SOMERSET, N.J.--(BUSINESS WIRE)--Catalent, Inc. (NYSE: CTLT), the leader in enabling the development and supply of better treatments for patients worldwide, today announced that it will release financial results for the second quarter of fiscal year 2024 ended December 31, 2023, before the market open on Friday, February 9, 2024. The Company’s management will host a webcast to discuss the results at 8:15 a.m. ET on the same day. Catalent invites all interested parties to listen to the webcast and view a su ...

SOMERSET, N.J.--(BUSINESS WIRE)--Catalent, Inc. (NYSE: CTLT), the leader in enabling the development and supply of better treatments for patients worldwide, today announced its targets to reduce greenhouse gas emissions (Scope 1 and 2) by 42% by 2030. The company also committed to engaging with its suppliers, of purchased goods and services, capital goods, and upstream transportation and distribution, such that 70% of their emissions will have reduction goals aligned with science-based targets by the end of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36587 atalent CATALENT, INC. (Exact name of registrant as specified in its charter) | --- | --- | |------------------------------------------------- ...

Financial Performance - Net revenue for the three months ended September 30, 2023, was $982 million, a decrease of 6% compared to $1,022 million for the same period in 2022[193]. - Gross margin decreased to $169 million, down 37% from $258 million year-over-year[193]. - Net revenue decreased by $58 million, or 6%, excluding the impact of foreign exchange, compared to the three months ended September 30, 2022[208]. - Biologics segment net revenue decreased by $81 million, or 15%, primarily due to a decline in demand for COVID-19 related programs[237]. - Pharma and Consumer Health segment net revenue increased by $35 million, or 7%, driven by acquisitions[220]. - Gross margin decreased by $94 million, or 37%, with a percentage of revenue dropping to 17.0% from 25.2% year-over-year[210]. - The company reported a net loss of $759 million for the three months ended September 30, 2023[218]. - Segment EBITDA for the Biologics segment decreased by 57% to $49 million, while the Pharma and Consumer Health segment's EBITDA decreased by 10% to $101 million[214]. - Biologics Segment EBITDA decreased by $64 million, or 57%, compared to the same period in 2022, primarily due to a decline in demand for COVID-19 related programs[238]. - Pharma and Consumer Health net revenue increased by $23 million, or 4%, but decreased 1% organically, driven by a decline in consumer health products[239]. Expenses and Charges - Goodwill impairment charges amounted to $689 million for the three months ended September 30, 2023, with no charges reported in the same period of the previous year[193][185]. - Selling, general, and administrative expenses rose by $7 million, or 3%, compared to the same period last year, driven by operational enhancements and incremental expenses from acquisitions[195]. - Interest expense increased by 80% to $58 million for the three months ended September 30, 2023, compared to $32 million in the same period of 2022[193]. - Interest expense increased by $26 million, or 80%, to $58 million due to higher interest rates and increased borrowing[228]. Assets and Liabilities - Total assets decreased to $10,023 million as of September 30, 2023, down from $10,777 million as of June 30, 2023[175]. - Total prepaid expenses and other increased to $779 million as of September 30, 2023, compared to $633 million as of June 30, 2023[178]. - The company had $509 million in available borrowing capacity under its revolving credit facility as of September 30, 2023[222]. - The company has increased borrowings on its revolving credit facility to $670 million, which is expected to meet liquidity needs for at least the next 12 months[252]. - As of September 30, 2023, the company had $872 million of euro-denominated debt outstanding, qualifying as a hedge of a net investment in European operations[247]. Cash Flow - For the three months ended September 30, 2023, cash used in operations was $70 million, a decrease from $92 million in the same period in 2022[253]. - Cash used in investing activities decreased to $84 million from $116 million year-over-year, primarily due to reduced acquisition of property and equipment[254]. - Cash provided by financing activities increased to $98 million from $74 million, driven by a $13 million increase in net borrowings[255]. Strategic Initiatives - The company plans to close its San Francisco facility as part of its restructuring efforts, with costs under evaluation[180]. - The company is focused on expanding its capabilities in new treatment modalities and market segments through investments in state-of-the-art facilities[183]. - The company plans to complete the remediation of identified material weaknesses in internal controls over financial reporting by the third quarter of fiscal 2024[270]. Risks and Challenges - The company is subject to economic and political risks, including inflation and global supply chain disruptions, which could affect profitability and operational procedures[42]. - The company has a substantial level of indebtedness, which may limit its ability to raise additional capital and increase exposure to interest rate risks[14]. - The company’s interest expense on variable-rate debt may continue to rise due to potential interest rate increases aimed at combating inflation[44]. - The company is no longer eligible to use the Form S-3 registration statement, which could impair its capital-raising activities[29]. - The company’s stock price has historically been volatile, and future sales of common stock could lead to a decline in market price[28]. - The company may face litigation and government investigations that could impact its business and financial condition[12]. Governance and Compliance - The company has identified material weaknesses in its internal controls over financial reporting, which could lead to future material misstatements in financial statements and affect timely reporting obligations[16]. - The company anticipates increasing focus from investors and stakeholders on environmental, social, and governance (ESG) matters, which may impact business strategies and operations[22]. - The company may pursue acquisitions to complement or expand its business, but such transactions carry significant risks related to integration and realization of anticipated benefits[24]. Operational Efficiency - The company produced approximately 70 billion unit doses annually for nearly 8,000 customer products, representing about 1 in every 26 unit doses taken globally[183]. - The company is utilizing advanced information and communication systems to enhance operational efficiency, but risks associated with cybersecurity remain a concern[43]. - The company continues to evaluate hedging opportunities for foreign currency in the future, although currently, no forward foreign currency exchange contracts are in use[262].

Financial Data and Key Metrics Changes - Net revenue for Q1 2024 was $982 million, down 4% on a reported basis and 6% on a constant currency basis compared to the prior year, primarily due to a significant reduction in COVID-related revenue of approximately $85 million [18] - Adjusted net loss was $19 million or a loss of $0.10 per diluted share compared to adjusted net income of $61 million or $0.34 per diluted share last year [19] - Adjusted EBITDA decreased 38% to $115 million, with a margin of 11.7% compared to 18.3% in the prior year quarter [39] Business Line Data and Key Metrics Changes - Biologics segment net revenue was $447 million, a 16% decrease year-over-year, primarily driven by lower COVID demand [40] - Non-COVID Biologics revenue growth was approximately 11% when excluding a one-time $30 million licensing fee from the prior year [40] - Pharma and Consumer Health segment generated net revenue of $535 million, an increase of 5% compared to the prior year, driven by the acquisition of Metrics [23] Market Data and Key Metrics Changes - The company expects non-COVID non-Sarepta Biologics business to grow in the low- to mid-teens in fiscal '24, driven by GLP-1 production and improved productivity [22] - The company anticipates that GLP-1 programs will contribute less than $100 million in fiscal '24, with expectations of over $0.5 billion in revenue once all lines are operational [36] Company Strategy and Development Direction - The company is focused on improving operational performance and margin recovery to pre-COVID levels while expanding its presence in high-demand areas such as gene therapy and GLP-1 production [15][27] - A strategic review committee has been formed to evaluate options for maximizing long-term value creation for shareholders [29][90] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro headwinds but expressed confidence in achieving mid to high teens revenue growth excluding COVID-related revenue [10] - The company is optimistic about the future, citing strong demand for gene therapy services and a healthy pipeline of late-stage programs [12][15] Other Important Information - The company is working to finalize its SEC filings for fiscal 2023 and Q1 2024, with expectations to file by the end of November [38] - The company reported a goodwill impairment of approximately $700 million related to acquisitions in its Consumer Health and Biologics segments [17] Q&A Session Summary Question: Implications of Sarepta's label expansion on FY '24 guidance - Management noted positive momentum in the relationship with Sarepta and emphasized the importance of operational performance in meeting demand [50][51] Question: Sequential growth in Biologics revenue - Management clarified that the sequential decline was influenced by capacity utilization and noted improvements in the BWI gene therapy business [52][53] Question: Gene therapy franchise size and other programs - Management highlighted a balanced portfolio in gene therapy and noted good momentum in drug substance programs [54][55] Question: Strategic review timeline - Management indicated that the review is thorough and aims to address capital structure improvements with a sense of urgency [90][91] Question: Returns on GLP-1 prefilled syringe capacity - Management refrained from disclosing specific returns but indicated that the investment would be attractive for the company [92][94]

Preliminary Q1'24 Earnings Call Presentation This presentation contains both historical and forward-looking statements and guidance. 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 "belie ...

Financial Data and Key Metrics Changes - Net revenue for Q4 2023 was $1.1 billion, down 17% year-over-year on both a reported and constant currency basis [104] - Adjusted EBITDA decreased 61% to $139 million, with a margin of 13% compared to 27.8% in the prior year quarter [105] - Adjusted net income was $16 million or $0.09 per diluted share, compared to $195 million or $1.08 per diluted share last year [115] Business Line Data and Key Metrics Changes - Biologics segment revenue was $406 million, a decrease of 37% year-over-year, primarily due to lower COVID demand [106] - Non-COVID Biologics revenue declined 16% year-over-year, while drug product and drug substance offerings grew double-digit [107] - Pharma and Consumer Health segment generated net revenue of $662 million, an increase of 3% year-over-year, with segment EBITDA of $187 million, down 6% [118] Market Data and Key Metrics Changes - COVID-related revenue in Biologics declined over 50% from $1.3 billion in fiscal 2022 to approximately $625 million in fiscal 2023 [117] - The company expects mid-to-high single-digit growth in the Pharma and Consumer Health segment for fiscal 2024 [88] - Non-COVID business is projected to grow approximately 15% to 20% in fiscal 2024, driven by significant growth from the largest customer [123] Company Strategy and Development Direction - The company has established a new strategic and operational review committee to enhance operational performance and maximize long-term shareholder value [11][12] - Cost reduction plans are expected to yield over $100 million in incremental savings in fiscal 2024, with annualized run rate savings projected between $150 million to $170 million [90] - The company aims to reduce CapEx in fiscal 2024 to around 8% to 10% of sales, maintaining this lower level in the coming years [93] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the macro-driven pressures in the pharma services industry, including lower biotech funding and cautious customer decision-making [79] - The company is focused on improving EBITDA margins and cash flow generation to enhance shareholder value [89] - Management expressed confidence in returning to historical margin levels in the Biologics segment by addressing underutilization and productivity improvements [64][125] Other Important Information - The company plans to file a notification of late filing on Form 12b-25 for its fiscal 2023 Form 10-K due to ongoing improvements in accounting and finance processes [127][128] - The strategic review committee's first meeting is scheduled for September, with expectations to provide updates by the next earnings call [150] Q&A Session Summary Question: Can you help build a bridge from the $715 million in 2023 EBITDA to $720 million in 2024? - Management noted a significant drop in COVID revenues, which has a high margin profile, leaving behind costs that have been addressed [145] Question: Any color on the anticipated timelines for the strategic review? - The strategic review committee's mandate includes improving operational performance and strengthening the financial profile, with the first meeting in September [148] Question: Will there be a need to raise capital via equity or debt? - Management indicated that anticipated working capital improvements and cuts in CapEx may reduce the need for capital raising [149]

We do not provide a reconciliation of forward-looking non-GAAP financial measures to our 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, we do so primarily on a ...

Forward-looking Statements 2 Non-GAAP Financial Measures We evaluate the performance of our 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 our credit agreement, our ability to engage in certain activities, such as incurring certain additional indebtedness, making certain investments and paying certain dividends, i ...

Financial Data and Key Metrics Changes - Net revenue for Q3 2023 was $1.04 billion, down 19% on a reported basis and a 17% decrease on a constant currency basis compared to Q3 2022 [34] - Adjusted EBITDA decreased 69% to $105 million, representing 10.1% of net revenue versus 26.6% in the prior year quarter [34] - Adjusted net income was negative $17 million or negative $0.09 per diluted share, compared to adjusted net income of $188 million or $1.04 per diluted share in the third quarter a year ago [35] Business Line Data and Key Metrics Changes - Biologics segment net revenue was $475 million, a decrease of 32% compared to Q3 2022, primarily driven by significantly lower year-on-year COVID demand [37] - COVID revenue in Q3 was approximately $120 million, down 68% year-on-year, with a notable component sourcing settlement impacting margins [38][40] - Pharma and Consumer Health segment generated net revenue of $563 million, an increase of 1% compared to Q3 2022, with segment EBITDA down 10% [46] Market Data and Key Metrics Changes - Non-COVID growth in Biologics was approximately 11% year-on-year, with gene therapy being the strongest source of growth [42] - The company expects a significant year-on-year reduction in COVID revenue in fiscal 2024, with long-term COVID agreements now tied to standard ordering arrangements [41] Company Strategy and Development Direction - The company is focused on improving its cost structure and has developed a cost reduction plan targeting $100 million in savings for fiscal 2024 [26][28] - Catalent aims to return to historical performance levels and is committed to remaining a leading CDMO partner, with strong customer retention noted [30][31] - The company is evaluating its portfolio to ensure sustainable, profitable growth and is limiting new capital expenditures [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational challenges due to the COVID-19 pandemic and is working to address productivity issues and improve forecasting [6][23] - There are initial signs of recovery in biotech funding, although the path back to previous activity levels is expected to be gradual [111] - The company anticipates continued depressed margins in the Biologics segment for Q4 due to ongoing operational challenges [57] Other Important Information - The company recorded a goodwill impairment of $210 million related to its Consumer Health business [12] - A material weakness in internal control over financial reporting was identified, leading to a reevaluation of financial processes [14][15] Q&A Session Summary Question: Expectations for Biologics segment in Q4 - Management expects a decline in Biologics revenues in Q4 compared to Q3 due to lower COVID revenue and ongoing operational challenges [61][62] Question: Update on gene therapy customer conversations - Management indicated that they are working collaboratively with customers to improve working capital efficiency and cash flow generation [67][89] Question: Clarification on cost reduction targets - The $100 million cost reduction target includes remediation costs, with progress being made on headcount reductions and other actions [94] Question: Impact of the $26 million revenue correction - The $26 million correction from fiscal 2022 has been accounted for and will not impact fiscal 2023 financial statements [98] Question: CapEx and capacity alignment - Management stated that current capacity is capable of delivering estimated revenues, but they are pulling back on CapEx due to mismatches with revenue expectations [135]