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 | | CATALENT PHARMA SOLUTIONS REPORTS FISCAL 2008 FIRST QUARTER RESULTS | | | Catalent Pharma Solutions, Inc | | 13/11/2007 | | | Catalent Pharma Solutions, Inc., one of the leading providers of advanced technologies and outsourced services to the global pharmaceutical,biotechnology and consumer health industry announced its financial results for the first quarter ended September 30, 2007. Catalent recognized net revenue for the three months then ended of USD 438.0 million, and EBITDA from continuing operations of USD 57.8 million for the same period after giving effect to the Acquisition and related purchase method of accounting adjustments. Adjusted EBITDA as detailed in the attached schedules for the twelve months ended September 30, 2007 was USD 339.1 million. EBITDA and adjusted EBITDA are defined below under "Non-GAAP Financial Matters".
Catalent's President and Chief Executive Officer, John Lowry, said, "Catalent's achievements over the past seven months since our acquisition by an affiliate of the Blackstone Group have been remarkable. Our separation activities continue ahead of schedule, the reorganization into three business units has clarified accountability and improved performance, and the appointments of Sam Khichi as General Counsel and Tracy Tsuetaki as Group
President of our global Packaging Services business have brought outstanding new talent to my already strong executive team. Catalent's employees are excited by the opportunity to operate as an independent company, and this has contributed to the strong performance reflected in the first quarter results for fiscal 2008."
David Eatwell, Catalent's Chief Financial Officer stated, "All three operating segments reported impressive EBITDA growth for the first quarter. The EBITDA growth was led by Sterile Technologies, which benefited from improved utilization at all of their manufacturing facilities. The strong performance for the quarter resulted in an increase to adjusted EBITDA for the twelve months
ending September 30, 2007 of USD 339.1 million."
A description of adjusted EBITDA, which excludes costs related to the separation of Catalent from Cardinal Health, Inc. and costs related to The Blackstone Group's acquisition of Catalent, among other items, and a reconciliation of adjusted EBITDA to GAAP results are included in this press release.
Results of Operations - First Fiscal Quarter Ended September 30,2007
Net revenue for the three months ended September 30, 2007, was USD 438.0 million, an increase of USD 39.5 million, or 9.9%, compared to USD 398.5 million in the same period for 2006. The increase was primarily due to strong demand for Oral Technologies pharmaceutical products and increased volumes and throughput within our Sterile Technologies segment, including increased output from our new sterile facilities. The weaker U.S. dollar favorably impacted the Company's revenue growth by approximately 5 percentage points.
Gross margin for the three months ended September 30, 2007, was USD 105.0 million, including the impact of purchase accounting adjustments. Excluding purchase accounting adjustments, gross margin was USD 107.1 million, an increase of USD 20.5 million, or 23.7%, compared to USD 86.6 million in the same period for 2006. The increase in gross margin was primarily due to increased revenues and improved utilization at our sterile facilities. In addition our operational excellence program continued to improve throughput and increase operational efficiencies, which particularly benefited our Zydis(R)
operation.
Selling, general and administrative expenses for the three months ended September 30, 2007, were USD 74.3 million, including the impact of purchase accounting adjustments. Excluding purchase accounting adjustments, SG&A was USD 64.0 million, a decrease of USD 10.3 million, or 13.9%, compared to USD 74.3 million in the same period for 2006. The decrease was primarily due to the savings achieved as a standalone company in comparison to the allocation of costs from Cardinal Health for the same period in 2006, lower equity compensation charges and lower salary costs as a result of the reduction in force that was completed in the quarter ending June 30, 2007.
EBITDA from continuing operations for the three months ended September 30, 2007, was USD 57.8 million, an increase of USD 26.4 million or 84.1% compared to the same period in 2006. Sterile Technologies increased EBITDA by USD 11.2 million to USD 6.1 million, due to increased volumes and improved utilization of facilities, including the ramp-up of their new facilities in Brussels and North Carolina. The EBITDA for Oral Technologies increased by USD 7.3 million, primarily due to strong demand for pharmaceutical products and increased throughput of Zydis(R) products as a result of improved cycle times. The EBITDA for Packaging Services increased by USD 3.8 million, or 22.4% to USD 20.8 million, primarily due to increased European volumes and growth in clinical services.
The Acquisition
On April 10, 2007, an entity controlled by affiliates of The Blackstone Group acquired from Cardinal Health, Inc. ("Cardinal") certain businesses of the Pharmaceutical Technologies and Services segment of Cardinal, which now constitute the Company, for an aggregate purchase price of approximately USD 3.3 billion (the "Acquisition"). The Company has performed an evaluation of the fair values of the real and personal property, inventory and certain identifiable intangible assets in connection with the purchase price allocation related to the Acquisition. The valuation study resulted in a fair value step-up to real and personal property, inventory and certain identifiable intangible assets. Catalent is in the process of finalizing its purchase accounting information. In connection with the Acquisition, Catalent entered into a senior secured credit facility, consisting of an approximate USD 1.4 billion aggregate principal term loan, a USD 350.0 million revolving credit facility, and issued USD 565.0 million of 9 1/2%/ 10 1/4% Senior PIK-Election Notes due 2015 and EUR 225.0 million of 9 3/4% euro-denominated (USD 300.3 million dollar equivalent) Senior Subordinated Notes due 2017.
Non-GAAP Financial Matters
In addition to disclosing financial results that are determined in accordance with US GAAP, Catalent discloses EBITDA and Adjusted EBITDA, which are non-GAAP measures. You should not consider EBITDA or Adjusted EBITDA as an alternative to operating or net earnings, determined in accordance with US GAAP, as an indicator of Catalent's operating performance, or as an alternative to cash flows from operating activities, determined in accordance with US GAAP, as an indicator of cash flows, or as a measure of liquidity. EBITDA is calculated by the sum of earnings before interest, taxes, depreciation and amortization.
The Company's credit facilities and the indentures governing the outstanding notes have certain covenants that use ratios utilizing a measure referred to as Adjusted EBITDA ("Adjusted EBITDA"). The supplementary adjustments to EBITDA to derive Adjusted EBITDA may not be in accordance with current SEC practices or the rules and regulations adopted by the SEC that apply to periodic reports filed under the Securities Exchange Act of 1934.
Accordingly, the SEC may require that Adjusted EBITDA be presented differently in filings that will be made with the SEC than as presented in this release, or not be presented at all. The most directly comparable GAAP measure to EBITDA and Adjusted EBITDA is net earnings (loss). Included in this release is a reconciliation of net earnings (loss) to EBITDA and to Adjusted EBITDA.
About Catalent
Headquartered in Somerset, New Jersey, Catalent is one of the leading providers of advanced technologies, and development, manufacturing and packaging services for pharmaceutical, biotechnology and consumer healthcare companies in nearly 100 countries. The company applies its local market expertise and technical creativity to advance treatments, change markets and enhance patient outcomes. Catalent employs approximately 10,000 people at more than 30 facilities worldwide and generates more than USD 1.7 billion in annual revenue. | |
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