Catalent(US:CTLT)2024-11-05 21:01Financial Performance - Net revenue for the three months ended September 30, 2024, was $1,023 million, an increase of $38 million or 4% compared to $982 million in the same period of 2023[144]. - Gross margin increased by $11 million or 7%, reaching $181 million, with a gross margin percentage of 17.7% for the three months ended September 30, 2024, compared to 17.2% in the prior year[148]. - The operating loss for the three months ended September 30, 2024, was $67 million, a significant improvement from a loss of $726 million in the same period of 2023, reflecting a 91% decrease in losses[145]. - The company reported a net loss of $129 million for the three months ended September 30, 2024, compared to a net loss of $759 million in the same period of 2023, marking an 83% improvement[145]. - EBITDA from operations for the three months ended September 30, 2024, was $56 million, a significant improvement from a loss of $627 million in the same period of 2023[161]. Revenue Segments - Organic revenue growth for the same period was 4%, driven by increased demand for prescription products and gene therapy offerings[146]. - The Biologics segment net revenue increased by $11 million, or 3%, to $461 million, driven by growth in gene therapy offerings, despite a decline in COVID-19 related programs[162]. - The Pharma and Consumer Health segment net revenue increased by $27 million, or 5%, to $563 million, primarily due to increased revenue from prescription products and demand for Zydis commercial products[164]. Expenses and Costs - Selling, general, and administrative expenses rose by $47 million or 23%, totaling $252 million, primarily due to acquisition costs related to the pending Novo merger[149]. - Other operating expenses increased by $12 million, primarily due to a rise in restructuring charges and fixed-asset impairment charges[152]. - Unallocated costs for the three months ended September 30, 2024, totaled $109 million, a decrease from $777 million in the same period of 2023, reflecting restructuring and special items[159]. Cash Flow and Liquidity - Cash provided by operating activities was $61 million for the three months ended September 30, 2024, compared to cash used in operations of $70 million for the same period in 2023, reflecting a year-over-year change of $131 million[168]. - Cash used in investing activities decreased to $34 million for the three months ended September 30, 2024, from $84 million in the same period of 2023, primarily due to a decrease in acquisition of property and equipment[169]. - The company had $1.09 billion in available borrowing capacity under its revolving credit facility as of September 30, 2024[165]. - The company expects its cash on hand, cash from operations, and available borrowings to be adequate to meet liquidity needs for at least the next 12 months[166]. - As of September 30, 2024, the company held consolidated cash and cash equivalents of $335 million, with foreign subsidiaries holding $277 million[178]. Debt and Interest Rates - The company has $919 million of euro-denominated debt outstanding as of September 30, 2024, which qualifies as a hedge of a net investment in European operations[181]. - The variable portion of the applicable interest rate on $500 million of the U.S. dollar-denominated term loan is effectively fixed at 0.9431% due to the 2023 Rate Swap[180]. - The applicable rate for the U.S. dollar-denominated term loan was LIBOR plus 2.00% as of September 30, 2024, prior to the interest-rate swap agreement[179]. Mergers and Acquisitions - A merger agreement with Novo Holdings was approved by stockholders, with the merger expected to close towards the end of calendar year 2024[136]. - The company announced a definitive agreement to sell its oral solids development and small-scale manufacturing facility in Somerset, New Jersey, expected to close in early 2025[133]. Internal Controls and Risks - The company has identified a material weakness in internal control over financial reporting related to inventory costing and valuation at its Bloomington, Indiana facility[189]. - A comprehensive remediation plan is being developed to address the material weakness, including hiring additional personnel and updating processes[190]. - The company's disclosure controls and procedures were deemed not effective as of September 30, 2024, due to the identified material weakness[187]. - As of September 30, 2024, there has been no material change in the company's quantitative and qualitative disclosures about market risks[185]. - The company maintains no material off-balance sheet arrangements as of September 30, 2024[183]. - The company does not currently use any forward foreign currency exchange contracts but continues to evaluate hedging opportunities for foreign currency in the future[182].