Catalent(US:CTLT)2023-08-29 20:02Financial 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]