Embecta Corp. Reports Fiscal 2024 Fourth Quarter and Full Year Financial Results; Provides Initial Fiscal Year 2025 Financial Guidance; Discontinues Insulin Patch Pump Program; and Announces Restructuring to Streamline Operations and Reduce Costs
Embecta Corp. (EMBC) reported Q4 FY2024 results with revenues of $286.1M, up 1.5%. The company announced significant strategic changes including discontinuing its insulin patch pump program and initiating a restructuring plan expected to generate annual pre-tax savings of $60-65M. The restructuring will incur total pre-tax charges of $35-45M in FY2025. For FY2024, total revenues were $1,123.1M, up 0.2%, with net income of $78.3M. The company provided FY2025 guidance with expected revenues of $1,093-1,110M and adjusted EPS of $2.70-2.90.
Embecta Corp. (EMBC) ha riportato i risultati del Q4 FY2024 con ricavi di 286,1 milioni di dollari, in aumento dell'1,5%. L'azienda ha annunciato significative modifiche strategiche, tra cui la cessazione del programma di pompe per insulina adesive e l'avvio di un piano di ristrutturazione che si prevede genererà risparmi annuali prima delle tasse tra i 60 e i 65 milioni di dollari. La ristrutturazione comporterà oneri totali prima delle tasse tra i 35 e i 45 milioni di dollari nel FY2025. Per il FY2024, i ricavi totali sono stati di 1,123.1 milioni di dollari, in aumento dello 0,2%, con un reddito netto di 78,3 milioni di dollari. L'azienda ha fornito una guida per il FY2025 con ricavi attesi tra 1,093 e 1,110 milioni di dollari e un EPS rettificato tra 2,70 e 2,90 dollari.
Embecta Corp. (EMBC) reportó resultados del Q4 del FY2024 con ingresos de 286,1 millones de dólares, un aumento del 1,5%. La compañía anunció cambios estratégicos significativos, incluyendo la discontinuación de su programa de bomba de insulina en parche y el inicio de un plan de reestructuración que se espera genere ahorros anuales antes de impuestos de entre 60 y 65 millones de dólares. La reestructuración incurrirá en costos totales antes de impuestos de entre 35 y 45 millones de dólares en el FY2025. Para el FY2024, los ingresos totales fueron de 1,123.1 millones de dólares, un aumento del 0,2%, con un ingreso neto de 78,3 millones de dólares. La compañía proporcionó orientación para el FY2025 con ingresos esperados entre 1,093 y 1,110 millones de dólares y un EPS ajustado de entre 2,70 y 2,90 dólares.
Embecta Corp. (EMBC)는 FY2024 4분기 결과로 2억 8610만 달러의 수익을 보고했으며, 이는 1.5% 증가한 수치입니다. 이 회사는 인슐린 패치 펌프 프로그램 중단 및 연간 세전 절감액이 6000만 달러에서 6500만 달러에 이를 것으로 예상되는 구조 조정 계획을 시작하는 등 중요한 전략적 변화를 발표했습니다. 구조 조정에는 FY2025에 걸쳐 총 3500만 달러에서 4500만 달러의 세전 비용이 수반될 것입니다. FY2024의 총 수익은 11억 2310만 달러로 0.2% 증가했으며, 순이익은 7830만 달러였습니다. 이 회사는 FY2025에 대한 예상 수익을 10억 9300만 달러에서 11억 1100만 달러로, 조정 EPS는 2.70달러에서 2.90달러로 제공했습니다.
Embecta Corp. (EMBC) a annoncé les résultats du Q4 FY2024 avec des revenus de 286,1 millions de dollars, en hausse de 1,5 %. L'entreprise a annoncé d'importants changements stratégiques, notamment l'arrêt de son programme de pompe à insuline en patch et le lancement d'un plan de restructuration qui devrait générer des économies annuelles avant impôts de 60 à 65 millions de dollars. La restructuration entraînera des charges totales avant impôts de 35 à 45 millions de dollars pour le FY2025. Pour le FY2024, les revenus totaux s'élevaient à 1,123.1 millions de dollars, en hausse de 0,2 %, avec un bénéfice net de 78,3 millions de dollars. L'entreprise a fourni des prévisions pour le FY2025 avec des revenus attendus entre 1,093 et 1,110 millions de dollars et un BPA ajusté de 2,70 à 2,90 dollars.
Embecta Corp. (EMBC) hat die Ergebnisse des Q4 FY2024 mit einem Umsatz von 286,1 Millionen Dollar, was einem Anstieg von 1,5% entspricht, veröffentlicht. Das Unternehmen gab bedeutende strategische Änderungen bekannt, darunter die Einstellung seines Insulin-Patch-Pumpenprogramms und die Einleitung eines Restrukturierungsplans, der jährlich vor Steuern Einsparungen von 60 bis 65 Millionen Dollar generieren soll. Die Restrukturierung wird in FY2025 Gesamtkosten vor Steuern zwischen 35 und 45 Millionen Dollar verursachen. Für FY2024 lagen die Gesamterlöse bei 1,123.1 Millionen Dollar, was einem Anstieg von 0,2% entspricht, mit einem Nettogewinn von 78,3 Millionen Dollar. Das Unternehmen gab eine Prognose für FY2025 ab mit einem erwarteten Umsatz von 1,093 bis 1,110 Millionen Dollar und einem bereinigten EPS von 2,70 bis 2,90 Dollar.
- Restructuring plan expected to generate $60-65M in annual pre-tax cost savings
- Q4 revenues increased 1.5% to $286.1M
- U.S. Q4 revenues increased 10.3%
- Successfully transitioned 98% of revenue to own ERP system
- Discontinuation of insulin patch pump program
- Expected restructuring charges of $35-45M in FY2025
- Q4 adjusted operating margin declined to 21.1% from 23.1% YoY
- FY2025 guidance projects revenue decline of 1.2-2.7%
- International Q4 revenues decreased 8.8%
Insights
A significant strategic shift is underway at embecta with the discontinuation of their insulin patch pump program and implementation of a major restructuring plan. The company expects
The FY2025 guidance suggests continued pressure with projected revenue decline of
The discontinuation of the insulin patch pump program represents a strategic pivot to focus on core diabetes care products like pen needles, where embecta maintains strong market position. The launch of small-pack GLP-1 needles in Germany is particularly noteworthy given the explosive growth in GLP-1 medications. The
The restructuring appears well-timed as the company completes its separation from BD, with
PARSIPPANY, N.J., Nov. 26, 2024 (GLOBE NEWSWIRE) -- Embecta Corp. (“embecta” or the "Company") (Nasdaq: EMBC), a global diabetes care company, today reported financial results for the three- and twelve-month periods ended September 30, 2024.
"We are pleased to report a strong fourth quarter and end to our fiscal year, as we once again delivered results that exceeded our expectations across key financial metrics. We continued to execute on our strategic priorities, and to date, our significant accomplishments include the successful transition of approximately
Mr. Kurdikar continued: "As our stand-up work nears completion and following an in-depth review of our portfolio and strategy, we have decided to discontinue our insulin patch pump program and initiate an organizational restructuring plan. We believe this approach will streamline operations, reduce costs and enhance our profitability and free cash flow profile. We intend to concentrate our resources on our core business and to prioritize our free cash flow towards paying down debt which we expect will give us the financial flexibility needed for future investments."
The Company currently expects to incur total pre-tax charges of between
The Company expects the restructuring plan to be substantially complete during the first half of fiscal year 2025 and expects the discontinuation of the patch pump program and organizational restructuring plan to generate annualized pre-tax cost savings of between
Fourth Quarter Fiscal Year 2024 Financial Highlights:
- Reported Revenues of
$286.1 million , up1.5% ; - Adjusted Revenues of
$290.2 million , up4.1% on an adjusted constant currency basis- U.S. revenues increased
10.3% on both a reported and adjusted constant currency basis - International revenues decreased
8.8% on a reported basis, and decreased3.1% on an adjusted constant currency basis
- U.S. revenues increased
- Gross profit and margin of
$173.8 million and60.7% , compared to$181.8 million and64.5% in the prior year period - Adjusted gross profit and margin of
$178.3 million and61.4% compared to$182.6 million and64.8% in the prior year period - Operating income and margin of
$26.2 million and9.2% , compared to$25.8 million and9.2% in the prior year period - Adjusted operating income and margin of
$61.2 million and21.1% , compared to$65.2 million and23.1% in the prior year period - Net income of
$14.6 million and earnings per diluted share of$0.25 . This compares to net income of$6.0 million and earnings per diluted share of$0.10 in the prior year period. - Adjusted net income and adjusted earnings per diluted share of
$25.9 million and$0.45 , compared to$34.1 million and$0.59 in the prior year period - Adjusted EBITDA and margin of
$73.0 million and25.2% , compared to$79.6 million and28.2% in the prior year period - Announced a dividend of
$0.15 per share
Twelve Months Ended September 30 Fiscal Year 2024 Financial Highlights:
- Reported Revenues of
$1,123.1 million , up0.2% ; - Adjusted Revenues of
$1,127.2 million , up1.1% on an adjusted constant currency basis- U.S. revenues increased
1.0% on both a reported and adjusted constant currency basis - International revenues decreased
0.7% on a reported basis, and increased1.3% on an adjusted constant currency basis
- U.S. revenues increased
- Gross profit and margin of
$735.2 million and65.5% , compared to$749.9 million and66.9% in the prior year period - Adjusted gross profit and margin of
$740.7 million and65.7% , compared to$751.2 million and67.0% in the prior year period - Operating income and margin of
$166.8 million and14.9% , compared to$221.5 million and19.8% in the prior year period - Adjusted operating income and margin of
$296.9 million and26.3% , compared to$331.5 million and29.6% in the prior year period - Net income and earnings per diluted share of
$78.3 million and$1.34 , respectively. This compares to net income and earnings per diluted share of$70.4 million and$1.22 , respectively, in the prior year period. - Adjusted net income and adjusted earnings per diluted share of
$143.1 million and$2.45 , compared to$172.6 million and$2.99 in the prior year period - Adjusted EBITDA and margin of
$353.4 million and31.4% , compared to$378.7 million and33.8% in the prior year period
Adjusted Constant Currency Revenue Growth is based upon Reported Revenues, adjusted to exclude, depending on the period presented, the items described in Adjusted Revenues and to eliminate the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. The impact of changes in foreign currency may vary significantly from period to period, and such changes generally are outside of the control of our management. We believe that this measure facilitates a comparison of our operating performance exclusive of currency exchange rate fluctuations that do not reflect our underlying performance or business trends. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on an Adjusted constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Fourth Quarter Fiscal Year 2024 Results:
Revenues by geographic region are as follows:
| Three months ended September 30, | ||||||||||||||||||||||||||||||
| Dollars in millions | % Increase/(Decrease) | |||||||||||||||||||||||||||||
| 2024 | 2023 | Reported Revenue Growth | Currency Impact | Adjustment Impact | Adjusted Constant Currency Revenue Growth | |||||||||||||||||||||||||
| Reported Revenues | Adjustment | Adjusted Revenues | Reported Revenues | Adjustment | Adjusted Revenues | % | ||||||||||||||||||||||||
| United States | $ | 167.4 | $ | — | $ | 167.4 | $ | 151.8 | $ | — | $ | 151.8 | 10.3 | % | — | % | — | % | 10.3 | % | ||||||||||
| International1 | 118.7 | (4.1 | ) | 122.8 | 130.1 | — | 130.1 | (8.8 | ) | (2.6 | ) | (3.1 | ) | (3.1 | ) | |||||||||||||||
| Total | $ | 286.1 | $ | (4.1 | ) | $ | 290.2 | $ | 281.9 | $ | — | $ | 281.9 | 1.5 | % | (1.2 | )% | (1.4 | )% | 4.1 | % | |||||||||
Revenues by product family are as follows:
| Three months ended September 30, | |||||||||||||||||||||||||||||||
| Dollars in millions | % Increase/(Decrease) | ||||||||||||||||||||||||||||||
| 2024 | 2023 | Reported Revenue Growth | Currency Impact | Adjustment Impact | Adjusted Constant Currency Revenue Growth | ||||||||||||||||||||||||||
| Reported Revenues | Adjustment | Adjusted Revenues | Reported Revenues | Adjustment | Adjusted Revenues | % | |||||||||||||||||||||||||
| Pen Needles | $ | 215.2 | $ | — | $ | 215.2 | $ | 211.1 | $ | — | $ | 211.1 | 1.9 | % | (0.9 | )% | — | % | 2.8 | % | |||||||||||
| Syringes | 33.7 | — | 33.7 | 33.2 | — | 33.2 | 1.5 | (3.3 | ) | — | 4.8 | ||||||||||||||||||||
| Safety | 32.8 | — | 32.8 | 31.3 | — | 31.3 | 4.8 | (1.0 | ) | — | 5.8 | ||||||||||||||||||||
| Other2 | (0.3 | ) | (4.1 | ) | 3.8 | 3.9 | — | 3.9 | (107.7 | ) | (5.1 | ) | (102.6 | ) | — | ||||||||||||||||
| Contract Manufacturing | 4.7 | — | 4.7 | 2.4 | — | 2.4 | 95.8 | — | — | 95.8 | |||||||||||||||||||||
| Total | $ | 286.1 | $ | (4.1 | ) | $ | 290.2 | $ | 281.9 | $ | — | $ | 281.9 | 1.5 | % | (1.2 | )% | (1.4 | )% | 4.1 | % | ||||||||||
1 In 2024, International includes the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 in order to arrive at Adjusted Revenues.
2 Other includes product revenue for swabs and other accessories. In 2024, Other reflects the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 in order to arrive at Adjusted Revenues.
Our revenues increased by
Twelve Months Fiscal Year 2024 Results:
Revenues by geographic region are as follows:
| Twelve months ended September 30, | ||||||||||||||||||||||||||||||
| Dollars in millions | % Increase/(Decrease) | |||||||||||||||||||||||||||||
| 2024 | 2023 | Reported Revenue Growth | Currency Impact | Adjustment Impact | Adjusted Constant Currency Revenue Growth | |||||||||||||||||||||||||
| Reported Revenues | Adjustment | Adjusted Revenues | Reported Revenues | Adjustment | Adjusted Revenues | % | ||||||||||||||||||||||||
| United States | $ | 607.2 | $ | — | $ | 607.2 | $ | 601.4 | $ | — | $ | 601.4 | 1.0 | % | — | % | — | % | 1.0 | % | ||||||||||
| International1 | 515.9 | (4.1 | ) | 520.0 | 519.4 | — | 519.4 | (0.7 | ) | (1.2 | ) | (0.8 | ) | 1.3 | ||||||||||||||||
| Total | $ | 1,123.1 | $ | (4.1 | ) | $ | 1,127.2 | $ | 1,120.8 | $ | — | $ | 1,120.8 | 0.2 | % | (0.5 | )% | (0.4 | )% | 1.1 | % | |||||||||
Revenues by product family are as follows:
| Twelve months ended September 30, | ||||||||||||||||||||||||||||||
| Dollars in millions | % Increase/(Decrease) | |||||||||||||||||||||||||||||
| 2024 | 2023 | Reported Revenue Growth | Currency Impact | Adjustment Impact | Adjusted Constant Currency Revenue Growth | |||||||||||||||||||||||||
| Reported Revenues | Adjustment | Adjusted Revenues | Reported Revenues | Adjustment | Adjusted Revenues | % | ||||||||||||||||||||||||
| Pen Needles | $ | 844.4 | $ | — | $ | 844.4 | $ | 829.2 | $ | — | $ | 829.2 | 1.8 | % | (0.8 | )% | — | % | 2.6 | % | ||||||||||
| Syringes | 126.2 | — | 126.2 | 138.1 | — | 138.1 | (8.6 | ) | 0.2 | — | (8.8 | ) | ||||||||||||||||||
| Safety | 129.4 | — | 129.4 | 126.3 | — | 126.3 | 2.5 | — | — | 2.5 | ||||||||||||||||||||
| Other2 | 10.3 | (4.1 | ) | 14.4 | 14.2 | — | 14.2 | (27.5 | ) | — | (28.2 | ) | 0.7 | |||||||||||||||||
| Contract Manufacturing | 12.8 | — | 12.8 | 13.0 | — | 13.0 | (1.5 | ) | — | — | (1.5 | ) | ||||||||||||||||||
| Total | $ | 1,123.1 | $ | (4.1 | ) | $ | 1,127.2 | $ | 1,120.8 | $ | — | $ | 1,120.8 | 0.2 | % | (0.5 | )% | (0.4 | )% | 1.1 | % | |||||||||
1 In 2024, International includes the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 in order to arrive at Adjusted Revenues.
2 Other includes product sales for swabs and other accessories. In 2024, Other reflects the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 in order to arrive at Adjusted Revenues.
Our revenues increased by
Preliminary Fiscal Year 2025 Financial Guidance:
For fiscal year 2025, excluding the patch pump program, the Company expects:
| Dollars in millions, except percentages and per share data | |||
| Reported Revenues | |||
| Reported Revenue Growth (%) | (2.7)% - (1.2)% | ||
| Impact of F/X (%) | (0.6)% | ||
| Impact of Italian Payback Measure (1) (%) | 0.4% | ||
| Adjusted Constant Currency Revenue Growth (%) | (2.5)% - (1.0)% | ||
| Adjusted Gross Margin (%) | |||
| Adjusted Operating Margin (%) | |||
| Adjusted Earnings per Diluted Share | |||
| Adjusted EBITDA Margin (%) | |||
| (1) | Reflects the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 recorded in Revenues. | |
We are unable to present a quantitative reconciliation of our expected adjusted earnings per diluted share, expected adjusted EBITDA and our expected adjusted EBITDA margin as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of any one-time items. The financial impact of these one-time items is uncertain and is dependent on various factors, including timing, and could be material to our Condensed Consolidated Statements of Income.
Balance sheet, Liquidity and Other Updates
During the fourth quarter, the Company paid an aggregate principal amount of approximately
As of September 30, 2024, the Company had
The Company’s Board of Directors declared a quarterly cash dividend of
Fiscal 2024 Fourth Quarter and Full Year Earnings Conference Call:
Management will host a conference call at 8:00 a.m. Eastern Time (ET) on November 26, 2024 to discuss the results of the quarter and full year, provide an update on its business, and host a question and answer session. Those who would like to participate may access the live webcast here, or access the teleconference here. The live webcast can also be accessed via the Company’s website at investors.embecta.com.
A webcast replay of the call will be available beginning at 11:00 a.m. ET on November 26, 2024, via the embecta investor relations website and archived on the website for one year.
| Condensed Consolidated Statements of Income Embecta Corp. (Unaudited, in millions, except per share data) | |||||||||||||||
| Three Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues | $ | 286.1 | $ | 281.9 | $ | 1,123.1 | $ | 1,120.8 | |||||||
| Cost of products sold | 112.3 | 100.1 | 387.9 | 370.9 | |||||||||||
| Gross Profit | $ | 173.8 | $ | 181.8 | $ | 735.2 | $ | 749.9 | |||||||
| Operating expenses: | |||||||||||||||
| Selling and administrative expense | 96.8 | 95.7 | 365.1 | 341.3 | |||||||||||
| Research and development expense | 19.8 | 23.6 | 78.8 | 85.2 | |||||||||||
| Impairment expense | — | 2.5 | — | 2.5 | |||||||||||
| Other operating expenses | 31.0 | 34.2 | 124.5 | 99.4 | |||||||||||
| Total Operating Expenses | $ | 147.6 | $ | 156.0 | $ | 568.4 | $ | 528.4 | |||||||
| Operating Income | $ | 26.2 | $ | 25.8 | $ | 166.8 | $ | 221.5 | |||||||
| Interest expense, net | (29.0 | ) | (27.6 | ) | (112.3 | ) | (107.0 | ) | |||||||
| Other income (expense), net | (4.2 | ) | 6.8 | (10.3 | ) | (8.8 | ) | ||||||||
| Income (Loss) Before Income Taxes | $ | (7.0 | ) | $ | 5.0 | $ | 44.2 | $ | 105.7 | ||||||
| Income tax provision (benefit) | (21.6 | ) | (1.0 | ) | (34.1 | ) | 35.3 | ||||||||
| Net Income | $ | 14.6 | $ | 6.0 | $ | 78.3 | $ | 70.4 | |||||||
| Net Income per common share: | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.10 | $ | 1.36 | $ | 1.23 | |||||||
| Diluted | $ | 0.25 | $ | 0.10 | $ | 1.34 | $ | 1.22 | |||||||
| Condensed Consolidated Balance Sheets Embecta Corp. (Unaudited, in millions, except share and per share data) | |||||||
| September 30, 2024 | September 30, 2023 | ||||||
| Assets | |||||||
| Current Assets | |||||||
| Cash and equivalents | $ | 267.5 | $ | 326.3 | |||
| Restricted cash | 6.7 | 0.2 | |||||
| Trade receivables, net (net of allowance for doubtful accounts of | 193.0 | 16.7 | |||||
| Inventories: | |||||||
| Materials | 40.4 | 32.1 | |||||
| Work in process | 4.8 | 8.1 | |||||
| Finished products | 126.3 | 111.9 | |||||
| Total Inventories | $ | 171.5 | $ | 152.1 | |||
| Amounts due from Becton, Dickinson and Company | 53.8 | 142.4 | |||||
| Prepaid expenses and other | 68.5 | 111.4 | |||||
| Total Current Assets | $ | 761.0 | $ | 749.1 | |||
| Property, Plant and Equipment, Net | 290.4 | 300.2 | |||||
| Goodwill and Intangible Assets | 23.7 | 24.7 | |||||
| Deferred Income Taxes and Other Assets | 210.2 | 140.4 | |||||
| Total Assets | $ | 1,285.3 | $ | 1,214.4 | |||
| Liabilities and Equity | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 91.0 | $ | 53.5 | |||
| Accrued expenses | 134.2 | 118.1 | |||||
| Amounts due to Becton, Dickinson and Company | 42.5 | 73.1 | |||||
| Salaries, wages and related items | 66.7 | 62.1 | |||||
| Current debt obligations | 9.5 | 9.5 | |||||
| Current finance lease liabilities | 3.4 | 3.6 | |||||
| Income taxes | 26.7 | 33.6 | |||||
| Total Current Liabilities | $ | 374.0 | $ | 353.5 | |||
| Deferred Income Taxes and Other Liabilities | 54.1 | 57.2 | |||||
| Long-Term Debt | 1,565.3 | 1,593.9 | |||||
| Non Current Finance Lease Liabilities | 30.2 | 31.5 | |||||
| Contingencies | |||||||
| Embecta Corp. Equity | |||||||
| Common stock, Authorized - 250,000,000 Issued and outstanding - 57,707,285 as of September 30, 2024 and 57,333,353 as of September 30, 2023 | 0.6 | 0.6 | |||||
| Additional paid-in capital | 52.5 | 27.9 | |||||
| Accumulated deficit | (498.6 | ) | (541.1 | ) | |||
| Accumulated other comprehensive loss | (292.8 | ) | (309.1 | ) | |||
| Total Equity | (738.3 | ) | (821.7 | ) | |||
| Total Liabilities and Equity | $ | 1,285.3 | $ | 1,214.4 | |||
| Condensed Consolidated Statements of Cash Flows Embecta Corp. (Unaudited, in millions) | |||||||
| Twelve Months Ended September 30, | |||||||
| 2024 | 2023 | ||||||
| Operating Activities | |||||||
| Net income | $ | 78.3 | $ | 70.4 | |||
| Adjustments to net income to derive net cash provided by operating activities: | |||||||
| Depreciation and amortization | 36.2 | 32.6 | |||||
| Amortization of debt issuance costs | 6.9 | 6.4 | |||||
| Amortization of cloud computing costs | 6.3 | — | |||||
| Impairment of property, plant and equipment | — | 2.5 | |||||
| Stock-based compensation | 26.3 | 21.5 | |||||
| Deferred income taxes | (70.6 | ) | 14.3 | ||||
| Change in operating assets and liabilities: | |||||||
| Trade receivables, net | (174.7 | ) | 7.0 | ||||
| Inventories | (16.5 | ) | (28.8 | ) | |||
| Due from/due to Becton, Dickinson and Company | 58.9 | (23.2 | ) | ||||
| Prepaid expenses and other | 19.9 | (14.2 | ) | ||||
| Accounts payable, accrued expenses and other current liabilities | 60.0 | 7.9 | |||||
| Income and other net taxes payable | 32.8 | (12.6 | ) | ||||
| Other assets and liabilities, net | (28.1 | ) | (16.1 | ) | |||
| Net Cash Provided by Operating Activities | $ | 35.7 | $ | 67.7 | |||
| Investing Activities | |||||||
| Capital expenditures | (15.8 | ) | (26.5 | ) | |||
| Net Cash Used for Investing Activities | $ | (15.8 | ) | $ | (26.5 | ) | |
| Financing Activities | |||||||
| Payments on long-term debt | (34.6 | ) | (9.5 | ) | |||
| Payments related to tax withholding for stock-based compensation | (3.0 | ) | (3.6 | ) | |||
| Payments on finance lease | (1.3 | ) | (1.2 | ) | |||
| Dividend payments | (34.5 | ) | (34.4 | ) | |||
| Net Cash Used for Financing Activities | $ | (73.4 | ) | $ | (48.7 | ) | |
| Effect of exchange rate changes on cash and equivalents and restricted cash | 1.2 | 3.1 | |||||
| Net Change in Cash and equivalents and restricted cash | $ | (52.3 | ) | $ | (4.4 | ) | |
| Opening Cash and equivalents and restricted cash | 326.5 | 330.9 | |||||
| Closing Cash and equivalents and restricted cash | $ | 274.2 | $ | 326.5 | |||
About Non-GAAP financial measures
In evaluating our operating performance, we supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial measures including (i) Adjusted Revenues, (ii) earnings before interest, taxes, depreciation, and amortization (“EBITDA”), (iii) Adjusted EBITDA and Adjusted EBITDA Margin, (iv) Adjusted Gross Profit and Adjusted Gross Profit Margin, (v) Adjusted Constant Currency Revenue Growth, (vi) Adjusted Operating Income and Adjusted Operating Income Margin, and (vii) Adjusted Net Income and Adjusted earnings per diluted share. These non-GAAP financial measures are indicators of our performance that are not required by, or presented in accordance with, GAAP. They are presented with the intent of providing greater transparency to financial information used by us in our financial analysis and operational decision-making. We believe that these non-GAAP measures provide meaningful information to assist investors, stockholders and other readers of our consolidated financial statements in making comparisons to our historical operating results and analyzing the underlying performance of our results of operations. However, the presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these non-GAAP measures may not be comparable to other similarly titled measures of other companies. The Company uses non-GAAP financial measures in its operational and financial decision making, and believes that it is useful to exclude certain items in order to focus on what it regards to be a meaningful alternative representation of the underlying operating performance of the business.
For the three- and twelve-month periods ended September 30, 2024 and 2023, the reconciliation of (1) GAAP Revenues ("Reported Revenues") to Adjusted Revenues and (2) GAAP Net income to EBITDA and Adjusted EBITDA was as follows (unaudited, in millions)
| Three Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Reported Revenues | $ | 286.1 | $ | 281.9 | $ | 1,123.1 | $ | 1,120.8 | |||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Adjusted Revenues | $ | 290.2 | $ | 281.9 | $ | 1,127.2 | $ | 1,120.8 | |||||||
| GAAP Net Income | $ | 14.6 | $ | 6.0 | $ | 78.3 | $ | 70.4 | |||||||
| Interest expense, net | 29.0 | 27.6 | 112.3 | 107.0 | |||||||||||
| Income taxes | (21.6 | ) | (1.0 | ) | (34.1 | ) | 35.3 | ||||||||
| Depreciation and amortization | 9.5 | 9.3 | 36.2 | 32.6 | |||||||||||
| EBITDA | $ | 31.5 | $ | 41.9 | $ | 192.7 | $ | 245.3 | |||||||
| Stock-based compensation expense (2) | 6.2 | 4.9 | 26.6 | 21.9 | |||||||||||
| One-time stand up costs (3) | 26.2 | 31.8 | 111.2 | 93.7 | |||||||||||
| European regulatory initiative-related costs ("EU MDR") (4) | 0.2 | 0.6 | 0.5 | 1.3 | |||||||||||
| Business optimization and severance related costs (5) | 1.7 | 2.6 | 7.4 | 5.6 | |||||||||||
| Impairment losses (6) | — | 2.5 | — | 2.5 | |||||||||||
| Deferred jurisdiction adjustments in Other income (expense), net for taxes (7) | 0.6 | (4.7 | ) | 4.6 | 8.4 | ||||||||||
| Amortization of cloud computing arrangements (8) | 2.5 | — | 6.3 | — | |||||||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Adjusted EBITDA | $ | 73.0 | $ | 79.6 | $ | 353.4 | $ | 378.7 | |||||||
| Adjusted EBITDA Margin | 25.2 | % | 28.2 | % | 31.4 | % | 33.8 | % | |||||||
| 1 | Reflects the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 recorded in Revenues. | |
| 2. | Represents stock-based compensation expense incurred during the three and twelve months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024, | |
| 3. | One-time stand-up costs incurred primarily include: (i) product registration and labeling costs; (ii) warehousing and distribution set-up costs; (iii) legal costs associated with patents and trademark work; (iv) temporary headcount resources within accounting, tax, finance, human resources, regulatory and IT; and (v) one-time business integration and IT related costs primarily associated with our global ERP implementation. For the three months ended September 30, 2024, approximately | |
| 4. | Represents costs required to develop processes and systems to comply with regulations such as the EU MDR and General Data Protection Regulation ("GDPR") which represent a significant, unusual change to the existing regulatory framework. We consider these costs to be duplicative of previously incurred costs and/or one-off costs, which are limited to a specific period of time. These costs are recorded in Research and development expense. | |
| 5. | Represents business optimization and severance related costs associated with standing up the organization recorded in Other operating expenses. | |
| 6. | Relates to impairment charges incurred related to the abandonment of certain manufacturing equipment in China that is no longer in use that was inherited as part of the Separation from BD. The impairment charges are recorded in Impairment Expense. | |
| 7. | Represents amounts due to BD for tax liabilities incurred in deferred closing jurisdictions where BD is considered the primary obligor. | |
| 8. | Represents amortization of implementation costs associated with cloud computing arrangements recorded in Other operating expenses. | |
For the three- and twelve-month periods ended September 30, 2024, the reconciliations of (1) GAAP Revenues ("Reported Revenues") to Adjusted Revenues (2) GAAP Gross Profit and Gross Margin to Adjusted Gross Profit and Adjusted Gross Margin, (3) GAAP Operating Income and Operating Margin to Adjusted Operating Income and Adjusted Operating Income Margin and (4) GAAP Net Income Per Diluted Share to Adjusted Net Income Per Diluted Share are as follows (unaudited in millions, except per share amounts):
| Three Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Reported Revenues | $ | 286.1 | $ | 281.9 | $ | 1,123.1 | $ | 1,120.8 | |||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Adjusted Revenues | $ | 290.2 | $ | 281.9 | $ | 1,127.2 | $ | 1,120.8 | |||||||
| GAAP Gross Profit | $ | 173.8 | $ | 181.8 | $ | 735.2 | $ | 749.9 | |||||||
| GAAP Gross Profit Margin | 60.7 | % | 64.5 | % | 65.5 | % | 66.9 | % | |||||||
| Stock-based compensation expense (2) | 0.1 | — | 0.3 | 0.1 | |||||||||||
| Amortization of intangible assets (3) | 0.3 | 0.8 | 1.1 | 1.2 | |||||||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Adjusted Gross Profit | $ | 178.3 | $ | 182.6 | $ | 740.7 | $ | 751.2 | |||||||
| Adjusted Gross Profit Margin | 61.4 | % | 64.8 | % | 65.7 | % | 67.0 | % | |||||||
| GAAP Operating Income | $ | 26.2 | $ | 25.8 | $ | 166.8 | $ | 221.5 | |||||||
| GAAP Operating Income Margin | 9.2 | % | 9.2 | % | 14.9 | % | 19.8 | % | |||||||
| Amortization of intangible assets (3) | 0.3 | 0.8 | 1.1 | 1.2 | |||||||||||
| One-time stand up costs (4) | 27.5 | 31.8 | 112.5 | 93.7 | |||||||||||
| EU MDR (5) | 0.2 | 0.6 | 0.5 | 1.3 | |||||||||||
| Stock-based compensation expense (6) | 1.2 | 1.1 | 4.5 | 5.7 | |||||||||||
| Impairment losses (7) | — | 2.5 | — | 2.5 | |||||||||||
| Business optimization and severance related costs (8) | 1.7 | 2.6 | 7.4 | 5.6 | |||||||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Adjusted Operating Income | $ | 61.2 | $ | 65.2 | $ | 296.9 | $ | 331.5 | |||||||
| Adjusted Operating Income Margin | 21.1 | % | 23.1 | % | 26.3 | % | 29.6 | % | |||||||
| GAAP Net Income | $ | 14.6 | $ | 6.0 | $ | 78.3 | $ | 70.4 | |||||||
| Adjustments: | |||||||||||||||
| GAAP Income tax provision (benefit) | (21.6 | ) | (1.0 | ) | (34.1 | ) | 35.3 | ||||||||
| Amortization of intangible assets (3) | 0.3 | 0.8 | 1.1 | 1.2 | |||||||||||
| One-time stand up costs (4) | 27.5 | 31.8 | 112.5 | 93.7 | |||||||||||
| EU MDR (5) | 0.2 | 0.6 | 0.5 | 1.3 | |||||||||||
| Stock-based compensation expense (6) | 1.2 | 1.1 | 4.5 | 5.7 | |||||||||||
| Impairment losses (7) | — | 2.5 | — | 2.5 | |||||||||||
| Business optimization and severance related costs (8) | 1.7 | 2.6 | 7.4 | 5.6 | |||||||||||
| Italian payback measure (1) | 4.1 | — | 4.1 | — | |||||||||||
| Deferred jurisdiction adjustments in Other income (expense), net for taxes (9) | 0.6 | (4.7 | ) | 4.6 | 8.4 | ||||||||||
| Non-GAAP Income tax provision (10) | (2.7 | ) | (5.6 | ) | (35.8 | ) | (51.5 | ) | |||||||
| Adjusted Net Income | $ | 25.9 | $ | 34.1 | $ | 143.1 | $ | 172.6 | |||||||
| GAAP Net Income per Diluted share | $ | 0.25 | $ | 0.10 | $ | 1.34 | $ | 1.22 | |||||||
| Adjusted Net Income per Diluted share | $ | 0.45 | $ | 0.59 | $ | 2.45 | $ | 2.99 | |||||||
| Diluted weighted-average shares outstanding (in thousands) | 58,122 | 57,473 | 58,326 | 57,758 | |||||||||||
| (1) | Reflects the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 recorded in Revenues. | |
| (2) | Represents stock-based compensation expense recognized during the period associated with the incremental value of converted legacy BD share-based awards and sign-on equity awards granted to certain members of the embecta leadership team in connection with the Separation from BD recorded in Cost of products sold. | |
| (3) | Amortization of intangible assets is recorded in Cost of products sold. | |
| (4) | One-time stand-up costs incurred primarily include: (i) product registration and labeling costs; (ii) manufacturing, warehousing, and distribution set-up costs; (iii) legal costs associated with patents and trademark work; (iv) temporary headcount resources within accounting, tax, finance, human resources, regulatory and IT; and (v) one-time business integration and IT related costs primarily associated with our global ERP implementation. For the three months ended September 30, 2024, approximately | |
| (5) | Represents costs required to develop processes and systems to comply with regulations such as the EU MDR and GDPR which represent a significant, unusual change to the existing regulatory framework. We consider these costs to be duplicative of previously incurred costs and/or one-off costs, which are limited to a specific period of time. These costs are recorded in Research and development expense. | |
| (6) | Represents stock-based compensation expense recognized during the period associated with the incremental value of converted legacy BD share-based awards and sign-on equity awards granted to certain members of the embecta leadership team in connection with the Separation from BD. For the three months ended September 30, 2024, | |
| (7) | Relates to impairment charges incurred related to the abandonment of certain manufacturing equipment in China that is no longer in use that was inherited as part of the Separation from BD. The impairment charges are recorded in Impairment Expense. | |
| (8) | Represents business optimization and severance related costs associated with standing up the organization recorded in Other operating expenses. | |
| (9) | Represents amounts due to BD for tax liabilities incurred in deferred jurisdictions where BD is considered the primary obligor. | |
| (10) | Represents the amount of tax expense that the Company estimates that it would record if it used non-GAAP results instead of GAAP results in the calculation of its tax provision. The non-GAAP effective tax rate for the three and twelve months ended September 30, 2024 were | |
About embecta
embecta is a global diabetes care company that is leveraging its nearly 100-year legacy in insulin delivery to empower people with diabetes to live their best life through innovative solutions, partnerships and the passion of approximately 2,000 employees around the globe. For more information, visit embecta.com or follow our social channels on LinkedIn, Facebook, and Instagram.
Safe Harbor Statement Regarding Forward-Looking Statements
This press release contains express or implied "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our current expectations regarding our future results from operations, performance, financial condition, goals, strategies, plans and achievements. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors, and you should not rely upon them except as statements of our present intentions and of our present expectations, which may or may not occur. When we use words such as "believes," "expects," "anticipates," "estimates," "plans," "intends", “pursue”, “will”, “may” or similar expressions, we are making forward-looking statements. For example, embecta is using forward-looking statements when it discusses its plans to discontinue its patch pump program, concentrate its resources on its core business, prioritize free cash flow towards paying down debt, and create financial flexibility for future investments, its ability to reduce costs, streamline operations and enhance profitability, its expected savings and expenses from its organizational restructuring and the timing thereof, its fiscal 2025 financial guidance and its expectations with respect to strengthening its base business, separating and standing up embecta as an independent company, and investing in growth, and geographic expansion of new product pacts for non-insulin diabetes drugs. Although we believe that our forward-looking statements are based on reasonable assumptions, our expected results may not be achieved, and actual results may differ materially from our expectations. In addition, important factors that could cause actual results to differ from expectations include, among others: (i) competitive factors that could adversely affect embecta’s operations; (ii) any inability to extend or replace the services provided by BD under the transaction documents; (iii) any failure by BD to perform its obligations under the various separation agreements entered into in connection with the separation and distribution; (iv) any events that adversely affect the sale or profitability of embecta’s products or the revenues delivered from sales to its customers; (v) increases in operating costs, including fluctuations in the cost and availability of raw materials or components used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items; (vi) changes in reimbursement practices of governments or private payers or other cost containment measures; (vii) the adverse financial impact resulting from unfavorable changes in foreign currency exchange rates, as well as regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates; (viii) the impact of changes in U.S. federal laws and policy that could affect fiscal and tax policies, healthcare and international trade, including import and export regulation and international trade agreements; (ix) any new pandemic, or any geopolitical instability, including disruptions in its operations and supply chains; (x) new or changing laws and regulations, or changes in enforcement practices, including laws relating to healthcare, environmental protection, trade, monetary and fiscal policies, taxation and licensing and regulatory requirements for products; (xi) the expected benefits of the separation from BD; (xii) risks associated with embecta’s indebtedness; (xiii) the risk that ongoing dis-synergy costs, costs of restructuring and other costs incurred in connection with the separation from BD will exceed our estimates of these costs; (xiv) the risk that it will be more difficult than expected to effect embecta’s full separation from BD; (xv) expectations related to the costs, profitability, timing and the estimated financial impact of, and charges and savings associated with, the restructuring plan we announced; (xvi) risks associated with not completing strategic collaborative partnerships and acquisitions for innovative technologies, complementary product lines, and new markets; and (xvii) the other risks described in our periodic reports filed with the Securities and Exchange Commission, including under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, as further updated by our Quarterly Reports on Form 10-Q we have filed or will file hereafter. Except as required by law, we undertake no obligation to update any forward-looking statements appearing in this release.
CONTACTS
Investors:
Pravesh Khandelwal
VP, Head of Investor Relations
551-264-6547
Contact IR
Media:
Christian Glazar
Sr. Director, Corporate Communications
908-821-6922
Contact Media Relations
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