Catalent, Inc. Reports Third Quarter Fiscal 2021 Results

Rhea-AI Summary

Catalent, Inc. (NYSE: CTLT) reported a robust third quarter for fiscal 2021, with net revenue of $1.05 billion, up 38% year-over-year. Net earnings were $231.8 million, including a $184 million gain from a business sale. Adjusted EBITDA grew 48% to $274.2 million, and the Biologics segment experienced a remarkable 117% revenue increase. The company has raised its fiscal 2021 guidance, expecting revenues between $3.875 billion to $3.975 billion.

Positive

• Net revenue increased 38% year-over-year to $1.05 billion.
• Adjusted EBITDA rose 48% to $274.2 million, or 26% of net revenue.
• Biologics segment revenue up 117%, with EBITDA up 247%.
• Revised guidance for fiscal 2021 increased to $3.875-$3.975 billion.

Negative

• Softgel and Oral Technologies segment revenue increased only 1%, EBITDA down 1%.
• Oral and Specialty Delivery segment revenue decreased by 5%, and EBITDA down 45%.

Catalent, Inc. (NYSE: CTLT), the leading global provider of advanced delivery technologies, development, and manufacturing solutions for drugs, biologics, cell and gene therapies, and consumer health products, today announced financial results for the third quarter of fiscal 2021, which ended March 31, 2021.

“I am proud of Catalent's robust third-quarter results and excited by the strong foundation we’ve built for continued growth, through the dedication and ingenuity of our talented workforce,” said John Chiminski, Chair and Chief Executive Officer of Catalent, Inc. “Throughout the pandemic, we’ve worked around-the-clock to deliver for patients, while also investing in capabilities and capacity to ensure Catalent can continue to meet global demand for COVID-19 vaccines and other important customer programs for years to come.”

Third Quarter 2021 Consolidated Results

Net revenue of $1.05 billion increased 38% as reported, or 35% in constant currency, from the $760.6 million reported for the third quarter a year ago. Overall organic net revenue growth (i.e., excluding the effect of acquisitions) was 35%.

Net earnings were $231.8 million, including a $184.0 million gain attributable to the sale of the blow-fill-seal business, which closed on March 31, 2021. After accounting for the net earnings attributable to holders of Catalent’s Series A convertible preferred stock, net earnings attributable to common shareholders were $217.1 million, or $1.27 per basic share, compared to net earnings attributable to common shareholders of $11.8 million, or $0.08 per basic share, in the third quarter a year ago.

EBITDA from operations⁽¹⁾ was $419.9 million, an increase of $291.0 million from $128.9 million in the third quarter a year ago. Third quarter fiscal 2021 Adjusted EBITDA⁽¹⁾ was $274.2 million, or 26.0% of net revenue, compared to $185.4 million, or 24.4% of net revenue, in the third quarter a year ago. This represents an increase of 48% as reported, and an increase of 44% on a constant-currency basis.

Adjusted Net Income⁽¹⁾ was $148.3 million, or $0.82 per diluted share, compared to Adjusted Net Income of $82.9 million, or $0.50 per diluted share, in the third quarter a year ago.

Third Quarter 2021 Segment Review

Biologics

Net revenue from the Biologics segment was $543.7 million for the third quarter of fiscal 2021, an increase of 117% as reported and 113% in constant currency, compared to the third quarter a year ago. Segment EBITDA⁽¹⁾ in the third quarter of fiscal 2021 was $179.9 million, an increase of 247% as reported and 238% in constant currency compared to the third quarter a year ago. Segment EBITDA margin was 33.1% in the third quarter of fiscal 2021 compared to 20.8% in the third quarter of the prior year.

Excluding the effect of acquisitions, net revenue increased 113% and Segment EBITDA increased 239% compared to the three months ended March 31, 2020.

The Biologics segment represented 52% of Catalent’s total net revenue in the third quarter of fiscal 2021.

Softgel and Oral Technologies

Net revenue from the Softgel and Oral Technologies segment was $243.7 million for the third quarter of fiscal 2021, an increase of 1% as reported and a decrease of 2% in constant currency, compared to the third quarter a year ago. Segment EBITDA was $59.6 million in the third quarter of fiscal 2021, a decrease of 1% as reported, or 3% in constant currency, compared to the third quarter a year ago. Segment EBITDA margin was 24.5% in the third quarter of fiscal 2021, compared to 24.8% in the third quarter of the prior year.

The Softgel and Oral Technologies segment represented 23% of Catalent’s total net revenue in the third quarter of fiscal 2021.

Oral and Specialty Delivery

Net revenue from the Oral and Specialty Delivery segment was $171.7 million for the third quarter of fiscal 2021, a decrease of 5% as reported and 9% in constant currency, over the third quarter a year ago. Segment EBITDA in the third quarter of fiscal 2021 was $30.7 million, a decrease of 45% as reported, or 49% in constant currency, compared to the third quarter a year ago. Segment EBITDA margin was 17.9% in the third quarter of fiscal 2021, compared to 31.0% in the third quarter of the prior year.

Excluding the effect of acquisitions, net revenue decreased 10% and Segment EBITDA decreased 48% compared to the three months ended March 31, 2021.

The Oral and Specialty Delivery segment represented 16% of Catalent’s total net revenue in the third quarter of fiscal 2021.

Clinical Supply Services

Net revenue from the Clinical Supply Services segment was $100.0 million for the third quarter of fiscal 2021, an increase of 12% as reported and 9% in constant currency, compared to the third quarter a year ago. Segment EBITDA in the third quarter of fiscal 2021 was $27.1 million, an increase of 10% as reported, or 4% in constant currency, compared to the third quarter a year ago. Segment EBITDA margin was 27.1% in the third quarter of fiscal 2021 compared to 27.7% in the third quarter of the prior year.

The Clinical Supply Services segment represented 9% of Catalent’s total net revenue in the third quarter of fiscal 2021.

Balance Sheet and Liquidity

As of March 31, 2021, Catalent had $3.2 billion in total debt, and $2.2 billion in total debt net of cash and short-term investments, compared to $2.2 billion in total net debt as of December 31, 2020. The current debt structure does not include any significant maturity until 2027.

Catalent’s net leverage ratio⁽¹⁾ as of March 31, 2021 was 2.3x, compared to 2.6x at December 31, 2020 and 3.8x at March 31, 2020.

Fiscal Year 2021 Outlook

Catalent is raising its previously issued guidance to account for higher net underlying demand for COVID-19 vaccines and treatments.

The revised guidance assumes no major unforeseen change to either the current status of the COVID-19 pandemic generally or its effect on Catalent’s operations and business. The revised guidance does not assume the receipt of any vaccine or treatment order from any of our customers beyond what either has been received to date or is deemed required under executed take-or-pay arrangements. The revised guidance ranges are wider than the ranges we have forecasted in the previous few fiscal years due to the continuing uncertainty in both revenues and costs across our businesses engendered by the COVID-19 pandemic. The revised guidance projects:

• Net revenue for fiscal 2021 in the range of $3.875 billion to $3.975 billion, compared to the previous range of $3.80 billion to $3.95 billion;
• Adjusted EBITDA for fiscal 2021 in the range of $975 million to $1.015 billion, compared to the previous range of $950 million to $1.000 billion;
• Adjusted Net Income for fiscal 2021 in the range of $500 million to $540 million, compared to the previous range of $475 million to $525 million; and
• A fully diluted share count in the range of 180 million to 182 million shares on a weighted-average basis, which includes the outstanding Series A convertible preferred stock as-if converted.

Board Member Appointment

On April 28, 2021, Michael J. Barber was elected as the newest member of the

FAQ

What were Catalent's earnings for Q3 2021?

Catalent reported net earnings of $231.8 million for Q3 2021.

What is Catalent's guidance for fiscal year 2021?

Catalent raised its guidance to a revenue range of $3.875 billion to $3.975 billion.

How did Catalent's Biologics segment perform in Q3 2021?

The Biologics segment's revenue increased 117%, with EBITDA rising 247%.

What is the adjusted EBITDA for Catalent in Q3 2021?

Adjusted EBITDA for Q3 2021 was $274.2 million, or 26% of net revenue.