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Catalent (CTLT) Preliminary Q4 Revenues Dampened by Lower Sales
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Catalent, Inc. (CTLT - Free Report) reported preliminary fourth-quarter fiscal 2023 adjusted earnings per share (EPS) of 9 cents, down 91.7% from the year-over-year period. The Zacks Consensus Estimate was 10 cents.
The adjustments include charges related to amortization, and acquisition, integration and other special items’ costs, among others.
The company’s GAAP loss per share was 48 cents during the quarter against the year-over-year period’s EPS of 93 cents.
Revenues in Detail
Per the preliminary report, revenues grossed $1.07 billion in the reported quarter, down 17% year over year. However, the metric surpassed the Zacks Consensus Estimate by 1.7%.
At constant exchange rate or CER, revenues were also down 17%.
The top line was hampered by soft performances in its Biologics segment in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) decreased 19% year over year.
Per the preliminary report, full-year revenues were $4.28 billion, reflecting a 10.9% decline from the comparable fiscal 2022 period. However, the figure topped the Zacks Consensus Estimate by 0.5%.
At CER, revenues were down 9%.
Segments in Detail
Per Catalent’s new organizational structure, it reports via two segments — Biologics and Pharma and Consumer Health.
Per the preliminary report, revenues in the Biologics segment fell 37.1% year over year on a reported basis (down 37% at CER) to $406 million in the quarter under review. This compares to our projection of fiscal fourth-quarter segmental revenues of $518.2 million.
Per the preliminary report, revenues in the Pharma and Consumer Health segment increased 2.9% from the year-ago period (up 3% at CER) to $662 million. This compares to our projection of fiscal fourth-quarter segmental revenues of $526.2 million.
In the quarter under review, Catalent’s gross profit fell 49.1% to $235 million. The gross margin contracted a huge 1389 basis points to 22%.
We had projected 23% of gross margin for the fiscal fourth quarter.
Selling, general and administrative expenses fell 3.1% to $219 million year over year.
Adjusted operating profit totaled $16 million, reflecting a 93.2% decline from the prior-year quarter’s level. Adjusted operating margin in the fiscal fourth quarter contracted a huge 1684 bps to 1.5%.
Financial Update
Catalent exited fiscal 2023 with cash and cash equivalents of $280 million compared with $449 million at the end of fiscal 2022. Total debt at the fiscal 2023-end was $4.85 billion compared with $4.20 billion at the end of fiscal 2022.
Cumulative net cash provided by operating activities at the end of fiscal 2023 was $261 million compared with $439 million a year ago.
Guidance
Catalent has initiated its financial outlook for fiscal 2024.
The company projects revenues between $4,300 million and $4,500 million for the full year. The Zacks Consensus Estimate for fiscal 2024 revenues is currently pegged at $4.21 billion.
Our Take
Catalent exited the fourth quarter of fiscal 2023 with lower-than-expected earnings and dismal overall top-line and bottom-line performances. The decline in Biologics segment’s revenues during the period was also disappointing. Rising operating costs leading to the contraction of both margins in the quarter do not bode well.
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 were impressive. Management’s confirmation regarding Catalent’s continued progress in improving its operational performance and winning new business with new and existing customers raises our optimism.
In June, Catalent expanded its integrated development, manufacturing and supply solution, OneBio Suite, across a range of biologic modalities, including antibody and recombinant proteins, cell and gene therapies, and mRNA. In May, the company expanded the services and capabilities at its facility in Shiga, Japan, to include the storage, kitting, and distribution of advanced therapies at ultra-low temperatures for clinical trials. These developments look promising for Catalent.
Zacks Rank and Stocks to Consider
Catalent currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. (DVA - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and McKesson Corporation (MCK - Free Report) .
DaVita, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2023 adjusted EPS of $2.08, beating the Zacks Consensus Estimate by 25.3%. Revenues of $3.00 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has a long-term estimated growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 21.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, beating the Zacks Consensus Estimate by 24.3%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. It currently carries a Zacks Rank #2.
McKesson has a long-term estimated growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.
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Catalent (CTLT) Preliminary Q4 Revenues Dampened by Lower Sales
Catalent, Inc. (CTLT - Free Report) reported preliminary fourth-quarter fiscal 2023 adjusted earnings per share (EPS) of 9 cents, down 91.7% from the year-over-year period. The Zacks Consensus Estimate was 10 cents.
The adjustments include charges related to amortization, and acquisition, integration and other special items’ costs, among others.
The company’s GAAP loss per share was 48 cents during the quarter against the year-over-year period’s EPS of 93 cents.
Revenues in Detail
Per the preliminary report, revenues grossed $1.07 billion in the reported quarter, down 17% year over year. However, the metric surpassed the Zacks Consensus Estimate by 1.7%.
At constant exchange rate or CER, revenues were also down 17%.
The top line was hampered by soft performances in its Biologics segment in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) decreased 19% year over year.
Per the preliminary report, full-year revenues were $4.28 billion, reflecting a 10.9% decline from the comparable fiscal 2022 period. However, the figure topped the Zacks Consensus Estimate by 0.5%.
At CER, revenues were down 9%.
Segments in Detail
Per Catalent’s new organizational structure, it reports via two segments — Biologics and Pharma and Consumer Health.
Per the preliminary report, revenues in the Biologics segment fell 37.1% year over year on a reported basis (down 37% at CER) to $406 million in the quarter under review. This compares to our projection of fiscal fourth-quarter segmental revenues of $518.2 million.
Per the preliminary report, revenues in the Pharma and Consumer Health segment increased 2.9% from the year-ago period (up 3% at CER) to $662 million. This compares to our projection of fiscal fourth-quarter segmental revenues of $526.2 million.
Catalent, Inc. Price, Consensus and EPS Surprise
Catalent, Inc. price-consensus-eps-surprise-chart | Catalent, Inc. Quote
Operational Update
In the quarter under review, Catalent’s gross profit fell 49.1% to $235 million. The gross margin contracted a huge 1389 basis points to 22%.
We had projected 23% of gross margin for the fiscal fourth quarter.
Selling, general and administrative expenses fell 3.1% to $219 million year over year.
Adjusted operating profit totaled $16 million, reflecting a 93.2% decline from the prior-year quarter’s level. Adjusted operating margin in the fiscal fourth quarter contracted a huge 1684 bps to 1.5%.
Financial Update
Catalent exited fiscal 2023 with cash and cash equivalents of $280 million compared with $449 million at the end of fiscal 2022. Total debt at the fiscal 2023-end was $4.85 billion compared with $4.20 billion at the end of fiscal 2022.
Cumulative net cash provided by operating activities at the end of fiscal 2023 was $261 million compared with $439 million a year ago.
Guidance
Catalent has initiated its financial outlook for fiscal 2024.
The company projects revenues between $4,300 million and $4,500 million for the full year. The Zacks Consensus Estimate for fiscal 2024 revenues is currently pegged at $4.21 billion.
Our Take
Catalent exited the fourth quarter of fiscal 2023 with lower-than-expected earnings and dismal overall top-line and bottom-line performances. The decline in Biologics segment’s revenues during the period was also disappointing. Rising operating costs leading to the contraction of both margins in the quarter do not bode well.
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 were impressive. Management’s confirmation regarding Catalent’s continued progress in improving its operational performance and winning new business with new and existing customers raises our optimism.
In June, Catalent expanded its integrated development, manufacturing and supply solution, OneBio Suite, across a range of biologic modalities, including antibody and recombinant proteins, cell and gene therapies, and mRNA. In May, the company expanded the services and capabilities at its facility in Shiga, Japan, to include the storage, kitting, and distribution of advanced therapies at ultra-low temperatures for clinical trials. These developments look promising for Catalent.
Zacks Rank and Stocks to Consider
Catalent currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. (DVA - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and McKesson Corporation (MCK - Free Report) .
DaVita, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2023 adjusted EPS of $2.08, beating the Zacks Consensus Estimate by 25.3%. Revenues of $3.00 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita has a long-term estimated growth rate of 12.7%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 21.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
McKesson reported first-quarter fiscal 2024 adjusted EPS of $7.27, beating the Zacks Consensus Estimate by 24.3%. Revenues of $74.48 billion surpassed the Zacks Consensus Estimate by 6.6%. It currently carries a Zacks Rank #2.
McKesson has a long-term estimated growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 8.1%.