Q4 2020 Catalent Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Katelyn fiscal 2020, Q4 earnings call and webcast. At this time all participants are in listen only mode. After the speakers presentation, there will be a question and answer session.
Ask the question during the session you will need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Paul Surdez, Vice President of Investor Relations. Thank you. Please go ahead Sir.
Good morning, everyone and thank you for joining us today to review catalyst fourth quarter full year. This school 2020 financial results.
Joining me on the call today, or John Chiminski Chair, and Chief Executive Officer, and with me Joseph Senior Vice President and Chief Financial Officer.
We see our agenda for this call on slide two of or supplemental presentation, which is available on our investor Relations website.
Www Dot com Catalent dot com.
During our call today management will make forward looking statements and refer to non-GAAP financial measures. It is possible that actual results could differ from management's expectations. We refer you to slide three for more detail.
Slides four and five disgusted non-GAAP measures and are just issued earnings release provides reconciliations to the most directly comparable GAAP measures.
I don't form 10-K to be filed with the FCC. Later today has additional information on the risks and uncertainties that made bear on our operating results performance and financial condition, including those related to the Cobiz 19 pandemic no I would like to turn the call over to John Chiminski, who.
His remarks, beginning with slide six of the presentation.
Thanks, Paul and welcome everyone to the call.
That's a preannouncement release on July Thirtyth already foreshadowed Catalent had a very strong finish the fiscal 2020.
Throughout the pandemic, we've maintained its our top priority the health and safety of our employees and in doing so maintained business continuity.
We're very pleased to deliver record financial results, including robust organic growth, while keeping our employee say you know facilities open so that'd be a central medicines, we developed in produce are available for patients.
Without the karen's dedication of our employees. These results would not have been possible.
As such we recently authorized another round of thank you bonuses totaling around $9 million for on site production in support employees in the first half of fiscal 2021 to acknowledge the dedication of these employees and their versatility in adapting to our enhanced safety measures and adjusted.
Production flows and recognized other pandemic related financial impacts.
Screens by this dedicated group of onsite employees.
Throughout this pandemic our site teams have maintained their professionalism customer service and patient first focus and I personally could not be more grateful that catalents committed employees have kept their facilities open in operational.
We continue to work proactively with our customers and suppliers to ensure supply chain continuity for our customers and their patients.
As part of this effort, we expanded our safety stock of raw materials, causing higher than normal inventory levels, thus impacting our working capital.
While we not experienced any significant supply shortage today, and if successfully navigated several challenging supply situations. So rapidly changing global demand for in supply of E. T I and other critical manufacturing components may produce more challenges in the future.
To further protect our critical supply needs, we continue to commit more resources to identify navigate and resolve potential supply chain disruptions.
Over the last several years Catalent has made transformative investments to shift their technology portfolio to even more innovative and in demand areas of drug development and manufacturing.
As a result, we are now a go to company for potential cobot 19 vaccines and treatments.
We've already been awarded work at more than 50 cobot related compounds across all four of our business segments and are currently involved in client discussion regarding over 100 digital opportunities.
Some of these wins have been publicly announced including our work with Humana Jens investigational monoclonal antibody, which was developed using catalyst proprietary GE pack cell line development technology and is now leveraging catalyst one bio integrated biologic suite to help accelerate development of this potential.
Oh, good 19 therapy.
We also now several high profile supply agreements for the manufacturer of several coated 19 vaccine candidates in the U.S. and in Europe, including drug product work in Bloomington for Johnson, and Johnson and Madonna.
Drug product worked for a non need for Astra zeneca in JNJ.
Drug substance work in Madison Park tourist since the Kona and.
And drug substance work in BW wiper Astra Zeneca.
These important coded 19 response program illustrate our broad capabilities geographically and technologically as they represent all major classes of coated 19 vaccine candidates in development.
Viral vector nucleic acid and protein base.
This not only illustrates our position as the go to company for the manufacturer of potential Cobot 19 vaccines and treatments, but also provides a greater sense to the wide range of products, we manufacturer on behalf of our customers every year.
The strategic investments we've made over the last few years. In addition to recent and ongoing investments made in concert with certain strategic customers have been able to cattle into being a position to provide multi dose bio filling manufacturing capability and capacity were potentially billions of coated 19 back.
Seen doses over the next few years.
Now I'd like to provide a summary of our financial and operational highlights from the fourth quarter full year, which are covered on slide 789.
Our revenue for the fourth quarter increased 31% as reported or 32% in constant currency compared to the fourth quarter fiscal 2000 $19 million to $948 million, including organic growth of 22% measured in constant currency.
Our adjusted EBITDA of $267 million for the fourth quarter once a bump the fourth quarter fiscal 2019 by 34% as reported or 36% in constant currency, including organic growth of 32% measured in constant currency.
Our adjusted net income for the fourth quarter was $154 million or 90 cents per diluted share up from 70 cents per share in the corresponding prior year period.
Among the factors contributing to the strong fourth quarter results were double digit organic revenue growth in our biologics and orland specialty delivery segment.
Colluding, 66% organic net revenue growth and 87% organic EBITDA growth in our biologics segment.
While programs related to Cobot 19 created some revenue tailwinds for the biologic segment in the fourth quarter revenue growth in this segment when excluding Tobin 19 related projects was still robust.
The soft fuel in oral technologies segment has continued its strong performance during the pandemic with organic revenue growth in the high single digits in the fourth quarter.
Revenue in our clinical supply services segment was flat compared to the corresponding prior year period, but significant deceleration from the mid teens growth reported in the third quarter fiscal 2020, but was better than anticipated as the pandemics disruption of clinical trials was less than expected.
For fiscal 2020 revenue and adjusted EBITDA organic growth rates came in above the high end of our long term targets of 8% in 11% respectively.
Fiscal 2020 revenue was just under $3.1 billion and constant currency organic growth was 12% compared to the prior fiscal year.
Adjusted EBITDA was $751 million for fiscal 2020, and constant currency organic growth was 14% compared to the prior fiscal year.
Notably our integrated gene therapy business only contributed to our organic growth rate for the last two months of the fiscal year.
Before walking you through some of our operational highlights since our last call I'd like to comment on the strength of our balance sheet, which enables catalent to flexibly invest in our business.
In June we raised $548 million in net proceeds through our second equity offering for the fiscal year, the proceeds of which we used to repay $200 million and borrowings under our revolver that we had taken late in the third quarter I'll give an abundance of caution with the remainder of.
Doable for general corporate purposes.
This successful equity offering combined with our strong adjusted EBITDA growth lowered our net leverage a full turn to 2.8 times on June Thirtyth.
Versus 3.8 times at the ended the third quarter.
With an additional $82 million of cash that was raised when the underwriter for this offering exercised its greenshoe option in July our current cash on hand stands at more than $1 billion.
While our cash on hand position provides the flexibility to execute on strategic bolt on opportunities that may arise. Our primary plan. Its uses cash to fund our growth strategy through organic investments.
Over the last two years, we've announced several substantial capital projects that will enable us to meet anticipated demand across our business some of which have been recently accelerated to meet new demand created by the Pandemics.
Given our strong cash position and long debt maturities, we expect to continue our elevated levels of Capex in fiscal 2021 to enable continued strong organic growth in the future.
Our fiscal year 2021, Capex spend is projected to be in the half billion dollars range and is overwhelmingly directed to growth projects, particularly in our biologics segment, including more than $150 million projects that were either accelerated for or reassigned to co.
Good 19 programs.
During the fourth quarter, we continue to grow and invest in our biologics segment, including our cell and gene therapy business by integrating the premier assets, we acquired and deploying our cash on hand to further build our capacity and capability.
As we've continued to substantial buildout in capacity manufacturing suites for gene therapy business.
We also hosted the at the beginning in June for the first commercial inspection of our flagship gene therapy manufacturing facility near the BW I Airport.
Following that inspection the site was approved by the FDA to produce commercial drug substance for Abaxis is spinal muscular atrophy gene therapy product.
This was a significant milestone for both Catalent and the gene therapy industry as a whole as we became the first CDMO to be approved by the FDA for commercial gene therapy production and we're pleased to continue to meet our commitments to support Abaxis in our other customers as they did.
Liver life changing treatments for patients.
But gene therapy team has also accelerated the build out of one of the manufacturing suites located at the same facility in order to manufacture drug substance for Astrazeneca for the University of Oxford's Adenovirus vector based co bid 19 vaccine candidate.
This dedicated suite is the fifth operational suite at the BW eyesight with the remaining five suites expected to be ready by the end of this calendar year.
And to meet the rapidly growing demand for viral vector manufacturing our board of directors recently approved additional suites to be built at the BW I'd campus.
We plan to announce more details on this investment in the coming weeks.
In February we announced our acquisition of cell therapy leader Master cell a complimentary addition to our gene therapy capabilities.
We envisioned that the acquisition would further enhance our cross selling opportunities across Catalents other advanced delivery technology platforms, and our clinical supply services.
Earlier this month, we announced an expanded strategic relationship with Eddie tests to help bring new CRISPR based medicines to patients utilizing our gene therapy cell therapy, and clinical supply services offerings exemplifying our ability to realize the benefits of multiple complement.
Terry offerings for our customers and their patients.
To date Katelyn has undertaken manufacturing and related services for Editas, and our gene therapy manufacturing facility in Baltimore.
Through the recently expanded strategic relationship Kendall and will provide further services to include development in manufacturing of any taxes come complex cell and gene medicines at BW, why as well as the master cell facility in Houston.
In addition, our CSS segment will also play an integral part in delivering these vital therapies to clinical trials for administration patients.
In all our integrated support will range from supplying critical raw materials viral vectors and engineered cell medicine production to storage and distribution of finished product for clinical trials.
We also continued to execute on our Capex plans to enhance and expand our drug product in drug substance biologics offerings.
As we reviewed last quarter through joint investments with JNJ, we significantly accelerated our expansion plans at our Bloomington facility to meet the drug product needs for its leading Tobin 19 vaccine candidate.
Over the summer, we also announced that Bloomington will provide bio filling and packaging capacity to mature enough as well to support production of an initial 100 million doses of its coated 19 vaccine candidate intended to supply the U.S market with an opportunity to significantly expand the.
The agreement.
Candle and is also providing clinical supply services, including packaging and labeling as well as storage and distribution to support but during this phase III clinical study for this cobot 19 vaccine candidate.
With two high speed vial lines in Bloomington, potentially dedicated to cobot 19 vaccine candidates dependent upon regulatory approval for one or both vaccine candidates. Our board of directors recently approved a capital expenditure to add another high throughput vial filling line at the site to support new and existing.
Customer programs, which is expected to come online before the end of fiscal 2021.
We also plan to announce further details on this investment in the coming weeks.
In Europe, we are also rapidly expanding our drug product capabilities at our non you facility, we dedicated to file lines at the site to drug product capacity for Cobot 19 vaccine candidates for both Astrazeneca and Jane Jade.
We've accelerated the rapid scale up of capacity to support the potential launch and round the clock manufacturing schedules for these vaccine candidates should either be approved.
In addition, we plan to invest in our facility in Limoges, France to create a European center of excellence for clinical biologics formulation development and drug products still finished services.
The modernization of the 180000 square foot facility will include the installation of a high speed flexible line capable with filling vials syringes or partridges under barrier Isolator technology as well as enhancements to its analytical and quality control laboratories with completion anticipated in.
2020 to 2022.
Our new center of excellence in Lmost will strengthen catalents biologics global in European capacities, and our ability to bring new biologic treatments to market faster.
We expect strong long term revenue and adjusted EBITDA growth from our Biologics segment, and we continue to target growing the biologic segment to comprise approximately 50% of our total company revenue in fiscal 2024 compared to 38% in the fourth quarter fiscal 2021.
Third of the total company revenue in fiscal 2020, and less than one quarter of our total company revenue in fiscal 2019.
I'd like to close by reviewing some of our top goals and objectives for fiscal 2021.
In addition to delivering on our financial guidance, which reflects accelerated double digit organic revenue and adjusted EBITDA growth and navigating issues created by the Kobin 19 pandemic.
Including preparing for the new normal we will focus on several critical components necessary to position us to deliver even better on our mission that help people live better healthier lives.
First our focus in our people, including their safety during times of pandemic or not and our patient first culture are critical foundations for us.
We're committed to a diverse and inclusive environment. We're all employees deal valued empowered respected and inspired to do their best work.
By listening to our people in our customers and engaging their communities, we will build an even stronger company.
Next in order to bring the full potential of our complete biologics offering to the next stage, we will continue to integrate and invest in the in non U.S site and our newly acquired cell therapy business. This year.
We will continue to invest in new capabilities across the company and seek the right bolt on acquisitions to strengthen our position as an industry leading CDMO.
Finally, we will continue to invest in the key enablers that propelled the growth of our business. While also working toward the commitments made in our first corporate responsibility report published this past April.
These enablers include operationally quality excellence commercial execution science and technology.
And talent.
As a leading global development and manufacturing partner for medicines clinical trial materials and health products. Our team who are literally working around the clock to deliver life saving products for our customers and patients around the world no that our commitment to deliver on our mission.
Has never been more important.
I'd like now to turn the call over to Whitening, who will review our financial results in fiscal 2021 guidance.
Thank job.
I will begin this morning.
The discussion on segment performance, where both the fiscal Twentytwenty and fiscal 2019 fourth quarter results are presented on the basis of the reporting segments. We introduced at the start of fiscal 2012.
As in past earnings calls my commentary around segment growth will be in constant currency.
Well, Joe on all technologies revenue of $291.2 million increased 2% compared to the fourth quarter of 2019 with segment EBITDA, increasing 4% over the same period.
After excluding the impact of the October 2019 divestiture of the segments manufacturing site in beside Australia segment revenue and segment EBITDA was 7% at 6% respectively.
This organic growth was primarily driven by increased demand across the segments portfolio of higher margin prescription products in North America, as well as well and the consumer health business in Europe, Latin America in Latin America.
Partisan esselte and in all segments for that matter were impacted by elevated operating costs related to go at 19, including thank you bonuses additional protective equipment and adjusted production workflows put in place to facilitate social distancing.
Looking ahead to fiscal 2021.
Esselte segment Fourish, we target long term organic revenue growth in the range of 3% to 5% will be facing a difficult comparison to fiscal 2020 as organic growth in 2020 was well above this long term target growth ranch.
A contributor to actual T. significant fiscal 2020 growth was due to increased demand in the consumer health business, which had a strong back half of fiscal 2020.
To start 2021, we're seeing a trend which has been factored into our guidance for lower demand in consumer health, particularly in cough cold and over the counter pain relief products.
Slide 11 shows a while biologic segment recorded revenue of $257.8 million in the fourth quarter, which is up 102% compared to the fourth quarter of 29 shown that segment EBITDA growing 93% over the same period.
While the significant growth within the segment was substantially due to organic revenue and EBITDA will acquisitions contributed 36 percentage points to revenue and six percentage points to segment EBITDA growth for biologics segment in the fourth quarter compared to the prior year period.
Acquisition as a contributor to revenue and segment EBITDA includes our initial gene therapy acquisition, which occurred in May of 2019. So it only contributed to inorganic growth what part of the quarter.
Our master cell cell therapy business, which we acquired in February 2020.
And for a lot of facility, which we acquired has generated 20 to 24 extra my script as part of which included an extension of larger aquatic business that falls within the biologics segments.
Note that we did and we'll continue to attribute all non Vms work, including all coded 19 vaccine projects that we brought to the facility to organic growth and the segment.
The record organic revenue growth in our biologics segment in the quarter was in part driven by strong demand for both drug substance and drug product in North America and these offerings also expanded margins nicely compared to the fourth quarter of 2019th.
While a portion of this growth is attributable to new covert 19 related programs, which was roughly $20 million organic revenue growth was still over 50%. Excluding these projects.
Another contributor to organic revenue growth in our biologics segment was our gene therapy business, which became part of organic growth calculation in May 2020.
However, despite significant growth in the biologics segment this quarter.
There were several factors that negatively impacted margin contribution from segment in the fourth quarter compared to the prior to year periods.
In addition to elevated costs required to safely operated manufacturing facility is doing a pandemic activities related to our continued strategic investments to build out capabilities and capacity in certain of our facilities and related headcount additions and lower margin component sourcing services, all of which we expect to drive superior feature growth in the biologics business.
Also negatively impacted margin contribution in the quarter.
I would like to draw your attention to the Bar chart on slide 11, which shows a lot of biologics revenue generated in the fourth quarter by development services on the one hand, and manufacturing and commercial product supply on the other.
Over the last year development revenue biologic, because while and approximately 150% and in the fourth quarter, representing over 70% of the segment's revenue.
As we noted last quarter development program serve as a strong foundation for Fisher organic growth because a portion of them will eventually move to commercialization.
However, the increase in the proportion of development revenue compared to manufacturing and commercial revenue will lead to somewhat less predictability and financial performance from greater swings and quarter to quarter fluctuations as you saw throughout fiscal 2020.
As we embark on fiscal 2021, we expect that global demand for Coca 19 therapies and vaccine candidates will drive high levels of demand for both through our product and drug substance manufacturing capacity now North American and European facilities.
Looking at fiscal 2021, and beyond we foresee that the revenue attributable to catalyst Paramount and raw materials and components for the manufacturer of products in the biologics segment may affect segment margin.
We currently expect the impact to margins to increase as commercial product manufacturing volumes increase within the biologics segment.
Got a component sourcing it comes with two distinct dynamics high revenue and low margin.
Oh, each program source by Kevin that's the cost to collect foot care the materials components and for the supplies have generally formed a substantial portion of the fee Kevin has been able to charge to our customers for these complex services.
Indeed, the margins associated with the sourcing activity drilling a generally love the well below the segment average typically averaging in the high single digits.
No in commercial production for one or more of that over 19 candidates and I'll biologics segments nickel sourcing and mass the margin otherwise attributable for this revenue.
Slide 12 shows that all oil and specialty delivery segment recorded revenue of $218.7 million in the quarter, which is up 24% compared to the fourth quarter fiscal 2019 segment EBITDA of 38% over the fourth quarter 2019.
A portion of the allowing facility that is part of the or is this segment contributed 13 percentage points to revenue and nine percentage points to EBITDA growth.
As discussed last quarter and Ninetys margins are expected to be below the segment average until new customers onboarded into the facility overtime.
Organic revenue growth of 11% and organic adjusted EBITDA growth of 29% in the segment compared to fourth quarter plenty 19 were driven by recent product launches in the segments respiratory health tomich delivery platforms, when one product, where we benefited from a product like especially components.
As a result epic over 19 pandemic Theres, a general increase in demand for respiratory products.
In addition to the contribution from our respiratory health economic business. The second also benefited from strong end market demand for oil commercial products across itis only the solving tablet technology platform.
It was this segment that units or have a strong development pipeline that is expected to drive future long term growth.
In order to provide additional insight into our long cycle segments, which includes soft gel in all technologies biologics and oil specialty delivery each quarter, we disclose our long cycle development revenue in the current year.
In fiscal 2020, Threerd quarter development revenue across both small and large molecule of $1.02 billion, which is 59% of both the development revenue recorded in fiscal 2019 represents 32% of our revenue compared to 25% in fiscal 2019.
In addition to our quarters disclosures of development revenue. We also provides the total number of new product introductions as well as revenue from these npis in the current year.
We entered this 163 in your products in fiscal endpoint, which contributed approximately $51 million of revenue in fiscal 2000 twice.
As a reminder, these measurement metrics are only directional indicators of our business since we do not control the sales and marketing all these products and we cannot predict the ultimate commercial success of them.
Now as shown on slide 13, our clinical flight services segment posted revenue of $83.6 million flat over the fourth quarter, the prior year and segment EBITDA of $21 million or 6% decline.
As noted last quarter, we saw accelerated backlog burn for storage and distribution services in the early stages of condemning as some work was full forward from the fourth quarter by our customers.
In the fourth quarter. This this disruption of clinical trials due to the coated 19 pandemic impacted the distribution and packaging businesses, but this was partly offset by growth in the storage business.
As with the other segments elevated costs related to the endemic also impacted CSS margins.
Although again 30 appoint 20, our backlog for the CSF segment was $425 million up 7% from $396 million at March 30 Onest.
The segment reported net new business wins $104 million during the fourth quarter at 10% increase compared to the fourth quarter over the prior year.
The segments trailing 12 month book to Bill ratio remained at 1.1 times.
We are seeing a return towards more normal levels of demand for our focus by services fallen global Lockdowns experienced earlier. This calendar year. In addition to new clinical trials with is over 19 therapy of vaccine candidates. As a result, we expect to say at this segment to resume growth in fiscal 2001.
Although it is not expected to be a noteworthy contributor for CSS growth in 2021, our July 1st acquisition of Teva Takeda Pharmaceuticals, clinical packaging facility and trigger decline will add to our clinical trial capability and growth in the Asia Pac weekly as it builds a customer base over time.
Moving to companywide adjusted EBITDA on Slide 14, our fourth quarter, adjusted EBITDA increased 34% to $206 million to $7.4 million, while 28.2% of revenue compared to 27.5% of revenue reported in the fourth quarter fiscal 2019.
On a constant currency basis, our fourth quarter, adjusted EBITDA increased 36% culling, 32% organic compared to the fourth quarter fiscal 2019.
Disappointing 20, adjusted EBITDA increased 25% to $750.9 million, while 24.3% of revenue compared to 23.8% of revenue in fiscal 2019.
On a constant currency basis fiscal 2020, adjusted EBITDA increased 26%, Oakland, 14% organic compared to fiscal 19.
Fyfifteen you can see that fourth quarter adjusted net income was $154.4 million or 90 cents per diluted share compared to adjusted net income of $102.9 million or 70 cents per diluted share in the fourth quarter year ago.
This was one is one adjusted net income was $349.8 million or $2.11 per diluted share compared to adjusted net income of $264.9 million or $1.81 cents per diluted share in fiscal 19.
But the same show held debt related ratios and our capital allocation priorities.
As John mentioned earlier since our last call. We raised net proceeds of $548 million through a common stock offering Joe.
We as $200 million of the proceeds to repay borrowings we have made an abundance of caution in the early days of endemic under our $550 million revolving credit facility.
Andr foot added to our balance sheet for general corporate purposes.
Including funding organic growth plans and possible future M&A activity.
After the end of the fourth quarter, the underwriter exercises greenshoe option generating a further $82 million of net proceeds, which we again added to our balance sheet.
Our cash and cash equivalents balance at June Thirtyth was $953 million compared to $608 million on March 30, Onest and $345 million at the end of fiscal 19.
As of today, our cash and cash equivalents over $1 billion.
The June equity offering and our growing adjusted EBITDA drove our net leverage ratio down to 2.8 times at June Thirtyth, a full turn lower than the 3.8 times at March 31st Slide 20, and compared to 4.4 times at the end of fiscal 2019.
As John discussed, we're lowering our long term net leverage target to 3.0 times compared to our previous target of 3.5 times.
Moving on to capital expenditures in fiscal 2020, our total capex was $456 million, representing approximately 15% of revenue before customer contributions will roughly double our historical levels of spending as we built out our cut that capability and capacity.
Our service offerings, particularly within the biologics segment.
We expect capital expenditures as a percentage of revenue to remain at elevated levers levels for the next two years and we continue our organic growth class.
In fiscal 2021 total capex is expected to be approximately $500 million roughly 14% of the midpoint of the guidance range. We are providing today regarding a fiscal 2021 revenue.
Capex workovers and accumulated programs, including those reassigned or accelerated from previous plants is expected to be in excess of $150 million.
We cash flow in fiscal 2020 was approximately negative $50 million due to our increase in capex spending and the cost of new pandemic related for cautions such as increased inventory levels and other splashing mitigation efforts, which more than offset the high level of EBITDA generated in the year.
We capex cash flow was $415 million in fiscal 2020, a 44% increase year on year, despite working capital headwinds related to supply chain mitigation.
In fiscal 2021 as a result of our continued expansion plans and risk mitigation efforts for supply chain, we again expect free cash flow to be much lower than historical levels.
Given investor interest in our capital expenditures I want to repeat some general comments regarding the composition of our Capex that I made last quarter, which generally fall into three categories.
First roughly 3% to 4% of revenues that every year to maintain our facilities and to meet the rigorous regulatory requirements with GMP manufacturing.
Second theres spot based on our insights regarding our basket of development programs and careful consideration of long term affected demand, we've built capacity with high confidence that a substantial portion of new capacity will be engaged to meet customer expected customer demand.
Finally, this was a natural attrition inherently farms pharmaceutical development programs, we typically attacked our insurers and did not invest capital speculative grid for individual product launches that we generally do not the floor on capital to meet the anticipated needs of a single products.
Let me do require mix of customer contributions and take or pay arrangements to offset the risks associated with any single product.
Now, let's turn to a financial outlook for fiscal 2021 as outlined on slide 17.
The assumptions underlying core guidance include the following elements.
First we assume no major external change to the current status of the Coca 19, pandemic and it and its effects on our business.
Second we're not assuming that any of our customers over 19 vaccine candidates will get so FDA or other regulatory approval. However, we are including the effect of all executed take or pay arrangements. So revenue from any commercial volume, but were pools products that is at or below that take or pay levels would.
The already factored into guidance.
Third revenue from pre existing acquisitions is projected to represent approximately two percentage points of our projected revenue will.
For the year.
Regarding a 90 revenue remember that only revenue in the first two quarters and only from work for BMS is considered inorganic since we acquired a nonissue on January onest.
Fourth as with past years, we continue to expect revenue and adjusted EBITDA to be weighted more heavily towards the back half of the fiscal year. However, current forecasts expects this to be somewhat less pronounced in fiscal 2000 to anyone given the revenue from programs related scolded 19 therapy and vaccine candidates that will materialize in the first half of fiscal year.
Finally, we extended our rented this year compared to past years to account for the increase uncertainty introduced by the covert 19 pandemic, including the uncertainty regarding the future core subjects over 19 response products, we are working on.
After taking these assumptions into account, we expect full year revenue in the range of 3.4 or $5 billion to $3.6 billion, representing growth of 12% to 16% compared to fiscal 2020.
We attribute approximately five to seven percentage points of the revenue growth over 19 related revenue after factoring in the amount of executed take or pay agreements against other work that would likely have been placed in the same space as well as estimated loss revenue and parts of the business due to the go the 19th endemic such as distribution revenue in our CSS segment.
For full year adjusted EBITDA, we expected range of 840 $390 million representing growth of 12% to 19% compared to fiscal 2020.
We expect full year adjusted net income of 292, three $455 million representing growth of 11.4% compared to fiscal 2020.
We also expect our fully diluted share count on the weighted average basis for fiscal 2021 will be in the range of 178 to 180 million shares.
This projection counts are series a convertible preferred shares as it all were converted to common shares and the club in accordance with their terms.
We expect our consolidated effective tax rate to be between 24% in 26% for the fiscal year.
Operator, this concludes our prepared remarks, and we'd now like to open the call for questions.
Thank you as a reminder to ask a question you want me to press Star one on your telephone to withdraw your question. Please press the pound or hash key please limit yourself to one question to allow for everyone to ask a question and re queue for follow up.
Please standby when we come pilot culinary roster.
And our first question today comes from the line of Daniel Brennan from you B.S. Your line is open.
Great. Thank you. Thanks for the question and congrats guys on it [noise].
Strong quarter, you managing a lot of things here might really exciting I guess my question is going to focusing on the biologic side of the equation and Whitney right at the end there you discuss implicit in the fiscal 21 Guy is I think you said five to seven points from coded I was hoping maybe you could then because I haven't done the math yet I was hoping maybe you can give us a sense of what's.
Baked in within your fiscal 21 guide for Biologics could you just separate out what the impact is from Colgate and from the base business and could you also maybe walk us through on drug product and drug substance as well from cold it like how we're thinking about those and then related to that you discussed I think 100 programs that are in you know.
You're in discussions with and you also mentioned that you're not baking in any impact obviously from successful vaccines, but any way to think about.
You know as as as we begin to get data in over coming months here on some of your bigger programs. How you know how do we think about as these programs transition from you know the development tied to the commercials on what that impact could be thank you.
Sure then a low cost first.
I would just say, we're incredibly proud of the men and women of Catalent throughout.
It all our operations, so we're working diligently and delivering quality products and services to our customers and patients. We're very pleased with our results for fiscal 20 record results that we've posted and well positioned well solid growth in fiscal 2021, and as both John and I.
Covered during the prepared commentary here, we've made even further improvements in the on our balance sheet and our cash position really support clipped both organically and Inorganically that we plan.
For the business in terms of your question just as a reminder, we give guidance.
At the overall company level, which we've we've laid out both in the presentation and are prepared commentary what I'll do is provide a little bit of color in terms of this segments, particularly biologics us at the focal point of your question, but wont go as far as to give specific guidance by segment here as you know thought in terms of how.
We have.
Consistently done so in the past.
Looking at the business clearly posted a significant growth for the entire fiscal year.
Just as a reminder of biologics business delivered 27% organic topline growth on a year with substantial growth in the fourth quarter.
Yes, we would expect given the health of the underlying.
Programs that we have which we've talked about development programs in a significant portion of the 70, and therefore contributing some more variability from quarter to quarter, but nonetheless, the base business X linked over 19 is I would say healthy.
Set of.
Programs, including our gene therapy.
And our cell therapy businesses.
Driving significant growth for the business because the 19 programs the larger ones are concentrated within our biologics business. Although we have signed programs across all four of our segments, which John alluded to during the prepared commentary.
Those would.
Lead to the biologics business to have I was a significant tailwind coming into fiscal 2021, and therefore will be leading the way with respect to the growth that we've laid out in the guidance that we've just laid out today.
So I won't go into again versus specific levels of guidance for the segment, but needless to say our drug product you exceptions are well positioned both excluding a core relaxing programs, but especially when factoring in the covert 19 programs. There's one part of your question I wanted to clarify which is what happens with any.
Potential.
Successful programs or from a regulatory approval perspective.
It is not that our guidance does not include any a math for those programs. It is that our guidance factors in take or pay contracts or within the current fiscal year.
Four programs, regardless of whether they are commercially approved and so there is a commercial overall and the depending on the volumes for that and timing of that approval of such a pool.
If the if the demand where volumes are at a lower than the then the take or pay.
I would require than there would be no further adjustment to our guidance should be.
Sure, who will come to edit and the volume is above the take or pay included that would have.
Potential upside to what we've discussed all else being equal of course of course, the business and so that's just one clarifier clarifying point I would it make around your question in terms of.
Successful if there is a successful pull down on that.
Okay, great. Thank you.
And our next question comes from the line of Taco Peterson from JP Morgan Your line is open.
Hey, Thanks, a another follow up on the on the coated in particular on the vaccine opportunity. Obviously, the FDA is talking about bypassing stage three going straight to eat away for some of the vaccine programs I'm. Just wondering how you would manage that dynamic can extend your involved with any of those programs in terms of asking a lot.
Yeah, well claims this is really something that's more for sponsors.
The various companies will work and John highlighted work, we're done with various.
Three of the four.
I would say large programs that are being pursued we were engaged with our sponsors on and the regulatory.
Pathway is really.
Depended on they'll work with the regulatory agencies, but at the FDA others around the world. So we've all that's sort of comment on that what I would say is that we are working around the clock both in the U.S. as well as in Europe, ready, our capacity and resources and wrapping up to be in Peru.
In addition to two extra.
Due to manufacture with the same rigor in such a quality that we do with every product to deliver when that and if that's on comps.
And then on the guidance, let me just two quick follow ups on soft gel you know you kind of guided to flattish growth.
You know like reflected by the comp and also slowing demand for consumer products I'm wondering why that wouldn't pick back up in the fall with flu season, and maybe you know another wave of co locations and then on T.S.S. last quarter. You know you talked about a surge in storage and distribution services you know I'm wondering to what extent that's carrying through and then its clinical trials pick back up to an extent CSS could see some.
The company thanks.
Yeah, so within within soldier on a full technologies as a reminder, beginning of last fiscal year with that I'll, just close segments and so there are some non sub gel elements in that segment.
Well first of all very pleased with the growth the business posted in fiscal 20, as a reminder, our subsea business.
The whole technologies, rather delivered 8% organic growth.
Our expectation for business long term is to be in the 3% to 5% range. So first thing I would say esselte is up against some relatively difficult comparison in the prior year in terms of what we would expect to see in terms of Ah. The fall, what we were actually seeing as to some extent or perhaps related to.
Social distancing et cetera, the cough and cold season, we're expecting to be a little bit lighter than that we would normally see ER and thats what were reflected in our prepared commentary here as far as expectation. So the business. Again reminder, is that long term, we expect 3% to 5%.
Well for this segment wish it posted well above that in that.
In the year with just ended.
And we anticipating some of this again headwinds as we described.
For the current year, and we'll look as we execute throughout the year, how how that goes but all that's already factored into our guidance in terms of what we laid out today for the oil company for CSS at the onset of the pandemic as customers anticipated locked thousand various locations they actually accelerated some of the execution of.
Work, particularly for distribution work.
To get a products out into the clinics for patients.
We saw that drive double digit top line organic growth for the business and our fiscal third quarter and as we said on the last call we saw.
That have a reversal of that in the fourth quarter I would say that business ended better.
Than we anticipated for the fourth quarter, we are starting to see.
A trend towards more normal levels, although not quite at pandemic levels, yet and we're also are benefiting from some of the work that the segment is doing on the larger Clovis 19 programs as John alluded in the prepared commentary. So so we're seeing a return to growth in this fiscal year.
From this segment.
And we're also.
As you saw in terms of those backlog and book to Bill ratios et cetera, I was sort of as that business is positioned well for future growth.
Given given our signings and on new business wins that Weve recorded in segment.
Okay. Thank you.
Our next question comes from the line that Dave Windley from Jefferies. Your line is open.
Hi, Thanks, good morning, and congrats on a great quarter.
Maybe a two parter on.
On the coven vaccine related activity I'm I'm wondering if you could clarify whether the what needs to your point on the on the take or pay arrangements should we think about those is roughly paralleling what.
The government stockpiling orders might look like and then secondly, as it related kind of broader question do you would you have the capacity in so much as you're you're putting more capex against.
Capacity it sounds like in Bloomington, do you have the capacity to support additional large programs in your facilities beyond the three that you highlighted this morning. Thanks.
Sure. They a first of all I wouldn't necessarily true are the two right to specific coalition so the government stockpiling.
Oh approach these are reflecting contracts, although we will talk about in specific loans, but overall contract we have directly with our customers as I as I mentioned in terms of our approach for capital deployment, we have either.
We have directed accelerated or otherwise earmark kept capacity for our production and we're ramping up resources to do so and if we want to make sure we protect.
Those capital deployment to make sure that we see ensure return from those and have entered into contracts that shouldn't take or pay arrangements for customers that would say, we would receive a certain minimum volumes accordingly.
So those those are what were alluding to.
Sure if those.
The eco with 19 programs. So the latter part of your question around whether we have additional capacity.
First of all we have 1100 development programs across the company.
Across all of our segments that were working on and some of which I'll late fees that are programs that have recently been launched to commercial or that we have commitments to their customers to make sure that we have the capacity not just in biologics, but elsewhere to make sure that we're able to deliver on those commitments as John alluded to the board has recently approved.
Additional capital.
Not only switching therapy, but also in our.
Most of baseball logic business, which we will detail in the coming weeks, but those are to make sure that either non corporate related programs again that are in our pipeline or otherwise we have capacity to do or is there more programs, including auto the auto so that we're still in dialogue active.
Dialogue with customers on if any of those should be.
It should be contracted that we'll be able to be in position to to deliver on the commitments that would make accordingly. So.
It's a we can't predict exactly what thoughtful when a professional who was me they happen, but certainly we are working well.
Well to auto business segments to make sure that we efficacy that's necessary to deliver our core customers in patient.
Okay. Thank you.
Our next question comes from the line of John Cracker from William Blair. Your line is on time.
Hi, Thanks, Hey, when it could you just go back and clarify some of the margin comments you made around the biologics segments.
What is your outlook for EBITDA margins, a in fiscal <unk> 21 and longer term given some of the puts and takes you've got thanks.
So just to clarify my points in terms of how the margins for fiscal 20, which just ended and.
Again, I won't give specifics in terms of margin expectations for a segment for it given year, but I really people, what our expectations. Our overall for the biologics segment.
Going into the future when we will you pair back and look at fiscal 20 margins within the segments. There are three.
Main themes that you're going to see a first overall margins in the segment declined.
For the year.
As we are deploying and expanding in our.
Particularly from the acquisitions that we've made as we said at the onset within our expectations. Our cell therapy acquisition is expected to be margin dilutive in the first a few years.
We expected our an ending a nani acquisition, which is partly in biologics to also be margin dilutive, but clearly strategically important and well positioned to drive growth.
In the fiscal year end beyond so building long term disorder or on the right. Most for the business. So few if you parse out the impact of and not to not to mention in our gene therapy business. As we are wrapping up significantly not only capex to to build up the suites, but also.
The highly skilled employees that are needed across our biologics segment in particular to be able to execute on that added capacity and extension.
His front loaded if you will head of the volumes that today with the executing on so those are all deliberate moves that we're making that had an impact on overall margins sort of business. If you separate out to look at organic.
Persecution across the business.
In biologics I would say margins were slightly a negative to the tune of about 30 basis points.
And that's largely due to component sourcing or that we are seeing start to increase in the business as we execute on larger programs commercial programs. So component sourcing our materials that we buy on behalf of our customers to go into production, we see that as a all else being here.
Equal additive to to be based services and manufacturing that we do.
Very high margin, so the business and I'll get to long term expectations before I wrap up the answer to this question.
And so if you look at our services.
That we perform excluding component sourcing margins actually in the segment extended.
To the tune of about 125 basis points, what into our five to 130 basis points expansion.
If you look at the base biologics business, excluding acquisitions, excluding the impact of component sourcing so as we go forward.
Again, we're anticipating both in our base biologics as well as any potential large volume commercial production for close to 19 programs. We believe those will potentially come with more component sourcing, which we see that as an additive element again, all else being equal adding to both revenue and EBITDA, but clearly.
In the high single digit margin for component sourcing that would be masking what is what I just described which occurred in fiscal 20, which is the base business actually extended its margins over 100 basis points yet the the overall margin picture it looks like it was negative.
Organically. So that's what we're trying to convey long term the biologics business given the complex nature.
And premier assets, we have and sterile fill finish.
This is business that that can sustain margins again for our core services in the in that 30% mid Thirtys range. That's our long term expectation for the business and we're very pleased with the execution on that front and we will continue to take advantage of the opportunity to deliver additional revenues whether its component sourcing.
Otherwise.
Albeit masking what underneath is a very healthy margin picture.
That's helpful. Thank you.
And our next question comes from the line of won the Avondale from Bank of America. Your line is open.
Hi.
Thank you my question is gone capacity and I would appreciate a quantitative answer as much as possible and so what was your total fill finish capacity in Bloomington in 29 team that is excluding the capacity expansions that are going how many doses would you make last year and backend what is your anticipated total.
Phil finished capacity across Bloomington, and a non U.S, including the capacity expansions and ramp up activities that are taking place right now and so I'm interested in the still finish those ground raised but you anticipate to have by the end this fiscal year 21.
First of all one I, what I would say is I won't give you that level of specificity [laughter]. If that's what the fill finish capacity. We're as we've said all as you mentioned Bloomington in particular, we've now had Bloomington as part of the Catalent family.
Got to over 2017 and over that period of time, we his team on increasing so the utilization of our capacity, whereas initially we were in the 40% range. We've added more shifts to operations to access that capacity, even more so and yet over that time period, we've got all the way to around 75% you'll lose.
Additional that capacity, but we also have you had a half ago announced a expansions that are well underway and and have actually been accelerated in order to meet the demands.
For potential commercial volumes Fourq over 19 program. So we're very pleased with how the business and executing.
The progress that we're making on the expansion that will continue to meet our customer demands, albeit also with various take or pay arrangements that said again.
Protect our investments so without giving specific fill finish capacity.
What I would what I would say is in terms of commitments were made to our customers and the pipeline that we have it we're working with development programs well cost of what coughing that with our ability to meet those demands as well as overall growth that we see in the pipeline broadly with respect to biologics. Let me just add one a couple of more point.
It all prepared commentary to talk about Vietnamese facility, which was added to Catalent Oh in the middle of fiscal 2020 as you know when when.
By facilities, which are from pharma. It typically comes with a fair amount of capacity, which is why we said we expect the business to be at lower range of margin initially, but the finished position us well at other quality and clearly that's happening with respect to the programs that were working on now fourq overnight.
And specifically, but not exclusively as we continue to pursue additional customers to going to facility and last but not least we also have the addition of fill finish of product capacity for Limoges, France facility in biologics. So as you can see throughout a three of our.
Our premier centers of excellence across biologics.
We have expansion plans on the way to add capacity to meet customer demands and we'll continue to monitor both our pipeline that we have as was the broader market demand here to make sure it position or given our premier assets to capitalize on demand from our customers.
Alright, thank you.
And our next question comes from the line of Jacob Johnson from Stephens. Your line is something.
Hey, Thanks, Congrats on the strong for key issues and clearly only exciting things going on halex laying out a noncovered fraud Paragon largely focused on the navy today, but are there any other cell and gene therapy, Cape <unk> capabilities. He would like to add a teaser paragon or masters now I guess, maybe any thoughts on plasma.
Consumer lending viral vectors in particular and are these capabilities that you think you can add organically or could this be in an area for bolt on M&A.
Yeah, So things Jacob John here. So first one I just want to say, we've really acquired some premier assets in Paragon in and Master cell.
Really giving us a incredible entry into this thing in this very fast growing area, where literally we're going to be manufacturing miracles and I'm very proud to say that at our Paragon facility. We are the first CDMO approved by the FDA for gene gene therapy.
Factoring so I think catalent is in.
A terrific position also mentioned that Paragon has been in the big business.
Vaccine development and using I would say multiple platforms for many years before they focused on the AB platform, but as we move forward and now that we have the acquisition of master cell on clearly the ability for us to to get into.
To grow our capabilities from a lentivirus standpoint.
Are there because as you know for cell therapy Lentivirus is more of a preferred platform. So again, we see the synergies between or gene therapy business and also our cell therapy business also looking very closely at and doing work to develop our own capability for Plasman DNA.
Development and manufacturing. This is a key sources component as you know for for gene therapy, and we clearly have the keep ability for that in house in our ability to control that raw material is going to be important. So I would you say.
In General Katelyn has a very robust science and technology roadmap that envisions further expanding our our capabilities.
In the gene and cell therapy areas to include other viral vectors and also include Plasmin DNA.
Great. Thanks, Sean.
Our next question comes from the line of Ricky Goldwasser from Morgan Stanley. Your line is open.
Yeah, Hi, good morning can you just kind of like [noise] <unk> guidance as to how should we think about.
Keep in earnings in fiscal year, 21, and when we think about tie in enabling us to guidance range.
Roger Tim historically, considering that there's no upside.
There is optionality associated because exceeding it seems more visibility associated with Japan pre.
What are you factoring into low end kind in the guidance versus high end us to guide.
[noise] fuel Mickey this is a wedding here in terms of the cadence we alluded to course half second half, but I think the core of your question is really.
In terms of range.
We came out with a wider range than typical clearly we are still in active endemic.
And which remains fluid as John alluded to in his prepared commentary, we've put a number of actions in place too.
To plan and mitigate any potential issues around our supply chain, but we have to remain.
Somewhat cautious in terms of continuing to execute across those.
The other point out I would make two more points out Ricky on this is.
As you saw our development revenues or an increasing percentage of but the overall revenue base, which tend to drive a little bit more variability compared to commercial revenue. So we do take that into consideration and particularly in the biologics segment, but certainly as we discussed what we've included here from equivalent.
Hi team program perspective, but really the take or pay so clearly that gives a certain level.
Certainty within the range around our ability to.
Over the longer the results that we've highlighted in our in our guidance.
Range here.
But we're also coming off of a year or just to remind you for overall catalyst for fiscal 2020 organic top line growth was 12% well above.
6% to 8% range that we.
Discussed so we we're off I would say gets tougher comps in that regard, but very pleased to to be in position to deliver solid growth again in fiscal 2001 on between 12, and 16% to kind of where you fall on the on the range. So we haven't Wagner.
For a reason no point in that range anymore, I, let's say a higher profitability than any other uh huh.
The reason for range I would say within the core with 19 related piece that we highlighted 5% to 7% versus the overall range.
They're not necessarily quality that so the high end of the equaling 19 range doesnt necessary quality to the high end of the overall Kaufman range, so called anywhere anywhere in that in that regard. The last point I'll make Ricky is it's very you know, we're not giving any specific estimation to local cost 7000 products that we supply.
In the market in terms of any potential impact be those may have into the demand across the marketplace. We discussed the escalation segment in terms of customer health will see little bit of slow down compared to where the business posted.
In fiscal Tony which are well above the long term range that we've discussed so all of those things are factored into the guidance ER and we're still early yet in the fiscal year. So we'll continue to to look at how the years executing as we as we go forward.
Thank you and can I just have one follow up when we think about the potential Kenny listening seen should read in Italy. We look at what the manufacturers are seeing should we [laughter] to you guys can capacity you and [noise].
Quantities organovo.
Oh, let's say look as we've highlighted John covered all we're doing work across the board.
The U.S. and Europe up for for sponsors those companies. So that we highlighted plus the ones that we haven't also a specifically put.
Put any sort of a announcements on as a reminder, resigned 50 quote ask both on the therapy side as well as on the vaccine side.
And those will be global in nature.
Across those were doing work in the U.S. for both us and.
Outside us as well as in Europe for Europe, and outside Europe. So I wouldn't I would look at those those numbers is more global in nature necessary for each and every customer level, but but across some of the logical steps.
Thank you.
Our next question comes from the line of Donald Hooker from Keybanc. Your line is Anthony.
Oh, great a lot of information provided here I'll now turn the basket simple anemia headwinds, but just scribbling down no tier keeping up with your comments in terms of the debt targets. It looks like you took down your debt target three times.
You've done a good job taking on debt that ratio down can you elaborate a bit on sort of the thinking behind reducing that debt net debt ratio target.
Sure.
I'm certainly we've.
Listen to our investors in terms of their look on capital structure and.
Debt levels, we've been very pleased with the successful equity raises this past fiscal year, well positioned with a net leverage ratio at 2.8 times as we sit today I also think it's a reflection of the maturity of the company as we continue to grow.
And have the ability to execute on organic as well as inorganic opportunities that were positioned to set a long term target of 3.0 times I Didnt Pat as in the past, we would take that leverage up to execute on inorganic strategic.
Acquisitions of course as long as we have visibility into getting back to that long term a target within a certain timeframe, which typically be able to to be able to the in position to do so within about an 18 24 month periods. So a long term target at 3.0 times, we will take that.
Up temporarily to execute on strategic acquisitions, clearly you can see what that implies as a firepower.
From where we sit today for your potential inorganic opportunities, but certainly well position to execute on the organic ones as well, but we're pleased to be able to take that long term target down from 3.5 times, if we want to do at times.
Thank you.
[noise]. Our next question comes from the line up Sean Dodge from RBC capital markets. Your line is open.
Hey, good morning, maybe going back to margins what needs to be pushing bookends around the magnitude that kogan related costs that you're incurring right now and.
Not necessarily the investments, you're making a ramp manufacturing in vaccines, but I'm thinking when do the elevated costs to operate facilities and then things like that that thank you bonuses and and then any any often when or if we should expect to see those oh begin to unwind.
Sure look as Sean alluded to both this time and last quarter or we had about $5 million in the first thank you bonus round.
And on incremental.
A 9 million now in this second Lotto. Thank you bonuses to our employees, we won't put specific bounce around what the rest of the cost might be around the network.
Some corporate 19, we've made adjustments tool.
Our shifts and work approaches to ensure that our employees are safe and have a social distancing between them certainly those have applications.
Additional PE or that we are buying and using an execution of our work across the network have an impact as well, but I would say there are some items that albeit the opposite direction to well for example, less travel and entertainment means lower cost for those and in some instances you may see.
So the cost of health and welfare too so it's not all going in one direction.
I would say the one piece we quantified is.
Thank you bonuses.
Now, let's say the rest the also would fall in net cost, but Ah, but there are some offsets as well as I just give some examples.
Got it that's helpful. Thank you.
Our next question comes from the line of Jack Meehan from Nephron Research. Your line is open.
Thank you good morning.
I had two follow ups uncovered 19 in the near term you know you're trying to compress what usually would be years of work in the just a few quarters. So I was curious how you feel about the efficiency at you know the rate at which you're scaling up the use of vaccines and what impact that might have on the margins.
And the way you've contracted and then longer term. We've also accelerated a lot of investment just to support some of these projects. So I know you. Just recently raised your long term targets, but I was wondering how you feel about the durability of some of.
The revenue contribution you're seeing in the near term and what that might mean for the longer term.
Trajectory.
Oh sure are lucky for its first part of your question Jack in terms of efficiencies clearly, we we have catalent have large scale.
Pasadena, where we deliver over 70 billion doses, a year and various programs depending on.
The last of runs et cetera can have positive.
Effects on our margins are the bigger around the longer the around et cetera, and naturally inherently par so to the extent that we get to a point where were 90 fashion large volumes of the any program, whether it's called the 19 or not it would have a positive applications, but also keep in mind their development activities that were engaging in current.
Lee that don't necessarily lend themselves to that same level Oh.
Now, let's see operating throughput Ah Ah. So I think on balance these programs would feel a whole lot like most of the work. We're doing this in this space versus anything nuanced in that regard.
But certainly again, if if there are certain approvals that drives high level to put any in a short period of time those could be beneficial in terms of operating throughput.
In terms of investments.
Acceleration of those of course, those haven't made a we've highlighted the impact those have on free cash flows et cetera, and that will be well positioned both to deliver the growth expectations. We have across the company, but also close biologics as a reminder, for the company a long term growth rate is 6% to 8% or with biologics.
Some being in the mid teens and Theres, a long term, you're seeing us posting numbers above that in fiscal 20, and given the tailwind related to cover that some programs and other baseline programs were doing.
Our business is a is positioned well two to deliver on those kind of numbers or both.
But looking at long term.
Targets that we have goes all you know sort of five year pipe or targets that we havent as a long time and while we are positioned to to deliver as it goes to company.
Here related to cover that can in particular with a very healthy pipeline has 1100 development programs.
Certainly, especially what we're still a mix of academic it is not the time that we would be taking another look at our long term target of 68%, which we believe is well supported given the base assets that we haven't investments that we're making.
I would now like to hand, the call back over to John Chiminski for closing remarks.
Thanks, operator, and thanks, everyone for your questions for taking the time to join or call I'd like to close by reminding you of a few important points.
First the transformative acquisitions, we made over the last several years combined with our strategic internal growth investments across the company what is to deliver double digit organic revenue growth in fiscal 2020, and also positioned us to forecast another year of double digit organic revenue growth in fiscal 2021.
Next continuing to build out our world class biologics business and integrating the premier assets, we've acquired remain a top priority.
The Kobin 19 pandemic has increased the demand for these offerings and let us to accelerate in reassigned some of our Capex plans to meet these customer patient needs.
We continue to expect strong revenue and adjusted EBITDA growth from our biologics segment and target the biologics segment to make up approximately 50% of our total revenues in fiscal 2024 versus approximately one third of revenue in fiscal 2020.
Finally, our mission to develop manufacture and supply products that help people live better and healthier lives has never been more important.
It all starts with our 14000 employees, who live our patient first culture and have worked hard to carry out the great responsibility, we have to maintain business continuity for all those counting on us to deliver.
For potential cobot, 19 vaccine or treatment for the 70 billion doses reproduce every year across thousands of our customers other products.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[noise].