Catalent, Inc. Reports Third Quarter Fiscal 2022 Results

Rhea-AI Summary

Catalent, Inc. (CTLT) reported Q3'22 net revenue of $1.27 billion, a 21% increase from Q3'21, with organic growth at 20%. Net earnings stood at $141 million, down from $217 million a year prior, largely due to a prior gain from a business sale. Adjusted EBITDA for Q3'22 was $339 million, representing a 24% increase. The company updated its FY'22 guidance, projecting net revenue growth of 20-23% and Adjusted EBITDA growth of 24-28%. For FY'23, Catalent anticipates organic growth aligning with its long-term outlook of 8-10%.

Positive

• Q3'22 net revenue increased by 21% to $1.27 billion.
• Adjusted EBITDA rose 24% to $339 million.
• FY'22 guidance upgraded to 20-23% net revenue growth and 24-28% Adjusted EBITDA growth.
• Strong demand projected for non-COVID-19 products in FY'23.

Negative

• Net earnings decreased from $217 million to $141 million year-over-year.
• EBITDA from operations fell 25% from $420 million to $308 million.

• Q3'22 net revenue of $1.27 billion increased 21% as reported, or 23% in constant currency, compared to Q3'21. Organic, constant-currency net revenue grew 20%, compared to Q3'21.
• Q3'22 net earnings of $141 million.
• Q3'22 Adjusted EBITDA⁽¹⁾ of $339 million increased 24% as reported, or 26% in constant currency, compared to Q3'21.
• Increasing and tightening FY'22 guidance to reflect projected net revenue growth of 20-23% and Adjusted EBITDA growth of 24-28%, compared to previous projected net revenue growth of 19-22% and Adjusted EBITDA growth of 23-27%.
• Preliminary FY'23 organic, constant-currency net revenue growth outlook in line with long-term 8-10% growth rate.

SOMERSET, N.J.--(BUSINESS WIRE)-- 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 third quarter of fiscal 2022, which ended March 31, 2022.

“We are pleased with our strong results in the third quarter and our plans to continue to expand our capabilities to address long-term customer needs as our end markets grow. Our recent acquisitions in cell therapy in the U.S. and biologics manufacturing in the U.K., as well as the recently approved $350 million investment in Bloomington, Indiana, will provide additional flexible capacity and allow us to deliver an increasing number of products and treatments to patients and consumers worldwide,” said John Chiminski, Chair and Chief Executive Officer of Catalent, Inc.

Third Quarter 2022 Consolidated Results

Net revenue of $1.27 billion increased 21% as reported, or 23% in constant currency, from the $1.05 billion reported for the third quarter a year ago. Overall organic net revenue growth (i.e., excluding the effect of acquisitions, divestitures, and currency translation) was 20% over the same periods.

Net earnings attributable to common shareholders were $141 million, or $0.78 per basic and $0.78 per diluted share, compared to net earnings attributable to common shareholders of $217 million, or $1.27 per basic share, $1.26 per diluted share, in the third quarter a year ago, the decrease driven in part by a $184 million gain from the sale of the Blow-Fill-Seal business in the prior-year period.

EBITDA from operations⁽¹⁾ was $308 million, a decrease of $112 million from $420 million in the third quarter a year ago, driven in part by a $184 million gain from sale of the Blow-Fill-Seal business in the prior-year period. Third quarter fiscal 2022 Adjusted EBITDA⁽¹⁾ was $339 million, or 27% of net revenue, compared to $274 million, or 26% of net revenue, in the third quarter a year ago. This represents an increase of 24% as reported and an increase of 26% on a constant-currency basis, compared to the fiscal 2021 period.

Adjusted Net Income⁽¹⁾ was $188 million, or $1.04 per diluted share, compared to Adjusted Net Income of $148 million, or $0.82 per diluted share, in the third quarter a year ago.

Third Quarter 2022 Segment Review

(Dollars in millions)	Three Months Ended March 31,								Constant Currency
		2022				2021			Change %
Biologics
Net revenue	$	698			$	544			30	%
Segment EBITDA		216				180			23	%
Segment EBITDA margin		31.1	%			33.1	%
Softgel and Oral Technologies
Net revenue		324				244			37	%
Segment EBITDA (2)		75				59			29	%
Segment EBITDA margin (2)		23.2	%			24.4	%
Oral and Specialty Delivery
Net revenue		154				171			(8	)%
Segment EBITDA		41				31			37	%
Segment EBITDA margin		26.6	%			18.0	%
Clinical Supply Services
Net revenue		101				100			3	%
Segment EBITDA		30				27			14	%
Segment EBITDA margin		29.6	%			27.1	%
Inter-segment revenue elimination		(4	)			(6	)		34	%
Unallocated costs		(54	)			123			(146	)%
Combined totals
Net revenue	$	1,273			$	1,053			23	%
EBITDA from operations	$	308			$	420			(25	)%

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

(2) SOT Segment EBITDA and Segment EBITDA margin for the three months ended March 31, 2022 includes a one-time non-cash inventory fair value adjustment for $7 million associated with our Bettera acquisition.

Biologics segment	2022 vs. 2021						2022 vs. 2021
Year-Over-Year Change	Three Months Ended March 31,						Nine Months Ended March 31,
	Net Revenue			Segment EBITDA			Net Revenue			Segment EBITDA
Organic	30	%		23	%		43	%		40	%
Impact of acquisitions	—	%		—	%		—	%		(1	)%
Constant-currency change	30	%		23	%		43	%		39	%
Foreign exchange translation impact on reporting	(2	)%		(3	)%		(1	)%		(2	)%
Total % change	28	%		20	%		42	%		37	%

Softgel and Oral Technologies segment	2022 vs. 2021						2022 vs. 2021
Year-Over-Year Change	Three Months Ended March 31,						Nine Months Ended March 31,
	Net Revenue			Segment EBITDA			Net Revenue			Segment EBITDA
Organic	14	%		16	%		13	%		23	%
Impact of acquisitions (3)	23	%		13	%		15	%		15	%
Constant-currency change	37	%		29	%		28	%		38	%
Foreign currency translation impact on reporting	(4	)%		(3	)%		(2	)%		(3	)%
Total % change	33	%		26	%		26	%		35	%

(3) Segment EBITDA for the three and nine months ended March 31, 2022 includes a one-time non-cash inventory fair value adjustment for $7 million associated with our Bettera acquisition.

Oral and Specialty Delivery segment	2022 vs. 2021						2022 vs. 2021
Year-Over-Year Change	Three Months Ended March 31,						Nine Months Ended March 31,
	Net Revenue			Segment EBITDA			Net Revenue			Segment EBITDA
Organic	4	%		64	%		4	%		55	%
Impact of acquisitions	1	%		(10	)%		1	%		(12	)%
Impact of divestitures	(13	)%		(17	)%		(14	)%		(21	)%
Constant-currency change	(8	)%		37	%		(9	)%		22	%
Foreign currency translation impact on reporting	(2	)%		(4	)%		—	%		1	%
Total % change	(10	)%		33	%		(9	)%		23	%

Clinical Supply Services segment	2022 vs. 2021						2022 vs. 2021
Year-Over-Year Change	Three Months Ended March 31,						Nine Months Ended March 31,
	Net Revenue			Segment EBITDA			Net Revenue			Segment EBITDA
Organic	3	%		14	%		4	%		8	%
Constant-currency change	3	%		14	%		4	%		8	%
Foreign currency translation impact on reporting	(2	)%		(4	)%		—	%		(1	)%
Total % change	1	%		10	%		4	%		7	%

Segment Net Revenue as a % of Total Net Revenue
	Three Months Ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
Biologics	55	%		52	%		53	%		50	%		52	%
Softgel and Oral Technologies	25	%		27	%		24	%		25	%		23	%
Oral and Specialty Delivery	12	%		13	%		14	%		16	%		16	%
Clinical Supply Services	8	%		8	%		9	%		9	%		9	%
Net Revenue	100	%		100	%		100	%		100	%		100	%

Balance Sheet and Liquidity

As of March 31, 2022, Catalent had $4.19 billion in total debt, and $3.31 billion in total debt net of cash, cash equivalents, and marketable securities, compared to $3.31 billion in total net debt as of December 31, 2021. The current debt structure does not include any significant maturity until 2027.

Catalent’s net leverage ratio⁽¹⁾ as of March 31, 2022 was 2.6x, compared to a proforma calculation of 2.8x at December 31, 2021 and 2.3x at March 31, 2021.

Fiscal Year 2022 Outlook

	Previous Guidance	Updated Guidance
Net revenue	$4,740 million - $4,860 million	$4,800 million - $4,900 million
Adjusted EBITDA	$1,250 million - $1,300 million	$1,265 million - $1,305 million
Adjusted net income	$650 million - $700 million	$665 million - $705 million
Weighted average shares outstanding - diluted	181 million - 183 million	181 million - 183 million

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

Fiscal Year 2023

Catalent projects organic, constant-currency net revenue growth for fiscal 2023, compared to fiscal 2022, in line with its previously announced range of long-term net revenue growth of 8-10%, due, in part, to its projection of strong commercial demand for products other than COVID-19 products and increased utilization of both current and recently acquired assets. This fiscal 2023 outlook mitigates future risk by assuming a considerable decline in COVID-19 product net revenue.

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 nearly 7,000 products to over 1,000 customers annually.

Catalent’s expert workforce exceeds 19,000, 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 March 31,							FX Impact				Constant Currency Increase (Decrease)
		2022			2021							Change $				Change %
Net revenue	$	1,273		$	1,053			$	(24	)		$	244			23	%
Cost of sales		850			687				(15	)			178			26	%
Gross margin		423			366				(9	)			66			18	%
Selling, general, and administrative expenses		207			173				(2	)			36			21	%
Gain on sale of subsidiary		—			(184	)			—				184			*
Other operating expense		5			8				—				(3	)		(39	)%
Operating earnings		211			369				(7	)			(151	)		(41	)%
Interest expense, net		33			27				(1	)			7			25	%
Other expense, net		2			25				(2	)			(21	)		(85	)%
Earnings before income taxes		176			317				(4	)			(137	)		(43	)%
Income tax expense		35			85				—				(50	)		(58	)%
Net earnings	$	141		$	232			$	(4	)		$	(87	)		(38	)%
Less: Net earnings attributable to preferred shareholders		—			(15	)
Net earnings attributable to common shareholders	$	141		$	217
Weighted average shares outstanding - basic		180			170
Weighted average shares outstanding - diluted		181			172
Earnings per share:
Basic
Net earnings	$	0.78		$	1.27
Diluted
Net earnings	$	0.78		$	1.26

Catalent, Inc. Consolidated Statements of Operations (Unaudited; dollars and shares in millions, except per share data)
	Nine Months Ended March 31,								FX impact				Constant Currency Increase (Decrease)
		2022				2021							Change $				Change %
Net revenue	$	3,515			$	2,810			$	(30	)		$	735			26	%
Cost of sales		2,363				1,897				(19	)			485			26	%
Gross margin		1,152				913				(11	)			250			27	%
Selling, general and administrative expenses		618				503				(2	)			117			23	%
Gain on sale of subsidiary		(1	)			(184	)			—				183			(99	)%
Other operating expense		25				17				—				8			46	%
Operating earnings		510				577				(9	)			(58	)		(10	)%
Interest expense, net		91				78				—				13			17	%
Other expense, net		25				5				(4	)			24			465	%
Earnings before taxes		394				494				(5	)			(95	)		(19	)%
Income tax expense		63				91				—				(28	)		(30	)%
Net earnings	$	331			$	403			$	(5	)		$	(67	)		(17	)%
Less: Net earnings attributable to preferred shareholders		(15	)			(43	)
Net earnings attributable to common shareholders	$	316			$	360
Weighted average shares outstanding - basic		176				167
Weighted average shares outstanding - diluted		177				169
Earnings per share:
Basic
Net earnings	$	1.81			$	2.15
Diluted
Net earnings	$	1.79			$	2.12

Catalent, Inc. Condensed Consolidated Balance Sheets (Unaudited; dollars in millions)
	March 31, 2022			June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	786		$	896
Trade receivables, net		932			1,012
Inventories		676			563
Prepaid expenses and other		537			376
Marketable securities		94			71
Total current assets		3,025			2,918
Property, plant, and equipment, net		2,820			2,524
Other non-current assets, including intangible assets		4,477			3,670
Total assets	$	10,322		$	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		401			385
Other accrued liabilities		616			736
Total current liabilities		1,046			1,196
Long-term obligations, less current portion		4,157			3,166
Other non-current liabilities		487			476
Redeemable preferred stock		—			359
Total shareholders' equity		4,632			3,915
Total liabilities, redeemable preferred stock, and shareholders' equity	$	10,322		$	9,112

Catalent, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited; dollars in millions)
	Nine Months Ended March 31,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities	$	370			$	299
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, equipment, and other productive assets		(425	)			(497	)
Purchases of marketable securities		(25	)			(75	)
(Settlement on) proceeds from sale of subsidiaries, net		(3	)			287
Payment for acquisitions, net of cash acquired		(1,033	)			(147	)
Payments for investments		(4	)			(4	)
Net cash used in investing activities		(1,490	)			(436	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings		1,100				167
Payments related to long-term obligations		(72	)			(55	)
Financing fees paid		(15	)			(18	)
Dividends paid		(4	)			(18	)
Proceeds from sale of common stock, net		—				82
Cash paid, in lieu of equity, for tax withholding obligations		(9	)			(27	)
Exercise of stock options		21				22
Other financing activities		9				6
Net cash provided by financing activities		1,030				159
Effect of foreign currency exchange on cash and cash equivalents		(20	)			13
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(110	)			35
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		896				953
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	786			$	988

Catalent, Inc. Reconciliation of Net Earnings to EBITDA from Operations and Adjusted EBITDA* (Unaudited; dollars in millions)
	Three months ended
	March 31, 2021				June 30, 2021				September 30, 2021				December 31, 2021			March 31, 2022
Net earnings	$	232			$	182			$	93			$	97		$	141
Interest expense, net		27				32				26				32			33
Income tax expense		85				39				10				18			35
Depreciation and amortization		76				73				81				98			99
EBITDA from operations		420				326				210				245			308
Stock-based compensation		8				13				21				11			10
Impairment charges and loss on sale of assets		5				1				3				16			2
Financing-related expenses		17				1				4				—			—
Restructuring costs		3				1				1				1			3
Acquisition, integration, and other special items		1				7				7				22			9
(Gain) loss on sale of subsidiary		(184	)			2				(1	)			—			—
Foreign exchange (gain) loss		4				(2	)			9				15			1
Inventory fair value step-up charges		—				—				—				—			7
Other adjustments		—				(1	)			(2	)			—			(1	)
Adjusted EBITDA	$	274			$	348			$	252			$	310		$	339
Favorable (unfavorable) FX impact																	(7	)
Adjusted EBITDA at constant currency																$	346

* 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
	March 31, 2021				June 30, 2021				September 30, 2021				December 31, 2021				March 31, 2022
Net earnings	$	232			$	182			$	93			$	97			$	141
Amortization (1)		23				24				23				34				33
Stock-based compensation		8				13				21				11				10
Impairment charges and gain/loss on sale of assets (2)		5				1				3				16				2
Financing-related expenses		17				1				4				—				—
Restructuring costs		3				1				1				1				3
Acquisition, integration, and other special items		1				7				7				22				9
(Gain) loss on sale of subsidiary (3)		(184	)			2				(1	)			—				—
Foreign exchange loss (gain)		4				(2	)			9				15				1
Inventory fair value step-up charges (4)		—				—				—				—				7
Other adjustments (5)		—				(1	)			(2	)			—				(1	)
Estimated tax effect of adjustments (6)		(17	)			40				(15	)			(24	)			(15	)
Discrete income tax (benefit) expense items (7)		56				(59	)			(15	)			(9	)			(2	)
Adjusted net income (ANI)	$	148			$	209			$	128			$	163			$	188
Weighted average shares outstanding - basic		170																180
Weighted average shares outstanding - diluted		172																181
Earnings per share:
Net earnings per share - basic	$	1.27															$	0.78
Net earnings per share - diluted	$	1.26															$	0.78
ANI per share:
ANI per share - basic	$	0.87															$	1.05
ANI per share - diluted (8)	$	0.82															$	1.04

* 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 Oral and Specialty Delivery segment.
(3)	Represents the (gain) loss on sale of subsidiary associated with the 2021 divestiture of Catalent's former blow-fill-seal business.
(4)	Represents a one-time non-cash inventory fair value adjustment of $7 million recorded in connection with the Bettera acquisition.
(5)	Represents unrealized gains related to the fair value of the derivative liability associated with Catalent's formerly outstanding Series A convertible preferred stock.
(6)	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.
(7)	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.
(8)	For the three months ended March 31, 2022, 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 March 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, 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 March 31, 2022 and 2021, 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 March 31,								Nine Months Ended March 31,
		2022				2021				2022				2021
Biologics	$	216			$	180			$	579			$	422
Softgel and Oral Technologies		75				59				194				143
Oral and Specialty Delivery		41				31				118				97
Clinical Supply Services		30				27				83				77
Sub-Total	$	362			$	297			$	974			$	739
Reconciling items to net earnings
Unallocated costs (1)		(54	)			123				(211	)			49
Depreciation and amortization		(99	)			(76	)			(278	)			(216	)
Interest expense, net		(33	)			(27	)			(91	)			(78	)
Income tax expense		(35	)			(85	)			(63	)			(91	)
Net earnings	$	141			$	232			$	331			$	403

(1)	Unallocated costs include restructuring and special items, stock-based compensation, impairment charges, gain on sale of subsidiary, certain other corporate directed costs, and other costs that are not allocated to the segments.

Catalent, Inc. Calculation of Net Leverage Ratio (Unaudited; dollars in millions)
	March 31, 2021			June 30, 2021			September 30, 2021 Pro Forma (2)			December 31, 2021			March 31, 2022
Total Secured Debt	$	992		$	989		$	1,435		$	1,431		$	1,428
Total Unsecured Debt		2,231			2,252			2,869			2,789			2,758
Total Debt		3,223			3,241			4,304			4,220			4,186
Cash and Cash Equivalents		988			896			971			849			786
Marketable Securities		75			71			50			66			94
Total Net Debt		2,160			2,274			3,283			3,305			3,306
Adjusted EBITDA
Q4 2020		268
Q1 2021		174			174
Q2 2021		224			224			224
Q3 2021		274			274			274			274
Q4 2021					348			348			348			348
Q1 2022								252			252			252
Q2 2022											310			310
Q3 2022														339
LTM Adjusted EBITDA	$	940		$	1,020		$	1,098		$	1,184		$	1,249
Net Sr. Secured Debt / Adj. EBITDA	n.a.(1)			0.0x			0.4x			0.4x			0.4x
Net Debt / Adj. EBITDA	2.3x			2.2x			3.0x			2.8x			2.6x

(1)	The sum of cash and cash equivalents plus marketable securities exceeds total secured debt.
(2)	Assumes Bettera acquisition closed on September 30, 2021.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220503005206/en/

Investor Contact:

Catalent, Inc.

Paul Surdez

732-537-6325

investors@catalent.com

Source: Catalent, Inc.

FAQ

What were Catalent's Q3'22 earnings results for stock CTLT?

Catalent reported Q3'22 net earnings of $141 million, down from $217 million in Q3'21.

How much did Catalent's net revenue grow in Q3'22?

Catalent's net revenue for Q3'22 grew by 21% to $1.27 billion.

What guidance did Catalent provide for FY'22?

Catalent upgraded its FY'22 guidance to 20-23% net revenue growth and 24-28% Adjusted EBITDA growth.

What is Catalent's growth outlook for FY'23?

Catalent projects FY'23 organic, constant-currency net revenue growth of 8-10%.