Catalent, Inc. (NYSE: CTLT), the leading global provider of
advanced delivery technologies, development, and manufacturing
solutions for drugs, biologics, cell and gene therapies, and
consumer health products, today announced that, given the fluidity
created by the COVID-19 pandemic and level of uncertainty at the
time when Catalent last provided financial guidance on May 5, 2020,
it is providing certain preliminary financial results for the
fourth quarter and full fiscal year, both of which ended June 30,
2020, including net revenue, earnings before income taxes, and
Adjusted EBITDA (see the non-GAAP reconciliation elsewhere in this
release for a discussion of Adjusted EBITDA).
Catalent now expects full fiscal year 2020 net revenue in a
range of $3.084 billion to $3.096 billion, compared to prior
guidance in the range of $2.871 billion to $2.946 billion; earnings
before income taxes in a range of $255 million to $259 million; and
Adjusted EBITDA in the range of $745 million to $749 million,
compared to prior guidance in the range of $700 million to $725
million. For the fourth quarter ending June 30, 2020, Catalent
expects to report net revenue in the range of $937 million to $949
million, earnings before income taxes in the range of $173 million
to $177 million, and Adjusted EBITDA in the range of $262 million
to $266 million.
Catalent’s net revenue, earnings before income taxes, and
Adjusted EBITDA for the last three months of its fiscal year were
significantly higher than expected as momentum across the business
accelerated. Among the factors contributing to these results:
Certain activity related to potential COVID-19 vaccines and
treatments had a positive impact on the Biologics segment, and
strong demand for recent product launches within the Oral and
Specialty Delivery segment contributed more to the quarter than
expected. In addition, the pandemic’s negative impact on the
Clinical Supply Services segment was less than anticipated.
Catalent expects to record a substantial gain in the fourth quarter
relating to the portion of its convertible preferred stock
accounted for as a derivative, but this gain affects only the
earnings before income taxes metric reported here, as the gain is
adjusted out when computing Adjusted EBITDA.
Catalent also announced today it will release full financial
results for the fourth quarter of fiscal year 2020 before the
market opens on Monday, August 31, 2020. Catalent management will
host a webcast to discuss the results at 8:15 a.m. ET on the same
day.
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 at
www.catalent.com.
Preliminary Unaudited Results for the Quarter and Year Ended
June 30, 2020
The financial information presented above and in this section
reflects certain preliminary financial results based upon
information available to Catalent as of the date hereof, is not a
comprehensive statement of its financial results for the three
months or the fiscal year ended June 30, 2020, has not been audited
or reviewed by its independent registered public accounting firm,
and should not be viewed as a substitute for full, audited
financial statements prepared in accordance with U.S. generally
accepted accounting principles (“U.S. GAAP”). Catalent’s actual
reported results may differ materially from this preliminary
financial information. During the course of the preparation of its
audited consolidated financial statements and related notes,
additional adjustments to the preliminary financial information
presented above and in this section may be identified. Any such
adjustment or other development arising between now and the time
that Catalent finalizes its financial results may be material.
Accordingly, readers should not place undue reliance on this
preliminary financial information.
The following table includes estimates of Catalent’s Adjusted
EBITDA for the three months ended June 30, 2020 and the fiscal year
ended June 30, 2020. Adjusted EBITDA is not defined under U.S.
GAAP, is not a measure of operating income, operating performance,
or liquidity presented in accordance with U.S. GAAP, and is subject
to important limitations. For Catalent’s definition of Adjusted
EBITDA, see “Non-GAAP Financial Measures” below. Certain columns
that appear to be added in the table may not sum to the amounts
indicated because the sums are derived independently from data not
included in the table rather than the summing process
indicated.
The most directly comparable U.S. GAAP financial measure to
Catalent’s measure of Adjusted EBITDA is net earnings. Catalent
cannot currently estimate U.S. GAAP net earnings for the three
months or the fiscal year ended June 30, 2020, primarily due to the
complexity of the calculation of, and the fact that Catalent has
not yet completed its determination of, U.S. GAAP income tax
expense/(benefit). Therefore, the following table reconciles its
estimated earnings before income taxes, the nearest available U.S.
GAAP measure, to Adjusted EBITDA for the periods presented in this
table.
Three months Ended June
30,
Fiscal Year Ended
2020
2019
2020
2019
(in millions)
(estimated)
(actual)
(estimated)
(actual)
Net revenue
$
937 - 949
$
726
$
3,084 - 3,096
$
2,518
Earnings before income taxes
173 - 177
80
255 - 259
160
Interest expense, net
21
31
126
111
Depreciation and amortization
66
54
253
229
EBITDA
260 - 264
165
634 - 638
500
Other adjustments
2
34
111
100
Adjusted EBITDA
$
262 - 266
$
199
$
745 - 749
$
600
Non-GAAP Financial Measures
Under Catalent’s senior secured credit facilities (as amended,
the “Credit Agreement”) and the indentures governing its various
senior unsecured notes (collectively, the “Indentures”), Catalent’s
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 “Consolidated EBITDA” in the Credit Agreement
and “EBITDA” in the Indentures). Adjusted EBITDA is a covenant
compliance measure in our Credit Agreement and Indentures,
particularly those covenants governing debt incurrence and
restricted payments. Adjusted EBITDA is not defined under U.S.
GAAP, is not a measure of operating income, operating performance
or liquidity presented in accordance with U.S. GAAP, and is subject
to important limitations. Because not all companies use identical
calculations, our presentation of Adjusted EBITDA may not be
comparable to other similarly titled measures of other
companies.
In addition, Catalent uses Adjusted EBITDA as a performance
metric that guides management in its operation of and planning for
the future of the business and drives certain management
compensation programs. Management believes that Adjusted EBITDA
provides a useful measure of Catalent’s operating performance from
period to period by excluding certain items that are not
representative of its core business, including interest expense and
non-cash charges like depreciation and amortization.
The measure under U.S. GAAP most directly comparable to Adjusted
EBITDA is net earnings. In calculating Adjusted EBITDA, Catalent
adds back certain non-cash, non-recurring and other items that are
deducted when calculating net earnings, consistent with the
requirements of the Credit Agreement. Adjusted EBITDA, among other
things:
- does not include non-cash stock-based employee compensation
expense and certain other non-cash charges;
- does not include cash and non-cash restructuring, severance and
relocation costs incurred to realize future cost savings and
enhance operations;
- adds back any non-controlling interest expense, which
represents minority investors’ ownership of non-wholly owned
consolidated subsidiaries and is, therefore, not available;
and
- includes estimated cost savings that have not yet been fully
reflected in the results.
About Catalent, Inc.
Catalent, Inc. (NYSE: CTLT) is the leading global provider of
advanced delivery technologies, development, and manufacturing
solutions for drugs, biologics, gene therapies, 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 more than
13,000 people, including approximately 2,400 scientists, at more
than 40 facilities across four continents. Catalent is
headquartered in Somerset, N.J. For more information, please visit
www.catalent.com.
Forward-Looking Statements
This release contains both historical and forward-looking
statements. All statements other than statements of historical
fact, including expected preliminary results for the fiscal year
and fourth quarter ending June 30, 2020, 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 Catalent’s
objectives, plans, or goals are, or may be, forward-looking
statements. These statements are based on current expectations of
future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could
vary materially from Catalent’s expectations and projections. Some
of the factors that could cause actual results to differ include,
but are not limited to, the following: the current or future
effects of the COVID-19 pandemic on Catalent's and its clients'
businesses; participation in a highly competitive market and
increased competition that may adversely affect Catalent’s
business; demand for its offerings, which depends in part on its
customers’ research and development and the clinical and market
success of their products; product and other liability risks that
could adversely affect Catalent’s results of operations, financial
condition, liquidity and cash flows; failure to comply with
existing and future regulatory requirements; failure to provide
quality offerings to customers could have an adverse effect on
Catalent’s business and subject it to regulatory actions and costly
litigation; problems providing the highly exacting and complex
services or support required; global economic, political and
regulatory risks to Catalent’s operations; inability to enhance
existing or introduce new technology or service offerings in a
timely manner; inadequate patents, copyrights, trademarks and other
forms of intellectual property protections; fluctuations in the
costs, availability, and suitability of the components of the
products Catalent manufactures, including active pharmaceutical
ingredients, excipients, purchased components and raw materials;
changes in market access or healthcare reimbursement in the United
States or internationally; fluctuations in the exchange rate of the
U.S. dollar against other currencies, including as a result of the
U.K.’s exit from the European Union; adverse tax legislative or
regulatory initiatives or challenges or adjustments to Catalent’s
tax positions; loss of key personnel; risks generally associated
with information systems; inability to complete any future
acquisitions or other transactions that may complement or expand
its business or divest of non-strategic businesses or assets and
difficulties in successfully integrating acquired businesses and
realizing anticipated benefits of such acquisitions; risks
associated with timely and successfully completing, and correctly
anticipating the future demand predicted for, capital expansion
projects at existing facilities, offerings and customers’ products
that may infringe on the intellectual property rights of third
parties; environmental, health and safety laws and regulations,
which could increase costs and restrict operations; labor and
employment laws and regulations or labor difficulties, which could
increase costs or result in operational disruptions; additional
cash contributions required to fund Catalent’s existing pension
plans; substantial leverage that may limit its ability to raise
additional capital to fund operations and react to changes in the
economy or in the industry; and exposure to interest-rate risk to
the extent of its variable-rate debt preventing it 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 Catalent’s Annual Report on Form 10-K for the
fiscal year ended June 30, 2019, filed August 27, 2019, as
supplemented by the "Risk Factors" in Catalent's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2020, filed May 5,
2020. All forward-looking statements speak only as of the date of
this release or as of the date they are made, and Catalent does not
undertake to update any forward-looking statement as a result of
new information or future events or developments except to the
extent required by law.
More products. Better treatments. Reliably
supplied.™
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version on businesswire.com: https://www.businesswire.com/news/home/20200730005171/en/
Investor Contact: Catalent, Inc. Paul Surdez 732-537-6325
investors@catalent.com
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