Fourth Quarter Fiscal Year 2014 Highlights
- Total revenue increased 3% (or 2% on a constant currency basis) to $519.6 million from fourth quarter 2013
- Net income of $27.2 million, an increase of 66% from fourth quarter 2013
- Adjusted EBITDA increased 18% to $150.7 million from fourth quarter 2013
- Earnings of $0.36 per share and $0.36 per diluted share
- Launched ADVASEPTTM, aseptic technology for the glass-free delivery of injectable drugs
- Revealed plans to open a lab in Japan to provide proof-of-concept support and feasibility studies for the proprietary Zydis® platform
Catalent, Inc. (NYSE:CTLT), the leading global provider of advanced
delivery technologies and development solutions for drugs, biologics and
consumer health products, today announced financial results for the
fourth quarter and fiscal year ended June 30, 2014.
Fourth quarter revenue of $519.6 million increased 3% as reported, or 2%
on a constant currency basis, from the $505.2 million in the fourth
quarter a year ago. Fiscal year 2014 revenue of $1.83 billion increased
2%, both on an as reported and on a constant currency basis, from the
$1.80 billion in the prior year.
Fourth quarter net income of $27.2 million increased 66% from the $16.4
million in the fourth quarter a year ago. Fiscal year 2014 net income of
$16.2 million increased from the loss of $49.6 million recorded in the
prior year.
Fourth quarter 2014 EBITDA from continuing operations was $127.7
million, an increase of 15% compared to the prior year period. Fiscal
year 2014 EBITDA from continuing operations was $374.4 million, an
increase of 13% compared to the prior year.
Fourth quarter 2014 Adjusted EBITDA, as defined in the GAAP to non-GAAP
reconciliation provided later in this release, was $150.7 million, or
29.0% of revenue, compared to $128.1 million, or 25.4% of revenue, in
the fourth quarter a year ago. Fiscal year 2014 Adjusted EBITDA was
$432.3 million, or 23.7% of revenue, compared to $412.7 million, or
22.9% of revenue, for the prior year.
Fourth quarter 2014 Adjusted Net Income was $77.0 million, or $1.01 per
diluted share, compared to $54.5 million, or $0.72 per diluted share, in
the fourth quarter a year ago. Fiscal year 2014 Adjusted Net Income was
$142.4 million, or $1.87 per diluted share, compared to $82.6 million,
or $1.10 per diluted share, for the prior year.
"We are pleased with our fourth quarter results,” said John Chiminski,
President and Chief Executive Officer of Catalent, Inc. “Our performance
was highlighted by double-digit EBITDA growth within all three of our
reporting segments. We continue to execute and to make strategic
investments to position Catalent for organic growth and further market
expansion, as evidenced by the launch of our ADVASEPT™ technology and
the upcoming expansion plans in Japan.
Fourth Quarter 2014 Segment Highlights
Revenue Highlights by Business Segment
Revenue from the Oral Technologies segment was $348.1 million, an
increase of 4% (or 5% on a constant currency basis) over the fourth
quarter a year ago. This growth was primarily led by the softgel
business in international markets. Growth was partially offset by volume
declines in the pharmaceutical softgel business in North America and by
the Company’s exit from its remaining non-core third-party commercial
packaging business. The total adverse impact on fourth quarter revenue
from the packaging business exit was $8 million. Excluding this impact,
revenue from Oral Technologies would have grown 6% (or 7% on a constant
currency) basis compared to the prior year period.
Revenue from the Development and Clinical Services segment was $105.4
million, a decrease of 1% (or 4% on a constant currency basis) over the
fourth quarter a year ago, primarily due to lower comparator sales.
Given the low margins associated with comparator sales, the revenue
decline had a minimal impact on the segment’s profitability.
Revenue from the Medication Delivery Solutions segment was $68.9
million, an increase of 1% (or a decrease of 1% on a constant currency
basis) over the fourth quarter a year ago. This decline was primarily
due to lower sales within the Company’s European sterile injectables
business.
Segment EBITDA Highlights
Oral Technologies segment EBITDA in the fourth quarter of 2014 was
$113.1 million, an increase of 12% (or 13% on a constant currency
basis). This increase was primarily due to favorable product mix within
the softgel and modified release technologies businesses.
Development and Clinical Services segment EBITDA in the fourth quarter
of 2014 was $26.3 million, an increase of 35% (or 29% on a constant
currency basis). This EBITDA improvement was attributable to favorable
product mix within clinical supply services, performance within
analytical services, and the realization of cost synergies driven by
site consolidations in North America.
Medication Delivery Solutions segment EBITDA in the fourth quarter of
2014 was $17.8 million, an increase of 24% (or 21% on a constant
currency basis). This increase was driven by favorable product mix and
by the timing of facility preventative maintenance expenses.
Fiscal Year 2014 Segment Highlights
Revenue Highlights by Business Segment
Revenue from the Oral Technologies segment was $1.18 billion, a decrease
of 1% (or an increase of 1% on a constant currency basis) over fiscal
year 2013. During fiscal year 2014, the Company exited its remaining
non-core third-party packaging business in Europe. The total impact on
fiscal year 2014 revenue from the packaging business exit was $32
million. Excluding this impact, revenue from Oral Technologies would
have been in line with the prior year (or an increase of 2% on a
constant currency basis).
Revenue from the Development and Clinical Services segment was $412.2
million, an increase of 2% as reported, but in line with the prior year
on a constant currency basis.
Revenue from the Medication Delivery Solutions segment was $246.1
million, an increase of 12% (or 10% on a constant currency basis) over
fiscal year 2013. This increase was driven by a strong injectable
pipeline and growth within Blow-Fill-Seal.
Segment EBITDA Highlights
Oral Technologies segment EBITDA in fiscal year 2014 was $324.3 million,
an increase of 3% (or 4% on a constant currency basis) over fiscal year
2013. This increase was driven by solid performance within the modified
release technologies and consumer health softgel businesses, partially
offset by volume declines within the prescription softgel business.
Development and Clinical Services segment EBITDA in fiscal year 2014 was
$83.5 million, an increase of 11% (or 9% on a constant currency basis)
over fiscal year 2013. This increase was due to favorable product mix
within clinical services and strong performance within analytical
science services.
Medication Delivery Solutions segment EBITDA in fiscal year 2014 was
$48.7 million, an increase of 55% (or 51% on a constant currency basis)
over fiscal year 2013. This increase was due to a strong injectable
pipeline and favorable product mix within Blow-Fill-Seal.
Additional Financial Highlights
Fourth quarter gross margin of 36.6% improved 2.2 percentage points from
34.4% in the fourth quarter a year ago. Fiscal year 2014 gross margin of
32.8% improved 1.2 percentage points from 31.6% in fiscal year 2013,
driven by favorable product mix within each of the three business units.
Fourth quarter selling, general and administrative expenses were $78.6
million and represented 15.1% of revenue compared to 17.6% of revenue in
the fourth quarter a year ago. Fiscal year 2014 selling, general and
administrative expenses were $334.8 million and represented 18.3% of
revenue compared to 18.9% of revenue in fiscal year 2013. The decrease
in selling, general and administrative expenses as a percent of revenue
for the fourth quarter and for the fiscal year was primarily driven by a
decrease in acquisition integration costs.
Backlog for the Development and Clinical Services segment was $373.8
million as of June 30, 2014, an increase of 37% over the prior fiscal
year. The segment also recorded net new business wins of $107.3 million
during the fourth quarter, an increase of 8% compared to the fourth
quarter of fiscal year 2013. The segment’s trailing-twelve-month
book-to-bill ratio was 1.25.
Balance Sheet and Liquidity
As of June 30, 2014, Catalent had $74.4 million in cash and cash
equivalents and $2.6 billion in debt. The Company generated $178.3
million in cash from operating activities during fiscal year 2014.
Subsequent to the close of the quarter, Catalent completed an initial
public offering of its common stock that closed on August 5, 2014. In
the IPO, Catalent raised net proceeds of approximately $822.7 million
after the underwriting discount and offering expenses. Information on
the use of the Company's IPO proceeds is contained in the prospectus
dated July 30, 2014 filed with the Securities and Exchange Commission.
Fiscal Year 2015 Outlook
For fiscal year 2015, the Company expects its revenue to be in the range
of $1.89 billion to $1.92 billion, its Adjusted EBITDA to be in the
range of $450 million to $460 million, its Adjusted Net Income to be in
the range of $215 million to $225 million, and its capital expenditures
to be in the range of $115 million to $125 million.
Earnings Webcast
The Company’s management will host a webcast to discuss the results at
4:30 p.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.
The webcast replay, along with supplemental slides, will be available
for 90 days in the Investors section at www.catalent.com.
About Catalent, Inc.
Catalent, Inc. (NYSE:CTLT) is the leading global provider of advanced
delivery technologies and development solutions for drugs, biologics and
consumer health products. With over 80 years serving the industry,
Catalent has proven expertise in bringing more customer products to
market faster, enhancing product performance and ensuring reliable
clinical and commercial product supply. Catalent employs more than 8,000
people, including over 1,000 scientists, at nearly 30 facilities across
5 continents. Catalent is headquartered in Somerset, N.J. For more
information, please visit www.catalent.com.
We use our website (www.catalent.com),
our corporate Facebook page (https://www.facebook.com/CatalentPharmaSolutions)
and our corporate Twitter account (@catalentpharma) as channels of
distribution of company information. The information we post through
these channels may be deemed material. Accordingly, investors should
monitor these channels, in addition to following our press releases,
Securities and Exchange Commission ("SEC") filings and public conference
calls and webcasts. The contents of our website and social media
channels are not, however, a part of this report.
Non-GAAP Financial Measures
Use of EBITDA from continuing operations, Adjusted EBITDA and
Adjusted Net Income
Management measures operating performance based on consolidated earnings
from continuing operations before interest expense, expense/(benefit)
for income taxes, and depreciation and amortization, and it is adjusted
for the income or loss attributable to non-controlling interest (“EBITDA
from continuing operations”). EBITDA from continuing 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 continuing
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 continuing 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 continuing 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 continuing operations may not be the same as similarly
titled measures used by other companies.
In addition, 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”). Under the indentures governing the Company’s notes
and the credit agreement governing the senior unsecured term loan
facility, 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
defined as “EBITDA” in the indentures and the credit agreement governing
the senior unsecured term loan facility). Adjusted EBITDA is based on
the definitions in the Company’s indentures and the credit agreement
governing the senior unsecured term loan facility, is not defined under
U.S. GAAP, and is subject to important limitations. The Company has
included the calculations of Adjusted EBITDA for the periods presented.
Adjusted EBITDA is the covenant compliance measure used in certain
covenants under the indentures governing its notes and the credit
agreement governing the senior unsecured term loan facility,
particularly those 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). 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. For example, Adjusted Net Income excludes our
non-cash tax expense and does not reflect the impact on earnings
resulting from certain other items.
We believe that the presentation of Adjusted Net Income/(loss) enhances
an investor’s understanding of our financial performance. We believe
this measure is a useful financial metric to assess our operating
performance from period to period by excluding certain items that we
believe are not representative of our core business and we use this
measure for business planning purposes. We define Adjusted Net
Income/(loss) as net earnings/(loss) adjusted for (1) earnings or loss
of discontinued operations, net of tax, (2) tax expense or income which
is not cash, (3) amortization attributable to purchase accounting and
(4) income or loss from non-controlling interest in our majority-owned
operations. We also make adjustments for other cash and non-cash items
included in the table below, partially offset by our estimate of the
cash taxes saved as a result of such cash and non-cash items. We believe
that Adjusted Net Income/(loss) will provide investors with a useful
tool for assessing the comparability between periods of our ability to
generate cash from operations available to our stockholders.
We present Adjusted Net Income/(loss) in order to provide supplemental
information that we consider relevant for the readers of our
consolidated financial statements included elsewhere in this prospectus,
and such information is not meant to replace or supersede U.S. GAAP
measures. Our 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 continuing
operations and Adjusted EBITDA is earnings/(loss) from continuing
operations. Included in this release is a reconciliation of
earnings/(loss) from continuing operations to EBITDA from continuing
operations, Adjusted EBITDA and Adjusted Net Income.
Use of Constant Currency
As 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. 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 our 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: participation in
a highly competitive market and increased competition 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 our business and subject the Company 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
and other foreign currencies; adverse tax legislation initiatives or
challenges to the Company’s tax positions; loss of key personnel; risks
generally associated with information systems; inability to complete any
future acquisitions and other transactions that may complement or expand
the business of the Company or divest of non-strategic businesses or
assets and the Company’s ability to successfully integrate acquired
business and realize anticipated benefits of such acquisitions;
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; 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, exposure to interest rate risk to the extent
of the Company’s variable rate debt and preventing the Company from
meeting our obligations under our indebtedness. For a more detailed
discussion of these and other factors, see the information under the
caption “Risk Factors” in our Prospectus dated July 30, 2014, filed with
the Securities and Exchange Commission. 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 statements as a result of new information or future
events or developments unless required by law.
More products. Better treatments. Reliably supplied.™
|
Catalent, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited; Dollars in millions)
|
|
|
|
|
Three Months Ended
June 30,
|
|
FX impact
(unfav)/fav
|
|
Increase/(Decrease)
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
Change $
|
|
Change %
|
|
Net revenue
|
$
|
519.6
|
|
|
$
|
505.2
|
|
|
$
|
3.7
|
|
|
$
|
10.7
|
|
|
2%
|
|
Cost of sales
|
329.3
|
|
|
331.5
|
|
|
3.3
|
|
|
(5.5
|
)
|
|
(2)%
|
|
Gross margin
|
190.3
|
|
|
173.7
|
|
|
0.4
|
|
|
16.2
|
|
|
9%
|
|
Selling, general and administrative expenses
|
78.6
|
|
|
88.8
|
|
|
0.4
|
|
|
(10.6
|
)
|
|
(12)%
|
|
Impairment charges and (gain)/loss on sale of assets
|
2.8
|
|
|
0.6
|
|
|
—
|
|
|
2.2
|
|
|
*
|
|
Restructuring and other
|
7.8
|
|
|
5.7
|
|
|
0.1
|
|
|
2.0
|
|
|
35%
|
|
Operating earnings/(loss)
|
101.1
|
|
|
78.6
|
|
|
(0.1
|
)
|
|
22.6
|
|
|
29%
|
|
Interest expense, net
|
40.3
|
|
|
42.5
|
|
|
0.6
|
|
|
(2.8
|
)
|
|
(7)%
|
|
Other (income)/expense, net
|
7.6
|
|
|
4.8
|
|
|
(2.1
|
)
|
|
4.9
|
|
|
*
|
|
Earnings/(loss) from continuing operations, before income taxes
|
53.2
|
|
|
31.3
|
|
|
1.4
|
|
|
20.5
|
|
|
65%
|
|
Income tax expense/(benefit)
|
26.2
|
|
|
21.1
|
|
|
(0.7
|
)
|
|
5.8
|
|
|
27%
|
|
Earnings/(loss) from continuing operations
|
27.0
|
|
|
10.2
|
|
|
2.1
|
|
|
14.7
|
|
|
*
|
|
Net earnings/(loss) from discontinued operations, net of tax
|
—
|
|
|
6.1
|
|
|
—
|
|
|
(6.1
|
)
|
|
*
|
|
Net earnings/(loss)
|
27.0
|
|
|
16.3
|
|
|
2.1
|
|
|
8.6
|
|
|
53%
|
|
Less: Net earnings/(loss) attributable to noncontrolling interest,
net of tax
|
(0.2
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
*
|
|
Net earnings/(loss) attributable to Catalent
|
$
|
27.2
|
|
|
$
|
16.4
|
|
|
$
|
2.1
|
|
|
$
|
8.7
|
|
|
53%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Catalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) from continuing operations less net income (loss)
attributable to noncontrolling interest
|
27.2
|
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss) attributable to Catalent
|
27.2
|
|
|
16.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Catalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
0.36
|
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss)
|
0.36
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
0.36
|
|
|
0.13
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss)
|
0.36
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
* - percentage not meaningful
|
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Unaudited; Dollars in millions)
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
FX impact
(unfav)/fav
|
|
Increase/(Decrease)
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
Change $
|
|
Change%
|
|
Oral Technologies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
$
|
348.1
|
|
|
$
|
333.3
|
|
|
|
$
|
(0.9
|
)
|
|
$
|
15.7
|
|
|
5%
|
|
|
Segment EBITDA
|
113.1
|
|
|
100.8
|
|
|
|
(0.9
|
)
|
|
13.2
|
|
|
13%
|
|
|
Medication Delivery Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
68.9
|
|
|
68.1
|
|
|
|
1.5
|
|
|
(0.7
|
)
|
|
(1)%
|
|
|
Segment EBITDA
|
17.8
|
|
|
14.4
|
|
|
|
0.4
|
|
|
3.0
|
|
|
21%
|
|
|
Development and Clinical Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
105.4
|
|
|
106.7
|
|
|
|
3.1
|
|
|
(4.4
|
)
|
|
(4)%
|
|
|
Segment EBITDA
|
26.3
|
|
|
19.5
|
|
|
|
1.2
|
|
|
5.6
|
|
|
29%
|
|
|
Inter-segment revenue elimination
|
(2.8
|
)
|
|
(2.9
|
)
|
|
|
—
|
|
|
0.1
|
|
|
(3)%
|
|
|
Unallocated Costs
|
(29.5
|
)
|
|
(23.6
|
)
|
|
|
1.9
|
|
|
(7.8
|
)
|
|
33%
|
|
|
Combined Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
$
|
519.6
|
|
|
$
|
505.2
|
|
|
|
$
|
3.7
|
|
|
$
|
10.7
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing operations
|
$
|
127.7
|
|
|
$
|
111.1
|
|
|
|
$
|
2.6
|
|
|
$
|
14.0
|
|
|
13%
|
|
* - percentage not meaningful
|
Catalent, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited; Dollars in millions)
|
|
|
|
|
|
|
Fiscal Year
June 30,
|
|
FX impact
(unfav)/fav
|
|
Constant Currency Increase/(Decrease)
|
|
|
(Dollars in millions)
|
2014
|
|
|
2013
|
|
|
|
|
|
Change $
|
|
Change%
|
|
|
Net revenue
|
$
|
1,827.7
|
|
|
$
|
1,800.3
|
|
|
$
|
(1.6
|
)
|
|
29.0
|
|
|
2%
|
|
|
Cost of products sold
|
1,229.1
|
|
|
1,231.7
|
|
|
0.2
|
|
|
(2.8
|
)
|
|
*
|
|
|
Gross margin
|
598.6
|
|
|
568.6
|
|
|
(1.8
|
)
|
|
31.8
|
|
|
6%
|
|
|
Selling, general and administrative expenses
|
334.8
|
|
|
340.6
|
|
|
(0.2
|
)
|
|
(5.6
|
)
|
|
(2)%
|
|
|
Impairment charges and (gain)/loss on sale of assets
|
3.2
|
|
|
5.2
|
|
|
0.1
|
|
|
(2.1
|
)
|
|
(40)%
|
|
|
Restructuring and other
|
19.7
|
|
|
18.4
|
|
|
0.1
|
|
|
1.2
|
|
|
7%
|
|
|
Operating earnings/(loss)
|
240.9
|
|
|
204.4
|
|
|
(1.8
|
)
|
|
38.3
|
|
|
19%
|
|
|
Interest expense, net
|
163.1
|
|
|
203.2
|
|
|
1.4
|
|
|
(41.5
|
)
|
|
(20)%
|
|
|
Other (income)/expense, net
|
10.4
|
|
|
25.1
|
|
|
(2.6
|
)
|
|
(12.1
|
)
|
|
(48)%
|
|
|
Earnings/(loss) from continuing operations before income taxes
|
67.4
|
|
|
(23.9
|
)
|
|
(0.6
|
)
|
|
91.9
|
|
|
*
|
|
|
Income tax expense/(benefit)
|
49.5
|
|
|
27.0
|
|
|
(1.3
|
)
|
|
23.8
|
|
|
88%
|
|
|
Earnings/(loss) from continuing operations
|
17.9
|
|
|
(50.9
|
)
|
|
0.7
|
|
|
68.1
|
|
|
*
|
|
|
Net earnings/(loss) from discontinued operations, net of tax
|
(2.7
|
)
|
|
1.2
|
|
|
—
|
|
|
(3.9
|
)
|
|
*
|
|
|
Net earnings/(loss)
|
15.2
|
|
|
(49.7
|
)
|
|
0.7
|
|
|
64.2
|
|
|
*
|
|
|
Less: Net earnings/(loss) attributable to noncontrolling interest,
net of tax
|
(1.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
*
|
|
|
Net earnings/(loss) attributable to Catalent
|
$
|
16.2
|
|
|
$
|
(49.6
|
)
|
|
$
|
0.7
|
|
|
65.1
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to Catalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) from continuing operations less net income (loss)
attributable to noncontrolling interest
|
18.9
|
|
|
(50.8
|
)
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss) attributable to Catalent
|
16.2
|
|
|
(49.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Catalent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
0.25
|
|
|
(0.68
|
)
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss)
|
0.22
|
|
|
(0.66
|
)
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.25
|
|
|
$
|
(0.68
|
)
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss)
|
0.21
|
|
|
(0.66
|
)
|
|
|
|
|
|
|
|
|
|
* - percentage not meaningful
|
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Unaudited; Dollars in millions)
|
|
|
|
|
Fiscal Year Ended
June 30,
|
|
FX impact
(unfav)/fav
|
|
Constant Currency Increase/(Decrease)
|
|
(Dollars in millions)
|
2014
|
|
|
2013
|
|
|
|
|
|
Change $
|
|
Change %
|
|
Oral Technologies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
$
|
1,180.1
|
|
|
$
|
1,186.3
|
|
|
$
|
(13.5
|
)
|
|
$
|
7.3
|
|
|
1%
|
|
Segment EBITDA
|
324.3
|
|
|
315.7
|
|
|
(4.0
|
)
|
|
12.6
|
|
|
4%
|
|
Medication Delivery Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
246.1
|
|
|
219.3
|
|
|
5.6
|
|
|
21.2
|
|
|
10%
|
|
Segment EBITDA
|
48.7
|
|
|
31.5
|
|
|
1.0
|
|
|
16.2
|
|
|
51%
|
|
Development and Clinical Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
412.2
|
|
|
404.8
|
|
|
6.4
|
|
|
1.0
|
|
|
*
|
|
Segment EBITDA
|
83.5
|
|
|
75.0
|
|
|
2.0
|
|
|
6.5
|
|
|
9%
|
|
Inter-segment revenue elimination
|
(10.7
|
)
|
|
(10.1
|
)
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
5%
|
|
Unallocated Costs (1)
|
(82.1
|
)
|
|
(90.6
|
)
|
|
2.5
|
|
|
6.0
|
|
|
(7)%
|
|
Combined Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
$
|
1,827.7
|
|
|
$
|
1,800.3
|
|
|
$
|
(1.6
|
)
|
|
$
|
29.0
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA from continuing operations
|
$
|
374.4
|
|
|
$
|
331.6
|
|
|
$
|
1.5
|
|
|
$
|
41.3
|
|
|
12%
|
* - percentage not meaningful
|
Catalent, Inc. and Subsidiaries
Reconciliation of Earnings/(Loss) from Continuing Operations to
EBITDA from Continuing Operations and Adjusted EBITDA
(Unaudited; Dollars in millions)
|
|
|
|
|
Quarter Ended
|
|
Twelve Months Ended
|
|
Quarter Ended
|
|
Twelve Months Ended
|
|
|
June 30, 2013
|
|
September
30, 2013
|
|
December 31, 2013
|
|
March 31, 2014
|
|
March 31, 2014
|
|
June 30,
2014
|
|
June 30,
2014
|
|
Earnings/(loss) from continuing operations
|
$
|
10.2
|
|
|
$
|
1.8
|
|
|
$
|
(18.9
|
)
|
|
$
|
8.0
|
|
|
$
|
1.1
|
|
|
$
|
27.0
|
|
|
$
|
17.9
|
|
|
Interest expense, net
|
42.5
|
|
|
40.9
|
|
|
41.5
|
|
|
40.4
|
|
|
165.3
|
|
|
40.3
|
|
|
163.1
|
|
|
Income tax (benefit)/provision
|
21.1
|
|
|
(6.6
|
)
|
|
23.3
|
|
|
6.6
|
|
|
44.4
|
|
|
26.2
|
|
|
49.5
|
|
|
Depreciation and amortization
|
37.2
|
|
|
36.5
|
|
|
37.3
|
|
|
35.1
|
|
|
146.1
|
|
|
34.0
|
|
|
142.9
|
|
|
Noncontrolling interest
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
|
0.9
|
|
|
0.2
|
|
|
1.0
|
|
|
EBITDA from continuing operations
|
111.1
|
|
|
72.7
|
|
|
83.5
|
|
|
90.5
|
|
|
357.8
|
|
|
127.7
|
|
|
374.4
|
|
|
Equity compensation
|
0.6
|
|
|
1.2
|
|
|
1.1
|
|
|
1.1
|
|
|
4.0
|
|
|
1.1
|
|
|
4.5
|
|
|
Impairment charges and (gain)/loss on sale of assets
|
0.6
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
1.0
|
|
|
2.8
|
|
|
3.2
|
|
|
Financing related expenses and other
|
5.7
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
5.8
|
|
|
10.9
|
|
|
11.0
|
|
|
US GAAP Restructuring
|
5.7
|
|
|
3.0
|
|
|
5.4
|
|
|
3.5
|
|
|
17.6
|
|
|
7.8
|
|
|
19.7
|
|
|
Acquisition, integration and other special items
|
2.7
|
|
|
3.7
|
|
|
2.8
|
|
|
2.7
|
|
|
11.9
|
|
|
0.6
|
|
|
9.8
|
|
|
Foreign Exchange loss/(gain) (included in other, net) (1)
|
(4.8
|
)
|
|
(1.7
|
)
|
|
(2.5
|
)
|
|
4.5
|
|
|
(4.5
|
)
|
|
(3.8
|
)
|
|
(3.5
|
)
|
|
Other adjustments
|
3.6
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
3.5
|
|
|
0.4
|
|
|
0.3
|
|
|
Sponsor monitoring fee
|
2.9
|
|
|
3.2
|
|
|
3.2
|
|
|
3.3
|
|
|
12.6
|
|
|
3.2
|
|
|
12.9
|
|
|
Subtotal
|
128.1
|
|
|
82.2
|
|
|
93.4
|
|
|
106.0
|
|
|
409.7
|
|
|
150.7
|
|
|
432.3
|
|
|
Estimated cost savings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted EBITDA
|
$
|
128.1
|
|
|
$
|
82.2
|
|
|
$
|
93.4
|
|
|
$
|
106.0
|
|
|
$
|
409.7
|
|
|
$
|
150.7
|
|
|
$
|
432.3
|
|
(1) Foreign exchange gain of $3.5 million for the twelve
months ended June 30, 2014 included $17.1 million of unrealized foreign
currency exchange rate gains primarily driven by gains of $26.6 million
related to inter-company loans denominated in a currency different from
the functional currency of either the borrower or the lender, partially
offset by foreign currency exchange losses of $9.5 million driven by the
ineffective portion of the net investment hedge related to the Euro
denominated debt. The foreign exchange adjustment was also impacted by
the exclusion of realized foreign currency exchange rate losses from the
non-cash and cash settlement of inter-company loans of $13.6 million.
Inter-company loans are between Catalent entities and do not reflect the
ongoing results of the company's trade operations.
|
Catalent, Inc. and Subsidiaries
Reconciliation of Earnings/(Loss) from Continuing Operations to
Adjusted Net Income
(Unaudited; Dollars in millions)
|
|
|
|
|
|
Quarter Ended
|
|
Twelve Months Ended
|
|
Quarter Ended
|
|
Twelve Months Ended
|
|
|
|
June 30, 2013
|
|
September
30, 2013
|
|
December 31, 2013
|
|
March 31, 2014
|
|
March 31, 2014
|
|
June 30,
2014
|
|
June 30,
2014
|
|
Net earnings/(loss)
|
|
$
|
16.3
|
|
|
$
|
1.4
|
|
|
$
|
(19.5
|
)
|
|
$
|
6.3
|
|
|
$
|
4.5
|
|
|
$
|
27.0
|
|
|
$
|
15.2
|
|
|
Net earnings/(loss) from discontinued operations, net of tax
|
|
(6.1
|
)
|
|
0.4
|
|
|
0.6
|
|
|
1.7
|
|
|
(3.4
|
)
|
|
—
|
|
|
2.7
|
|
|
Earnings/(loss) from continuing operations
|
|
10.2
|
|
|
1.8
|
|
|
(18.9
|
)
|
|
8.0
|
|
|
1.1
|
|
|
27.0
|
|
|
17.9
|
|
|
Amortization (1)
|
|
11.1
|
|
|
10.2
|
|
|
10.5
|
|
|
11.0
|
|
|
42.8
|
|
|
10.8
|
|
|
42.5
|
|
|
Income tax expense/(benefit) (2)
|
|
21.1
|
|
|
(6.6
|
)
|
|
23.3
|
|
|
6.6
|
|
|
44.4
|
|
|
26.2
|
|
|
49.5
|
|
|
Cash taxes (paid) / refunded
|
|
(3.9
|
)
|
|
(15.8
|
)
|
|
3.4
|
|
|
(1.1
|
)
|
|
(17.4
|
)
|
|
(7.6
|
)
|
|
(21.1
|
)
|
|
Net (earnings)/loss attributable to noncontrolling interest, net of
tax
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
|
0.9
|
|
|
0.2
|
|
|
1.0
|
|
|
Equity compensation (3)
|
|
0.6
|
|
|
1.2
|
|
|
1.1
|
|
|
1.1
|
|
|
4.0
|
|
|
1.1
|
|
|
4.5
|
|
|
Impairment charges and (gain)/loss on sale of assets (4)
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
1.0
|
|
|
2.8
|
|
|
3.2
|
|
|
Financing related expenses (5)
|
|
5.7
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
5.8
|
|
|
10.9
|
|
|
11.0
|
|
|
U.S. GAAP restructuring (6)
|
|
5.7
|
|
|
3.0
|
|
|
5.4
|
|
|
3.5
|
|
|
17.6
|
|
|
7.8
|
|
|
19.7
|
|
|
Acquisition, integration and other special items (7)
|
|
2.7
|
|
|
3.7
|
|
|
2.8
|
|
|
2.7
|
|
|
11.9
|
|
|
0.6
|
|
|
9.8
|
|
|
Foreign exchange loss (gain) (included in other (income) / expense,
net) (8)
|
|
(4.8
|
)
|
|
(1.7
|
)
|
|
(2.5
|
)
|
|
4.5
|
|
|
(4.5
|
)
|
|
(3.8
|
)
|
|
(3.5
|
)
|
|
Other adjustments (9)
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
3.5
|
|
|
0.4
|
|
|
0.3
|
|
|
Sponsor advisory fee (10)
|
|
2.9
|
|
|
3.2
|
|
|
3.2
|
|
|
3.3
|
|
|
12.6
|
|
|
3.2
|
|
|
12.9
|
|
|
Estimated cash tax (savings) / expense attributable to reconciling
items (11)
|
|
(1.1
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
(3.8
|
)
|
|
(2.6
|
)
|
|
(5.3
|
)
|
|
Adjusted net income / (loss)
|
|
$
|
54.5
|
|
|
$
|
(1.5
|
)
|
|
$
|
27.9
|
|
|
$
|
39.0
|
|
|
$
|
119.9
|
|
|
$
|
77.0
|
|
|
$
|
142.4
|
|
(1) Represents the amortization attributable to purchase accounting for
previously completed business combinations.
(2) Represents the amount of income tax-related (benefit)/expense
recorded within our net earnings/(loss) which may not result in cash
payment or receipt.
(3) Reflects non-cash stock-based compensation expense under the
provisions of ASC 718 Compensation Stock Compensation.
(4) Reflects non-cash asset impairment charges and losses from the sale
of assets not included in restructuring and other special items
discussed below.
(5) Reflects the expense associated with refinancing activities
undertaken by the Company during the period.
(6) Reflects U.S. GAAP restructuring charges which were primarily
attributable to activities which focus on various aspects of operations,
including consolidating certain operations, rationalizing headcount and
aligning operations in a more strategic and cost-efficient structure to
optimize our business.
(7) Primarily reflects acquisition and integration related costs.
(8) Represents unrealized foreign currency exchange rate (gains)/losses
primarily driven by inter-company loans denominated in a currency
different from the functional currency of either the borrower or the
lender. The foreign exchange adjustment is also impacted by the
exclusion of realized foreign currency exchange rate (gains)/losses from
the non-cash and cash settlement of inter-company loans. Inter-company
loans are between Catalent entities and do not reflect the ongoing
results of our trade operations.
(9) Reflects certain other adjustments made pursuant to the definition
of “EBITDA” under our indentures and credit agreements.
(10) Represents amount of sponsor advisory fee, which will be terminated
following the offering. See “Certain Relationships and Related Party
Transactions-Transaction and Advisory Fee Agreement.”
(11) Represents the estimated cash tax impact of certain items recorded
in each period that are added back in the calculation of Adjusted Net
Income/(loss). The estimate is determined by applying the statutory tax
rate in tax paying jurisdictions to income or expense items which impact
cash taxes paid. Generally, amortization attributable to purchase
accounting, unrealized gains/losses due to foreign currency translation
and non-cash equity compensation do not impact cash taxes.
|
Catalent, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited; Dollars in millions)
|
|
|
|
|
|
|
|
June 30,
2014
|
|
June 30,
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
74.4
|
|
|
$
|
106.4
|
|
|
Trade receivables, net
|
|
403.7
|
|
|
358.0
|
|
|
Inventories
|
|
134.8
|
|
|
124.9
|
|
|
Prepaid expenses and other
|
|
74.6
|
|
|
89.8
|
|
|
Total current assets
|
|
687.5
|
|
|
679.1
|
|
|
Property, plant, and equipment, net
|
|
873.0
|
|
|
814.5
|
|
|
Other non-current assets, including intangible assets
|
|
1,529.7
|
|
|
1,455.9
|
|
|
Total assets
|
|
$
|
3,090.2
|
|
|
$
|
2,949.5
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND
SHAREHOLDER’S DEFICIT
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current portion of long-term obligations and other short-term
borrowings
|
|
$
|
25.2
|
|
|
$
|
35.0
|
|
|
Accounts payable
|
|
148.1
|
|
|
150.8
|
|
|
Other accrued liabilities
|
|
279.7
|
|
|
224.5
|
|
|
Total current liabilities
|
|
453.0
|
|
|
410.3
|
|
|
Long-term obligations, less current portion
|
|
2,685.4
|
|
|
2,656.6
|
|
|
Other non-current liabilities
|
|
319.1
|
|
|
292.9
|
|
|
Redeemable noncontrolling interest
|
|
4.5
|
|
|
—
|
|
|
Commitment and contingencies (1)
|
|
|
|
|
|
|
|
Total shareholder’s deficit
|
|
(371.8
|
)
|
|
(410.3
|
)
|
|
Total liabilities, redeemable noncontrolling interest and
shareholder’s deficit
|
|
$
|
3,090.2
|
|
|
$
|
2,949.5
|
|
(1) Please refer to note 15 of the consolidated financial
statements within our June 30, 2014 Form 10-K.
|
Catalent, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited; Dollars in millions)
|
|
|
|
|
|
Twelve Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net cash provided by/(used in) operating activities from continuing
operations
|
|
180.2
|
|
|
139.1
|
|
|
Net cash provided by/(used in) operating activities from
discontinued operations
|
|
(1.9
|
)
|
|
(1.4
|
)
|
|
Net cash provided by/(used in) operating activities
|
|
178.3
|
|
|
137.7
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Acquisition of property and equipment and other productive assets
|
|
(122.4
|
)
|
|
(122.5
|
)
|
|
Proceeds from sale of property and equipment
|
|
0.9
|
|
|
2.9
|
|
|
Payment for acquisitions, net
|
|
(53.7
|
)
|
|
(2.5
|
)
|
|
Net cash provided by/(used in) investing activities from continuing
operations
|
|
(175.2
|
)
|
|
(122.1
|
)
|
|
Net cash provided by/(used in) investing activities from
discontinued operations
|
|
4.0
|
|
|
—
|
|
|
Net cash provided by/(used in) investing activities
|
|
(171.2
|
)
|
|
(122.1
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Net change in short-term borrowings
|
|
(17.5
|
)
|
|
(3.9
|
)
|
|
Proceeds from borrowing, net
|
|
1,723.7
|
|
|
672.7
|
|
|
Payments related to long-term obligations
|
|
(1,741.3
|
)
|
|
(708.5
|
)
|
|
Call premium payments and financing fees paid
|
|
(7.2
|
)
|
|
(10.8
|
)
|
|
Equity contribution/(redemption)
|
|
0.2
|
|
|
1.2
|
|
|
Net cash (used in)/provided by financing activities from continuing
operations
|
|
(42.1
|
)
|
|
(49.3
|
)
|
|
Net cash (used in)/provided by financing activities from
discontinued operations
|
|
—
|
|
|
—
|
|
|
Net cash (used in)/provided by financing activities
|
|
(42.1
|
)
|
|
(49.3
|
)
|
|
Effect of foreign currency on cash
|
|
3.0
|
|
|
1.1
|
|
|
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS
|
|
(32.0
|
)
|
|
(32.6
|
)
|
|
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
|
|
106.4
|
|
|
139.0
|
|
|
CASH AND EQUIVALENTS AT END OF PERIOD
|
|
$
|
74.4
|
|
|
$
|
106.4
|
|
Investor:
Bertner Advisors, LLC
Monique Kosse, 860-940-0352
Monique.Kosse@BertnerAdvisors.com