.
James C. Foster -- Chairman, President and Chief Executive Officer
Yes, not really. There's constantly new Chinese competitors sort of cropping up believing that the business is more simple and more trivial than it actually is. And they tend to fall into difficulty relatively quickly. So the competition sort of comes and goes. Having said that there's a fair number of small Chinese competitors and while we are a substantial player we only have a 30% market share. We hope we can get that to 50% or 60% going forward. So we like our competitive position. The quality of the product from the competition is inferior. We don't have any of our sort of usual competitors on a worldwide basis producing animals in China. And it's about geographic expansion. So we are working on our third facility which will be in centrally -- Central China and we will then look to Southern China. That will give us a much broader portfolio than the competition. And the locales in which we are moving are so substantial that being close will be important. So long runway. We look at the world in 5-year increments because that's we do a 5-year strategic plan. I think the runway is way longer than that. Certainly a decade probably longer but we are going to see the growth rates that we have been enjoying now. There's a major investment by the Chinese government in the life sciences particularly in biotech. So they're really working to play competitively on the international stage and high-quality work is going to have to be done locally. And those tools are going to often require high-quality analysts.
Erin Wright -- Credit Suisse -- Analyst
Great, Thank you.
James C. Foster -- Chairman, President and Chief Executive Officer
sure.
Operator
And we will go to Eric Coldwell with Baird. Please go ahead.
Eric Coldwell -- Baird -- Analyst
Thanks. Good morning. First one unallocated corporate you're showing some improvement there. Could you be a bit more specific on the drivers of that improvement beyond just revenue leverage? And how do you get to your longer-term goals which I believe are still a fair amount lower than this?
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Yes, we have been bringing down as a percentage of revenue about 50 basis points for a number of years. And at New York, we did signal we get from the 6% that we are at this year down toward a 5%. We are getting leverage and have been over that period and continue to get leverage out of the way we have built our corporate offices. We've got shared service functions, for instance, sensitive excellence which allow us to basically scalable and actually put more through with the same staffing structures. We've been doing that in HR and IT as well continually thinking about how we structure so that we can actually leverage more M&A out of the back of that. So it's not something that is built overnight. We've been working on this for a number of years. We're seeing those economies coming out each year. And we do feel comfortable we will see that going into 2020 and '21 as well.
Eric Coldwell -- Baird -- Analyst
Great. Biologics the new Wayne site registered. You're doing validations with clients. I guess my question is I'm still not sure I'm 100% comfortable with the process of moving out of the old site to new one. Is there a non-duplicative unencumbered work happening in the new site right now? Or are you still going through these validations through the end of the quarter such that we would get another pop in margin as you're able to move out of the old facility early next year?
James C. Foster -- Chairman, President and Chief Executive Officer
We should probably stop giving details on this because I think we are dragging everybody through the day-to-day movement activity. So the reality is we are very -- we are largely in the new site lots of clients. So some of the work is unencumbered and are straight up. Clients are validating. There's a lot of assays to be moved. We're moving them constantly sort of daily certainly weekly. We closed one -- we had two other sites we have closed one and the other one is being sort of repurposed. It's going to stay open but do some other things in there. I would say that the margin drag is meaningfully over certainly will be over by the end of the year. We'll stop giving you the gory details. We're really pleased with the facility. Clients are very pleased with it. We're actually pleased with how easily work has been moved. It's just a lot of it to move because -- and you saw that the growth rate for this business is terrific. So it's growing dramatically in spite of a move in spite of those changes. So I think it will be a positive contributor as we go in.
Eric Coldwell -- Baird -- Analyst
That's great. My last one quickly. Microbials nice production here in Endosafe good sales there. I know you always get that razor-razor blade model with the cartridge pull-through later. Is there any way to quantify the increase in Endosafe sales or number of units so we could have some sense on the growth rate they're in as products lead future consumable sales?
James C. Foster -- Chairman, President and Chief Executive Officer
Hard to do that. Obviously, the substantial cartridges used with every unit that we sell. Increasingly we are selling units Eric that are -- use multiple cartridges at the same time we call it an MCS. These big robots that use lots of them. So the cartridge utilization is increasing substantially. We have a relatively small percentage of clients that we have transferred over to this new technology. So there's a lot more market opportunity for us even though that we have a lot of the market dollars so far. So far we have the competition just in terms of the sophistication of the gear. Clients are so happy with it and using it multiple systems across big sites let's say for many of the big pharmaceutical companies that we are quite confident this will continue. We've launched some new products in 2019 and we will continue to do so. So how to get more granular than that in our prepared remarks we did say that it gets a lot of new systems being installed. Obviously, nobody buys the system without intending to use cartridges on a sustainable basis.
Eric Coldwell -- Baird -- Analyst
Okay, that's great. Thanks guys.
Operator
We'll go to Ricky Goldwasser with Morgan Stanley. Please go ahead.
Rong Li -- Morgan Stanley -- Analyst
Hi. This is Rong Li for Ricky. So I have a question on RMS. You previously have mentioned about the increasing focus on streamlining the RMS cost structure to kind of offset the volume pressure in the mature markets. Can you maybe elaborate on some of the initiatives you have been doing and the progress you are making here?
James C. Foster -- Chairman, President and Chief Executive Officer
Why don't I start? We do have a whole host of things where we are making sure that our capacity is in sync with demand. So we pared down some facilities at multiple sites. We want to make sure that our head count is also accordingly at the right levels. We've also taken a lot of our sort of standard manual processes and computerized them. So that's helped with the labor component that's helped with efficiency that's helped with inventory management and that's also helped with capacity utilization. We have this downward pressure from the Western locations particularly the U.S. and Europe where a lot of space has been taken offline by the drug companies that sort of one step forward and a couple of steps back tied to predict how much more of that there'll be or how deep those cuts will go. But putting those aside I think our capacity is well utilized now. We are getting some margin accretion. You saw that in the margin in the third quarter. China is growing nicely in some of our services businesses. By the way, some of the services businesses have an extremely high operating margin. So I don't want you to think of the services only as a drag. As we said some of the in-sourcing solutions particularly the government contracts are lower. So we will continue to drive efficiency in RMS like we do in all of our businesses. It's running appropriately lean and appropriately focused on driving margin.
Rong Li -- Morgan Stanley -- Analyst
Thank you.
Operator
And we will go to John Kreger with William Blair. Please go ahead.
Courtney Owens -- William Blair -- Analyst
Hi, This is Courtney Owens on for John this morning. So in your earlier prepared comments, I think you guys mentioned that demand environment is pretty robust at present. However, I guess thus far in Q3 and also into Q4 we are seeing kind of the biotech funding is starting to cool on a year-over-year basis but it's still pretty solid on a dollar basis. But are you guys kind of starting to hear any commentary from clients around that? Just kind of any early more cautionary commentary from them?
James C. Foster -- Chairman, President and Chief Executive Officer
Yes. Biotech funding has been so strong for so long that I think people are watching it too closely for any indications of a slowdown. We have been answering those questions at a time. I think you all keep asking them for at least five years. So what are you seeing? And when is it going to slow down? And what's that going to do to your business? It's a fair question. The reality is that the funding levels are still quite substantial. We reckon they have three or four years of cash in the bank from the capital markets plus a lot of money is coming in directly from pharma. I would say increasingly monies coming in directly from Big Pharma. VC funds are quite plentiful. A lot of M&A. We had 48 biotech companies bought so far this year some by Big Pharma some by larger biotech companies. So we are hearing nothing from our clients. Our biotech client base has increased dramatically to some extent through M&A but just a constant increase in new modalities that are requiring them to outsource. We would hear it probably before anyone because our services are so broad gauge and we have so many clients. If there was any concern or hesitancy in terms of available funds we would begin to see that maybe in multiple geographies but certainly across multiple clients and we are just not. So doesn't mean we don't watch it as well. But you have to have something pretty diabolical and dramatic to happen or to cause any sort of pullback given the strength of the science these days.
Courtney Owens -- William Blair -- Analyst
Great. Thank you.
Operator
We'll go to Juan Avendano with Bank of America. Please go ahead.
Juan Avendano -- Bank of America -- Analyst
Thank you. You mentioned in your prepared remarks that you intend to add about $1 billion in annual revenue through M&A over the next five years. Outside of Safety Assessment can you share with us what are your interests and how many deals let's say annually you anticipate being able to complete to get to your target five years from now?
James C. Foster -- Chairman, President and Chief Executive Officer
So we never have an artificial number of deals that we will do. That would be frustrating and something we couldn't fulfill. So we are well financed. You saw that we did a bond. Our balance sheet is really strong. Our leverage has come down. Our free cash is good. But you heard us say in our prepared remarks that there are a lot of M&A targets out there mostly private equity on so they're definitions for sale. If we don't do a deal in fiscal '20 let's say we would be surprised but not necessarily disappointed if we didn't do a deal. The prices wouldn't have held up or we would have something like sales and due diligence and we would have been disappointed. So we are constantly enhancing our portfolio. That's the reason we are doing it. We're not doing it to be large. So you're going to see us do more in Discovery in therapeutic areas more Early Discovery technology maybe in the antibody space. Definitely more in cell and gene therapy perhaps more geographically. We have some interesting deals in the research model studies believe it or not something you would not anticipate some small opportunities in biologics and microbial. So -- and we wouldn't do anything in safety unless it was a small niche deal small niche technology of something that we don't do now and I can't imagine what that is or something that could be additive to something we would like to do more of.
And we got that with CiTox and with MPI we picked up those capabilities. So we feel very good about where we stand right now with six months post CiTox even though that's a complex one. We're locked and loaded financially to do deals but we won't do one unless we meet the financial hurdles. We have multiple conversations going on right now real time as we always do. So don't be surprised if we do something and don't be surprised if we don't. But no artificial number. So -- and I think you're asking the question because we threw out $1 billion so it's a fair question. So given the landscape that we see given the size of the company and the growth rate given the types of things that we want to add and their growth rates on a composite basis we think that's a pretty realistic number. And while we have a real clear view today what the composite will be we could actually tell you what companies that would comprise. It's not the way it will turn out. But the areas in which we invest will be quite similar. And we don't -- we have some but we have less strategic competition than we have historically although I would say an increasing amount of sponsor competition financial sponsors. So that's the M&A strategy.
Juan Avendano -- Bank of America -- Analyst
Got it. I appreciate the color and detail. And you just completed a compensation adjustment last year and that just annualized. How do you feel about your compensation structure now? And how likely is another adjustment necessary over the next two years?
James C. Foster -- Chairman, President and Chief Executive Officer
That was an important catch-up in multiple geographies and we have a whole new human resources organization and we are really working hard to stay way ahead of that. So I think if we ever had to make any adjustments they will be small subtle specific geographic adjustments because competition waxes and wanes in certain geographies. But our starting wages are competitive with different types of companies and the geos that we are in it's easier to recruit people and our retention has improved as well. So highly unlikely we would ever have to make an adjustment with that magnitude.
Juan Avendano -- Bank of America -- Analyst
Thank you.
Operator
And we will go to Jack Meehan with Barclays. Please go ahead.
Andrew Wald -- Barclays -- Analyst
Hi. This is Andrew Wald on for Jack. In RMS how did the GEMS business perform in the quarter? We noticed that wasn't called out in the slide deck.
James C. Foster -- Chairman, President and Chief Executive Officer
Good catch. It's doing fine. Things up and then fluctuate from quarter-to-quarter. The GEMS business has been a very steady growth business for us and very strong pretty much across the world certainly in the U.S. and Europe and thirdly in Japan. So technology is a great necessity to the researchers. I think we are one of the premier players in terms of producing and providing those models to our clients. Just -- there are a couple of other facets in the quarter that were more dramatic from a financial point of view so we call those out more readily. That's really what it's about.
Andrew Wald -- Barclays -- Analyst
Great. And in the past, you've spoken about legacy Charles River clients beginning to audit some of your newer sites like MPI. Have you seen this play out with clients becoming more flexible?
James C. Foster -- Chairman, President and Chief Executive Officer
We have. So the real -- it's a really big footprint. If you look at our Discovery and Safety sites it's something like 37. And so we can do multiple things. If they just want to work close by there's a site we are close by. If they want to work in multiple sites they can do that. If they want a specific scientific capability we can point them to a single site or multiple sites. So it's given them more flexibility and us more flexibility as well. We -- sometimes the clients are agnostic to where they go so we can place them there and sometimes they have very specific needs. It's important for them to audit and see these facilities themselves. So it's a very powerful footprint right now and we are definitely using it strategically to our advantage and should be able to continue to do so.
Operator
And we will go to the line of Robert Jones with Goldman Sachs. Please go ahead.
Great. Thanks for taking my question. This is Jack Rogoff on for Bob. So it sounds like you feel good about your staffing levels in the DSA business and I think some of the margin headwinds in the first half of the year were related to staffing increases to meet demand beyond the wage increases which had been known since 2018. So at this stage do you foresee another bolus of DSA hiring on the horizon? Or should we expect a more smooth progression going forward?
James C. Foster -- Chairman, President and Chief Executive Officer
You should see a more smooth progression. What we tried to iterate clearly in our prepared remarks so let me repeat it is that we have invested heavily in capacity and infrastructure in wages and in numbers of people to do the work. Some of it was catch up because the business had been more robust than we had anticipated. I think that we have caught up nicely. We'll have to add people sort of subtly as we continue to grow. And we are quite confident that we will see some leverage from those investments in the bottom line going forward.
Jack Rogoff -- Goldman Sachs -- Analyst
Great, thanks very much.
Operator
We'll go to Don Hooker with KeyBanc. Please go ahead.
Don Hooker -- KeyBanc -- Analyst
Okay. Good morning. So you guys don't talk about pricing I get that. But in terms of study start timing -- or any kind of delays there? I know it's hard to kind of -- so I know you do a lot of different types of studies but any kind of commentary that you can give us around study start-ups?
James C. Foster -- Chairman, President and Chief Executive Officer
So we would like the client to wait as long as possible. They don't agree with that philosophy. So we have to be thoughtful enough to accommodate clients who really need to start immediately. And I think we have enough capacity right now that we are able to do that for clients where we have rational price points and rational relationships. So we certainly are competitive from a study start point of view. We -- I mean occasionally we might lose some more but that's probably something that we consciously know and we have done a very good job of accommodating clients' needs throughout the year. And there's no reason why that shouldn't continue.
Don Hooker -- KeyBanc -- Analyst
Okay. And then one last quick one. In terms of capital spending to sort of maintain your infrastructure as you grow, it sounded like some capex was delayed into 2020. So I guess I would assume 2020 is going to be a pretty intense year for capital spending. What is a normal sort of capex rate maybe as a percent of revenues or something else that we can sort of think about going forward for you guys?
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
So in New York, we signaled that the sort of typical yardstick would be under 7% of revenue. That said just a couple of comments on this year which actually reflect on next year as well. We've not started any business or capex. They've got the means to deliver the sort of growth rates that we are expecting in the near term. And we are very pleased with the aggregate space that we have in Safety Assessment. In North America, we have still got an opportunity in MPI in the space there. And Citoxlab gave us some opportunities in Europe which we enabled as Citoxlab. We did enable it to delay some of the spend into 2020. But we are continuing to control the spend making sure that the capacity that we put on is kind of at that leading edge of the need for the service that we need to provide. So we actually were looking at this year from our perspective it's a good news item because we have been able to control that spend on capex that's similar to 2018. Now to the core of your question, we will obviously give more detail as to where we think capex will be in 2020 but we will continue to make sure we control it tightly without starving the units. But at the moment the uptick is under 7% and we will sharpen that up in February for 2020.
Don Hooker -- KeyBanc -- Analyst
Thank you.
Operator
And we will go to Dan Brennan with UBS. Please go ahead.
Dan Brennan -- UBS -- Analyst
Great. Thank you. Thanks for taking the questions. Maybe the first one just within the 120 basis points or so of the margin expansion targeted through 2021 could you just give us a bridge? Just I know you've given us a quantification for CiTox and biologic capacity absorption and unallocated corporate overhead but like is it possible to just kind of bridge that 120 basis points with some of those discrete factors?
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Yes. So we have -- in New York, we gave some signals as to where the margin should be. RMS north of 25%. The real expansion is in the DSA segment. Manufacturing is already in the mid-30s and we expect that to continue next year. And then the unallocated corporate costs will continue to come down. So the two areas where you get the bridge is through DSA and through the unallocated corporate costs.
Dan Brennan -- UBS -- Analyst
And specifically though David like in terms of that biologic capacity absorption in CiTox how much of a kind of -- if you would just separate those two out for the $120 million how much would they kind of account for that?
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Well, we don't break out microbial from Biologics. But Manufacturing obviously we have had a drag from Biologics this year. But we were in the mid-30s prior to that investment this year. And as you heard this morning we are back into the mid-30s for manufacturing. So we expect that to continue. So you get obviously from an EPS point of view you get the leverage on the revenue growth but bringing back to your question about where the margin expansion is it's really the expansion in DSA and unallocated corporate costs.
Dan Brennan -- UBS -- Analyst
Great. And then maybe just one other unrelated one. I know at the Investor Day you were very bullish on Discovery. Sounded like you thought there was a real inflection coming in terms of penetration opportunity. Could you just help us think about kind of how like the magnitude of this coming penetration opportunity you see and how that might influence the current growth rate of Discovery as we look out over the next couple of years?
James C. Foster -- Chairman, President and Chief Executive Officer
A whole host of technology will be beneficial for our clients once they discover a target or molecule or in some cases, we help them to do that. So we have got -- we have an increasing number of Discovery clients working across our whole portfolio. That was the logic of the strategy. And we think that will continue to increase dramatically. We also think that a lot of our M&A and as we said in our prepared remarks we haven't commented yet in the Q&A we are doing technology deals where we are finding pretty cutting-edge technologies where we are making a small upfront investment sort of seeing whether the technology is as good as the company said it is and those will have to be long-term marketing arrangements or deals that don't work out or potential acquisitions. So if they're continued market arrangements or acquisitions that will expand the Discovery portfolio even earlier. So strategy is to grab the client as early as possible and they're always in a race to get to market. So if we get them early we do good work for them they'll tend to stay with us through the development and life cycle of the drug. So very very important strategic lever. It's going really well. It's got nice growth metrics should have improving margin metrics. It's very very complex science. So that's a lot of the places where we grab these very small biotech clients very early who are very -- who are insistent on world-class science instead of bringing it in-house.
Dan Brennan -- UBS -- Analyst
Great, thanks Jim.
James C. Foster -- Chairman, President and Chief Executive Officer
Sure.
Operator
And I'll turn it back to Todd Spencer for closing comments.
Todd Spencer -- Corporate Vice President of Investor Relations
Great. Thank you for joining us on the conference call this morning. We look forward to seeing you at several upcoming investor conferences. This concludes the conference call. Thank you.
Operator
[Operator Closing Remarks]
Duration: 71 minutes
Call participants:
Todd Spencer -- Corporate Vice President of Investor Relations
James C. Foster -- Chairman, President and Chief Executive Officer
David R. Smith -- Corporate Executive Vice President and Chief Financial Officer
Tycho Peterson -- JPMorgan -- Analyst
David Windley -- Jefferies -- Analyst
Erin Wright -- Credit Suisse -- Analyst
Eric Coldwell -- Baird -- Analyst
Rong Li -- Morgan Stanley -- Analyst
Courtney Owens -- William Blair -- Analyst
Juan Avendano -- Bank of America -- Analyst
Andrew Wald -- Barclays -- Analyst
Jack Rogoff -- Goldman Sachs -- Analyst
Don Hooker -- KeyBanc -- Analyst
Dan Brennan -- UBS -- Analyst
