CTLT - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the First Quarter Fiscal Year 2020 Catalent Inc Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be question-and-answer session. [Operator Instructions] Please be advised today's conference is being recorded.

to Castellano, conference Relations Vice like speaker to and now Tom today, President would hand over the your Treasurer. I of Investor you. Thank go sir. Please ahead,

Tom Castellano

thank today Thank on for financial our is of results. agenda website. quarter everyone, our Good our you, XXXX and Investor see Slide Jimmy. fiscal year Relations joining review to available on us Please Catalent's Company first morning, which you X presentation

Joseph. for Catalent John are Wetteny today Speaking Chiminski myself, and

forward-looking statements results our refer today, management's call will make is Slide actual During financial non-GAAP that expectations. to It detail. could and measures. for you management to from more X We possible refer differ

X the the risks issued our and Form has measures. X, and Catalent's operating on X, provides SEC measures additional to performance, information nearest non-GAAP our earnings filed be bear later GAAP Slides XX-Q just may on results, today condition. with discuss reconciliations and and the release to that uncertainties financial the

the John to I'd over Chiminski. call Now like turn to

John Chiminski

Thanks off Tom. quarter have year. earnings which call. financial start results welcome our us our pleased with We're a our XXXX first strong in fiscal everyone to And to

and segments or can above double-digit to the increased our rates first which X, As XX% to growth recorded during nicely on being strong constant contributed currency quarter $XXX were constant the of our long-term in revenue the reporting as revenue four for see you million our slide with of outlook. first reported XX% quarter currency quarter XX% All the growth organic. growth

basis XXXX first $XXX on the XX% being quarter year organic. fiscal above by of was with for the million EBITDA adjusted XX% Our a constant currency of quarter

year. from $X.XX share reporting strong contributions first segments. results income the fiscal million $XX line is above figure profitability all at prior from per net our four for $X.XX quarter included was adjusted same the also Our The diluted the which the or of

update. to our moving operational on Now

biologic which commercial a the was to several strides horizon. Bloomington on to the received XXst that from we time that the up continue recently great strategy site the products announce pleased is and the launches at of additional its First, with acquisition, on make producing XX I'm for approval

late-stage a that and Bloomington manage bodes robust well future. to across funnel of continue clinical for opportunities We Madison

expansions still our the in growth will by Biologics to plan. both and among manufacturing investment according are Additionally, and finished future spanning well meet supported to Madison add million $XXX capacity projected substance customers. drug existing more progressing product investment and This drug Bloomington underway and

strategy acquisition July, into biologic in the space of the the Bioservices through of therapeutic acquisition entrance and we assets new healthcare. therapy one acquisition and XXXX. gained in have in capabilities therapy late Through our in of expertise reflected is aspect growing areas the our related significant gene gene in our Another fastest of additional Paragon May,

vectors, reinforce as a and used of us adeno-associated growth accelerated gene adjacent categories entry to developments cell platform for expanded technology support by across therapy leadership commonly system bringing in of delivery most into long-term development These Catalent's gene for an enabling expertise and vectors, the well position biologics therapies. viral manufacturing development and offering for of as deep the position other

order combines to facilities therapy. capabilities expertise world-class strong business gene industry and this cell tailwind therapy with and gene Our on manufacturing in in capitalize substantial

to growth our X% of from expected future long-term outlook our EBITDA on profile increase X% business X% value compelling highly Catalent of integration the is expected gate the The will portfolio out therapy evidenced progressing revenue by therapy underway the expectations. performing and well of deliver gene impact therapy to gene to as The the revenue and our positive to business ahead gene well our and shareholders of the is X%. assets into in

which suite Essentially, our to bio packaging We customers' combines service biologic and this also service possible. customers looking first from fast development clinical integrated There's gene the accelerate just as to molecule is Solutions interest our development signed by and to off and large to simplified in among one great as in successfully development discussions. offering. clinic more active been into weeks fill/finish months with manufacturing, contract all capabilities launched Catalent's timelines expertise Catalent molecule designed Supply one to recently move bio one standard our trim dozens leveraging

biologics suite needs in our and of increase this is cross-selling biologics of clinical example another have seen and our exciting differentiate The how which to one fast-growing capabilities also bio market. one We Catalent our continues to innovate just bio businesses, supply and opportunities in an outgrowth overall between one is customer offering. meet

of a cartridges and analytical services through including reminder, clinical integrated forms therapy can from substance syringes. finished product gene our and businesses drug fill/ and a Biologics and vials, viral and in pre-existing biologics solutions those and As including drug Catalent commercial vector variety protein provide manufacturing finish supply and

Biologics create the company's inorganic shareholders. next over represented our biologics is in benefits making the our revenue XXXX are The investments to and our will customers the will of fiscal we combination percentage an XX% and and become significant than years. substantial of larger in more of three value revenue even already continue company, patients for organic to delivering and

growing since market remain pipeline positioned development robust attractive with the inception and X,XXX an Catalent's strongest have we well projects. active Second, more increasingly in than

to with Next, reflects are which financial fiscal reaffirming results EBITDA fully guidance XX% aligned adjusted our to delivering guidance to we range of XX% year and growth and of revenue remain our committed XX% XX%. growth

drug internally increased platforms. contribution internal and product our which morning structure assets to to to longer gene provides specialty with of release the describes the business better molecule fiscal each of capabilities made our how segment each our revised our we delivery and our year press on follow substance, business biologics capabilities. reporting X segment the Finally, reflects from transparency issued molecules through structure, within revenue strategy drug complete focus our and revised related adjusted align segments manage therapy unit shows segments. no which operating structure adjustments performance includes this the in the our XXXX the we A biologics have our large the our parallels we Slide

renamed technology Softgel dose entirety, were that Technologies segment. all segment in Oral Our the our of platforms oral includes form included well its our scale in and solid Softgel as as drug delivery segment large commercial previously

small well activities analytical medium as products development to devoted Zydus and Our delivery drying specialty orally spray to and oral supply our small dissolving ophthalmic specialty facilities for includes including and capabilities molecule business respiratory services. scale oral, and or tablet segment technologies as early development our

specialty with no our segment. to and purposes services. to filed for Softgel our represent services supply Form There Biologics, to comprehensive financial change clinical Technologies, segments, more is A reporting today. description supply found Oral be our XX-Q later and four Therefore Oral Clinical in segments the of be we delivery and SEC can continue

I'll over who'll Now to results. our Officer take XXXX Chief through quarter the turn year call fiscal financial our you Wetteny first Joseph, Financial

Wetteny Joseph

to on our will Softgel of John. our first and revised this discussion Thank fiscal reporting Please this business. both turn basis on of fiscal Oral presents and are begin results where I month XXXX Slide segment presented the the Technologies morning quarter a performance segments. XXXX which X with

calls, earnings around past commentary will constant segment in As currency. my in growth be

the EBITDA $XXX.X strong America recently quarter strong health from with attributable segment products. experienced portfolio. across prescription increased launched North from increasing XX% and consumer to in the of XX% revenue Technologies Oral million volumes is uptake to partly due performance and segment The entire growth Softgel which the during

demand consumer higher recorded Europe. for also segment The products health in

mix product Additionally, driven and the the by strong performance EBITDA capacity favorable across was utilization network. improved

segment of and All revenue was organic. EBITDA the

Additionally, we in Softgel April completed Blackmores, of XXXX. facility of the in we the announced which VMS late sale our Australia, October, Braeside, back to

guidance. the of entered the impact reflected fiscal as known in closing already year, reminder, our a and date As was is sale current its the we financial

revenue million shows which during that the segment period, in X our quarter, of recorded revamped growing XX% quarter. $XXX.X EBITDA year the comparable the XX% versus with segment Biologics prior up was Slide

gene was XX to acquisitions, and the points driven of However, growth the therapy segment's the growth. growth contributed which segment's of most growth segment's segment's and points percentage percentage XX revenue by EBITDA inorganic EBITDA and the the revenue all to

organic but in of EBITDA segment an decline XX%. acquisitions, X% Excluding quarter, recorded of growth first the the revenue

services, quarter, But drug as limited-duration line business US. of Recent revenue, investments to has into during first our translate been the partly customer own the strong growth clinical in for continued the declines recorded completed we non-cell substance growth as across earnings due in Biologics capacity. experiencing as of the business in highlighted its completion its manufacturing call, our volumes customer product last drug the in the to contracts build-out a

work utilization drug to new substance We be our a to continue couple next headwind to the we to this of and over increase customers quarters, business for as our expect on-board levels. continuing

confident that biologics our growth. remain well overall business positioned organic to we strong is feature However, drive

we June, along drug site. biologics us to in and and dose facility and product months. solid manufacturing completing transaction development to of portfolio supply. with few fill/finish the agreement the and reminder, at network the provides our BMS' a their biologics The announced Italy. oral will global programs Squibb's great and sterile next agreement This to and to We product Europe, Anagni, addition facility sterile oral provide packaging As transaction in improve capacity manufacturing capabilities solid, manufacture European oral in purchase is Anagni with our enhance the commercial current our Bristol-Myers continue customers accelerate dose anticipate an in

the oral and the recorded XX% organic. analytical revenue across product was development quarter. increased and quarter, delivery new of of which Europe, products and during versus XX% million that end-market period well EBITDA as an in driven and performance the XX% services XX growth comparable XX% mix, was revenue. segment molecules, overall of increased Delivery increasing Specialty strong Oral which demand our with up prior year drove as Slide and The revenue EBITDA the by segment $XXX.X favorable shows segment intake of the US commercial was the strong

this late-stage the XXXX, business, percentage the This fill considered sterile the pipelines, the first is of one segment, quarter line development to Additionally, the inorganic, attractive in one which during free is revenue segment's of month The platforms. growth result the are programs. for of prior the the segment's Juniper X acquisition remain EBITDA were now to with growth of Pharmaceuticals of but points continues fundamentals X several fiscal points year quarter. the in technology these timing Ophthalmic the and strongest our to in drug the segment development included percentage Respiratory and which year of period, key have including results contributed close

as Oral revenue and long-cycle our disclosing well product Oral of development In into revenue businesses, and insight Technologies, order the to which we new from and our long-cycle are or includes and Delivery, additional number provide Biologics NPIs. NPIs, Softgel introductions, Specialty as

metrics As ultimate these of a the them. our reminder, directional predict success we of or business, are products, do nor not control can these since sales of the indicators only marketing we commercial

the the recorded first of first XX% small year. molecule million, quarter XXXX, of revenue prior we recorded above development revenue the in across of and which development For large fiscal is than fiscal more $XXX quarter the both

included Additional the filed development revenue disclosure with on to our is SEC. XX-Q be today in our Form

to In expected approximately fiscal are addition, introduced we in year. the revenue million these XX $XX of products, which new contribute

was XX% well posted year. shown revenue of the the million as which quarter growth Clinical our as year of prior by as prior XX, distribution EBITDA $XX.X increased of Slide both to and million, services. The and Supply and in of segment both storage and double-digit revenue Now, higher EBITDA of packaging volumes segment manufacturing Services - driven $XX.X on compared

All recorded CSS segment the within was growth EBITDA of revenue and organic.

or XXXX, quarter, The X% which to year. the backlog XX% The new September for the at first business of XX, $XXX X.X ratio times. is trailing segment million net new in sequential our an wins million CSS the segment first the $XX remained recorded wins of On XX-month increase. the during net recorded segment's book-to-bill quarter the increase of was compared business prior

XX reference Slide information. contains

segment results the results to to the the remainder results. contains shown our slide, necessary discussed overall the consolidating this and information total of compare segment slide already have on We

figures the measure, GAAP are reported proximate bridge is This next Slide slide. from computation will the adjusted XX net a to detailed of which provides loss. operations reconciliation the most of from our in a assist on EBITDA tying earnings EBITDA, which or out

on Slide Moving to EBITDA adjusted XX.

be currency Oral adjusted constant EBITDA to quarter XX% million. driven and basis, EBITDA by increased with across quarter Softgel XX% Technologies, Delivery First growth Clinical double-digit first adjusted XX% the our a our and XX% Services increased On Specialty and $XXX.X Supply and of segments. inorganic Oral the

$X.XX or first first the quarter you ago. $XX.X diluted adjusted per net million was see the or income per of On share adjusted $X.XX in can quarter a slide net diluted income share XX, million year to compared $XX.X

our our capital ratios shows and priorities. debt-related XX Slide allocation

Our end from was transaction. the improvement Pro to net XX announced the at leverage prior as ratio for reduced leverage ratio September of turn X.Xx, of net modestly ratio we of total the was an acquisition, the quarter. therapy which the ratio gene X.Xx, the as is three-tenths forma a our of of the compared which is total time

cash and its of Given the de-levers of the adjusted Company free flow generation between three return one naturally the EBITDA, and Company per half growing year. quarters

of in gene increase to XX% to approximately to year expected our investments including revenue. XXXX are Additionally, capital therapy, Biologics, continued XX% fiscal expenditures net

and growth, Our foremost on by focus M&A. organic strategic capital allocation and priorities followed remain first unchanged

year fiscal slide first Turning XXXX financial on to for XX. outlook our

financial year billion $X.XX to guidance in billion. continue range the John our previously and revenue of are stated, $X.XX reaffirming full As expect we to

EBITDA full range We $XXX to adjusted $XXX $XXX and income million net year to million of million in expect of range in adjusted the million. $XXX full-year the

We shares, the expect ending converted part range million fiscal million preferred on of XXX we the diluted fund acquisition May year were in Paragon counting in count to that shares they accordance for basis XX their common with be if issued our in XXX a will the June shares weighted fully average to terms. the of all as to share

to consolidated I guidance that between to tax adjusted our XX% rate adjusted fiscal year. we - addition in and reiterate now also net and the EBITDA on income, be XX% In effective expect reaffirming revenue, our we that expect

seasonality Lastly, through in highlight expected the business let of remind progression our me our year. everyone and the

between our being between case to continue first the of fiscal by and XX% with will far, EBITDA year This fourth As year of quarter in several in of adjusted our be half generally strongest realize years our discussed of we XX% for now, generally adjusted quarter half our expect of the of XX% year. in and first XXXX, year EBITDA is by the but XX% the second lightest the the fiscal any and any quarter year to far. the fiscal

open call Operator, for now we'd to like questions. the

Operator

Instructions] [Operator

with Our Tycho question comes JPMorgan. from first Peterson

now open. is line Your

TejasSavant

Tycho. performance ahead well Hey, least like came your things guys, good wanted couple for John, This yet pretty morning. a I fiscal unchanged. It XXXX healthy, get looks I model, the just is guidance overall left of one. Tejas on perspective here. on our top-line was your at to you in mean, of

any trying you a which Just in that drove to for one-off on later sort sense pull-forwards get in what will bit the of a offset of in XQ, that dynamic. of Were result saw there sort year? little

WettenyJoseph

It's Hey, here. Tejas. Wetteny

to do timing And quarter given we of far, consistently we this the years, as really, As have quarter, now results and beginning first the really either in at is year. of the guidance continue when given have our our and we've visibility business in direction prior we move we consistent tend set look after is line a that said quarter that on to into, year by the we don't course we and of in first of the shutdowns. posting the maintenance the at the lightest our out again of sight majority we

So be that case in case last to us. the for years the and will several was the continue

TejasSavant

fiscal business, I drug within about Got think, What down that of basis. contract that on an look substance? once duration adjusted here, segment it. that on number mentioned completion limited EBITDA the was And you does margins Biologics you to 'XX follow-up and that like specifically the organic just then Wetteny, for XX%

WettenyJoseph

Yes.

a growth our for look, overall well of as posting with three So, growth, as posting organic solid a here as completed organic quarter really strong double-digit Catalent double-digit overall Tejas. - segments we've reminder

we've really Our prepared executing year. acquisitions reaffirming guidance us above our our as are said are expectations. well well very for during or at for and comments, the performing we And the

that in a highlight building EBITDA the and a And organic we for at you make last organic X% XX% did manufacturing own top adjust fourth our a Now, doing their that have we been growth in they non-cell were Biologics, them your clinical in parts of as they customer the we line, for that years line capacity were known in as the Biologics about that the various quarter the that concluded. question, and reminded for performing was line if you business would here as out out, few had growth about timeframe have we over to continue that investments we were that business.

Now, in the in drug mentioned to John utilization to as business seen, have last business that as biologics site up product we'll us. continues across for product highlighted calls Utilization demand. US commercial ramp there. drug in I product approval our significant as And XXst well, continues nicely our quite continue to the and earlier, the of the we've see manufacturing ramp-up

business, Drug almost certain have in pipeline - substance, approval, see of variability And that have the the however, drug a that plans before will and business and say, a see entirely if us, business. we commercial US is continue variability in we'll a programs to preclinical and commercial have in products facility, stages, we continue which level more have, matter our to let's until of manufacturing in substance commercial have we in is we some less based you should our time product to for commercial-ready in clinical will. advance that the

exclude one line growth about segment. you'd X% the about if in growth are organically we contributions top customer referenced, those EBITDA that and you So at the XX% But here. looking be

Operator

Thank question our next Kreger William you. with John Blair. And from comes

open. now is Your line

JonKaufman

up last in Jon drug is just on the Kaufman on question following This here substance. morning. good Hi, Kreger, for

demand this clients volatility? Are lot the might significant a and you your at guys election about, all? for cycle talking any it of their of preclinical Are is and how obviously, example, seeing impact strategies clinical. So,

WettenyJoseph

Yes.

to here. robust. We're look. Jon, seeing The continues variability demand really certainly not remain market So, significant

what we're here seeing is think I clinical variability cycles. on

we cycle. third I So, not to from it's X, vary ago, amount site the compared you more certain of to are are a we Clinical know, batches. is to XX%-plus they sort for of XX and previous in seeing it's that we suite, they on manufacturing utilization smaller meeting would are which Phase years market. is the up XX manufacturing programs which would I supply suites continues the tend to suite anywhere XX% be in largest April launched know from months and the that manufacturing earlier depending reference of are ramp and variability thing advance to bioreactor, commercial programs. have to - the about prior you've the above really you to It's to expectations. they x that in fiscal have as we're where to third say, the time One on time or in buy We're batches that is X drug continuing seeing, the programs our really, X,XXX-liter, that the those that seeing ones would clinical need have larger-sized say,

last its to the road. part more work we development will, which early in down doing development if the make where uptick cell-line some signs terms point see process earliest would lead biomanufacturing of I'll the of to One - some are business, starting are of of we other is, of you

signal more commercial continue for future we terms that in and So we'll that's But clinical than facility, more the a have I we're in pipeline commercial, for that products might business. to variability. typically what variable what would transaction of that say the bit until the and is little see seeing

JonKaufman

then follow-up And Okay, great. here. one

mentioned earlier. guys opportunities cross-sell You

traction in how cross-selling from X of So or about of most terms where the think let's revenue to is interested most using then And base client are gaining your do you open - offerings? to which next, the multiple you over say, X years? opportunity

JohnChiminski

Chiminski John here. So,

small that the ones with for looking to are medium of are getting would cross-selling. really the the So our of customers service, first regards size, most that to I who all a suite say full we're in traction

we looking all And to project besides enough think early sites, access really early did we Supply that I development significant is a managers things mid-size launching Suite we've to simple again, for the the would capabilities, that OneBio our our into to of Clinical of put Services. companies the some of say for capabilities. easy got small very for our these, them giving are customers previously basically had Some there. not focus I just access And and it them made end-to-end to on

Clinical is supplies shipping to customers capability, Services probably to that that continue that we closest the So patients. in our directly unit business end-to-end the our see Supply a has it's to business provide asset literally critical clinical to that as patients, given we're our

customers project say a more given lot doing suppliers, look a it's for and molecules businesses. to able to designed do OneBio providing to really being do Catalent And and So to partner is better our Services access Clinical through the more cross-selling. our to for improve Supply certainly to And would are customers access frequently Oral on their big them again, opportunity that able overall, in development they're specifically also offering we business, a here early our that be through outcomes and bigger, but deal. banners do to that just Biologics have fewer position as I those overall is us early capabilities more has for an broad an

Operator

comes And question you. Thank with next Windley David from our Jefferies.

Your line now is open.

DavidWindley

follow up your just Follow on taking my that commentary to as at Molecule little Hi, of depth I I the as understand a wanted standpoints. couple a look questions. from the in One, descriptions thanks you're obvious solid figure the and is John, couple understand I dose want not doesn't understand more Follow now and segmentation around different how that's for segments, so in to oral must of with I seem consistent presenting Molecule the manufacturing that, is that see like I of that the a me. to to -

really maybe managing have financial is least the public. presentation And mirroring this past think underlying you're time in then way business, the third, the came guys broadly, you the at the about has since I think changed fourth that and the you talked I

change you appreciate extent if Catalent of it that I'd kind is businesses these and Thank you. is, so underlying the managers and the the frequently stability it. segmentation the the of the of And could to for org the talk chart as changing kind as about of

JohnChiminski

a Yes. good start and No, question, David, that's that. I'll with

If to you we're take were IPO today, is only had of We look a are at significantly from business where time an of the and standpoint we about at about the started where where our we XX% with the transformed was sitting exposed we've to at revenue, business. the now IPO that XX%. biologics

the second which development late-phase thing in more a putting the much went significant the didn't early The I assets. we of is that would in actually development for company a the of at enough pretty strategy, IPO say missing Molecule place early we Follow with time - although platform have we we was through the transformation company, were have

acquisition of site. we the added our also and Pharmatek, Juniper, then So repositioned Somerset

launched that, spray to addition significant activity of activities. early drying those a in pretty then And development into we because get to

over the business. a So years, a of very the look you take business if now we substantial biologics last five transformation have at the

business. a didn't in commercial have we time late-phase still have at have development XXX over the early that a that substantial and molecules that's We we business bringing

biologics, we've what unit gene dose I'll doesn't one business say into would can an work done we've and contained completely is, it's I though, the it specialty - So, look alignment number put which one, contains say business from at internal forms now standpoint have standpoint, that therapy unit it not you our and biologics from before. an in perfect

running we're So internally. that's way the it now

visibility from that. you standpoint, obviously gives into think, it I investor complete an

in - are our that added development platform - into Delivery development phase into business now now say now our say then in would being growth opportunity we've where of you a our bring basically that is our development The the ultimately Because it contains organic of several purely of you our Oral with, and our transfer combined tech would we of that more in other think there commercial meaning look those inconsistent to is early molecules assets manufacturing the Zydus, assets - is Zydus mid-size for Specialty commercial it. large dosage I transfer and in commercial business, a into which capacity it point and Specialty tuned I Oral is the an small late-stage Softgel, at and the is Delivery, take growth early tech form but in one in. assets in of be that group, commercial may those no

I transformation of think organizations we've unit to the optimize the mirror our And so is business done to continued business. what

you right very unit look some as in we you again, the with tuned specific so comfortable going a look to new drive to though have so And And as transparency. board take transformation with that at on. and I take again that aligned brought we've is at structure think right over our it teams units, it. be growing, the and time, really now as our feel assets now that additional I'm are business able we've that's with provides a on

this that business Softgel. unit our The performance will be you as a XX% Softgel Technologies, roughly look for of the to continue still quarter performance. Softgel Oral take and Even at mirrors

with modify again, business think, I very externally. I providing, the it's continue continue segments helpful us for So this we're those to improved as our to structure would say, and to reporting to visibility organization we transform

DavidWindley

speaking product Yes, on up on I'm drug If great Biologics in thanks have to. could I certainly you for the that. just drug product, success That's commentary, had approvals follow helpful.

some to point of quantities now to seeing stability? Thanks. be you you Are point, a products have repeat come ones those where are you that have the to seen particularly are reorders a getting orders before you've they kind the waiting to a and As launch, the launch exhausted for you're progressing progressed been void acquisition, approved since of the back? degree in

JohnChiminski

from across next with those have commercial we - which we're clinical-based the business been, commentary bringing - of urgency with and the our to uptake drug large Wetteny products and say, you variability can the that and have These quarter-to-quarter as would those I substance, provide double of for had is board a over for Biologics a gives primarily additional love. it that assets for that there What sort on would a us Bloomington. capacity half not quite XX number all volatile a some visibility level I have it of of is product previous drug products launch with frankly, we're drug in say that we the products; our to business, just we you've is that consistent sense in regards of strong products. seeing year consistency

So more the product with couldn't the way pleased drug progressing. is be

on the be and and we're should in consistent year that drug drug to side, 'XX, And will I that product as strong the we aggressively I over first side. position we it good acquire to some put calendar And have think that and customer. commercial-ready visibility substance performing be now have on working think then our to as

So green very I say about would feel both just it. light good on fronts

Operator

you. Thank

of Juan next comes Our Bank from question America. with Avendano

now open. is line Your

JuanAvendano

by at think the beat the Oral believe you. driven growth you organic that Delivery our in company said for XX%. Relative organic to the thank I Specialty Hi, came was I and segment. primarily estimate,

specialty XX% well, fiscal did due any of there drug 'XX? drove the year most business, were on - in you the part that the or the continuing business segment? believe organic struggling growth of can benefits that a timing-related Zydus - have non-recurring delivery And for was to you beat so And I an particularly that that rebound was to do or

WettenyJoseph

delivered organic performance on across So, Oral quarter and to we driven have on three XX% OSD in CSS. I strength Juan, Technologies and the not the across top our EBITDA organic first all, our line posting quarter. All been Specialty by the the first in both organic Oral growth but the business and XX% With in only line. respect growth, was double-digit particular Softgel the and EBITDA, of the really say would revenue adjusted saw

all Zydus line services the a to the then with respiratory end would which strength spectrum, driver was part what that as latter including roughly Across that we of that of business. wrote in our the our mentioned, the in as ophthalmic say The saw question not for down your well what year prior development, in respect was of I with is business you the platform. quarter. our and really commercial part

reminder, So transpire quarter, how if terms weaker year the was terms I a in in recall, speaking, that in just segment would of first relative last you it say relatively to for certainly.

as So that performance, of the for to expect would the look organic be performance of business year. we level at this the not I

today. all across is visibility just with those we have into the the and Our guidance and things reaffirmed that factored strong business started we

JuanAvendano

to with related have reporting that given now? can guess are of us organically segments as I you expectations question, you once share segments again, each your the your they that reorganized growth Okay. for normalized

WettenyJoseph

Yes.

would I all, say what right. is, of first Juan, don't guidance, So we segment-level give

term. segments and have factor you expectations of our But to want all will continue are long we certainly just and our share in guidance annual I So from we what our our remind shared and businesses visibility for to basis. an

grower XX%, I I now perspective, segment calling legacy X% roughly moved Technologies, long-term and And that a are segment. Softgel a term. to that the portion from would SOT, would was so long we Softgel is business - into we of say Oral look, the XX% the said say that X% now And we've what

at ends to probably to X%, of So say point for substantially, so X% term. X% than X% you're looking that move I but that it not at segment large long on would to that enough probably a both

it Specialty And would be should to well, the said Oral performing the be our we've higher former then and of at X% segment, X%. previously - end

should points percent-ish long if probably we've moved that term. about same out, the maybe saying to XX, to were pieces I with slightly XX you the business X X say, were would that we it's below in grow that basis the So that.

So I I would say. it probably to would put X% X% in range what is long term that

X So to business a and out you you OSD. sort point from the SOT of the add take

primary the are those So moves.

of we've If the the you you slower will. end if was segment. look Biologics, That removed from at that now spectrum, and a ophthalmic respiratory

Have had that Europe, long-term So transform have we with XX% core the molecule is we be - a previously but specialty. small continue more say Biologics be being XX% the now, term XX% we to in still if injectables focus? - - portion, said this that with plans I'd removed XX%, But to the to would Biologics our team in business will of the you that biologics-focus, business largely which if SDD the were we segment to to XX% remaining expect XX% X% it's are take growing which latter long you will XX% about XX% to the in more range. X% in

term to that a grower, would what unchanged. we've backlog, segments along recent that their right the favorable. obviously we are CSS given from We you again, above a long sense expect our execute very that business hopefully remains now were a we be, to various more clearly burning gives of which long and seeing now X% wins, from seen expect X% a lines term So which and in through the new uptick in

Operator

Thank you.

comes Dan with Our next UBS. from question Brennan

Your line is now open.

DanBrennan

the questions. taking for Thanks you. thank Great,

that or Let to the know maybe I Wetteny me back question. earlier - you guidance answered apologize. just it I John,

given you I think seek of guess post of it back it to the low of just kind guidance? quarters. outcome, like to the guidance, I year is just half or mentioned the three X% end after weighted raise. into would just really is policies imply understand your remaining the a plausible for don't to policy heavily QX your But is the steadfast you your QX it's guys that I change growth want

WettenyJoseph

the year in quarter the again, XX% I XX% first all, we to typically represents of anywhere would our quarter. say first of first about what Look, from see

which business unless would it's not long-cycle our in to the in across be we visibility, where So portion year the of the in parts change substantial see material see something terms we we in on proportional segments. business what our both our we our guidance a confident short-cycle across of of continue our

So we have just not thinking on the to guidance. to tend or shift

of keep remind laid out that top you guidance, those I sure, I the we revenue in to including our about so we thing might is, closed, was - also issued, terms quarter in you million million take as $XX want where you buildup other EBITDA line, back to it million you Paragon take of which if year. into acquisition, allow just just line, we million of the the of $XX that the mind prior to I one things organic, you guidance the make are $X would the to reference consideration the and the taking - of of just out we The would $X inorganic facility the Australia for

included an not commentary the So be from would perspective. that organic given in

pleased start a quarter. year we're with the look, the as of So solid first

we we're the reaffirmed have there to out to we rest delivering of we continue the change of unless look again, but are We is going the material and visibility strong in that which just not as is what year our tend to a rest - today, shift year. for the seeing, outlook confident for

DanBrennan

Got to think Paragon. it just XXX I it, million. we know maybe was expectation comment the revenue $XXX to Okay. that's basically slightly expected. - And just better Can you on was it's versus then reported XXXX your $XXX in It organic, to on, I than million for - implicit

any I'm this change? but for previously, and for look that confirm beyond that any well commitments kind - any And revenue kind provide comments And look just discussed they out as sure of be you've then you year visibility, on So trends Paragon? the can demand that's year. commitments what revenue not thinking about this how of for we Paragon? Is you should area right

WettenyJoseph

Yes.

you in guidance It column Paragon, organic. include the in does of the not that So we terms at portion range. when in buildup that the is the you're provided, look were correct

middle we quarter. of you closed recall, As deal may fourth in the the the

closer the overall all EBITDA the respect So, business, to say With we're we're $XX line I in to would the see we what of robust what's business would I it largely top continue visibility. contracted for of really to the we across is amount a the the million see, represents normally in at guidance. the that's $XXX would roughly sleeve than in, demand visibility what million seeing line, clinic, portion embedded the in higher is of year. for say given a seeing

of when change from we growth continues seen we haven't rate of the I'll of you any picture. is what top that announced or looks recall, And X% deal, this outlook terms our demand. to say in from X% X% and to organic perspective to Catalent overall took may at a terms the on a growth X% expectations business in line perform the to of long-term the rate above we our like for

have long-term from that to. a think part that calculate expect what execute So we business from implies the the I of perspective you Paragon are and we for and business to as continue to back can what seeing

Operator

question our comes Thank And Stover next Robert with Baird. you. Evan from

now Your line is open.

EvanStover

continue mid margin you. math Paragon Hi, looks quarter, going on it XXs. the bit. run thank the Kind a EBITDA I of to the like little on was If in the

get about your up Is facility EBITDA and primary up generally you for Airport expect from business? you margin the some think the EBITDA I to of know Can rest that you're in the year? you the guidance just here implies filling that around opened that new margins BWI year. talk function around XX% capacity. leverage I the for on trends

WettenyJoseph

Yes, about Evan, you're right.

closed say expectations, and I the the our I continues again business announce we the think certain in Novavax from Paragon at to quarter. did assets when of early you above look would perform, acquisition

sites, to in and to to We continue and new to business as for and programs really make more those expand our gene investments front we end, into which Paragon. ability the there say, cell individuals our would onboard attract those business therapy I continue more the

is what continue very were and what we business be we guidance, our you had that marginally the at say gave in with that Novavax part the as to to When it expected. first that in So and we first a bit going, expect. look line what here is we've the assets of integration pleased we is with investment into visibility and the seen of to with would deliver picture dilutive quarter, certain what it's quarter we're how I that respect

EvanStover

And you. a for that even Zolgensma knowing it's secondary I'm And this if Paragon one of doesn't stage suppliers wondering the that out you that on of of fiscal any include there just second if just one significant commercial the equation the are you a outlook thank Okay, Paragon. in you the commercial is supply. kind there revenue? put 'XX saying year. release there press confirm I asked Can any

WettenyJoseph

Yes.

that things in is like place. businesses you first putting there Paragon, but the of contracted customers sort domain us would all, rather things say to than out, that's of in business our I respect are our that the in for Evan, than the take-or-pays say, clinic, out would what and largely our again have certainly put that given the may look, higher with public the in level would I expect visibility customers So have revenues,

As and not the any to our acquisition, customers launched you will, we contracted, what work approved is we so with get uptake, on on business that necessarily modeled any the significant if those commercial banking certainly products we and and model particular forth. their programs

of of as EBITDA, I I'll it visibility all The into. well million inorganic $XXX-ish further we any in and have of give Paragon. say organic, terms in, of the there So detail fairly million $XX of high the portion would portion cap is as I will on revenue that something including

EvanStover

I me. of in have fiscal a that it, ibuprofen on bit, we're on past product availability but but that hear you we're growing can API ibuprofen I that little know of where tell issue moving now topic kind supply. and might XXXX? I commentary any on missed us Okay. wrap stand up and you if didn't A and from side separate final question

WettenyJoseph

Yes.

grappled So plans and according as continue go-forward to throughout really we and have said get our that to suppliers on last we've that a a this so have are in and to mitigate put plans is in mitigation we we can expectations. working shortage we place basis, year, with alternative worldwide those to

looks year us. year, for last year like the challenging the last how ibuprofen in first that, not quarter a this to what went and of terms in was quarter relation Just year particularly

in impact more the the the pronounced of The was terms far first quarter. ibuprofen quarter on year than of second

out look a prior was we year, meaningful it driver. say as So versus I would

I for we've has year the ibuprofen first what in fact, in with roughly last think was quarter. line it been business seen In

last where becomes quarter second bigger year impact. The was

more where to but say replenishing hard would their of say terms it's stable continue some to a precisely mitigation we this saw work I of throughout than chains, business supply this those for is certainly our and So plans that's year last customers us. far year been in

EvanStover

Okay.

on couple clarify, next versus over ibuprofen get fiscal you're comparisons saying of the the easier Just to quarters XQ?

WettenyJoseph

Yes, I QX. versus say QX particularly right roughly that's would

Operator

Thank you. And First comes next Analysis. from question our with Joe Munda

is line now Your open.

JoeMunda

these of going give to of backlog, you ratio you for Clinical morning, Supply Good question the sorry. guys. can wondering types is sense some Thanks us hold but the guess questions. business for A book-to-bill growing projects projects, length I'm focuses on the time questions of are guys. the if the my I afternoon, here, backlog nicely taking I and that Good lot answered, been in think of true and forward? is was that have just the going Thanks.

JohnChiminski

Yes.

the so. of from is So two shorter-cycle to look, business our a rest wise we see to business when executing on than or three start segments, bit business and anywhere those book to quarters from started we of our when we're a timing Clinical to able Supply

uptick seen is that business. is wins in strong not that have back you visibility to new year And you're into very of so net fairly a would to terms have translating seeing that growth ago that in to and go the business

where projects of types Clinical we of in say seeing Services the typical here, projects we're So terms they would I are Supply are.

WettenyJoseph

through goes clinics the and a good the packaging in seeing actually that part business, of part to terms of uptick I in balance say We're of it. projects all the in go those and it's one III, manufacturing packaging gets the are drugs they and Phase whether the we Engaging the then clinic in, they way a so patients. through the it's packaging for as as performing nice - through and would I we logistics the delivered Phase handle and

be those. of We also well, which and good cold Biologics the in see those for margins good to handling trials of etc. level terms tend as chain, demand more across

into and book-to-bill we ratio the business. see what that indicator, of X.X wins visibility we of what And So say, fluctuations quarter provide ordinary is for the every ratio business the a out would would say, The good accordingly. I do business. in you'll new book-to-bill are from this fairly nothing, I on would the expect

Operator

And Thank Chiminski for the I'm closing showing to queue this John the remarks. no at like in further questions back you. I'd call any to turn time.

John Chiminski

your for for like join everyone I thanks the and would call. of questions a taking you time close our you to points. to few and Thank important reminding by

to on First, and financial are we're delivering drive guidance consistent results growth our segments. continuing FY all organic of 'XX across to our committed focused with

acquisitions top grow our demonstrated further and our Second, being CapEx and, millions of continue out business in our will deployed dollars as of priority. offerings. Madison, and and forward sites. integration We by efficient high-margin to build to enhanced of our Biologics gene EBITDA world-class capability therapy continued in gene therapy capacity of revenue fiscal XXXX the Catalent strong there and look the to into The Bloomington hundreds family continued growth successful Biologics remains from a we businesses

of Third, a key expanding toward as our the management further is years. expansion adjusted over EBITDA basis team three XXX points of for two focus margin this to business we next drive to XXX area the

the of customer every Last, first do. and remain our project We patient a to run and we support the focus operations, with but priority. how all constant are we you. heart deep certainly at not and Thank excellence in scientific regulatory and business putting quality expertise a commitment least,

Operator

for you thank conference. gentlemen, today's and in participation Ladies your

disconnect. now may You

Tom Castellano	Vice President of Investor Relations and Treasurer
John Chiminski	Chair and Chief Executive Officer
Wetteny Joseph	Senior Vice President and Chief Financial Officer
Tejas Savant	JP Morgan
Jon Kaufman	William Blair
David Windley	Jefferies
Juan Avendano	Bank of America
Dan Brennan	UBS
Evan Stover	Robert Baird
Joe Munda	First Analysis

Catalent (CTLT) 6 Nov 192020 Q1 Earnings call transcript