Q3 2022 Catalent Inc Earnings Call
Now I'd like to turn the call over to John Suminski Who's opening remarks will begin on slide six of the presentation.
Thanks, Paul and welcome everyone to the call.
I am pleased to report that the positive momentum we built through the first half of our fiscal year continued in the third quarter.
Our financial results were driven by strong continued growth in our biologics segment with additional support from our other service offerings, including our consumer preferred gummy dosage forms for nutritional supplements, which act as an additional growth engine for the company.
Our strong performance in the third quarter, coupled with continued momentum has enabled us to increase our fiscal 2022 guidance for the third time this fiscal year, which Tom will review later in the call.
Regarding financial performance, our revenue for the third quarter was $1 $2 7 billion, increasing 21% as reported or 23% in constant currency compared to the third quarter of fiscal 2021.
When excluding acquisitions and divestitures organic growth was 20% measured in constant currency.
Our adjusted EBITDA of $339 million for the third quarter increased 24% as reported or 26% on a constant currency basis compared to the third quarter of fiscal 2021.
When excluding acquisitions and divestitures organic growth was 26% measured in constant currency.
Our adjusted net income for the third quarter was $188 million or $1 <unk> per diluted share up from 82 per diluted share in the corresponding prior year period.
Our biologics segment was again the top contributor to <unk> financial performance as it experienced organic net revenue growth of 30% driving an EBITDA increase of $41 million or the third quarter of last year.
These strong results came from across our broad base of service offerings within our biologics segment and were driven in part by Covid vaccine demand.
Demand remains strong in this segment, including a notable increase from several of our large gene therapy customers for viral vector manufacturing.
Given the high utilization of our biologics assets as well as projections for continued demand in the years ahead, we continue to take.
Both organic and inorganic actions to increase our footprint in drug product drug substance and cell and gene therapy.
Alessandro will walk through our latest developments in a few minutes.
And our Softgel and oral technologies segment are complex oral solid offerings continued to recover from the pandemic related headwinds as we'd anticipated.
And results from this segment were again further enhanced by the acquisition, but Tara.
Organic growth was very strong at 14% is year over year demand for both prescription and consumer health products recovered nicely over the same period last fiscal year.
Inorganically, we received another boost from the recently acquired <unk> business, which added more than 20 percentage points of net revenue growth to this segment.
The acquisition is performing even better than we initially expected and we are investing in additional capacity to meet the high demand for gummy formats from our consumer health customers.
Our oral and specialty delivery segment reported 4% organic net revenue growth driven by early phase development offerings.
With the Divesture of our blow fill seal business in March of 2021, now annualized it will no longer negatively impact reported growth beginning in the fourth quarter of this fiscal year.
Future growth in this segment will be aided by recently completed expansions of our nasal capabilities in RTP and oral solid dose GMP manufacturing suites in Kansas City, as well as strong growth from commercial products.
<unk> fast dissolve dosage format.
Viewed holistically catalytic remains well positioned to continue delivering strong financial performance and growth and we remain committed to providing patients around the world with life saving and enhancing treatments.
Now ill turn the call over to Alessandro who will review various operational highlights from the quarter, including recent acquisitions and capital expended.
Expenditure projects.
Thank you John .
We continued to expand our global network invest in growth driving capabilities.
New talent and accelerating that progress in operational excellence.
These will be critical drivers with covenant with an EBIT of our long term targets I outlined last quarter, including the <unk> 26 targets of more than $7 $5 billion since revenues and adjusted EBITDA margin of approximately 30%.
With that said I want to address the question. So we haven't seen the gathering the degree of covenants reliance on continuing the COVID-19 vaccine revenue to deliver these numbers.
While our current strategic plan, which I outlined the last quarter, thus, including vies. Consequently seek some projected revenue from the recipes that already vaccine.
Our model assumed that they will likely be only a fraction of the revenue generated to date from Covid vaccines. This.
Strong industry backdrop, and forecasted demand across multiple therapeutic categories categories and modalities confirmed that we have not.
Reliant on substantial revenues from Covid vaccine to achieve our targets.
We also continue to be comfortable with our overall long term organic revenue growth of 8% to 10%.
Looking into fiscal 'twenty three.
We see growth in line with that range driven by.
Increased utilization of recent investment across the company, including a new growth investments that al will review in a moment.
Organic growth through current assets, including a notable uptick in commercial demand in <unk> and a shift of some of our fungible biologics asset. The currently producing causes vaccines to other customer projects, including the newly signed large commercial tech transfer program.
Yes.
In formulating the <unk> 'twenty three outlook.
Also mitigated the future we skip by assuming that a considerable decline in COVID-19 product revenue in fiscal 'twenty three.
So to be clear our growth drivers are expected to be more than that.
Expected to more than compensate the fourth considerable decline in our <unk> vaccine revenue leading to topline growth in our loan book in line with our long term growth rate of 8% to 10%.
While the company is exceeding the immediate demand over the course of the pandemic, we concurrently made the strategic investment and allocating capital to other areas of the business that position our overall portfolio for long term success.
In addition, our robust global network of facilities enables us to ship production based on demand and reliably supply our customers with a wide range of products they need.
Core to our <unk> business model, our 70 cell settings across the company agenda designed to be flexible and fungible. So bad that they might set up a multiple customers products therapeutic categories and in some cases modalities, providing us with a balanced platform for growth.
Let me review some of the latest growth actions.
On the acquisition front, we recently announced a 40, Florida and enough medium dollar purchase of a state of Dr. Commercial scale cell therapy manufacturing facility in Kingston, New Jersey that.
But we're closing we're working close collaboration with our existing cell therapy sites, particularly our cell therapy, and plus visa center of excellence and ghastly.
Essentially we purchased the Princeton facility from <unk> pharma.
Manufactured at the site and exclusively supply its lead product candidate for the treatment of acute lymphoblastic leukemia.
The 31000 square foot site policies 16 suites designed for GMP production as well as labs for analytical development quality console and microbial testing.
We are also in the process of leasing at two other buildings nearby to enable future expansion.
Seemingly to the cell therapy campus, we built through acquisition and goes to lease we envision Princeton, becoming a strategic campuses for cell therapy development.
<unk> and commercial scale cell therapy amount of operating in North America.
We also continue to invest in that gene therapy assets and a top 10% near BWI Airport.
We are on track to open eight additional suites by the end of this calendar year, bringing the total to 18 with GMP manufacturing suites.
Each of these which is designed to accommodate multiple via the actors suitable for commercial scale manufacturing from cell bank to purify the drug substance across different modalities.
On the bad debt I'm excited that we acquired largely complete the biologics development and manufacturing facility in the biomedical science hub near Oxford UK.
We plan to invest up to $160 million to complete the facility and extend it to duck Samsung capabilities for development and manufacture of biologic therapy therapies and vaccines, including the mrna.
<unk> and other advanced modalities.
It is expected in the new facility will employ at least an additional 250 people and support public and private organizations seeking to develop and manufacture bio therapeutics and vaccines.
As we are able to get these sites up and running on an accelerated timeline compared to the previously announced organic deals of drug substance capabilities in R&D, we will reassess the best use of that allocated spacing alignment and focus our efforts and capital on bringing our first drug substance offerings to Europe .
Our new Fox Web site.
In the European drug product space I was happy to be with our team along with national and local dignitaries in the March trends in March for the rebound cutting ceremony that recognize the completion of the multimillion dollar projects that transform the most site into a European center of excellence for <unk>.
Biopharmaceutical development.
But that product to fill and finish services and packaging the.
Besides the focus you still Natalie phased integrated clinical development, including this most key less commercial manufacturing.
Wowing, the four seamless technology transfer of projects within the kind of the network as they progress to late stage and largest scale commercial supply phase yourself.
Also Europa our drug product facility in Bras Seltzer continues to make substantial progress which is allow us to begin the restart of manufacturing operations at the site. While we continue in parallel to announce our overall side operations.
In the U S. Our board recently approved a multiyear investment in Bloomington totaling $350 million.
To expand the biologic drug substance and drug product manufacturing capabilities, including quality go onto <unk> and complex automated packaging lines.
The project will serve the site's robust biologics pipeline as well as the manufacturing capacity for commercially approved products in <unk> demand.
Does that substance part of the expansion, which is expected to be completed before the end of this calendar year is designed with diversity enabled the site to serve a more commercial products.
The expansion of the Doctor of affiliate and finishing capacity, which is expected to be completed in 2024 includes the buildout of new syringe filling lines as well as new localizing capacity.
These investments will enable us to expand our flagship with Bloomington campus and extend that leadership is one of the largest and more comprehensive a global center of fully integrated manufacturing capabilities in North America.
With that I will now turn the call back over to John who will discuss how carbonite incorporates a sustainability of user as part of our long term core business operations and planning.
Thank you Alessandro.
As detailed in slide eight in March we released our third annual corporate responsibility report covering our progress in environmental social and governance matters during fiscal 2021.
At a high level, we've made significant progress in key ESG areas over the past year, such as carbon emissions diversity and inclusion and community investment and continue to shape, our sustainability focus in alignment with our core business strategy.
Beginning with people fiscal 2021 was a record breaking hiring year for catalyst as we on boarded more than 4000 colleagues, while keeping their safety and well being at the forefront of our efforts.
In addition, we expanded employee resource groups and diversity among our leadership.
Our employee resource group network now comprises more than 45 chapters across eight global communities and continues to grow thrive and positively impact our inclusive culture.
On the environmental front, we met our goal to reduce our indirect carbon emissions by 15%.
This success was primarily the result of our transition to renewable electricity sources as well as continuous improvements through onsite engineering equipment and facilities management.
We've also set new science based targets to reduce scope, one that is direct and scope to indirect emissions by 42% by 2030 and committed to no residual active pharmaceutical ingredient in our wastewater above the.
Predicted no effect concentration.
Thus, taking a leadership position in the industry from a sustainability perspective.
The fiscal 2021 corporate responsibility report also includes our first ever task force for climate related financial disclosure or TFS, Tc FTE reporting underscoring our progress and commitment to best in class sustainability practices.
Third is our focus on communities.
21, 2021 was a milestone year for philanthropic, giving a catalyst as we distributed more than $1 2 million to support COVID-19 relief efforts stem education and organizations that support patients in underserved communities.
In addition.
Since the Russian invasion of Ukraine earlier this year.
<unk> and our employees have donated to over 45, nongovernmental organizations supporting humanitarian and refugee support efforts in Ukraine and eastern Europe .
As they prepare to transition to my new role as executive Chair I can't help but reflect on and be proud of the substantial progress we've made in corporate responsibility, particularly in the last five years.
This evolution was achieved by staying true to our values and at the same time advancing in delivering real life solutions for people and the environment.
While we are delighted by the progress we've made we know our work in this area is far from done and we will continue to enhance our efforts that have put us at the forefront of corporate responsibility in the <unk> industry.
Before turning the call over to Tom I'd like to make a few comments on the overall health of our business before Alessandro begins as CEO on July one.
Given our growth history and trajectory.
Increased profitability and proven success with strategic execution, including the transformation of the company over the last few years as we've grown our biologics segment and further diversified our portfolio I'm proud of where Cadillac stands today and the people who got us here.
<unk> offerings are not only balanced they also closely match the industry's R&D pipeline.
We have never been in a stronger position in the dynamic growth markets we serve.
Now it may already be understood, but nonetheless like to make clear that this will be my last earnings call as I transition to the position of executive chair of the board.
I certainly appreciate the many interactions I've had with you over the years, but importantly, I am not going away and will continue to discharge important responsibilities in my new role.
I look forward to continuing my work in close partnership with the board.
Sandra and the rest of our talented team while contributing to the ongoing success of Catlin.
To reiterate from prior comments there is no better person suited to take this company forward than my long term colleague and friend Alessandro and he has my full confidence.
I'd now like to turn the call over to Tom will review, our financial results for the third quarter and our updated fiscal 2022 guidance.
Thanks, John I'll begin this morning with a discussion on segment performance, where commentary around segment growth will be in constant currency.
I will start on slide nine with the biologics segment.
To highlight the company's transformation over the last two years, you will see that the segment represented 55% of our net revenue growth net revenue in Q3 of this fiscal year compared to 52% in Q3 of fiscal 2021 and 33% in Q3 of 2020.
Biologics net revenue in Q3 of $698 million increased 30% compared to the third quarter of 2021.
This robust net revenue growth was driven organically by broad based demand across the segment, most notably for COVID-19 related programs, which we're only ramping up in the third quarter of last year.
The segment EBITDA margin of 31, 1% was up 20 basis points sequentially over the second quarter of this fiscal year, but down year over year from 33, 1% recorded in the third quarter of fiscal 2021.
The year on year decline was primarily driven by costs arising from the remediation efforts at our Brussels sites.
In addition component sourcing revenue, which represents more than 25% of total COVID-19 vaccine revenue was higher this quarter compared to the prior year quarter.
As we discussed in the past component sourcing is where we source materials components and other supplies for our customers and these activities come with two opposing dynamics increased revenue, but margins well below the segment average.
Looking to the next couple of quarters, we expect the biologics segment revenue growth rate to gravitate towards its normalized growth rate of 10% to 15%.
Please turn to slide 10, which represents results from our Softgel and oral technologies segment.
Softgel and oral technologies net revenue of $324 million increased 37% compared to the third quarter of fiscal 2021 with segment EBITDA, increasing 29% over the same period last fiscal year.
October one acquisition of the Terra contributed 23 percentage points to <unk> net revenue growth and 13 percentage points to segment EBITDA growth during the quarter.
Inorganic EBITDA was adversely affected in the current quarter about a one time accounting adjustment for inventory valuation as of the time of the acquisition.
Excluding this onetime charge operational performance of the daughter entities.
Can use to meet our expectations and remain a key driver for margin expansion for the <unk> segment and the company overall.
The organic net revenue increase was driven by growth in both prescription products and consumer health products, particularly in cold cough and over the counter pain relief products.
Slide 11 shows the results of the oral and specialty delivery segment.
After factoring out the net impact from the divestiture of our blow fill seal business and the acquisition of the quarters spray drying assets, both of which annualized in the third quarter of this fiscal year net revenue grew 4% and segment EBITDA was up 64% over the third quarter of last year.
With topline growth was primarily driven by elevated demand for early phase development programs.
EBITDA margin improvement was driven by favorable revenue mix as well as a favorable comparison to our third quarter of fiscal 2021, when we booked charges related to our customer September 2020, voluntary recall of our respiratory products.
As shown on slide 12, our clinical supply services segment posted net revenue of $101 million.
Representing 3% growth over the third quarter of fiscal 2021, driven by growth in our manufacturing and packaging service offerings in North America.
Segment, EBITDA grew 14% with favorable product mix driving the performance.
As of March 31, 2022 backlog for the segment was $529 million.
Unchanged from $529 million at the end of last quarter and up 8% from March 31 2021.
The segment recorded net new business wins of $111 million during the third quarter compared to $137 million in the third quarter of the prior year. The segment's trailing 12 month book to Bill ratio is one one times.
Moving to our consolidated adjusted EBITDA on Slide 13, our third quarter, adjusted EBITDA increased 24% to $339 million or 26, 6% of net revenue compared to 26% of net revenue in the third quarter of fiscal 2021.
On a constant currency basis, our third quarter adjusted EBITDA increased 26% all of which is organic compared to the third quarter of fiscal 2021.
As shown on slide 14 third quarter, adjusted net income was $188 million or $1 <unk> per diluted share compared to adjusted net income of $148 million or <unk> 82 per diluted share in the third quarter a year ago.
Slide 15 shows our debt related ratios and our capital allocation priorities.
<unk> net leverage ratio as of March 31, 2022 was two six times below our long term target of three times.
This compares to net leverage of two eight times on December 31, 2021, and our reported net leverage ratio of two three times on March 31 2021.
Our combined balance of cash cash equivalents and marketable securities as of March 31, 2022 was $880 million compared to $915 million.
As of December 31, 2021.
Moving onto capital expenditures, we now expect capex to be approximately 13% to 14% of our fiscal 2022 net revenue compared to our previous expectation of 15% to 16%.
The key factor for this change include our higher than previously expected net revenue.
Combined with some supply chain related delays and longer lead times for some of our capital projects.
To be clear new capex associated with our recent acquisitions, most notably for our new biologics facility in the UK.
Is already contemplated in our new guidance.
Of course, our elevated capex is temporarily impacting free cash flow, but we expect capex to return to a more normal 8% to 10% range in the next few years.
Note that our free cash flow has also been negatively impacted the last two years of our strategic decision at the onset of the pandemic to increase inventory levels, which continue to allow us to have the inputs, we need to meet our supply obligations to our patients and customers in a timely manner.
When we feel the time is appropriate and are more comfortable with the stabilization of our supply chain. We will begin to reverse course, which will have a future positive effect on free cash flow.
Now, we turn to our financial outlook for fiscal 'twenty, two as outlined on slide 16.
Following a strong third quarter and a solid outlook for the remainder of the fiscal year, we are raising both the low and high ends of our financial guidance ranges.
We're also tightening the range since there is just one quarter remaining in the fiscal year.
We now expect full fiscal year net revenue in the range of $4 eight to $4 9 billion.
Representing growth of 20% to 23% versus our previous estimate $4 74 to $4 $86 billion.
We project that net revenue growth from M&A will continue to be two to three percentage points, principally driven by the acquisition of the tariff.
For full year adjusted EBITDA, we expect a range of one to 6521 $305 billion.
Representing growth of 24% to 28% over fiscal 2021 compared to our previous estimate of $1 25 to $1 three zero billion.
Note that the continued strengthening of the U S dollar against both Euro and British pound is expected to negatively impact our adjusted EBITDA by an additional $3 million in the fourth quarter of the fiscal year the effect of which has once again been absorbed into our new financial guidance.
Also absorbed in guidance is approximately $8 million of expected costs in the fourth quarter with little or no associated revenue for the cell therapy facility acquisition in Princeton and the Biotherapeutics facility acquisition in the UK.
We expect full year, adjusted net income of $665 million to $705 million representing growth of 21% to 28% over the last fiscal year compared to our previous estimate of $650 million to $700 million.
We continue to expect our consolidated annual effective tax rate to be 23% to 25%.
Finally, I'll close by reiterating Alessandra as comments on our initial estimate off the top line for fiscal 2023, which projects growth in line with our publicly announced long term organic constant currency net revenue growth rate range of 8% to 10%.
Among the factors, we've considered and formulating this estimate or any.
Increased utilization of recent investments across the company include including those highlighted earlier this call.
Organic growth through current assets.
A shift of some of our fungible biologics assets currently producing COVID-19 vaccines to other customer projects, including recently signed large commercial tech transfer programs and.
As a risk mitigation factor, assuming a considerable decline in revenue from our COVID-19 product programs.
Operator. This concludes our prepared remarks, and we would now like to open the call for questions.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.
We'd like to remove your question. Please press star followed by <unk>.
<unk> to ask a question. Please ensure your phone is on mute lately.
We take our first question from Tejas Savant from Morgan Stanley . Please go ahead.
Hey, guys good morning, and I appreciate the time here.
So Tom I appreciate the color on the organic constant currency growth for fiscal 'twenty. Three is there any way you can quantify perhaps the percent decline in Covid contributions you are baking in at this stage and how are you thinking about overall EBITDA margins trending heading into next year in light of the Covid revenue coming out as well as <unk>.
Some of the other near term factors you flagged up weighing on biologics margins here.
Sure I'll take that so as you know we intentionally as we entered fiscal year 'twenty two have gone away from disclosing revenue contributions related to COVID-19 demand as we consider that part of the base business. So at this stage, we're certainly not going to backtrack on that and start to narrow the decline.
Disclose what the revenue contributions are.
Assuming for fiscal 'twenty, three but as we said in the remarks, we have considerably.
Derisk the overall contributions here as part of our.
As part of the fiscal 'twenty, three and continue to have line of sight to growth despite that demand declining demand profile of COVID-19 related.
<unk> seen revenue to the 8% to 10% long term growth target that we have in place for the consolidated company.
With regards to your question on margin look I would say we're not at this point in a position to provide full guidance here and this is obviously much earlier in the process than we've ever talked about the next fiscal year.
Than we've done before.
Arent in a position to be able to elaborate any further around around the EBITDA contributions what I will tell you.
As the Covid related revenue does have a significant piece of it that's tied to lower EBITDA margins, given the component sourcing dynamic, which I highlighted in my in my prepared remarks.
And then lastly, obviously, we will give a more detailed read on our guidance for fiscal 'twenty three as part of our next earnings call, including all of the usual.
<unk> and cash flow items that we tend to disclose the only other item I'll comment too related to EBITDA margins as we do have a long term EBITDA margin target out there for achieving a 28% consolidated EBITDA margin by 2024, as well as near 30% EBITDA margins by 2026, and we continue.
To be on track to achieve both of those.
Got it that's helpful and a quick follow up specific to biologics.
Tom and Alessandro and John feel free to chime in as well do you do you anticipate a meaningful headwind to fiscal 'twenty for revenue. The context for the question is there's been some investor concern around one of your key Covid vaccine customers leveraging the steel sales finished partnership they signed with one of your competitors.
Or put another way I mean, what underpins your confidence that you can navigate and growth of this dynamic not just in the context of your fiscal 'twenty six targets, but also a little bit more near term, perhaps in fiscal 'twenty four.
Yeah sure this is understandable.
I'll, let <unk> run.
A couple of comments here number one I will state that our relationship with our.
Coffee the partners.
Which has been built through the pandemic has never been stronger remains a strong and long lasting.
Despite the fact that we are as we said.
Mitigating that east Gulf coffee revenues and the outlook. We provided today, we will always be there for them for.
Or whatever it needs of their pipeline coffee done non COVID-19 related.
In the next few years.
With regard to the biologics with <unk>.
I will tell you that during the pandemic and that this was part of my prepared remarks. So we were very intentional in keeping best in building and accelerating some investments in the assets. So we could sell Lena.
And we should we could the field with the programs, which were late stage or non club with the Canadian following that different dynamics.
Is that late stage of tech transfer.
Are being progressed in these days is the bulk of the investments that we've done in our biologics.
This unit as it might remarks.
Eight out of those tech transfer so would be a part of the of the dynamics of biologics in the next five years.
Thanks, guys I appreciate the time.
The next question comes from Scott <unk> from Barclays. Please go ahead. Thank.
Great. Thanks for the question.
Can we talk a little bit about pricing and what you guys are seeing on the raw material side.
And how you are thinking about the 8% to 10% guide how much of pricing is baked into that.
Yes sure look.
As you can expect that this is a very dynamic investment in <unk>.
<unk>.
Where.
That is a significant pressure on on supplies, but there is also.
We have contractual arrangements that which.
Allow us to.
Offset to some of those impacts.
In.
In our in our relationship with our partners.
At the moment that we are we continue to be in the position to manage these.
We have deployed additional resources.
Task force internally to the company.
In order to manage the situation where we've been.
If you like a little bit.
I had a time here.
As you've seen and as Tom described that we have back in the last few months increase our inventories are bleeding off there so for longer lead times to get prepared for these fees. So I will tell you look we are.
She said that our very best to navigate the current scenario in the few challenges ahead of us.
And we expect it to be to be able to go through them.
Okay, Great and then follow up here is just I mean, you guys have done five deals in the last six weeks or something like that.
Can you talk about.
How advanced some of these facilities or any additional capex needed to bring them up to speed and are they on a partial coverage for the sterilization and then more broadly how does that change your mix going.
Considerably from drug substance and drug product, assuming that all of them are up to full capacity utilization.
Yes sure Luke.
I got a couple of things here number one one of the results of the current <unk>.
Supply shut the cheese is that building from a ground zero assets has become increasingly expensive and increasingly long in terms of timeline.
That was our preference for sure until a couple of years to go but candidly in the current climate that we still have significant opportunity to accelerate those timelines.
By acquiring facilities, which are either already finished there like the one increase done or nearly to completion, which will likely be one of the not only these as oxy.
As an edge towards the into diesel.
To build because of these much much easier to build in a time with of those materials with less expensive, but also provide ddos acceleration to revenue so which is the key factor influencing returns on visa.
Green and brownfield type of investments. So so we are very very happy that we were able to get our hands on those assets, which are which are both the in very high demand I believe that both the with regards of the cell therapy and <unk>.
And that piece done and the investments we've done in OXXO or both of them are we more increasing our presence in drug substance I don't know if that product in fact, almost entirely those assets will be classified as <unk> asset.
So.
And very very important because these are feeling the two areas.
So where we had the need the four strengths one without presence of drug substance to Europa, which would be.
The amounts you for some time on the other end.
<unk> facility in Keystone completes our North America footprint in terms of commercial scale of center cell therapy capabilities.
Where we see significant opportunities with the recently approved products.
Great. Thank you.
Okay.
The next question is from Jacob Johnson from Stephens. Please go ahead.
Hey, Thanks, Good morning, and John Congrats on all the accomplishments over the years, maybe just first following up quickly on lukes question.
On these recent acquisitions and the biologics segment it sounds like there.
Quasi organic investments buying facilities that were underway already bill can you just talk about the revenue contribution contribution from those deals and how we should think about that.
Maybe over the next 12 to 18 months.
Right so.
Deep to Tom a little bit more.
The possibility to China and with some more color around that.
These two investments up very very strategic.
Clearly as you define them, so very well, which are nearly organic investments.
Which again.
Sure.
Deployed because they are world class premium facilities have very high standards in meeting customer expectations Nowadays.
But also very close to completion of one of which is already completed then there is some.
Some business already into that.
<unk>, which is the one in clean stone, though so we expected that the revenue growth is going to be fairly.
But of course, it's going to take some time to get these assets to fluid utilization, which is good news because he is going to give us is underway in the next at least for the next two three years and be able to continue to grow our biologic segment over and beyond the utilization of the gathering assets.
And Jacob I'll, just add here as Alessandro mentioned, there is a very small.
Certainly a material revenue contribution that will come from from the Princeton asset there'll be no revenue in fiscal 'twenty two associated with these with the UK asset and as I noted in my comments around our revised fiscal 2022 guidance Theres a significant amount of.
Cost that were.
Inheriting as well as continuing to invest in here that is absorbed.
In our fiscal 'twenty two guidance.
<unk>, enabling the dollar headwind between the two deals at the EBITDA line. That's included in our in our new fiscal 'twenty two guidance and we'll give more specificity around the contributions of these two.
Additional sites as part of fiscal 2003, when we update our guidance, we'll provide more specificity around our guidance in the in the August call.
Got it and then I guess the follow up you guys called out strength in gene therapy in the quarter can you just talk about what's driving that I think there is some commentary about demand from large customers is this commercial demand do you have some customers nearing commercialization just any context around that.
Yes sure look we have commented in these a few times and the reality is that our pipeline is stronger but is also maturing so that assets that are transitioning to later stages.
Of the pipeline in those.
Excluding the latest BG duty acquire a much higher.
Quantities of viral vectors.
We could drive the drive through with them.
Is pretty normal.
That's which are primarily <unk>.
Having clinical clinical work at this point in time I believe the profile of the customers is more skewed the two.
Neither to larger organizations.
In the latest stage and we also have a.
A good.
Pipeline inevitable stage, which we are progressing.
Got it thanks I'll leave it there.
The next question comes from Jamie Quinn. Please go ahead gena.
Hi, good morning. Thanks.
Thanks for taking our question.
So I know a part of the well and the future is coming from <unk>, and then a pretty soft arrangements on the truck products side okay.
The supply and demand dynamics look like from a regular Nashville finished capacity and do you expect to sustain.
<unk> revenue also finished with somebody.
With contract roll off and.
Our next year, what are you assuming in terms of her finish packing.
Yeah sure look clearly.
We are investing heavily in this area, we see significant demand in front of US I believe there are two factors here number one when you look at the pipeline and the expected.
Bigger products, which are going to be growing commercially in the next few years.
On the on.
That's one dynamic of the other dynamics modal technological one.
As the regulatory expectations continues to increase there will be much more demand in products going towards the underwriter to lead with technology.
Which of course will continue to move.
The demand towards these more modern.
Higher containment assets and with a better city assurance and indeed dynamic is where he is going to be a significant one going towards.
The assets, we've been building over the years the last dynamic <unk> about the LIFO position I believe we continue to see significant opportunity there and there will be products that will continue to require localizing. The activities. The team sees a stability and shelf life and as such we as we described it.
We are investing also in this area. So there are a number of different dynamics the pipeline itself the movement towards.
On the regulated technology in localizing, the product <unk>, <unk>, which are surely creating a significant tailwind for our.
Demand in tech and.
That product, but the size of what we are experiencing buyouts in the last couple of years.
Did he got to accept sensor.
I'm going to tell you, we always look at our assets in that area to be very fungible and very deployable, if you like across the different modalities.
And particularly this is very true for the new facility in Oxford, where we planned it to be able to serve out of that facility across several different modalities, including messenger RNA.
Classic <unk>.
<unk> sales.
In others the facility was.
Intentionally designed in deals to do.
To be able to serve across many different modalities and thats why we saw attractive to us.
That's great.
A follow up I know your PBC study at many call the customer has to stick around post pandemic.
Curious to what extent happy on a call that customers made commitments to you beyond call it projects.
Right now, mostly filling capacity with new non called the customers.
In general how fast do you expect the transition from call that do not call that projects can be.
Sure look that there are some customers, where we have a we don't call it.
Supply relationship, where we call them the partnership so which means that we discussed and that's we have.
Our portfolio approach, where we offered them a capacity.
Cross or the pipeline that they ever coming through so one and we have a visibility on that pipeline on their on their end as they enter the CBD Jim the capacity, we create than we have.
Some contractual arrangements the three.
So the opportunity on both sides to continue the collaboration.
In a productive way going forward I believe that the base. All of these is that he's very strong then the successful relationship that has been created during that <unk>.
And that together in very difficult times.
Providing significant relief to the water in terms of vaccination in that spread and the relationship to a level that makes us feel comfortable about the future prospects of these partners.
Thank you very much.
The next question comes from Sean Dodge from RBC capital markets. Please go ahead.
Yes, thanks, good morning.
Maybe just going back to the comments around the longer term margin outlook.
Tara said margins there running mid Twenty's now and I think you said overtime you can get back there.
You can elevate those are more like biologic global so something in the 30.
Now there were a couple of quarters into the acquisition can you can you just give us an update on.
Which should be the main contributors or drivers behind that and over what timeline do you think you can you can.
Drive that.
Sure.
No.
Luca.
I'm, sorry, Sean as I said in the prepared remarks.
Margin expansion is something we continue to be very focused on we're on track towards our 2004 and 26 long term outlooks.
Went out of our way to specifically call out the Terra business as being one of the drivers of the margin expansion opportunity as you.
Rightfully pointed out here, we do have line of sight to this business operating at margins that are closer to that of biologics, let's say, we're in only our second quarter here with the <unk> business.
Part of the Cadillac portfolio.
And it is already tracking at an EBITDA margin that is north of what we see from our <unk> segment overall in terms of of the.
The phasing of the margin expansion opportunity there I would say we continue to be an early innings. As I said. This is only the second quarter that this business has been part of the portfolio and I think through.
Operational efficiencies running.
The sites more catalyst like as well as further.
Operating leverage from continued and improving higher levels of utilization.
In that business that is one of the key drivers that would help drive the margin expansion the.
The pricing dynamic in this business also remains extremely robust that's another contributor to the potential potential increase in the margin profile here.
And when we highlighted a 28% EBITDA margin in fiscal 'twenty, four but our business was not part of the catalyst portfolio at that time. So this just gives us even more confidence in being able to deliver on that 20%, 28% by 2024, and then ultimately the 30%.
So that was talked about by fiscal 'twenty, six and we will give more specificity around the margin profile of the business in fiscal 'twenty, three but as I said from the 26, 6%. We're at today continue to have line of sight to 28% by 2024.
Okay, that's great and then if we think about.
Tom you mentioned capacity utilization being one of the primary drivers there how does capacity utilization across the <unk> footprint average maybe to like what you did see.
Across the rest of SRT is there a meaningful difference.
It's a very dynamic picture there because that is the physical capacity and the best capacity.
Out of the gate.
We could surely free up additional capacity and seven more demand it through increasing actually flattened our staffing levels and there shouldn't be through applying it.
What we called the capital in a way, which is our operational excellence.
If you'd like a playbook to these assets were.
Applying these two changeovers and and reduce downtime improving efficiencies and deals we will be able to unlock some additional capacity in the <unk> that are willing to significant investments in terms of additional lines, which will create significant additional capacity. These invest.
<unk> had ongoing well.
Well on the way some of them actually started under previous ownership, but which we will continue to give us enough capacity to serve the high demand we're seeing in that area.
Okay very helpful. Thanks again.
Yeah.
Our next question comes from Dave Windley from Jefferies. Please go ahead.
Hi, good morning, Thanks for taking my questions regarding the 23 initial guidance initial revenue guidance commentary that you've given.
Can you comment on what your expectations for gross or specifically in biologics I think Tom you mentioned.
We have a glide path down to the 10% to 15% long term range, but I wasn't sure if that was applicable specifically to 'twenty three.
So look I think we're not in a position to provide.
Fiscal 'twenty three guidance at this stage at the segment level given how early enough in the process. We are as I said.
In my remarks, we're already speaking around next year at a much earlier.
Than we ever have historically that being said, we've clearly laid out four or so key drivers of the fiscal 'twenty three.
Revenue growth of 8% to 10%, including increased utilization of recent investments across the company, which we've talked about on this call that are very much biologics focused. In addition, we also called out a shift from some of our fungible biologics assets currently producing COVID-19 vaccines to other customer product.
<unk>, including recently signed large scale commercial tech transfer programs those two bullet specifically or are related to the biologics segment.
Being said I'm not going to quantify the growth range of that we will give more specificity around that again as we.
Give more clarity around our fiscal 'twenty two.
Fiscal 'twenty three year full guidance as part of our.
<unk>.
August release, but I think that color should be enough here around some of the assumptions around biologics next year.
That is very helpful. Thank you for that Tom. The other question I had was just around Brussels and the remediation there.
Is that on track.
To your expectations to be Remediated and back to two operation.
Then you call it out as a margin compression factor in the segment would you be able to quantify how much that impacted margin in the quarter. Thank you.
So.
First of all on the Thunder here I would tell you. We are pleased with the progress he's an incredible work done by <unk>.
In the in addressing the 43 as we stated in previous calls.
For the agency's needs.
Capex so by definition.
And some of those cap us require.
The facility to be bolstering venmo amount of activity because of more invasive any flood engineering changes to some others don't so I would say that our progress in terms of addressing those requiring them to many changes in the amount of ethylene tools have progressed well.
As described.
In our prepared remarks.
We have the staff the manufacturing operation, So which is which is good especially for patients.
But at the other end and we continue to work diligently on all our capital plan.
On that with regards of the margin I'll pass over to Dawn, Yes, I'll chime in here David So we did see a 200 basis point decline in margin versus where we were in the third quarter of last year.
We don't quantify contributions from individual facilities within the <unk>.
Network, but I will tell you in addition to component sourcing as well as some.
Further investments that we're making in some of our smaller scale less mature businesses that have recently been acquired within biologics. The Brussels remediation efforts are absolutely the bulk of the margin compression that we saw in comparison to the prior year levels.
Okay helpful. Thank you.
The next question comes from Jon <unk> from UBS. Please go ahead Jim.
Good morning, and congrats on the quarter I know you arent quantifying the COVID-19 revenue dollars, but I guess have you started to see any of that drop off in Covid revenues currently and is reflected at all in the fiscal <unk> guidance and then as.
There is a continued shift to lower dose vials any way to think about the cadence of that drop.
In fiscal 'twenty three.
Okay.
Look.
I won't provide the specifics and NDP sit down to how the.
Volumes are shifting at close with guidance for Q4.
I would tell you that.
We are definitely at the moment the seen the transition of the <unk> into the endemic.
Use of the vaccines.
There are many dynamics out there, which are kind of interesting the number one.
Everybody knows in the public venues.
I'm going to let our own green Chiles before a reformulation of vaccines, So Florida, an updated version so vaccines.
But.
It's something that we're going to continue to.
Work on the project for the for the transition to a lower dose.
<unk>.
And as we shared a ship in.
And that we continue to work on those on those budgets as we speak as well as continuing to supply the legacy presentations, so that us. So many many dynamics at play here and the weekends.
That's why we do.
Deep into the season of shedding.
Fiscal 'twenty three guidance in which we need to get to the east coast of the of these revenues as we look into the future.
Got it and I guess, just as a follow up on the preliminary guidance for next year any way to think about what is baked in on cell and gene therapy and Paragon as this becomes a more of a meaningful driver to maybe make up some of that decline in <unk> revenues any.
Any way to comment on his health catalyst portfolio is growing maybe in line with some of the market growth rates.
Yes, I would just say here again, we're not going to get to the specific assumptions around segments or sub segments, even John as part of our fiscal 'twenty three outlook, obviously again I'll reiterate that we'll give more color here in August around this but I will say I think it has been mentioned several times in the remarks today, including John and almost hundreds section.
Around the continued strength that we see around the cell and gene therapy business I think recent current recent <unk> and <unk>.
Current investments that we're making around this segment speak to the demand profile that we see particularly with some very large customers that are.
I would say seeing a good progression of the pipeline moving closer and closer to commercialization. So.
Totally.
Our robust part of our business Mark.
Our business one we continue to be excited about and invest in and certainly will be a contributor to growth next year.
Thanks for taking the questions.
We'll take our next question from Justin <unk> from Deutsche Bank. Please go ahead Justin.
Thank you and good morning, and I appreciate all the detail in the prepared remarks I was just hoping to understand some of the tech transfer projects you have underway.
Is that rescue work or.
New sponsor or existing sponsor projects and.
What type of modalities and technologies.
Are there any considerations, we should take into account.
In terms of timing or duration duration for switching lines.
Yes sure look at these are.
Projects that we've started already a few a few quarters ago of course, the tech transfers don't happen overnight.
We do see opportunities.
With regards of our drug product.
Business, So which is the one where he is.
More likely that youre going to see that translate into the biologics space.
I would tell you that that I've said that all therapeutic areas, which are interesting to us which.
One is the oncology which is.
Mostly encompassing monoclonal antibodies and therapeutic proteins said there are other like diabetes that a lot of other like in neurologic disorders, and so on and so these are all areas, where we look with great interest, which have interesting what a good combination of late stage products as well as you know.
A full rollout.
Commercially approved products and so.
We there that intention on it very strategically engaging with the with the customers in those fees to <unk> and.
And planning the debt.
Capacity and capability set to serve those therapeutic categories and we are pleased with the success that our commercial team add in securing that those those new contracts.
Okay, and then as a follow up in terms of the 2023 gross look is there a way to.
Help us understand how much of that is coming from existing capacity versus.
Some of the new capacity coming online and then.
With the with the EBITDA headwinds that you called out in the fourth quarter, how does that phase out over the next.
A few quarters.
So I'm going to cover the first part the second part I'll leave it to Tom look it's always a combination but I will tell you when you look into the fiscal year 'twenty three.
In terms of having a material.
Any thoughts on the top line normally those those assets are already been qualified already qualified so you should be looking at mostly discounting that from all the investments we've done in the last couple of years on which we've been keeping that.
Up to date in terms of how the capacity that's coming online I defer to the traditional that subsequent change that came online earlier this year.
In the Madison cancels.
Some additional capacities coming online as we described in our gene therapy campus in Baltimore and the BWI Airport the.
The additional capacity that came online in demolish some expansions we've done.
<unk>.
A number of you.
You can assets on which we have been announcing investments, which came online in the last few months, which will be shortly.
Instrumental to.
The progression of the company into fiscal year 'twenty and beyond.
And with regards to the.
The costs related headwinds, we see in both of these acquisitions that have been announced just and it's difficult for me to give you any more specific specifics around what the contributions.
We will look like.
And next year other than to say I would not expect the combined two facilities to get to positive EBITDA next year I do think there will be.
Negative burn associated with this but we will give a lot more again specificity around the individual contributions here as part of our full guidance.
List.
I appreciate it I'll hop back in queue.
Next question comes from Jack Meehan from Nephron Research. Please go ahead Jack.
Thank you good morning.
I had another follow up question on the COVID-19 demand. So your guidance for 2023 contemplates the considerable decline I was curious what youre hearing from customers around demand.
Whether this is really kind of the base case scenario around boosters and.
Demand does persist at current levels would you now consider that upside to the 8% to 10% target you laid out.
Look as I said that there is a lot of dynamics out there.
But I got to tell you.
We still see.
Some dynamics, we'd ask estimates and why we took the defendant decided that that in terms of giving an update on our current health will continue because I think today, we decided to to mitigate the need because of those revenues in our guidance.
That being said that in the next few months.
Some of those dynamics, we will get the theater.
And some of them could get theatres during the summer.
We will continue to provide updates on this one as we get into our next our next call which is in August I would just add Jack I think the way you are interpreting this is exactly right line of sight to 8% to 10% with a considerably declining profile around COVID-19 and if we were to see COVID-19 contribute at the levels in which we are at today that would absolutely be upside to the.
To the 8% to 10% we expect to see for next year.
Great.
And as a follow up Tom Capex for the year.
The aggregate revenue dollars or lower.
$650 million at the midpoint versus closer to $750 million previously.
Just talk about maybe some of the projects going a little slower than you might have thought previously.
Just any thoughts on level of Capex in 2023, I know, it's early just would be helpful.
I think I think 23 remains at elevated year for us from a capex perspective, especially given some of the carry over that we'll see from 2022 as you mentioned, we did lower our 2022 Capex outlook really based on some of the delays we're seeing longer lead times for some.
Key items necessary in order to execute as well as just labor related challenges so.
The challenges that we see on the supply chain side that are impacting the ability to to get.
<unk> necessary components also impacts the ability to get what you need to execute around capex. So.
That is having a.
A little bit of an adverse effect here and one of the reasons why we've lowered the 'twenty two outlook I would expect that 'twenty three outlook to be as I said elevated we're not going to give specific specifics as to what that means in terms of a percentage of revenue, but we did purposefully say in my section of the prepared remarks that we do need to get back to an 8% 10% normalized level.
In the years to come and we absolutely will do that the level of capital intensity. We are seeing in the business is based on the demand profile the progression of the pipeline and the strategic initiatives that we're undertaking but it's not the new normal for the company from a longer term perspective, yeah, I would add that these one locally through that youre seeing that capex numbers per se, which is.
Lower but that would be.
Put us back on the comment before that some of these acquisitions I believe that we have announced that I think need to be seen as an accelerated capex deployment intensive organic growth. So as Tom referred to there are some areas.
Of the supply and we did a gassy over the building.
Sure.
The opportunity and we took a little bit of a full network spending in one year and trying to understand how we best deploy that part of the investment. So so in many ways that there is.
Im movements of some cash if at all what you classify as capex into the.
The acquisition and a little bit of that also goes to the Kingston facility, where we decided to go there because we saw a much faster access to the market compared to some of you know organically with our with our in our Capex projection for the fiscal year.
Okay.
Okay.
Next question operator.
Our next question to try to prove it.
From Bank of America. Please go ahead Doug.
Hi, Good morning, Hey, just a couple of questions. You commented on some inventory builds and I'm also wondering like have you seen stocking at your customers.
And.
And I've got a couple of follow ups to that.
I'll ask Alexandre to jump in here as well, but I'm certainly not hearing or seeing that I think when you think about stocking of raw materials and consumables being very different than stocking of finished dose forms given shelf life dynamics and other things that come into play Derrick.
So not something im seeing or hearing across the business I don't know off hand or anything to add there no no I would say that.
We have not seen that happening.
Across the board I believe that the diesel to due to the fact that the menu add yes at the end of the demand of the market. This will be the stronger. So we are now.
Refocusing the biggest ship that to the markets we serve.
We did it all capacity that we are deploying in those high demand areas.
Great.
OSB segment.
Organic revenue growth rate, there was a little bit lower on the stack basis than I would've thought is there anything specific going on in west side, we've been a little faster given the comp this quarter.
No.
I think this is a business that should be derik, probably performing in the long term outlook range is maybe a 100 basis points or so above what we saw in the quarter here I would say where we've seen.
Growth has been from an early an early phase.
Development program standpoint, I don't think Theres anything underlying in the business and I think our long term outlooks are meant to cover longer analysis period, more like years and year to date looks than simple 90 day period. So we're not seeing anything here the pipeline remains.
Robust.
As do the end market dynamics. So we're not seeing anything here that causes us any concern based on the sort of low to mid single digit growth. We saw in that business in the third quarter. The only the only call out without that there is that.
In one big piece of our OSB.
Business unit. The society that is it is an element of seasonality in terms of the mix of the products that are part of the seasons, where you tend to grow more.
In prescription products for Immunotherapies.
And some other therapeutic areas with some others, it's more consumer focused so depending on visa cycles.
The revenues can grow can grow.
And not only the 70 the volumes of the revenues can be can have a little bit of a dynamic there. So there is a little bit of cyclical dynamic there.
And should we as we emerge out of the dynamic we've seen a significant demand before some consumer product, which were where we.
Really not north United ended during the pandemic because of the.
That specific area of the market being not being not not used.
So maybe a little bit of that dynamic cannot be structured all that are.
<unk> is a business that does have some of those cycles.
Great.
One final one if I can.
When you look at your contracts that are rolling off for Covid. It's like how many of these are in light of the take or pay nature that is I mean, if customers arent.
Arent.
Being able to fulfill what they originally thought, particularly originally thought or are they still being charged for it.
Basically the question being is like is this sort of helping you sort of like make the transition as then.
So this helped EBITDA margin profile.
So.
I will tell you that.
These contracts that caused the take or pay for a reason.
That being said.
We always look at the <unk>.
Sheets to with our clients in the.
The lease succession.
And we normally have a such a wide the relationship with these customers. We always try to find that we actually successfully to find that we'd see ratios in those each of those situations should should present themselves. So we are not.
Send about.
To have to navigate through if they would be faster <unk> December close situation because again, we did <unk>, we have a portfolio approach as opposed to just on a relationship once we see the <unk> center product.
Thank you.
The next question comes from Paul <unk> from Keybanc. Please go ahead Tom.
Hi, Alexandra could you talk to your cell and gene therapy market outlook, specifically your capex as robust obviously is this coming from anticipated approvals or a label expansions on the cell and gene therapy as part of your business.
So I would.
They keep separated that gene therapy is that from cell therapy. If I may do a these are two businesses that are in a deep.
The different stage of the lifecycle with regards of the gene therapies is already a sizable I wouldn't call it to mature, but the scale business.
We built over the years.
Our significant pipeline of Av.
Different customers and treatments and soy debated each bike lineup summer what is driving that the dynamics in the short term in the next few quarters genetic that this pipeline is in fact maturity there. So some of the assets that we've been onboarding.
We had some sizable organizations and again.
In that in that business, we'd be in a very very purposeful in the past.
The organization with a portfolio of products in North America, 71 product with one customer and and also well funded organizations. So these allowed those organizations who have more shots on goal so to speak in terms of our late stage assets, but also the progress of the assets to the latest stage of the pipeline and.
Those assets that IV phase II phase G. The quantities of a viral vectors required these are significantly higher than that debate certosa, even without the on boarding of new programs in your pessimistic drives growth.
With regards of the cell therapy.
I would tell you I see more opportunity there from <unk>.
Commercial.
Treatment as we speak.
As opposed to two mainly related to pipeline.
Both both of these businesses at the moment.
As our processes to be children don't take much to be to be saturated in terms of capacity.
So when you when you look at.
Our facility got a number of suites have been fully utilized and not looking at the tanks of products. They can be can be separated with the lumpy programs. So it's.
It is a it is indeed.
An area of the business, where we're seeing those dynamics, we feel very very comfortable with the prospects of the cell and gene therapy, which you feel like it's been one area of the business in the last couple of years, where we were moving building mode as opposed to be in a <unk> mode and we are pleased that the.
The phase is changing now.
Operator, and then final question.
No.
Alright.
Yeah.
Okay. We'll go we'll go to the next one.
Thank you we'll take our final question from Kristine <unk> from William Blair. Please go ahead Christine.
Hi, Thanks for the question I'll keep it short I think we've covered a lot of ground. So just one for me and I'm just wondering if there's any update on drug substance and the monoclonal antibody production side and specifically outside of not error out of Madison is there any product nearing <unk>.
Commercialization there.
So look I would tell you that we are very very pleased with the performance of our members on site now the site has grown significantly.
This was a greenfield investment for Covenant and now these arrived the tool to have.
A significant amount of capacity again should be now the footprint and the scale, which is suitable for commercial manufacturing I would tell you will see a lot of success in terms of continuing to build our pipeline there.
Thanks to our technology, we continue to be our technology differentiator in the desktop since our thoughtful seats to provide customers with more for that gave the most stable cell lines in a shorter timeframe and what the <unk> technology, providing them. So the pipeline is very very robust.
<unk> growth.
So we are pleased to read the medicine assets, but I would also like to remind the significant investments we're doing in Bloomington drug substance, we shouldnt, we've essentially doubled the capacity, there, which combined without Oxford.
New facility is even significantly increasing that each shelf catheter <unk> to the substance and in general the new modalities.
Okay.
I will now return the call back to that turns netsuke for final remarks.
Thanks, operator, and thanks, everyone for your questions and for taking the time to join our call.
I'd like to close by highlighting a few key points.
The trajectory of Cadillac remains as strong as ever as demonstrated by our ability to increase our fiscal 'twenty two guidance for the third consecutive time this fiscal year.
Our ability to confidently provide robust projected growth targets out to fiscal 2026.
Including expected net revenue growth in fiscal 2023 in line with our long term growth target range of 8% to 10%.
So far this fiscal year, we've been able to achieve an impressive level of success due to our highly talented employee base for continued execution of our long term strategy rooted in our patient first culture and best in class sustainability.
And delivering for our customers and their patients when they need us most.
In addition, we remain encouraged by the positive growth trends across the <unk> industry as well as the prospects for the investments we've made in other therapeutic areas and modalities, which provide a foundation for catlin to continue expanding and enable us to pursue new opportunities for <unk>.
Partnership.
<unk> remains the global leader in enabling its health care partners to optimize product development launch.
Full lifecycle supply for patients around the world.
Further the broad diversity of our products as well as our substantial scale and expertise and development sciences delivery technologies and multi modality manufacturing.
Continue to make us the industry's preferred partner.
I firmly believe that we have the right people leadership processes technologies and long term strategy in place to help our customers and we're proud to see how our work continues to improve the lives of millions. Thank.
Thank you.
Okay.
This now concludes the call. Thank you all for joining please disconnect your lines.
Sure.