- Q1'19 revenue of $551.8 million
increased 1% as-reported, or 3% in constant currency, from the
prior-year period.
- Closed the acquisition of Juniper
Pharmaceuticals, a European early development Center of Excellence
with dose form development and clinical manufacturing
capabilities.
- FY'19 financial guidance
reaffirmed.
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 first quarter of fiscal year 2019, which ended
September 30, 2018. As a reminder, the Company adopted ASC 606, the
new accounting standard concerning revenue from contracts with
customers, as of July 1, 2018 using the modified retrospective
method. The reported results for the three months ended September
30, 2018 reflect the application of the new standard, while the
reported results for the three months ended September 30, 2017 were
prepared under the guidance of the prior standard, ASC 605.
First quarter 2019 revenue of $551.8 million increased 1% as
reported and 3% in constant currency from $543.9 million reported
in the first quarter a year ago, primarily driven by the Catalent
Indiana (formerly Cook Pharmica) and Juniper Pharmaceuticals
acquisitions, partially offset by a reduction in revenue from
comparator sourcing arrangements, due to the changes in revenue
recognition mandated by ASC 606, pursuant to which we now record
comparator sourcing arrangements on a net basis versus the former
gross basis. Net revenue also decreased within our Softgel
Technologies segment primarily due to decreased prescription
product volume in North America and Europe and lower product
participation revenue, and within our Oral Drug Delivery segment
primarily due to decreased end-market demand within our commercial
oral delivery solution platform.
First quarter 2019 net loss was $14.4 million, or $0.10 per
diluted share, compared to net earnings of $3.8 million, or $0.03
per diluted share, in the first quarter a year ago. First quarter
2019 EBITDA from operations of $67.6 million, as referenced in the
GAAP to non-GAAP reconciliation provided later in this release,
increased 4% from $65.2 million in the first quarter a year
ago.
First quarter 2019 Adjusted EBITDA (see the non-GAAP
reconciliation for a discussion of this metric) was $115.0 million,
or 20.8% of revenue, compared to $90.9 million, or 16.7% of
revenue, in the first quarter a year ago. This represents an
increase of 27% as reported, and an increase of 28% on a
constant-currency basis.
First quarter 2019 Adjusted Net Income (see the non-GAAP
reconciliation) was $40.5 million, or $0.28 per diluted share,
compared to Adjusted Net Income of $27.1 million, or $0.21 per
diluted share, in the first quarter a year ago.
“Despite the challenging first quarter that was modestly below
our internal expectations, I'm very pleased with the state of our
development pipeline, which is stronger than ever before and
provides us with opportunities to continue to deliver organic
revenue growth aligned with our long-term outlook of 4 to 6
percent,” said John Chiminski, Chair, President and Chief Executive
Officer of Catalent, Inc. “This was further enhanced by the Juniper
Pharmaceuticals acquisition, which closed during the first quarter
and provides both additional spray drying capability and a European
early-stage formulation and development center of excellence. The
integration of Juniper is well underway in accordance with
expectations and already creating value for our customers and
shareholders.”
First Quarter 2019 Segment Highlights
Revenue Highlights by Business Segment
Revenue from the Softgel Technologies segment was $199.2 million
for the first quarter of fiscal 2019, a decrease of 9% as reported,
or 6% in constant currency, compared to the first quarter a year
ago. The constant-currency decline was primarily driven by a
reduction in product participation revenue, volume declines for
prescription products within North America and Europe, and the
impact of the fiscal 2018 Asia Pacific divestitures; partially
offset by strong demand for consumer health products across the
softgel network.
Revenue from the Biologics and Specialty Drug Delivery segment
was $154.6 million for the first quarter of fiscal 2019, an
increase of 69% as reported and in constant currency, over the
first quarter a year ago. The constant-currency growth was largely
attributable to the acquisition of Catalent Indiana, which
contributed 66 percentage points to the segment's constant-currency
revenue growth. Excluding the acquisition, the segment's
constant-currency revenue growth of 3% was driven by favorable
end-customer demand for our U.S.-based drug substance and European
drug product biologics offerings, partially offset by lower volumes
associated with products utilizing our respiratory and opthalmic
drug delivery platforms.
Revenue from the Oral Drug Delivery segment was $130.1 million
for the first quarter of fiscal 2019, a decrease of 3% as reported
and in constant currency, over the first quarter a year ago. The
constant-currency decline was primarily driven by decreased
end-market demand for certain high-margin offerings, primarily in
our U.S. operations within our commercial oral delivery solutions
platform; partially offset by the impact of the Juniper
acquisition, which closed in August 2018 and contributed 6
percentage points to the segment's revenue, in constant
currency.
Revenue from the Clinical Supply Services segment was $77.7
million for the first quarter of fiscal 2019, a decrease of 29% as
reported and in constant currency, over the first quarter a year
ago. The constant-currency decline resulted from the adoption of
ASC 606, which changed the way the Company recorded comparator
sourcing arrangements and resulted in a decrease of first quarter
revenue by 30 percentage points on a constant-currency basis.
Excluding the impact of ASC 606, revenue increased 1% due to higher
volume in our storage and distribution business.
Segment EBITDA Highlights
Softgel Technologies segment EBITDA (see the discussion of
non-GAAP measures below) in the first quarter of fiscal 2019 was
$33.3 million, a decrease of 5% as reported, or 1% in constant
currency, versus the first quarter a year ago. The decrease was
primarily driven by lower product participation revenue, partially
offset by favorable product mix in Asia Pacific and an improved
cost position across the softgel network.
Biologics and Specialty Drug Delivery segment EBITDA in the
first quarter of fiscal 2019 was $26.5 million, an increase of 205%
as reported and in constant currency. The constant-currency growth
was primarily attributable to the Catalent Indiana acquisition,
which contributed 240 percentage points to the segment's EBITDA
growth. Excluding the impact of the acquisition, segment EBITDA
decreased 35% in constant currency, driven by volume declines and
lower capacity utilization within our respiratory and opthalmic
drug delivery platforms, related to the timing of shipments in the
prior-year period.
Oral Drug Delivery segment EBITDA in the first quarter of fiscal
2019 was $27.4 million, a decrease of 29% as reported and in
constant currency. The constant-currency decline was primarily
driven by decreased end-market demand for certain high-margin
offerings, primarily in our U.S. operations within our commercial
oral delivery solutions platform, and decreased volume related to
fee-for-service development work and analytical testing; partially
offset by the impact of the Juniper acquisition, which closed in
August 2018 and contributed 9 percentage points to the segment's
EBITDA growth in constant currency.
Clinical Supply Services segment EBITDA in the first quarter of
fiscal 2019 was $20.2 million, an increase of 21% as reported, or
22% in constant currency. The increase was primarily attributable
to higher demand and favorable product mix within our storage and
distribution services, as well as improved capacity utilization
across the network.
Additional Financial Highlights
First quarter 2019 gross margin of 26.9% increased 110 basis
points as-reported, from 25.8% in the first quarter a year ago. The
increase was primarily attributable to the adoption of ASC 606,
which drove the treatment of comparator sourcing revenue on a net
basis rather than the former gross basis within our Clinical Supply
Services segment.
First quarter 2019 selling, general and administrative expenses
were $115.5 million and represented 20.9% of revenue, compared to
$107.5 million, or 19.7% of revenue, in the first quarter a year
ago. The increased percentage was attributable to the adoption of
ASC 606, which drove the treatment of comparator sourcing revenue
on a net basis rather than the former gross basis within our
Clinical Supply Services segment, and decreased our reported
revenue.
Backlog for the Clinical Supply Services segment, defined as
estimated future service revenues from work not yet completed under
signed contracts, was $302 million as of September 30, 2018, a 11%
increase compared to the fourth quarter of fiscal 2018. The segment
recorded net new business wins of $73 million during the first
quarter, which is an increase of 9% compared to the net new
business wins recorded in the same period of prior year. The
segment’s trailing-twelve-month book-to-bill ratio was 1.0x. The
backlog, net new business wins, and book-to-bill ratio is presented
on the basis of ASC 606 revenue recognition.
Balance Sheet and Liquidity
As of September 30, 2018, Catalent had $2.3 billion in total
debt, and $2.0 billion in total debt net of cash and short-term
investments, which is a decrease from the total debt and net debt
as of June 30, 2018, as a result of the debt pay down of $450
million completed in July. As of September 30, 2018, Catalent’s
total net leverage ratio was 3.5x, a sequential improvement
compared to the total net leverage of 4.2x as of June 30, 2018.
Fiscal Year 2019 Outlook
Management is reaffirming its previously issued financial
guidance. For fiscal year 2019, Catalent expects revenue in the
range of $2.50 billion to $2.59 billion, Adjusted EBITDA in the
range of $597 million to $622 million, and Adjusted Net Income in
the range of $260 million to $285 million. The Company expects
self-funded capital expenditures in the range of $175 million to
$185 million and fully diluted share count in the range of 146
million to 147 million shares on a weighted-average basis, taking
into account the issuance of 11.4 million shares in the July 2018
equity offering.
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) 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 over 11,000 people, including over 1,800
scientists, at more than 30 facilities across 5 continents and in
fiscal 2018 generated approximately $2.5 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 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 (“EBITDA from
operations”). EBITDA from 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
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 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
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 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 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
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 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
operations and Adjusted EBITDA is earnings/(loss) from 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 operations to EBITDA from
operations and Adjusted EBITDA and a 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 U.K.’s exit from the European Union; adverse tax legislative or
regulatory initiatives or challenges or adjustments 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 Company’s 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 our 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 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, 2018, filed August 28, 2018. 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
(In millions, except per share
data)
Three Months Ended September
30,
FX impact
Constant Currency
Increase/(Decrease)
2018 2017 Change $
Change % Net revenue $ 551.8 $ 543.9 $ (7.8 ) $ 15.7 3 %
Cost of sales 403.3 403.8 (5.7 ) 5.2 1 % Gross
margin 148.5 140.1 (2.1 ) 10.5 7 % Selling, general and
administrative expenses 115.5 107.5 (0.5 ) 8.5 8 % Impairment
charges and (gain)/loss on sale of assets 2.9 — (0.1 ) 3.0 *
Restructuring and other 9.7 1.2 (0.3 ) 8.8 733
% Operating earnings 20.4 31.4 (1.2 ) (9.8 ) (31 )% Interest
expense, net 28.1 24.3 — 3.8 16 % Other expense/(income), net 5.7
5.2 (0.5 ) 1.0 19 % Earnings from operations,
before income taxes (13.4 ) 1.9 (0.7 ) (14.6 ) * Income tax
expense/(benefit) 1.0 (1.9 ) — 2.9 * Net
earnings/(loss) $ (14.4 ) $ 3.8 $ (0.7 ) $ (17.5 ) *
Weighted average shares outstanding 142.1 125.7 Weighted
average diluted shares outstanding 142.1 127.8
Earnings/(loss) per share: Basic Net earnings/(loss) $ (0.10
) $ 0.03 Diluted Net earnings/(loss) $ (0.10 ) $ 0.03
* - percentage not meaningful
Catalent, Inc. and Subsidiaries
Selected Segment Financial Data
(Dollars in millions)
Three Months Ended
September 30, FX impact
Constant Currency
Increase/(Decrease)
2018 2017 Change $
Change % Softgel Technologies Net revenue $ 199.2 $
219.7 $ (6.3 ) $ (14.2 ) (6 )% Segment EBITDA $ 33.3 $ 35.1 $ (1.4
) $ (0.4 ) (1 )%
Biologics and Specialty Drug Delivery Net
revenue 154.6 91.7 (0.4 ) 63.3 69 % Segment EBITDA 26.5 8.7 — 17.8
205 %
Oral Drug Delivery Net revenue 130.1 134.6 (0.5 ) (4.0
) (3 )% Segment EBITDA 27.4 38.7 (0.2 ) (11.1 ) (29 )%
Clinical
Supply Services Net revenue 77.7 109.7 (0.3 ) (31.7 ) (29 )%
Segment EBITDA 20.2 16.7 (0.1 ) 3.6 22 %
Inter-segment revenue
elimination (9.8 ) (11.8 ) (0.3 ) 2.3 (19 )%
Unallocated
costs (39.8 ) (34.0 ) 0.6 (6.4 ) 19 %
Combined totals
Net revenue $ 551.8 $
543.9 $ (7.8 ) $ 15.7 3 %
EBITDA from operations $ 67.6 $ 65.2 $ (1.1 )
$ 3.5 5 %
* - percentage not meaningful
Refer to the Company's description of non-GAAP measures
including segment EBITDA and EBITDA from operations as referenced
above.
Catalent, Inc. and Subsidiaries
Reconciliation of Earnings/(Loss) to
EBITDA from Operations and Adjusted EBITDA*
(Dollars in millions)
Quarter Ended Twelve Months
Ended September 30, 2017 December
31, 2017 March 31, 2018
June 30, 2018 September 30, 2018
September 30, 2018 Net earnings / (loss) $ 3.8 $
(21.9 ) $ 19.0 $ 82.7 $ (14.4 ) $ 65.4 Interest expense, net 24.3
27.2 29.9 30.0 28.1 115.2 Income tax expense/(benefit) (1.9 ) 49.9
13.7 6.7 1.0 71.3 Depreciation and amortization 39.0 46.8
51.7 52.6 52.9 204.0 EBITDA from
operations 65.2 102.0 114.3 172.0 67.6 455.9 Stock-based
compensation 7.0 8.5 5.6 6.1 10.0 30.2 Impairment charges and
(gain)/loss on sale of assets — 4.2 0.2 4.3 2.9 11.6
Financing-related expenses — 11.8 — — 4.2 16.0 U.S. GAAP
restructuring and other 1.2 0.1 1.4 7.5 9.7 18.7 Acquisition,
integration, and other special items 11.0 11.8 9.1 12.2 3.6 36.7
Cumulative effect of change in accounting for ASC 606 — — — — 15.1
15.1 Foreign exchange loss/(gain) (included in other, net) (1) 6.5
0.6 8.4 (20.5 ) 2.0 (9.5 ) Other adjustments — 0.3 —
(0.1 ) (0.1 ) 0.1 Adjusted EBITDA $ 90.9 $
139.3 $ 139.0 $ 181.5 $ 115.0 $ 574.8
FX impact (unfavorable) (1.5 ) Adjusted EBITDA at Constant
Currency $ 116.5
* Refer to the Company's description of non-GAAP measures
including EBITDA from operations and Adjusted EBITDA as referenced
above.
(1) Foreign exchange gain of $9.5 million for the twelve
months ended September 30, 2018 includes: (a) $6.8 million of
unrealized gains related to foreign trade receivables and payables,
(b) $1.0 million of unrealized losses on the ineffective portion of
the Company's net investment hedge, and (c) $1.6 million of
unrealized gains on inter-company loans. The foreign exchange
adjustment was also affected by the exclusion of realized foreign
currency exchange rate gains from the settlement of inter-company
loans of $2.2 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*
(In millions, except per share
data)
Quarter Ended September 30,
2017 December 31, 2017 March
31, 2018 June 30, 2018
September 30, 2018 Net earnings / (loss) $ 3.8 $
(21.9 ) $ 19.0 $ 82.7 $ (14.4 ) Amortization (1) 11.4 16.1 17.6
17.5 18.2 Stock-based compensation 7.0 8.5 5.6 6.1 10.0 Impairment
charges and (gain)/loss on sale of assets — 4.2 0.2 4.3 2.9
Financing-related expenses — 11.8 — — 4.2 U.S. GAAP restructuring
and other 1.2 0.1 1.4 7.5 9.7 Acquisition, integration, and other
special items 11.0 11.8 9.1 12.2 3.6 Cumulative effect of change in
accounting for ASC 606 — — — — 15.1 Foreign exchange loss/(gain)
(included in other, net) (2) 6.5 0.6 8.4 (20.5 ) 2.0 Other
adjustments — 0.3 — (0.1 ) (0.1 ) Estimated tax effect of
adjustments (3) (11.2 ) (14.0 ) (11.6 ) (6.7 ) (10.6 ) Discrete
income tax (benefit)/expense items (4) (2.6 ) (2.8 ) (0.1 ) (3.9 )
(0.1 ) Tax law changes provision (5) — 46.0 5.6
(9.1 ) — Adjusted net income (ANI) $ 27.1 $
60.7 $ 55.2 $ 90.0 $ 40.5 Weighted
average shares outstanding 125.7 142.1 Weighted average diluted
shares outstanding 127.8 144.1
ANI per share: ANI per basic
share $ 0.22 $ 0.28 ANI per diluted share $ 0.21 $ 0.28
Earnings/(loss) per share: Net earnings/(loss) per basic
share $ 0.03 $ (0.10 ) Net earnings/(loss) per diluted share $ 0.03
$ (0.10 )
* 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)
Foreign exchange gain of $9.5 million for the twelve months ended
September 30, 2018 includes: (a) $6.8 million of unrealized gains
related to foreign trade receivables and payables, (b) $1.0 million
of unrealized losses on the ineffective portion of the Company's
net investment hedge, and (c) $1.6 million of unrealized gains on
inter-company loans. The foreign exchange adjustment was also
affected by the exclusion of realized foreign currency exchange
rate gains from the settlement of inter-company loans of $2.2
million. Inter-company loans are between Catalent entities and do
not reflect the ongoing results of the Company's trade operations.
(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. (5) During the fiscal year 2018, the Company recorded a
net tax charge of $42.5 million as its provisional estimate of the
net accounting impact of the recently enacted U.S. tax law changes.
The Company will continue to evaluate the full impact of the 2017
income tax legislation and record any potential adjustment during
the permitted one-year measurement period.
Catalent, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions)
September 30, 2018
June 30, 2018 ASSETS Current assets: Cash and
cash equivalents $ 266.1 $ 410.2 Trade receivables, net 503.3 555.8
Inventories 235.8 209.1 Prepaid expenses and other 78.2 65.2
Total current assets 1,083.4 1,240.3 Property, plant, and
equipment, net 1,288.2 1,270.6 Other non-current assets, including
intangible assets 2,128.2 2,020.2
Total assets
$ 4,499.8 $ 4,531.1
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Current portion of long-term obligations and other short-term
borrowings $ 73.4 $ 71.9 Accounts payable 180.1 192.1 Other accrued
liabilities 274.0 312.9 Total current liabilities 527.5
576.9 Long-term obligations, less current portion 2,205.7 2,649.4
Other non-current liabilities 237.2 218.1 Commitments and
contingencies (1) — — Total shareholders' equity 1,529.4
1,086.7
Total liabilities and shareholders' equity $
4,499.8 $ 4,531.1 (1) Please
refer to note 14 of the consolidated financial statements within
our Quarterly Report on Form 10-Q for the quarter ended September
30, 2018.
Catalent, Inc. and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Dollars in millions)
Three Months Ended September 30,
2018 2017 CASH FLOWS FROM OPERATING
ACTIVITIES: Net cash provided by operating activities $
41.2 $ 83.7
CASH FLOWS FROM INVESTING
ACTIVITIES: Acquisition of property and equipment and other
productive assets (38.3 ) (42.7 ) Payment for acquisitions, net of
cash acquired (127.5 ) — Net cash (used in) investing
activities from continuing operations (165.8 ) (42.7 )
CASH
FLOWS FROM FINANCING ACTIVITIES: Net change in other borrowings
(4.5 ) (1.7 ) Payments related to long-term obligations (454.7 )
(4.7 ) Proceeds from sale of common stock, net 445.5 277.8 Cash
paid, in lieu of equity, for tax withholding obligations (5.1 )
(8.4 )
Net cash (used in)/provided by financing activities
(18.8 ) 263.0 Effect of foreign currency exchange on cash
(0.7 ) 9.1
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS
(144.1 ) 313.1
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
410.2 288.3
CASH AND EQUIVALENTS AT END OF
PERIOD $ 266.1 $ 601.4
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version on businesswire.com: https://www.businesswire.com/news/home/20181106005243/en/
Investors:Catalent, Inc.Thomas Castellano,
732-537-6325investors@catalent.com
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