ctlt-20240930

false2025Q1Catalent, Inc.6/30FALSEFALSE00015967830.010.011,000,000,0001,000,000,000181,000,000181,000,000180,000,000179,000,0000.010.01100,000,000100,000,000————12231,9831,915855353544991461462626180,15724,6973723684,70327807,818362362424299212199667597593333187,90025,0742274274,422REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

As described in the Amended Fiscal 2022 10-K, in preparing the consolidated financial statements for the three and nine months ended March 31, 2023, the Company identified a $26 million error related to the over-recognition of revenue in the consolidated financial statements it issued with respect to its fiscal year ended June 30, 2022. This error resulted from the misapplication of the contract modification guidance in accordance with ASC 606, Revenue from Contracts with Customers, related to one of the Company’s customer arrangements. The Company assessed the materiality of the error both quantitatively and qualitatively and determined this error to be immaterial to those consolidated financial statements. However, the Company concluded that the effect of correcting the error in the quarter ended March 31, 2023 would materially misstate the Company’s unaudited consolidated financial statements for the three and nine months ended March 31, 2023 and, accordingly, determined that it was necessary to revise the consolidated financial statements it previously issued with respect to the fiscal year ended June 30, 2022.

The following tables reflect the impact of this revision on the Company’s consolidated balance sheet as of June 30, 2022:


Consolidated Balance Sheet	June 30, 2022
(Dollars in millions)	As Previously
	Reported		Adjustment		As Revised
Prepaid expenses and other	$	625	$	1	$	626
Total current assets	2,916		1		2,917
Total assets	10,507		1		10,508
Other accrued liabilities	620		26		646
Total current liabilities	1,072		26		1,098
Deferred income taxes	202		(5)		197
Total liabilities	5,712		21		5,733
Retained earnings	538		(20)		518
Total shareholders' equity	4,795		(20)		4,775
Total liabilities and shareholders' equity	$	10,507	$	1	10,508

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

______________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

001-36587

(Commission File Number)

_____________________________

Catalent, Inc.

(Exact name of registrant as specified in its charter)

_____________________________


Delaware		20-8737688
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

14 Schoolhouse Road
Somerset,	New Jersey	08873
(Address of principal executive offices)_______		(Zip code)

(732) 537-6200

Registrant's telephone number, including area code

____________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	CTLT	New York Stock Exchange

____________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes ☒ No

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On October 28, 2024, there were 181,511,586 shares of the Registrant's common stock, par value $0.01 per share, issued and outstanding.

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CATALENT, INC.

Index to Form 10-Q

For the Three Months Ended September 30, 2024


Item		Page

Part I.	Financial Information

Item 1.	Financial Statements (unaudited)	7

	Consolidated Statements of Operations for the Three Months Ended September 30, 2024 and September 30, 2023	7

	Consolidated Statements of Comprehensive Loss for the Three Months Ended September 30, 2024 and September 30, 2023	8

	Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024	9

	Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended September 30, 2024 and September 30, 2023	10

	Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and September 30, 2023	11

	Notes to Unaudited Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

Part II.	Other Information	40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	41

Signatures		42

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Special Note Regarding Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q of Catalent, Inc. (“Catalent” or the “Company”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “future,” “forward,” “sustain,” or the negative version of these words or other comparable words.

These statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statement is subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements include, but are not limited to, those summarized below, in addition to those described more fully (i) in Part II, “Item 1A. Risk Factors” and elsewhere in this report, (ii) from time to time in reports that we have filed or in the future may file with the Securities and Exchange Commission (the “SEC”), and (iii) under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “Fiscal 2024 10-K”).

Risks Relating to Pending Merger with Novo Holdings

• We may not complete the pending merger with Novo Holdings A/S (“Novo Holdings”) within the timeframe anticipated, or at all, which could have a material adverse effect on our business, financial condition or results of operations, as well as negatively impact our share price.

Risks Relating to Our Business and the Industry in Which We Operate

•Actions of activist shareholders could impact the pursuit of our business strategies and adversely affect our results of operations, financial condition, or share price.

•We anticipate being subject to increasing focus by our investors, regulators, customers, and other stakeholders on environmental, social, and governance (“ESG”) matters.

•We are a part of the highly regulated healthcare industry, subject to stringent regulatory standards and other applicable laws and regulations, which can change unexpectedly or be the subject of unexpected changes in interpretation or enforcement, any of which may adversely impact our business.

•Any failure to implement fully, monitor, and continuously improve our quality management strategy could lead to quality or safety issues and expose us to significant costs, potential liability, and adverse publicity.

•We have experienced, and may continue to experience, productivity issues and higher-than-expected costs at certain of our facilities, which have resulted in, and may continue to result in, material and adverse impacts on our financial condition and results of operations.

•The declining demand for various COVID-19 vaccines and treatments from both patients and governments around the world has affected and may continue to affect sales of the COVID-19 products we manufacture and our financial condition.

•The demand for our offerings depends in part on our customers’ research and development and the clinical and market success of their products.

•Our results of operations are subject to fluctuations in the costs, availability, and suitability of the components of the products we manufacture, including active pharmaceutical ingredients, excipients, purchased components, and raw materials, and other supplies or equipment we need to run our business.

•Our goodwill has been subject to impairment and may be subject to further impairment in the future, which could have a material adverse effect on our results of operations, financial condition, or future operating results.

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•Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

•We may acquire businesses and offerings that complement or expand our business or divest non-strategic businesses or assets. We may not be able to complete desired transactions, and such transactions, if executed, pose significant risks, including risks relating to our ability to successfully and efficiently integrate acquisitions or execute on dispositions and realize anticipated benefits therefrom. The failure to execute or realize the full benefits from any such transaction could have a negative effect on our operations and profitability.

•We may become subject to litigation, other proceedings, and government investigations relating to us or our operations, and the ultimate outcome of any such matter may have an adverse impact on our business, prospects, financial condition, and results of operations.

•Our global operations are subject to economic and political risks, including risks resulting from continuing inflation, disruptions to global supply chains, destabilization of a regional or national banking system, or from the Ukrainian-Russian war or the effect of the evolving nature of the recent war in Gaza between Israel and Hamas and conflict in the Middle East, which could affect the profitability of our operations or require costly changes to our procedures.

•We use advanced information and communication systems to run our operations, compile and analyze financial and operational data, and communicate among our employees, customers, and counterparties, and the risks generally associated with information and communications systems could adversely affect our results of operations. We continuously work to install new, and upgrade existing, systems and provide employee awareness training around phishing, malware, and other cybersecurity risks to enhance the protections available to us, but such protections may be inadequate to address malicious attacks or inadvertent compromises affecting data security or the operability of such systems.

•Artificial intelligence-based platforms present new risks and challenges to our business.

•Our cash, cash equivalents, and financial investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents, and financial investments fail.

Risks Relating to Our Indebtedness

•The size of our indebtedness and the obligations associated with it could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or in our industry or to deploy capital to grow our business, expose us to interest-rate risk to the extent of our variable-rate debt, or prevent us from meeting our obligations under our indebtedness. These risks may be increased in a recessionary environment, particularly as sources of capital may become less available or more expensive.

•Despite our high indebtedness level, we and our subsidiaries are still capable of incurring significant additional debt, which could further exacerbate the risks associated with our substantial indebtedness.

•Our interest expense on our variable-rate debt may continue to increase if and to the extent that policymakers combat inflation through interest-rate increases on benchmark financial products.

•Despite the limitations in our debt agreements, we retain the ability to take certain actions that may interfere with our ability to timely pay our substantial indebtedness.

•We may not be able to pay our indebtedness when it becomes due.

•We are currently using and may in the future use derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable-rate indebtedness or changes in currency exchange rates, and any such instrument may expose us to risks related to counterparty credit worthiness or non-performance of these instruments.

Risks Relating to Ownership of Our Common Stock

•We do not presently maintain effective disclosure controls and procedures due to a material weakness we have identified in our internal control over financial reporting. Material weaknesses have in this past resulted in the revision of our financial statements. If we fail to remediate this material weakness, or if any other material weakness or significant deficiency is identified in the future or if we otherwise fail to maintain an effective system of internal controls, material misstatements in our financial statements could result, and, as in the past, we could fail to timely meet our periodic reporting obligations.

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•Our stock price has historically been and may continue to be volatile, and a holder of shares of our common stock may not be able to resell such shares at or above the price such stockholder paid, or at all, and could lose all or part of such investment as a result.

•Future sales, or the perception of future sales, of our common stock, by us or our existing stockholders could cause the market price for our common stock to decline.

•We are not currently eligible to use the Form S-3 registration statement, which could impair our capital-raising activities.

•Provisions in our organizational documents could delay or prevent a change of control.

We caution that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties, and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct, or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

Social Media

We use our website (catalent.com), Facebook page (facebook.com/CatalentPharmaSolutions), LinkedIn page (linkedin.com/company/catalent-pharma-solutions/) and Twitter account (@catalentpharma) as channels of distribution of information concerning our activities, our offerings, our various businesses, and other related matters. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings, and public conference calls and webcasts. The information contained on or accessible through our website, our social media channels, or any other website that we may maintain is not a part of this Quarterly Report.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Catalent, Inc.

Consolidated Statements of Operations

(Unaudited; dollars in millions, except per share data)


	Three Months Ended September 30,
	2024		2023
Net revenue	$	1,023	$	982
Cost of sales	842		813
Gross margin	181		169
Selling, general, and administrative expenses	252		205
Gain on sale of subsidiary	(17)		—
Goodwill impairment charges	—		689
Other operating expense, net	13		1
Operating loss	(67)		(726)
Interest expense, net	60		58
Other (income) expense, net	(10)		13
Loss before income taxes	(117)		(797)
Income tax expense (benefit)	12		(38)


Net loss	$	(129)	$	(759)









Earnings (loss) per share:
Basic

Net loss	$	(0.71)	$	(4.19)
Diluted

Net loss	$	(0.71)	$	(4.19)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Catalent, Inc.

Consolidated Statements of Comprehensive Loss

(Unaudited; dollars in millions)


	Three Months Ended September 30,
	2024		2023
Net loss	$	(129)	$	(759)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	66		(39)
Pension and other post-retirement adjustments	1		—



Derivatives and hedges	(13)		5
Other comprehensive income (loss), net of tax	54		(34)
Comprehensive loss	$	(75)	$	(793)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Catalent, Inc.

Consolidated Balance Sheets

(Unaudited; in millions, except share and per share data)


	September 30, 2024		June 30, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	335	$	289
Trade receivables, net of allowance for credit losses of $12 and $23, respectively	760		921
Inventories	553		574
Prepaid expenses and other current assets	859		813

Total current assets	2,507		2,597
Property, plant, and equipment, net of accumulated depreciation of $1,983 and $1,915, respectively	3,671		3,643
Other assets:
Goodwill	2,366		2,333
Other intangibles, net	811		841
Deferred income taxes	32		7
Other long-term assets	321		332
Total assets	$	9,708	$

SEC Form 10-Q filed by Catalent Inc.