- Total revenue increased 3% as
reported and 8% in constant currency to $455.8 million from second
quarter 2014
- Adjusted EBITDA increased 21% to
$112.9 million from second quarter 2014
- Adjusted net income of $0.44 per
diluted share, compared to adjusted net income of $0.37 per diluted
share in second quarter 2014
- Acquired Micron Technologies, a
leading global provider of particle size engineering
technologies
- Acquired the remaining stake in
Redwood Bioscience Inc. and its SMARTag™ Antibody-Drug Conjugate
(ADC) technology platform
- Entered into a collaboration with
Sanofi-Aventis to implement Catalent’s proprietary SMARTag™
technology in the development of next generation Antibody-Drug
Conjugates (ADCs)
- Announced the addition of new
coating and blister packaging equipment at Eberbach, Germany
softgel facility, expanding the integrated softgel solutions
available for customers
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 second quarter of fiscal year
2015, which ended December 31, 2014.
Second quarter 2015 revenue of $455.8 million
increased 3% as reported and 8% at constant currency, from $440.7
million in the second quarter a year ago. For the first six months
of fiscal year 2015, revenue was $874.1 million, an increase of 2%
as reported and 5% at constant currency, from $855.0 million for
the same period a year ago. Revenue growth for both the quarter and
year-to-date was driven by strong performance of the Medication
Delivery Solutions segment and the modified release technologies
business within the Oral Technologies segment, as well as increased
demand for analytical services within the Development and Clinical
Services segment.
Second quarter 2015 net income was $46.5
million, or $0.37 per diluted share, compared to a net loss of
$19.2 million, or $0.26 per diluted share, in the second quarter a
year ago. For the first six months of fiscal year 2015, net income
was $27.0 million, compared to a net loss of $17.7 million for the
same period a year ago. The increase in profitability for the
quarter and year-to-date was primarily related to strong business
performance, as well as a $17.6 million decrease and a $23.0
million decrease in net interest expense, respectively, due to
lower levels of the outstanding debt at the Company compared to the
same periods a year ago, as a result of the Company's fiscal year
2015 first quarter initial public offering (IPO).
Second quarter 2015 EBITDA from continuing
operations was $101.7 million, an increase of 22% from $83.5
million in the second quarter a year ago. For the first six months
of fiscal year 2015, EBITDA from continuing operations was $138.3
million, a decrease of 11% from $156.2 million for the same period
a year ago.
Second quarter 2015 Adjusted EBITDA, as
referenced in the GAAP to non-GAAP reconciliation provided later in
this release, was $112.9 million, or 25% of revenue, compared to
$93.4 million, or 21% of revenue, in the second quarter a year ago.
Second quarter 2015 Adjusted Net Income, as referenced in the GAAP
to non-GAAP reconciliation provided later in this release, was
$55.9 million, or $0.44 per diluted share, compared to Adjusted Net
Income of $27.9 million, or $0.37 per diluted share, in the second
quarter a year ago.
"We are pleased with our second quarter
results, highlighted by revenue growth across all of our business
segments and strong levels of profitability,” said John Chiminski,
President and Chief Executive Officer of Catalent, Inc. “Our recent
acquisition of Micron Technologies affirms our commitment to
provide the best drug delivery technologies and the broadest drug
development expertise. Also, the acquisition of Redwood Bioscience
and its SMARTag antibody-drug conjugate technology platform, along
with our collaboration with Sanofi-Aventis, strengthens our
position in the fast growing biologics market. These recent
developments, coupled with the addition of new coating and blister
packaging equipment at our Eberbach softgel facility, position
Catalent for further growth and market share expansion.”
Second Quarter 2015 Segment
Highlights
Revenue Highlights by Business
Segment
Revenue from the Oral Technologies segment was
$277.2 million for the second quarter of fiscal 2015, a decrease of
3%, or an increase of 3% on a constant currency basis, versus the
second quarter a year ago. This growth was attributable to
favorable product mix within the modified release technologies
business and higher revenue from product participation-related
activities, partially offset by lower end-market demand for certain
customer products using the Company’s softgel technology
offering.
Revenue from the Development and Clinical
Services segment was $107.8 million for the second quarter of
fiscal 2015, an increase of 6%, or an increase of 7% on a constant
currency basis, over the second quarter a year ago. This growth was
primarily attributable to increased revenue in the analytical
services business, due to growth of the Company’s integrated oral
solids development and manufacturing capabilities, and higher
project volumes in the U.S., as well as due to the impact of the
acquisition completed during the quarter.
Revenue from the Medication Delivery Solutions
segment was $73.7 million for the second quarter of fiscal 2015, an
increase of 33% as reported, or an increase of 38% on a constant
currency basis, over the second quarter a year ago. The strong
performance was attributable to timing of customer order patterns,
contractual settlements, increased demand for blow-fill-seal
products, injectable products, and biologics.
Segment EBITDA Highlights
Oral Technologies segment EBITDA in the second
quarter of 2015 was $73.1 million, with no change as reported, or
an increase of 7% on a constant currency basis. The increase was
primarily driven by increased profit from the Company’s
product-participation related activities and higher revenues from
products utilizing modified release technologies.
Development and Clinical Services segment
EBITDA in the second quarter of 2015 was $21.9 million, an increase
of 18%, or 21% on a constant currency basis. This EBITDA
improvement was primarily attributable to increased demand for
analytical services and favorable product mix within clinical
services.
Medication Delivery Solutions segment EBITDA in
the second quarter of 2015 was $18.1 million, an increase of 161%,
or 164% on a constant currency basis. This increase was driven by
increased demand, timing of customer ordering patterns, and a
favorable product mix shift within blow-fill-seal, as well as
increased demand for injectable products.
First Six Months of Fiscal 2015 Segment
Highlights
Revenue Highlights by Business
Segment
Revenue from the Oral Technologies segment was
$538.3 million for the first six months of fiscal year 2015, a
decrease of 1%, or an increase of 3% on a constant currency basis,
over the same period a year ago. This growth was mainly
attributable to strong performance within the modified release
technologies business and increased profit from product
participation-related activities, partially offset by lower
end-market demand for certain customer products using the Company’s
softgel technology offering.
Revenue from the Development and Clinical
Services segment was $210.9 million for the first six months of
fiscal year 2015, an increase of 4%, or an increase of 3% on a
constant currency basis, over the same period a year ago. This
growth was attributable to increased revenue in the analytical
services business, due to higher project volumes in the U.S. and
growth of the Company’s integrated oral solids development and
manufacturing capabilities, as well as due to the impact of the
acquisition completed in the second quarter. Lower revenue from
clinical services partially offset the organic and inorganic growth
from the analytical services business.
Revenue from the Medication Delivery Solutions
segment was $130.6 million for the first six months of fiscal year
2015, an increase of 17%, or an increase of 19% on a constant
currency basis, over the same period a year ago. The strong
performance was attributable to timing of customer ordering
patterns, contractual settlements, and increased demand within the
Company’s blow-fill-seal technology platform. Increased revenue
from biologics due to the timing of customer order patterns and
increased demand for the Company’s injectable products also
contributed to the favorability.
Segment EBITDA Highlights
Oral Technologies segment EBITDA for the first
six months of fiscal year 2015 was $132.4 million, a decrease of
2%, or an increase of 3% on a constant currency basis. The increase
was primarily driven by increased revenues and favorable product
mix within the modified release technologies platform, partially
offset by decreased demand and unfavorable product mix within the
Company’s softgel offering.
Development and Clinical Services segment
EBITDA for the first six months of fiscal year 2015 was $43.3
million, an increase of 27%, or 26% on a constant currency basis.
This EBITDA improvement was attributable to increased demand for
analytical services and favorable revenue mix across the business
segment.
Medication Delivery Solutions segment EBITDA
for the first six months of fiscal year 2015 was $28.0 million, an
increase of 84%, or 86% on a constant currency basis. This increase
was primarily attributable to timing of customer order patterns,
and a favorable product mix shift within the Company’s
blow-fill-seal technology platform.
Additional Financial Highlights
Second quarter 2015 gross margin of 34.2%
increased 3.0 percentage points from 31.2% in the second quarter a
year ago. For the first six months of fiscal year 2015, gross
margin was 32.2%, an increase of 2.2 percentage points from 30.0%
for the same period a year ago. The increases in gross margins were
driven by favorable product mix and by improved leveraging of fixed
manufacturing costs.
Second quarter 2015 selling, general and
administrative expenses were $88.1 million and represented 19.3% of
revenue, compared to $87.5 million, or 19.9% of revenue, in the
second quarter a year ago. For the first six months of fiscal 2015,
selling, general and administrative expenses were $169.5 million
and represented 19.4% of revenue, compared to $168.6 million, or
19.7% of revenue, for the same period a year ago.
Backlog for the Development and Clinical
Services segment was $381.0 million as of December 31, 2014, a 1%
decrease compared to the first quarter of fiscal year 2015. The
segment also recorded net new business wins of $95.5 million during
the second quarter, which decreased significantly compared to the
second quarter of fiscal year 2014 due to above normal new business
wins in the prior year, led by several large signings and recent
softness in the European market. The segment’s
trailing-twelve-month book-to-bill ratio was 1.0x.
Balance Sheet and Liquidity
As of December 31, 2014, Catalent had $1.9
billion in debt as compared to $2.7 billion as of June 30, 2014.
During the first half of fiscal 2015, the Company's IPO raised over
$1 billion in gross proceeds and the Company used the net proceeds
to pay down its unsecured debt. As of December 31, 2014, Catalent’s
leverage ratio was 4.1x, compared to 6.1x as of June 30, 2014.
Fiscal Year 2015 Outlook
Due to the impact of the continued
strengthening of the U.S. Dollar against all other currencies in
which the Company does business and its effect on foreign exchange
translations, Catalent is revising its previously issued financial
guidance despite that the Company is trending above its previously
issued guidance on a constant currency basis. For fiscal year 2015,
the Company now expects revenue to be in the range of $1.82 billion
to $1.86 billion, compared to its previous guidance of $1.89
billion to $1.92 billion.
The Company now expects Adjusted EBITDA to be
in the range of $434 million to $444 million, compared to previous
guidance of $450 million to $460 million. Adjusted Net Income is
now expected to be in the range of $204 million to $214 million,
compared to previous guidance of $215 million to $225 million.
In addition, based on the updated operational
outlook, capital expenditures are now expected to be in the range
of $120 million to $130 million, compared to previous guidance of
$115 million to $125 million.
The Company is also now providing guidance for
fully diluted share count on a weighted average basis for fiscal
year ending June 30, 2015, which is expected to be in the range of
122 million shares to 124 million shares.
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 approximately 8,000 people,
including over 1,000 scientists, at nearly 30 facilities across 5
continents and in fiscal 2014 generated more than $1.8 billion in
annual revenue. Catalent is headquartered in Somerset, N.J. For
more information, please visit www.catalent.com.
Non-GAAP Financial Measure
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 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.
The Company has included the calculations of Adjusted EBITDA for
the periods presented. 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). 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. 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. 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 continuing operations to EBITDA from
continuing operations and Adjusted EBITDA and reconciliation of net
earnings/(loss) to Adjusted Net Income.
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 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 Annual Report on Form 10-K for the fiscal year ended June 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 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
(Unaudited; Dollars in millions, except
per share amounts)
Three Months Ended December
31,
FX impact(unfavorable)
/favorable
Increase/(Decrease) 2014 2013 Change
$ Change% Net revenue $ 455.8 $ 440.7 $ (22.1 ) $
37.2 8 % Cost of sales 299.7 303.3
(15.8 ) 12.2 4 % Gross margin 156.1 137.4 (6.3
) 25.0 18 % Selling, general and administrative expenses 88.1 87.5
(2.3 ) 2.9 3 % Impairment charges and (gain)/loss on sale of assets
3.5 — 0.1 3.4 * Restructuring and other 2.1
5.4 (0.2 ) (3.1 ) (57 )% Operating
earnings/(loss) 62.4 44.5 (3.9 ) 21.8 49 % Interest expense, net
23.9 41.5 (0.4 ) (17.2 ) (41 )% Other (income)/expense, net
(3.6 ) (1.4 ) (1.6 ) (0.6 ) 43 %
Earnings/(loss) from continuing
operations, beforeincome taxes
42.1 4.4 (1.9 ) 39.6 * Income tax expense/(benefit) (4.1 )
23.3 (0.8 ) (26.6 ) * Earnings/(loss)
from continuing operations 46.2 (18.9 ) (1.1 ) 66.2 *
Net earnings/(loss) from discontinued
operations, net oftax
(0.2 ) (0.6 ) — 0.4 (67
)% Net earnings/(loss) 46.0 (19.5 ) (1.1 ) 66.6 *
Less: Net earnings/(loss) attributable to
noncontrollinginterest, net of tax
(0.5 ) (0.3 ) — (0.2 ) 67 % Net
earnings/(loss) attributable to Catalent $ 46.5 $ (19.2 ) $
(1.1 ) $ 66.8 *
Amounts attributable to
Catalent:
Earnings/(loss) from continuing operations
less netincome (loss) attributable to noncontrolling interest
46.7 (18.6 ) Net earnings/(loss) attributable to Catalent 46.5
(19.2 ) Weighted average diluted shares outstanding 126.0
75.0
Earnings per share attributable to Catalent:
Basic Earnings/(loss) from continuing operations 0.38 (0.25
) Net earnings/(loss) 0.37 (0.26 )
Diluted Earnings/(loss)
from continuing operations 0.37 (0.25 ) Net earnings/(loss) 0.37
(0.26 )
* - percentage not meaningful
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Unaudited; Dollars in
millions)
Three Months Ended December
31,
FX impact(unfavorable)
/favorable
Increase/(Decrease) 2014 2013
Change $ Change% Oral Technologies Net
revenue $ 277.2 $ 285.8 $ (18.1 ) $ 9.5 3 % Segment EBITDA 74.7
74.6 (5.0 ) 5.1 7 %
Medication Delivery Solutions Net
revenue 73.7 55.3 (2.7 ) 21.1 38 % Segment EBITDA 18.1 7.0 (0.1 )
11.2 *
Development and Clinical Services Net revenue 107.8
102.1 (1.4 ) 7.1 7 % Segment EBITDA 21.9 18.5 (0.4 ) 3.8 21 %
Inter-segment revenue elimination (2.9 ) (2.5 ) 0.1 (0.5 ) 20 %
Unallocated Costs (13.0 ) (16.6 ) 1.8 1.8 (11 )%
Combined
Total Net revenue $ 455.8
$ 440.7 $ (22.1 ) $ 37.2 8 %
EBITDA from continuing operations $ 101.7
$ 83.5 $ (3.7 ) $ 21.9 26 %
* - percentage not meaningful
Catalent, Inc. and Subsidiaries
Consolidated Statements of
Operations
(Unaudited; Dollars in millions, except
per share amounts)
Six Months Ended December
31,
FX impact(unfavorable)
/favorable
Constant
CurrencyIncrease/(Decrease)
2014 2013 Change $
Change% Net revenue $ 874.1 $ 855.0 $ (23.1 ) $ 42.2 5 %
Cost of sales 592.7 598.4 (15.4
) 9.7 2 % Gross margin 281.4 256.6 (7.7 ) 32.5 13 %
Selling, general and administrative expenses 169.5 168.6 (2.2 ) 3.1
2 % Impairment charges and (gain)/loss on sale of assets 3.5 — —
3.5 * Restructuring and other 3.5 8.4
(0.1 ) (4.8 ) (57 )% Operating earnings/(loss) 104.9
79.6 (5.4 ) 30.7 39 % Interest expense, net 59.4 82.4 (0.1 ) (22.9
) (28 )% Other (income)/expense, net 37.7 (2.4
) (2.2 ) 42.3 *
Earnings/(loss) from continuing operations
beforeincome taxes
7.8 (0.4 ) (3.1 ) 11.3 * Income tax expense/(benefit) (18.1
) 16.7 (1.4 ) (33.4 ) * Earnings/(loss)
from continuing operations 25.9 (17.1 ) (1.7 ) 44.7 *
Net earnings/(loss) from discontinued
operations, netof tax
0.2 (1.0 ) — 1.2 *
Net earnings/(loss) 26.1 (18.1 ) (1.7 ) 45.9 *
Less: Net earnings/(loss) attributable
tononcontrolling interest, net of tax
(0.9 ) (0.4 ) — (0.5 ) * Net
earnings/(loss) attributable to Catalent $ 27.0 $ (17.7 ) $
(1.7 ) $ 46.4 *
Amounts attributable to
Catalent:
Earnings/(loss) from continuing operations
less netincome (loss) attributable to noncontrolling interest
26.8 (16.7 ) Net earnings/(loss) attributable to Catalent 27.0
(17.7 ) Weighted average diluted shares outstanding 116.7
75.0
Earnings per share attributable to Catalent:
Basic Earnings/(loss) from continuing operations 0.23 (0.22
) Net earnings/(loss) 0.24 (0.24 )
Diluted Earnings/(loss)
from continuing operations 0.23 (0.22 ) Net earnings/(loss) 0.23
(0.24 )
* - percentage not meaningful
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Unaudited; Dollars in
millions)
Six Months Ended December 31,
FX impact(unfavorable)
/favorable
Constant
CurrencyIncrease/(Decrease)
2014 2013 Change $
Change% Oral Technologies Net revenue $ 538.3 $ 544.7
$ (21.8 ) $ 15.4 3 % Segment EBITDA 132.4 135.0 (6.8 ) 4.2 3 %
Medication Delivery Solutions Net revenue 130.6 111.8 (2.7 )
21.5 19 % Segment EBITDA 28.0 15.2 (0.2 ) 13.0 86 %
Development
and Clinical Services Net revenue 210.9 203.1 1.5 6.3 3 %
Segment EBITDA 43.3 34.2 0.3 8.8 26 %
Inter-segment revenue
elimination (5.7 ) (4.6 ) (0.1 ) (1.0 ) 22 %
Unallocated
Costs (1) (65.4 ) (28.2 ) 2.4 (39.6 ) *
Combined
Total Net revenue $ 874.1
$ 855.0 $ (23.1 ) $ 42.2 5 %
EBITDA from continuing operations $ 138.3
$ 156.2 $ (4.3 ) $ (13.6 ) (9 )%
* - 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
TwelveMonthsEnded
QuarterEnded
TwelveMonthsEnded
December 31, 2013 March 31, 2014
June 30, 2014 September 30,
2014 September 30, 2014 December 31,
2014 December 31, 2014 Earnings/(loss) from
continuing operations $ (18.9 ) $ 8.0 $ 27.0 $ (20.3 ) $ (4.2 ) $
46.2 $ 60.9 Interest expense, net 41.5 40.4 40.3 35.5 157.7 23.9
140.1 Income tax expense/(benefit) (1) 23.3 6.6 26.2 (14.0 ) 42.1
(4.1 ) 14.7 Depreciation and amortization 37.3 35.1 34.0 35.0 141.4
35.2 139.3 Noncontrolling interest 0.3 0.4
0.2 0.4 1.3
0.5 1.5 EBITDA from continuing operations 83.5
90.5 127.7 36.6 338.3 101.7 356.5 Equity compensation 1.1 1.1 1.1
1.5 4.8 2.7 6.4
Impairment charges and (gain)/loss onsale
of assets
— 0.4 2.8 — 3.2 3.5 6.7
Financing related expensesand other
(2)
(0.1 ) 0.1 10.9 20.6 31.5 1.2 32.8 US GAAP Restructuring 5.4 3.5
7.8 1.4 18.1 2.1 14.8
Acquisition, integration and other
specialitems
2.8 2.7 0.6 3.2 9.3 4.4 10.9
Foreign Exchange loss/(gain) (includedin
other, net) (3)
(2.5 ) 4.5 (3.8 ) (3.7 ) (5.5 ) 0.5 (2.5 ) Other adjustments (4) —
(0.1 ) 0.4 23.8 24.1 (3.2 ) 20.9 Sponsor monitoring fee (5)
3.2 3.3 3.2 —
9.7 — 6.5 Subtotal 93.4
106.0 150.7 83.4 433.5 112.9 453.0 Estimated cost savings —
— — — —
— — Adjusted EBITDA $ 93.4
$ 106.0 $ 150.7 $ 83.4 $ 433.5 $
112.9 $ 453.0 (1) Represents the amount
of income tax-related expense/(benefit) recorded within our net
earnings/(loss) which may not result in cash payment or receipt.
(2) Financing related expenses for the three months ended September
30, 2014 include $20.6 million of early debt termination expenses
which were a result of the IPO. See footnote 4 for an additional
$29.8 million of IPO related costs; totaling $50.4 million. (3)
Foreign exchange gain of $2.5 million for the twelve months ended
December 31, 2014 included $21.7 million of unrealized foreign
currency exchange rate gains primarily driven by losses of $9.9
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 gains of
$31.6 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 $19.2 million. Inter-company
loans are between Catalent entities and do not reflect the ongoing
results of the company's trade operations. (4) Other Adjustments
for the three months ended September 30, 2014 includes $29.8
million for a sponsor advisory agreement termination fee paid in
connection with the IPO. See footnote 2 for an additional $20.6
million of IPO related costs; totaling $50.4 million. (5)
Represents the amount of sponsor advisory fee for each respective
period. The sponsor advisory fee agreement was terminated following
the completion of our IPO.
Catalent, Inc. and Subsidiaries
Reconciliation of Net Earnings/(Loss)
to Adjusted Net Income/(Loss)
(Unaudited; Dollars in
millions)
Quarter Ended
TwelveMonthsEnded
QuarterEnded
TwelveMonthsEnded
December 31, 2013 March 31, 2014
June 30, 2014 September 30,
2014 September 30, 2014 December 31,
2014 December 31, 2014 Net earnings/(loss) $
(19.5 ) $ 6.3 $ 27.0 $ (19.9 ) $ (6.1 ) $ 46.0 $ 59.4
Net earnings/(loss) from
discontinuedoperations, net of tax
(0.6 ) (1.7 ) — 0.4
(1.9 ) (0.2 ) (1.5 )
Earnings/(loss) from continuingoperations,
net of tax
(18.9 ) 8.0 27.0 (20.3 ) (4.2 ) 46.2 60.9 Amortization (1) 10.5
11.0 10.8 11.3 43.6 11.6 44.7 Income tax expense/(benefit) (2) 23.3
6.6 26.2 (14.0 ) 42.1 (4.1 ) 14.7 Cash taxes (paid)/refunded 3.4
(1.1 ) (7.6 ) (9.9 ) (15.2 ) (8.2 ) (26.8 )
Net (earnings)/loss attributable
tononcontrolling interest, net of tax
0.3 0.4 0.2 0.4 1.3 0.5 1.5 Equity compensation 1.1 1.1 1.1 1.5 4.8
2.7 6.4
Impairment charges and loss on sale
ofassets
— 0.4 2.8 — 3.2 3.5 6.7 Financing related expenses (3) (0.1 ) 0.1
10.9 20.6 31.5 1.2 32.8 U.S. GAAP restructuring 5.4 3.5 7.8 1.4
18.1 2.1 14.8
Acquisition, integration and other
specialitems
2.8 2.7 0.6 3.2 9.3 4.4 10.9
Foreign exchange loss/(gain) (included
inother (income)/expense, net) (4)
(2.5 ) 4.5 (3.8 ) (3.7 ) (5.5 ) 0.5 (2.5 ) Other adjustments (5) —
(0.1 ) 0.4 23.8 24.1 (3.2 ) 20.9 Sponsor advisory fee (6) 3.2 3.3
3.2 — 9.7 — 6.5
Estimated cash tax
(savings)/expenseattributable to reconciling items (7)
(0.6 ) (1.4 ) (2.6 ) (0.9 ) (5.5
) (1.3 ) (6.2 ) Adjusted net income/(loss) $ 27.9
$ 39.0 $ 77.0 $ 13.4 $ 157.3 $
55.9 $ 185.3 (1) Represents the
amortization attributable to purchase accounting for previously
completed business combinations. (2) Represents the amount of
income tax-related expense/(benefit) recorded within our net
earnings/(loss) which may not result in cash payment or receipt.
(3) Financing related expenses for the three months ended September
30, 2014 include $20.6 million of early debt termination expenses
which were a result of the IPO. See footnote 5 for an additional
$29.8 million of IPO related costs; totaling $50.4 million. (4)
Foreign exchange gain of $2.5 million for the twelve months ended
December 31, 2014 included $21.7 million of unrealized foreign
currency exchange rate gains primarily driven by losses of $9.9
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 gains of
$31.6 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 $19.2 million. Inter-company
loans are between Catalent entities and do not reflect the ongoing
results of the company's trade operations. (5) Other Adjustments
for the three months ended September 30, 2014 includes $29.8
million for a sponsor advisory agreement termination fee paid in
connection with the IPO. See footnote 3 for an additional $20.6
million of IPO related costs; totaling $50.4 million. (6)
Represents the amount of sponsor advisory fee for each respective
period. The sponsor advisory fee agreement was terminated following
the completion of our IPO. (7) 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)
December 31, 2014 June 30,
2014 ASSETS Current assets: Cash and cash equivalents
$ 84.1 $ 74.4 Trade receivables, net 336.4 403.7 Inventories 144.3
134.8 Prepaid expenses and other 72.7 74.6
Total current assets 637.5 687.5 Property, plant, and equipment,
net 865.1 873.0 Other non-current assets, including intangible
assets 1,535.5 1,529.7
Total assets
$ 3,038.1 $ 3,090.2
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND
SHAREHOLDERS' EQUITY/(DEFICIT) Current liabilities: Current
portion of long-term obligations and other short-term borrowings $
28.8 $ 25.2 Accounts payable 118.4 148.1 Other accrued liabilities
199.3 279.7 Total current liabilities 346.5
453.0 Long-term obligations, less current portion 1,905.4 2,685.4
Other non-current liabilities 289.9 319.1 Redeemable noncontrolling
interest 3.9 4.5 Commitment and contingencies (1) Total
Shareholders' equity/(deficit) 492.4 (371.8 )
Total liabilities, redeemable noncontrolling interest and
Shareholders' equity/(deficit) $ 3,038.1 $
3,090.2 (1) Please refer to note 15 of
the consolidated financial statements within our December 31, 2014
Form 10-Q.
Catalent, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
(Unaudited; Dollars in
millions)
Six Months Ended December 31, 2014
2013 CASH FLOWS FROM OPERATING ACTIVITIES: Net
cash provided by/(used in) operating activities from continuing
operations $ 0.2 $ 41.5 Net cash provided by/(used in) operating
activities from discontinued operations 0.2
(1.1 )
Net cash provided by/(used in) operating activities
0.4 40.4 CASH FLOWS
FROM INVESTING ACTIVITIES: Acquisition of property and
equipment and other productive assets (71.3 ) (39.8 ) Proceeds from
sale of property and equipment — 0.8 Payment for acquisitions, net
(125.1 ) (51.0 ) Net cash provided by/(used in)
investing activities from continuing operations (196.4 ) (90.0 )
Net cash provided by/(used in) investing activities from
discontinued operations — 4.0
Net
cash provided by/(used in) investing activities
(196.4 ) (86.0 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Net change in short-term borrowings
6.0 15.0 Proceeds from borrowing, net 150.4 0.7 Payments related to
long-term obligations (869.3 ) (15.2 ) Call premium payments and
financing fees paid (12.6 ) — Equity contribution/(redemption)
948.8 0.2 Share settlement (0.7 ) Net cash (used
in)/provided by financing activities from continuing operations
222.6 0.7 Net cash (used in)/provided by financing activities from
discontinued operations — —
Net cash
(used in)/provided by financing activities 222.6
0.7 Effect of foreign currency on cash
(16.9 ) 2.7
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS
9.7 (42.2 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
74.4 106.4
CASH AND EQUIVALENTS AT
END OF PERIOD $ 84.1 $ 64.2
Investor:Catalent, Inc.Thomas
CastellanoorBertner Advisors, LLCJeremy Feffer,
732-537-6325investors@catalent.com
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