- Q3'20 revenue of $760.6 million increased 23% as-reported,
or 25% in constant currency, from Q3'19.
- Solid organic revenue growth in all four segments.
- Reporting net debt leverage of 3.8x as of March 31 vs 4.2x
at December 31, 2019; more than $600 million in cash and cash
equivalents on-hand; growth capital projects continue on
schedule.
- Completed the acquisition of MaSTherCell, a
technology-focused cell and gene therapy development and
manufacturing partner, on February 10, 2020.
- Revising FY'20 financial guidance range modestly to reflect
fluid COVID-19 situation; long-term fundamentals remain
intact.
- Revised guidance reflects revenue growth of 14-17%,
unchanged from previous revenue growth guidance, and adjusted
EBITDA growth of 17-21%, compared to adjusted EBITDA growth of
19-23% previously.
Catalent, Inc. (NYSE: CTLT), the leading global provider of
advanced delivery technologies, development, and manufacturing
solutions for drugs, biologics, cell and gene therapies, and
consumer health products, today announced financial results for the
third quarter of fiscal year 2020, which ended March 31, 2020, and
provided details on its response to the COVID-19 pandemic.
“In order to keep our 13,500 employees safe and continue to
serve patients' needs, which include aiding the development of
numerous potential treatments and vaccines for COVID-19, Catalent
implemented responsive measures to the pandemic that allowed our
more than 40 operating facilities around the world to continue
production and the advancement of products and product candidates
during this crisis,” said John Chiminski, Chair and Chief Executive
Officer of Catalent, Inc. “Overall financial performance for the
fiscal third quarter, which included solid organic growth in each
of our four segments, was not meaningfully affected by the COVID-19
pandemic and its effects. In addition, earlier in the quarter and
prior to the worldwide spread of the pandemic, we strengthened our
balance sheet through several transactions, which, when combined
with the cash generated from operations in the quarter, reduced our
net leverage to 3.8x and positioned us to continue our growth
projects, including those that will bring significantly more
capacity to our growing biologics and gene therapy businesses.”
Third Quarter 2020 Consolidated Results
Third quarter 2020 revenue of $760.6 million increased 23% as
reported, or 25% in constant currency, from the $617.5 million
reported in the third quarter a year ago, primarily driven by the
acquisitions of its gene and cell therapy businesses as well as the
acquisition of Bristol-Myers Squibb’s biologics, sterile, and oral
solid dose product manufacturing and packaging facility in Anagni,
Italy, and were partially offset by the divestiture of a
manufacturing facility located in Braeside, Australia. Overall
organic growth of 7% was driven by solid growth within each of
Catalent’s business segments: Softgel and Oral Technologies,
Biologics, Oral and Specialty Delivery, and Clinical Supply
Services.
Third quarter 2020 net earnings were $20.9 million. Accounting
for the dividend on Catalent’s Series A convertible preferred
stock, net earnings attributable to common shareholders were $11.8
million, or $0.08 per basic share, compared to net earnings of
$31.7 million, or $0.22 per basic share, in the third quarter a
year ago.
Third quarter 2020 EBITDA from operations of $128.9 million, as
referenced in the GAAP to non-GAAP reconciliation provided later in
this release, decreased $6.5 million from $135.4 million in the
third quarter a year ago. Third quarter 2020 Adjusted EBITDA (see
the non-GAAP reconciliation elsewhere in this release for a
discussion of this metric) was $185.4 million, or 24.4% of revenue,
compared to $154.3 million, or 25.0% of revenue, in the third
quarter a year ago. This represents an increase of 20.2% as
reported, and an increase of 21.5% on a constant-currency basis,
with all four segments growing EBITDA year over year.
Third quarter 2020 Adjusted Net Income (see the GAAP to non-GAAP
reconciliation) was $82.9 million, or $0.50 per diluted share,
compared to Adjusted Net Income of $71.2 million, or $0.49 per
diluted share, in the third quarter a year ago.
Third Quarter 2020 Segment Review
Segment Revenue
Revenue from the Softgel and Oral Technologies segment was
$242.3 million for the third quarter of fiscal 2020, a decrease of
5% as reported, or 3% in constant currency, compared to the third
quarter a year ago. After excluding the impact of the October 2019
divestiture of the segment's manufacturing site in Australia, net
revenue increased 4% compared to the three months ended March 31,
2019. The increase primarily relates to demand increases across the
segment's portfolio of prescription products within North America,
which is partially attributable to recently launched products.
Revenue in the consumer health business was also strong,
predominantly within Europe.
Revenue from the Biologics segment was $250.0 million for the
third quarter of fiscal 2020, an increase of 87% as reported, or
88% in constant currency, over the third quarter a year ago. The
constant-currency growth was primarily driven by the gene therapy
acquisitions and the acquisition of the Anagni facility (part of
which is recognized in the Biologics segment), as well as the
acquisition of MaSTherCell, which was completed on February 10,
2020. These acquisitions contributed 77 percentage points to the
segment's revenue growth in constant currency. Excluding the effect
of acquisitions, the net revenue increase was driven primarily by
strong end-market demand for the segment's U.S. drug product and
U.S. drug substance offerings. Revenue growth was partially offset
by the fiscal 2019 completion of a limited duration customer
contract for non-cell line clinical manufacturing services in the
segment's U.S. drug substance offering as well as softening demand
for the segment's European drug product offering.
Revenue from the Oral and Specialty Delivery segment was $181.4
million for the third quarter of fiscal 2020, an increase of 18% as
reported and 19% in constant currency, over the third quarter a
year ago. The constant-currency growth was primarily driven by the
acquisition of the Anagni facility, part of which is recognized in
the Oral and Specialty Delivery segment. Excluding the effect of
acquisitions, the net revenue increase of 6% was driven by strong
end-market demand for oral commercial products across North America
and Europe as well as increased volume in the segment's respiratory
and ophthalmic specialty platform due to new product launches.
Revenue growth was partially offset by a prior-year favorable
impact from a one-time up-front license fee.
Revenue from the Clinical Supply Services segment was $88.9
million for the third quarter of fiscal 2020, an increase of 14% as
reported and 16% in constant currency, over the third quarter a
year ago. The increase was driven by strong global demand in the he
storage and distribution and manufacturing and packaging
businesses.
Segment EBITDA (see non-GAAP discussion below)
Softgel and Oral Technologies segment EBITDA was $60.1 million
in the third quarter of fiscal 2020, an increase of 7% as reported,
or 9% in constant currency, versus the third quarter a year ago.
After excluding the impact of the October 2019 divestiture of the
segment's VMS manufacturing site in Australia, segment EBITDA
increased 13% compared to the three months ended March 31, 2019.
The increase primarily relates to elevated demand across the
segment's portfolio of higher-margin prescription product business
in North America, as well as in the consumer health business due to
strong revenue growth within Europe.
Biologics segment EBITDA in the third quarter of fiscal 2020 was
$51.9 million, an increase of 45% as reported and 46% in constant
currency. The constant-currency growth was driven by the gene and
cell therapy acquisitions, as well as the acquisition of the Anagni
facility, part of which is recognized in the Biologics segment.
These acquisitions contributed 51 percentage points to segment
EBITDA in constant currency. Segment EBITDA without acquisitions
decreased 5% from the prior-year period, primarily due to softening
demand in the segment's European drug product offering as well as
the fiscal 2019 completion of a limited duration customer contract
for non-cell line clinical manufacturing services, partially offset
by strong end-market demand for U.S. drug product and U.S. drug
substance offerings.
Oral and Specialty Delivery segment EBITDA in the third quarter
of fiscal 2020 was $56.2 million, an increase of 15% on a reported
basis and 16% on a constant-currency basis. The constant-currency
growth was partially driven by the acquisition of the Anagni
facility, part of which is recognized in the Oral and Specialty
Delivery segment. Segment EBITDA without acquisitions increased 7%
from the prior-year period, primarily due to favorable product mix
in the segment's respiratory and ophthalmic specialty platform due
to new product launches as well as strong end-market demand for
higher-margin oral commercial products across North America and
Europe. Segment EBITDA growth was partially offset by the
prior-year impact from a one-time up-front license fee.
Clinical Supply Services segment EBITDA in the third quarter of
fiscal 2020 was $24.6 million, an increase of 21% as reported, or
24% in constant currency, primarily due to strong global demand in
the storage and distribution and manufacturing and packaging
businesses.
Additional Financial Information
Third quarter 2020 gross margin of 31.4% decreased 80 basis
points as-reported, from 32.2% in the third quarter a year ago. The
decrease was primarily attributable to acquisitions which had lower
margins than the company average, as well as from lower margin
within the Biologics segment, due in part to the fiscal 2019
completion of a limited-duration customer contract for
non-cell-line clinical manufacturing services. These items were
partially offset by margin improvement in the Softgel and Oral
Technologies and Clinical Supply Services segments.
Backlog for the Clinical Supply Services segment, defined as
estimated future service revenues from work not yet completed under
signed contracts, was $396 million as of March 31, 2020, a 1.5%
increase compared to backlog of $390 million as of December 31,
2019. The segment recorded net new business wins of $96 million
during the third quarter, a decline of 15.1% compared to the net
new business wins recorded in the same period of prior year. The
segment’s trailing-twelve-month book-to-bill ratio was 1.1x.
Balance Sheet and Liquidity
As of March 31, 2020, Catalent had $3.2 billion in total debt,
and $2.6 billion in total debt net of cash and short-term
investments, compared to $2.7 billion in total net debt as of
December 31, 2019. The current debt structure does not include any
significant maturity until 2026. As of March 31, 2020, the Company
borrowed $200 million from its $550 million revolving credit
facility.
Catalent’s total net leverage ratio as of March 31, 2020 was
3.8x, compared to 4.2x at December 31, 2019. On a pro forma basis
for acquisitions, Catalent’s total net leverage ratio as of March
31, 2020 would have been 3.7x, an improvement compared to the pro
forma total net leverage ratio of 4.5x at the time of the May 2019
gene therapy (Paragon Bioservices) acquisition.
Fiscal Year 2020 Outlook
The Company is adjusting elements of its previously issued
financial guidance, primarily to account for the potential impact
of and effects from the COVID-19 pandemic. For fiscal 2020, the
Company now expects:
- Revenue in the range of $2.87 billion to $2.95 billion,
unchanged from the previous range;
- Adjusted EBITDA in the range of $700 million to $725 million
compared to the previous range of $711 million to $735 million;
and
- Adjusted Net Income in the range of $295 million to $320
million compared to the previous range of $307 million to $331
million.
- A fully diluted share count in the range of 165 million to 166
million shares on a weighted-average basis, compared to the
previous range of 160 million to 161 million shares on the same
basis, counting the Series A preferred shares as-if converted.
Catalent's Response to COVID-19
As a global development and manufacturing partner that supplies
medicines, clinical trial materials, and health products to
millions of patients and consumers, Catalent took decisive action
during the quarter to minimize the impact of the COVID-19 pandemic
on employees, partners, customers, and patients. To address the
many varied aspects of the outbreak, a senior, multi-disciplinary
Coronavirus Response Team monitors the global situation and
executes mitigation activities whenever and wherever required.
Catalent has also created a task force focused on defining a
pathway for operating during the next, post-lockdown phase of the
COVID-19 pandemic.
To help ensure the safety of its employees and partners and to
protect supply to patients, Catalent has taken extensive actions to
meet or exceed guidelines issued by global, national, and local
authorities. These safety measures include re-emphasizing good
hygiene practices for cleaning and handwashing, providing face
masks and other personal protective equipment, severely curtailing
non-essential access to sites, reorganizing workflows and adding
shifts where permitted to maximize social distancing, limiting
employees to business-critical travel, facilitating safer
alternatives for travel to and from work, and employing
remote-working for all Catalent employees whose jobs permit that. A
detailed response plan has been developed and employed to manage
any impact on employee health, site operations, and product supply.
The plan includes a robust, immediate risk assessment of the health
of any employee reporting COVID-19 symptoms and all persons with
whom that employee has come into contact while on site, along with
a comprehensive risk assessment of any potential impact to quality
and to determine the need for additional cleaning protocols and
alternative shift patterns.
Catalent continues to survey its direct and indirect supply
chain and has not identified significant risks, delays, or concerns
that may have a substantial effect on delivery of its products or
services. Catalent has also adopted specific procedures to minimize
and manage any future disruption to ongoing operations. These
include expanded safety stocks of raw materials and personal
protective equipment, as well as ongoing monitoring of suppliers’
stock levels to best assure future deliveries.
To date, all operating sites have remained open and commitments
to internal and external stakeholders have not been significantly
affected as a result of the COVID-19 pandemic. Due in part to the
diversity of Catalent's business, including 7,000 products and
development services for more than 1,000 projects, Catalent has not
seen a net shift in overall demand. While COVID-19 has not had a
material adverse impact on results to date, Catalent has observed
some increases in customer delays and cancellations, absenteeism of
production employees in certain affected regions, and disruptions
in clinical trials supported by its Clinical Supply Services
segment, with a small percentage of customers expecting a reduction
in demand and a larger percentage expecting an increase in demand,
in each case due to circumstances relating to the COVID-19
pandemic. Catalent is also working with numerous customers on a
wide variety of COVID-related treatments, vaccines, and diagnostics
for symptoms and effects of the disease.
At this point, due to its still-unfolding nature, the extent to
which the COVID-19 pandemic may affect Catalent's future financial
condition or results of operations remains uncertain, despite the
current observation that opportunities and risks are somewhat
offsetting.
Earnings Webcast
The Company’s management will host a webcast to discuss the
results at 8:15 a.m. ET today. Catalent invites all interested
parties to listen to the webcast, which will be accessible through
Catalent’s website at http://investor.catalent.com. A supplemental
slide presentation will also be available in the “Investors”
section of Catalent’s website prior to the start of the webcast.
The webcast replay, along with the supplemental slides, will be
available for 90 days in the “Investors” section of Catalent’s
website at www.catalent.com.
About Catalent, Inc.
Catalent, Inc. (NYSE: CTLT) is the leading global provider of
advanced delivery technologies, development, and manufacturing
solutions for drugs, biologics, cell and gene therapies, and
consumer health products. With over 85 years serving the industry,
Catalent has proven expertise in bringing more customer products to
market faster, enhancing product performance and ensuring reliable
global clinical and commercial product supply. Catalent employs
more than 13,500 people, including approximately 2,400 scientists,
at more than 40 facilities across four continents and in fiscal
2019 generated over $2.5 billion in annual revenue. Catalent is
headquartered in Somerset, N.J. For more information, please visit
www.catalent.com.
Non-GAAP Financial Measures
Use of EBITDA from operations, Adjusted EBITDA, Adjusted Net
Income and Segment EBITDA
Management measures operating performance based on consolidated
earnings from operations before interest expense, expense/(benefit)
for income taxes, and depreciation and amortization (“EBITDA from
operations”). EBITDA from operations is not defined under U.S. GAAP
and is not a measure of operating income, operating performance or
liquidity presented in accordance with U.S. GAAP and is subject to
important limitations.
The Company believes that the presentation of EBITDA from
operations enhances an investor’s understanding of its financial
performance. The Company believes this measure is a useful
financial metric to assess its operating performance from period to
period by excluding certain items that it believes are not
representative of its core business and uses this measure for
business planning purposes.
In addition, given the significant investments that Catalent has
made in the past in property, plant and equipment, depreciation and
amortization expenses represent a meaningful portion of its cost
structure. The Company believes that EBITDA from operations will
provide investors with a useful tool for assessing the
comparability between periods of its ability to generate cash from
operations sufficient to pay taxes, to service debt and to
undertake capital expenditures because it eliminates depreciation
and amortization expense. The Company presents EBITDA from
operations in order to provide supplemental information that it
considers relevant for the readers of the Consolidated Financial
Statements, and such information is not meant to replace or
supersede U.S. GAAP measures. The Company’s definition of EBITDA
from operations may not be the same as similarly titled measures
used by other companies.
Catalent evaluates the performance of its segments based on
segment earnings before other (income)/expense, impairments,
restructuring costs, interest expense, income tax
expense/(benefit), and depreciation and amortization (“segment
EBITDA”). Moreover, under the Company's credit agreement, its
ability to engage in certain activities, such as incurring certain
additional indebtedness, making certain investments and paying
certain dividends, is tied to ratios based on Adjusted EBITDA,
which is not defined under U.S. GAAP and is subject to important
limitations. Adjusted EBITDA is the covenant compliance measure
used in the credit agreement governing debt incurrence and
restricted payments. Because not all companies use identical
calculations, the Company’s presentation of Adjusted EBITDA may not
be comparable to other similarly titled measures of other
companies.
Management also measures operating performance based on Adjusted
Net Income/(Loss) and Adjusted Net Income/(Loss) per share.
Adjusted Net Income/(Loss) is not defined under U.S. GAAP and is
not a measure of operating income, operating performance or
liquidity presented in accordance with U.S. GAAP and is subject to
important limitations. The Company believes that the presentation
of Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) per
share enhances an investor’s understanding of its financial
performance. The Company believes this measure is a useful
financial metric to assess its operating performance from period to
period by excluding certain items that it believes are not
representative of its core business and the Company uses this
measure for business planning purposes. The Company defines
Adjusted Net Income/(Loss) as net earnings/(loss) adjusted for
amortization attributable to purchase accounting and adjustments
for other cash and non-cash items included in the table below,
partially offset by its estimate of the tax effects of such cash
and non-cash items. The Company believes that Adjusted Net
Income/(Loss) and Adjusted Net Income/(Loss) per share will provide
investors with a useful tool for assessing the comparability
between periods of its ability to generate cash from operations
available to its stockholders. The Company’s definition of Adjusted
Net Income/(Loss) may not be the same as similarly titled measures
used by other companies.
The most directly comparable GAAP measure to EBITDA from
operations and Adjusted EBITDA is earnings/(loss) from operations.
The most directly comparable GAAP measure to Adjusted Net
Income/(Loss) is net earnings/(loss). Included in this release is a
reconciliation of earnings/(loss) from operations to EBITDA from
operations and Adjusted EBITDA and a reconciliation of net
earnings/(loss) to Adjusted Net Income.
The Company does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting and analyzing future periods, the Company
does so primarily on a non-GAAP basis without preparing a GAAP
analysis as that would require estimates for various cash and
non-cash reconciling items that would be difficult to predict with
reasonable accuracy. For example, equity compensation expense would
be difficult to estimate because it depends on the Company’s future
hiring and retention needs, as well as the future fair market value
of the Company’s common stock, all of which are difficult to
predict and subject to constant change. It is equally difficult to
anticipate the need for or magnitude of a presently unforeseen
one-time restructuring expense or the values of end-of-period
foreign currency exchange rates. As a result, the Company does not
believe that a GAAP reconciliation would provide meaningful
supplemental information about the Company’s outlook.
Use of Constant Currency
As changes in exchange rates are an important factor in
understanding period-to-period comparisons, the Company believes
the presentation of results on a constant currency basis in
addition to reported results helps improve investors’ ability to
understand its operating results and evaluate its performance in
comparison to prior periods. Constant currency information compares
results between periods as if exchange rates had remained constant
period over period. The Company uses results on a constant currency
basis as one measure to evaluate its performance. The Company
calculates constant currency by calculating current-year results
using prior-year foreign currency exchange rates. The Company
generally refers to such amounts calculated on a constant currency
basis as excluding the impact of foreign exchange or being on a
constant currency basis. These results should be considered in
addition to, not as a substitute for, results reported in
accordance with U.S. GAAP. Results on a constant currency basis, as
the Company presents them, may not be comparable to similarly
titled measures used by other companies and are not measures of
performance presented in accordance with U.S. GAAP.
Forward-Looking Statements
This release contains both historical and forward-looking
statements. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally can be identified by the
use of statements that include phrases such as “believe,” “expect,”
“anticipate,” “intend,” “estimate,” “plan,” “project,” “foresee,”
“likely,” “may,” “will,” “would” or other words or phrases with
similar meanings. Similarly, statements that describe the Company’s
objectives, plans or goals are, or may be, forward-looking
statements. These statements are based on current expectations of
future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could
vary materially from Catalent, Inc.’s expectations and projections.
Some of the factors that could cause actual results to differ
include, but are not limited to, the following: the current or
future effects of the COVID-19 pandemic on the Company's and its
clients' businesses; participation in a highly competitive market
and increased competition that may adversely affect the business of
the Company; demand for the Company’s offerings, which depends in
part on the Company’s customers’ research and development and the
clinical and market success of their products; product and other
liability risks that could adversely affect the Company’s results
of operations, financial condition, liquidity and cash flows;
failure to comply with existing and future regulatory requirements;
failure to provide quality offerings to customers could have an
adverse effect on the Company’s business and subject it to
regulatory actions and costly litigation; problems providing the
highly exacting and complex services or support required; global
economic, political and regulatory risks to the operations of the
Company; inability to enhance existing or introduce new technology
or service offerings in a timely manner; inadequate patents,
copyrights, trademarks and other forms of intellectual property
protections; fluctuations in the costs, availability, and
suitability of the components of the products the Company
manufactures, including active pharmaceutical ingredients,
excipients, purchased components and raw materials; changes in
market access or healthcare reimbursement in the United States or
internationally; fluctuations in the exchange rate of the U.S.
dollar against other currencies, including as a result of the
U.K.’s exit from the European Union; adverse tax legislative or
regulatory initiatives or challenges or adjustments to the
Company’s tax positions; loss of key personnel; risks generally
associated with information systems; inability to complete any
future acquisitions or other transactions that may complement or
expand the Company’s business or divest of non-strategic businesses
or assets and difficulties in successfully integrating acquired
businesses and realizing anticipated benefits of such acquisitions;
risks associated with timely and successfully completing, and
correctly anticipating the future demand predicted for, capital
expansion projects at existing facilities, offerings and customers’
products that may infringe on the intellectual property rights of
third parties; environmental, health and safety laws and
regulations, which could increase costs and restrict operations;
labor and employment laws and regulations or labor difficulties,
which could increase costs or result in operational disruptions;
additional cash contributions required to fund the Company’s
existing pension plans; substantial leverage resulting in the
limited ability of the Company to raise additional capital to fund
operations and react to changes in the economy or in the industry;
and exposure to interest-rate risk to the extent of the Company’s
variable-rate debt preventing the Company from meeting its
obligations under its indebtedness. For a more detailed discussion
of these and other factors, see the information under the caption
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2019, filed August 27, 2019, as
supplemented by the "Risk Factors" in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020, filed May
5, 2020. All forward-looking statements speak only as of the date
of this release or as of the date they are made, and Catalent, Inc.
does not undertake to update any forward-looking statement as a
result of new information or future events or developments except
to the extent required by law.
More products. Better treatments. Reliably
supplied.™
Catalent, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(Unaudited; dollars and shares
in millions, except per share data)
Three Months Ended
March 31,
FX Impact
Constant Currency
Increase/(Decrease)
2020
2019
Change $
Change %
Net revenue
$
760.6
$
617.5
$
(9.1)
$
152.2
25
%
Cost of sales
521.8
418.8
(6.5)
109.5
26
%
Gross margin
238.8
198.7
(2.6)
42.7
21
%
Selling, general, and administrative
expenses
136.1
129.9
(0.8)
7.0
5
%
Impairment charges and (gain)/loss on sale
of assets
0.6
(0.1)
0.6
0.1
(100)
%
Restructuring and other
1.3
3.1
(0.1)
(1.7)
(55)
%
Operating earnings
100.8
65.8
(2.3)
37.3
57
%
Interest expense, net
34.4
26.4
—
8.0
30
%
Other expense/(income), net
36.7
(3.2)
(0.3)
40.2
(1256)
%
Earnings from operations before income
taxes
29.7
42.6
(2.0)
(10.9)
(26)
%
Income tax expense
$
8.8
$
10.9
$
(0.2)
$
(1.9)
(17)
%
Net earnings
$
20.9
$
31.7
$
(1.8)
$
(9.0)
(28)
%
Less: Net earnings attributable to
preferred shareholders
(9.1)
—
—
—
—
%
Net earnings attributable to common
shareholders
$
11.8
$
31.7
$
—
$
—
—
%
Weighted average shares outstanding
151.3
145.1
Weighted average diluted shares
outstanding
153.1
146.8
Earnings per share:
Basic
Net earnings
$
0.08
$
0.22
Diluted
Net earnings
$
0.08
$
0.22
Catalent, Inc. and
Subsidiaries
Selected Segment Financial
Data
(Unaudited; dollars in
millions)
Three Months Ended
March 31,
FX Impact
Constant Currency
Increase/(Decrease)
2020
2019
Change $
Change %
Softgel and Oral Technologies
Net revenue
$
242.3
$
254.0
$
(5.2)
$
(6.5)
(3)
%
Segment EBITDA
60.1
56.3
(1.1)
4.9
9
%
Biologics
Net revenue
250.0
133.7
(1.5)
117.8
88
%
Segment EBITDA
51.9
35.8
(0.2)
16.3
46
%
Oral and Specialty Delivery
Net revenue
181.4
153.8
(1.4)
29.0
19
%
Segment EBITDA
56.2
49.0
(0.6)
7.8
16
%
Clinical Supply Services
Net revenue
88.9
77.8
(1.0)
12.1
16
%
Segment EBITDA
24.6
20.3
(0.5)
4.8
24
%
Inter-segment revenue
elimination
(2.0)
(1.8)
—
(0.2)
(11)
%
Unallocated Costs
(63.9)
(26.0)
(0.2)
(37.7)
(145)
%
Combined totals
Net revenue
$
760.6
$
617.5
$
(9.1)
$
152.2
25
%
EBITDA from operations
$
128.9
$
135.4
$
(2.6)
$
(3.9)
(3)
%
Refer to the Company's description of non-GAAP measures,
including segment EBITDA and EBITDA from Operations as referenced
above.
Catalent, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(Dollars in millions, except
per share amounts)
Nine Months Ended March
31,
FX impact
Constant Currency
Increase/(Decrease)
2020
2019
Change $
Change %
Net revenue
$
2,146.7
$
1,792.3
$
(25.3)
$
379.7
21
%
Cost of sales
1498.0
1243.7
(18.6)
272.9
22
%
Gross margin
648.7
548.6
(6.7)
106.8
19
%
Selling, general, and administrative
expenses
419.9
368.6
(2.1)
53.4
14
%
Impairment charges and loss on sale of
assets
2.1
2.7
0.6
(1.2)
(44)
%
Restructuring and other
2.5
12.9
(0.1)
(10.3)
(80)
%
Operating earnings
224.2
164.4
(5.1)
64.9
39
%
Interest expense, net
105.6
80.0
(0.2)
25.8
32
%
Other expense, net
37.2
3.9
(2.2)
35.5
*
Earnings from operations before income
taxes
81.4
80.5
(2.7)
3.6
4
%
Income tax expense
14.9
14.2
(0.4)
1.1
8
%
Net earnings
$
66.5
$
66.3
$
(2.3)
$
2.5
4
%
Less: Net earnings attributable to
preferred shareholders
(27.8)
—
—
—
—
%
Net earnings attributable to common
shareholders
$
38.7
$
66.3
$
—
$
—
—
%
Weighted average shares outstanding
147.6
143.9
Weighted average diluted shares
outstanding
149.5
145.6
Earnings per share:
Basic
Net earnings
$
0.26
$
0.46
Diluted
Net earnings
$
0.26
$
0.46
Catalent, Inc. and
Subsidiaries
Selected Segment Financial
Data
(Dollars in millions)
Nine Months Ended March
31,
FX Impact
Constant Currency
Increase/(Decrease)
2020
2019
Change $
Change %
Softgel and Oral Technologies
Net revenue
$
770.8
$
748.5
$
(14.8)
$
37.1
5
%
Segment EBITDA
171.0
152.3
(3.0)
21.7
14
%
Biologics
Net revenue
663.8
395.8
(3.9)
271.9
69
%
Segment EBITDA
150.7
101.9
(0.5)
49.3
48
%
Oral and Specialty Delivery
Net revenue
457.2
419.1
(3.3)
41.4
10
%
Segment EBITDA
117.0
113.9
(1.4)
4.5
4
%
Clinical Supply Services
Net revenue
261.4
236.3
(3.2)
28.3
12
%
Segment EBITDA
70.2
61.5
(1.4)
10.1
16
%
Inter-segment revenue
elimination
(6.5)
(7.4)
(0.1)
1.0
14
%
Unallocated costs
(134.6)
(95.2)
2.0
(41.4)
(43)
%
Combined totals
Net revenue
$
2,146.7
$
1,792.3
$
(25.3)
$
379.7
21
%
EBITDA from operations
$
374.3
$
334.4
$
(4.3)
$
44.2
13
%
Refer to the Company's description of non-GAAP measures,
including segment EBITDA and EBITDA from Operations as referenced
above.
Catalent, Inc. and
Subsidiaries
Reconciliation of Net Earnings
to EBITDA from Operations and Adjusted EBITDA*
(Unaudited; dollars in
millions)
Quarter Ended
March 31, 2019
June 30, 2019
September 30, 2019
December 31, 2019
March 31, 2020
Net earnings
$
31.7
$
71.1
$
0.1
$
45.5
$
20.9
Interest expense, net
26.4
30.9
36.3
34.9
34.4
Income tax expense
10.9
8.7
(6.9)
13.0
8.8
Depreciation and amortization
66.4
54.7
60.6
61.9
64.8
EBITDA from operations
135.4
165.4
90.1
155.3
128.9
Equity compensation
6.6
9.2
16.6
10.3
8.6
Impairment charges and (gain)/loss on sale
of assets
(0.1)
2.4
(0.2)
1.7
0.6
Financing-related expenses and other
—
11.7
0.1
—
16.0
U.S. GAAP restructuring and other
3.1
1.2
0.7
0.5
1.3
Acquisition, integration, and other
special items
13.1
21.3
11.1
7.5
7.5
Foreign exchange loss/(gain) (included in
other, net)
(3.7)
1.2
(0.1)
5.5
(3.8)
Other adjustments
(0.1)
(13.0)
8.8
(9.8)
26.3
Adjusted EBITDA
$
154.3
$
199.4
$
127.1
$
171.0
$
185.4
FX impact (unfavorable)
(2.1)
Adjusted EBITDA at constant currency
$
187.5
* Refer to the Company's description of non-GAAP measures,
including EBITDA from operations and Adjusted EBITDA as referenced
above.
Catalent, Inc. and
Subsidiaries
Reconciliation of Net Earnings
to Adjusted Net Income*
(Unaudited; in millions,
except per share data)
Quarter Ended
March 31, 2019
June 30, 2019
September 30, 2019
December 31, 2019
March 31, 2020
Net earnings
$
31.7
$
71.1
$
0.1
$
45.5
$
20.9
Amortization (1)
31.4
19.1
21.5
21.8
23.0
Stock-based compensation
6.6
9.2
16.6
10.3
8.6
Impairment charges and (gain)/loss
on sale of assets
(0.1)
2.4
(0.2)
1.7
0.6
Financing-related expenses
—
11.7
0.1
—
16.0
U.S. GAAP restructuring and other
3.1
1.2
0.7
0.5
1.4
Acquisition, integration, and other
special items
13.1
21.3
11.1
7.5
7.6
Foreign exchange loss/(gain) (included in
other, net)
(3.7)
1.2
(0.1)
5.5
(3.9)
Other adjustments(2)
(0.1)
(13.0)
8.8
(9.8)
26.2
Estimated tax effect of adjustments
(3)
(11.3)
(13.0)
(12.1)
(10.5)
(17.7)
Discrete income tax (benefit)/expense
items (4)
(2.8)
(8.3)
(6.0)
(0.5)
0.2
Tax law changes provision
3.3
—
—
—
—
Adjusted net income (ANI)
$
71.2
$
102.9
$
40.5
$
72.0
$
82.9
Weighted average shares outstanding
145.1
151.3
Weighted average diluted shares
outstanding
146.8
166.2
ANI per share:
ANI per basic share
$
0.49
$
0.55
ANI per diluted share
$
0.49
$
0.50
Earnings/(loss) per share:
Net earnings per basic share
$
0.22
$
0.08
Net earnings per diluted share
$
0.22
$
0.08
* Refer to the Company's description of non-GAAP measures,
including Adjusted Net Income as referenced above.
(1)
Represents the amortization attributable
to purchase accounting for previously completed business
combinations.
(2)
Represents unrealized (gains)/losses
related to the fair value of the derivative liability associated
with the Series A Preferred Stock
(3)
The tax effect of adjustments to Adjusted
Net Income are computed by applying the statutory tax rate in the
jurisdictions to the income or expense items that are adjusted in
the period presented; if a valuation allowance exists, the rate
applied is zero.
(4)
Discrete period income tax
expense/(benefit) items are unusual or infrequently occurring
items, primarily including: changes in judgment related to the
realizability of deferred tax assets in future years, changes in
measurement of a prior-year tax position, deferred tax impact of
changes in tax law, and purchase accounting.
Catalent, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited; dollars in
millions)
March 31, 2020
June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
608.4
$
345.4
Trade receivables, net
698.7
693.1
Inventories
297.2
257.2
Prepaid expenses and other
141.8
100.1
Total current assets
1,746.1
1,395.8
Property, plant, and equipment, net
1,769.5
1,536.7
Other non-current assets, including
intangible assets
3,564.0
3,251.5
Total assets
$
7,079.6
$
6,184.0
LIABILITIES, REDEEMABLE PREFERRED
STOCK, AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations
and other short-term borrowings
$
271.8
$
76.5
Accounts payable
276.2
255.8
Other accrued liabilities
369.1
338.4
Total current liabilities
917.1
670.7
Long-term obligations, less current
portion
2,926.9
2,882.8
Other non-current liabilities
441.3
342.3
Commitments and contingencies (1)
—
—
Redeemable preferred stock
606.6
606.6
Total shareholders' equity
2,187.7
1,681.6
Total liabilities, redeemable preferred
stock, and shareholders' equity
$
7,079.6
$
6,184.0
(1)
Please refer to note 16 of the
consolidated financial statements within the Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 2020.
Catalent, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Unaudited; dollars in
millions)
Nine Months Ended March
31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash provided by operating
activities
$
267.6
$
159.8
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property, equipment, and
other productive assets
(303.5)
(129.3)
Proceeds from sale of subsidiaries
20.8
0.4
Payment for acquisitions, net of cash
acquired
(379.7)
(127.5)
Payments for investments
(2.4)
(1.3)
Net cash (used in) investing activities
from continuing operations
(664.8)
(257.7)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net change in other borrowings
(45.2)
(6.5)
Proceeds from borrowing, net
1,109.1
—
Payments related to long-term
obligations
(808.9)
(508.0)
Call premium payments and financing fees
paid
(25.1)
—
Dividends paid
(28.1)
—
Proceeds from sale of common stock,
net
494.2
445.3
Cash paid, in lieu of equity, for tax
withholding obligations
(25.3)
(13.3)
Net cash (used in) by financing
activities
670.7
(82.5)
Effect of foreign currency exchange on
cash
(10.5)
(1.9)
NET INCREASE/(DECREASE) IN CASH AND
EQUIVALENTS
263.0
(182.3)
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD
345.4
410.2
CASH AND EQUIVALENTS AT END OF
PERIOD
$
608.4
$
227.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005263/en/
Investor Contact: Catalent, Inc. Paul Surdez 732-537-6325
investors@catalent.com
Catalent (NYSE:CTLT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Catalent (NYSE:CTLT)
Historical Stock Chart
From Apr 2023 to Apr 2024