Catalent, Inc. Reports Preliminary Fourth Quarter and Fiscal 2023 Results

August 29, 2023

    Please note these preliminary results were updated on December 8, 2023. Please refer to the 8-K/A published that day for the revised amounts.

  • Q4'23 net revenue of $1.07 billion decreased (17)% as reported, or (17)% in constant currency, compared to Q4'22. Organic, constant-currency net revenue decreased (19)%, compared to Q4'22.
  • Fiscal 2023 net revenue of $4.28 billion decreased (11)% as reported, or (9)% in constant currency, compared to fiscal 2022. Organic, constant-currency net revenue decreased (11)% compared to FY'22.
  • Q4'23 net loss of $(86) million and fiscal 2023 net loss of $(232) million.
  • Q4'23 Adjusted EBITDA(1) of $139 million decreased (61)% as reported, or (61)% in constant currency, compared to Q4'22.
  • Fiscal 2023 Adjusted EBITDA(1) of $714 million decreased (43)% as reported, or (42)% in constant currency, compared to FY'22.
  • FY'24 financial guidance includes net revenue of $4.3 billion to $4.5 billion and Adjusted EBITDA of $680 million to $760 million.
  • Plans to file Form 12b-25 to extend filing date of its Form 10-K.

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

Catalent, Inc. (NYSE: CTLT), the leader in enabling the development and supply of better treatments for patients worldwide, today announced preliminary financial results for the fourth quarter of fiscal 2023, which ended June 30, 2023.

“We continue to make progress in improving our operational performance and continue to win new business with new and existing customers, including in some of the industry’s most exciting areas, leading us on a path toward more sustainable, profitable growth and to exit fiscal 2024 in a much stronger operational and financial position,” said Alessandro Maselli, President and Chief Executive Officer of Catalent, Inc. “We are also executing on our previously announced, company-wide cost initiatives intended to right-size our business to current levels of market demand and deliver value for our shareholders. We remain confident in our leading market position as well as our long-term opportunities, and are committed to delivering the industry’s most complex manufacturing solutions and innovative medicines for the benefit of our healthcare partners and patients.”

Fourth Quarter 2023 Consolidated Results

Net revenue of $1.07 billion decreased 17% as reported, or 17% in constant currency, from the $1.29 billion reported for the fourth quarter a year ago. Overall organic net revenue (i.e., excluding the effect of acquisitions, divestitures, and currency translation) decreased by 19% over the same periods.

Net loss and loss per basic and diluted share was $86 million, or $0.48, respectively, compared to net earnings attributable to common shareholders of $168 million, or $0.94 per basic share, $0.93 per diluted share, in the fourth quarter a year ago.

EBITDA from operations(1) was $18 million, a decrease of $299 million from $317 million in the fourth quarter a year ago. Fourth quarter fiscal 2023 Adjusted EBITDA(1) was $139 million, or 13% of net revenue, compared to $358 million, or 28% of net revenue, in the fourth quarter a year ago. This represents a decrease of 61% as reported and on a constant-currency basis, compared to the fiscal 2022 fourth quarter.

Adjusted Net Income(1) was $16 million, or $0.09 per diluted share, compared to Adjusted Net Income of $195 million, or $1.08 per diluted share, in the fourth quarter a year ago.

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

Fourth Quarter 2023 Segment Review

 

(Dollars in millions)

Three Months Ended
June 30,

 

Constant
Currency

 

2023

 

2022

 

Change %

Biologics

 

 

 

 

 

Net revenue

$

406

 

$

645

 

(37) %

Segment EBITDA

 

(12)

 

 

194

 

(106) %

Segment EBITDA margin

 

(2.9) %

 

 

30.0 %

 

 

Pharma and Consumer Health

 

 

 

 

 

Net revenue

 

662

 

 

643

 

3 %

Segment EBITDA

 

187

 

 

198

 

(6) %

Segment EBITDA margin

 

28.2 %

 

 

30.8 %

 

 

Inter-segment revenue elimination

 

 

 

(1)

 

17 %

Unallocated costs

 

(157)

 

 

(75)

 

107 %

Combined totals

 

 

 

 

 

Net revenue

$

1,068

 

$

1,287

 

(17) %

EBITDA from operations

$

18

 

$

317

 

(94) %

Fiscal Year 2023 Segment Review

 

(Dollars in millions)

Fiscal Year Ended
June 30,

 

FX Impact

 

Constant Currency

Increase (Decrease)

 

2023

 

2022

 

 

 

Change $

 

Change %

Biologics

 

 

 

 

 

 

 

 

 

Net revenue

$

1,984

 

$

2,534

 

$

(30)

 

$

(520)

 

(21) %

Segment EBITDA

 

287

 

 

777

 

 

(4)

 

 

(486)

 

(63) %

Segment EBITDA margin

 

14.5 %

 

 

30.7 %

 

 

 

 

 

 

Pharma and Consumer Health

 

 

 

 

 

 

 

 

 

Net revenue

 

2,294

 

 

2,271

 

 

(78)

 

 

101

 

4 %

Segment EBITDA

 

555

 

 

589

 

 

(23)

 

 

(11)

 

(2) %

Segment EBITDA margin

 

24.2 %

 

 

25.9 %

 

 

 

 

 

 

Inter-segment revenue elimination

 

(2)

 

 

(3)

 

 

 

 

1

 

*

Unallocated Costs

 

(551)

 

 

(286)

 

 

9

 

 

(274)

 

97 %

Combined totals

 

 

 

 

 

 

 

 

 

Net revenue

$

4,276

 

$

4,802

 

$

(108)

 

$

(418)

 

(9) %

EBITDA from operations

$

291

 

$

1,080

 

$

(18)

 

$

(771)

 

(71) %

Biologics segment

2023 vs. 2022

 

2023 vs. 2022

Year-Over-Year Change

Three Months Ended

June 30,

 

Fiscal Year Ended

June 30,

 

Net Revenue

 

Segment
EBITDA

 

Net Revenue

 

Segment
EBITDA

Organic

(37) %

 

(105) %

 

(21) %

 

(61) %

Impact of acquisitions

— %

 

(1) %

 

— %

 

(2) %

Constant-currency change

(37) %

 

(106) %

 

(21) %

 

(63) %

Foreign exchange translation impact on reporting

— %

 

— %

 

(1) %

 

— %

Total % change

(37) %

 

(106) %

 

(22) %

 

(63) %

Pharma and Consumer Health segment

2023 vs. 2022

 

2023 vs. 2022

Year-Over-Year Change

Three Months Ended

June 30,

 

Fiscal Year Ended

June 30,

 

Net Revenue

 

Segment EBITDA

 

Net Revenue

 

Segment EBITDA

Organic

(1) %

 

(11) %

 

(1) %

 

(8) %

Impact of acquisitions

4 %

 

5 %

 

5 %

 

6 %

Constant-currency change

3 %

 

(6) %

 

4 %

4 %

(2) %

Foreign currency translation impact on reporting

— %

 

— %

 

(3) %

 

(4) %

Total % change

3 %

 

(6) %

 

1 %

 

(6) %

Segment Net Revenue as a % of Total Net Revenue

 

 

Three Months Ended

 

June 30,
2023

 

March 31,
2023

 

December 31,
2022

 

September 30,
2022

 

June 30,
2022

Biologics

38 %

 

46 %

 

50 %

 

51 %

 

50 %

Pharma and Consumer Health

62 %

 

54 %

 

50 %

 

49 %

 

50 %

Net Revenue

100 %

 

100 %

 

100 %

 

100 %

 

100 %

Balance Sheet and Liquidity

As of June 30, 2023, Catalent had $4.85 billion in total debt, and $4.57 billion in total debt net of cash, cash equivalents, and marketable securities, compared to $4.60 billion in total net debt as of March 31, 2023.

Catalent's ratio of Net First Lien Debt over LTM Adjusted EBITDA was 2.8x at June 30, 2023. Catalent's senior secured credit agreement requires that this ratio remain below 6.5x.

Catalent’s net leverage ratio(1) as of June 30, 2023 was 6.4x, compared to 4.9x at March 31, 2023 and 2.9x at June 30, 2022.

(1) Net Leverage Ratio is a non-GAAP measure that represents the ratio of Net Debt (total principal amount of debt outstanding, net of amortized discount and debt issuance costs, less cash and cash equivalents and marketable securities) to Adjusted EBITDA for each applicable period. For a reconciliation of Adjusted EBITDA, which is subject to important limitations, to net earnings see our reconciliation of Adjusted EBITDA provided later in this release.

Fiscal Year 2024 Outlook

 

FY'24 Initial Full-Year Guidance

Net revenue

$4,300 million - $4,500 million

Adjusted EBITDA

$680 million - $760 million

Adjusted net income

$113 million - $175 million

Weighted average shares outstanding - diluted

181 million - 183 million

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.

Late Filing on Form 12b-25

Tomorrow, the Company expects to file with the SEC a Notification of Late Filing on Form 12b-25, as it determined it would be unable to file its Annual Report on Form 10-K (the “Annual Report”) by its original due date of August 29, 2023. The Company requires additional time to complete procedures related to management’s assessment of the effectiveness of its internal controls and other closing procedures. Based on currently available information and subject to the completion of the preparation of the Company's financial statements and assessment of the Company’s internal controls over financial reporting and completion of the audits thereof, the Company does not expect any material change to the financial results included in the Form 10-K compared to the financial information reported in this earnings release. The Company expects to file its Annual Report within the extension period of 15 calendar days provided by Rule 12b-25 of the Securities Exchange Act of 1934, as amended.

About Catalent, Inc.

Catalent, Inc., 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 a preferred industry partner for personalized medicines, consumer health brand extensions, and blockbuster drugs. Catalent helps accelerate over 1,500 partner programs and launch over 150 new products every year. Its flexible manufacturing platforms at over 50 global sites supply approximately 70 billion doses of nearly 8,000 products annually. Catalent’s expert workforce of approximately 17,800 includes more than 3,000 scientists and technicians. Headquartered in Somerset, New Jersey, the company generated nearly $4.3 billion in revenue in its 2023 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. Adjusted Net Income per share is computed by dividing Adjusted Net Income by the weighted average diluted shares outstanding.

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 and guidance. 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, projections, and guidance. Some of the factors that could cause actual results to differ include, but are not limited to, the following: the finalization of Catalent's fiscal 2023 financial statements, the completion of Catalent's closing procedures, including without limitation its evaluation of the effectiveness of its internal controls over financial reporting, the final timing of filing Catalent's Annual Report on Form 10-K for the fiscal year ended June 30, 2023; Catalent’s ability to resolve productivity issues at three of its manufacturing facilities, the impact of such issues on product made at these facilities, the timing of recovering unproduced batches and resumption of normal activities at these facilities, and the impact of such issues on Catalent’s results of operations and financial condition; the declining demand for various vaccines and treatments for the SARS-Co-V-2 strain of coronavirus and its variants (“COVID-19”) from both patients and governments around the world may affect sales of the COVID-19 products Catalent manufactures; 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, including risks from inflation, disruptions to global supply chains, or from the Ukrainian-Russian war; 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; exposure to interest-rate risk to the extent of its variable-rate debt preventing it from meeting its obligations under its indebtedness; and the Company’s ability to file the Annual Report within the time period permitted by Rule 12b-25 of the Securities Exchange Act of 1934, amended; and the Company’s 2023 fiscal year fourth quarter final results differing materially from the preliminary, unaudited 2023 fiscal year fourth quarter results set forth herein. . 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, 2022, as amended by its Annual Report on Form 10-K/A for the same fiscal year, and its Quarterly Report on Form 10-Q for the three and nine months ended March 31, 2023. 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, including without limitation, any financial projection or guidance, as a result of new information, future events, developments, or otherwise, 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

June 30,

 

FX Impact

 

Constant Currency

Increase (Decrease)

 

2023

 

2022

 

 

 

Change $

 

Change %

Net revenue

$

1,068

 

$

1,287

 

$

3

 

$

(222)

 

(17) %

Cost of sales

 

833

 

 

825

 

 

2

 

 

6

 

1 %

Gross margin

 

235

 

 

462

 

 

1

 

 

(228)

 

(49) %

Selling, general, and administrative expenses

 

219

 

 

226

 

 

1

 

 

(8)

 

(3) %

Other operating expense, net

 

116

 

 

16

 

 

2

 

 

98

 

661 %

Operating (loss) earnings

 

(100)

 

 

220

 

 

(2)

 

 

(318)

 

(144) %

Interest expense, net

 

54

 

 

32

 

 

 

 

22

 

67 %

Other (income) expense, net

 

(4)

 

 

3

 

 

1

 

 

(8)

 

(238) %

(Loss) earnings before income taxes

 

(150)

 

 

185

 

 

(3)

 

 

(332)

 

(179) %

Income tax (benefit) expense

 

(64)

 

 

17

 

 

(2)

 

 

(79)

 

(458) %

Net (loss) earnings

$

(86)

 

$

168

 

$

(1)

 

$

(253)

 

(150) %

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

181

 

 

180

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

181

 

 

181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(0.48)

 

$

0.94

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(0.48)

 

$

0.93

 

 

 

 

 

 

Catalent, Inc.

Consolidated Statements of Operations

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

 

 

Fiscal Year Ended

June 30,

 

FX impact

 

Constant Currency
Increase (Decrease)

 

2023

 

2022

 

 

 

Change $

 

Change %

Net revenue

$

4,276

 

$

4,802

 

$

(108)

 

$

(418)

 

(9) %

Cost of sales

 

3,216

 

 

3,188

 

 

(79)

 

 

107

 

3 %

Gross margin

 

1,060

 

 

1,614

 

 

(29)

 

 

(525)

 

(33) %

Selling, general and administrative expenses

 

831

 

 

844

 

 

(12)

 

 

(1)

 

— %

Gain on sale of subsidiary

 

 

 

(1)

 

 

 

 

1

 

*

Goodwill impairment charges

 

210

 

 

 

 

 

 

210

 

*

Other operating expense, net

 

156

 

 

41

 

 

2

 

 

113

 

277 %

Operating (loss) earnings

 

(137)

 

 

730

 

 

(19)

 

 

(848)

 

(116) %

Interest expense, net

 

184

 

 

123

 

 

(3)

 

 

64

 

51 %

Other (income) expense, net

 

(6)

 

 

28

 

 

(8)

 

 

(26)

 

(93) %

(Loss) earnings before taxes

 

(315)

 

 

579

 

 

(8)

 

 

(886)

 

(153) %

Income tax (benefit) expense

 

(83)

 

 

80

 

 

(5)

 

 

(158)

 

(197) %

Net (loss) earnings

$

(232)

 

$

499

 

$

(3)

 

$

(728)

 

(146) %

Less: Net earnings attributable to preferred shareholders

 

 

 

(16)

 

 

 

 

 

 

Net (loss) earnings attributable to common shareholders

$

(232)

 

$

483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

181

 

 

176

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

181

 

 

178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(1.29)

 

$

2.74

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net (loss) earnings

$

(1.29)

 

$

2.73

 

 

 

 

 

 

Catalent, Inc.

Condensed Consolidated Balance Sheets

(Unaudited; dollars in millions)

 

 

June 30,
2023

 

June 30,
2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

280

 

$

449

Trade receivables, net

 

977

 

 

1,051

Inventories

 

764

 

 

702

Prepaid expenses and other

 

658

 

 

626

Marketable securities

 

 

 

89

Total current assets

 

2,679

 

 

2,917

Property, plant, and equipment, net

 

3,699

 

 

3,127

Other non-current assets, including intangible assets

 

4,404

 

 

4,464

Total assets

$

10,782

 

$

10,508

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

 

 

 

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

$

536

 

$

31

Accounts payable

 

427

 

 

421

Other accrued liabilities

 

544

 

 

646

Total current liabilities

 

1,507

 

 

1,098

Long-term obligations, less current portion

 

4,313

 

 

4,171

Other non-current liabilities

 

327

 

 

464

Total shareholders' equity

 

4,635

 

 

4,775

Total liabilities and shareholders' equity

$

10,782

 

$

10,508

Catalent, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited; dollars in millions)

 

 

Fiscal Year Ended

June 30,

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net cash provided by operating activities

$

261

 

$

439

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property, equipment, and other productive assets

 

(583)

 

 

(660)

Proceeds from maturity (purchases) of marketable securities

 

89

 

 

(20)

Proceeds from sale of property and equipment

 

8

 

 

Settlement on sale of subsidiaries, net

 

 

 

(3)

Payment for acquisitions, net of cash acquired

 

(474)

 

 

(1,199)

Payments for investments

 

(2)

 

 

(2)

Net cash used in investing activities

 

(962)

 

 

(1,884)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from borrowing

 

715

 

 

1,100

Payments related to long-term obligations

 

(230)

 

 

(78)

Financing fees paid

 

(4)

 

 

(15)

Dividends paid

 

 

 

(4)

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

 

 

 

(10)

Exercise of stock options

 

4

 

 

26

Other financing activities

 

36

 

 

12

Net cash provided by financing activities

 

521

 

 

1,031

Effect of foreign currency exchange on cash and cash equivalents

 

11

 

 

(33)

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(169)

 

 

(447)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

449

 

 

896

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

280

 

$

449

Catalent, Inc.

Reconciliation of Net Earnings (Loss) to EBITDA from Operations and Adjusted EBITDA*

(Unaudited; dollars in millions)

 

 

Three months ended

 

June 30,
2022(1)

 

September 30,

2022

 

December 31,
2022

 

March 31, 2023

 

June 30,
2023

Net earnings (loss)

$

168

 

$

 

$

81

 

$

(227)

 

$

(86)

Interest expense, net

 

32

 

 

32

 

 

47

 

 

51

 

 

54

Income tax expense (benefit)

 

17

 

 

3

 

 

33

 

 

(55)

 

 

(64)

Depreciation and amortization

 

100

 

 

99

 

 

103

 

 

106

 

 

114

EBITDA (loss) from operations

 

317

 

 

134

 

 

264

 

 

(125)

 

 

18

Goodwill impairment charges

 

 

 

 

 

 

 

210

 

 

Stock-based compensation

 

12

 

 

19

 

 

10

 

 

6

 

 

Impairment charges and gain/loss on sale of assets

 

10

 

 

(2)

 

 

1

 

 

6

 

 

85

Restructuring costs

 

5

 

 

4

 

 

23

 

 

9

 

 

30

Acquisition, integration, and other special items

 

8

 

 

5

 

 

9

 

 

8

 

 

9

Foreign exchange (gain) loss

 

6

 

 

27

 

 

(26)

 

 

(8)

 

 

(4)

Other adjustments

 

 

 

 

 

2

 

 

(1)

 

 

1

Adjusted EBITDA

$

358

 

$

187

 

$

283

 

$

105

 

$

139

Favorable (unfavorable) FX impact

 

 

 

 

 

 

 

 

 

Adjusted EBITDA at constant currency

 

 

 

 

 

 

 

 

$

139

 

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

(1) Balances reflect correction of prior-period error.

Catalent, Inc.

Reconciliation of Net Earnings to Adjusted Net Income*

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

 

 

Three months ended

 

June 30,
2022(9)

 

September 30,
2022

 

December 31,
2022

 

March 31,
2023

 

June 30,
2023

Net earnings (loss)

$

168

 

$

 

$

81

 

$

(227)

 

$

(86)

Amortization (1)

 

33

 

 

33

 

 

34

 

 

34

 

 

35

Goodwill impairment charges (2)

 

 

 

 

 

 

 

210

 

 

Stock-based compensation

 

12

 

 

19

 

 

10

 

 

6

 

 

Impairment charges and gain/loss on sale of assets (3)

 

10

 

 

(2)

 

 

1

 

 

6

 

 

85

Restructuring costs (4)

 

5

 

 

4

 

 

23

 

 

9

 

 

30

Acquisition, integration, and other special items (5)

 

8

 

 

5

 

 

9

 

 

8

 

 

9

Foreign exchange loss (gain)

 

6

 

 

27

 

 

(26)

 

 

(8)

 

 

(4)

Other adjustments

 

(1)

 

 

 

 

2

 

 

 

 

Estimated tax effect of adjustments (6)

 

(18)

 

 

(19)

 

 

(12)

 

 

(12)

 

 

(81)

Discrete income tax benefit items (7)

 

(28)

 

 

(6)

 

 

 

 

(43)

 

 

28

Adjusted net income (loss) (ANI)

$

195

 

$

61

 

$

122

 

$

(17)

 

$

16

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

180

 

 

 

 

 

 

 

 

181

Weighted average shares outstanding - diluted

 

181

 

 

 

 

 

 

 

 

182

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Net earnings (loss) per share - basic

$

0.94

 

 

 

 

 

 

 

$

(0.48)

Net earnings (loss) per share - diluted

$

0.93

 

 

 

 

 

 

 

$

(0.48)

 

 

 

 

 

 

 

 

 

 

ANI per share:

 

 

 

 

 

 

 

 

 

ANI per share - basic

$

1.09

 

 

 

 

 

 

 

$

0.09

ANI per share - diluted (8)

$

1.08

 

 

 

 

 

 

 

$

0.09

* 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) Goodwill impairment charges during the three months ended March 31, 2023 were associated with the Company's Consumer Health reporting unit.

(3) For the three months ended June 30, 2023, represents fixed asset impairment charges primarily associated with an idle facility in the Biologics segment and obsolete equipment that could not be sold or repurposed in the Pharma and Consumer Health segment. For the three months ended June 30, 2022, represents fixed asset impairment charges primarily associated with obsolete equipment in the Biologics segment.

(4) Restructuring costs during the three months ended March 31, 2023 and December 31, 2022 represent restructuring charges associated with Catalent's plans to reduce costs, consolidate facilities, and optimize its infrastructure across the organization.

(5) Acquisition, integration and other special items during the three months ended December 31, 2022 include costs associated with its October 2022 acquisition of Metrics Contract Services.

(6) The tax effect of adjustments to Adjusted Net (Loss) 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 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 June 30, 2023 and 2022, represents Adjusted Net (Loss) Income divided by the weighted average sum of fully diluted shares outstanding, which is equal to (a) the number of shares of common stock outstanding, plus (b) the number of shares of its common stock that would be issued assuming exercise or vesting of all potentially dilutive instruments. For the three months ended June 30, 2023 and 2022, the weighted average number of shares was 182 million and 181 million, respectively.

(9) Balances reflect correction of prior-period error.

Catalent, Inc.

Reconciliation of Segment EBITDA to Net (Loss) Earnings

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

 

 

Three Months Ended

June 30,

 

Fiscal Year Ended

June 30,

2023

 

2022

 

2023

 

2022

Biologics Segment EBITDA

$

(12)

 

$

194

 

$

287

 

$

777

Pharma and Consumer Health Segment EBITDA

 

187

 

 

198

 

 

555

 

 

589

Sub-Total

$

175

 

$

392

 

$

842

 

$

1,366

Reconciling items to net earnings

 

 

 

 

 

 

 

Unallocated costs (1)

 

(157)

 

 

(75)

 

 

(551)

 

 

(286)

Depreciation and amortization

 

(114)

 

 

(100)

 

 

(422)

 

 

(378)

Interest expense, net

 

(54)

 

 

(32)

 

 

(184)

 

 

(123)

Income tax expense

 

64

 

 

(17)

 

 

83

 

 

(80)

Net (loss) earnings

$

(86)

 

$

168

 

$

(232)

 

$

499

 

(1) Unallocated costs include restructuring and special items, stock-based compensation, impairment charges, gain/loss 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)

 

 

 

June 30,
2022(1)

 

September
30, 2022(1)

 

December 31,
2022(1)

 

March 31,
2023(1)

 

June 30, 2023

Incremental Term Loan, due 2028

 

$

1,433

 

$

1,429

 

$

1,426

 

$

1,422

 

$

1,418

Revolving credit facility

 

 

 

 

75

 

 

600

 

 

550

 

 

500

Unamortized discount and debt issuance costs

 

 

(9)

 

 

(7)

 

 

(13)

 

 

(12)

 

 

(11)

Total Secured Debt

 

 

1,424

 

 

1,497

 

 

2,013

 

 

1,960

 

 

1,907

Senior Notes, due 2027, 5.000%

 

 

500

 

 

500

 

 

500

 

 

500

 

 

500

Senior Notes, due 2028 (EUR), 2.375%

 

 

874

 

 

794

 

 

879

 

 

895

 

 

904

Senior Notes, due 2029, 3.125%

 

 

550

 

 

550

 

 

550

 

 

550

 

 

550

Senior Notes due 2030, 3.500%

 

 

650

 

 

650

 

 

650

 

 

650

 

 

650

Finance Leases / Other

 

 

234

 

 

245

 

 

291

 

 

323

 

 

366

Unamortized discount and debt issuance costs

 

 

(30)

 

 

(32)

 

 

(30)

 

 

(29)

 

 

(28)

Total Unsecured Debt

 

 

2,778

 

 

2,707

 

 

2,840

 

 

2,889

 

 

2,942

Total Debt

 

 

4,202

 

 

4,204

 

 

4,853

 

 

4,849

 

 

4,849

Cash and Cash Equivalents

 

 

449

 

 

281

 

 

442

 

 

252

 

 

280

Marketable Securities

 

 

89

 

 

64

 

 

28

 

 

 

 

Total Net Debt

 

$

3,664

 

$

3,859

 

$

4,383

 

$

4,597

 

$

4,569

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

Q1 2022

 

 

252

 

 

 

 

 

 

 

 

Q2 2022

 

 

310

 

 

310

 

 

 

 

 

 

Q3 2022

 

 

339

 

 

339

 

 

339

 

 

 

 

Q4 2022

 

 

358

 

 

358

 

 

358

 

 

358

 

 

Q1 2023

 

 

 

 

187

 

 

187

 

 

187

 

 

187

Q2 2023

 

 

 

 

 

 

283

 

 

283

 

 

283

Q3 2023

 

 

 

 

 

 

 

 

105

 

 

105

Q4 2023

 

 

 

 

 

 

 

 

 

 

139

LTM Adjusted EBITDA

 

$

1,259

 

$

1,194

 

$

1,167

 

$

933

 

$

714

Net First Lien Debt / LTM Adj. EBITDA (2)

 

0.9x

 

1.2x

 

1.6x

 

2.2x

 

2.8x

Net Debt / LTM Adj. EBITDA

 

2.9x

 

3.2x

 

3.8x

 

4.9x

 

6.4x

 

(1) Balances reflect correction of prior-period error.

(2) Net First Lien Debt ratio represents gross secured debt and finance leases/other outstanding, less cash and cash equivalents and marketable securities, divided by LTM Adjusted EBITDA.

 

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

Source: Catalent, Inc.