Flavia Pease
Chief Financial Officer at Charles River Laboratories International
Thank you, Jim, and good morning. Before I begin, may I remind you that I'll be speaking primarily to non-GAAP results, which exclude amortization and other acquisition-related adjustments, costs related primarily to our global efficiency initiatives, gains or losses from our venture capital and other strategic investments, a gain on the sale of the Avian Vaccine business and certain other items.
Many of my comments will also refer to organic revenue growth, which excludes the impact of acquisitions, divestitures, foreign currency translation and the 53rd week in 2022. My discussion this morning will focus primarily on our financial guidance for 2023. We're very pleased with our fourth quarter results, which included revenue and earnings per share that outperformed our previous guidance, including quarterly revenue exceeding the $1 billion level for the first time.
Our 2023 guidance ranges reflect multiple scenarios with regards to the estimated impact from the NHP supply constraint, as Jim outlined, the impact of which is expected to result in reported revenue growth of 1.5% to 4.5% and organic revenue growth of 4.5% to 7.5% in 2023. Notwithstanding the NHP supply situation, our outlook reflects sustained underlying trends in most of our businesses and a resilient funding environment. We expect non-GAAP earnings per share between $9.70 and $10.90, reflecting meaningful headwinds associated with both NHP supply and non-operating items.
I will not provide too many more comments on the NHP supply impact since Jim covered it. So, I'll focus my comments on the other headwinds, which include the impact of the Avian Vaccine divestiture, a higher tax rate and increased interest expense.
In combination, these non-operating headwinds will reduce earnings per share by approximately $1.20 to $1.40 for the year, partially offset by an FX benefit to earnings per share of up to $0.25 in 2023. These items will reduce earnings per share growth by nearly 10% at midpoint.
I'd like to provide some additional details on the three non-operating items that we expect will generate headwinds for our financial performance in 2023. First, we completed the Avian Vaccine divestiture in December as expected. The transaction will reduce 2023 revenue by approximately $80 million and non-GAAP earnings per share by approximately $0.25 net of the interest expense benefit since we used the proceeds to repay debt.
Second, the non-GAAP tax rate is expected to move to the top of our long-term low 20% range to 22.5% to 23.5% in 2023, representing a nearly 400 basis point increase at midpoint compared to the 2022 tax rate of 19.2%. The increase will be primarily driven by a year-over-year reduction in the excess tax benefit related to stock compensation as a lower stock price will generate less of a benefit in 2023 compared to the prior year as well as discrete tax benefits in 2022 that are not expected to reoccur this year. The higher tax rate is expected to reduce 2023 earnings per share by $0.50 to $0.65 and the earnings growth rate by over 500 basis points at midpoint.
Finally, total adjusted net interest expense in 2023 is expected to increase to a range of $133 million to $137 million compared to $105 million last year. We expect year-over-year increase will be driven by higher variable interest rates primarily as a result of the Federal Reserve's actions, partially offset by repayment of debt.
We anticipate the higher interest expense will create an earnings per share headwind of $0.45 to $0.50 and reduce the earnings growth rate by at least 400 basis points. As we mentioned last quarter, we entered into an interest rate swap agreement effectively locking in a fixed rate for two years on $500 million of our revolving credit facility. At year-end, approximately three-quarters of our $2.7 billion debt was at a fixed rate. We believe the Federal Reserve will increase rates in the near term, and our outlook accommodates an additional 100 basis point increase in rates in 2023 beyond the recently announced February increase.
At the end of the fourth quarter, our gross and net leverage ratios were approximately 2.2 times and 2.1 times, respectively. This is a meaningful decline from the third quarter due in part to a cash gain on the Avian divestiture. We continuously evaluate our capital priorities and as always, intend to deploy capital to the areas that we believe will generate the greatest returns. Our outlook assumes an average diluted share count of approximately 51.5 million to 52 million shares outstanding in 2023.
From a segment perspective, our 2023 revenue growth outlook reflects sustained client demand trends, offset by the NHP supply impact in the DSA segment. Similar to the prior year, the RMS segment is expected to achieve high single-digit organic revenue growth, the result of continued robust demand for research models and associated services. As a reminder, the Cambodian NHP supply situation does not have an impact on our RMS segment as these large models are sourced and used to support our Safety Assessment operation.
For the DSA segment, we expect the organic growth rate will be between low to mid-single digits based on our NHP supply assumptions around the timing of the resumption of imports. The Manufacturing segment is expected to generate low double-digit organic revenue growth with the increase from the 2022 growth rate principally driven by the expected rebound in the CDMO performance during the year.
While foreign exchange was a 350-basis point headwind in 2022, the weakening of the U.S. dollar since November is expected to result in a slight FX benefit of up to 50 basis points to revenue growth in 2023, assuming near current foreign exchange rates. This will drop down to a more meaningful contribution to the bottom line and is projected to generate up to a $0.25 earnings per share benefit due largely to movements in the Canadian dollar.
You may recall, in Canada, we invoiced most of our revenue in U.S. dollars, but essentially all of our costs are in current Canadian dollars. We have provided information on our 2022 revenue by currency and the foreign exchange rates that we are assuming for 2023 in our slide presentation. For the operating margin, we would have expected to generate moderate margin improvement in 2023 without an NHP supply impact. But given this meaningful headwind, we expect the 2023 operating margin to be flat to down EOF
