- Q3'17 revenue $532.6 million
increased 22% as-reported, or 25% in constant currency from the
prior year period.
- Q3'17 YTD revenue $1,458.5 million
increased 11% as-reported, or 14% in constant currency from the
prior year period.
- Completed the acquisition of
Accucaps, a Canadian developer and manufacturer of over-the-counter
(OTC) and prescription softgel products.
- Announced Madhu Balachandran, former
Amgen Executive Vice President of Operations, joined our Board of
Directors.
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 third quarter of fiscal year 2017, which ended
March 31, 2017.
Third quarter 2017 revenue of $532.6 million increased 22% as
reported and increased 25% in constant currency from $438.0 million
reported in the third quarter a year ago. For the first nine months
of fiscal year 2017, revenue was $1,458.5 million and increased 11%
as reported and 14% in constant currency, compared to the $1,315.9
million recorded in the prior-year period. All three of the
Company’s reporting segments posted constant currency revenue
growth for the quarter and year-to-date period when compared to the
comparable periods of the prior year.
Third quarter 2017 net earnings attributable to Catalent were
$26.0 million, or $0.21 per diluted share, compared to net earnings
of $10.7 million, or $0.09 per diluted share, in the third quarter
a year ago. For the first nine months of fiscal year 2017, net
earnings attributable to Catalent were $48.0 million, or $0.38 per
diluted share, compared to net earnings of $53.4 million, or $0.42
per diluted share, in the same period of the prior year.
Third quarter 2017 EBITDA from continuing operations of $93.8
million, as referenced in the GAAP to non-GAAP reconciliation
provided later in this release, increased 33% from $70.3 million in
the third quarter a year ago. For the first nine months of fiscal
year 2017, EBITDA from continuing operations was $241.7 million, an
increase of 1% compared to the $239.9 million recorded in the
prior-year period.
Third quarter 2017 Adjusted EBITDA (see the non-GAAP
reconciliation) was $117.8 million, or 22.1% of revenue, compared
to $80.7 million, or 18.4% of revenue, in the third quarter a year
ago. This represents an increase of 46% as reported and an increase
of 51% on a constant currency basis.
Third quarter 2017 Adjusted Net Income (see the non-GAAP
reconciliation) was $48.7 million, or $0.38 per diluted share,
compared to Adjusted Net Income of $26.4 million, or $0.21 per
diluted share, in the third quarter a year ago.
"We're pleased with our performance during the third quarter,
where we recorded double-digit organic revenue growth on a constant
currency across all three of our reporting segments, and closed our
second strategic acquisition of the fiscal year," said John
Chiminski, President and Chief Executive Officer of Catalent, Inc.
"The integrations of both acquisitions closed during the fiscal
year, Pharmatek and Accucaps, are progressing according to our
expectations and are already creating value for the company and our
shareholders."
Third Quarter 2017 Segment Highlights
Revenue Highlights by Business Segment
Revenue from the Softgel Technologies segment was $209.9 million
for the third quarter of fiscal 2017, an increase of 13% as
reported, or 14% in constant currency, compared to the third
quarter a year ago. The constant currency growth was attributable
to higher end-market demand for prescription products in Europe,
which includes increased volume at the Beinheim facility compared
to lower production levels in the prior year due to a temporary
suspension of operations. Increased demand for prescription
products in North America also contributed to the growth, but was
partially offset by lower end-market demand for consumer health
products in Asia Pacific. The acquisition of Accucaps contributed
6% of the segment's revenue growth during the quarter.
Revenue from the Drug Delivery Solutions segment was $234.6
million for the third quarter of fiscal 2017, an increase of 23% as
reported, or 27% in constant currency, over the third quarter a
year ago. The growth was primarily driven by favorable end-customer
demand for certain higher margin offerings within our U.S. oral
delivery solutions platform, increased volume related to our
biologics offering, and increased activity within the analytical
services platform. The acquisition of Pharmatek contributed 4% of
the segment's revenue growth during the quarter.
Revenue from the Clinical Supply Services segment was $97.5
million for the third quarter of fiscal 2017, an increase of 36% as
reported, or an increase of 44% in constant currency over the third
quarter a year ago. Approximately half of the revenue growth was
driven by lower-margin comparator sourcing volume, with the other
half of the growth coming from core storage, distribution,
manufacturing, and packaging volumes.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA in the third quarter of
fiscal 2017 was $51.4 million, an increase of 45% as reported, or
48% in constant currency, versus the third quarter a year ago. The
increase was primarily attributable to a favorable mix shift to
higher margin prescription products in Europe and North America,
and increased volume and reduced costs at the Beinheim facility.
The acquisition of Accucaps contributed 8% of the growth in the
segment EBITDA during the quarter.
Drug Delivery Solutions segment EBITDA in the third quarter of
fiscal 2017 was $59.5 million, an increase of 49% as reported, or
56% in constant currency. The increase was primarily driven by
increased demand for certain higher margin offerings with our U.S.
oral delivery solutions platform, and increased volume related to
our biologics offering; partially offset by unfavorable product mix
with respect to products utilizing our blow-fill-seal technology
platform. The acquisition of Pharmatek contributed 3% of the growth
in segment EBITDA during the quarter.
Clinical Supply Services segment EBITDA in the third quarter of
fiscal 2017 was $15.7 million, an increase of 30% as reported, or
43% in constant currency. The increase was primarily attributable
to higher demand for our core storage, distribution, manufacturing
and packaging services. Increased volume related to lower-margin
comparator sourcing activities also modestly contributed to the
segment's EBITDA growth.
See the section of this release captioned "Non-GAAP Financial
Measures" for an explanation of "segment EBITDA."
First Nine Months of Fiscal 2017 Segment Highlights
Revenue Highlights by Business Segment
Revenue from the Softgel Technologies segment was $598.2 million
for the first nine months of fiscal year 2017, an increase of 9% as
reported, or 10% in constant currency, compared to the same period
a year ago. The constant currency growth was attributable to higher
end-market demand for prescription products in Europe, which
includes increased volume at the Beinheim facility compared to
lower production levels in the prior year. Increased demand for
prescription products in North America also contributed to the
growth, but this was partially offset by lower end-market demand
for consumer health products in Asia Pacific. The acquisition of
Accucaps contributed 2% of the segment's revenue growth during the
period.
Revenue from the Drug Delivery Solutions segment was $639.9
million for the first nine months of fiscal year 2017, an increase
of 13% as reported, or 16% in constant currency, over the same
period a year ago. The strong performance was primarily driven by
favorable end-customer demand for certain higher margin offerings
within our U.S. oral delivery solutions platform, increased volume
related to our biologics offering, and increased activity within
the analytical services platform. The acquisition of Pharmatek
modestly contributed to the segment's year-to-date revenue
growth.
Revenue from the Clinical Supply Services segment was $249.5
million for the first nine months of fiscal year 2017, an increase
of 10% as reported, or an increase of 18% in constant currency over
the same prior-year period. This growth was due to higher volume
related to core storage, distribution, manufacturing, and packaging
services; as well as due to increased lower-margin comparator
sourcing activities.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA for the first nine months of
fiscal year 2017 was $125.3 million, an increase of 20% as
reported, or 24% in constant currency, compared to the same period
a year ago. The increase was primarily attributable to a favorable
mix shift to higher margin prescription products in Europe and
North America, and increased volume and reduced costs at the
Beinheim facility. The acquisition of Accucaps contributed 3% of
the segment EBITDA growth during the period.
Drug Delivery Solutions segment EBITDA in the first nine months
of fiscal year 2017 was $151.5 million, an increase of 9% as
reported, or 14% in constant currency. The increase was understated
due to a $12.5 million resolution of volume commitments recorded in
the prior-year period. Excluding this event, segment EBITDA
increased 24% due to increased volume and favorable product mix
within our analytical services platform and biologics offering, as
well as due to increased volumes related to our integrated oral
solids development and manufacturing capabilities within our oral
delivery solutions platform. The acquisition of Pharmatek modestly
contributed to the year-to-date segment EBITDA growth.
Clinical Supply Services segment EBITDA in the first nine months
of fiscal year 2017 was $37.8 million, a decrease of 4% as
reported, or an increase of 7% in constant currency. The increase
was primarily attributable to higher demand for our core storage,
distribution, manufacturing and packaging services. Increased
volume related to lower-margin comparator sourcing activities also
modestly contributed to the segment EBITDA growth.
See the section of this release captioned "Non-GAAP Financial
Measures" for an explanation of "segment EBITDA."
Additional Financial Highlights
Third quarter 2017 gross margin of 31.4% increased 260 basis
points as-reported, from 28.8% in the third quarter a year ago. The
increase was primarily attributable to favorable product mix within
the Softgel Technologies and Drug Delivery Solutions segments.
Gross margin of 30.1% in the first nine months of fiscal year 2017
declined 30 basis points as-reported, from the 30.4% recorded in
the same period a year ago. The year-to-date decline was primarily
attributable to the $12.5 million resolution of volume commitments
recorded in the prior-year period, partially offset by a favorable
shift in product mix within the Softgel Technologies and Drug
Delivery Solutions segments.
Third quarter 2017 selling, general and administrative expenses
were $100.9 million and represented 18.9% of revenue, compared to
$93.4 million, or 21.3% of revenue, in the third quarter a year
ago. Selling, general and administrative expenses for the first
nine months of fiscal year 2017 were $295.3 million and represented
20.2% of revenue, compared to $268.6 million, or 20.4% of revenue,
in the same period of the prior year.
Backlog for the Clinical Supply Services segment, defined as
estimated future service revenues from work not yet completed under
signed contracts was $329.8 million as of March 31, 2017, a 1%
decrease compared to the second quarter of fiscal year 2017. The
segment also recorded net new business wins of $98.6 million during
the third quarter, which represented a 18% increase year over year.
The segment’s trailing-twelve-month book-to-bill ratio was
1.2x.
Balance Sheet and Liquidity
As of March 31, 2017, Catalent had $2.0 billion in total debt,
and $1.8 billion in total debt net of cash and short-term
investments, which is essentially in-line with the total and net
debt levels as of December 31, 2016. As of March 31, 2017,
Catalent’s net leverage ratio was 4.2x, an improvement compared to
the 4.5x recorded in the prior quarter.
Fiscal Year 2017 Outlook
There is no change to Catalent’s previously issued financial
guidance. For fiscal year 2017, the company expects revenue in the
range of $1.940 billion to $1.980 billion. Catalent expects
Adjusted EBITDA in the range of $435 million to $450 million and
Adjusted Net Income in the range of $168 million to $183 million.
These guidance ranges continue to be consistent with the organic,
constant currency long-term CAGR growth expectations of 4-6% for
revenue and 6-8% for Adjusted EBITDA. The Company expects
self-funded capital expenditures in the range of $130 million to
$135 million and fully diluted share count in the range of 126
million to 128 million shares on a weighted average basis.
Earnings Webcast
The Company’s management will host a webcast to discuss the
results at 4:45 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. 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.
Board Member Appointment
On May 2, 2017 the Company's Board of Directors increased the
size of the Board from nine to ten members and appointed Madhavan
("Madhu") Balachandran as a director of the Company, effective
immediately. The Board also appointed Mr. Balachandran as a member
of the Board's Quality and Regulatory Compliance Committee, also
with immediate effect.
Mr. Balachandran was Executive Vice President, Operations of
Amgen Inc., a global biotechnology company, from August 2012 until
July 2016 and retired as an Executive Vice President in January
2017. Mr. Balachandran joined Amgen in 1997 as Associate Director,
Engineering. He became Director, Engineering in 1998, and, from
1999 to 2001, he held the position of Senior Director, Engineering
and Operations Services before moving to the position of Vice
President, Information Systems from 2001 to 2002. Thereafter, Mr.
Balachandran was Vice President, Puerto Rico Operations from May
2002 to February 2007. From February 2007 to October 2007, Mr.
Balachandran was Vice President, Site Operations, and, from October
2007 to August 2012, he held the position of Senior Vice President,
Manufacturing. Prior to his tenure at Amgen, Mr. Balachandran held
leadership positions at Copley Pharmaceuticals, now a part of Teva
Pharmaceuticals Industries Ltd., and Burroughs Welcome Company, a
predecessor through mergers of GlaxoSmithKline plc. Mr.
Balachandran holds a Master of Science degree in Chemical
Engineering from The State University of New York at Buffalo and an
MBA from East Carolina University.
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 10,000 people, including over 1,400
scientists, at more than 30 facilities across 5 continents and in
fiscal 2016 generated $1.85 billion in annual revenue. Catalent is
headquartered in Somerset, N.J. For more information, please visit
www.catalent.com.
Non-GAAP Financial Measures
Use of EBITDA from continuing operations, Adjusted EBITDA,
Adjusted Net Income and Segment EBITDA
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.
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 the Company'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 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, 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) and Adjusted Net Income/(loss) per share.
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. The Company believes that the presentation
of Adjusted Net Income/(loss) and Adjusted Net Income/loss per
share 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 the Company uses this
measure for business planning purposes. The Company defines
Adjusted Net Income/(loss) as net earnings/(loss) adjusted for (1)
earnings or loss of discontinued operations, net of tax, (2)
amortization attributable to purchase accounting and (3) income or
loss from non-controlling interest in its majority-owned
operations. The Company also makes adjustments for other cash and
non-cash items included in the table below, partially offset by its
estimate of the tax effects as a result of such cash and non-cash
items. The Company believes that Adjusted Net Income/(loss) and
Adjusted Net Income/(loss) per share will provide investors with a
useful tool for assessing the comparability between periods of its
ability to generate cash from operations available to its
stockholders. The Company’s 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.
The Company does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable 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, the Company
does so primarily on a non-GAAP basis without preparing a 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 the Company’s future
hiring and retention needs, as well as the future fair market value
of the Company’s 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, the Company does not
believe that a GAAP reconciliation would provide meaningful
supplemental information about the Company’s outlook.
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 the Company’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, 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 the
Company’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 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 including as a result of
the recent U.K. referendum to exit from the European Union; 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 its obligations under its
indebtedness. For a more detailed discussion of these and other
factors, see the information under the caption “Risk Factors” in
the Company’s Annual Report on Form 10-K for the fiscal year ended
June 30, 2016, 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
(Dollars in millions, except per share
data)
Three Months Ended March 31,
FX impact
Constant
CurrencyIncrease/(Decrease)
2017 2016 Change $
Change % Net revenue $ 532.6 $ 438.0 $ (13.3 ) $ 107.9 25 %
Cost of sales 365.2 311.8 (7.9 ) 61.3 20 %
Gross margin 167.4 126.2 (5.4 ) 46.6 37 % Selling, general and
administrative expenses 100.9 93.4 (1.3 ) 8.8 9 % Impairment
charges and (gain)/loss on sale of assets 1.8 (0.3 ) (0.1 ) 2.2 *
Restructuring and other 0.1 1.8 0.5 (2.2 ) *
Operating earnings 64.6 31.3 (4.5 ) 37.8 * Interest expense, net
22.6 21.7 (0.5 ) 1.4 6 % Other (income)/expense, net 7.3
(4.2 ) (0.8 ) 12.3 * Earnings from continuing operations,
before income
taxes
34.7 13.8 (3.2 ) 24.1 * Income tax expense 8.7 3.1
(0.4 ) 6.0 * Net earnings 26.0 10.7 (2.8 ) 18.1 * Less: Net
earnings/(loss) attributable to noncontrolling
interest, net of tax
— — — — * Net earnings attributable to
Catalent $ 26.0 $ 10.7 $ (2.8 ) $ 18.1 *
Weighted average shares outstanding 125.0 124.8
Weighted average diluted shares outstanding 126.8 125.8
Earnings per share attributable to Catalent: Basic
Net earnings 0.21 0.09
Diluted Net earnings 0.21 0.09
* - percentage not meaningful
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Dollars in millions)
Three Months Ended March 31,
FX impact
Constant
CurrencyIncrease/(Decrease)
2017 2016 Change $
Change % Softgel Technologies Net revenue $ 209.9 $
185.1 $ (1.3 ) $ 26.1 14 % Segment EBITDA 51.4 35.4 (1.0 ) 17.0 48
%
Drug Delivery Solutions Net revenue 234.6 190.5 (6.7 )
50.8 27 % Segment EBITDA 59.5 39.9 (2.6 ) 22.2 56 %
Clinical
Supply Services Net revenue 97.5 71.5 (5.4 ) 31.4 44 % Segment
EBITDA 15.7 12.1 (1.6 ) 5.2 43 % Inter-segment revenue elimination
(9.4 ) (9.1 ) 0.1 (0.4 ) 4 % Unallocated Costs (32.8 ) (17.1 ) 0.4
(16.1 ) 94 %
Combined Total
Net revenue $ 532.6 $ 438.0 $ (13.3 ) $ 107.9
25 % EBITDA from
continuing operations $ 93.8 $ 70.3 $ (4.8 ) $ 28.3
40 %
Refer to the Company's description of non-GAAP measures
including segment EBITDA as referenced above.
Catalent, Inc. and Subsidiaries
Consolidated Statements of
Operations
(Dollars in millions, except per share
data)
Nine Months Ended March 31,
FX impact
Constant
CurrencyIncrease/(Decrease)
2017 2016 Change $
Change % Net revenue $ 1,458.5 $ 1,315.9 $ (40.6 ) $ 183.2
14 % Cost of sales 1,019.1 916.1 (22.7 ) 125.7
14 % Gross margin 439.4 399.8 (17.9 ) 57.5 14 % Selling, general
and administrative expenses 295.3 268.6 (4.7 ) 31.4 12 % Impairment
charges and (gain)/loss on sale of assets 2.3 0.8 — 1.5 *
Restructuring and other 4.5 3.4 0.3 0.8
24 % Operating earnings 137.3 127.0 (13.5 ) 23.8 19 % Interest
expense, net 67.5 66.7 (2.1 ) 2.9 4 % Other (income)/expense, net
3.4 (7.1 ) (2.1 ) 12.6 * Earnings from continuing
operations, before income
taxes
66.4 67.4 (9.3 ) 8.3 12 % Income tax expense 18.4 14.3
(1.9 ) 6.0 42 % Net earnings 48.0 53.1 (7.4 ) 2.3 4 %
Less: Net earnings/(loss) attributable to noncontrolling
interest, net of tax
— (0.3 ) — 0.3 * Net earnings attributable to
Catalent $ 48.0 $ 53.4 $ (7.4 ) $ 2.0 4 %
Weighted average shares outstanding 124.9 124.8
Weighted average diluted shares outstanding 126.5 125.9
Earnings per share attributable to Catalent: Basic
Net earnings 0.38 0.43
Diluted Net earnings 0.38 0.42
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Dollars in millions)
Nine Months Ended March 31,
FX impact
Constant
CurrencyIncrease/(Decrease)
2017 2016 Change $
Change % Softgel Technologies Net revenue $ 598.2 $
550.2 $ (7.0 ) $ 55.0 10 % Segment EBITDA 125.3 104.8 (5.0 ) 25.5
24 %
Drug Delivery Solutions Net revenue 639.9 568.2 (17.4 )
89.1 16 % Segment EBITDA 151.5 139.5 (7.5 ) 19.5 14 %
Clinical
Supply Services Net revenue 249.5 226.0 (16.7 ) 40.2 18 %
Segment EBITDA 37.8 39.5 (4.3 ) 2.6 7 % Inter-segment revenue
elimination (29.1 ) (28.5 ) 0.5 (1.1 ) 4 % Unallocated Costs (72.9
) (43.9 ) 1.7 (30.7 ) 70 %
Combined Total
Net revenue $ 1,458.5 $ 1,315.9
$ (40.6 ) $ 183.2 14 %
EBITDA from continuing operations $ 241.7 $ 239.9 $
(15.1 ) $ 16.9 7 %
Refer to the Company's description of non-GAAP measures
including segment EBITDA as referenced above.
Catalent, Inc. and Subsidiaries
Reconciliation of Earnings/(Loss) from
Continuing Operations to EBITDA from Continuing Operations and
Adjusted EBITDA*
(Dollars in millions)
Quarter Ended
TwelveMonthsEnded
March 31, 2016 June 30, 2016
September 30, 2016 December 31,
2016 March 31, 2017 March 31,
2017 Earnings from continuing operations $ 10.7 $ 58.1 $ 4.6
$ 17.4 $ 26.0 $ 106.1 Interest expense, net 21.7 21.8 22.1 22.8
22.6 89.3 Income tax expense/(benefit) 3.1 19.4 0.2 9.5 8.7 37.8
Depreciation and amortization 34.8 35.1 35.8
35.5 36.5 142.9 EBITDA from continuing
operations 70.3 134.4 62.7 85.2 93.8 376.1 Equity compensation 3.6
2.1 6.9 4.9 4.6 18.5 Impairment charges and (gain)/loss on sale of
assets (0.3 ) 1.9 — 0.5 1.8 4.2 Financing related expenses
and other
— — — 4.3 — 4.3 US GAAP Restructuring and
Other (1)
1.8 5.6 1.1 3.3 0.1 10.1 Acquisition, integration and other special
items 7.8 5.8 4.8 3.9 8.4 22.9 Foreign Exchange loss/(gain)
(included in other, net) (2) (2.0 ) (4.7 ) (0.5 ) (3.2 ) 9.2 0.8
Other adjustments (0.5 ) (3.3 ) — (0.8 ) (0.1 ) (4.2 )
Adjusted EBITDA $ 80.7 $ 141.8 $ 75.0 $ 98.1
$ 117.8 $ 432.7 FX impact (unfavorable) —
(4.4 ) Adjusted EBITDA - Constant Currency $ 80.7 $
122.2
* Refer to the Company's description of non-GAAP measures
including Adjusted EBITDA as referenced above.
(1) Restructuring and Other costs for the three months ended
December 31, 2016 includes settlement charges of $3.2 million for
certain customer claims related to the temporary Beinheim facility
suspension.
(2) Foreign exchange loss of $0.8 million for the twelve months
ended March 31, 2017 includes: (a) $3.4 million of unrealized
gains related to foreign trade receivables and payables, (b) $3.2
million of unrealized losses on the ineffective portion of the
Company's net investment hedge, and (c) $0.2 million of unrealized
losses on inter-company loans. The foreign exchange adjustment was
also affected by the exclusion of realized foreign currency
exchange rate losses from the settlement of inter-company loans of
$0.7 million. Inter-company loans are between Catalent entities and
do not reflect the ongoing results of the Company's trade
operations.
Catalent, Inc. and Subsidiaries
Reconciliation of Net Earnings/(Loss)
to Adjusted Net Income*
(Dollars in millions)
Quarter Ended
TwelveMonthsEnded
March 31, 2016 June 30, 2016
September 30, 2016 December 31,
2016 March 31, 2017 March 31,
2017 Net earnings $ 10.7 $ 58.1 $ 4.6 $ 17.4 $ 26.0 $ 106.1
Amortization (1) 11.4 11.4 11.0 11.1 11.0 44.5 Equity compensation
3.6 2.1 6.9 4.9 4.6 18.5 Impairment charges and loss on sale of
assets (0.3 ) 1.9 — 0.5 1.8 4.2 Financing related expenses — — —
4.3 — 4.3 U.S. GAAP restructuring (2) 1.8 5.6 1.1 3.3 0.1 10.1
Acquisition, integration and other special items 7.8 5.8 4.8 3.9
8.4 22.9 Foreign exchange loss/(gain) (included in other
(income)/expense, net) (2.0 ) (4.7 ) (0.5 ) (3.2 ) 9.2 0.8 Other
adjustments (0.5 ) (3.3 ) — (0.8 ) (0.1 ) (4.2 ) Estimated tax
effect of
adjustments(3)
(6.5 ) (6.1 ) (6.5 ) (6.5 ) (10.7 ) (29.8 ) Discrete income tax
expense/(benefit) items(4) 0.4 (5.9 ) (1.8 ) (0.2 ) (1.6 )
(9.5 ) Adjusted net income $ 26.4 $ 64.9 $ 19.6
$ 34.7 $ 48.7 $ 167.9
* Refer to the Company'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) Restructuring and Other costs for the three months ended
December 31, 2016 includes settlement charges of $3.2 million for
certain customer claims related to the temporary Beinheim facility
suspension.
(3) 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 which are adjusted in the period
presented; if a valuation allowance exists, the rate applied is
zero.
(4) 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.
Catalent, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions)
March 31, 2017 June
30, 2016 ASSETS Current assets: Cash and cash
equivalents $ 241.2 $ 131.6 Trade receivables, net 402.6 414.8
Inventories 193.9 154.8 Prepaid expenses and other 90.7 89.0
Total current assets 928.4 790.2 Property, plant, and equipment,
net 968.9 905.8 Other non-current assets, including intangible
assets 1,387.9 1,395.1
Total assets $
3,285.2 $ 3,091.1 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Current portion
of long-term obligations and other short-term borrowings $ 23.7 $
27.7 Accounts payable 137.6 143.7 Other accrued liabilities 228.8
219.8 Total current liabilities 390.1 391.2 Long-term
obligations, less current portion 2,025.3 1,832.8 Other non-current
liabilities 227.1 231.2 Commitment and contingencies (1) Total
shareholders' equity 642.7 635.9
Total liabilities and
shareholders' equity $ 3,285.2 $
3,091.1
(1) Please refer to note 12 of the consolidated financial
statements within our March 31, 2017 Form 10-Q.
Catalent, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
(Dollars in millions)
Nine Months Ended March 31,
2017 2016 CASH FLOWS FROM OPERATING
ACTIVITIES: Net cash provided by operating activities
199.3 121.4 CASH FLOWS FROM
INVESTING ACTIVITIES: Acquisition of property and equipment and
other productive assets (87.8 ) (107.8 ) Proceeds from sale of
property and equipment 0.7 — Payment for acquisitions, net of cash
acquired (169.9 ) —
Net cash (used in)/provided by
investing activities (257.0 ) (107.8
) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in
other borrowings (5.9 ) 0.6 Proceeds from borrowing, net 397.4 —
Payments related to long-term obligations (213.9 ) (13.9 ) Call
premium payments and financing fees paid (6.4 ) — Purchase of
Redeemable Noncontrolling Interest Shares — (5.8 ) Cash paid, in
lieu of equity, for tax withholding obligations (2.8 ) (8.0 )
Net cash provided by/(used in) financing activities
168.4 (27.1 ) Effect of foreign
currency on cash (1.1 ) (3.9 )
NET INCREASE/(DECREASE) IN CASH
AND EQUIVALENTS 109.6 (17.4 )
CASH AND EQUIVALENTS AT
BEGINNING OF PERIOD 131.6 151.3
CASH AND
EQUIVALENTS AT END OF PERIOD $ 241.2
$ 133.9
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170504006406/en/
Investor:Catalent, Inc.Thomas Castellano,
732-537-6325investors@catalent.com
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