- Q3'23 net revenue of $1.04 billion decreased 19% as
reported, or 17% in constant currency(1), compared to Q3'22.
Organic, constant-currency net revenue decreased by 19%, compared
to Q3'22.
- Q3'23 net loss of $(227) million, including a goodwill
impairment of $210 million.
- Q3'23 Adjusted EBITDA(1) of $105 million decreased 69% as
reported, or 68% in constant currency, compared to Q3'22.
- Updated FY'23 financial guidance projects net revenue of
$4,225 million to $4,325 million and Adjusted EBITDA(1) of $700
million to $750 million.
(1) See "Non-GAAP Financial Measures" below and the GAAP to
non-GAAP reconciliation provided later in this release.
Catalent, Inc. (NYSE: CTLT), the leader in enabling the
development and supply of better treatments for patients worldwide,
today announced financial results for the third quarter of fiscal
2023, which ended March 31, 2023.
“We continue to make progress in addressing our previously
announced operational challenges, while also completing our
strategic investments in high-demand, high-growth areas and
executing a company-wide cost-reduction plan,” said Alessandro
Maselli, President and Chief Executive Officer of Catalent, Inc.
“The fundamentals of our business remain strong, with durable
customer demand for our global services and our talented colleagues
continuing to deliver on some of the most complex and significant
programs in the CDMO industry.”
Third Quarter 2023 Consolidated Results
Net revenue of $1.04 billion decreased 19% as reported, or 17%
in constant currency, from the $1.27 billion reported for the third
quarter a year ago. Overall organic net revenue (i.e., excluding
the effect of acquisitions, divestitures, and currency translation)
decreased by 19% over the same period.
Net loss and loss per basic and diluted share was $(227)
million, or ($1.26) per basic and diluted share, compared to net
earnings of $141 million, or $0.78 per basic and diluted share, in
the third quarter a year ago. The net loss includes a goodwill
impairment of $210 million, which includes the effect of a $42
million deferred tax adjustment.
EBITDA from operations(1) was a loss of $(125) million, a
decrease of $433 million from the $308 million reported in the
third quarter a year ago. Third quarter fiscal 2023 Adjusted
EBITDA(1) was $105 million, or 10% of net revenue, compared to $339
million, or 27% of net revenue, in the third quarter a year ago.
This represents a decrease of 69% as reported and a decrease of 68%
on a constant-currency basis, compared to the fiscal 2022
period.
Adjusted Net Loss(1) was $(17) million, or $(0.09) per diluted
share, compared to Adjusted Net Income of $188 million, or $1.04
per diluted share, in the third quarter a year ago.
(1) See "Non-GAAP Financial Measures" below and the GAAP to
non-GAAP reconciliation provided later in this release.
Third Quarter 2023 Segment Review
(Dollars in millions)
Three Months Ended March
31,
Constant Currency
2023
2022
Change %
Biologics
Net revenue
$
475
$
700
(32
)%
Segment EBITDA
6
218
(98
)%
Segment EBITDA margin
1.1
%
31.1
%
Pharma and Consumer Health
Net revenue
563
574
1
%
Segment EBITDA
125
144
(10
)%
Segment EBITDA margin
22.3
%
25.2
%
Inter-segment revenue
elimination
(1
)
(1
)
—
%
Unallocated costs
(256
)
(54
)
375
%
Combined totals
Net revenue
$
1,037
$
1,273
(17
)%
(Loss) EBITDA from operations
$
(125
)
$
308
(140
)%
Biologics segment
2023 vs. 2022
2023 vs. 2022
Year-Over-Year Change
Three Months Ended
March 31,
Nine Months Ended
March 31,
Net Revenue
Segment EBITDA
Net Revenue
Segment EBITDA
Organic
(32) %
(97) %
(15) %
(46) %
Impact of acquisitions
— %
(1) %
— %
(2) %
Constant-currency change
(32) %
(98) %
(15) %
(48) %
Foreign exchange translation impact on
reporting
— %
— %
(1) %
— %
Total % change
(32) %
(98) %
(16) %
(48) %
Pharma and Consumer Health
segment
2023 vs. 2022
2023 vs. 2022
Year-Over-Year Change
Three Months Ended
March 31,
Nine Months Ended
March 31,
Net Revenue
Segment EBITDA
Net Revenue
Segment EBITDA
Organic
(3) %
(15) %
(1) %
(6) %
Impact of acquisitions
4 %
5 %
6 %
6 %
Constant-currency change
1 %
(10) %
5 %
— %
Foreign currency translation impact on
reporting
(3) %
(3) %
(5) %
(6) %
Total % change
(2) %
(13) %
— %
(6) %
Segment Net Revenue as a % of Total Net Revenue
Three Months Ended
March 31, 2023
December 31, 2022
September 30,
2022
June 30, 2022
March 31, 2022
Biologics
46 %
50 %
51 %
51 %
55 %
Pharma and Consumer Health
54 %
50 %
49 %
49 %
45 %
Net Revenue
100 %
100 %
100 %
100 %
100 %
Balance Sheet and Liquidity
As of March 31, 2023, Catalent had $4.85 billion in total debt,
and $4.60 billion in total debt net of cash, cash equivalents, and
marketable securities, compared to $4.38 billion in total net debt
as of December 31, 2022.
Catalent's ratio of First Lien Debt over LTM Adjusted EBITDA was
2.2x at March 31, 2023. Catalent's senior secured credit agreement
requires that this ratio remain below 6.5x.
Catalent’s net leverage ratio(1) as of March 31, 2023 was 4.9x,
compared to 3.8x at December 31, 2022 and 2.9x as of June 30,
2022.
(1) See "Non-GAAP Financial Measures" below and the GAAP to
non-GAAP reconciliation provided later in this release.
Fiscal Year 2023 Outlook
Previous
FY'23 Full Year Guidance
FY'23
Full Year Guidance
Net revenue
$4,250 million - $4,350
million
$4,225 million - $4,325
million
Adjusted EBITDA
$725 million - $775 million
$700 million - $750 million
Adjusted net income
$187 million - $228 million
$169 million - $210 million
Weighted average shares outstanding -
diluted
181 million - 183 million
181 million - 183 million
Amended Fiscal 2022 10-K
Catalent will file today with the Securities and Exchange
Commission (the “SEC”) its Amendment No. 1 on Form 10‑K/A (the
“Amended Fiscal 2022 10-K”) to its Annual Report on Form 10-K for
the fiscal year ended June 30, 2022, which had been filed with the
SEC on August 29, 2022. As described in the Amended Fiscal 2022
10-K, in preparing Catalent’s consolidated financial statements for
the three and nine months ended March 31, 2023, Catalent identified
a $26 million error related to the over-recognition of revenue in
the consolidated financial statements it issued with respect to its
fiscal year ended June 30, 2022. This error resulted from the
misapplication of the contract modification guidance to one of the
Company’s customer arrangements in accordance with U.S. generally
accepted accounting principles, particularly ASC 606, Revenue from
Contracts with Customers. Catalent assessed the materiality of the
error both quantitatively and qualitatively and determined this
error to be immaterial to those consolidated financial statements.
While the revenue recognition error did not result in a material
misstatement of the Company’s previously issued consolidated
financial statements, the Company nevertheless determined to revise
those consolidated financial statements it issued with respect to
its fiscal year ended June 30, 2022 to reflect the impact of that
error in the appropriate period. Due to the discovery of this
error, Catalent also re-evaluated the effectiveness of its internal
control over financial reporting (“ICFR”) as of June 30, 2022 and
identified a material weakness in its ICFR as of that date related
to the accounting for modifications of customer agreements at our
Bloomington, Indiana facility. For a more detailed description of
this material weakness, refer to Part II, Item 9A, “Controls and
Procedures” in the Amended Fiscal 2022 10-K. The Amended Fiscal
2022 10-K therefore restates Catalent’s assessment of its ICFR and
its disclosure controls and procedures to indicate that they were
not effective as of June 30, 2022 because of this material
weakness. Catalent’s independent registered public accounting firm,
Ernst & Young LLP, has also restated its opinion on Catalent’s
ICFR as of June 30, 2022.
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.
About Catalent, Inc.
Catalent is the global leader in enabling pharma, biotech, and
consumer health partners to optimize product development, launch,
and full life-cycle supply for patients around the world. With
broad and deep scale and expertise in development sciences,
delivery technologies, and multi-modality manufacturing, Catalent
is a preferred industry partner for personalized medicines,
consumer health brand extensions, and blockbuster drugs. Catalent
helps accelerate over 1,000 partner programs and launch over 150
new products every year. Its flexible manufacturing platforms at
over 50 global sites supply around 80 billion doses of nearly 8,000
products annually. Catalent’s expert workforce of approximately
18,000 includes more than 3,000 scientists and technicians.
Headquartered in Somerset, New Jersey, the company generated nearly
$5 billion in revenue in its 2022 fiscal year. For more
information, visit www.catalent.com.
Non-GAAP Financial Measures
Use of EBITDA from operations, Adjusted EBITDA, Adjusted Net
Income and Segment EBITDA
Management measures operating performance based on consolidated
earnings from operations before interest expense, expense (benefit)
for income taxes, and depreciation and amortization, adjusted for
the income or loss attributable to non-controlling interests
(“EBITDA from operations”). EBITDA from operations is not defined
under U.S. GAAP, is not a measure of operating income, operating
performance, or liquidity presented in accordance with U.S. GAAP,
and is subject to important limitations.
Catalent believes that the presentation of EBITDA from
operations enhances an investor’s understanding of its financial
performance. Catalent believes this measure is a useful financial
metric to assess its operating performance across periods by
excluding certain items that it believes are not representative of
its core business and uses this measure for business planning
purposes.
In addition, given the significant investments that Catalent has
made in the past in property, plant and equipment, depreciation and
amortization expenses represent a meaningful portion of its cost
structure. Catalent believes that EBITDA from operations will
provide investors with a useful tool for assessing the
comparability between periods of Catalent's ability to generate
cash from operations sufficient to pay taxes, to service debt and
to undertake capital expenditures because it eliminates
depreciation and amortization expense. Catalent presents EBITDA
from operations in order to provide supplemental information that
it considers relevant for the readers of its consolidated financial
statements, and such information is not meant to replace or
supersede U.S. GAAP measures. Catalent’s definition of EBITDA from
operations may not be the same as similarly titled measures used by
other companies.
Catalent evaluates the performance of its segments based on
segment earnings before non-controlling interest, other (income)
expense, impairments, restructuring costs, interest expense, income
tax expense (benefit), and depreciation and amortization (“segment
EBITDA”). Moreover, under Catalent’s credit agreement, its ability
to engage in certain activities, such as incurring certain
additional indebtedness, making certain investments and paying
certain dividends, is tied to ratios based on Adjusted EBITDA,
which is not defined under U.S. GAAP, is not a measure of operating
income, operating performance, or liquidity presented in accordance
with U.S. GAAP, and is subject to important limitations. Adjusted
EBITDA is the covenant compliance measure used in the credit
agreement governing debt incurrence and restricted payments.
Because not all companies use identical calculations, Catalent’s
presentation of Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.
Management also measures operating performance based on Adjusted
Net Income and Adjusted Net Income per share. Adjusted Net Income
is not defined under U.S. GAAP, is not a measure of operating
income, operating performance, or liquidity presented in accordance
with U.S. GAAP and is subject to important limitations. Catalent
believes that the presentation of Adjusted Net Income and Adjusted
Net Income per share enhances an investor’s understanding of its
financial performance. Catalent believes these measures are a
useful financial metric to assess its operating performance across
periods by excluding certain items that it believes are not
representative of its core business and Catalent uses these
measures for business planning purposes. Catalent defines Adjusted
Net Income as net earnings adjusted for amortization attributable
to purchase accounting and adjustments for other cash and non-cash
items included in the table below, partially offset by its estimate
of the tax effects of such cash and non-cash items. Catalent
believes that Adjusted Net Income and Adjusted Net Income per share
provides investors with a useful tool for assessing the
comparability between periods of its ability to generate cash from
operations available to its stockholders. Catalent’s definition of
Adjusted Net Income may not be the same as similarly titled
measures used by other companies. Adjusted Net Income per share is
computed by dividing Adjusted Net Income by the weighted average
diluted shares outstanding.
The most directly comparable U.S. GAAP measure to EBITDA from
operations, Adjusted EBITDA, and Adjusted Net Income is net
earnings. Included in this release is a reconciliation of net
earnings to EBITDA from operations, Adjusted EBITDA and Adjusted
Net Income.
Catalent does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable U.S. GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting, and analyzing future periods, Catalent does
so primarily on a non-GAAP basis without preparing a U.S. GAAP
analysis as that would require estimates for various cash and
non-cash reconciling items that would be difficult to predict with
reasonable accuracy. For example, equity compensation expense would
be difficult to estimate because it depends on Catalent’s future
hiring and retention needs, as well as the future fair market value
of its common stock, all of which are difficult to predict and
subject to constant change. It is equally difficult to anticipate
the need for or magnitude of a presently unforeseen one-time
restructuring expense or the values of end-of-period foreign
currency exchange rates. As a result, Catalent does not believe
that a U.S. GAAP reconciliation would provide meaningful
supplemental information about its outlook.
Use of Constant Currency
As changes in exchange rates are an important factor in
understanding period-to-period comparisons, Catalent believes the
presentation of results on a constant-currency basis in addition to
reported results helps improve investors’ ability to understand its
operating results and evaluate its performance in comparison to
prior periods. Constant-currency information compares results
between periods as if exchange rates had remained constant period
over period. Catalent uses results on a constant-currency basis as
one measure to evaluate its performance. Catalent calculates
constant currency by calculating current-year results using
prior-year foreign currency exchange rates. Catalent generally
refers to such amounts calculated on a constant-currency basis as
excluding the impact of foreign exchange or being on a
constant-currency basis. These results should be considered in
addition to, not as a substitute for, results reported in
accordance with U.S. GAAP. Results on a constant-currency basis, as
Catalent presents them, may not be comparable to similarly titled
measures used by other companies and are not measures of
performance presented in accordance with U.S. GAAP.
Forward-Looking Statements
This release contains both historical and forward-looking
statements. All statements other than statements of historical
fact, are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements generally can be
identified by the use of statements that include phrases such as
“believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,”
“project,” “predict,” “hope,” “foresee,” “likely,” “may,” “could,”
“target,” “will,” “would,” or other words or phrases with similar
meanings. Similarly, statements that describe Catalent’s
objectives, plans, or goals are, or may be, forward-looking
statements. These statements are based on current expectations of
future events. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results could
vary materially from Catalent’s expectations and projections. Some
of the factors that could cause actual results to differ include,
but are not limited to, the following: Catalent’s ability to regain
compliance with the NYSE's listing standards, Catalent’s ability to
resolve productivity issues at three of its manufacturing
facilities, the impact of such issues on product made at these
facilities, the timing of recovering unproduced batches and
resumption of normal activities at these facilities, and the impact
of such issues on Catalent’s results of operations and financial
condition; the declining demand for various vaccines and treatments
for the SARS-Co-V-2 strain of coronavirus and its variants
(“COVID-19”) from both patients and governments around the world
may affect sales of the COVID-19 products Catalent manufactures;
participation in a highly competitive market and increased
competition that may adversely affect Catalent’s business; demand
for its offerings, which depends in part on its customers’ research
and development and the clinical and market success of their
products; product and other liability risks that could adversely
affect Catalent’s results of operations, financial condition,
liquidity and cash flows; failure to comply with existing and
future regulatory requirements; failure to provide quality
offerings to customers could have an adverse effect on Catalent’s
business and subject it to regulatory actions and costly
litigation; problems providing the highly exacting and complex
services or support required; global economic, political and
regulatory risks to Catalent’s operations, including risks from
rising inflation, disruptions to global supply chains, or from the
Ukrainian-Russian war; inability to enhance existing or introduce
new technology or service offerings in a timely manner; inadequate
patents, copyrights, trademarks and other forms of intellectual
property protections; fluctuations in the costs, availability, and
suitability of the components of the products Catalent
manufactures, including active pharmaceutical ingredients,
excipients, purchased components and raw materials; changes in
market access or healthcare reimbursement in the United States or
internationally; fluctuations in the exchange rate of the U.S.
dollar against other currencies; adverse tax legislative or
regulatory initiatives or challenges or adjustments to Catalent’s
tax positions; loss of key personnel; risks generally associated
with information systems; inability to complete any future
acquisition or other transaction that may complement or expand its
business or divest of non-strategic businesses or assets and
difficulties in successfully integrating acquired businesses and
realizing anticipated benefits of such acquisitions; risks
associated with timely and successfully completing, and correctly
anticipating the future demand predicted for, capital expansion
projects at existing facilities; offerings and customers’ products
that may infringe on the intellectual property rights of third
parties; environmental, health, and safety laws and regulations,
which could increase costs and restrict operations; labor and
employment laws and regulations or labor difficulties, which could
increase costs or result in operational disruptions; additional
cash contributions required to fund Catalent’s existing pension
plans; substantial leverage that may limit its ability to raise
additional capital to fund operations and react to changes in the
economy or in the industry; 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, 2022 (as amended), the Company’s
Quarterly Report on Form 10-Q for the three and nine months ended
March 31, 2023, and the Company’s other filings with the SEC. 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.™
Catalent, Inc.
Consolidated Statements of
Operations
(Unaudited; dollars and shares
in millions, except per share data)
Three Months Ended
March 31,
FX Impact
Constant Currency Increase
(Decrease)
2023
2022
Change $
Change %
Net revenue
$
1,037
$
1,273
$
(20
)
$
(216
)
(17
)%
Cost of sales
857
850
(15
)
22
3
%
Gross margin
180
423
(5
)
(238
)
(56
)%
Selling, general, and administrative
expenses
190
207
(3
)
(14
)
(7
)%
Goodwill impairment charges
210
—
—
210
*
Other operating expense, net
15
5
1
9
172
%
Operating (loss) earnings
(235
)
211
(3
)
(443
)
(210
)%
Interest expense, net
51
33
—
18
53
%
Other (income) expense, net
(4
)
2
(2
)
(4
)
(200
)%
(Loss) earnings before income taxes
(282
)
176
(1
)
(457
)
(260
)%
Income tax (benefit) expense
(55
)
35
—
(90
)
(259
)%
Net (loss) earnings
$
(227
)
$
141
$
(1
)
$
(367
)
(261
)%
Weighted average shares outstanding –
basic
181
180
Weighted average shares outstanding –
diluted
181
181
Earnings per share:
Basic
Net (loss) earnings
$
(1.26
)
$
0.78
Diluted
Net (loss) earnings
$
(1.26
)
$
0.78
* Not meaningful
Catalent, Inc.
Consolidated Statements of
Operations
(Unaudited; dollars and shares
in millions, except per share data)
Nine Months Ended
March 31,
FX impact
Constant Currency Increase
(Decrease)
2023
2022
Change $
Change %
Net revenue
$
3,208
$
3,515
$
(110
)
$
(197
)
(6
)%
Cost of sales
2,383
2,363
(81
)
101
4
%
Gross margin
825
1,152
(29
)
(298
)
(26
)%
Selling, general and administrative
expenses
612
618
(13
)
7
1
%
Goodwill impairment charges
210
—
—
210
*
Gain on sale of subsidiary
—
(1
)
—
1
*
Other operating expense
40
25
1
14
50
%
Operating (loss) earnings
(37
)
510
(17
)
(530
)
(104
)%
Interest expense, net
130
91
(2
)
41
44
%
Other (income) expense, net
(2
)
25
(8
)
(19
)
(76
)%
(Loss) earnings before taxes
(165
)
394
(7
)
(552
)
(140
)%
Income tax (benefit) expense
(19
)
63
(4
)
(78
)
(125
)%
Net (loss) earnings
$
(146
)
$
331
$
(3
)
$
(474
)
(143
)%
Less: Net earnings attributable to
preferred shareholders
—
(15
)
Net (loss) earnings attributable to common
shareholders
$
(146
)
$
316
Weighted average shares outstanding –
basic
180
176
Weighted average shares outstanding –
diluted
180
177
Earnings per share:
Basic
Net (loss) earnings
$
(0.81
)
$
1.81
Diluted
Net (loss) earnings
$
(0.81
)
$
1.79
* Not meaningful
Catalent, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited; dollars in
millions)
March 31, 2023
June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
252
$
449
Trade receivables, net
1,049
1,051
Inventories
744
702
Prepaid expenses and other
693
626
Marketable securities
—
89
Total current assets
2,738
2,917
Property, plant, and equipment, net
3,671
3,127
Other non-current assets, including
intangible assets
4,421
4,464
Total assets
$
10,830
$
10,508
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term obligations
and other short-term borrowings
$
588
$
31
Accounts payable
394
421
Other accrued liabilities
505
646
Total current liabilities
1,487
1,098
Long-term obligations, less current
portion
4,261
4,171
Other non-current liabilities
379
464
Total shareholders' equity
4,703
4,775
Total liabilities and shareholders'
equity
$
10,830
$
10,508
Catalent, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited; dollars in
millions)
Nine Months Ended
March 31,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash provided by operating
activities
$
58
$
370
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property, equipment, and
other productive assets
(455
)
(425
)
Proceeds from maturity of (purchase of)
marketable securities
89
(25
)
Proceeds from sale of property and
equipment
8
—
Settlement on sale of subsidiaries,
net
—
(3
)
Payment for acquisitions, net of cash
acquired
(474
)
(1,033
)
Payments for investments
(2
)
(4
)
Net cash used in investing activities
(834
)
(1,490
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from borrowing
715
1,100
Payments related to long-term
obligations
(176
)
(72
)
Financing fees paid
(4
)
(15
)
Dividends paid
—
(4
)
Cash paid, in lieu of equity, for tax
withholding obligations
—
(9
)
Exercise of stock options
4
21
Other financing activities
33
9
Net cash provided by financing
activities
572
1,030
Effect of foreign currency exchange on
cash and cash equivalents
7
(20
)
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(197
)
(110
)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD
449
896
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
252
$
786
Catalent, Inc.
Reconciliation of Net Earnings
(Loss) to EBITDA from Operations and Adjusted EBITDA*
(Unaudited; dollars in
millions)
Three months ended
March 31, 2022
June 30, 2022(1)
September 30, 2022
December 31, 2022
March 31, 2023
Net earnings (loss)
$
141
$
168
$
—
$
81
$
(227
)
Interest expense, net
33
32
32
47
51
Income tax expense (benefit)
35
17
3
33
(55
)
Depreciation and amortization
99
100
99
103
106
EBITDA (loss) from operations
308
317
134
264
(125
)
Goodwill impairment charges
—
—
—
—
210
Stock-based compensation
10
12
19
10
6
Impairment charges and gain/loss on sale
of assets
2
10
(2
)
1
6
Restructuring costs
3
5
4
23
9
Acquisition, integration, and other
special items
9
8
5
9
8
Foreign exchange loss (gain)
1
6
27
(26
)
(8
)
Inventory fair value step-up charges
7
—
—
—
—
Other adjustments
(1
)
—
—
2
(1
)
Adjusted EBITDA
$
339
$
358
$
187
$
283
$
105
Favorable (unfavorable) FX impact
(4
)
Adjusted EBITDA at constant currency
$
109
* Refer to Catalent's description of
non-GAAP measures, including EBITDA from operations and Adjusted
EBITDA as referenced above.
(1) Balances have been restated to correct
prior-period error.
Catalent, Inc.
Reconciliation of Net Earnings
(Loss) to Adjusted Net (Loss) Income*
(Unaudited; dollars in
millions, except per share data)
Three months ended
March 31, 2022
June 30, 2022(11)
September 30, 2022
December 31, 2022
March 31, 2023
Net earnings (loss)
$
141
$
168
$
—
$
81
$
(227
)
Amortization (1)
33
33
33
34
34
Goodwill impairment charges (2)
—
—
—
—
210
Stock-based compensation
10
12
19
10
6
Impairment charges and gain/loss on sale
of assets (3)
2
10
(2
)
1
6
Restructuring costs (4)
3
5
4
23
9
Acquisition, integration, and other
special items (5)
9
8
5
9
8
Foreign exchange loss (gain)
1
6
27
(26
)
(8
)
Inventory fair value step-up charges
(6)
7
—
—
—
—
Other adjustments (7)
(1
)
(1
)
—
2
—
Estimated tax effect of adjustments
(8)
(15
)
(18
)
(19
)
(12
)
(12
)
Discrete income tax benefit items (9)
(2
)
(28
)
(6
)
—
(43
)
Adjusted net (loss) income (ANI)
$
188
$
195
$
61
$
122
$
(17
)
Weighted average shares outstanding –
basic
180
181
Weighted average shares outstanding –
diluted
181
181
Earnings per share:
Net earnings (loss) per share – basic
$
0.78
$
(1.26
)
Net earnings (loss) per share –
diluted
$
0.78
$
(1.26
)
ANI per share:
ANI (loss) per share – basic
$
1.05
$
(0.09
)
ANI (loss) per share – diluted (10)
$
1.04
$
(0.09
)
* Refer to Catalent's description of
non-GAAP measures, including Adjusted Net Income as referenced
above.
(1)
Represents the amortization attributable to purchase
accounting for previously completed business combinations.
(2)
Goodwill impairment charges during the three months ended
March 31, 2023 were associated with the Company's Consumer Health
reporting unit.
(3)
For the three months ended June 30, 2022, represents fixed
asset impairment charges primarily associated with obsolete
equipment in the Biologics segment.
(4)
Restructuring costs during the three months ended March 31,
2023 and December 31, 2022 represent restructuring charges
associated with Catalent's plans to reduce costs, consolidate
facilities, and optimize its infrastructure across the
organization.
(5)
Acquisition, integration and other special items during the
three months ended December 31, 2022 include costs associated with
its October 2022 acquisition of Metrics Contract Services.
(6)
For the three months ended March 31, 2022, represents a
one-time non-cash inventory fair value adjustment of $7 million
recorded in connection with Catalent's October 2021 acquisition of
the Bettera Wellness business.
(7)
Primary represents unrealized gains related to the fair
value of the derivative liability associated with Catalent's
formerly outstanding Series A convertible preferred stock.
(8)
The tax effect of adjustments to Adjusted Net (Loss) Income
is computed by applying the statutory tax rate in the jurisdictions
to the income or expense items that are adjusted in the period
presented; if a valuation allowance exists, the rate applied is
zero.
(9)
Discrete period income tax expense items are unusual or
infrequently occurring items, primarily including: changes in
judgment related to the realizability of deferred tax assets in
future years, changes in measurement of a prior-year tax position,
deferred tax impact of changes in tax law, and purchase accounting.
(10)
For the three months ended March 31, 2023 and 2022,
represents Adjusted Net (Loss) Income divided by the weighted
average sum of fully diluted shares outstanding, which is equal to
(a) the number of shares of common stock outstanding, plus (b) the
number of shares of its common stock that would be issued assuming
exercise or vesting of all potentially dilutive instruments. For
the three months ended March 31, 2023 and 2022, the weighted
average number of shares was 181 million.
(11)
Balances have been restated to correct prior-period error.
Catalent, Inc.
Reconciliation of Segment
EBITDA to Net (Loss) Earnings
(Unaudited; dollars in
millions, except per share data)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2023
2022
2023
2022
Biologics Segment EBITDA
$
6
$
218
$
299
$
584
Pharma and Consumer Health Segment
EBITDA
125
144
368
390
Sub-Total
$
131
$
362
$
667
$
974
Reconciling items to net (loss)
earnings
Unallocated costs (1)
(256
)
(54
)
(394
)
(211
)
Depreciation and amortization
(106
)
(99
)
(308
)
(278
)
Interest expense, net
(51
)
(33
)
(130
)
(91
)
Income tax benefit (expense)
55
(35
)
19
(63
)
Net (loss) earnings
$
(227
)
$
141
$
(146
)
$
331
(1)
Unallocated costs include restructuring and special items,
stock-based compensation, impairment charges, gain on sale of
subsidiary, certain other corporate directed costs, and other costs
that are not allocated to the segments.
Catalent, Inc.
Calculation of Net Leverage
Ratio
(Unaudited; dollars in
millions)
March 31, 2022
June 30, 2022(1)
September 30, 2022(1)
December 31, 2022(1)
March 31, 2023(1)
Incremental Term Loan, due 2028
$
1,437
$
1,433
$
1,429
$
1,426
$
1,422
Revolving credit facility
—
—
75
600
550
Unamortized discount and debt issuance
costs
(9
)
(9
)
(7
)
(13
)
(12
)
Total Secured Debt
1,428
1,424
1,497
2,013
1,960
Senior Notes, due 2027, 5.000%
500
500
500
500
500
Senior Notes, due 2028 (EUR), 2.375%
905
874
794
879
895
Senior Notes, due 2029, 3.125%
550
550
550
550
550
Senior Notes due 2030, 3.500%
650
650
650
650
650
Finance Leases / Other
187
234
245
291
323
Unamortized discount and debt issuance
costs
(34
)
(30
)
(32
)
(30
)
(29
)
Total Unsecured Debt
2,758
2,778
2,707
2,840
2,889
Total Debt
4,186
4,202
4,204
4,853
4,849
Cash and Cash Equivalents
786
449
281
442
252
Marketable Securities
94
89
64
28
—
Total Net Debt
$
3,306
$
3,664
$
3,859
$
4,383
$
4,597
Adjusted EBITDA
Q4 2021
348
Q1 2022
252
252
Q2 2022
310
310
310
Q3 2022
339
339
339
339
Q4 2022
358
358
358
358
Q1 2023
187
187
187
Q2 2023
283
283
Q3 2023
105
LTM Adjusted EBITDA
$
1,249
$
1,259
$
1,194
$
1,167
$
933
First Lien Debt / Adj. EBITDA
0.7x
1.0x
1.2x
1.6x
2.2x
Net Sr. Secured Debt / Adj. EBITDA
0.4x
0.7x
1.0x
1.3x
1.8x
Net Debt / Adj. EBITDA
2.6x
2.9x
3.2x
3.8x
4.9x
(1) Balances have been restated to correct
prior-period error.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230612691463/en/
Investor Contact: Catalent, Inc. Paul Surdez 732-537-6325
investors@catalent.com
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