Catalent, Inc. Reports Second Quarter Fiscal 2022 Results

  • Q2'22 net revenue of $1.22 billion increased 34% as reported, or 35% in constant currency, compared to Q2'21. Organic, constant-currency net revenue grew 32%, compared to Q2'21.
  • Q2'22 net earnings of $97 million.
  • Q2'22 Adjusted EBITDA(1) of $310 million increased 39% as reported and in constant currency, compared to Q2'21.
  • Increasing and tightening guidance to reflect projected net revenue growth of 19-22% and Adjusted EBITDA growth of 23-27%, compared to previous projected net revenue growth of 16-21% and Adjusted EBITDA growth of 20-27%.

SOMERSET, N.J.--()--Catalent, Inc. (NYSE: CTLT), the global leader in enabling pharma, biotech, and consumer health partners to optimize development, launch, and supply of better patient treatments across multiple modalities, today announced financial results for the second quarter of fiscal 2022, which ended December 31, 2021.

“Our second quarter results demonstrated steady momentum across our businesses, and we expect favorable market dynamics will continue to fuel long-term growth. Consequently, we recently announced fiscal 2026 financial targets that include projections of more than $7.5 billion of net annual revenue and margin expansion, driven by our expectation for continued organic growth and additional acquisitions. As we execute on our strategy over the next four years, we will continue to anticipate and meet our customers’ needs, and accelerate innovations, to serve patients around the world,” said John Chiminski, Chair and Chief Executive Officer of Catalent, Inc.

Second Quarter 2022 Consolidated Results

Net revenue of $1.22 billion increased 34% as reported, or 35% in constant currency, from the $911 million reported for the second quarter a year ago. Overall organic net revenue growth (i.e., excluding the effect of acquisitions, divestitures, and currency translation) was 32%.

After accounting for the net earnings attributable to holders of Catalent’s formerly outstanding Series A convertible preferred stock, net earnings attributable to common shareholders were $93 million, or $0.53 per basic and $0.52 per diluted share, compared to net earnings attributable to common shareholders of $77 million, or $0.46 per basic share, $0.45 per diluted share, in the second quarter a year ago.

EBITDA from operations(1) was $245 million, an increase of $39 million from $206 million in the second quarter a year ago. Second quarter fiscal 2022 Adjusted EBITDA(1) was $310 million, or 25.4% of net revenue, compared to $224 million, or 24.5% of net revenue, in the second quarter a year ago. This represents an increase of 39% as reported and on a constant-currency basis.

Adjusted Net Income(1) was $163 million, or $0.90 per diluted share, compared to Adjusted Net Income of $114 million, or $0.63 per diluted share, in the second quarter a year ago.

Second Quarter 2022 Segment Review

(Dollars in millions)

Three Months Ended
December 31,

 

Constant
Currency

 

2021

 

2020

 

Change %

Biologics

 

 

 

 

 

Net revenue

$

638

 

 

$

404

 

 

60

%

Segment EBITDA

 

197

 

 

 

136

 

 

47

%

Segment EBITDA margin

 

30.9

%

 

 

33.5

%

 

 

Softgel and Oral Technologies

 

 

 

 

 

Net revenue

 

329

 

 

 

247

 

 

36

%

Segment EBITDA

 

78

 

 

 

46

 

 

73

%

Segment EBITDA margin

 

23.6

%

 

 

18.5

%

 

 

Oral and Specialty Delivery

 

 

 

 

 

Net revenue

 

156

 

 

 

170

 

 

(8

) %

Segment EBITDA

 

44

 

 

 

44

 

 

%

Segment EBITDA margin

 

28.2

%

 

 

26.0

%

 

 

Clinical Supply Services

 

 

 

 

 

Net revenue

 

99

 

 

 

93

 

 

7

%

Segment EBITDA

 

27

 

 

 

25

 

 

9

%

Segment EBITDA margin

 

27.4

%

 

 

27.1

%

 

 

Inter-segment revenue elimination

 

(5

)

 

 

(3

)

 

(61

) %

Unallocated costs

 

(101

)

 

 

(45

)

 

(130

) %

Combined totals

 

 

 

 

 

Net revenue

$

1,217

 

 

$

911

 

 

35

%

 

 

 

 

 

 

EBITDA from operations

$

245

 

 

$

206

 

 

20

%

(1) See "Non-GAAP Financial Measures" below and the GAAP to non-GAAP reconciliation provided later in this release.

Biologics segment

2021 vs. 2020

 

2021 vs. 2020

Year-Over-Year Change

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

Net Revenue

 

Segment
EBITDA

 

Net Revenue

 

Segment
EBITDA

Organic

59

%

 

48

%

 

52

%

 

51

%

Impact of acquisitions

1

%

 

(1

) %

 

%

 

(1

) %

Constant currency change

60

%

 

47

%

 

52

%

 

50

%

Foreign currency translation impact on reporting

(2

) %

 

(2

) %

 

%

 

%

Total % change

58

%

 

45

%

 

52

%

 

50

%

Softgel and Oral Technologies segment

2021 vs. 2020

 

2021 vs. 2020

Year-Over-Year Change

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

Net Revenue

 

Segment
EBITDA

 

Net Revenue

 

Segment
EBITDA

Organic

14

%

 

43

%

 

12

%

 

28

%

Impact of acquisitions

22

%

 

30

%

 

11

%

 

16

%

Constant currency change

36

%

 

73

%

 

23

%

 

44

%

Foreign currency translation impact on reporting

(3

) %

 

(3

) %

 

(1

) %

 

(2

) %

Total % change

33

%

 

70

%

 

22

%

 

42

%

Oral and Specialty Delivery segment

2021 vs. 2020

 

2021 vs. 2020

Year-Over-Year Change

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

Net Revenue

 

Segment
EBITDA

 

Net Revenue

 

Segment
EBITDA

Organic

5

%

 

24

%

 

4

%

 

50

%

Impact of acquisitions

2

%

 

(7

) %

 

1

%

 

(12

) %

Impact of divestitures

(15

) %

 

(17

) %

 

(14

) %

 

(23

) %

Constant currency change

(8

) %

 

%

 

(9

) %

 

15

%

Foreign currency translation impact on reporting

%

 

%

 

1

%

 

3

%

Total % change

(8

) %

 

%

 

(8

) %

 

18

%

Clinical Supply Services segment

2021 vs. 2020

 

2021 vs. 2020

Year-Over-Year Change

Three Months Ended

December 31,

 

Six Months Ended

December 31,

 

Net Revenue

 

Segment
EBITDA

 

Net Revenue

 

Segment
EBITDA

Organic

7

%

 

9

%

 

5

%

 

5

%

Constant currency change

7

%

 

9

%

 

5

%

 

5

%

Foreign currency translation impact on reporting

%

 

(1

) %

 

%

 

1

%

Total % change

7

%

 

8

%

 

5

%

 

6

%

Segment Net Revenue as a % of Total Net Revenue

 

Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

Biologics

52

%

 

53

%

 

50

%

 

52

%

 

44

%

Softgel and Oral Technologies

27

%

 

24

%

 

25

%

 

23

%

 

27

%

Oral and Specialty Delivery

13

%

 

14

%

 

16

%

 

16

%

 

19

%

Clinical Supply Services

8

%

 

9

%

 

9

%

 

9

%

 

10

%

Net Revenue

100

%

 

100

%

 

100

%

 

100

%

 

100

%

Balance Sheet and Liquidity

As of December 31, 2021, Catalent had $4.22 billion in total debt, and $3.31 billion in total debt net of cash, cash equivalents, and marketable securities, compared to $2.29 billion in total net debt as of September 30, 2021. The current debt structure does not include any significant maturity until 2027.

Catalent’s net leverage ratio(1) as of December 31, 2021 was 2.8x, compared to a proforma calculation of 3.0x at September 30, 2021 (which incorporates the issuance of debt on September 29 and Bettera acquisition on October 1) and 2.6x at December 31, 2020.

Fiscal Year 2022 Outlook

 

Previous Guidance

Updated Guidance

Net revenue

$4,620 million - $4,820 million

$4,740 million - $4,860 million

Adjusted EBITDA

$1,225 million - $1,295 million

$1,250 million - $1,300 million

Adjusted net income

$630 million - $695 million

$650 million - $700 million

Weighted average shares outstanding - diluted

181 million - 183 million

181 million - 183 million

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, Inc. (NYSE: CTLT), an S&P 500® company, 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 the industry’s preferred 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 over 70 billion doses of more than 7,000 products to over 1,000 customers annually.

Catalent’s expert workforce exceeds 17,000, including more than 2,500 scientists and technicians. Headquartered in Somerset, New Jersey, the company generated $4 billion in revenue in its 2021 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.

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: the current or future effects of the COVID-19 pandemic or any global health developments on Catalent's or its customers' or suppliers' 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; 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, 2021, filed August 30, 2021. 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
December 31,

 

FX Impact

 

Constant Currency Increase
(Decrease)

 

2021

2020

 

 

Change $

Change %

Net revenue

$

1,217

 

 

$

911

 

 

$

(13

)

 

$

319

 

 

35

%

Cost of sales

 

812

 

 

 

613

 

 

 

(8

)

 

 

207

 

 

34

%

Gross margin

 

405

 

 

 

298

 

 

 

(5

)

 

 

112

 

 

38

%

Selling, general, and administrative expenses

 

228

 

 

 

165

 

 

 

(1

)

 

 

64

 

 

38

%

Other operating expense

 

16

 

 

 

6

 

 

 

(1

)

 

 

11

 

 

185

%

Operating earnings

 

161

 

 

 

127

 

 

 

(3

)

 

 

37

 

 

30

%

Interest expense, net

 

32

 

 

 

26

 

 

 

 

 

 

6

 

 

24

%

Other expense (income), net

 

14

 

 

 

(8

)

 

 

(2

)

 

 

24

 

 

(292

) %

Earnings before income taxes

 

115

 

 

 

109

 

 

 

(1

)

 

 

7

 

 

6

%

Income tax expense (benefit)

 

18

 

 

 

21

 

 

 

 

 

 

(3

)

 

(14

) %

Net earnings

$

97

 

 

$

88

 

 

$

(1

)

 

$

10

 

 

11

%

Less: Net earnings attributable to preferred shareholders

 

(4

)

 

 

(11

)

 

 

 

 

 

 

Net earnings attributable to common shareholders

$

93

 

 

$

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

175

 

 

 

167

 

 

 

 

 

 

 

Weighted average shares outstanding – diluted

 

177

 

 

 

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net earnings

$

0.53

 

 

$

0.46

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net earnings

$

0.52

 

 

$

0.45

 

 

 

 

 

 

 

Catalent, Inc.
Consolidated Statements of Operations
(Unaudited; dollars and shares in millions, except per share data)

 

Six Months Ended
December 31,

 

FX impact

 

Constant Currency Increase
(Decrease)

 

2021

 

2020

 

 

 

Change $

 

Change %

Net revenue

$

2,242

 

 

$

1,757

 

 

$

(6

)

 

$

491

 

 

28

%

Cost of sales

 

1,513

 

 

 

1,210

 

 

 

(4

)

 

 

307

 

 

25

%

Gross margin

 

729

 

 

 

547

 

 

 

(2

)

 

 

184

 

 

34

%

Selling, general and administrative expenses

 

411

 

 

 

330

 

 

 

 

 

 

81

 

 

24

%

Gain on sale of subsidiary

 

(1

)

 

 

 

 

 

 

 

 

(1

)

 

*

Other operating expense

 

20

 

 

 

9

 

 

 

(1

)

 

 

12

 

 

138

%

Operating earnings

 

299

 

 

 

208

 

 

 

(1

)

 

 

92

 

 

44

%

Interest expense, net

 

58

 

 

 

51

 

 

 

1

 

 

 

6

 

 

12

%

Other expense (income), net

 

23

 

 

 

(19

)

 

 

(1

)

 

 

43

 

 

(223

) %

Earnings before taxes

 

218

 

 

 

176

 

 

 

(1

)

 

 

43

 

 

24

%

Income tax expense

 

28

 

 

 

5

 

 

 

 

 

 

23

 

 

400

%

Net earnings

$

190

 

 

$

171

 

 

$

(1

)

 

$

20

 

 

11

%

Less: Net earnings attributable to preferred shareholders

 

(13

)

 

 

(26

)

 

 

 

 

 

 

Net earnings attributable to common shareholders

$

177

 

 

$

145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

173

 

 

 

166

 

 

 

 

 

 

 

Weighted average shares outstanding – diluted

 

175

 

 

 

168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

Net earnings

$

1.02

 

 

$

0.88

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net earnings

$

1.01

 

 

$

0.87

 

 

 

 

 

 

 

Catalent, Inc.
Condensed Consolidated Balance Sheets
(Unaudited; dollars in millions)

 

 

December 31,
2021

 

June 30,
2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

849

 

$

896

Trade receivables, net

 

871

 

 

1,012

Inventories

 

688

 

 

563

Prepaid expenses and other

 

500

 

 

376

Marketable securities

 

66

 

 

71

Total current assets

 

2,974

 

 

2,918

Property, plant, and equipment, net

 

2,727

 

 

2,524

Other non-current assets, including intangible assets

 

4,502

 

 

3,670

Total assets

$

10,203

 

$

9,112

 

 

 

 

LIABILITIES, REDEEMABLE PREFERRED STOCK, AND SHAREHOLDERS' EQUITY

Current liabilities:

 

 

 

Current portion of long-term obligations and other short-term borrowings

$

29

 

$

75

Accounts payable

 

363

 

 

385

Other accrued liabilities

 

653

 

 

736

Total current liabilities

 

1,045

 

 

1,196

Long-term obligations, less current portion

 

4,191

 

 

3,166

Other non-current liabilities

 

486

 

 

476

Redeemable preferred stock

 

 

 

359

Total shareholders' equity

 

4,481

 

 

3,915

Total liabilities, redeemable preferred stock, and shareholders' equity

$

10,203

 

$

9,112

Catalent, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited; dollars in millions)

 

 

Six Months Ended
December 31,

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net cash provided by operating activities

$

232

 

 

$

224

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property, equipment, and other productive assets

 

(277

)

 

 

(339

)

Proceeds from maturity of marketable securities

 

4

 

 

 

 

Settlement on sale of subsidiaries, net

 

(3

)

 

 

 

Payment for acquisitions, net of cash acquired

 

(1,020

)

 

 

(14

)

Payments for investments

 

(3

)

 

 

(1

)

Net cash used in investing activities

 

(1,299

)

 

 

(354

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Proceeds from borrowings

 

1,100

 

 

 

2

 

Payments related to long-term obligations

 

(64

)

 

 

(55

)

Financing fees paid

 

(15

)

 

 

 

Dividends paid

 

(4

)

 

 

(13

)

Proceeds from sale of common stock, net

 

 

 

 

82

 

Cash paid, in lieu of equity, for tax withholding obligations

 

(9

)

 

 

(27

)

Exercise of stock options

 

19

 

 

 

 

Other financing activities

 

6

 

 

 

4

 

Net cash provided by (used in) financing activities

 

1,033

 

 

 

(7

)

Effect of foreign currency exchange on cash and cash equivalents

 

(13

)

 

 

17

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(47

)

 

 

(120

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

896

 

 

 

953

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

849

 

 

$

833

 

Catalent, Inc.
Reconciliation of Net Earnings to EBITDA from Operations and Adjusted EBITDA*
(Unaudited; dollars in millions)

 

 

Three months ended

 

December 31,
2020

 

March 31,
2021

 

June 30,
2021

 

September 30,
2021

 

December 31,
2021

Net earnings

$

88

 

 

$

232

 

 

$

182

 

 

$

93

 

 

$

97

 

Interest expense, net

 

26

 

 

 

27

 

 

 

32

 

 

 

26

 

 

 

32

 

Income tax expense

 

21

 

 

 

85

 

 

 

39

 

 

 

10

 

 

 

18

 

Depreciation and amortization

 

71

 

 

 

76

 

 

 

73

 

 

 

81

 

 

 

98

 

EBITDA from operations

 

206

 

 

 

420

 

 

 

326

 

 

 

210

 

 

 

245

 

Stock-based compensation

 

11

 

 

 

8

 

 

 

13

 

 

 

21

 

 

 

11

 

Impairment charges and (gain) loss on sale of assets

 

1

 

 

 

5

 

 

 

1

 

 

 

3

 

 

 

16

 

Financing-related expenses

 

 

 

 

17

 

 

 

1

 

 

 

4

 

 

 

 

Restructuring costs

 

5

 

 

 

3

 

 

 

1

 

 

 

1

 

 

 

1

 

Acquisition, integration, and other special items

 

9

 

 

 

1

 

 

 

7

 

 

 

7

 

 

 

22

 

(Gain) loss on sale of subsidiary

 

 

 

 

(184

)

 

 

2

 

 

 

(1

)

 

 

 

Foreign exchange (gain) loss

 

(2

)

 

 

4

 

 

 

(2

)

 

 

9

 

 

 

15

 

Other adjustments

 

(6

)

 

 

 

 

 

(1

)

 

 

(2

)

 

 

 

Adjusted EBITDA

$

224

 

 

$

274

 

 

$

348

 

 

$

252

 

 

$

310

 

Favorable (unfavorable) FX impact

 

 

 

 

 

 

 

 

 

(1

)

Adjusted EBITDA at constant currency

 

 

 

 

 

 

 

 

$

311

 

* Refer to Catalent's description of non-GAAP measures, including EBITDA from operations and Adjusted EBITDA as referenced above.

Catalent, Inc.
Reconciliation of Net Earnings to Adjusted Net Income*
(Unaudited; dollars in millions, except per share data)

 

 

Three months ended

 

December 31,
2020

 

March 31,
2021

 

June 30,
2021

 

September 30,
2021

 

December 31,
2021

Net earnings

$

88

 

 

$

232

 

 

$

182

 

 

$

93

 

 

$

97

 

Amortization (1)

 

23

 

 

 

23

 

 

 

24

 

 

 

23

 

 

 

34

 

Stock-based compensation

 

11

 

 

 

8

 

 

 

13

 

 

 

21

 

 

 

11

 

Impairment charges and (gain) loss on sale of assets (2)

 

1

 

 

 

5

 

 

 

1

 

 

 

3

 

 

 

16

 

Financing-related expenses

 

 

 

 

17

 

 

 

1

 

 

 

4

 

 

 

 

Restructuring costs

 

5

 

 

 

3

 

 

 

1

 

 

 

1

 

 

 

1

 

Acquisition, integration, and other special items

 

9

 

 

 

1

 

 

 

7

 

 

 

7

 

 

 

22

 

(Gain) loss on sale of subsidiary (3)

 

 

 

 

(184

)

 

 

2

 

 

 

(1

)

 

 

 

Foreign exchange (gain) loss

 

(2

)

 

 

4

 

 

 

(2

)

 

 

9

 

 

 

15

 

Other adjustments (4)

 

(6

)

 

 

 

 

 

(1

)

 

 

(2

)

 

 

 

Estimated tax effect of adjustments (5)

 

(11

)

 

 

(17

)

 

 

40

 

 

 

(15

)

 

 

(24

)

Discrete income tax (benefit) expense items (6)

 

(4

)

 

 

56

 

 

 

(59

)

 

 

(15

)

 

 

(9

)

Adjusted net income (ANI)

$

114

 

 

$

148

 

 

$

209

 

 

$

128

 

 

$

163

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

167

 

 

 

 

 

 

 

 

 

175

 

Weighted average shares outstanding - diluted

 

169

 

 

 

 

 

 

 

 

 

177

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Net earnings per share - basic

$

0.46

 

 

 

 

 

 

 

 

$

0.53

 

Net earnings per share - diluted

$

0.45

 

 

 

 

 

 

 

 

$

0.52

 

 

 

 

 

 

 

 

 

 

 

ANI per share:

 

 

 

 

 

 

 

 

 

ANI per share - basic

$

0.68

 

 

 

 

 

 

 

 

$

0.93

 

ANI per share - diluted (7)

$

0.63

 

 

 

 

 

 

 

 

$

0.90

 

* 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) For the three months ended December 31, 2021, represents $16 million in fixed asset impairment charges primarily associated with a product in our respiratory and specialty platform.

(3) Represents the (gain) loss on sale of subsidiary associated with the 2021 divestiture of its former blow-fill-seal business.

(4) Represents unrealized gains related to the fair value of the derivative liability associated with Catalent's formerly outstanding Series A convertible preferred stock.

(5) The tax effect of adjustments to Adjusted Net 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.

(6) Discrete period income tax expense (benefit) items are unusual or infrequently occurring items, primarily including: changes in judgment related to the realizability of deferred tax assets in future years, changes in measurement of a prior-year tax position, deferred tax impact of changes in tax law, and purchase accounting.

(7) For the three months ended December 31, 2021, represents Adjusted Net Income divided by the weighted average sum of (a) the number of shares of Common Stock outstanding, plus (b) the number of shares of Common Stock that would be issued assuming exercise or vesting of all potentially dilutive instruments. For the three months ended December 31, 2020, represents Adjusted Net Income divided by the weighted average sum of (a) the number of shares of Common Stock outstanding, plus (b) the number of shares of Common Stock that would be issued assuming exercise or vesting of all potentially dilutive instruments, plus (c) the number of shares of Common Stock equivalent to the shares of Series A Preferred Stock outstanding under the "if-converted" method. For the three months ended December 31, 2021 and 2020, the weighted average was 181 million and 180 million, respectively.

 

Catalent, Inc.
Reconciliation of Segment EBITDA to Net Earnings
(Unaudited; dollars in millions, except per share data)

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

2021

 

2020

 

2021

 

2020

Biologics

$

197

 

 

$

136

 

 

$

363

 

 

$

242

 

Softgel and Oral Technologies

 

78

 

 

 

46

 

 

 

119

 

 

 

83

 

Oral and Specialty Delivery

 

44

 

 

 

44

 

 

 

77

 

 

 

66

 

Clinical Supply Services

 

27

 

 

 

25

 

 

 

53

 

 

 

50

 

Sub-Total

$

346

 

 

$

251

 

 

$

612

 

 

$

441

 

Reconciling items to net earnings

 

 

 

 

 

 

 

Unallocated costs (1)

 

(101

)

 

 

(45

)

 

 

(157

)

 

 

(74

)

Depreciation and amortization

 

(98

)

 

 

(71

)

 

 

(179

)

 

 

(140

)

Interest expense, net

 

(32

)

 

 

(26

)

 

 

(58

)

 

 

(51

)

Income tax expense

 

(18

)

 

 

(21

)

 

 

(28

)

 

 

(5

)

Net earnings

$

97

 

 

$

88

 

 

$

190

 

 

$

171

 

(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)

 

 

December 31,
2020

 

March 31,
2021

 

June 30,
2021

 

September 30,
2021 Pro
Forma (2)

 

December 31,
2021

Total Secured Debt

$

925

 

$

992

 

$

989

 

$

1,435

 

$

1,431

Total Unsecured Debt

 

2,131

 

 

2,231

 

 

2,252

 

 

2,869

 

 

2,789

Total Debt

 

3,056

 

 

3,223

 

 

3,241

 

 

4,304

 

 

4,220

Cash and Cash Equivalents

 

833

 

 

988

 

 

896

 

 

971

 

 

849

Marketable Securities

 

 

 

75

 

 

71

 

 

50

 

 

66

Total Net Debt

 

2,223

 

 

2,160

 

 

2,274

 

 

3,283

 

 

3,305

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Q3 2020

 

185

 

 

 

 

 

 

 

 

Q4 2020

 

268

 

 

268

 

 

 

 

 

 

Q1 2021

 

174

 

 

174

 

 

174

 

 

 

 

Q2 2021

 

224

 

 

224

 

 

224

 

 

224

 

 

Q3 2021

 

 

 

274

 

 

274

 

 

274

 

 

274

Q4 2021

 

 

 

 

 

348

 

 

348

 

 

348

Q1 2022

 

 

 

 

 

 

 

252

 

 

252

Q2 2022

 

 

 

 

 

 

 

 

 

310

LTM Adjusted EBITDA

$

851

 

$

940

 

$

1,020

 

$

1,098

 

$

1,184

Net Sr. Secured Debt / Adj. EBITDA

0.1x

 

n.a.1

 

0.0x

 

0.4x

 

0.4x

Net Debt / Adj. EBITDA

2.6x

 

2.3x

 

2.2x

 

3.0x

 

2.8x

1 The sum of cash and cash equivalents plus marketable securities exceeds total secured debt.

2 Assumes Bettera acquisition closed on September 30, 2021.

Contacts

Investor Contact:
Catalent, Inc.
Paul Surdez
732-537-6325
investors@catalent.com

Contacts

Investor Contact:
Catalent, Inc.
Paul Surdez
732-537-6325
investors@catalent.com