Catalent(CTLT)2022-08-29 17:16Financial Data and Key Metrics Changes - Fiscal 2022 net revenue was 1.29 billion, reflecting constant currency organic growth of 28% compared to fiscal 2021, with an adjusted EBITDA margin increase to 26.6% [8][39] - Fourth quarter revenue was 215 million or 1.16 per diluted share in the corresponding prior year period [40] Business Line Data and Key Metrics Changes - Biologics segment net revenue in Q4 was 350 million, increasing 22% compared to the fourth quarter of fiscal 2021, with the acquisition of Bettera contributing significantly to growth [32][33] - Oral and Specialty Delivery segment net revenue grew 11%, with segment EBITDA up 27% over the fourth quarter of last year, driven by demand for Zydis offerings [35] - Clinical Supply Services segment posted net revenue of 540 million, up from $529 million at the end of the last quarter and up 10% from June 30, 2021 [37] - The company expects long-term net revenue growth for the Pharma and Consumer Health segment to be 6% to 10%, with the Biologics segment expected to grow at 10% to 15% [12][13] Company Strategy and Development Direction - The company has reorganized its structure, reducing operating segments from four to two, focusing on Biologics and Pharmaceuticals & Consumer Health to enhance customer access to services [10][11] - The acquisition of Metrics Contract Services is expected to accelerate growth in the high drug manufacturing sector, with anticipated revenue growth comparable to the segment's projected overall long-term growth of 6% to 10% [19][21] - The company aims to achieve a 30% EBITDA margin by fiscal 2026, despite current challenges from inflation and supply chain issues [60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2023 organic growth in line with the long-term growth rate of 8% to 10%, despite a decline in COVID-related revenue [15][16] - The company anticipates that non-COVID business will grow organically by more than 25% at constant currency due to expansions and efficiencies in existing assets [17] - Management acknowledged ongoing supply chain challenges and inflationary pressures but remains optimistic about the company's growth strategy and market position [25] Other Important Information - The company reported a net leverage ratio of 2.9x as of June 30, 2022, slightly below the long-term target of 3.0x [41] - Capital expenditures as a percentage of revenue were 14% in fiscal 2022, with expectations for a similar range in fiscal 2023 [45][46] Q&A Session Summary Question: Can you provide insights on the margin headwinds and the impact of facility remediation? - Management confirmed that FX impacts are significant, with EBITDA being more affected than revenue, and ongoing remediation efforts in Brussels are factored into guidance [54][55][56] Question: What changes can customers expect from the new operating structure? - The new structure aims to reduce internal barriers and increase the share of services purchased by existing customers, enhancing commercial synergies [61][62] Question: What is the expected range of COVID-related revenue decline for 2023? - Management indicated a two-thirds reduction in COVID-related volumes, with minimal variability expected around this assumption [69][70] Question: How is the company addressing supply chain challenges? - Supply chain challenges are primarily impacting the consumer health side, with management actively seeking to offset inflationary pressures through pricing strategies [81][82] Question: What is the long-term growth outlook for the Biologics segment? - The long-term growth outlook for the Biologics segment remains at 10% to 15%, with significant capacity additions expected to support this growth [12][90]