Company Announcements

Catalent, Inc. Reports Third Quarter Fiscal 2022 Results

  • Q3'22 net revenue of $1.27 billion increased 21% as reported, or 23% in constant currency, compared to Q3'21. Organic, constant-currency net revenue grew 20%, compared to Q3'21.
  • Q3'22 net earnings of $141 million.
  • Q3'22 Adjusted EBITDA(1) of $339 million increased 24% as reported, or 26% in constant currency, compared to Q3'21.
  • Increasing and tightening FY'22 guidance to reflect projected net revenue growth of 20-23% and Adjusted EBITDA growth of 24-28%, compared to previous projected net revenue growth of 19-22% and Adjusted EBITDA growth of 23-27%.
  • Preliminary FY'23 organic, constant-currency net revenue growth outlook in line with long-term 8-10% growth rate.

SOMERSET, N.J.--(BUSINESS WIRE)--May 3, 2022-- Catalent, Inc. (NYSE: CTLT), the global leader in enabling pharma, biotech, and consumer health partners to optimize development, launch, and supply of better patient treatments across multiple modalities, today announced financial results for the third quarter of fiscal 2022, which ended March 31, 2022.

“We are pleased with our strong results in the third quarter and our plans to continue to expand our capabilities to address long-term customer needs as our end markets grow. Our recent acquisitions in cell therapy in the U.S. and biologics manufacturing in the U.K., as well as the recently approved $350 million investment in Bloomington, Indiana, will provide additional flexible capacity and allow us to deliver an increasing number of products and treatments to patients and consumers worldwide,” said John Chiminski, Chair and Chief Executive Officer of Catalent, Inc.

Third Quarter 2022 Consolidated Results

Net revenue of $1.27 billion increased 21% as reported, or 23% in constant currency, from the $1.05 billion reported for the third quarter a year ago. Overall organic net revenue growth (i.e., excluding the effect of acquisitions, divestitures, and currency translation) was 20% over the same periods.

Net earnings attributable to common shareholders were $141 million, or $0.78 per basic and $0.78 per diluted share, compared to net earnings attributable to common shareholders of $217 million, or $1.27 per basic share, $1.26 per diluted share, in the third quarter a year ago, the decrease driven in part by a $184 million gain from the sale of the Blow-Fill-Seal business in the prior-year period.

EBITDA from operations(1) was $308 million, a decrease of $112 million from $420 million in the third quarter a year ago, driven in part by a $184 million gain from sale of the Blow-Fill-Seal business in the prior-year period. Third quarter fiscal 2022 Adjusted EBITDA(1) was $339 million, or 27% of net revenue, compared to $274 million, or 26% of net revenue, in the third quarter a year ago. This represents an increase of 24% as reported and an increase of 26% on a constant-currency basis, compared to the fiscal 2021 period.

Adjusted Net Income(1) was $188 million, or $1.04 per diluted share, compared to Adjusted Net Income of $148 million, or $0.82 per diluted share, in the third quarter a year ago.

Third Quarter 2022 Segment Review

(Dollars in millions)

Three Months Ended March 31,

 

Constant Currency

 

 

2022

 

 

 

2021

 

 

Change %

Biologics

 

 

 

 

 

Net revenue

$

698

 

 

$

544

 

 

30

%

Segment EBITDA

 

216

 

 

 

180

 

 

23

%

Segment EBITDA margin

 

31.1

%

 

 

33.1

%

 

 

Softgel and Oral Technologies

 

 

 

 

 

Net revenue

 

324

 

 

 

244

 

 

37

%

Segment EBITDA (2)

 

75

 

 

 

59

 

 

29

%

Segment EBITDA margin (2)

 

23.2

%

 

 

24.4

%

 

 

Oral and Specialty Delivery

 

 

 

 

 

Net revenue

 

154

 

 

 

171

 

 

(8

)%

Segment EBITDA

 

41

 

 

 

31

 

 

37

%

Segment EBITDA margin

 

26.6

%

 

 

18.0

%

 

 

Clinical Supply Services

 

 

 

 

 

Net revenue

 

101

 

 

 

100

 

 

3

%

Segment EBITDA

 

30

 

 

 

27

 

 

14

%

Segment EBITDA margin

 

29.6

%

 

 

27.1

%

 

 

Inter-segment revenue elimination

 

(4

)

 

 

(6

)

 

34

%

Unallocated costs

 

(54

)

 

 

123

 

 

(146

)%

Combined totals

 

 

 

 

 

Net revenue

$

1,273

 

 

$

1,053

 

 

23

%

 

 

 

 

 

 

EBITDA from operations

$

308

 

 

$

420

 

 

(25

)%

(1) See "Non-GAAP Financial Measures" below and the GAAP to non-GAAP reconciliation provided later in this release.

(2) SOT Segment EBITDA and Segment EBITDA margin for the three months ended March 31, 2022 includes a one-time non-cash inventory fair value adjustment for $7 million associated with our Bettera acquisition.

Biologics segment

2022 vs. 2021

 

2022 vs. 2021

Year-Over-Year Change

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

Net Revenue

 

Segment EBITDA

 

Net Revenue

 

Segment EBITDA

Organic

30

%

 

23

%

 

43

%

 

40

%

Impact of acquisitions

%

 

%

 

%

 

(1

)%

Constant-currency change

30

%

 

23

%

 

43

%

 

39

%

Foreign exchange translation impact on reporting

(2

)%

 

(3

)%

 

(1

)%

 

(2

)%

Total % change

28

%

 

20

%

 

42

%

 

37

%

Softgel and Oral Technologies segment

2022 vs. 2021

 

2022 vs. 2021

Year-Over-Year Change

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

Net Revenue

 

Segment EBITDA

 

Net Revenue

 

Segment EBITDA

Organic

14

%

 

16

%

 

13

%

 

23

%

Impact of acquisitions (3)

23

%

 

13

%

 

15

%

 

15

%

Constant-currency change

37

%

 

29

%

 

28

%

 

38

%

Foreign currency translation impact on reporting

(4

)%

 

(3

)%

 

(2

)%

 

(3

)%

Total % change

33

%

 

26

%

 

26

%

 

35

%

(3) Segment EBITDA for the three and nine months ended March 31, 2022 includes a one-time non-cash inventory fair value adjustment for $7 million associated with our Bettera acquisition.

Oral and Specialty Delivery segment

2022 vs. 2021

 

2022 vs. 2021

Year-Over-Year Change

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

Net Revenue

 

Segment EBITDA

 

Net Revenue

 

Segment EBITDA

Organic

4

%

 

64

%

 

4

%

 

55

%

Impact of acquisitions

1

%

 

(10

)%

 

1

%

 

(12

)%

Impact of divestitures

(13

)%

 

(17

)%

 

(14

)%

 

(21

)%

Constant-currency change

(8

)%

 

37

%

 

(9

)%

 

22

%

Foreign currency translation impact on reporting

(2

)%

 

(4

)%

 

%

 

1

%

Total % change

(10

)%

 

33

%

 

(9

)%

 

23

%

Clinical Supply Services segment

2022 vs. 2021

 

2022 vs. 2021

Year-Over-Year Change

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

Net Revenue

 

Segment EBITDA

 

Net Revenue

 

Segment EBITDA

Organic

3

%

 

14

%

 

4

%

 

8

%

Constant-currency change

3

%

 

14

%

 

4

%

 

8

%

Foreign currency translation impact on reporting

(2

)%

 

(4

)%

 

%

 

(1

)%

Total % change

1

%

 

10

%

 

4

%

 

7

%

Segment Net Revenue as a % of Total Net Revenue

 

Three Months Ended

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

Biologics

55

%

 

52

%

 

53

%

 

50

%

 

52

%

Softgel and Oral Technologies

25

%

 

27

%

 

24

%

 

25

%

 

23

%

Oral and Specialty Delivery

12

%

 

13

%

 

14

%

 

16

%

 

16

%

Clinical Supply Services

8

%

 

8

%

 

9

%

 

9

%

 

9

%

Net Revenue

100

%

 

100

%

 

100

%

 

100

%

 

100

%

Balance Sheet and Liquidity

As of March 31, 2022, Catalent had $4.19 billion in total debt, and $3.31 billion in total debt net of cash, cash equivalents, and marketable securities, compared to $3.31 billion in total net debt as of December 31, 2021. The current debt structure does not include any significant maturity until 2027.

Catalent’s net leverage ratio(1) as of March 31, 2022 was 2.6x, compared to a proforma calculation of 2.8x at December 31, 2021 and 2.3x at March 31, 2021.

Fiscal Year 2022 Outlook

 

Previous Guidance

Updated Guidance

Net revenue

$4,740 million - $4,860 million

$4,800 million - $4,900 million

Adjusted EBITDA

$1,250 million - $1,300 million

$1,265 million - $1,305 million

Adjusted net income

$650 million - $700 million

$665 million - $705 million

Weighted average shares outstanding - diluted

181 million - 183 million

181 million - 183 million

(1) See "Non-GAAP Financial Measures" below and the GAAP to non-GAAP reconciliation provided later in this release.

Fiscal Year 2023

Catalent projects organic, constant-currency net revenue growth for fiscal 2023, compared to fiscal 2022, in line with its previously announced range of long-term net revenue growth of 8-10%, due, in part, to its projection of strong commercial demand for products other than COVID-19 products and increased utilization of both current and recently acquired assets. This fiscal 2023 outlook mitigates future risk by assuming a considerable decline in COVID-19 product net revenue.

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), an S&P 500® company, is the global leader in enabling pharma, biotech, and consumer health partners to optimize product development, launch, and full life-cycle supply for patients around the world.

With broad and deep scale and expertise in development sciences, delivery technologies, and multi-modality manufacturing, Catalent is the industry’s preferred partner for personalized medicines, consumer health brand extensions, and blockbuster drugs. Catalent helps accelerate over 1,000 partner programs and launch over 150 new products every year. Its flexible manufacturing platforms at over 50 global sites supply over 70 billion doses of nearly 7,000 products to over 1,000 customers annually.

Catalent’s expert workforce exceeds 19,000, including more than 2,500 scientists and technicians. Headquartered in Somerset, New Jersey, the company generated $4 billion in revenue in its 2021 fiscal year. For more information, 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, adjusted for the income or loss attributable to non-controlling interests (“EBITDA from operations”). EBITDA from operations is not defined under U.S. GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. GAAP, and is subject to important limitations.

Catalent believes that the presentation of EBITDA from operations enhances an investor’s understanding of its financial performance. Catalent believes this measure is a useful financial metric to assess its operating performance across periods 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. Catalent believes that EBITDA from operations will provide investors with a useful tool for assessing the comparability between periods of Catalent's 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. Catalent presents EBITDA from operations in order to provide supplemental information that it considers relevant for the readers of its consolidated financial statements, and such information is not meant to replace or supersede U.S. GAAP measures. Catalent’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 non-controlling interest, other (income) expense, impairments, restructuring costs, interest expense, income tax expense (benefit), and depreciation and amortization (“segment EBITDA”). Moreover, under Catalent’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, is not a measure of operating income, operating performance, or liquidity presented in accordance with 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, Catalent’s presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Management also measures operating performance based on Adjusted Net Income and Adjusted Net Income per share. Adjusted Net Income is not defined under U.S. GAAP, is not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. GAAP and is subject to important limitations. Catalent believes that the presentation of Adjusted Net Income and Adjusted Net Income per share enhances an investor’s understanding of its financial performance. Catalent believes these measures are a useful financial metric to assess its operating performance across periods by excluding certain items that it believes are not representative of its core business and Catalent uses these measures for business planning purposes. Catalent defines Adjusted Net Income as net earnings 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. Catalent believes that Adjusted Net Income and Adjusted Net Income per share provides investors with a useful tool for assessing the comparability between periods of its ability to generate cash from operations available to its stockholders. Catalent’s definition of Adjusted Net Income may not be the same as similarly titled measures used by other companies.

The most directly comparable U.S. GAAP measure to EBITDA from operations, Adjusted EBITDA, and Adjusted Net Income is net earnings. Included in this release is a reconciliation of net earnings to EBITDA from operations, Adjusted EBITDA and Adjusted Net Income.

Catalent does not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable U.S. 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, Catalent does so primarily on a non-GAAP basis without preparing a U.S. 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 Catalent’s future hiring and retention needs, as well as the future fair market value of its 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, Catalent does not believe that a U.S. GAAP reconciliation would provide meaningful supplemental information about its outlook.

Use of Constant Currency

As changes in exchange rates are an important factor in understanding period-to-period comparisons, Catalent 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. Catalent uses results on a constant-currency basis as one measure to evaluate its performance. Catalent calculates constant currency by calculating current-year results using prior-year foreign currency exchange rates. Catalent 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 Catalent 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,” “predict,” “hope,” “foresee,” “likely,” “may,” “could,” “target,” “will,” “would,” or other words or phrases with similar meanings. Similarly, statements that describe Catalent’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’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 or any global health developments on Catalent's or its customers' or suppliers' businesses; participation in a highly competitive market and increased competition that may adversely affect Catalent’s business; demand for its offerings, which depends in part on its customers’ research and development and the clinical and market success of their products; product and other liability risks that could adversely affect Catalent’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 Catalent’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 Catalent’s operations; 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 Catalent 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; adverse tax legislative or regulatory initiatives or challenges or adjustments to Catalent’s tax positions; loss of key personnel; risks generally associated with information systems; inability to complete any future acquisition or other transaction that may complement or expand its 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 Catalent’s existing pension plans; substantial leverage that may limit its ability 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 its variable-rate debt preventing it 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 Catalent’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed August 30, 2021. All forward-looking statements speak only as of the date of this release or as of the date they are made, and Catalent 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.

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)

 

 

2022

 

 

2021

 

 

 

 

Change $

 

Change %

Net revenue

$

1,273

 

$

1,053

 

 

$

(24

)

 

$

244

 

 

23

%

Cost of sales

 

850

 

 

687

 

 

 

(15

)

 

 

178

 

 

26

%

Gross margin

 

423

 

 

366

 

 

 

(9

)

 

 

66

 

 

18

%

Selling, general, and administrative expenses

 

207

 

 

173

 

 

 

(2

)

 

 

36

 

 

21

%

Gain on sale of subsidiary

 

 

 

(184

)

 

 

 

 

 

184

 

 

*

Other operating expense

 

5

 

 

8

 

 

 

 

 

 

(3

)

 

(39

)%

Operating earnings

 

211

 

 

369

 

 

 

(7

)

 

 

(151

)

 

(41

)%

Interest expense, net

 

33

 

 

27

 

 

 

(1

)

 

 

7

 

 

25

%

Other expense, net

 

2

 

 

25

 

 

 

(2

)

 

 

(21

)

 

(85

)%

Earnings before income taxes

 

176

 

 

317

 

 

 

(4

)

 

 

(137

)

 

(43

)%

Income tax expense

 

35

 

 

85

 

 

 

 

 

 

(50

)

 

(58

)%

Net earnings

$

141

 

$

232

 

 

$

(4

)

 

$

(87

)

 

(38

)%

Less: Net earnings attributable to preferred shareholders

 

 

 

(15

)

 

 

 

 

 

 

Net earnings attributable to common shareholders

$

141

 

$

217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

180

 

 

170

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

181

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net earnings

$

0.78

 

$

1.27

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net earnings

$

0.78

 

$

1.26

 

 

 

 

 

 

 

 

Catalent, Inc.

Consolidated Statements of Operations

(Unaudited; dollars and shares in millions, except per share data)

 

 

Nine Months Ended

March 31,

 

FX impact

 

Constant Currency

Increase (Decrease)

 

 

2022

 

 

 

2021

 

 

 

 

Change $

 

Change %

Net revenue

$

3,515

 

 

$

2,810

 

 

$

(30

)

 

$

735

 

 

26

%

Cost of sales

 

2,363

 

 

 

1,897

 

 

 

(19

)

 

 

485

 

 

26

%

Gross margin

 

1,152

 

 

 

913

 

 

 

(11

)

 

 

250

 

 

27

%

Selling, general and administrative expenses

 

618

 

 

 

503

 

 

 

(2

)

 

 

117

 

 

23

%

Gain on sale of subsidiary

 

(1

)

 

 

(184

)

 

 

 

 

 

183

 

 

(99

)%

Other operating expense

 

25

 

 

 

17

 

 

 

 

 

 

8

 

 

46

%

Operating earnings

 

510

 

 

 

577

 

 

 

(9

)

 

 

(58

)

 

(10

)%

Interest expense, net

 

91

 

 

 

78

 

 

 

 

 

 

13

 

 

17

%

Other expense, net

 

25

 

 

 

5

 

 

 

(4

)

 

 

24

 

 

465

%

Earnings before taxes

 

394

 

 

 

494

 

 

 

(5

)

 

 

(95

)

 

(19

)%

Income tax expense

 

63

 

 

 

91

 

 

 

 

 

 

(28

)

 

(30

)%

Net earnings

$

331

 

 

$

403

 

 

$

(5

)

 

$

(67

)

 

(17

)%

Less: Net earnings attributable to preferred shareholders

 

(15

)

 

 

(43

)

 

 

 

 

 

 

Net earnings attributable to common shareholders

$

316

 

 

$

360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

176

 

 

 

167

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

177

 

 

 

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net earnings

$

1.81

 

 

$

2.15

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net earnings

$

1.79

 

 

$

2.12

 

 

 

 

 

 

 

 

Catalent, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; dollars in millions)

 

 

March 31,
2022

 

June 30,
2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

786

 

$

896

Trade receivables, net

 

932

 

 

1,012

Inventories

 

676

 

 

563

Prepaid expenses and other

 

537

 

 

376

Marketable securities

 

94

 

 

71

Total current assets

 

3,025

 

 

2,918

Property, plant, and equipment, net

 

2,820

 

 

2,524

Other non-current assets, including intangible assets

 

4,477

 

 

3,670

Total assets

$

10,322

 

$

9,112

 

 

 

 

LIABILITIES, REDEEMABLE PREFERRED STOCK, AND SHAREHOLDERS' EQUITY

Current liabilities:

 

 

 

Current portion of long-term obligations and other short-term borrowings

$

29

 

$

75

Accounts payable

 

401

 

 

385

Other accrued liabilities

 

616

 

 

736

Total current liabilities

 

1,046

 

 

1,196

Long-term obligations, less current portion

 

4,157

 

 

3,166

Other non-current liabilities

 

487

 

 

476

Redeemable preferred stock

 

 

 

359

Total shareholders' equity

 

4,632

 

 

3,915

Total liabilities, redeemable preferred stock, and shareholders' equity

$

10,322

 

$

9,112

 

Catalent, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited; dollars in millions)

 

 

Nine Months Ended

March 31,

 

 

2022

 

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net cash provided by operating activities

$

370

 

 

$

299

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property, equipment, and other productive assets

 

(425

)

 

 

(497

)

Purchases of marketable securities

 

(25

)

 

 

(75

)

(Settlement on) proceeds from sale of subsidiaries, net

 

(3

)

 

 

287

 

Payment for acquisitions, net of cash acquired

 

(1,033

)

 

 

(147

)

Payments for investments

 

(4

)

 

 

(4

)

Net cash used in investing activities

 

(1,490

)

 

 

(436

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from borrowings

 

1,100

 

 

 

167

 

Payments related to long-term obligations

 

(72

)

 

 

(55

)

Financing fees paid

 

(15

)

 

 

(18

)

Dividends paid

 

(4

)

 

 

(18

)

Proceeds from sale of common stock, net

 

 

 

 

82

 

Cash paid, in lieu of equity, for tax withholding obligations

 

(9

)

 

 

(27

)

Exercise of stock options

 

21

 

 

 

22

 

Other financing activities

 

9

 

 

 

6

 

Net cash provided by financing activities

 

1,030

 

 

 

159

 

Effect of foreign currency exchange on cash and cash equivalents

 

(20

)

 

 

13

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(110

)

 

 

35

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

896

 

 

 

953

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

786

 

 

$

988

 

 

Catalent, Inc.

Reconciliation of Net Earnings to EBITDA from Operations and Adjusted EBITDA*

(Unaudited; dollars in millions)

 

 

Three months ended

 

March 31, 2021

 

June 30, 2021

 

September 30, 2021

 

December 31, 2021

 

March 31, 2022

Net earnings

$

232

 

 

$

182

 

 

$

93

 

 

$

97

 

$

141

 

Interest expense, net

 

27

 

 

 

32

 

 

 

26

 

 

 

32

 

 

33

 

Income tax expense

 

85

 

 

 

39

 

 

 

10

 

 

 

18

 

 

35

 

Depreciation and amortization

 

76

 

 

 

73

 

 

 

81

 

 

 

98

 

 

99

 

EBITDA from operations

 

420

 

 

 

326

 

 

 

210

 

 

 

245

 

 

308

 

Stock-based compensation

 

8

 

 

 

13

 

 

 

21

 

 

 

11

 

 

10

 

Impairment charges and loss on sale of assets

 

5

 

 

 

1

 

 

 

3

 

 

 

16

 

 

2

 

Financing-related expenses

 

17

 

 

 

1

 

 

 

4

 

 

 

 

 

 

Restructuring costs

 

3

 

 

 

1

 

 

 

1

 

 

 

1

 

 

3

 

Acquisition, integration, and other special items

 

1

 

 

 

7

 

 

 

7

 

 

 

22

 

 

9

 

(Gain) loss on sale of subsidiary

 

(184

)

 

 

2

 

 

 

(1

)

 

 

 

 

 

Foreign exchange (gain) loss

 

4

 

 

 

(2

)

 

 

9

 

 

 

15

 

 

1

 

Inventory fair value step-up charges

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Other adjustments

 

 

 

 

(1

)

 

 

(2

)

 

 

 

 

(1

)

Adjusted EBITDA

$

274

 

 

$

348

 

 

$

252

 

 

$

310

 

$

339

 

Favorable (unfavorable) FX impact

 

 

 

 

 

 

 

 

 

(7

)

Adjusted EBITDA at constant currency

 

 

 

 

 

 

 

 

$

346

 

* Refer to Catalent's description of non-GAAP measures, including EBITDA from operations and Adjusted EBITDA as referenced above.

 

Catalent, Inc.

Reconciliation of Net Earnings to Adjusted Net Income*

(Unaudited; dollars in millions, except per share data)

 

 

Three months ended

 

March 31, 2021

 

June 30, 2021

 

September 30, 2021

 

December 31, 2021

 

March 31, 2022

Net earnings

$

232

 

 

$

182

 

 

$

93

 

 

$

97

 

 

$

141

 

Amortization (1)

 

23

 

 

 

24

 

 

 

23

 

 

 

34

 

 

 

33

 

Stock-based compensation

 

8

 

 

 

13

 

 

 

21

 

 

 

11

 

 

 

10

 

Impairment charges and gain/loss on sale of assets (2)

 

5

 

 

 

1

 

 

 

3

 

 

 

16

 

 

 

2

 

Financing-related expenses

 

17

 

 

 

1

 

 

 

4

 

 

 

 

 

 

 

Restructuring costs

 

3

 

 

 

1

 

 

 

1

 

 

 

1

 

 

 

3

 

Acquisition, integration, and other special items

 

1

 

 

 

7

 

 

 

7

 

 

 

22

 

 

 

9

 

(Gain) loss on sale of subsidiary (3)

 

(184

)

 

 

2

 

 

 

(1

)

 

 

 

 

 

 

Foreign exchange loss (gain)

 

4

 

 

 

(2

)

 

 

9

 

 

 

15

 

 

 

1

 

Inventory fair value step-up charges (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Other adjustments (5)

 

 

 

 

(1

)

 

 

(2

)

 

 

 

 

 

(1

)

Estimated tax effect of adjustments (6)

 

(17

)

 

 

40

 

 

 

(15

)

 

 

(24

)

 

 

(15

)

Discrete income tax (benefit) expense items (7)

 

56

 

 

 

(59

)

 

 

(15

)

 

 

(9

)

 

 

(2

)

Adjusted net income (ANI)

$

148

 

 

$

209

 

 

$

128

 

 

$

163

 

 

$

188

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

170

 

 

 

 

 

 

 

 

 

180

 

Weighted average shares outstanding - diluted

 

172

 

 

 

 

 

 

 

 

 

181

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Net earnings per share - basic

$

1.27

 

 

 

 

 

 

 

 

$

0.78

 

Net earnings per share - diluted

$

1.26

 

 

 

 

 

 

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

ANI per share:

 

 

 

 

 

 

 

 

 

ANI per share - basic

$

0.87

 

 

 

 

 

 

 

 

$

1.05

 

ANI per share - diluted (8)

$

0.82

 

 

 

 

 

 

 

 

$

1.04

 

* Refer to Catalent'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)

 

For the three months ended December 31, 2021, represents $16 million in fixed asset impairment charges primarily associated with a product in our Oral and Specialty Delivery segment.

(3)

Represents the (gain) loss on sale of subsidiary associated with the 2021 divestiture of Catalent's former blow-fill-seal business.

(4)

Represents a one-time non-cash inventory fair value adjustment of $7 million recorded in connection with the Bettera acquisition.

(5)

Represents unrealized gains related to the fair value of the derivative liability associated with Catalent's formerly outstanding Series A convertible preferred stock.

(6)

The tax effect of adjustments to Adjusted Net Income is 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.

(7)

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.

(8)

 

For the three months ended March 31, 2022, represents Adjusted Net Income divided by the weighted average sum of (a) the number of shares of common stock outstanding, plus (b) the number of shares of Common Stock that would be issued assuming exercise or vesting of all potentially dilutive instruments. For the three months ended March 31, 2021, represents Adjusted Net Income divided by the weighted average sum of (a) the number of shares of common stock outstanding, plus (b) the number of shares of common stock that would be issued assuming exercise or vesting of all potentially dilutive instruments, plus (c) the number of shares of common stock equivalent to the shares of Series A Preferred Stock outstanding under the "if-converted" method. For the three months ended March 31, 2022 and 2021, the weighted average was 181 million and 180 million, respectively.

 

Catalent, Inc.

Reconciliation of Segment EBITDA to Net Earnings

(Unaudited; dollars in millions, except per share data)

 

 

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Biologics

$

216

 

 

$

180

 

 

$

579

 

 

$

422

 

Softgel and Oral Technologies

 

75

 

 

 

59

 

 

 

194

 

 

 

143

 

Oral and Specialty Delivery

 

41

 

 

 

31

 

 

 

118

 

 

 

97

 

Clinical Supply Services

 

30

 

 

 

27

 

 

 

83

 

 

 

77

 

Sub-Total

$

362

 

 

$

297

 

 

$

974

 

 

$

739

 

Reconciling items to net earnings

 

 

 

 

 

 

 

Unallocated costs (1)

 

(54

)

 

 

123

 

 

 

(211

)

 

 

49

 

Depreciation and amortization

 

(99

)

 

 

(76

)

 

 

(278

)

 

 

(216

)

Interest expense, net

 

(33

)

 

 

(27

)

 

 

(91

)

 

 

(78

)

Income tax expense

 

(35

)

 

 

(85

)

 

 

(63

)

 

 

(91

)

Net earnings

$

141

 

 

$

232

 

 

$

331

 

 

$

403

 

(1)

Unallocated costs include restructuring and special items, stock-based compensation, impairment charges, gain on sale of subsidiary, certain other corporate directed costs, and other costs that are not allocated to the segments.

 

Catalent, Inc.

Calculation of Net Leverage Ratio

(Unaudited; dollars in millions)

 

 

March 31,
2021

 

June 30,
2021

 

September 30, 2021
Pro Forma (2)

 

December 31,
2021

 

March 31,
2022

Total Secured Debt

$

992

 

$

989

 

$

1,435

 

$

1,431

 

$

1,428

Total Unsecured Debt

 

2,231

 

 

2,252

 

 

2,869

 

 

2,789

 

 

2,758

Total Debt

 

3,223

 

 

3,241

 

 

4,304

 

 

4,220

 

 

4,186

Cash and Cash Equivalents

 

988

 

 

896

 

 

971

 

 

849

 

 

786

Marketable Securities

 

75

 

 

71

 

 

50

 

 

66

 

 

94

Total Net Debt

 

2,160

 

 

2,274

 

 

3,283

 

 

3,305

 

 

3,306

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Q4 2020

 

268

 

 

 

 

 

 

 

 

Q1 2021

 

174

 

 

174

 

 

 

 

 

 

Q2 2021

 

224

 

 

224

 

 

224

 

 

 

 

Q3 2021

 

274

 

 

274

 

 

274

 

 

274

 

 

Q4 2021

 

 

 

348

 

 

348

 

 

348

 

 

348

Q1 2022

 

 

 

 

 

252

 

 

252

 

 

252

Q2 2022

 

 

 

 

 

 

 

310

 

 

310

Q3 2022

 

 

 

 

 

 

 

 

 

339

LTM Adjusted EBITDA

$

940

 

$

1,020

 

$

1,098

 

$

1,184

 

$

1,249

Net Sr. Secured Debt / Adj. EBITDA

n.a.(1)

 

0.0x

 

0.4x

 

0.4x

 

0.4x

Net Debt / Adj. EBITDA

2.3x

 

2.2x

 

3.0x

 

2.8x

 

2.6x

(1)

The sum of cash and cash equivalents plus marketable securities exceeds total secured debt.

(2)

Assumes Bettera acquisition closed on September 30, 2021.

 

Investor Contact:
Catalent, Inc.
Paul Surdez
732-537-6325
investors@catalent.com

Source: Catalent, Inc.