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, LLCMonique Kosse,
860-940-0352Monique.Kosse@BertnerAdvisors.com
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