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Catalent (CTLT) Q1 Earnings Top Estimates, FY22 View Up

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·4 min read
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Catalent, Inc. CTLT reported first-quarter fiscal 2022 adjusted earnings per share (EPS) of 71 cents, up 65.1% year over year. The bottom line exceeded the Zacks Consensus Estimate by 7.6%.

The adjustments include charges and benefits related to amortization as well as acquisition, integration and other special items costs.

The company’s GAAP EPS was 49 cents in the quarter, up 19.5% year over year.

Revenues in Detail

Revenues grossed $1.03 billion in the reported quarter, up 21.2% year over year (up 20% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 1.1%.

The top line was driven by robust growth in the Biologics segment and improving dynamics in the Softgel and Oral Technologies as well as Oral and Specialty Delivery segments in the reported quarter.

Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 23% year over year.

Segments in Detail

Revenues in the Biologics segment rose 44.8% year over year (up 44% at CER) to $546 million in the quarter under review.

Revenues in the Softgel and Oral Technologies segment increased 9.9% from the year-ago period’s levels (up 9% at CER) to $243 million.

The Oral and Specialty Delivery arm recorded revenues of $146 million, down 8.2% and 10% on a reported basis and at CER, respectively, year over year. Net revenues inched up 1% on excluding the impact of acquisitions, but declined 14% on excluding the impact of divestitures.

Revenues in the Clinical Supply Services business rose 3.2% year over year (up 2% at CER) to $96 million.

Catalent, Inc. Price, Consensus and EPS Surprise

Catalent, Inc. Price, Consensus and EPS Surprise
Catalent, Inc. Price, Consensus and EPS Surprise

Catalent, Inc. price-consensus-eps-surprise-chart | Catalent, Inc. Quote

Operational Update

In the quarter under review, Catalent’s gross profit rose 30.1% to $324 million. Gross margin expanded 218 basis points (bps) to 31.6%.

Selling, general and administrative expenses rose 10.9% to $183 million year over year.

Adjusted operating profit totaled $141 million, rising 67.9% from the prior-year quarter’s levels. Adjusted operating margin in the quarter expanded by 383 bps to 13.8%.

Financial Update

Catalent exited the first quarter of fiscal 2022 with cash and cash equivalents of $1.97 billion compared with $896 million at the end of fiscal 2021. Total debt at the end of the fiscal first quarter was $4.30 billion compared with $3.24 billion at the end of fiscal 2021.

Net cash provided by operating activities at the end of first-quarter fiscal 2022 was $163 million compared with $150 million a year ago.

FY22 Guidance

Catalent, to account for the Bettera acquisition (closed on Oct 1), raised its earlier-provided financial outlook for the year.

The company projects revenues within $4,620 million-$4,820 million for the full year, up from the previous projection of $4,300 million-$4,500 million. The Zacks Consensus Estimate for fiscal 2022 revenues is currently pegged at $4.54 billion.

Our Take

Catalent exited the fiscal first quarter with better-than-expected results. The year-over-year improvement in the top and the bottom line is impressive. Continued strength in its Biologics arm in the quarter under review looks encouraging. Robust performances by the Clinical Supply Services, and Softgel and Oral Technologies segments also raise optimism.

Catalent also completed its earlier-announced buyout of Bettera Holdings, LLC in October, which will complement and accelerate the growth of its global softgel and oral dose formulation and manufacturing business, raising our optimism on the stock. Expansion of the margins bodes well. A raised financial outlook for the year also heightens our positivity regarding the stock.

However, persistent soft revenues in the Oral and Specialty Delivery segment is a concern.

Zacks Rank and Key Picks

Catalent currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are West Pharmaceutical Services, Inc. WST, Thermo Fisher Scientific Inc. TMO and AngioDynamics, Inc. ANGO.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the consensus mark by 3.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently flaunts a Zacks Rank #1.

AngioDynamics reported first-quarter fiscal 2022 adjusted loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%. It currently sports a Zacks Rank #1.


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