Catalent(US:CTLT)2022-02-02 05:09Financial Data and Key Metrics Changes - Catalent's net revenue for Q2 was over $1.2 billion, increasing by 34% as reported or 35% in constant currency compared to Q2 of fiscal 2021 [9] - Adjusted EBITDA for Q2 was $310 million, up 39% on both an as-reported and constant currency basis compared to the same period last year [10] - Adjusted net income for Q2 was $163 million or $0.90 per diluted share, an increase from $0.63 per diluted share in the prior-year period [11] Business Segment Data and Key Metrics Changes - The Biologics segment generated net revenue of $638 million, a 60% increase compared to Q2 of fiscal 2021, driven by high demand for COVID-19 related programs [40] - The Softgel and Oral Technologies segment reported net revenue of $329 million, a 36% increase, with the acquisition of Bettera contributing significantly to this growth [45] - The Clinical Supply Services segment posted net revenue of $99 million, representing a 7% growth over the same period last year [51] Market Data and Key Metrics Changes - The Biologics segment now accounts for 52% of net revenue, up from 44% in Q2 of fiscal 2021 and 31% in Q2 of fiscal 2020 [39] - The backlog for the Clinical Supply Services segment was $529 million, up 18% from the previous year [52] Company Strategy and Development Direction - Catalent plans to continue expanding its global network and invest in growth-driving capabilities, particularly in biotherapeutics and cell and gene therapy [26] - The company has raised its long-term net revenue growth rate for the Softgel and Oral Technologies segment to 6% to 8% following the Bettera acquisition [14] - Catalent's long-term strategic plan anticipates continued growth even as COVID-19 related revenue declines in the coming years [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow the Biologics segment at a rate of 10% to 15% in the long term, despite expected deceleration in COVID-19 related revenue [66] - The company is addressing regulatory observations from the FDA with a focus on maintaining high standards of quality and compliance [36][68] Other Important Information - Catalent's net leverage ratio as of December 31, 2021, was 2.8 times, below the long-term target of 3.0 times [55] - The company expects full fiscal year net revenue in the range of $4.74 billion to $4.86 billion, representing growth of 19% to 22% [58] Q&A Session Summary Question: Contribution of COVID-19 programs to Biologics revenue - Management indicated that while they cannot provide specific figures, they expect COVID-19 revenue to be higher than the previous year's $550 million and to continue contributing into fiscal 2023 [63][64] Question: Timeline for remediation efforts at the Brussels facility - Management did not provide specific timelines but confirmed that significant resources are being deployed to address the issues [68] Question: Impact of remediation on new RFPs and win rates - Management stated that they have not experienced a slowdown in commercial activity and demand for services remains high [72] Question: Financial impact of remediation costs - Management noted that while there will be additional costs due to remediation, these have been factored into the updated guidance [74] Question: Capacity utilization across facilities - Management confirmed that many facilities are operating at high capacity, particularly in drug product assets, and additional capacity is expected to come online [94][95]