Q4 2021 Catalent Inc Earnings Call
We acquired the Terra wellness, a leading developer and producer gummy soft too.
Rodriguez for nutraceutical functional and botanical extract products.
Please see our agenda for todays call on slide two of our supplemental presentation, which is available on our Investor Relations website at Investor <unk> Com.
<unk> dot com during.
During our call today management will be making forward looking statements and refer to non-GAAP financial measures. It is possible actual results could differ from management's expectations. We refer you to slide three for more detail on forward looking statements slides four and five discuss catalog shoots of non-GAAP measures are just issued.
As the release provides reconciliations to the most directly comparable GAAP measures.
Please also refer to catalyst annual report on Form 10-K that will be filed with the SEC today for additional information on the risks and uncertainties that may bear on our operating results performance and financial condition, including those related to.
Depending of the 19 pandemic now I would like to turn the call over to John Szymanski, whose remarks will cover slides six through 13 of the presentation.
Thanks, Paul and welcome to the call.
2021 was an extraordinary year for the entire world and for catalyst during.
During the year, we achieved truly significantly.
For the Colts financially operationally and in terms of making a meaningful impact on our global community, including accelerating our capacity expansion and infrastructure substantially expanding expanding and deepening one of the best talent pools in the industry intensifying, our long standing commitment to sustainable practices.
And accelerating our growth strategy, all while delivering record financial results.
We rose to the challenge of scaling our capacity to meet significant demand for vaccines and treatments to address the COVID-19 pandemic and are on track to deliver well over 1 billion COVID-19 vaccine doses this calendar.
Mrs. We.
We've also continued to develop and manufacture a broad range of other important medicine under difficult unprecedented and rapidly changing global conditions.
Our top priority throughout the pandemic has been to keep our employees safe and we continue to be humbled by the dedication of the more than 17000 members of our.
Year around the world with enabled us to grow the company and deliver for our customers and their patients during this tumultuous time.
Through our shared experience navigating this pandemic, we've grown as individuals and as a company added substantial new capabilities and strengthened partnership that together enhance our ability to continue.
<unk> develop and deliver products that help people with better healthier lives.
With that overview I'll now provide a summary of our financials for the fourth quarter and full fiscal year as well as operational highlights since our last earnings call.
I'll then conclude my prepared remarks with an overview of the acquisition.
Tara wellness, which we announced this morning.
Our net revenue for the fourth quarter was $2.0 billion, increasing 25% as reported or 22% in constant currency compared to the fourth quarter of fiscal 2020.
When excluding acquisitions as well as the Divesture of our blow fill seal.
Of the six closed in March organic growth was 26% measured in constant currency, our adjusted EBITDA of $348 million for the fourth quarter increased 30% as reported or 27% in constant currency compared to the fourth quarter of fiscal 2020, which includes organic growth of 32%.
Measured in constant currency.
Our adjusted net income for the fourth quarter was $209 million or $17.0 per diluted share up from <unk> 90 per diluted share in the corresponding prior year period.
The biologics segment, given the continued high demand for drug product drug substance.
<unk> and viral based offerings was again the top contributor to <unk> financial performance with organic revenue growth of 66% and segment EBITDA more than doubling from the fourth quarter of last year.
Our softgel and oral technologies segment continued to experience some of the same pandemic related headwinds in the fourth quarter.
With net revenues down 1% over the fourth quarter of last year on a constant currency basis.
However margins improved year over year, and so as our outlook is we're seeing business gradually come back and we expect to return to organic growth in fiscal 2022.
Our oral and specialty delivery segment.
Organic net revenue growth in the mid teens.
After excluding the results due to the product in our respiratory platform that we voluntarily recalled last September.
OSD like <unk>, we're also seeing that certain offerings within that segment impacted by the pandemic are beginning to come back.
And finally, our clinical supply services segment posted over 20% constant currency net revenue growth and strong margin compared to the fourth quarter of fiscal 2020, a comparison period that included widespread disruption to clinical trials during global Lockdowns as a result of the pandemic.
For our full fiscal.
For 2021, net revenue and adjusted EBITDA came in at record levels, driven by robust growth in our biologics business, which represented 48% of our net revenue in the year.
Fiscal 2021, net revenue was $4 billion and constant currency organic growth was 25% compared to the prior fiscal year.
We estimate approximately 18 percentage points more than $550 million of our organic growth last year was derived from the net impact of the COVID-19 pandemic. After factoring in the amount of net revenue generated from COVID-19 projects against opportunity cost in pandemic related headwinds that were created.
Created in some of our service offerings.
Adjusted EBITDA exceeded $1 billion.
Resulting in constant currency organic growth of 32% compared to fiscal 2020.
We also increased our adjusted EBITDA margin to 25, 5% up 120 basis points from the 24 three.
<unk> adjusted EBITDA margin in fiscal 2020.
To meet our commitments to our customers and their patients a number of tablet facilities have been operating 24 hours a day seven days a week for more than a year.
At the same time, we've increased our workforce from 14000 at the end of the last fiscal year to more than 17000 today.
To meet our growing production volume.
As we said in past calls COVID-19 has not only accelerated our strategic plans, but also accelerated returns on the strategic investments, we've made enabling us to put additional cash to work to continue to drive our long term growth.
Let me update you on some.
These capacity and capability investments.
As you know our 950000 square foot facility in Bloomington, Indiana plays a critical role in the global vaccine production effort.
Over the last year, we brought online two new vial filling lines now dedicated to the manufacturer products, where two of our Covid <unk>.
<unk> 19 vaccine customers.
We're also qualifying a high speed syringe filling line at the site.
This project was first announced in January 2019, and is expected to be operational in the next several months in line with our original plan.
Given the strong demand for biotherapeutic manufacturing, we will continue.
Continue to invest in additional drug product and drug substance capacity at our Bloomington campus.
Our 300000 square foot facility in <unk>, Italy also continues to make significant contributions to the global supply of COVID-19 vaccines for multiple customers the.
The additional high speed vial filling line we've accelerated.
Rates for a vaccine customer is expected to be operational before the end of this calendar year.
Last month, we announced a $100 million expansion project at our 90 facility. They had biologics drug substance manufacturing capabilities to the site, establishing our first drug substance capacity outside of the U S to support the growing.
Growing European market demand for biologics manufacturer and supply.
Initial phase of the expansion includes installation of two 2000 liter single use bioreactors within new purpose built manufacturing suites associated investments to support clinical development and investments to support late stage and commercial.
Actual tech transfers.
This initial phase will also include the installation of all the needed infrastructure for further expansion in the future.
The initial bio reactors are expected to be operational for customer projects late in fiscal 2023.
Later phases of the planned expansion contemplate creating 16th.
The leaders of total flexible manufacturing capacity, enabling 2000 leader to 8000 liter batches.
Also in Europe, we announced last summer further investments at our <unk> facility in <unk>, France to create a European center of excellence for clinical biologics formulation development and.
And drug product fill finish services.
These investments are on track to be completed by the end of fiscal 2022.
The modernization of the 56000 square foot facility includes the installation of a high speed flexible line capable of filling vials syringes or cartridges under Isolator technology as.
As well as enhancements to its analytical and quality control laboratories.
Our new center of excellence in the mode will strengthen catalog biologics global and European capacity and will also serve as a feeder for additional services at our <unk> and Brussels facilities.
Moving to our cell and gene therapy offerings.
We continue to add both capabilities and related capacity.
We entered the cell therapy market in February of 2020, and have rapidly built our infrastructure and capabilities.
We recently completed the build out of our GMP cell therapies suites in Houston, Texas and have begun manufacturing for clinical supply.
We're also progressing the build out of our commercial scale cell therapy manufacturing facility in gasoline, which is on track to open in late fiscal 2022.
We also continue to identify inorganic opportunities to grow our cell and gene therapy platform.
Recently, we acquired wind cell therapeutics.
As a developer and manufacturer of GMP grade human induced pluripotent stem cells or <unk>.
Importantly, <unk> are an ethically sourced substitute for embryonic stem cells and have shown significant promise in regenerative medicine for a wide range of therapeutic indication.
Patients.
<unk> expands our existing custom cell therapy process development and manufacturing capabilities with proprietary GMP cell lines for ICSC based therapies and enables us to offer the building blocks to scale <unk> b cell therapies, while reducing the barriers cell therapy.
Innovators with otherwise space to gain entry into the clinic.
In February we entered into the plasmid DNA market through the acquisition of Delphi Genetics also located in gasoline now part of our European cell therapy Center of excellence together with the launch of plasmid DNA development and manufacturing.
Factoring capability through an organic investment at our Rockville, Maryland facility.
We've since further expanded our European cell therapy center of excellence on our gas loose campus with the acquisition of an additional 32000 square foot facility. This.
This facility provides us with the capacity for commercials.
<unk> scaled plasmid DNA manufacturing up to 500 liter scale.
With the integration of plasmid DNA into our overall cell and gene therapy offerings, choosing Catalan will allow customers to derisk their supply chain and optimize their programs along the entire development pipeline.
It gene therapy viral vector manufacturing capacity continues to be in high demand with a growing number of gene therapy compounds currently in the industry's development pipeline as well as for manufacturing viral based COVID-19 vaccines.
In fiscal 2021, we completed the build out of commercial scale manufacturing.
<unk> suites in the first building at our Maryland Gene therapy campus.
To meet the increasing demand we see we're now offering the adjacent building to include at least five additional cgmp suites a project that remains on track for completion by this time next year.
Before reviewing the <unk> acquisition.
I'd like to highlight our expanding corporate responsibility and ESG commitments and your digital progress we've made since our last update.
As the leader in the growing <unk> industry, we understand the need to demonstrate our shared commitment and sense of urgency and value and contributing to the long term sustainability.
The entire biopharma sector.
In June I shared our long term sustainability plans at the Biopharma CEO Investor Forum and I encourage you to watch the presentation on our IR website.
Since then we formalized our commitment to the science based target initiative, joining joining a growing list.
Listed companies setting actionable science based greenhouse gas emission reduction targets to limit global warming.
This commitment includes calculating and reducing direct and indirect emissions, even as the company continues to evolve and grow.
One of our first actions after making this commitment was to.
Ensure that the energy repurchased for all our sites in North America, South America, and Europe as well as the majority of our sites in Asia is coming from renewable resources.
As a result of our actions 97% of our electricity usage across the enterprise is.
Is now procured from renewable energy sources, such as wind solar hydro and biomass and achievement that will contribute to our overall greenhouse gas reduction efforts.
We will incorporate our work on science based targets into our annual ESG report for fiscal 2021.
Which we expect to publish in the fourth quarter of calendar 2022.
While I am very proud of the items I, just mentioned and the many other items that have become part of catalysts ESG progress over the last several years.
Still more work to do.
For example, some of our top ESG goals for fiscal 2022.
To include continuing to improve employee diversity at all levels of the organization and meeting our commitment to be landfill free by the end of fiscal 2024.
Now on to slide nine we are pleased to announce our agreement to acquire the Taro wellness.
We've been seeking.
The right opportunity to expand our participation in the Nutraceuticals and nutritional supplements market for quite some time, leveraging the accelerated growth dynamics of the space.
Tara is a leading developer and manufacturer of consumer preferred gummies soft chews and lozenges for nutraceutical.
Functional and botanical extract products and they have for fit for purpose production facilities in the U S.
There is no question that the Terra is one of the leading independent suppliers in this high growth capacity constrained portion of the market.
Within the space with Terra is well known for its ability.
<unk> to partner with its customers to develop a manufacturer manufacturer a variety of high quality delivery formats with differentiated flavors and superior consumer experience.
It's clear to us that the specialized expertise of the team will be bringing on is unparalleled and <unk> customer really.
Relationships reflect that.
The acquisition will enable Catalan and specifically, our softgel and oral technologies or <unk> segment to expand our substantial existing consumer health platform with the fastest growing wellness product offerings in this area and also expand our breakeven.
Ladies and market product library, as well as provide a variety of packaging options to meet customer needs.
We're excited to have this opportunity to strengthen our partnerships with our customers across gummies soft chews and Watson is going forward.
As part of today's announcement, we are also increasing.
Expectations for long term revenue growth rate for our <unk> segment from 3% to 5% to 6% to 8% given the strength of our advanced offerings and product libraries and supported by the significant growth contributions that we expect from the Taro.
Moving to the transaction details.
We've agreed to acquire the terror for $1 billion on a debt free cash free basis, and we expect to close the transaction within the first half of this fiscal year.
Today, the company generate approximately $150 million in sales at attractive margins, reflecting its premium offerings and is growing at over 20.
8% annually, we accept expect similar growth over the next several years.
We plan to fund the acquisition with a combination of cash on hand, a partial drought drawdown of our revolving credit facility and potentially the issuance of new debt with the resulting net leverage ratio of approximately three one times.
At close.
While some of our other recent acquisitions, we expect significant deleveraging in the near to medium term following closing and expect to maintain ample firepower for further strategic M&A.
From an earnings perspective, we expect the acquisition to be accretive to Eni per share in the first year after close.
Clothes and significantly accretive thereafter.
At <unk>, we pride ourselves in our ability to bring in new talent and capabilities and we're looking forward to seamlessly integrating <unk> and welcoming its team of approximately 500 experienced and knowledgeable employees and formulated to catalog.
On the integration.
Integration front, we've developed a detailed plan to support and accelerate the tears in flight growth plans and have already identified work streams and leader for integration let.
Let me now share some additional.
Ability information and market trends as covered on slide 11.
As I've mentioned, we've been seeking the right entry point into the Newton.
Suitable dummies soft choosing lozenges markets for some time importantly, with Terra is one of the few at scale independent manufacturers in the market today and as a market leader across all three categories in.
In addition to the terrorists and solutions from development to commercial manufacturing and packaging material.
As an extensive library of ready the market formulations to accelerate product launches for partner brands.
Importantly, with Taro has the ability to produce gummy formulations with both gelatin in plant based technologies with culture, while organic and other certifications.
<unk> also produced a soft U.
<unk> and in particular saw tooth using coal process, which is ideal for protecting heat sensitive ingredients.
Our consumer health customers are constantly asking catalysts for new formats and additions to our product library, and specifically ask about gummies and other engaging formats for their nutritional supplement.
And nutraceutical product concepts.
We view the tiara as an innovation engine for emerging high growth brands and we're excited to begin working with our customers in this area going forward.
One of the reasons, we're focused on investing in these areas is that we believe the terra is at the intersection of macro consumer health trends.
With innovative delivery systems growing at roughly four times the pace of the traditional market.
I would also note that about two thirds of this capacity constrained market is outsourced today.
While the market for traditional delivery systems remains large the innovative segment's recent explosive growth.
<unk> has increased its portion of the nutraceuticals market to close to $17 billion today measured at the retail level more than doubling its market size over the last five years and we expect the <unk> to grow in excess of the innovative market as a whole in the near to medium future.
Finally on this subject.
I want to emphasize our catalog, we always have room to add leading high growth premium CMO franchises to our business.
Tara is the latest example in our tradition of high growth and earnings accretive strategic M&A and we're excited to begin working with <unk> employees and customers.
I'll conclude my opening comments by saying that Carolyn prides itself on a track record of successfully identifying acquiring and integrating world class businesses with leading manufacturing and development capabilities.
Over the last several years, we've transformed our portfolio expanding capacity and capabilities across.
Across our service offerings with.
We're proud of the work we've accomplished our future has never looked brighter.
I look across our entire portfolio I note again that we remain on track to meet or beat our goal of achieving 50% of our 2024 net revenue from our biologics segment.
We continue to forecast long term growth in that segment in the range of 10% to 15%.
Based on our confidence in the growth we foresee across all of our segments. We're raising our projected consolidated long term net revenue growth rate to 8% to 10% from the previous 6% to eight.
Percent, which we expect will be coupled with continued EBITDA margin expansion.
We're confident in our trajectory and believe our announcement today is a testament to how our employees and partners at health catalyst positioned itself for continued long term growth.
I'm now very happy to welcome Tom Castaway.
<unk> back to our earnings calls as you know Tom previously served as the company's Investor Relations Officer through 2019 and was promoted on June <unk> to CFO from his most recent role as global Vice President of operational Finance welcome desktop.
Thanks, John I'll begin this morning.
Discussion on segment performance where commentary.
Segment growth will be in constant currency I'll start on slide 13, with biologics our largest business segment, which represented 48% of our net revenue in fiscal 2021 compared to 33% in fiscal 2020 and half of our net revenue in the fourth quarter compared to 38% in.
Last year.
<unk> net revenue in Q4 of $603 million increased 66% compared to the fourth quarter of 2020 with segment is about increasing a 112% over the same period.
All net revenue growth was essentially driven organically and EBITDA growth was slightly impacted by 1% to <unk>.
Costs associated with scaling integrating to cell therapy and positive view on all acquisitions, we closed in fiscal 2021.
The robust organic growth in our biologics segment in the quarter was again driven by high demand across segment offerings, including drug product drug substance bottleneck manufacturing along with buy online.
Analytical services the.
The increase was primarily driven by COVID-19 related projects, which continue to contribute to both development and commercial revenue growth.
The segment's EBITDA margin increased significantly year on year to just under 31% compared to 24, 3% in Q4 of last year, which is primarily attributable.
To increase capacity utilization and higher volumes manufactured.
In fiscal 2022, we expect the biologics segment will continue to grow net revenue at a double digit pace will not new or the 88% growth rate. The segment recorded in fiscal 2021.
Please turn to slide 14, which represents results from our Softgel.
And all technology segment.
Softgel and oral technologies net revenue of $301 million decreased 1% compared to the fourth quarter of 2020 with segment EBITDA, increasing 6% over the same period with.
This slight decline in net revenue revenue continued to be driven by reduced volume demand for certain.
Premium products as well as lower demand for consumer health products, particularly for core cough cold and over the counter pain relief products. However over the last couple of months, we've seen business begin to recover and expect a return to growth in fiscal 2022 complementary as contemplated in our guidance.
EBITDA margin.
And <unk> grew 220 basis points over the fourth quarter of 2020 due to an increase in productivity and favorable product mix.
Slide 15 shows the results of our oral and specialty delivery segment.
Which which were again impacted by the voluntary recall of a signal of our single product in our respiratory platform.
In September 2020 that we have previously discussed.
As previously reviewed this product had notably strong sales in Q4 of last year. Following its February 2020 launch and also included a product participation component, creating difficult comparisons over the periods.
There was an additional $3 million.
And recall related costs recorded in the fourth quarter, bringing the total to $32 million for the fiscal year.
With that background. The OSD segment recorded net revenue of $186 million in the quarter, which was down 19% compared to the fourth quarter of fiscal 2020.
<unk> EBITDA was $63 million or 29.
Percent decline over the fourth quarter of 2020.
When factoring out the net impact from the divestiture of our blow fill seal business and the acquisition of the quarters redrawing facility in February organic revenue declined 4% and segment EBITDA declined 11%.
Further if you back out the revenue from the recall product in the fourth.
Quarter of fiscal 2020, the OSD segment would have shown mid teens revenue growth this quarter driven by growth in both commercial and development revenue.
The OSD segments fourth quarter results reflect continued momentum in our guidance proprietary platform, which grew nicely. Despite some lingering consumer health pandemic related headwinds.
Each quarter, we disclose our long cycle development revenue and the current year in order to provide additional insight into our long cycle segments, which includes biologics softgel and oral technologies and oral and specialty delivery.
In the fourth quarter of 2021, we reported development revenue across both small and large molecule products of five.
At $38 million, which is 51% above the development revenue recorded in the fourth quarter of fiscal 2020.
Development revenue, which includes net revenue from certain COVID-19 related products approved for emergency use represented 45% of our revenue in the fourth quarter compared to 37%.
In the comparable period.
In the prior year with strong growth in our biologics business include growth from the manufacturer of COVID-19 vaccines and therapies approved for emergency use was the biggest driver of the year on year changes in the fourth quarter, our development pipeline with a 47, new product introductions for a total of 139 in fiscal 2000.
'twenty one.
As shown on slide 16, our clinical supply services segment posted net revenue of $105 million.
Representing 21% growth over Q4 of 2020.
This notable increase while appropriately reflecting the many positive aspects that work in that segment should also be understood in the context.
<unk> for the segment decreased performance in the fourth quarter of fiscal 'twenty to 2020, when the distribution and packaging businesses were impacted by global Lockdowns and clinical trial disruption due to the pandemic.
Segment, EBITDA was $31 million or 35% increase compared to Q4 fiscal 2020 and.
It was driven by strong demand in our manufacturing and packaging and storage and distribution offerings segment EBITDA margin was 29% up 262 basis points over the fourth quarter of last year.
As of June 32021 backlog for the CSS segment was $501 million compared to 490.
<unk> $90 million at the end of last quarter and up 18% from June 32020.
The segment recorded net new business wins of $119 million during the fourth quarter, a 14% increase compared to the fourth quarter of the prior year. The segment's trailing 12 month book to Bill ratio was one three times.
Moving to companywide adjusted EBITDA on Slide 17, our fourth quarter, adjusted EBITDA increased 30% to $348 million or 29, 3% of net revenue compared to 28, 3% of net revenue in the fourth quarter of fiscal 2020 on a constant currency basis, our fourth quarter adjusted EBITDA increased 27.
Compared to the fourth quarter of fiscal 2020.
As shown on slide 18 fourth quarter, adjusted net income was $209 million or $17.0 per diluted share compared to adjusted net income of $154 million or.
Or <unk> 90 per diluted share in the fourth quarter a year ago.
Slide 19 shows our debt related ratios and our capital allocation priorities. Our net leverage was two two times at June 30, compared to two three times at March 31, we expect the acquisition of the tariff to increase our net leverage ratio, possibly to the Thai or just slightly above our target ratio.
A three times, because we were funding acquisitions and deploying a combination on the $967 million cash on hand, and other liquid assets. We are reporting as of June 30, a partial drawdown of the more than $700 million of capacity were reported as available as of June 30th under our revolving credit facility.
And potentially the issuance of new deck, we will naturally delever from there providing us with plenty of flexibility to continue to pursue organic and inorganic growth opportunities.
As just noted our cash and cash equivalents balance at June 30 stood at $896 million and our marketable securities were $71 million.
Giving us liquid assets of $967 million compared to cash and cash equivalents of $953 million and no marketable securities as of June 32020.
Moving on our capital expenditures totaled $686 million in fiscal 2021 or approximately 17%.
This is in line with our expectations as we accelerate our organic growth plans to meet customer demand and patient needs and we expect our level of capital expenditures to remain elevated as a percentage of net revenue in fiscal 2022, when we expect that capex will be approximately 15% to 16% of 2000.
Turning to net revenue.
Free cash flow in fiscal 2021 was negative $253 million, despite the higher level of EBITDA generated in last year.
This was due to our increase in capex spending and the cost of pandemic related precautions, such as increased inventory levels and other supply chain mitigation efforts as.
Well as higher net receivables.
In fiscal 2022, we expect a return to positive free cash flow as a result of our strong EBITDA growth and expected improvement in our working capital despite continuing significant capex investments.
As a final note on the balance sheet I want to call out a disclosure in our 10-K annual report two.
<unk> filed with the SEC later today.
You will see that as of June 30, we had one large customer that represented 15% or $155 million of our net trade receivable balance.
This is an unusually high concentration reflected a single point in time to be ended the fiscal year I note that the customer significantly.
With violence in the days following the quarter close and the balance is now well below the 10% reporting threshold.
Now, we turn to our financial outlook for fiscal 2022 as outlined on slide 20, which does not reflect the just announced still pending acquisition of the tariff.
We expect full year net revenue.
<unk> in the range of 43% to $9.0 billion.
Representing growth of 8% to 13% compared to fiscal 2021.
Next is currently expected to have minimal impact on our revenue growth as a declining euro is offset against the increase in British pound, we project that revenue from pre existing M&A activity will negatively.
<unk> impact our growth rate by 1% to two percentage points and the divestiture of the BFS business more than offset the multiple smaller acquisitions completed in fiscal 2021.
We project organic revenue growth in each of our segments to be within or above the long term growth range. We had previously disclosed for each segment.
Leading to revenue growth at or above our new long term revenue growth range of 8% to 10%.
For full year adjusted EBITDA, we expect a range of $1, one three to $3.0 billion representing.
Representing growth of 11% to 18% compared to fiscal 2021.
I'd like to remind you of.
Seasonality nature of our business, where revenue and EBITDA generation is more weighted to the back half of the fiscal year.
We expect full year, adjusted net income to 585% to $650 million representing growth of 7% to 18% compared to fiscal 2021.
We also expect.
Expect a fully diluted share count on a weighted average basis for fiscal 2022 to be in the range of 181 to 183 million shares. This projection counts our series a convertible preferred shares as if all were converted to common shares in accordance with their terms.
We expect our consolidated.
<unk> effective tax rate to be between 23% and 25% for fiscal 2022.
Now I'd like to close with a few comments regarding the revenue contribution from our array of COVID-19 response products first all of the work all of that revenue is considered organic revenue.
Second we now expect particularly.
In light of the need to produce vaccine booster shots and address the growth in various forums that this revenue will have a multiyear duration.
As John said in his opening comments, our net COVID-19 related revenue in fiscal 2021 totaled more than $550 million.
While we do not the plant.
To disclose our forecast for growth related to Covid revenue in fiscal 'twenty two given the capacity we have dedicated to COVID-19 projects that was brought online in the last nine months. We do expect continued growth from our work related to Covid by June projects. In addition, we announced an innovative vaccines.
Particularly the newer June based vaccines as a long term strategic product area for catalyst given the substantial partnerships. We have built in this space due to pandemic. Operator. This concludes our prepared remarks, and we'd now like to open the call for questions.
As a reminder to ask a question please press star.
Star then the number one on your telephone keypad again. It is star then the number one and.
And your first question comes from Tycho Peterson with Jpmorgan.
Hey, good morning, I'll start with one on <unk>. It looks like this is basically 100% over the counter is that correct and then can you maybe just talk about how much of this was just.
About broadening the portfolio or is there a chance you could leverage some of the technology into your kind of branded business as well.
Yes. So first of all this is clearly in the.
Nutraceutical and nutrition category. So there are no prescription products in there and just as a reminder, this well tycho that catalog.
<unk> is the leading pharmaceutical services.
Provider for both biopharmaceutical companies and consumer health. So we've always had incredibly strong consumer health franchises. If you go into any Cvs or Walgreens.
Peruse, the aisles youre going to see pedaling.
Our.
Sizes that Catlin has from a liquid gel standpoint, as well as many other products that people don't know are being manufactured by catalyst. So this has always been somewhere between 50% of our overall softgel business and has been absolutely terrific. We've been looking to get into this area honestly.
Last four to five years, we recognize it is an incredibly high growth area and we believe given given the know how and expertise we have from an overall gelatin standpoint, we thought that we might be able to do this organically, but the truth of the matter is is theres significant know how in capabilities.
Somewhat.
Somewhat different from what we do in soft gels that necessitated us to go nationally.
Quarter, one of the leading.
Businesses in this overall area. What we also love about it is that given the strong relationships that we have with leading consumer health care.
Companies.
For the Liberal wedding partnered with from.
From a vms standpoint that we're going to be able to leverage those relationships and then the last thing I will tell you is this is a capacity constrained area in high growth and what <unk> does just like we did with.
Cook pharmacologist.
Like we did with Paragon just like we're doing in master cell in the cell therapy area catalyst as an operating company that does things to scale. So we acquire assets.
And given.
Given the fact that this is a capacity constrained area. We really believe that we can grow this business into the leading manufacturer.
Of this unique delivery platform and honestly the margins are incredibly attractive.
Great. That's helpful and then on guidance.
Obviously, you are not providing any guidance around COVID-19 I'm, just curious, though in the white house as I'm sure you're talking about an aggressive booster rollout plan starting.
Next month is that kind of thinking in the near term outlook or do you think the COVID-19 challenge could be higher or in line or below what you saw in 'twenty, one and then longer term youre not really kind of quantifying the EBITDA margin expansion pre so you talked about 8% to 11% I'm. Just curious if you could give us any kind of directional color. There. Thanks, yes, sure. So first of.
Of all is becoming increasingly clear that COVID-19 vaccines and also boosters are going to be part of the way forward here literally when we're sitting with only 15% of the population of the world vaccinated in the variance coming out we see.
As we've noted in our in our prepared remarks.
Mark that vaccines are really going to become part of actually the core catalog visit I will tell you that all of the current contracts and take or pay and forecast that we have.
From our customers with regards to to the vaccines are contemplated in our current guidance obviously.
There are situations, where that could actually go up it just depends upon what actually happens there, but all of the current information is currently baked.
Baked into our overall guidance I'll turn it over time for the back half of your question, Yes, I agree with that.
Everything John said.
Related to guidance I would also.
Tycho you are right, we didnt specifically high.
Highlight long term EBITDA growth rates, but did speak to the continued margin expansion, we expect to see.
As you remember we mentioned.
Looking towards a 28% EBITDA margin for the business by 2024, we continue to believe that's a good target.
We're on pace for that and.
And we will continue to see EBITDA growth rates in the long term exceeding that of revenue growth would be 8% to 10% revenue outlook, we put out there.
Okay. That's helpful. And then one last one before I hop off in cell and gene you highlighted a lot of capacity expansion in the rideshare dealers I'm just curious as you look at your portfolio.
You have what you need you still see gaps and then you've talked in the past about favorable upfront economics capacity reservation fees, given a lot of the capacity that's going to be coming online do you think that model still holds.
So first of all I would just say that the dynamics in the gene and cell therapy space continue to be extremely.
Robust.
I think over the last two years, we've really added critical pieces to our.
Portfolio.
In the cell therapy space, giving additional manufacturing facilities and capacity.
We entered into the plasmid DNA space.
Now.
Obviously with.
We sure Bryan so have our hands on kind of ICSC sell bearings. So we really think that we have a strong portfolio, but I will tell you that we have a very strong science and technology team that is forward looking and continues to understand where the technology is going and where category.
Can add additional I would say technology capabilities into our portfolio and we're going to continue to do that I would say that broadly speaking in the biologics area, it's going to continue to take a large part of our overall.
Capex for the company because we continue to see.
No.
Extremely strong pipelines in this business.
As we've seen over and over again, if you have the right capacity at the right time, you actually garner win that business. Our gene therapy business is moving much much more mainstream in terms of.
<unk> made.
Making product to meet.
Mick.
EBITDA and I would say that the reservation fees that we there were a significant component of the early part of the business.
When there when we were literally dealing with a handful of suites within catalyst.
Be somewhat part of the model, but it will not be the main part of the model. The Bottomline is is.
When we have capacity customers want we were able to actually basically the right deal in terms of what we.
You recall site preparedness equipped.
Equipment preparedness, and if a customer has long term forecast them once.
Suite from us.
For a certain period.
At a time, we're absolutely going to go ahead and get reservation fees, but I would say that that was much more of a.
Our model in the early days and now we're moving towards a model of just making literally hundreds and hundreds of batches in our team therapy business. So now now a lot of the money.
Money is flowing from truly the work that we're doing which is pure reservation fees.
Okay very helpful. Thank you.
Your next question is from Jacob Johnson with Stephens.
Hey, Thanks, Congrats on the quarter, maybe just.
Similar question on the SaaS, but actually in a different way.
The <unk> deal is a fairly significant deal to bolster the <unk> segment. After a variety of deals on the biologic side. I mean is this a signal that you have the majority of the biologics capabilities you need at this point. So we should think about the investments being largely organic on that side of the business in the near term.
Well clearly I would say we're always on the hunt.
Great Biologics asset period.
However, with the platform that we have.
Basically built through acquisition and the attitude from an organic standpoint, we really believe we have a footprint where organic investment is going to continue to fuel our growth. So in today's earnings.
Hunt for prepared remarks, we talked about.
Several significant expansions, whether it's <unk>, whether it's in Limoges I will say there are significant capex projects going on all across <unk> and <unk>.
Obviously, we're going to be seeing a high level of Capex spend again this year, but catlin.
Really does continue to be very active in the M&A market, we do feel that we have.
Really the right set of assets on the biologics front and quite frankly by being able to pivot here really.
<unk> acquisition is going to bolster our <unk> business segment from.
5% to 6% to 8% and incredibly attractive margins in a capacity constrained environment, where this is what catalyst does we operate at scale for catalyst's ability to scale up that business and drive to be number one.
<unk> delivered platform is really what we have are.
Three of the slide set on so what I really do like about <unk> is it's a well balanced business and quite frankly, we've re.
Really been taxing pretty aggressively through the through the pandemic into the vaccines are biologics and gene therapy segment and now this allows us in our <unk> segment into.
Our center.
Our other segments to be able to do.
Use our leadership to build out a part of the business. It's always been core a critical platform has paid the bills with cash flow for many many years again absolutely.
Terrific acquisition for Us and we're excited to have them.
<unk> team as part of catalog with their expertise and Knowhow and Jacob I would only add to this one are just around the most of the market grow Val John said in his prepared remarks as well as here around the attractiveness of the margins for <unk>, but they are actually accretive not only to the <unk> segment, which kind of went overall, so very strong financial profile here.
Some of the acquired business.
Got it got it thanks for that John Tom and then maybe just a.
Follow up on that John you mentioned in R&D, you're adding drug substance capabilities there.
You have both of the both.
Substances product capabilities can you just talked about the synergies between between having both of those.
Okay.
And a single copy.
No. It's a very big deal and thank you for pointing out the 91st of all I just want to.
Just say thanks to the <unk> leadership team what they have done over the last 18 months has been absolutely phenomenal.
Here in the U S. We talked a lot about our Bloomington.
But those type of Vietnam. These sizes literally bed marquee site for the European COVID-19 vaccine efforts and the team has really delivered flawlessly literally more than $100 million.
Vaccine doses that have come out of there so just a terrific leadership team.
I can tell you that the synergies.
Moving to between drug substance and drug product is huge actually we have an offering for within catalog, it's called one vial and our ability to basically do sell wide engineering.
As to drug substance scale up into phase, one and then be able to put that into a finished drug.
Dosage formed format for clinical.
Trials and then ultimately scale up for manufacturing is absolutely huge.
Relatively few non <unk> have that capability.
Our biopharma customers the large ones do but from a CD most standpoint, I think catlin.
Is is really up there with only maybe one.
<unk>.
CDM mode that is people that have drug substance drug product and even better. If you can have it all in one campuses, which was what we'll be able to do it in nine years. So we kind of announced the two by 2000 leaders, but we're going to have the ability obviously to scale that up much more significantly and I think youre going to.
Although headwinds becoming extremely strong player from a biologics drug substance.
And drug product standpoint back to the previous question with regards to M&A in Biologics. This is an area of world.
We have some terrific assets between our Brussels facility or a remote facility or non new facility, where we're investing from.
Sweet Kale product is now also a drug substance standpoint, if we could secure additional drug substance and drug product assets in Europe that would clearly be.
High on our priority list and we have been participating in quite a few processes, but haven't been able to land that one yet so.
We're clearly being aggressive on the overall.
Organic front, but back to the question the synergies between drug substance drug product in the <unk> offering we have which is bringing more and more.
Customer specifically.
With small to medium sized customers. We wanted to have one stop shopping from that standpoint is very significant.
Overall got it thanks for taking the questions.
Thank you Jacob.
Your next question is from John Kreger with William Blair.
John a couple of Capex questions.
John you mentioned, the terra in that whole space capacity constraint how.
Available capacity in that asset that Youre getting are you going to have to dedicate a fair amount of capex to keep up with the growth.
Yes, so first of all.
Material really is in a massive growth phase as we stated they're growing at 20%.
We have several in flight.
Capex.
X investments I'm sure at some point, we'll be talking on these calls about something called a mobile which is really the work of.
Of course for the Dummies area and.
We will be investing additional capex to scale that business, but I will tell you that the capex levels of spend.
<unk> is the much lower than anything that we see from an overall biologic standpoint, what were then what we see from an overall.
Catalyst standpoint, and we'll probably be slightly higher but more in line with what we've traditionally spent in the rest of the <unk> segment really making it again.
And we will burn cash generator.
Extremely attractive margins for the company.
Great and then.
So John I think you told us that capex in the coming year should be 15% to 16% of revenue should we start to think about that as sort of a new normal for the company long ago.
No no.
Strong.
We have to step back and remember that.
Covid was a massive accelerator for cattle and from a strategic standpoint, it actually accelerated our strategic plans and we brought on capacity earlier than we normally would have and then debt capacity.
Our post.
Let's say larger volumes of vaccines.
Three maybe four years is going to be re applied to the overall company. So I think we're seeing year over the first couple of years.
Obviously, this accelerated capex spend but as we've kind of modeled out in our strategic plans we see.
Tech spend moving much more towards that higher single digits.
Capex spend that we had prior to going into overall Covid I think thats the right way to look at the overall business that being said.
Traditionally see is.
<unk> catalysts to accompany.
Our.
High growth assets, and then scale them up.
Pete we are going to be working to be the number one provider in the stomach categories over time, so we take the assets and we invest in them to make them leading franchises. So.
We were to not acquire anything else.
So I would see our capex moving down to that high single digit level, but again as we acquire assets, we do invest in them, so really be dependent upon what assets we did John.
Whether or not that's good.
We will see slight.
Slightly elevated area, but again, we love this.
That's because the IRR cash.
Cash on cash returns from the investments we're doing on the growth side, specifically in biologics gene therapy and now in the government area is going to be pretty pretty fantastic.
Sounds good thank you.
Your next question.
President, Dave <unk> with Jefferies.
Hi, Thanks for taking my questions John I appreciate the emphasis you put on that answer to John.
Capex Capex intensity will come down good to know.
I'm wondering on on the longer term.
Gross algo I'm.
Mike.
Your biologics and Covid revenue within biologics and and the hand off of that over the long term.
And is the is the extension of a booster market does that make sense that much easier to manage that it's not going to be so sudden but rather a.
I'm thinking of a longer more protracted handoff to other products in the long term.
Sure. So first of all we do not see a COVID-19 cliff in catalysts.
We certainly came out of our strategic plans when we modeled out and this was in April a lot of things have happened. Since then but we bought about three different scenarios and right now I would tell you.
Current current modeling against expected cases actually higher given the fact that we see vaccines.
For Covid, specifically being really much more of a sustaining and enduring revenue for catalyst specifically with the advent of boosters that it'll come out lowering.
You bet.
Of those vaccines plus the large part of the world that still needs to get vaccinated. We're also seeing a changing formats, where we want fewer doses per for a while we're seeing.
<unk> seen a push towards going towards pre filled syringe and actually all those things actually.
When two increasing volume for CAD, one as you move towards either single dose or lower volume formats and also boosted the other thing that I would tell you Dave is that <unk>.
Headwind is now put itself into the vaccine category in a really substantial way it was always.
I would say a significant category.
E within catalyst catalyst, it's now moved up.
Within our overall look at that.
Overall, our categories within tablet.
Capacity and capabilities and quite frankly, the strong brand reputation of being able to deliver in this crazy tumultuous time.
<unk> vaccines has elevated our status as a CMO in the vaccine category. We also see that mrna is not just going to be a COVID-19 vaccine.
Reputed platform.
Madonna had quite a.
A large pipeline if you will of mrna vaccines.
I'm a partnered very closely with them with Covid, we certainly expect them as well as our other partner J&J to be using our expertise for non COVID-19 related.
Vaccine items, which I won't detail here on the call, but from a catalyst standpoint again COVID-19 was an accelerator of our strategic plans.
<unk> and quite frankly, our growth and our ability to upgrade our long term guidance now from.
From 6% to 8% to 8% 10%.
<unk> growth I think is a testament of that it also points to the fact that as you know we've we've held onto our long term growth guidance for quite some.
<unk> since 2014 before.
Bringing it up with the acquisition of Paragon and now bringing it up here in this earnings call. So that alone should tell you what our outlook is with regards to the growth rate of the company and how we see vaccines continuing to play a strong role into the future.
And without.
Any any I would say substantial cliff in terms of the business since we'll be duck tailing in some of our strong.
Our strong pipeline along with the continued sustained.
Supply required for the Covid vaccine sorry for the somewhat labored answer pretty soon.
It's a really important question and it's important for me to be able to pass along all of that information broadly to the analysts and investors.
Thanks for the context, there I appreciate that quickly on on margin.
Margins were strong the perhaps the composition of those was a little bit different than I.
With 10, others expected in the Biologics segment could you comment on weather.
There was a there was a mix change there or you mentioned reservation fees in the context of another answer.
Was there was there some impact that caused the biologics margin to drop a little bit from what we've seen in the last couple of quarters.
Tom here.
So just under 31% EBITDA margin for the fourth quarter here for the business a great performance from where we were a year ago.
Youre right sequentially. It was down from from what we work third quarter level of budget point to a couple of things here. We have to remember that this is still primarily development business and with that does come from I would say.
Related lumpiness that can have a negative impact on margins, but the fact that we're seeing the sustainable margins within this business north of 30% is up.
There's something.
Right in line with where were management expected it to be the other thing I would highlight here is component sourcing continues to be.
Okay.
Hey, Bonnie.
Growing revenue stream within the business. These are the pass through revenues associated with some of the components used for.
The vaccines.
That comes in at a very low margin profile and we're seeing that.
The increase having a law.
A little bit of a drag on the other thing I would say as you know we think about the the.
The level of maturity within our cell and gene therapy business cell therapy, primarily the investments that we continue to put into that business.
I would say a relatively substantial.
From an operating cost perspective.
Do you have a little bit of a <unk>.
Headwinds to the margin profile of biologics that again I just want to highlight the 31% that we saw in the fourth quarter and again right in line with where we were we expected that to be from a management standpoint, and seeing sustainable margins above 30% within biologics.
Got it thank you.
And our next question is from Paul Knight with Keybanc capital markets.
It's Mike on for Paul.
First one John it's nice to see cattle and continued to build presence in biologics in Europe, what the NRG announcement.
Just as a follow up you're obviously building out significant past capacity in the.
It's related to viral vectors, but given the capacity constraint that market when does it start to.
Makes sense to have a presence there for viral vectors given your significant cell therapy plasmid DNA presence already there.
Actually thank you for that highlight and I, probably should've also noted that that is also a category that we're looking at within Europe.
Clearly, we've got a strong footprint footprint for cell therapy across our gasoline, Belgium, Tampa Stow and also Houston.
And we have a huge.
Huge capability in viral vector manufacturing in the Baltimore area, but if we were able to either.
Our hands on the right asset from a viral vector manufacturing standpoint in Europe that would also be a priority for us we continue to see an extremely strong pipeline.
Overall, our gene and cell therapy space and I do believe that that having assets in there.
Here are going to be key we love being in Baltimore, given that that really is kind of a center from an overall.
I would just say that <unk> standpoint.
But clearly Europe will also be an area, where we're going to continue to look for for an asset there and if we're not able to get our hands on one we may pursue.
The organic Buildout route, but that would that would obviously take some additional time. So thank you for actually highlighting that.
And then just following up on Tom's pass comment with respect to gene based vaccine, specifically mrna kind of having a long duration for cattle outside of Covid.
I mean.
Good morning.
Vaccines, and therapeutics and more challenging deliver.
<unk> deliver to the body purchased the upstream check with Delphi and historically been strong and finished with therapeutics and vaccines, but and then obviously you have the viral based delivery technology at Paragon, but to other delivery technologies like lipid nanoparticles and electroporation kind of makes sense for.
These play an R&D perspective or potential M&A perspective for Cadillac. Thank you yes.
Certainly I would just say that.
Our LNP or lipid nanoparticles are a big part of the secret sauce.
For mrna delivery.
We know with regards to one.
Specific provider of that kept a lot of that in house and then with another provider. They are partnered but there is.
There is a lot of wraps around I would say the knowhow.
And the intellectual property of Booz Allen piece. It is an area that is.
An hour.
That is high on our list I've actually had some dialogues with.
One large customer about the ability for <unk> to be.
<unk> LNP provider and broad based from the mrna standpoint. So we're early in those discussions but it is a key area.
I have to emphasize again I mentioned, our science and technology team is constantly on the hunt for looking out with advanced radar to understand what are the key technologies in key growth areas that category needs to be participating in.
Example of that is the.
Haso acquisition, which again, we think it's going to be.
Key key for us in the cell therapy, and regenerative regenerative medicine areas. So we'll continue to see headwinds, bringing in those type of technologies into the company and certainly the mrna space is going to continue to be.
Aligned with two approved products here, it's clearly now it's going to be a therapeutic category.
We're all going to be watching what theyre going to be able to do beyond vaccines and the great News is we are partnered with.
One of the best if not the best in this area.
Great. Thank you for the time.
I mean next question is from Sean Dodge with RBC capital.
Thanks Scott.
Maybe going back to material.
The margin Jonathan incredibly attractive already accretive to the consolidated total is there any any more specificity you can share there.
And then just to better understand.
And the trajectory or potential I guess, if we roll forward a few years of 20% plus revenue growth.
Is there a lot of opportunity to continue scaling those higher or with the tight capacity constraints are things there.
As good as a CDR shouldn't be it's just more adding.
Revenue at those margins.
So first let me just sneak them.
The statements that that this is a category that has <unk>.
<unk> or higher margins to it.
So when we talk about it being.
Accretive and then accretive to overall category.
That should give you a signal.
Let me just.
Up a little bit here gummies have become the dominant dominant experiential delivery format and Vms.
The Vms retail market is growing three times faster than the rate of over the counter.
It's actually now larger than the over the counter.
Through the pandemic and either running up to the pandemic wellness.
It has really become something of a personal responsibility and people are really going out after <unk>.
Original nutraceutical and other functional areas and.
Gummies.
Backup have been thus format.
In fact, launching the most number of products in this category compared to everybody else.
Coming to grow more than 20% CAGR per year for the last four years and now represents more than 40 billion doses.
The Vms segment is growing in mid single digits.
Despite representing less than 20% of delivery formats are accounted for greater than 50% of total vms growth over the last several years nearly 70% is outsourced with a limited number of <unk> and its capacity constrained and again, what this catalyst do.
We do things at scale, so our ability to.
Alright.
Scale this business appropriately to be able to not only.
No.
With the market, but to grow substantially faster than the market that is capacity constrained.
Well.
Third to competition is really where we're going to be able to drive this to be kind of the number one franchise out there from a <unk> standpoint.
Why.
But we've got into that so it's.
Really.
Then.
Terrific business for us very high margins and one that catalyst to get its hands on integrate we have very detailed plans and.
And maybe maybe scales a little bit of the answer to my next question, but it's easy to see how catalytic can differentiate itself and sustained high margins in biologics and cell and gene.
I think just given.
The scientific rigor involved with it.
They're on the payroll side maybe.
And maybe just if you can talk a little bit more about what would've been the differentiating factor.
From here the neutral so what are the competitive moat.
We're quite there so so to give you a sense for the level of difficulty with all the capabilities that we have within catalog specifically in Softgel gelatin and the franchise that we've had there in the Vms standpoint, we were unable to attack this.
And they pull how in terms of developing these products with the right texture.
Built upon.
The capability of the team to formulate those.
<unk> products.
The ability to formulate before.
We're actively formulate these products because SME.
Safety, where customers are buying our office.
The shelf.
Products that are already proactively patented for catlin with all.
All of our skills and capabilities, we really range this business organically over the last five.
Essentials, and ultimately went down.
The inorganic part found one of the leading players we believe they are the number two player in the space and our goal is to make them. The number one player pure and simple so again.
Substantial I know that some people.
Years that don't understand Cadillac very well will.
Look at all of the Biologics gene therapy <unk> therapy.
And cell therapy acquisitions that we've done and say I don't get it but that's because they don't understand the fact that we are supplying.
Through biopharmaceutical customers and consumer health customers and are consuming that had been here for 20, plus years said that catalog liberally developed through our Softgel business.
The cough and cold categories that we now see ubiquitously.
Shell.
Two Walgreens Walmart and Cvs. So this is in our DNA.
It requires innovation, there's a different clock speed that's required in this category and we have longstanding relationships with all the big six players in the consumer health category.
Categories that are three times faster than OTC for so for catalyst. This actually was was a natural if that slightly late acquisition into this very fast growing space.
Your next question is from one of them Dano with Bank of America.
Hello. Thank you just one question for you.
I mean are you alluded to the change in the Covid vaccine packaging configuration in a previous answer.
Can you tell us how how is that a pure dose format compare to <unk>.
Anticipate this change to come through.
Okay.
I will answer just at a high level that says that from <unk> perspective, we are not.
We are not paid for both we are paid for.
So if you have sales that are at a lower number of doses. It means you generally need more so so from us.
Overall category perspective.
A positive tailwind as you go to formats that have fewer doses profile or potentially into the presale.
So syringe format, you can expect those to be down at.
A lot of things.
Thank you.
Your next question is from George Hill with Deutsche Bank.
Hey, good morning, guys. Thanks for taking the question I'm going to come back to the topic of M&A, One last time, John and Tom I mean, I guess can you talk about the processes that.
While the company wasn't able to get to the goal line on kind of what was the barrier. There was evaluation was it bidding environment was it not the right asset I'm sorry.
I didn't quite get the question about what went wrong on the MH.
We recently.
Yes sure.
You had talked about a couple of bidding processes, where you guys couldn't get.
The goal line and you guys have been very successful on M&A I guess models.
Do you hear more about what went wrong. When you guys couldn't get you'll sit there has kind of put us in the barrier.
Yes, nothing nothing went wrong.
Usually a case of us being disciplined.
<unk>.
Acquirers, both in terms of valuation.
I would say nothing is going wrong in our process at some point the valuations to get to a point.
So we're incredibly strongly led to the string of acquisitions that we've done.
<unk>.
With Paragon through.
That we built out and gasolines.
But.
Again doing M&A.
Play into that at some point.
The value for the asset.
We kind of move on so.
A disciplined acquirer.
We moved on and as you've seen we've taken a path that doesn't limit us by.
Hi.
Expanding pretty quickly organically in the Dms facility that we.
We.
That's in the non <unk> as well as expanding our la Roche facility. So look for those.
Yes.
So assets, but M&A is not.
Purely deterministic.
Activity is involves a lot of considerations in terms of moving forward.
That's kind.
I appreciate it thanks, Jeff.
Okay.
There are no further questions at this time I will now hand, the call back over to Mr. Paul.
And for final comments.
Actually our judgment skill conclude here, thanks, operator and thanks.
What I expect joined our call I'd like to close.
By highlighting a few.
Our fiscal 2021 was an incredible year for Catlin.
Expectations for 2021 journey.
Response to the pandemic.
Let's see.
Everyone's going to need to do real good for the entire world provided an insightful demonstration of the depth of our capabilities significantly elevated our brand helped increase our engagement with our employees as we've banded together to meet the challenges of the pandemic and enabled us to accelerate there.
In fiscal.
2022, we expect.
Strong revenue and EBITDA growth again, driven by continued growth in our biologics segment.
As well as the return to growth in our SLT and OSD segments.
Because of the investments we've made over the past few years, which included.
<unk> chatting high growth franchises like those we've acquired either biologics segments like the one we now anticipate with the PURA with stronger and better positioned for long term growth target to 8% to 10%.
Finally, I'm very proud of the team of more than 17000 in the way we've lived up to our mission to help people live.
Added another healthier lives when we looked at our last fiscal year, we know that across the <unk> hundred development programs with them and the 7000 products manufactured on behalf of our clients. We helped enhance the lives of millions of patients around the world.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.