Catalent, Inc. (NYSE:CTLT) Q2 2023 Earnings Call Transcript

Jack Meehan: Got it. And I wanted to try on the margin one more time. Just looking at the fourth quarter, your guidance in the commentary, I think it implies 4Q EBITDA is about 40% of the full year. I look over the last five years, it’s about 33% — so just help us with the math again. I know there are some things that are really stepping up in the fourth quarter. It’s just much more pronounced than I think we’ve seen previously?

Tom Castellano: Yes. I think your numbers are probably close. Maybe I’d say it’s a little bit on the high side in terms of the Q4 contribution, but again, not materially different, I would say, three things like point to one, the COVID-related revenue here is going to be sizable. As we’ve already talked, as we’ve already talked about, the ramp-up on the gene therapy side of the business related to a major customer program that we’ve talked about here, new capacity that’s going to be coming online in the third quarter. It’s going to be utilized. This is going to be by far the strongest gene therapy contribution we’ve ever seen in the fourth quarter. So very difficult to compare that to historical years where we weren’t seeing gene therapy contributions to the levels that we’ll see here around the business.

But third area that I would say I would factor in and then just a normal level of seasonality that we see around the PCH side of the business around Q4, heading into the summer shutdown period is another item to take into consideration here. Lastly, I would say the Brussels dynamic for us in the prior year, if you’re looking at this and certainly, I would say, a headwind that we had in the prior year. So the natural lift up that we’ll see here for the fourth quarter that was a business that was shut down or a facility that was shut down for us, that will be up and running here as well. So, I think all of those things factor into the margin profile we expect to see in the fourth quarter. And lastly, I would say I’d just reiterate that this was — that the demand is there, right?

The level of visibility that we have to volume or demand for the second half of the year and even the fourth quarter is high and it comes down to the levels of execution that we’re able to deliver upon across our network of sites.

Operator: Those are all the questions we have for today. So, I’ll turn the call back to Alessandro for concluding remarks.

Alessandro Maselli: Thank you, everyone, for taking the time to join our call and your continued support of Catalent.

Tom Castellano: Thank you.

Operator: Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.