CTLT - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Catalent, Inc.

Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. [Operator Instructions]. to Surdez, conference Relations. Vice like speaker to now Paul today, President would hand over the your I of Investor go ahead. Please

Paul Surdez

to Good joining XXXX thank and results. review today financial morning, quarter Catalent's you second everyone us for

our of John is agenda Joining Chief Relations Chair on for Investor Senior President this Executive today Officer. available Financial X Joseph, and and Wetteny call Chiminski, Chief www.catalent.com. me our and Please at call which on Vice the on supplemental are presentation, Officer; see website Slide our

provides discuss During our We and results, and just our reconciliations results measures. possible regarding Form call Catalent's Slide X today, the make pandemic. uncertainties that on the to refer expectations. the forward-looking to comparable X more may the and actual most you including refer management XX-Q also Please COVID-XX It GAAP risks non-GAAP performance earnings bear refer statements will for issued measures could that financial management's operating Slides X release condition financial and numbers. to those from to to related differ non-GAAP additional detail. is on and information directly our

like covered the John over the turn whose remarks X Chiminski are Now call presentation. would on I and to X Slides to of John?

John Chiminski

everyone Thanks call. welcome the Paul and to

and our safe priority the employees COVID-XX during second Before to doing to remind keeping discussing results business quarter continuity. our let top our you pandemic me moment so take that a be maintain continues by

way listening call have one of last vaccines to produce Catalent and am elsewhere our use. and approved help now that in many of our at lives. are these you I year. know me Like by wide range the appreciate sure save our include or us on products are of who today folks working behalf the fight and helping the out products to pandemic the employees the of touched more the we Given XXXX Products been emergency relentlessly of customers to I for COVID-XX treatments

employees is of ways million Catalent for more you frontline of appreciation than the our bonuses shown our beginning quarter. we've second the thank pandemic For the since one the which have $XX totaled through

to a quarter. I'm fiscal XXXX the Now that start in strong report continued to pleased second

at range by end Our low the with second million. Adjusted was of organic. when by XX% raise fiscal results higher $XX have XXXX million million The led was demand was of EBITDA over $XXX revenue currency $XXX $XX combined $XXX year adjusted end for constant of now end the In quarter XX% second year-over-year XX% the range the which second levels the expect our net the the by our the of end. was increasing net of at currency high with million revenue million quarter, increasing low constant of fiscal growth the the EBITDA to the range represents expectation which us high XX% XXXX of organic. we growth of remainder of and and quarter raised

flues the the segment. from was share company's where quarter revenue compared some driver to quarter second with biggest revenue the quarter XX% net another remains we the vector margin continue in basis of the more and the in was the which of primary XX% $X.XX share, to $X.XX will to a of second both in year. drug colds substance quarter prescription second XXX to We than and product currency from the growth the in in to $XXX half the with to year-on-year attribute up than to points basis has quarter for and which experience and second Biologics due the in performance headwinds performance potential our contributor to of of viral our XX% projections the and particularly see gatherings constant per offerings we expansion for to and during income normalize segment our saw segment, cautiously Technologies fiscal XXXX work as revenue our products fiscal treatments and contributing per and increased vaccines contribution decrease our XX.X%. Demand a In on optimistic high Oral including drug Softgel ‘XX. segment to We're over social due for again of on million fiscal travel net of adjusted organic Our muted occurrence that was growth of common Biologics worldwide The COVID-XX launches quarter net XX% more or improved XXXX. the we limited diluted new pandemic. grew back these fiscal begin

which for For demand new as we early platform as delivered Zydis commercial were by momentum offset oral and continued products. specialty saw delivery well revenue return growth organic certain development our in and to lower growth partially our product in orally phase a

As enthusiastic to launch Zydis plus given we Zydis on XXX OSD molecule first ultra the our technology which drug ultra year last will calendar we loading highlighted tablet. We anticipate continue the be its XXXX the in including frame. growth Zydis pipeline XXXX long-term to the segment into commercial novel each prospects enable in time quarter based higher regarding products

related November. results provide on for across compounds first you therapies our on increase since of We've vaccines potential to of XX segments, an XX programs. our COVID-XX with awarded than a reported more Now COVID-XX related four all in brief our and been update quarter compounds now unique reporting like work we I'd

accelerating global Some or other quickly aspects required related has order patient expansion capacity our meet emergency more collaborative and pandemic industry network the our authorization creative of accommodate part across similar have challenged fight additional pandemic and serve to COVID-XX of of use [considering] in to to previously granted some increased needs. to our programs, by projects global our manufacturing planned and demand The chain help supply all be been in those status. the therapies vaccines to

and would provide It's projects. to As long-term have an capacity approved no three Bloomington accelerator will projects know some for been a will we projects for will on in has in and COVID-XX capital and on both brief use non-COVID-XX used plans been update we important our helpful of for others readiness emergency hope sustainable COVID-XX projects their us start I'll be expansion our treatments Catalent thought timelines. update long-term growth. some and strategic capital that be specific of follow to continued investments soon position with order vaccines for an it for with

customer which hundreds over coordination and with spring. extraordinary commitment in January dedicated new of working XXXX Johnson the months us total States We're announced speed United This to which in the with operational commitment expansions & we the years. end vaccine including vaccine filling manufacturing Administration XXXX early other the government available in come in line along Bloomington and described demand Food space will December. announced by line commitments we the early high last expect for Through to first of doses vial and Johnson allowing people to Johnson's site September at was is Johnson with expectations of available first in tirelessly by we efforts, scheduled fourth project line and which authorization XXxX Drug to this online The for addition & XXX be in use received candidate. readiness next Moderna is has emergency the end the meet The truly a million help of our from worked online the space March become nine high-speed COVID-XX filling to of build three high Mordena's for meet support We've June. by last closely U.S. out track to the This of vial since doses within filling quarter. vial in the since million our capacity April. on complete recently its the XXX line meeting brought fiscal announcement COVID-XX

in operational of that announced new filling high-speed XXXX. will is line become flexible which syringe January a in in line calendar also XXXX Bloomington third was The cartridge

not of of and serve of related completed non-COVID-XX for line be As the programs. needed this we products urgently line XXXX type to in to is half back expect the COVID-XX manufacture the

transforming direct development anticipate that production in achieving this installation Anagni ago COVID-XX Limoges, for plans under for product our January vials, projects facility are as Europe, our is or fiscal we flexible work; mammalian our by XXXX projects with isolator to cartridges of and Fill/Finish substance vaccines. based and capacity will trains capable short for Bloomington critical the included both on manufacturing and and adding capacity fifth Like become July at at modernize just capital this enhancing on filling technology. facility announced liter in drug a last commercial non-COVID-XX we a and commercial to on manufacturing production in long-awaited line The high-profile increase related generate [indiscernible] of substantial in increased asset capacity increased Madison which France help are and has in cell very in vaccine substance the we the come demand XXXX site. we returns goal Europe we high-speed thereby accommodate announced the and in customers to These working of manufacturing additional programs. clinical GMP to and of support filling would historical in fourth period additional cultural of related multiple a customer for Further result our syringes drug COVID-XX trains capacity XXXX fourth including scale. year Additional a acquired including over online track investment providing projects site barrier batch track quarter projects

anticipate this XXXX. We in completion calendar year of project continue to the

high the in of the a is validating Adding and we of compounds growth therapeutics the site Our the currently of been in to with fill-finish patient to expanded Gosselies. vaccines to for acquisition being strategic for Gosselies, potential Houston located significant its unique portion the therapies. that for brought a in totals topping from high we've facility to manufacturing meet in these investments of diseases. therapy our different acquisition entering of customers. Belgium development our therapy adjacent cell dedicated. of additional viral which viral clinical production targeting therapy be scheduled on allogeneic to expect in for cell be Since development open commercial business XXXX. involve capacity lead ago now purpose-built in gene cell vector U.S. third with been the space developed opening the calendar count manufacturing assets to the assets therapy completed XXXX a for We've now bone existing build vector out number which next fiscal performing gene footprint we're treatments. number needs has where work in including COVID-XX capacity recently now building number our which in adjacent construction of expand to suites pipeline out a gene the More in therapy than CGXP and manufacturing available a assets therapy help and has newly MaSTherCell, building year our made at built rapidly facility our growing our of facility a is roughly XXX demand our in acquiring assets Continuing manufacturing all the of and XXXX announced site industry's scale the in A and facility and demand XXXX year of capacity to the first growing online

existing our segment. potential adjustments delivery our process appropriate. weeks, to offerings considering on making resulting In valuable as valuable for on the we've while even for capacity been expanding in where without portfolio our returns made focusing we technologies and and in also our and and evaluating considering the Given to dynamics their our oral across well the related offerings business. industry moves specialty demand portfolio creating acquisitions our demand long-term capabilities and two expand as COVID-XX for includes customers planning our products evolving the last strategic and adjust our six This patients our to

an Woodstock, [Blow-Fill-Seal] to Capital for million. close Illinois very to additional for business global performance agreement expected $XXX spring. to in is outs space for $XX attractive The manufacturing potential sale earn the located owner. The first coming to sell of was in is the right signing steel our million SK up with

that growth owner the potential expansions an our business to more believe of for other opportunities with desire trajectories higher in create the areas opportunities we have in returns Given the and facility that have employees customers pleased segment. and in for to we're potential and invest identified

XX,XXX as spray a provide from area the The will dry the scale encapsulation move agreement to Therapeutics and second for best-in-class acquire million. act Cambridge significant to center an site commercial foot global catalytic packaging. $XX includes a drying capabilities square is with Boston The CGMP portfolio permitting powder and facility in site and capacity Accorda

turn to In site close result a we'll to agreement existing in The which the and as estimate and dry is product in review quarter to at single symptoms the $XXX new commercial over there disease. XXXX growth for end serving high of quarter inhalation powder now long-term customers in addition for the and nasal treat supply acquisition over financial enhanced in quarter expected associated us will fiscal continue guidance. for complements capabilities which the manufacture fiscal our in the we the our positions manufacturer at of our a I'd for results Wetteny Parkinson's metered to market who call to of outsourced its digits. intended with total the our million a to U.S.-based growing dose before like prescription third inhaler

Wetteny Joseph

Thanks a discussion segment John. will with morning I performance. on this begin

revenue start same is now constant in increasing million This will net currency. on I of will largest business with XXXX. As $XXX which second be period. calls XX% the earnings Slide my to our my quarter X EBITDA segment. the past revenue prior February increased segment points percentage EBITDA in EBITDA Biologics commentary Anagni the January The [indiscernible] compared XXX% primarily over in attributed we business driven second a that our points growth segment include and and segment. in Biologics all expanded including to Biologics segment after XX organic gene facility projects. quarter to the to segment compared contributed contributed and acquisitions in higher work to In Biologics the XXXX product of was revenue the Acquisitions growth addition the segment primarily by capacity percentage X MaSTherCell and our that margin Anagni to of which year. the COVID-XX the facility non-BMS and of selling from segment the brought the organic in to quarter the drug for COVID-XX is attribute drug that products, in projects first all record all driven across to drug falls including substance was utilization XX.X% in segment The significantly within It increased level both volumes. related segment's EBITDA robust year-on-year acquisition therapy. and increased XXXX. we quarter growth which the primarily offerings to The to continue

for We presents to of expect year. turn strong year-on-year growth for the remainder Biologics Oral the X which our and segment this segment. slide Please Softgel fiscal Technologies

volumes for EBITDA Technologies XX% $XXX revenue with well XX same the for precision decreased second products particularly pain was XXXX million the by products decline health period. of and products. Softgel The Oral compared and demand % quarter of relief driven lower over-the-counter segment certain cough, decreasing net reduced for to as cold over consumer as

the expect XX% We SOT mitigation the of of $XXX slow affected volumes elevated adjusted roll-outs margin by the which Thank segment's stocking was for production social volumes for net distancing over the the these including lower social some Slide in primary new prescription We pandemic consumer second revenue our quarter related growth. the gatherings costs efficient that consumer of six to to recorded in well months costs You workflows year-on-year the lower travel combination all of put additional as continue consecutive pandemic due the drivers decline stages to pandemic to development in in subsiding we to the pandemic and Year-on-year compared segments also less the efforts. will revenue long-term to second that product a year. to segments. was health next new in the the will of protective of introductions fiscal early operating as of and revenue is were lead in bonuses, million these in higher demand help attribute which effects Lower a headwinds drive XX% of growth our limited equipment employees. the and quarter place and up growth revenue future expect shows costs to facilitate in quarter Note XXXX. all back products during our delivery see impacted to half incessantly improvement fiscal the which XX among eventually that

second technology commercial in Excluding a X% the the part tablets of EBITDA EBITDA lower XX% Anagni percentage offset partially product XXX orally year-on-year dissolving that for OSD acquired margin the point, quarter of facility return platform portion Segment acquired nearly early non-Zydis increased subscription of by is which and phase market development the portion was XX demand basis XXXX, Anagni Zydis by quarter increased activity facility for segment over to increased demand the growth the points. for of contributed in OSD products. rising segment revenue across

six months the changes. of in provide Softgel we led quarter, revenue for Biologics the our the pipeline of XX is total recorded in the fiscal The million $XXX remainder in of first the and in introduction XXXX, which and represented of use fiscal revenue approval product and quarter our Development second strong business the reported compared prior quarter we revenue in Oral of was growth revenue order XXXX. the period. the to biggest new development cycle across Biologics, comparable XXXX. driver quarter second of of Specialty In the both a second development XX% and Turning year-on-year development large Technologies includes net disclose additional quarter the XX% in the our development Delivery of to into revenue, revenue cycle from Oral which development long XX% year. second segment year XX insight our long to molecule which products includes the current of small revenue in emergency product for our to In each of

Now XX.X% segment for segment Clinical realities was was CSS last of is response the BREXIT. of our posted and XX In results UK Bolton, net EBITDA facility revenue $XX implemented new Germany. mix investment X% margin filling margin facility new close our by be to Japan Europe. consideration facility in facility increase where X% that the XX,XXX growth Schorndorf, as the phase facility. impacted shown Asia-Pacific Segment consolidate of and in year. is with process construction out in Supply Services second into San early quarter business an sales slightly segment the down XX,XXX million existing newly million in UK business on the starting enclosed in including will our co-located adjusting and over development EBITDA quarter some important Shiga, higher prior our in North existing of America on Diego by delivery a for The year, increase second over the have we was slide the $XX strong our are An acquired square-foot in and this where we square are Bathgate and for action we areas specialty or oral

XXXX. month prior went $XXX bill quarter ratio to XX for up of quarter year. trailing new segment's As quarter increase million X.X the net the of million to times. compared our book of the to from the backlog XX, The a XX, last end XX% was second is and up December at XX% million CSS segment XXXX $XXX segment recorded December during business second the The $XXX compared

allocation to EBITDA currency organic net to to share for net XX% or on and our quarter compared the $XX Slide slide ‘XX. see you debt, of XX% companywide priorities. diluted of $X.XX increased million increased ago. with fiscal in net On per our of basis share was $XXX XX or our quarter in and XX growth revenue shows the EBITDA the compared to adjusted XX, slide our adjusted a adjusted year second quarter the adjusted can Moving EBITDA million quarter including capital second of compared EBITDA revenue XX% XX.X% On fiscal quarter second second a that diluted net constant million XXXX. quarter income XX.X% $X.XX to second income $XXX adjusted ratio second per

Our roughly December $XXX was cash and at compared to XXXX. and December billion XX cash $X equivalents million September XX, at $XXX XX million balance at

was XXXX. our September as times the of X.X December long-term Our lowered that net our December target same target to at net the previous times in XX, X.X down end leverage August to ratio times leverage times. XX at XX, and X.X X.X Recall we of from compared

Moving on to capital expenditures.

XX% continue expect CapEx fiscal patient fiscal at years as percentage organic next as approximately of to two to remain XXXX, needs. the XXXX to a levels CapEx and over customer We plan continue of will revenue he elevated revenue. growth accelerated In we net meet demand to expect XX% be that to

financial we for XXXX Now slide outlined turn as our XX. on to outlook fiscal

to pandemic for We our The years range net are issued range $XXX compared of range compared of $X.X billion income recent million to revenue million range the $X.XX million to to second primarily Adjusted million in previous broader the performance $XXX and $X.XX quarter $X uncertainty previously $XXX by projects. are remain reflect related account million. raising than in $XXX higher million the net the in previous billion demand to to of due to guidance to to of and $XXX guidance adjusted introduced the previous million $X.XX to $XXX of increased the which in the compared now range ranges $XXX of the to to billion. COVID-XX to billion billion range

be estimate change million major weighted share revised on for fully of a XX% first guidance compared its our we status XXX tax expect current in external in that of XX%. our assumptions unforeseen XX% XX% There previous shares effect to the a the year important range no COVID-XX between and basis assume to our million XXX including will are the We of to fiscal pandemic and the business. underlying rate the diluted be year consolidated will and that fiscal average to our effective count on

our not beyond or of any the the is executed treatment under required any or customers deemed or has been guidance received revised vaccine of arrangements. from receipt either does pay order today what Second, assume take

acquisitions to from X points growth rate revenue for represent Third, is revenue year. approximately of the projected percentage our

previous in the finally, divestiture the as Oral as segment our such COVID-XX related well for like to open in business health assessment some would the among Operator space some we the in of projects opportunity remarks for OSD growth the as prescription of forecasts consumer coming work the approximately that and Softgel same that have And guidance and to XX now in call pandemics An assumes some the products. additional prepared reaching previously Technologies related to that points. as XX this that projected size placed based engaged. John net estimate to the factors which that or as multiple the revenue This of in have lost his been related in An is versus affect of of remarks not segment estimate concludes certain net likely from due percentage on we months. value our and opening loss including our certain approximately COVID-XX costs in business work. Our COVID-XX the lower revenue closed products X to projected now XX included business including attribute work updated parts previously segments are in acquisition Revenue including percentage we to anticipated other points the revenue highlighted increased that demand of triggers. as related to estimated milestones a impacts questions. result would of

Operator

Dan first Thank UBS. Your you. Brennan [Operator comes Instructions] from the with line question of

Your line open. is

Dan Brennan

quarter economy get are to Hey obviously guys everything guys, here. great job on going you strong congratulations the and doing a

just dig be could COVID. on So first in we question would maybe if

but So I can in if business change just math just time contributor on in base you could do about guidance you on about, think biggest the Wetteny then break us to us you're mean the your out and basically gave was that How what ex-COVID the just updated the think about walk do very could end the A I the here. front quarter? was but and of Biologics help B, at the implicit year? kind said kind growth just have impact how you the us we what math you but know I of through do full the thinking we didn't it

John Chiminski

Yes. vaccines on. we're to see look various the Sure. on therapeutics COVID quarter impact pleased Dan, with on the of we're customers working the terms the first progress our in clearly

a projects everyone As here is know you organic on XX% development then could products just scientists the in have over of is I to business why and going organic and in COVID is across the in COVID-XX. science guidance COVID saw portion came a the to growth stage described well. at the for compared we can good precise precision and and that our therefore to more we increasingly is the some therapeutics X,XXX we quality cases some remind on are that on But we're programs the just space the I One that say say portion the we're the working can of arguably is quarter XX% doing Dan first other the staying that have top well frankly impact comment and not the as to from working say count in the business in of professionals occupy would across use. we this was that those also and Biologics business laying a as COVID-XX the etc. we COVID-XX and a majority as thousand the some what the who so across therapeutics it not. programs had not the customers a of across the our company. which becomes a everyone to for as XXX quite impact remind business candidates given growth what quarter parts this science it earlier a customers. and activities a various pandemic still programs makes the pandemic of want current versus within company precise our COVID-XX we be we're which We good difficult purely to our we become really that level non-COVID-XX versus not now coming bifurcate COVID-XX or Biologics out significant case growth again with on pre-prior it it our very significant but company from

the as range if XX. X the X the base about added guidance gave XX from you we about take to Moving we COVID-XX on but midpoint by really range business now our we increased see for taking points you of might example points it X to that to that to to XX

about is would that business. base coming and remainder the from of coming imply COVID-XX X the So X from the

that of a you again we the terms everyone organic in where hopefully COVID-XX remind So see the sense of business and versus nature. rest activities COVID-XX in the base are gives I'll

Dan Brennan

maybe for in expansion have customer we and of guidance that's of points online incorporated plans? at year And room all obviously the your year will largely this year does expansion in some was year expansion us guidance new is the could tremendous think this with you kind in about the meaning step ongoing and open year capacity different detail that Thank that like your the left amount you. coming calendar new have then how manufacturing but ups see or when benefits this one further you for account you John coming occupying we that on timing already demand expansion plans updating that just fiscal this in follow-up on the things and if and of

John Chiminski

Yes.

an I of the regards the that's of Catalent's guidance that really has one that with emphasize really updated first want is in but assumptions thing all been COVID our to we the includes obviously have and place strategic capacity accelerator plans. currently programs important all to that So

in and would that also capacity plans. were we have in we've been put that our additional We place strategic planning pulled capacity for have within

So able we been look our our the when ongoing we'll we've COVID drive and Catalent we're continued fiscal going accelerate Thanks to really impact our but year ‘XX ‘XX plans strategic sustainable our help impacts an at is growth. to certainly in fiscal Dan. into a seeing long-term year importantly take of see on which impacts really

Dan Brennan

guys. Thanks Great.

Operator

Blair. William with line of from question Kreger the next Your is John

is Your open. line

John Kreger

expand doses I that there kicking idea you capacity. Hi, around for the I thanks in John an a Moderna's much. of way vials very more Is putting overall saw yesterday interesting think article their could to Thanks. Moderna that alleviate kind this of specific perspective that the not is you to from on that is quickly change feasible of implement comment the but capacity some constraint? and and maybe your to

John Chiminski

Moderna Yes. the that. the question That's that on we really the of What I'll is tell I I you Thanks comment that that for Moderna just something opine on. vials John. And to current in for can't have we is can press that configuration which really what and say their by of million are committed into end John. for the of release XXX Thanks million by June. is March put delivering a end doses question of a the XXX to total then

John Kreger

of sort how unprecedented are how given degree in disruptions on then for back Thanks. them? And the spike you to non-COVID to you follow-up a to clients? Great. some are the programs burnered COVID those Okay. Thanks. handling and have which work, mitigating you be disruptions comment Can had

John Chiminski

What customers in manage specifically have of in is on thanks discussed we capacity, quarter high-speed as that vial say of alleviated that I prepared I'll really a bringing we're challenging being see I our would that a No kind comments. although fourth to our my vial in new Bloomington situation Yes. a we site a John. with handful new say really that

will from although certainly I of coming say or additional the our fiscal we that year with definitely online. we're to quarter capacity with approach very So this of working situation certainly as related see relief our the closely that programs fourth standpoint challenging manage understand customers capacity mostly COVID and we're certainly and a situation in able but they all urgency

long-term see any this the for as don't pipeline impact the company. we So

John Kreger

Great. Thank you.

Operator

line of question comes the next Your Peterson Morgan. Tycho from with J.P.

Your is line open.

Tycho Peterson

issue June but there Hey gotten the for thanks. John about want capacity with new got could create strong-armed risk doing enough cushion government on pick you that by line doses get develop you've to million is Defense feel MRNA the XXX like Production question high-speed if actually and there? you request know or government actually by capacity. and March an viral that Act We've do could further and to you last kind point about I for of you're million XXX the the up

John Chiminski

us say not gets to for which want will in place Catalent I We're as we're I put going necessary then just & known just and that our necessary what's the for slows that's production probably the government well first quarter remainder have to the which Production our more a meet order the customers along down Act to calendar are capacity on in prepared customers in Well, described non-COVID as quarter. required be fourth clarification going our Johnson we that little the of early precisely. called related us dedicated customers that capacity to that We'll but of line between in through Johnson that the I through line qualify the really to bit Defense production coming with more that through comfortable rated XXXX. my additional our the be have vaccine fourth a to comments

Wetteny Joseph

balance add many customers Yes, certainly are responsible that with Tycho continue those with mindset and if closely customers we non-COVID-XX are to to our that a priorities items government using patient principle as a as work critical so for and culture impacting to here will our as other you delivering needs that medicines guiding agencies pandemic I just are first to will patients lines. we well and along patients and those and COVID-XX

Tycho Peterson

stocking the to guess of of fiscal gives Oral maybe get Tech to half digits. double that flu then it especially growth beginning down season the and I shifting the at happened all what over the pandemic? and lighter this in can confidence the back still back And you that year with Softgel

Wetteny Joseph

quarter the Yes, our half in quarter was. we quarter Tycho after the where all we second from said we improved being saw line first then where to landed already results the with roughly first be expected and first the half along back

and also our we're growth one It it said we is pipeline our of commercial which enter with will, of to into we to see majority of to interact products business as but looking business they're rest business half generate to and making our an we as which see half lower second was. year the flows see segments us the second at certainly segments. that long contributes love the where Softgel the in the has the with cautiously a the across in and we continues customers the improvement cycle, what his as expenses terms Keep an cash reasons is it versus growth remarks to in gives our first So what if of and opportunity so really starting thought in of the business will opening the business perform we're optimistic was. John in you a we're relative mind business they're our deliver in of what significant forecasting the rest amount the this

Tycho Peterson

a gene is the is is do one -- potential kind portfolio and shift Biologics think [indiscernible] there or cell last Okay you there therapy? more divestiture future a about as shaping one of seal of into one-off you How or ?

John Chiminski

understanding case include and Catalent we for strategy driving at is on while best higher this of you sustained it on growth we high for adjust right business you in our is count the one is but what growth, would where at able makes higher and what this tell sense the and owner looking margin been to margins for looking constantly plans that its businesses to Catalent this for updating going portfolio higher So growth constantly business. had long-term drive for mix strategically Catalent this portfolio a which our and businesses everything just the to the forward I so and strategic and continuing were was as find can we're

was a be investments business specifically it investments would better in the returns of was we at make against and up we to going stacked certain investments of gene our returns of CapEx situation that part CapEx our best The amount looked other we we when where other when is the areas therapy. cell knew Biologics, global that because a parts weren't It into of to requiring in business. able our get sale other Woodstock business

our divestitures. also So strong not portfolio very only we'll for our continue looking in that but at to acquisitions use potential discipline in

Tycho Peterson

Thank Okay. you.

Operator

Your next is question Dave Windley from Jefferies. with

line open. Your is

Dave Windley

was questions. to the do in have the higher half second the you've of that your Is Thanks is? number. I XX% new expecting you of of to in for what that of back figure you're kind first for or XX% that so half that trying in more it to guidance would to taking recognized total trying maybe say still out the and recognized year-to-date do more you're COVID be my like reasonable some you envelope percentage that expect something

Wetteny Joseph

Yes.

can if that. Let I some with help me see give

guidance and we're First year, of we us in the organic robust as position strong second starts increased Which to well. given year growth very the the with in the of right. that the raise outlook remainder with fiscal continued for pleased quarter the our put see

the our first saw still business we on quarter across saw the in robust and very-very again non-COVID on primarily the Biologics largely second in related but and a the we across recall our up Biologics the so saw good first and quarter primarily you etc. COVID and As growth work you OSD, company for quarter was we're seeing grew

some of so of volumes the in speaking some So authorizations the of year. will second on. I the be given the think and higher half Those used mostly the emergency timing of relatively

be X as COVID the So our adding the being growth of lion's those year X on first of the on impact that reminder points of the guidance. share just COVID to fall half related X and of the related. as year back year the well with the would would largely half we or the half about a It's versus second the raised

infer also the won't in half that take it lion's but back share that I So a would the number. down fall would precise to

Dave Windley

detail by The adds you've at on J&J question too presuming noted the that did some the there companies Okay. others one to of a relationships you about and broaden question capacity additional speed dedicated the just kind for Astrazeneca approvals to answering as companies wanted there that are that adding approval kind specific think capacity have you okay least appreciate you've I were get not as the of detailed releases filling and way. to I'm press you the we well? your press the releases you're that your discussion line in if get that service identify had thinking had couple you John I and that appreciate specific about line beyond specifically commentary everybody still of high Tycho's are relative

John Chiminski

that way All have to Thanks We're position gene in with obviously we newly acquired there are of the for used we're validated for meet would the Yes. using COVID being we're Dave the very to [indiscernible] now there assets a our signed vaccine which not by also welcoming gene development our therapy using business but because specific a therapy I and manufacturers is Astrazeneca in just that for Bloomington. right. just in commitments question assets be say needs with all up vaccine work. also

fortuitous very at Anagni coveted with work doing the which drug doing online to that drug perhaps regards our therapy Astrazeneca Astrazeneca business on so when work there. our So a facility side primarily will we're product again point be out of and came and that then was gene substance a became capacity acquisition

than essence commitments. even just other to our to meet be we comfortable your that we network to will meet of assets question customers the wider Catalent able multitude are back that our be and using a approvals also those able to have CDMOs again they're additional customers commitments of that with noting So to our a

to So bringing we'll that customers comfortable we've with be capacity committed we we're or very what our online. in the have

Dave Windley

are question this who for Last trying appreciating to folks in me, responsibly profiteer not environment. acting

of in in dampen Your Biologics? is extended in or until utilization is fully are pricing place run. EUAs offering or perhaps environment like kind services particularly that the relatively putting is not ramping the really margin, are I'm things being would short this that basket the that but high Utilization the of the for I'm also sure How used are thinking that you capacity about margins good. you

Wetteny Joseph

is Wetteny Dave this here.

on frankly clock around better previously deliver line to and be with we've record we're healthier for our mission help our and clearly being COVID-XX that quite services we for in people roughly demonstrate in activities shared performing employees to work non-COVID-XX working commitments lives related the the live pricing we're in time. network these As across for so so to the do we would and similar our put do for energized that with robustly position

to for in continue time that and it ways to way assets deliver our in we dedicating the we'll some capacity So worldwide. by do customers is locations accelerating to are be online

for I pricing example So might throughput into get a a any those seen the see is whenever that margins as Softgel nice and it's roughly increase have you in the in to line. in would quarter EBITDA point business margins our in levels translate to of higher to you high utilization business manufacturer whenever we're part in and going of happen. starting the and

we are come we parts that particularly through increase anticipate would the see we as translates in significantly to but you first just increasing as significant margins where this on see people resources better of as the a capacity see continuing hard year well. of amount see volume impact have overall volumes had continue back that margins and that into year reminder half as of not through to last the also well an of we As business half headcount add and

not the throughput the it's pricing also So purely on point in [indiscernible]. it's

Dave Windley

you. Okay. Thank

Operator

Stephens. of with Your next line Johnson question is Jacob from the

is open. line Your

Jacob Johnson

that of picture Hey coming a by thanks. XX% about Maybe Biologics. billion X.X big question revenues you talked XXXX. from

of that and assets? the therapy it profile by and ask about Biologics, think way gene your the long-term growth business we maybe could gene another how we cell As or therapy should XXXX organic large how component be cell think within about

John Chiminski

the you probably we and to over when space take about that that in Yes. more I'll therapy at from XXXX cell question. to assets look big therapy the gene standpoint, roughly first years you've it's six to be growth look prepared right in robust a to than a market had the at all if picture size. cell that a as therapy challenging so five to first therapy now for strategic to assets you the next and just you Thank double grow answer may overall XXXX comments, got then XXX assets expect for take you going incredibly be continues I have of the

I there end say robust supply throughout whole to market We see these outstripping period. continues for demand So would really a this be very services.

I $X.X beginning What the us Something of and the presentation else made we've contributing introduced At we we X.X as actually that a growth to that stated Biologics target of first and the as as XX% now moves JPM billion expansion from margins. that that JPM Anagni want XX% M&A coming space. we maybe well stated that to coming in chart at we in that year do growth the additional the substantial our of getting is to billion therapy as $X.X this capacity and year cell additional billion with there purchase at the envisioned capacity acquisition that about and both required highlight any not that with at our I introduced of our had I well to MaSTherCell expansions revenues organic inorganic our at chart that see XX% time to conference get the that time being from Biologics.

acquisition I would through we state EBITDA. substantial would material So an and word where it means enough revenue the use when the be it

if it any wants round comments So details. of with out picture other I'll as specific Wetteny leave see that kind the and to big

Wetteny Joseph

John. No

roughly therapy get growth cell see we therapy, where our across said sustainable or but our of on you think specific business of feel significant covered that. a business overall etc. as rate from that the We You long-term to Clearly and growth Biologics revenues won't see XXXX John we by progress expect really business can making trajectory great XX% well. about we towards we the into and I are be broadly. contribution the us gene and

Jacob Johnson

in one of follow-up the business? any is impact revenues you're Got way be of from it. $XXX operations the or selling Catalent the Blow-Fill-Seal financial just to there terms to up frame that for quick May margins million that sale

John Chiminski

by [indiscernible] just here as we year programs Look as of in the the and I just can see. includes for released. said are on gave prepared that the think well to able we the the reflecting given increased we the remainder we That the and pipeline our raise as [doubles] guidance that divestiture the in way guidance in comments

both vast to So that that as to we we the products coming just as amount and forth number the network say of from divestiture issued across timing on but guidance given to so won't reflects quantify that expect it already the that go Seal we based exact far the have close. we suffice the

Jacob Johnson

Got it. Thanks for getting the questions.

Operator

Your question Morgan is next from Ricky with Goldwasser Stanley.

open. is line Your

Unidentified Analyst

be Can Hi help you this from is up the us guidance follow increased [indiscernible] been in points room congratulations vaccine demand agreement upside wanted and working and about is the of versus much vaccine it J&J from and pay we comes contract approved or then J&J already already the think the that current should of the opportunity for? the or orders nature given the is the what on I our data take guidance how received the to in have embedded the on should there approved once for more the quarter. understand guidance.

John Chiminski

Yes.

take guidance, of everyone in terms treat the year. they left any the five the that our our customers COVID-XX we and will with this falls give end roughly guidance contractual year months the portion of at pay fiscal our our within frame required year. and a our in elements in we beginning, volume look So it's within how so us the consistent ends impacts fiscal we I of June remind from effectively reflect to basically time that very have where that have only assumes fiscal or

pay perhaps that we'll by customer fall is the to that throughout the into to as So those our in the even whether with but year fiscal requires is calendar ending give by there end given unordered effectively doing year year anything produce office year order customer volumes guidance August effectively require the certain or commitment already they customers calendar or the extent the those we're of the our been give following have that of to there is next June fiscal a end the getting take about fiscal into firm in the that which we by talk year year not. to the that's contractual or work and actually that's year would that reflected volume a given for us maybe in fiscal

in to year level what's gives above to time extent from the forward it's of our that would a potentially year. a reflected but limited orders that additional the of that's So year upside customer amount that remaining minimum provide some again

Unidentified Analyst

some next cell discussions and various touch Thank therapy and recently manufacturing wanted gene you and moving heard quality I over on the to biotech in-house manufacturers time given because on considerations. we've the

So what's your view and gene trends on cell the of clients? of based outsourcing with sustainability recent your therapy on conversations the

John Chiminski

rates Yes. here therapy This John that actually would to cell five I seven the over next see the space gene is across increasing and years. say outsourcing we

their make really therapy gene where actually biotech the small they're assets therapy reduced gene customers few majority, decision dramatically relatively disease for cure of sense. customers that for put understand doesn't to a and have a the could to the majority of cell lot You in are capacity volume a

seven space specifically towards XX% of XX% to to growing nearly saw showed therapy about research the therapy novo we our de we manufacturing gene itself outsourced So did years. the much actually gene five as that we lends looked that over next so outsourcing today was and more again actually it the and at that

therapy requirements gene like are very the So to cell channeling. it on still CDMOs both we capacity from bullish space as relates and

Unidentified Analyst

segment. and Softgel on helpful That's the Great. lastly

On segment the came the margin still expectation. bit below side a margin our

takes back are margin to see what pre-COVID puts the the the coming need if to we and So levels?

John Chiminski

Yes.

can capacity levels an of as a have business. in I portion that we products effect and in have come versus up said when high our good So of across when go that in supply sort directions Softgel where in where volumes outsize of volumes business particularly X,XXX down that we businesses Technologies you our both are

expansion see volume You outside in and quarter in pleased the effect margins the Biologics of our see margin We're in The increased impact company. increasing. the can this to even terms year business. across

see you midpoint margin guidance what the with Technologies despite expansion year-on-year in Our points question business just described our of the you guidance just to in your business. you about respect XX example if basis Softgel take for

reflected that reflected is described the first good half half of second already very what in have the what obviously in We we've and than business visibility and business coming the that in with all we've today included. better and

despite volumes we expect So through the for reverse business pleased these year which that that we're margins we come to impact and would delivering in margin the as in the in very terms are on expansion with of well.

Unidentified Analyst

Thank you.

Operator

next Dodge Your question from is with Capitals. RBC Sean

open. is line Your

Sean Dodge

morning. evidence the own insourcing changing supply aside of guys strain the kind their insourcing/outsourcing that capacity larger are available moment, processes thought this around to think good little not bit maybe them versus now? internal encourages on you the Maybe we is these to for therapy everyone about some if a think for but of added building more going for Thanks, set the decisions the a projects John gene you are any back new putting COVID outsourcing seeing critically

John Chiminski

is front general been of have realized because challenge and pharma fact not you vertically of and Actually CDMOs strategic I the has pharma all years were biotech partnership would that ago. understood pharma in nature what biotech COVID-XX happened able what of in to think the with I and by XX tell to really would that of in regards be put totally is would I say has companies integrated COVID

part done novel what CDMOs for clinical look comments. their allowed to they opening which then has capacity and build-outs COVID develop and it trials focus do with the If and has happened strategic pharma take these well partners to and on using has on our biotech through Catalent treatments which a my what noted is run vaccines their you and during

pharma to to strategic with outsourcing So challenge. really partnering nature strongly [indiscernible] believe overall it and and really throughout in got that specifically with partnered and be to partnerships think has biotech promoted probably the pharma increase actually large with regards again COVID that continue able CDMOs of the come I future bear to CDMOs I this will those companies the

Sean Dodge

then per do that you thank I with ahead of back vial question the they and for that if is loading that’s COVID guess contract more to affect at you into around vials per feasible basis? or go Okay, all on doses going you economics and the it, do helpful dose does a a the get paid

John Chiminski

but What what specifics we how our we they're from constructed our and into get so say orders contractually than it's they to is won't and place something that for above We indeed programs. us in very contractual I contracts guidance our would come or reflected across of with our is required I as as won't if well with in again these have terms concepts reflect vary which for unusual customers. individual go down doses minimums into what customers is those

just and it but it's that not the So down unusual COVID they're say patients. for for same not or across to is have come us to all an whether I would our contracts one individual doses

point. give as an just you I'll that So added that

Unidentified Analyst

enough. Fair Thanks again. Okay.

Operator

is question America. Juan of Bank next from with Avendano Your

open. Your line is

Juan Avendano

innings in other the for manufacturing and of COVID-XX continue comments some in by on activities Hello, me could you vaccine calendar this chain into XXXX. early players, supply the squeezing based thank

in that couldn't your in So year ‘XX. I do and expect guess COVID-XX conservatively fiscal fiscal my similar view given contribution why a question year agree we revenue this is with June ends you

John Chiminski

I the us to to that turn working think of are that who probably process. of the they role strains need them essentially information and what multiple first in this to will determine to I as with we arises need probably to same with what impact us or need would with what who some see deliver of look whether we Juan, working you're and assist that be have our work our in be those our seen you terms will are. on customers the going looking it's customers by question foremost at with different they're and

much of said some into and these as therefore use for giving full as the guidance In is on to specifically impact point of get very talk spill would give official current limited and terms potentially eventually in we'll guidance as imagine starts the approvals year following and get fiscal of the you year the have next time these commercial terms authorization then next those potentially programs to we year year. to how X on we I that some of see year and about the left we June point our of would earlier emergency more good of fiscal July data end in

John Chiminski

July Juan thinking guidance maybe a that and our in effectiveness we're learnings more lot to our are learn These vaccine months. formulate going the calendar I'll year aid requirements which say as going do manufacturing begins just coming to we That fiscal about year anticipate on ‘XX later say we likely fiscal into that also. I'd year said our ‘XX vaccines this X through for and year. ‘XX

Juan Avendano

Thank you. of drug you I helpful drug you is a disclosed on that look mind been at them API quick are most we what manufacturing substance that the product seeing partnerships Okay. state are to That's follow-up would and with COVID-XX Catalent the for the substance and prevent AstraZeneca but the the of drug if side that products aside you've of summoned has keeping from in color exception the publicly doing the vaccine mean this supply the any bottlenecks do?

Wetteny Joseph

more customers product references COVID-XX of are only may that our to Juan been but say those mind across substance spend biological have not our that in small our well your in of would therapeutics that those working we're drug you're One XX programs working segment. related the relatively product are have more thing and a with drug customers as business our making segments, in just that's first keep Indeed on across as announced there that than substance. we I many we number we across on all with and have

the first that's point. So

supply committed questions looks like for the they what fill still what the those at requirements chain if us. hinges product deliver clearly providing that I we contractor multiple the again they've to from and acceptance to those right of terms our customers terms supply include us drug add to to substance what execute substance to to drug to in our to places we that to in the on for are, guidance need if customers us out customer look from means drug customer. manufacturing and we're that what where we for. to you of we're and different anything We what prepared for for are and and reserve terms that speak the of in have overall coming of our volumes that? relatively They if perspective our gives In have us what There want a level tend John complex. of terms our would confidence we want contracts instances chain in is are

John Chiminski

you. Thank No.

Juan Avendano

you. Thank

Operator

from comes with Nephron Meehan question last Jack Research. our now And

open. is line Your

Jack Meehan

for questions. Yes, the thank you taking

impact from of from kind you're about terms are what whether for hearing of be lingering Tech, a know demand kind on start improve in ones about the some just and Can I segment? to and is talk in growth to about what customers Just going the cleanup Oral of half. couple there of, expectations Softgel the the thinking pandemic second could growth talk you you rates

John Chiminski

have in Look Yes. first not said Thanks second the already the a reflected. reflected do perspective. they terms below We have and we've is for we've the to in rolling in regular a the we the our tend those all improvement commercial basis term all only where day be a or we half communications many and clearly we've would sense forecast taken with those them long top substantially from Again becomes going from are as the what the do what on our X are half we for about our year question. has get as way have providing still out segment what guidance contract in it's expect customers a forecasts in in general to of expect period this a the instances who in growth thought business In where we firm. been what forecast. obviously line well shape so in

us that addition additional they're information a forecast perspective. to of from gives providing So us in clarity a the certain level clearly to

what business that take improve the term all the in again half would we expecting the in that we business that do to described business the some and from indeed we So we but reflected it seen which back impacts this are to commentary our good we below the prepared given visibility has substantially and in a still a long commercial level in is COVID-XX clearly products guidance very of we supply have gave.

Jack Meehan

us what the to embedded have guidance within you on to but the publicly the Great ones you're full give of if I sense similar and of increase The a expectation follow-ups that up any and any missed also the XX COVID? these projects for then then announced COVID. now that for you profile last quarter. Can this on sorry year earlier I'm of two incremental high since or just working or these is

John Chiminski

Yes.

what we of announced. announced terms there haven't mean in haven't I reasons So we that are

related spotlighted Biologics programs look antibodies, different are you of just the So we particularly won't on any with therapy, have number a information of of the of of And you business across our modalities, a we're programs we some into on more and a go look at when so and fair these cell remind detail amount point that business I'll vaccine clearly particular the those. public there customers monoclonal at view number we our therapy, gene working programs when development etc. strategic that on is

and as and potentially as require capacity fees volume to late programs well. need the these scale and We expectations for they add to to deploy have commercially approved more necessary more get require

COVID-XX So as well. some we long that in perfectly are viewpoint capacity are business term accelerating for builds necessary capacity strategic programs our but anticipate and in that the we would adding across are instances initially business

capacity, related needs essentially So is terms COVID whether meet this is strategic in to announced or why our plans capacity in accelerate we non-COVID programs particular. say haven't Biologics our -- this the of adding across we our announced those us to programs allowing segment

Jack Meehan

the this guidance within terms amount was And that of represented an the [raise]? in there

John Chiminski

in the [raise]? COVID terms of In the impact of terms

Jack Meehan

Correct. Yes.

John Chiminski

Yes.

any the about X points by we've increased other just we've COVID-XX midpoint the for points. our take X of just guidance guidance we've range increased So if increased point you about our contribution but net by it

hopefully some gives level clarity that you here. So of

Jack Meehan

Yes. Thank you.

Operator

to turn the over further remarks. for back call There Chiminski are John no questions. I closing

John Chiminski

points Thanks your like everyone close to a for key few we’ve operator to highlighting join by today. time thanks and and call. covered for questions taking our I'd

the back points the second including and First, of our growth a for revenue fiscal quarter expectations strong year forecasts XX% our adjusted organic growth EBITDA growth growth by by half led combined to results raise percentage and increased net the approximately seven XXXX percentage organic our adjusted with points. in us XX% approximately expectations have revenue six EBITDA net

business help Biologics meet Next non-COVID products. both we've strategic in to COVID plans accelerating our and our in been for CapEx order demand near-term

these help of fight COVID-XX As used a actions now treatments. producing this some They of result we are and pandemic. moment being vaccines to are at the

and quarter $X.X Biologics billion us can of Catalent without Biologics more is Importantly any XX% COVID-XX a ago. for of position new quarter for compared strategic revenue in XX% exceptional term the of overall which be growth net has revenue XXX%. large growth constituted target The meet plans an to our EBITDA continued believe with The we of will been driver revenue our the growth growth. accelerator long in And segment organic organic segment XXXX its term second met in segment to for XX% long sustainable than acquisitions. year net key continued report to

to never live products lives mission and and important. our supply healthier develop Finally, more been people better has manufacture help that

for business continuity for counting vaccine XX,XXX and we other great maintain patient to deliver continue culture out or hard to to for every or produce therapy of all work our first to be year. X,XXX the carry We products you. those have employees on COVID-XX we Thank the us responsibility thankful plus deliver

Operator

Ladies and today’s you that call. everyone conference for gentlemen Thank concludes joining.

disconnect. You now may

Catalent (CTLT) 2 Feb 212021 Q2 Earnings call transcript