- Q4'19 revenue of $725.7 million increased 6% as-reported, or
8% in constant currency, from Q4'18.
- Full-year 2019 revenue of $2,518.0 million increased 2%
as-reported, or 5% in constant currency, from the prior
year.
- Closed the acquisition of biologics gene therapy CDMO
Paragon Bioservices, Inc.
- Announced an agreement to purchase Bristol-Myers Squibb’s
oral solid, biologics, and sterile product manufacturing and
packaging facility in Anagni, Italy.
- Significantly expanded the capacity of our global spray
drying operations through an agreement with Sanofi Active
Ingredient Solutions.
- FY'20 financial guidance range reflects revenue growth of
10% to 14%, and adjusted EBITDA growth of 17% to 22%.
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 of fiscal year 2019, which ended
June 30, 2019. As a reminder, ASC 606, the new revenue accounting
standard, applies to our fiscal 2019 results, and the prior
standard applies to fiscal 2018.
Fourth quarter 2019 revenue of $725.7 million increased 6% as
reported, or 8% in constant currency, from the $685.3 million
reported in the fourth quarter a year ago, primarily driven by the
impact of the Paragon Bioservices acquisition within the Biologics
and Specialty Drug Delivery segment, and the impact of the Juniper
Pharmaceuticals acquisition within the Oral Drug Delivery segment;
partially offset by a reduction in revenue from comparator sourcing
arrangements, due to the ASC 606 changes, by which we now record
such revenue on a net versus the former gross basis. Excluding the
impact of the change in comparator sourcing revenue accounting and
the impact of Paragon and Juniper, revenue increased 4% in constant
currency driven by organic growth within our Softgel Technologies,
Oral Drug Delivery, and Biologics and Specialty Drug Delivery
segments. For fiscal 2019, revenue was $2,518.0 million and
increased 2% as reported and 5% in constant currency, compared to
$2,463.4 million in the prior-year period. The fiscal 2019 revenue
growth was driven by the Catalent Indiana (formerly Cook Pharmica),
Juniper, and Paragon acquisitions, along with favorable
end-customer demand for our biologics drug product offerings,
offset by the comparator sourcing accounting change. Excluding
these acquisitions and the accounting change, fiscal 2019 revenue
increased 2% in constant currency.
Fourth quarter 2019 net earnings were $71.1 million, or $0.44
per diluted share, compared to net earnings of $82.7 million, or
$0.61 per diluted share, in the fourth quarter a year ago. For
fiscal 2019, net earnings were $137.4 million, or $0.90 per diluted
share, compared to net earnings of $83.6 million, or $0.63 per
diluted share, in the prior year.
Fourth quarter 2019 EBITDA from operations of $165.4 million, as
referenced in the GAAP to non-GAAP reconciliation provided later in
this release, decreased $6.6 million from $172.0 million in the
fourth quarter a year ago. Fourth quarter 2019 Adjusted EBITDA (see
the non-GAAP reconciliation for a discussion of this metric) was
$199.4 million, or 27.5% of revenue, compared to $181.5 million, or
26.5% of revenue, in the fourth quarter a year ago. This represents
an increase of 10% as reported, and an increase of 11% on a
constant-currency basis.
Fourth quarter 2019 Adjusted Net Income (see the GAAP to
non-GAAP reconciliation) was $102.9 million, or $0.70 per diluted
share, compared to Adjusted Net Income of $90.0 million, or $0.67
per diluted share, in the fourth quarter a year ago.
“Our financial performance for the fourth quarter was in line
with our expectations and caps a year of significant achievement
for Catalent, putting us in an excellent position as we head into
fiscal 2020, where our guidance reflects organic revenue and
adjusted EBITDA growth rates aligned with our recently increased
long-term outlook,” said John Chiminski, Chair and Chief Executive
Officer of Catalent, Inc. “We are excited by our May 2019
acquisition of viral vector developer and manufacturer Paragon
Bioservices, which has already begun to accelerate Catalent’s
financial growth, as well as our agreement to purchase
Bristol-Myers Squibb's oral solid and biologics manufacturing and
packaging facilities in Anagni, Italy. We believe these
transactions will create substantial value for our customers,
patients, and shareholders.”
Fourth Quarter 2019 Segment Highlights
Revenue Highlights
Revenue from the Softgel Technologies segment was $244.7 million
for the fourth quarter of fiscal 2019, an increase of 2% as
reported, or 5% in constant currency, compared to the fourth
quarter a year ago. The constant-currency increase was primarily
driven by increased volume for prescription and consumer health
products across the globe, partly related to an improvement in
ibuprofen active pharmaceutical ingredient supply.
Revenue from the Biologics and Specialty Drug Delivery segment
was $231.1 million for the fourth quarter of fiscal 2019, an
increase of 18% as reported, or 19% in constant currency, over the
fourth quarter a year ago. The constant-currency growth was
primarily driven by the Paragon acquisition, which closed in May
2019 and contributed 15 percentage points to the segment's revenue
in constant currency. Excluding the impact of Paragon, segment
revenue increased 4% due to favorable end-customer demand for our
US-based biologics drug product and drug substance offerings,
partially offset by timing-related declines in our European
specialty drug product offering and the completion of a
limited-duration customer contract for non-cell line clinical
manufacturing services in our U.S. drug substance platform.
Revenue from the Oral Drug Delivery segment was $174.1 million
for the fourth quarter of fiscal 2019, an increase of 13% as
reported, or 16% in constant currency, over the fourth quarter a
year ago. The constant-currency increase was primarily driven by
the Juniper acquisition, which closed in August 2018, and
contributed 10 percentage points to the segment's revenue in
constant currency. Excluding the impact of Juniper, segment revenue
increased 6% due to increased end-market demand for our U.S.
commercial oral delivery solutions platform and increased revenue
from our analytical and development services business.
Revenue from the Clinical Supply Services segment was $85.1
million for the fourth quarter of fiscal 2019, a decrease of 21% as
reported or 19% in constant currency, over the fourth quarter a
year ago. The constant-currency decline primarily resulted from the
comparator sourcing ASC 606 change, which decreased fourth quarter
revenue by 16 percentage points on a constant-currency basis.
Excluding the ASC 606 impact, revenue decreased 3%, driven by
decreased volume related to our manufacturing and packaging
services offering.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA (see the non-GAAP discussion
below) was $65.3 million in the fourth quarter of fiscal 2019, an
increase of 11% as reported, or 14% in constant currency, versus
the fourth quarter a year ago. The increase was primarily driven by
increased volume and favorable product mix for prescription and
consumer health products in North America and Europe, partly
related to an improvement in ibuprofen active pharmaceutical
ingredient supply.
Biologics and Specialty Drug Delivery segment EBITDA in the
fourth quarter of fiscal 2019 was $61.3 million, an increase of 1%
as reported, or 2% in constant currency. The constant-currency
growth was driven by the May 2019 Paragon acquisition, which
contributed 17 percentage points to segment EBITDA in constant
currency. Excluding the impact of Paragon, segment EBITDA decreased
12%, driven by timing-related declines in our European specialty
drug product offering, unfavorable product mix within our
respiratory and ophthalmic drug delivery platforms, and the
completion of a limited-duration customer contract for non-cell
line clinical manufacturing services in our U.S. drug substance
platform, partially offset by favorable end-customer demand for our
U.S.-based biologics drug product business.
Oral Drug Delivery segment EBITDA in the fourth quarter of
fiscal 2019 was $63.6 million, an increase of 27% as reported, or
30% in constant currency, partially driven by the August 2018
Juniper acquisition, which contributed 13 percentage points to the
constant-currency growth. Excluding Juniper, segment EBITDA
increased 17%, driven by increased end-market demand and favorable
product mix for our commercial oral delivery solutions platform and
analytical and development services business.
Clinical Supply Services segment EBITDA in the fourth quarter of
fiscal 2019 was $22.9 million, an increase of 6% as reported, or
10% in constant currency. The increase was primarily attributable
to favorable product mix across the segment's manufacturing and
packaging service offering and improved capacity utilization across
the network.
Fiscal 2019 Segment Highlights
Revenue Highlights
Revenue from the Softgel Technologies segment was $872.1 million
for our fiscal year 2019, a decrease of 5% as reported, or 1% in
constant currency, compared to a year ago. The constant-currency
decrease was driven by the divestiture of two Asia Pacific softgel
facilities. Excluding the divestitures, segment revenue was in-line
with the prior year, as volume increases for our consumer health
portfolio in Europe were offset by generic price competition within
our prescription business in North America, and declines resulting
from a shortage in our ibuprofen active pharmaceutical ingredient
supply during the first nine months of the fiscal year.
Revenue from the Biologics and Specialty Drug Delivery segment
was $742.1 million for fiscal 2019, an increase of 23% as reported,
or 24% in constant currency, compared to a year ago. The
constant-currency growth was primarily driven by the acquisition of
Catalent Indiana, which closed in October 2018 and contributed 12
percentage points to the segment's revenue growth; as well as
Paragon, which closed in May 2019 and contributed 5 percentage
points to the segment's revenue in constant currency. Excluding the
impact of the two acquisitions, segment revenue increased 7% due to
favorable end-customer demand for our biologics drug product
offerings, slightly offset by the completion of the limited
duration customer contract.
Revenue from the Oral Drug Delivery segment was $619.9 million
for fiscal 2019, an increase of 8% as reported, or 10% in constant
currency, compared to a year ago. The constant-currency increase
was primarily driven by the August 2018 Juniper acquisition, which
contributed 10 percentage points to the segment's revenue in
constant currency. Excluding the impact of Juniper, segment revenue
was in-line with the prior year as decreased end-market demand for
a product within our U.S.-based commercial oral delivery solutions
platform was offset by an increase related to the intake of new
molecules within our development and analytical services platform,
the completion of a commercially ready process for a product within
our oral delivery solutions platform, and the favorable impact from
licensing revenue recorded during the third quarter.
Fiscal 2019 revenue from the Clinical Supply Services segment
was $321.4 million, a decrease of 25% as reported or 24% in
constant currency, compared to a year ago. The constant-currency
decline primarily resulted from the ASC 606 change, which decreased
revenue by 25 percentage points on a constant-currency basis.
Excluding the ASC 606 impact, revenue increased 1%, primarily
driven by increased storage, distribution, manufacturing, and
packaging volumes.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA (see the non-GAAP discussion
below) was $191.2 million in our fiscal year 2019, a decrease of 3%
as reported, but an increase of 1% in constant currency, versus a
year ago. The increase was primarily related to increased volume in
the European consumer health portfolio, offset by a shortage in our
supply of ibuprofen active pharmaceutical ingredient during the
first 9 months of the fiscal year.
Fiscal 2019 Biologics and Specialty Drug Delivery segment EBITDA
was $180.4 million, an increase of 23% as reported, or 24% in
constant currency. The constant-currency growth was driven by the
October 2018 Catalent Indiana acquisition, which contributed 17
percentage points to segment EBITDA growth, as well as the May 2019
Paragon acquisition, which contributed 7 percentage points to
segment EBITDA in constant currency. Excluding the two
acquisitions, segment EBITDA was in-line with the prior year
primarily due to strong U.S biologics drug product and
drug-substance end-market demand, offset by the completion of the
limited duration customer contract, as well as unfavorable product
mix in our European specialty drug product platform.
Oral Drug Delivery segment EBITDA in fiscal 2019 was $186.7
million, an increase of 8% as reported, or 10% in constant
currency, driven by the August 2018 Juniper acquisition, which
contributed 15 percentage points to the constant currency growth.
Excluding Juniper, segment EBITDA decreased 5%, primarily driven by
decreased end-market demand for a product within our U.S.-based
commercial oral delivery solutions platform, partially offset by an
increase in volume related to the intake of new molecules within
our development and analytical services platform, the completion of
a commercially ready process for a product within our U.S.-based
oral delivery solutions platform, and a favorable impact from
licensing profit recorded during the third quarter.
Fiscal 2019 Clinical Supply Services segment EBITDA was $84.4
million, an increase of 11% as reported, or 14% in constant
currency. The increase was primarily attributable to a favorable
shift within the storage and distribution business, increased
growth in project management revenue, and improved capacity
utilization across the network based on prior strategic
investments.
As noted in the tables later in this release reconciling net
earnings/(loss), a GAAP measure, to the non-GAAP measures Adjusted
EBITDA and Adjusted Net Income, we have removed an adjustment of
$15.1 million previously made solely in the first quarter of fiscal
2019. The adjustment related principally to a payment by a customer
that was fixed and determinable in the first quarter, following
termination of a contract with us, and that, due to the Company’s
adoption of ASC 606 as of July 1, 2018 using the modified
retrospective method, was not reflected in GAAP revenue in that
quarter and instead was part of a transitional adjustment to
retained earnings recorded as of the opening of the quarter.
Removal of that adjustment reduced Adjusted EBITDA in the first
quarter of fiscal 2019 by $15.1 million, to $99.9 million,
resulting in full-year Adjusted EBITDA for fiscal 2019 of $599.6
million.
Additional Financial Highlights
Fourth quarter 2019 gross margin of 35.3% increased 120 basis
points as-reported, from 34.1% in the fourth quarter a year ago.
The increase was primarily attributable to the ASC 606 comparator
sourcing change within our Clinical Supply Services segment.
Favorable mix within our Softgel Technologies, Oral Drug Delivery,
and Clinical Supply Services segments also contributed to the
fourth quarter gross margin expansion.
Backlog for the Clinical Supply Services segment, defined as
estimated future service revenues from work not yet completed under
signed contracts, was $366 million as of June 30, 2019, a 6%
increase compared to the third quarter of fiscal 2019. The segment
recorded net new business wins of $94 million during the fourth
quarter, which is a decrease of 6% compared to the net new business
wins recorded in the same period of prior year. The segment’s
trailing-twelve-month book-to-bill ratio was 1.2x. The backlog, net
new business wins, and book-to-bill ratio are presented on the
basis of ASC 606 revenue recognition.
Balance Sheet and Liquidity
As of June 30, 2019, Catalent had $3.0 billion in total debt,
and $2.6 billion in total debt net of cash and short-term
investments, which is above the total debt and net debt as of March
31, 2019 as a result of the new debt issued to fund the Paragon
Bioservices acquisition. Catalent’s total net leverage ratio as of
June 30, 2019 was 4.4x. On a pro forma basis for the Paragon
acquisition, Catalent’s total net leverage ratio as of June 30,
2019 would have been 4.2x; a sequential improvement compared to the
pro forma total net leverage ratio of 4.5x as of the time of the
announcement of the Paragon acquisition.
Fiscal Year 2020 Outlook
For fiscal 2020, the Company expects revenue in the range of
$2.78 billion to $2.88 billion. Catalent expects Adjusted EBITDA in
the range of $700 million to $730 million and Adjusted Net Income
in the range of $300 million to $330 million. The Company expects a
fully diluted share count in the range of 159 million to 160
million shares on a weighted-average basis, counting the Leonard
Green Partners preferred shares as-if converted.
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.
Upcoming Conference Presentation
The Company is announcing that John Chiminski, Chair and CEO,
and Wetteny Joseph, Senior Vice President & CFO, will present
at the Morgan Stanley 17th Annual Global Healthcare Conference at
8:45 a.m. ET on Monday, September 9, in New York, NY. A live
webcast of the presentations will be accessible through the
Company’s website at http://investor.catalent.com and will be available
for replay following the event.
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 85 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 nearly 12,300 people, including approximately
2,400 scientists, at more than 35 facilities across five continents
and in fiscal 2019 generated over $2.5 billion in annual revenue.
Catalent is headquartered in Somerset, N.J. For more information,
please visit www.catalent.com.
Non-GAAP Financial Measures
Use of EBITDA from operations, Adjusted EBITDA, Adjusted Net
Income and Segment EBITDA
Management measures operating performance based on consolidated
earnings from operations before interest expense, expense/(benefit)
for income taxes, and depreciation and amortization (“EBITDA from
operations”). EBITDA from operations is not defined under U.S. GAAP
and is not a measure of operating income, operating performance or
liquidity presented in accordance with U.S. GAAP and is subject to
important limitations.
The Company believes that the presentation of EBITDA from
operations enhances an investor’s understanding of its financial
performance. The Company believes this measure is a useful
financial metric to assess its operating performance from period to
period by excluding certain items that it believes are not
representative of its core business and uses this measure for
business planning purposes.
In addition, given the significant investments that Catalent has
made in the past in property, plant and equipment, depreciation and
amortization expenses represent a meaningful portion of its cost
structure. The Company believes that EBITDA from operations will
provide investors with a useful tool for assessing the
comparability between periods of its ability to generate cash from
operations sufficient to pay taxes, to service debt and to
undertake capital expenditures because it eliminates depreciation
and amortization expense. The Company presents EBITDA from
operations in order to provide supplemental information that it
considers relevant for the readers of the Consolidated Financial
Statements, and such information is not meant to replace or
supersede U.S. GAAP measures. The Company’s definition of EBITDA
from operations may not be the same as similarly titled measures
used by other companies.
Catalent evaluates the performance of its segments based on
segment earnings before other (income)/expense, impairments,
restructuring costs, interest expense, income tax
expense/(benefit), and depreciation and amortization (“segment
EBITDA”). Moreover, under the Company's credit agreement, its
ability to engage in certain activities, such as incurring certain
additional indebtedness, making certain investments and paying
certain dividends, is tied to ratios based on Adjusted EBITDA,
which is not defined under U.S. GAAP and is subject to important
limitations. Adjusted EBITDA is the covenant compliance measure
used in the credit agreement governing debt incurrence and
restricted payments. Because not all companies use identical
calculations, the Company’s presentation of Adjusted EBITDA may not
be comparable to other similarly titled measures of other
companies.
Management also measures operating performance based on Adjusted
Net Income/(Loss) and Adjusted Net Income/(Loss) per share.
Adjusted Net Income/(Loss) is not defined under U.S. GAAP and is
not a measure of operating income, operating performance or
liquidity presented in accordance with U.S. GAAP and is subject to
important limitations. The Company believes that the presentation
of Adjusted Net Income/(Loss) and Adjusted Net Income/(Loss) per
share enhances an investor’s understanding of its financial
performance. The Company believes this measure is a useful
financial metric to assess its operating performance from period to
period by excluding certain items that it believes are not
representative of its core business and the Company uses this
measure for business planning purposes. The Company defines
Adjusted Net Income/(Loss) as net earnings/(loss) adjusted for
amortization attributable to purchase accounting and adjustments
for other cash and non-cash items included in the table below,
partially offset by its estimate of the tax effects of such cash
and non-cash items. The Company believes that Adjusted Net
Income/(Loss) and Adjusted Net Income/(Loss) per share will provide
investors with a useful tool for assessing the comparability
between periods of its ability to generate cash from operations
available to its stockholders. The Company’s definition of Adjusted
Net Income/(Loss) may not be the same as similarly titled measures
used by other companies.
The most directly comparable GAAP measure to EBITDA from
operations and Adjusted EBITDA is earnings/(loss) from operations.
The most directly comparable GAAP measure to Adjusted Net
Income/(Loss) is net earnings/(loss). Included in this release is a
reconciliation of earnings/(loss) from operations to EBITDA from
operations and Adjusted EBITDA and a reconciliation of net
earnings/(loss) to Adjusted Net Income.
The Company does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting and analyzing future periods, the Company
does so primarily on a non-GAAP basis without preparing a GAAP
analysis as that would require estimates for various cash and
non-cash reconciling items that would be difficult to predict with
reasonable accuracy. For example, equity compensation expense would
be difficult to estimate because it depends on the Company’s future
hiring and retention needs, as well as the future fair market value
of the Company’s common stock, all of which are difficult to
predict and subject to constant change. It is equally difficult to
anticipate the need for or magnitude of a presently unforeseen
one-time restructuring expense or the values of end-of-period
foreign currency exchange rates. As a result, the Company does not
believe that a GAAP reconciliation would provide meaningful
supplemental information about the Company’s outlook.
Use of Constant Currency
As changes in exchange rates are an important factor in
understanding period-to-period comparisons, the Company believes
the presentation of results on a constant currency basis in
addition to reported results helps improve investors’ ability to
understand its operating results and evaluate its performance in
comparison to prior periods. Constant currency information compares
results between periods as if exchange rates had remained constant
period over period. The Company uses results on a constant currency
basis as one measure to evaluate its performance. The Company
calculates constant currency by calculating current-year results
using prior-year foreign currency exchange rates. The Company
generally refers to such amounts calculated on a constant currency
basis as excluding the impact of foreign exchange or being on a
constant currency basis. These results should be considered in
addition to, not as a substitute for, results reported in
accordance with U.S. GAAP. Results on a constant currency basis, as
the Company presents them, may not be comparable to similarly
titled measures used by other companies and are not measures of
performance presented in accordance with U.S. GAAP.
Forward-Looking Statements
This release contains both historical and forward-looking
statements. All statements other than statements of historical fact
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements generally can be identified by the
use of statements that include phrases such as “believe,” “expect,”
“anticipate,” “intend,” “estimate,” “plan,” “project,” “foresee,”
“likely,” “may,” “will,” “would” or other words or phrases with
similar meanings. Similarly, statements that describe the Company’s
objectives, plans or goals are, or may be, forward-looking
statements. These statements are based on current expectations of
future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could
vary materially from Catalent, Inc.’s expectations and projections.
Some of the factors that could cause actual results to differ
include, but are not limited to, the following: 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 the
Company’s business and subject it to regulatory actions and costly
litigation; problems providing the highly exacting and complex
services or support required; global economic, political and
regulatory risks to the operations of the Company; inability to
enhance existing or introduce new technology or service offerings
in a timely manner; inadequate patents, copyrights, trademarks and
other forms of intellectual property protections; fluctuations in
the costs, availability, and suitability of the components of the
products the Company manufactures, including active pharmaceutical
ingredients, excipients, purchased components and raw materials;
changes in market access or healthcare reimbursement in the United
States or internationally; fluctuations in the exchange rate of the
U.S. dollar against other currencies, including as a result of the
U.K.’s pending exit from the European Union; adverse tax
legislative or regulatory initiatives or challenges or adjustments
to the Company’s tax positions; loss of key personnel; risks
generally associated with information systems; inability to
complete any future acquisitions, including the pending acquisition
of the Anagni facility, and other transactions that may complement
or expand the Company’s business or divest of non-strategic
businesses or assets and difficulties in successfully integrating
acquired businesses and realizing anticipated benefits of such
acquisitions; risks associated with timely and successfully
completing, and correctly anticipating the future demand predicted
for, capital expansion projects at our existing facilities,
offerings and customers’ products that may infringe on the
intellectual property rights of third parties; environmental,
health and safety laws and regulations, which could increase costs
and restrict operations; labor and employment laws and regulations
or labor difficulties, which could increase costs or result in
operational disruptions; additional cash contributions required to
fund the Company’s existing pension plans; substantial leverage
resulting in the limited ability of the Company to raise additional
capital to fund operations and react to changes in the economy or
in the industry, exposure to interest-rate risk to the extent of
the Company’s variable-rate debt and preventing the Company from
meeting its obligations under its indebtedness. For a more detailed
discussion of these and other factors, see the information under
the caption “Risk Factors” in the Company’s Annual Report on Form
10-K for the fiscal year ended June 30, 2019, filed August 27,
2019. All forward-looking statements speak only as of the date of
this release or as of the date they are made, and Catalent, Inc.
does not undertake to update any forward-looking statement as a
result of new information or future events or developments except
to the extent required by law.
More products. Better treatments. Reliably
supplied.™
Catalent, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(In millions, except per share
data)
Three Months Ended June
30,
FX Impact
Constant Currency
Increase/(Decrease)
2019
2018
Change $
Change %
Net revenue
$
725.7
$
685.3
$
(17.0
)
$
57.4
8
%
Cost of sales
469.2
451.9
(12.3
)
29.6
7
%
Gross margin
256.5
233.4
(4.7
)
27.8
12
%
Selling, general and administrative
expenses
143.4
124.9
(1.3
)
19.8
16
%
Impairment charges and (gain)/loss on sale
of assets
2.4
4.3
(0.1
)
(1.8
)
(42
)%
Restructuring and other
1.2
7.5
—
(6.3
)
(84
)%
Operating earnings
109.5
96.7
(3.3
)
16.1
17
%
Interest expense, net
30.9
30.0
(0.2
)
1.1
4
%
Other expense/(income), net
(1.2
)
(22.7
)
(0.4
)
21.9
(96
)%
Earnings from operations before income
taxes
79.8
89.4
(2.7
)
(6.9
)
(8
)%
Income tax expense
8.7
6.7
(1.0
)
3.0
45
%
Net earnings
$
71.1
$
82.7
$
(1.8
)
$
(9.8
)
(12
)%
Weighted average shares outstanding
145.3
133.2
Weighted average diluted shares
outstanding
147.2
135.1
Earnings per share:
Basic
Net earnings
$
0.45
$
0.62
Diluted
Net earnings
$
0.44
$
0.61
* - percentage not meaningful
Catalent, Inc. and
Subsidiaries
Selected Segment Financial
Data
(Dollars in millions)
Three Months Ended June
30,
FX Impact
Constant Currency
Increase/(Decrease)
2019
2018
Change $
Change %
Softgel Technologies
Net revenue
$
244.7
$
241.0
$
(9.3
)
$
13.0
5
%
Segment EBITDA
$
65.3
$
59.0
$
(1.9
)
$
8.2
14
%
Biologics and Specialty Drug
Delivery
Net revenue
231.1
195.5
(1.8
)
37.4
19
%
Segment EBITDA
61.3
60.4
(0.1
)
1.0
2
%
Oral Drug Delivery
Net revenue
174.1
153.7
(4.1
)
24.5
16
%
Segment EBITDA
63.6
50.0
(1.6
)
15.2
30
%
Clinical Supply Services
Net revenue
85.1
107.6
(2.3
)
(20.2
)
(19
)%
Segment EBITDA
22.9
21.7
(0.9
)
2.1
10
%
Inter-segment revenue
elimination
(9.3
)
(12.5
)
0.5
2.7
22
%
Unallocated costs
(47.7
)
(19.1
)
0.6
(29.2
)
(153
)%
Combined totals
Net revenue
$
725.7
$
685.3
$
(17.0
)
$
57.4
8
%
EBITDA from operations
$
165.4
$
172.0
$
(3.9
)
$
(2.7
)
(2
)%
Refer to the Company's description of non-GAAP measures
including segment EBITDA and EBITDA from operations as referenced
above.
Catalent, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(Dollars in millions, except
per share amounts)
Twelve Months Ended
June 30,
FX impact
Constant Currency
Increase/(Decrease)
2019
2018
Change $
Change %
Net revenue
$
2,518.0
$
2,463.4
$
(57.0
)
$
111.6
5
%
Cost of sales
1,712.9
1,710.8
(41.1
)
43.2
3
%
Gross margin
805.1
752.6
(15.9
)
68.4
9
%
Selling, general and administrative
expenses
512.0
464.8
(5.1
)
52.3
11
%
Impairment charges and (gain)/loss on sale
of assets
5.1
8.7
(0.1
)
(3.5
)
(40
)%
Restructuring and other
14.1
10.2
(0.4
)
4.3
42
%
Operating earnings
273.9
268.9
(10.3
)
15.3
6
%
Interest expense, net
110.9
111.4
(0.7
)
0.2
*
Other (income)/expense, net
2.7
5.5
(2.9
)
0.1
2
%
Earnings from operations before income
taxes
160.3
152.0
(6.7
)
15.0
10
%
Income tax expense
22.9
68.4
(1.4
)
(44.1
)
(64
)%
Net earnings
$
137.4
$
83.6
$
(5.4
)
$
59.2
71
%
Weighted average shares outstanding
144.2
131.2
Weighted average diluted shares
outstanding
146.0
133.2
Earnings per share:
Basic
Net earnings
$
0.92
$
0.64
Diluted
Net earnings
$
0.90
$
0.63
* - percentage not meaningful
Catalent, Inc. and
Subsidiaries
Selected Segment Financial
Data
(Dollars in millions)
Twelve Months Ended June
30,
FX Impact
Constant Currency
Increase/(Decrease)
2019
2018
Change $
Change %
Softgel Technologies
Net revenue
$
872.1
$
917.3
$
(34.9
)
$
(10.3
)
(1
)%
Segment EBITDA
191.2
196.4
(7.3
)
2.1
1
%
Biologics and Specialty Drug
Delivery
Net revenue
742.1
601.9
(6.5
)
146.7
24
%
Segment EBITDA
180.4
146.8
(1.4
)
35.0
24
%
Oral Drug Delivery
Net revenue
619.9
573.9
(10.7
)
56.7
10
%
Segment EBITDA
186.7
172.9
(3.7
)
17.5
10
%
Clinical Supply Services
Net revenue
321.4
430.4
(6.3
)
(102.7
)
(24
)%
Segment EBITDA
84.4
76.2
(2.7
)
10.9
14
%
Inter-segment revenue
elimination
(37.5
)
(60.1
)
1.4
21.2
35
%
Unallocated Costs
(142.9
)
(138.8
)
4.3
(8.4
)
(6
)%
Combined totals
Net revenue
$
2,518.0
$
2,463.4
$
(57.0
)
$
111.6
5
%
EBITDA from operations
$
499.8
$
453.5
$
(10.8
)
$
57.1
13
%
Catalent, Inc. and
Subsidiaries
Reconciliation of Net
Earnings/(Loss) to EBITDA from Operations and Adjusted
EBITDA*
(Dollars in millions)
Quarter Ended
December 31, 2017
March 31, 2018
June 30, 2018
September 30,
2018
December 31,
2018
March 31, 2019
June 30, 2019
Net earnings/(loss)
$
(21.9
)
$
19.0
$
82.7
$
(14.4
)
$
49.0
$
31.7
$
71.1
Interest expense, net
27.2
29.9
30.0
28.1
25.5
26.4
30.9
Income tax expense
49.9
13.7
6.7
1.0
2.3
10.9
8.7
Depreciation and amortization
46.8
51.7
52.6
52.9
54.6
66.4
54.7
EBITDA from operations
102.0
114.3
172.0
67.6
131.4
135.4
165.4
Equity compensation
8.5
5.6
6.1
10.0
7.5
6.6
9.2
Impairment charges and (gain)/loss on sale
of assets
4.2
0.2
4.3
2.9
(0.1
)
(0.1
)
2.4
Financing-related expenses and other
11.8
—
—
4.2
—
—
11.7
U.S. GAAP restructuring and other
0.1
1.4
7.5
9.7
0.1
3.1
1.2
Acquisition, integration, and other
special items
11.8
9.1
12.2
3.6
5.6
13.1
21.3
Foreign exchange loss/(gain) (included in
other, net) (1)
0.6
8.4
(20.5
)
2.0
1.0
(3.7
)
1.2
Other adjustments
0.3
—
(0.1
)
(0.1
)
0.5
(0.1
)
(13.0
)
Adjusted EBITDA (2)
$
139.3
$
139.0
$
181.5
$
99.9
$
146.0
$
154.3
$
199.4
FX impact (unfavorable)
(2.2
)
Adjusted EBITDA at constant currency
$
201.6
Twelve months ended
September 30,
2018
December 31,
2018
March 31, 2019
June 30, 2019
Net earnings/(loss)
$
65.4
$
136.3
$
149.0
$
136.3
EBITDA from operations
455.9
485.3
506.4
499.8
Adjustments
103.8
81.1
75.3
99.8
Adjusted EBITDA (2)
$
559.7
$
566.4
$
581.7
$
599.6
* Refer to the Company's description of non-GAAP measures,
including EBITDA from operations and Adjusted EBITDA as referenced
above.
(1)
Foreign exchange loss of $0.5 million for
the twelve months ended June 30, 2019 includes: (a) $5.4
million of unrealized losses related to foreign trade receivables
and payables, (b) $3.4 million of unrealized losses on the unhedged
portion of the euro-denominated debt, and (c) $17.9 million of
unrealized losses on inter-company loans. The foreign exchange
adjustment was also affected by the exclusion of realized foreign
currency exchange rate gains from the settlement of inter-company
loans of $21.5 million. Inter-company loans are between our
subsidiaries and do not reflect the ongoing results of our trade
operations.
Foreign exchange gain of $5.0 million for
the twelve months ended June 30, 2018 includes: (a) $2.9
million of unrealized gains related to foreign trade receivables
and payables, (b) $11.9 million of unrealized losses on the
unhedged portion of the euro-denominated debt, and (c) $10.7
million of unrealized losses on inter-company loans. The foreign
exchange adjustment was also affected by the exclusion of realized
foreign currency exchange rate gains from the settlement of
inter-company loans of $24.7 million. Inter-company loans are
between our subsidiaries and do not reflect the ongoing results of
our trade operations.
(2)
In its earnings releases for the quarters
ended September 30, 2018, December 31, 2018, and March 31, 2019,
the Company included an adjustment in the three months ended
September 30, 2018 relating to a cumulative effect of change in
accounting for ASC 606. The Company is no longer making this
adjustment in its presentation of Adjusted EBITDA.
Catalent, Inc. and
Subsidiaries
Reconciliation of Net
Earnings/(Loss) to Adjusted Net Income*
(In millions, except per share
data)
Quarter Ended
December 31, 2017
March 31, 2018
June 30, 2018
September 30, 2018
December 31,
2018
March 31, 2019
June 30, 2019
Net earnings / (loss)
$
(21.9
)
$
19.0
$
82.7
$
(14.4
)
$
49.0
$
31.7
$
71.1
Amortization (1)
16.1
17.6
17.5
18.2
19.5
31.4
19.1
Stock-based compensation
8.5
5.6
6.1
10.0
7.5
6.6
9.2
Impairment charges and (gain)/loss on sale
of assets
4.2
0.2
4.3
2.9
(0.1
)
(0.1
)
2.4
Financing-related expenses
11.8
—
—
4.2
—
—
11.7
U.S. GAAP restructuring and other
0.1
1.4
7.5
9.7
0.1
3.1
1.2
Acquisition, integration, and other
special items
11.8
9.1
12.2
3.6
5.6
13.1
21.3
Foreign exchange loss/(gain) (included in
other, net) (2)
0.6
8.4
(20.5
)
2.0
1.0
(3.7
)
1.2
Other adjustments
0.3
—
(0.1
)
(0.1
)
0.5
(0.1
)
(13.0
)
Estimated tax effect of adjustments
(3)
(14.0
)
(11.6
)
(6.7
)
(10.6
)
(7.6
)
(11.3
)
(13.0
)
Discrete income tax (benefit)/expense
items (4)
(2.8
)
(0.1
)
(3.9
)
(0.1
)
(3.3
)
(2.8
)
(8.3
)
Tax law changes provision (5)
46.0
5.6
(9.1
)
—
(6.8
)
3.3
—
Adjusted net income (ANI) (6)
$
60.7
$
55.2
$
90.0
$
25.4
$
65.4
$
71.2
$
102.9
Weighted average shares outstanding
133.2
145.3
Weighted average diluted shares
outstanding
135.1
147.2
ANI per share:
ANI per basic share
$
0.68
$
0.71
ANI per diluted share
$
0.67
$
0.70
Earnings/(loss) per share:
Net earnings/(loss) per basic share
$
0.62
$
0.45
Net earnings/(loss) per diluted share
$
0.61
$
0.44
Twelve months ended
June 30, 2018
September 30,
2018
December 31,
2018
March 31, 2019
June 30, 2019
Net earnings/(loss)
$
83.6
$
65.4
$
136.3
$
149.0
$
137.4
Adjustments
149.4
165.9
99.7
103.0
127.5
Adjusted net income (ANI) (6)
$
233.0
$
231.3
$
236.0
$
252.0
$
264.9
Weighted average shares outstanding
131.2
144.2
Weighted average diluted shares
outstanding
133.2
146.0
ANI per share:
ANI per basic share
$
1.78
$
1.84
ANI per diluted share
$
1.75
$
1.81
Earnings/(loss) per share:
Net earnings/(loss) per basic share
$
0.62
$
0.92
Net earnings/(loss) per diluted share
$
0.61
$
0.90
* Refer to the Company's description of non-GAAP measures,
including Adjusted Net Income as referenced above.
(1)
Represents the amortization attributable
to purchase accounting for previously completed business
combinations.
(2)
Foreign exchange gain of $0.5 million for
the twelve months ended June 30, 2019 includes: (a) $5.4
million of unrealized losses related to foreign trade receivables
and payables, (b) $3.4 million of unrealized losses on the
ineffective portion of the Company's net investment hedge, and (c)
$17.9 million of unrealized losses on inter-company loans.
The foreign exchange adjustment was also affected by the exclusion
of realized foreign currency exchange rate gains from the
settlement of inter-company loans of $21.5 million. Inter-company
loans are between Catalent entities and do not reflect the ongoing
results of the Company's trade operations.
(3)
The tax effect of adjustments to Adjusted
Net Income are computed by applying the statutory tax rate in the
jurisdictions to the income or expense items that are adjusted in
the period presented; if a valuation allowance exists, the rate
applied is zero.
(4)
Discrete period income tax
expense/(benefit) items are unusual or infrequently occurring
items, primarily including: changes in judgment related to the
realizability of deferred tax assets in future years, changes in
measurement of a prior-year tax position, deferred tax impact of
changes in tax law, and purchase
accounting.
(5)
During fiscal 2018, we recorded a net tax
charge of $42.5 million as a provisional estimate of the net
accounting impact of the 2017 Tax Act. . In fiscal 2019, we
completed our analysis, as permitted by Staff Accounting Bulletin
No. 118, and recorded a reduction of $3.5 million.
(6)
In its earnings releases for the quarters
ended September 30, 2018, December 31, 2018, and March 31, 2019,
the Company included an adjustment in the three months ended
September 30, 2018 relating to a cumulative effect of change in
accounting for ASC 606. The Company is no longer making this
adjustment in its presentation of ANI.
Catalent, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Dollars in millions)
June 30, 2019
June 30, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
345.4
$
410.2
Trade receivables, net
716.4
555.8
Inventories
257.2
209.1
Prepaid expenses and other
76.8
65.2
Total current assets
1,395.8
1,240.3
Property, plant, and equipment, net
1,536.7
1,270.6
Other non-current assets, including
intangible assets
3,251.5
2,020.2
Total assets
$
6,184.0
$
4,531.1
LIABILITIES AND SHAREHOLDER’S
DEFICIT
Current liabilities:
Current portion of long-term obligations
and other short-term borrowings
$
76.5
$
71.9
Accounts payable
255.8
192.1
Other accrued liabilities
338.4
312.9
Total current liabilities
670.7
576.9
Long-term obligations, less current
portion
2,882.8
2,649.4
Other non-current liabilities
342.3
218.1
Commitments and contingencies (1)
—
—
Redeemable preferred stock
606.6
—
Total shareholder's equity
1,681.6
1,086.7
Total liabilities and shareholder’s
equity
$
6,184.0
$
4,531.1
(1)
Please refer to note 16 of the
consolidated financial statements within our Annual Report on Form
10-K for the fiscal year ended June 30, 2019.
Catalent, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(Dollars in millions)
Twelve Months Ended
June 30,
2019
2018
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash provided by operating
activities
$
247.7
$
374.5
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property and equipment and
other productive assets
(218.1
)
(176.5
)
Proceeds from sale of property and
equipment
0.5
1.8
Proceeds from sale of subsidiaries
—
3.4
Payment for acquisitions, net of cash
acquired
(1,291.0
)
(748.0
)
Payment made for investments
(1.8
)
—
Net cash (used in) investing activities
from continuing operations
(1,510.4
)
(919.3
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net change in other borrowings
(8.4
)
(3.1
)
Proceeds from borrowing, net
1,447.6
442.6
Payments related to long-term
obligations
(1,290.3
)
(18.9
)
Call premium payments and financing fees
paid
(24.7
)
(15.6
)
Proceeds from sale of common stock,
net
445.5
277.8
Proceeds from sale of preferred stock,
net
646.3
—
Cash paid, in lieu of equity, for tax
withholding obligations
(14.6
)
(13.7
)
Net cash (used in)/provided by financing
activities
1,201.4
669.1
Effect of foreign currency exchange on
cash
(3.5
)
(2.4
)
NET INCREASE/(DECREASE) IN CASH AND
EQUIVALENTS
(64.8
)
121.9
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD
410.2
288.3
CASH AND EQUIVALENTS AT END OF
PERIOD
$
345.4
$
410.2
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190827005396/en/
Investor: Catalent, Inc. Thomas Castellano 732-537-6325
investors@catalent.com
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