Catalent, Inc. (CTLT - Free Report) reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of 67 cents, down 27.9% year over year. The bottom line missed the Zacks Consensus Estimate by 6.9%.
The adjustments include charges and benefits related to amortization, and acquisition, integration and other special items’ costs, among others.
We had projected the fiscal second-quarter adjusted EPS to be 67 cents, which matched the company’s reported figure.
The company’s GAAP EPS was 44 cents during the quarter, down 15.4% year over year.
Revenues in Detail
Revenues grossed $1.15 billion in the reported quarter, down 5.6% year over year. However, the metric surpassed the Zacks Consensus Estimate by 2.4%.
At constant exchange rate or CER, revenues were down 2%.
The fiscal second-quarter revenue compares to our estimate of $1.12 billion.
The top line was hampered by soft performances by both its segment in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) decreased 4% year over year.
Segments in Detail
Per Catalent’s new organizational structure, it reports via two segments — Biologics and Pharma and Consumer Health.
Revenues in the Biologics segment fell 9.5% year over year (down 7% at CER) to $580 million in the quarter under review.
This compares to our projection of fiscal second-quarter segmental revenues of $586 million.
Revenues in the Pharma and Consumer Health segment decreased 1.2% from the year-ago period’s level (up 3% at CER) to $570 million.
This compares to our projection of fiscal second-quarter segmental revenues of $530.6 million.
Operational Update
In the quarter under review, Catalent’s gross profit fell 4.4% to $387 million. However, the gross margin expanded 40 basis points (bps) to 33.7%.
Selling, general and administrative expenses fell 0.9% to $226 million year over year.
Adjusted operating profit totaled $161 million, declining 9% from the prior-year quarter’s level. The adjusted operating margin in the quarter contracted by 53 bps to 14%.
Financial Update
Catalent exited the second quarter of fiscal 2023 with cash and cash equivalents of $442 million compared with $281 million at the end of the fiscal first quarter. Total debt at the end of second-quarter fiscal 2023 was $4.85 billion compared with $4.20 billion at the end of the fiscal first quarter.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2023 was $122 million compared with net cash provided by operating activities of $232 million a year ago.
Guidance
Catalent has reiterated its financial outlook for fiscal 2023.
The company continues to project revenues within $4,625 million-$4,875 million for the full year. The Zacks Consensus Estimate for fiscal 2023 revenues is currently pegged at $4.69 billion.
Our Take
Catalent exited the second quarter of fiscal 2023 with lower-than-expected earnings. Dismal overall top-line and bottom-line performances, along with a decline in both segments’ reported revenues during the period, are disappointing. The contraction of adjusted operating margin in the quarter also raises apprehension.
On a positive note, Catalent’s better-than-expected revenues in the reported quarter and the year-over-year improvement in the Pharma and Consumer Health segment at CER are impressive. The expansion of the gross margin bodes well. Catalent had undertaken some facility expansion activities during the reported quarter besides inking some strategic deals over the past few months. These developments raise our optimism about the stock.
Zacks Rank and Key Picks
Catalent currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Catalent, Inc. (CTLT - Free Report) reported second-quarter fiscal 2023 adjusted earnings per share (EPS) of 67 cents, down 27.9% year over year. The bottom line missed the Zacks Consensus Estimate by 6.9%.
The adjustments include charges and benefits related to amortization, and acquisition, integration and other special items’ costs, among others.
We had projected the fiscal second-quarter adjusted EPS to be 67 cents, which matched the company’s reported figure.
The company’s GAAP EPS was 44 cents during the quarter, down 15.4% year over year.
Revenues in Detail
Revenues grossed $1.15 billion in the reported quarter, down 5.6% year over year. However, the metric surpassed the Zacks Consensus Estimate by 2.4%.
At constant exchange rate or CER, revenues were down 2%.
The fiscal second-quarter revenue compares to our estimate of $1.12 billion.
The top line was hampered by soft performances by both its segment in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) decreased 4% year over year.
Segments in Detail
Per Catalent’s new organizational structure, it reports via two segments — Biologics and Pharma and Consumer Health.
Revenues in the Biologics segment fell 9.5% year over year (down 7% at CER) to $580 million in the quarter under review.
This compares to our projection of fiscal second-quarter segmental revenues of $586 million.
Revenues in the Pharma and Consumer Health segment decreased 1.2% from the year-ago period’s level (up 3% at CER) to $570 million.
This compares to our projection of fiscal second-quarter segmental revenues of $530.6 million.
Operational Update
In the quarter under review, Catalent’s gross profit fell 4.4% to $387 million. However, the gross margin expanded 40 basis points (bps) to 33.7%.
Selling, general and administrative expenses fell 0.9% to $226 million year over year.
Adjusted operating profit totaled $161 million, declining 9% from the prior-year quarter’s level. The adjusted operating margin in the quarter contracted by 53 bps to 14%.
Financial Update
Catalent exited the second quarter of fiscal 2023 with cash and cash equivalents of $442 million compared with $281 million at the end of the fiscal first quarter. Total debt at the end of second-quarter fiscal 2023 was $4.85 billion compared with $4.20 billion at the end of the fiscal first quarter.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2023 was $122 million compared with net cash provided by operating activities of $232 million a year ago.
Guidance
Catalent has reiterated its financial outlook for fiscal 2023.
The company continues to project revenues within $4,625 million-$4,875 million for the full year. The Zacks Consensus Estimate for fiscal 2023 revenues is currently pegged at $4.69 billion.
Our Take
Catalent exited the second quarter of fiscal 2023 with lower-than-expected earnings. Dismal overall top-line and bottom-line performances, along with a decline in both segments’ reported revenues during the period, are disappointing. The contraction of adjusted operating margin in the quarter also raises apprehension.
On a positive note, Catalent’s better-than-expected revenues in the reported quarter and the year-over-year improvement in the Pharma and Consumer Health segment at CER are impressive. The expansion of the gross margin bodes well. Catalent had undertaken some facility expansion activities during the reported quarter besides inking some strategic deals over the past few months. These developments raise our optimism about the stock.
Zacks Rank and Key Picks
Catalent currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
Highest Returns for Any Asset Class
It’s not even close. Despite ups and downs, Bitcoin has been more profitable for investors than any other decentralized, borderless form of money.
No guarantees for the future, but in the past three presidential election years, Bitcoin’s returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%. Zacks predicts another significant surge in months to come.
Hurry, Download Special Report – It’s FREE >>
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