Embecta Corp. Reports Third Quarter Fiscal 2024 Financial Results
Embecta Corp. (Nasdaq: EMBC) reported its third-quarter fiscal 2024 results with revenues of $272.5 million, a decline of 4.8% year-over-year. The gross profit was $190.1 million, with a margin of 69.8%, up from 66.2% a year ago. Adjusted earnings per diluted share reached $0.74, rising from $0.69 in the prior period.
Despite revenue contraction, the company showed stable performance with adjusted EBITDA of $99.2 million, reflecting a 36.4% margin.
For the nine-month period, revenues were $837.0 million, down 0.2% from the previous year. Net income stood at $63.7 million, with earnings per diluted share of $1.10.
Embecta also revised its fiscal 2024 guidance, expecting revenues between $1,111 - $1,116 million, adjusted EPS of $2.30 - $2.35, and an adjusted EBITDA margin of 31.25% - 31.50%.
The company advanced its ERP systems, strategic initiatives, and FDA 510(k) filing for its open-loop patch pump program.
Embecta Corp. (Nasdaq: EMBC) ha riportato i risultati del terzo trimestre dell'anno fiscale 2024, con un fatturato di 272,5 milioni di dollari, in calo del 4,8% rispetto all'anno precedente. Il profitto lordo è stato di 190,1 milioni di dollari, con un margine del 69,8%, in aumento rispetto al 66,2% dell'anno scorso. Gli utili per azione diluiti rettificati hanno raggiunto 0,74 dollari, rispetto ai 0,69 dollari del periodo precedente.
Nonostante il calo dei ricavi, l'azienda ha mostrato una performance stabile con un EBITDA rettificato di 99,2 milioni di dollari, che riflette un margine del 36,4%.
Per il periodo di nove mesi, i ricavi sono stati di 837,0 milioni di dollari, in diminuzione dello 0,2% rispetto all'anno precedente. Il reddito netto è stato di 63,7 milioni di dollari, con utili per azione diluiti di 1,10 dollari.
Embecta ha anche rivisto le previsioni per l'anno fiscale 2024, aspettandosi ricavi tra 1.111 e 1.116 milioni di dollari, EPS rettificato tra 2,30 e 2,35 dollari, e un margine EBITDA rettificato tra il 31,25% e il 31,50%.
L'azienda ha avanzato i propri sistemi ERP, le iniziative strategiche e la registrazione FDA 510(k) per il suo programma di pompa a patch a circuito aperto.
Embecta Corp. (Nasdaq: EMBC) anunció sus resultados del tercer trimestre del año fiscal 2024, con ingresos de 272,5 millones de dólares, una disminución del 4,8% en comparación con el año anterior. La ganancia bruta fue de 190,1 millones de dólares, con un margen del 69,8%, superior al 66,2% del año pasado. Las ganancias por acción diluidas ajustadas alcanzaron 0,74 dólares, un aumento respecto a los 0,69 dólares del periodo anterior.
A pesar de la contracción de ingresos, la empresa mostró un desempeño estable con un EBITDA ajustado de 99,2 millones de dólares, reflejando un margen del 36,4%.
En el período de nueve meses, los ingresos fueron de 837,0 millones de dólares, una caída del 0,2% en comparación con el año anterior. La renta neta se situó en 63,7 millones de dólares, con ganancias por acción diluidas de 1,10 dólares.
Embecta también revisó su orientación para el año fiscal 2024, esperando ingresos entre 1.111 y 1.116 millones de dólares, EPS ajustado de 2,30 a 2,35 dólares, y un margen EBITDA ajustado del 31,25% al 31,50%.
La compañía avanzó en sus sistemas ERP, iniciativas estratégicas y la presentación de la FDA 510(k) para su programa de bomba de parche de circuito abierto.
엠벡타(Embecta Corp.) (나스닥: EMBC)는 2024 회계년도 3분기 실적을 보고하며 2억 7천 2백 5십만 달러의 매출을 기록했으며, 이는 전년 대비 4.8% 감소한 수치입니다. 총 이익은 1억 9천 1백만 달러로, 마진은 69.8%로 전년의 66.2%에서 증가했습니다. 희석주당 조정된 수익은 0.74달러로, 이전 기간의 0.69달러에서 상승했습니다.
수익 감소에도 불구하고, 회사는 9천 9백 2십만 달러의 조정 EBITDA로 안정적인 성과를 보여주며, 이는 36.4%의 마진을 반영합니다.
9개월 동안의 매출은 8억 3천 7백만 달러로, 전년 대비 0.2% 감소했습니다. 순이익은 6천 3백 7십만 달러로, 희석주당 수익은 1.10달러입니다.
엠벡타는 2024 회계연도 가이던스를 수정하여 11억 1천1백만에서 11억 1천6백만 달러 사이의 매출, 2.30에서 2.35달러의 조정 EPS, 31.25%에서 31.50%의 조정 EBITDA 마진을 예상하고 있습니다.
회사는 ERP 시스템, 전략적 이니셔티브와 오픈 루프 패치 펌프 프로그램에 대한 FDA 510(k) 신청을 발전시켰습니다.
Embecta Corp. (Nasdaq: EMBC) a publié les résultats de son troisième trimestre de l'année fiscale 2024, avec des revenus de 272,5 millions de dollars, en diminution de 4,8 % par rapport à l'année précédente. Le bénéfice brut s'est élevé à 190,1 millions de dollars, avec une marge de 69,8 %, contre 66,2 % l'année dernière. Les bénéfices ajustés par action diluée ont atteint 0,74 dollar, en hausse par rapport à 0,69 dollar lors de la période précédente.
Malgré la contraction des revenus, l'entreprise a montré une performance stable avec un EBITDA ajusté de 99,2 millions de dollars, reflétant une marge de 36,4 %.
Pour la période de neuf mois, les revenus étaient de 837,0 millions de dollars, en baisse de 0,2 % par rapport à l'année précédente. Le revenu net s'élevait à 63,7 millions de dollars, avec un bénéfice par action diluée de 1,10 dollar.
Embecta a également révisé ses prévisions pour l'exercice 2024, s'attendant à des revenus compris entre 1 111 et 1 116 millions de dollars, un BPA ajusté entre 2,30 et 2,35 dollars, et une marge EBITDA ajustée de 31,25 % à 31,50 %.
La société a avancé ses systèmes ERP, ses initiatives stratégiques et sa demande FDA 510(k) pour son programme de pompes à patch à circuit ouvert.
Embecta Corp. (Nasdaq: EMBC) hat die Ergebnisse des dritten Quartals des Geschäftsjahres 2024 bekannt gegeben, mit einem Umsatz von 272,5 Millionen Dollar, was einem Rückgang von 4,8% im Vergleich zum Vorjahr entspricht. Der Bruttogewinn betrug 190,1 Millionen Dollar, mit einer Marge von 69,8%, einem Anstieg gegenüber 66,2% im Vorjahr. Die bereinigten Erträge je verwässerter Aktie beliefen sich auf 0,74 Dollar, gegenüber 0,69 Dollar im Vorzeitraum.
Trotz des Rückgangs der Einnahmen zeigte das Unternehmen eine stabile Leistung mit einem bereinigten EBITDA von 99,2 Millionen Dollar, was eine Marge von 36,4% widerspiegelt.
Im Neunmonatszeitraum lagen die Einnahmen bei 837,0 Millionen Dollar, ein Rückgang von 0,2% gegenüber dem Vorjahr. Der Nettogewinn betrug 63,7 Millionen Dollar, bei einem Gewinn je verwässerter Aktie von 1,10 Dollar.
Embecta hat auch seine Prognose für das Geschäftsjahr 2024 überarbeitet und erwartet Einnahmen zwischen 1.111 und 1.116 Millionen Dollar, bereinigte EPS von 2,30 bis 2,35 Dollar sowie eine bereinigte EBITDA-Marge von 31,25% bis 31,50%.
Das Unternehmen hat seine ERP-Systeme, strategischen Initiativen und die FDA 510(k) Einreichung für sein offenes Patchpumpen-Programm vorangetrieben.
- Adjusted gross profit margin improved to 69.8% from 66.3%.
- Adjusted operating income increased to $83.3 million from $79.8 million.
- Adjusted net income rose to $43.0 million from $39.8 million.
- Adjusted earnings per diluted share increased to $0.74 from $0.69.
- Adjusted EBITDA margin improved to 36.4% from 32.2%.
- Dividend of $0.15 per share announced.
- Strong balance sheet with $281.8 million in cash and equivalents.
- Revenue decreased by 4.8% to $272.5 million.
- U.S. revenues dropped by 6.7%.
- International revenues fell by 2.5%.
- Net income slightly reduced to $14.7 million from $15.2 million.
- Operating income for the nine-month period decreased to $140.6 million from $195.7 million.
- Adjusted operating margin for the nine-month period dropped to 28.2% from 31.7%.
PARSIPPANY, N.J., Aug. 09, 2024 (GLOBE NEWSWIRE) -- Embecta Corp. (“embecta” or the "Company") (Nasdaq: EMBC), a global diabetes care company, today reported financial results for the three and nine month periods ended June 30, 2024.
"During the third quarter our business performed in alignment with our expectations. We generated strong gross, operating and EBITDA margins even as revenue was impacted by the expected timing of customer orders that had positively impacted our second quarter results," said Devdatt (Dev) Kurdikar, Chief Executive Officer of embecta. "From a year-to-date perspective, our financial results demonstrated the continued resilience and stability of our business."
"Additionally, I’m proud of the significant strides we have made as an organization in advancing our strategic priorities, including the transition to our own enterprise resource planning (“ERP”) system, shared service capability and distribution infrastructure, which is now complete in most regions of the world. Furthermore, we made progress on our 510(k) application for the open-loop patch pump program. Lastly, given the strong year-to-date performance, coupled with our outlook for the remainder of the year, we are once again tightening and raising our fiscal 2024 outlook for certain financial metrics."
Third Quarter Fiscal Year 2024 Financial Highlights:
- Revenues of
$272.5 million , down4.8% on a reported basis; down3.9% on a constant currency basis- U.S. revenues decreased
6.7% on both a reported and constant currency basis - International revenues decreased
2.5% on a reported basis, and0.6% on a constant currency basis
- U.S. revenues decreased
- Gross profit and margin of
$190.1 million and69.8% , compared to$189.5 million and66.2% in the prior year period - Adjusted gross profit and margin of
$190.3 million and69.8% , compared to$189.6 million and66.3% in the prior year period - Operating income and margin of
$55.9 million and20.5% , compared to$51.3 million and17.9% in the prior year period - Adjusted operating income and margin of
$83.3 million and30.6% , compared to$79.8 million and27.9% in the prior year period - Net income and earnings per diluted share of
$14.7 million and$0.25 , compared to$15.2 million and$0.26 in the prior year period - Adjusted net income and adjusted earnings per diluted share of
$43.0 million and$0.74 , compared to$39.8 million and$0.69 in the prior year period - Adjusted EBITDA and margin of
$99.2 million and36.4% , compared to$92.2 million and32.2% in the prior year period - Announced a dividend of
$0.15 per share
Nine Months Ended June 30 2024 Financial Highlights:
- Revenues of
$837.0 million , down0.2% on a reported basis; up0.1% on a constant currency basis- U.S. revenues decreased
2.2% on both a reported and constant currency basis - International revenues increased
2.0% on a reported basis, and2.7% on a constant currency basis
- U.S. revenues decreased
- Gross profit and margin of
$561.4 million and67.1% , compared to$568.1 million and67.7% in the prior year period - Adjusted gross profit and margin of
$562.4 million and67.2% , compared to$568.6 million and67.8% in the prior year period - Operating income and margin of
$140.6 million and16.8% , compared to$195.7 million and23.3% in the prior year period - Adjusted operating income and margin of
$235.7 million and28.2% , compared to$266.3 million and31.7% in the prior year period - Net income and earnings per diluted share of
$63.7 million and$1.10 , compared to$64.4 million and$1.12 in the prior year period - Adjusted net income and adjusted earnings per diluted share of
$117.2 million and$2.02 , compared to$138.5 million and$2.40 in the prior year period - Adjusted EBITDA and margin of
$280.4 million and33.5% , compared to$299.1 million and35.7% in the prior year period
Strategic Highlights:
- Strengthen the base business
- Initiated a program with the objective of introducing a new small-pack pen needle product in Germany, to address unmet needs of growing number of customers using GLP-1
- Separate and stand-up
- Completed implementation of ERP, operationalization of shared service capability and distribution network in China; now approximately
93% of our global revenue is operating on our systems and processes
- Completed implementation of ERP, operationalization of shared service capability and distribution network in China; now approximately
- Invest for growth
- Progressed the U.S. Food and Drug Administration (“FDA”) 510(k) premarket filing of our open-loop insulin delivery system
- Advanced the development of a type 2 closed loop insulin delivery system utilizing embecta’s proprietary patch pump system, which carries Breakthrough Device Designation from the FDA
- Presented embecta-sponsored abstracts at American Diabetes Association’s 84th scientific sessions highlighting unmet need for patch pumps with 300 unit insulin reservoir
Third Quarter Fiscal Year 2024 Results:
Revenues by geographic region are as follows:
| Three months ended June 30, | |||||||||||||||
| Dollars in millions | Increase/(decrease) | ||||||||||||||
| As Reported | Constant Currency | ||||||||||||||
| 2024 | 2023 | $ | % | % | |||||||||||
| United States | $ | 143.6 | $ | 153.9 | $ | (10.3 | ) | (6.7 | ) % | (6.7 | )% | ||||
| International | 128.9 | 132.2 | (3.3 | ) | (2.5 | ) | (0.6 | ) | |||||||
| Total | $ | 272.5 | $ | 286.1 | $ | (13.6 | ) | (4.8 | ) % | (3.9 | )% | ||||
Our revenues decreased by
Nine Months Ended June 30, 2024 Results:
Revenues by geographic region are as follows:
| Nine months ended June 30, | |||||||||||||||
| Dollars in millions | Increase/(decrease) | ||||||||||||||
| As Reported | Constant Currency | ||||||||||||||
| 2024 | 2023 | $ | % | % | |||||||||||
| United States | $ | 439.8 | $ | 449.6 | $ | (9.8 | ) | (2.2 | )% | (2.2 | )% | ||||
| International | 397.2 | 389.3 | 7.9 | 2.0 | 2.7 | ||||||||||
| Total | $ | 837.0 | $ | 838.9 | $ | (1.9 | ) | (0.2 | )% | 0.1 | % | ||||
Our revenues decreased by
Fiscal Year 2024 Updated Financial Guidance:
For fiscal year 2024, the Company now expects:
| Dollars in millions, except percentages and per share data | Current | Previous (1) | ||||
| Revenues | ||||||
| As Reported (%) | ( | ( | ||||
| Constant Currency (%) | ( | ( | ||||
| F/X (%) | (0.4)% | (0.4)% | ||||
| Contract Manufacturing | $8 | $5 | ||||
| Adjusted Gross Margin (%) | ||||||
| Adjusted Operating Margin (%) | ||||||
| Adjusted Earnings per Diluted Share | ||||||
| Adjusted EBITDA Margin (%) | ||||||
(1) Previous guidance was issued on May 9, 2024.
We are unable to present a quantitative reconciliation of our expected adjusted gross margin, expected adjusted operating margin, 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
As of June 30, 2024, the Company had approximately
The Company’s Board of Directors declared a quarterly cash dividend of
Third Quarter Fiscal Year 2024 Earnings Conference Call:
Management will host a conference call at 8:00 a.m. Eastern Time (ET) on August 9, 2024 to discuss the results of the quarter, 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 August 9, 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 June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues | $ | 272.5 | $ | 286.1 | $ | 837.0 | $ | 838.9 | |||||||
| Cost of products sold | 82.4 | 96.6 | 275.6 | 270.8 | |||||||||||
| Gross Profit | $ | 190.1 | $ | 189.5 | $ | 561.4 | $ | 568.1 | |||||||
| Operating expenses: | |||||||||||||||
| Selling and administrative expense | 85.7 | 87.6 | 268.3 | 245.6 | |||||||||||
| Research and development expense | 20.4 | 22.6 | 59.0 | 61.6 | |||||||||||
| Other operating expenses | 28.1 | 28.0 | 93.5 | 65.2 | |||||||||||
| Total Operating Expenses | $ | 134.2 | $ | 138.2 | $ | 420.8 | $ | 372.4 | |||||||
| Operating Income | $ | 55.9 | $ | 51.3 | $ | 140.6 | $ | 195.7 | |||||||
| Interest expense, net | (27.8 | ) | (27.0 | ) | (83.3 | ) | (79.4 | ) | |||||||
| Other income (expense), net | (1.1 | ) | (4.2 | ) | (6.1 | ) | (15.6 | ) | |||||||
| Income Before Income Taxes | $ | 27.0 | $ | 20.1 | $ | 51.2 | $ | 100.7 | |||||||
| Income tax provision (benefit) | 12.3 | 4.9 | (12.5 | ) | 36.3 | ||||||||||
| Net Income | $ | 14.7 | $ | 15.2 | $ | 63.7 | $ | 64.4 | |||||||
| Net Income per common share: | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.27 | $ | 1.11 | $ | 1.13 | |||||||
| Diluted | $ | 0.25 | $ | 0.26 | $ | 1.10 | $ | 1.12 | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| Embecta Corp. | |||||||
| (in millions, except share and per share data) | |||||||
| June 30, 2024 | September 30, 2023 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Current Assets | |||||||
| Cash and equivalents | $ | 275.1 | $ | 326.3 | |||
| Restricted cash | 6.7 | 0.2 | |||||
| Trade receivables, net (net of allowance for doubtful accounts of and | 171.8 | 16.7 | |||||
| Inventories: | |||||||
| Materials | 38.2 | 32.1 | |||||
| Work in process | 5.8 | 8.1 | |||||
| Finished products | 141.6 | 111.9 | |||||
| Total Inventories | $ | 185.6 | $ | 152.1 | |||
| Amounts due from Becton, Dickinson and Company | 71.6 | 142.4 | |||||
| Prepaid expenses and other | 70.3 | 111.4 | |||||
| Total Current Assets | $ | 781.1 | $ | 749.1 | |||
| Property, Plant and Equipment, Net | 291.2 | 300.2 | |||||
| Goodwill and Intangible Assets | 23.8 | 24.7 | |||||
| Deferred Income Taxes and Other Assets | 171.4 | 140.4 | |||||
| Total Assets | $ | 1,267.5 | $ | 1,214.4 | |||
| Liabilities and Equity | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 66.8 | $ | 53.5 | |||
| Accrued expenses | 142.2 | 118.1 | |||||
| Amounts due to Becton, Dickinson and Company | 51.7 | 73.1 | |||||
| Salaries, wages and related items | 56.2 | 62.1 | |||||
| Current debt obligations | 9.5 | 9.5 | |||||
| Current finance lease liabilities | 3.4 | 3.6 | |||||
| Income taxes | 40.9 | 33.6 | |||||
| Total Current Liabilities | $ | 370.7 | $ | 353.5 | |||
| Deferred Income Taxes and Other Liabilities | 39.2 | 57.2 | |||||
| Long-Term Debt | 1,590.8 | 1,593.9 | |||||
| Non Current Finance Lease Liabilities | 30.5 | 31.5 | |||||
| Commitments and Contingencies | |||||||
| Embecta Corp. Equity | |||||||
| Common stock, Authorized - 250,000,000 Issued and outstanding - 57,676,467 as of June 30, 2024 and 57,333,353 as of September 30, 2023 | $ | 0.6 | $ | 0.6 | |||
| Additional paid-in capital | 46.2 | 27.9 | |||||
| Accumulated deficit | (504.2 | ) | (541.1 | ) | |||
| Accumulated other comprehensive loss | (306.3 | ) | (309.1 | ) | |||
| Total Equity | (763.7 | ) | (821.7 | ) | |||
| Total Liabilities and Equity | $ | 1,267.5 | $ | 1,214.4 | |||
| Condensed Consolidated Statements of Cash Flows | |||||||
| Embecta Corp. | |||||||
| (Unaudited, in millions) | |||||||
| Nine Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| Operating Activities | |||||||
| Net income | $ | 63.7 | $ | 64.4 | |||
| Adjustments to net income to derive net cash provided by operating activities: | |||||||
| Depreciation and amortization | 26.7 | 23.3 | |||||
| Amortization of debt issuance costs | 4.8 | 4.8 | |||||
| Amortization of cloud computing arrangements | 3.8 | — | |||||
| Stock-based compensation | 20.1 | 16.6 | |||||
| Deferred income taxes | (42.9 | ) | 2.2 | ||||
| Change in operating assets and liabilities: | |||||||
| Trade receivables, net | (156.2 | ) | 3.1 | ||||
| Inventories | (32.8 | ) | (42.5 | ) | |||
| Due from/due to Becton, Dickinson and Company | 49.2 | (54.8 | ) | ||||
| Prepaid expenses and other | 53.7 | (29.2 | ) | ||||
| Accounts payable, accrued expenses and other current liabilities | 34.5 | 53.3 | |||||
| Income and other net taxes payable | 7.2 | 11.3 | |||||
| Other assets and liabilities, net | (22.7 | ) | (14.4 | ) | |||
| Net Cash Provided by Operating Activities | $ | 9.1 | $ | 38.1 | |||
| Investing Activities | |||||||
| Capital expenditures | $ | (15.8 | ) | $ | (17.3 | ) | |
| Net cash used for investing activities | $ | (15.8 | ) | $ | (17.3 | ) | |
| Financing Activities | |||||||
| Payments on long-term debt | $ | (7.2 | ) | $ | (7.1 | ) | |
| Payments related to tax withholding for stock-based compensation | (2.8 | ) | (3.4 | ) | |||
| Payments on finance lease | (1.0 | ) | (2.7 | ) | |||
| Dividend payments | (25.8 | ) | (25.8 | ) | |||
| Net cash used for financing activities | $ | (36.8 | ) | $ | (39.0 | ) | |
| Effect of exchange rate changes on cash and equivalents and restricted cash | (1.2 | ) | 4.7 | ||||
| Net Change in Cash and equivalents and restricted cash | $ | (44.7 | ) | $ | (13.5 | ) | |
| Opening Cash and equivalents and restricted cash | 326.5 | 330.9 | |||||
| Closing Cash and equivalents and restricted cash | $ | 281.8 | $ | 317.4 | |||
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) earnings before interest, taxes, depreciation, and amortization (“EBITDA”), (ii) Adjusted EBITDA and Adjusted EBITDA Margin, (iii) Adjusted Gross Profit and Adjusted Gross Profit Margin, (iv) Constant Currency revenue growth, (v) Adjusted Operating Income and Adjusted Operating Income Margin, and (vi) 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 nine month periods ended June 30, 2024 and 2023, the reconciliation of GAAP net income to EBITDA and adjusted EBITDA was as follows (unaudited, in millions):
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| GAAP Net Income | $ | 14.7 | $ | 15.2 | $ | 63.7 | $ | 64.4 | |||||||
| Interest expense, net | 27.8 | 27.0 | 83.3 | 79.4 | |||||||||||
| Income tax provision (benefit) | 12.3 | 4.9 | (12.5 | ) | 36.3 | ||||||||||
| Depreciation and amortization | 8.9 | 8.1 | 26.7 | 23.3 | |||||||||||
| EBITDA | $ | 63.7 | $ | 55.2 | $ | 161.2 | $ | 203.4 | |||||||
| Stock-based compensation expense (1) | 6.5 | 5.7 | 20.4 | 17.0 | |||||||||||
| One-time stand up costs (2) | 23.1 | 25.5 | 85.0 | 61.9 | |||||||||||
| European regulatory initiative-related costs ("EU MDR") (3) | 0.1 | 0.2 | 0.3 | 0.7 | |||||||||||
| Business optimization and severance related costs (4) | 2.8 | 1.4 | 5.7 | 3.0 | |||||||||||
| Deferred jurisdiction adjustments in Other income (expense), net for taxes (5) | 0.8 | 4.2 | 4.0 | 13.1 | |||||||||||
| Amortization of cloud computing arrangements (6) | 2.2 | — | 3.8 | — | |||||||||||
| Adjusted EBITDA | $ | 99.2 | $ | 92.2 | $ | 280.4 | $ | 299.1 | |||||||
| Adjusted EBITDA Margin | 36.4 | % | 32.2 | % | 33.5 | % | 35.7 | % | |||||||
| (1) | Represents stock-based compensation expense incurred during the three and nine months ended June 30, 2024 and 2023, respectively. For the three months ended, June 30, 2024, |
| (2) | 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 June 30, 2024, approximately |
| (3) | 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. |
| (4) | Represents business optimization and severance related costs associated with standing up the organization recorded in Other operating expenses. |
| (5) | Represents amounts due to BD for tax liabilities incurred in deferred closing jurisdictions where BD is considered the primary obligor. |
| (6) | Represents amortization of implementation costs associated with cloud computing arrangements recognized in Other operating expenses. |
For the three and nine month periods ended June 30, 2024 and 2023, the reconciliations of (1) GAAP Gross Profit and Gross Margin to Adjusted Gross Profit and Adjusted Gross Margin, (2) GAAP Operating Income and Operating Margin to Adjusted Operating Income and Adjusted Operating Income Margin and (3) GAAP Net Income to Adjusted Net Income and calculations of GAAP Net Income per Diluted share and Adjusted Net Income per Diluted share are as follows (unaudited in millions, except per share amounts):
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| GAAP Gross Profit | $ | 190.1 | $ | 189.5 | $ | 561.4 | $ | 568.1 | |||||||
| GAAP Gross Profit Margin | 69.8 | % | 66.2 | % | 67.1 | % | 67.7 | % | |||||||
| Stock-based compensation expense | — | — | 0.2 | 0.1 | |||||||||||
| Amortization of intangible assets | 0.2 | 0.1 | 0.8 | 0.4 | |||||||||||
| Adjusted Gross Profit | $ | 190.3 | $ | 189.6 | $ | 562.4 | $ | 568.6 | |||||||
| Adjusted Gross Profit Margin | 69.8 | % | 66.3 | % | 67.2 | % | 67.8 | % | |||||||
| $ | — | ||||||||||||||
| GAAP Operating Income | $ | 55.9 | $ | 51.3 | $ | 140.6 | $ | 195.7 | |||||||
| GAAP Operating Income Margin | 20.5 | % | 17.9 | % | 16.8 | % | 23.3 | % | |||||||
| Amortization of intangible assets(1) | 0.2 | 0.1 | 0.8 | 0.4 | |||||||||||
| One-time stand up costs(2) | 23.1 | 25.5 | 85.0 | 61.9 | |||||||||||
| EU MDR(3) | 0.1 | 0.2 | 0.3 | 0.7 | |||||||||||
| Stock-based compensation expense(4) | 1.2 | 1.3 | 3.3 | 4.6 | |||||||||||
| Business optimization and severance related costs(5) | 2.8 | 1.4 | 5.7 | 3.0 | |||||||||||
| Adjusted Operating Income | $ | 83.3 | $ | 79.8 | $ | 235.7 | $ | 266.3 | |||||||
| Adjusted Operating Income Margin | 30.6 | % | 27.9 | % | 28.2 | % | 31.7 | % | |||||||
| GAAP Net Income | $ | 14.7 | $ | 15.2 | $ | 63.7 | $ | 64.4 | |||||||
| Adjustments: | |||||||||||||||
| GAAP Income tax provision (benefit) | 12.3 | 4.9 | (12.5 | ) | 36.3 | ||||||||||
| Amortization of intangible assets(1) | 0.2 | 0.1 | 0.8 | 0.4 | |||||||||||
| One-time stand up costs(2) | 23.1 | 25.5 | 85.0 | 61.9 | |||||||||||
| EU MDR(3) | 0.1 | 0.2 | 0.3 | 0.7 | |||||||||||
| Stock-based compensation expense(4) | 1.2 | 1.3 | 3.3 | 4.6 | |||||||||||
| Business optimization and severance related costs(5) | 2.8 | 1.4 | 5.7 | 3.0 | |||||||||||
| Deferred jurisdiction adjustments in Other income (expense), net for taxes(6) | 0.8 | 4.2 | 4.0 | 13.1 | |||||||||||
| Non-GAAP Income tax provision(7) | (12.2 | ) | (13.0 | ) | (33.1 | ) | (45.9 | ) | |||||||
| Adjusted Net Income | $ | 43.0 | $ | 39.8 | $ | 117.2 | $ | 138.5 | |||||||
| GAAP Net Income per Diluted share | $ | 0.25 | $ | 0.26 | $ | 1.10 | $ | 1.12 | |||||||
| Adjusted Net Income per Diluted share | $ | 0.74 | $ | 0.69 | $ | 2.02 | $ | 2.40 | |||||||
| Diluted weighted-average shares outstanding (in thousands) | 57,842 | 57,582 | 58,143 | 57,714 | |||||||||||
| (1) | Amortization of intangible assets is recorded in Cost of products sold. |
| (2) | 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 June 30, 2024, approximately |
| (3) | 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. |
| (4) | Represents stock-based compensation expense recognized during the period associated with the incremental value of converted legacy BD share-based awards and one-time 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 June 30, 2024, |
| (5) | Represents business optimization and severance related costs associated with standing up the organization recorded in Other operating expenses. |
| (6) | Represents amounts due to BD for tax liabilities incurred in deferred jurisdictions where BD is considered the primary obligor. |
| (7) | 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 rates for the three and nine months ended June 30, 2024 were |
Each reporting period, we face currency exposure that arises from translating the results of our worldwide operations to the U.S. dollar at exchange rates that fluctuate from the beginning of such period. A stronger U.S. dollar, compared to the prior-year period, resulted in an unfavorable foreign currency translation impact to our revenues as compared to the prior-year period. We evaluate our results of operations on both a reported and a Constant Currency basis, which excludes the impact of fluctuations in foreign currency exchange rates by comparing results between periods as if exchange rates had remained constant period-over-period. As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a Constant Currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. We calculate Constant Currency percentages by converting our current-period local currency financial results using the prior-period foreign currency exchange rates and comparing these adjusted amounts to our current-period results. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a 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.
For the three and nine month periods ended June 30, 2024 and 2023, the reconciliation of revenue growth to Constant Currency was as follows:
| Three months ended June 30, | ||||||||||||||
| Dollars in millions | 2024 | 2023 | Total Change | Estimated FX Impact | Constant Currency Change | |||||||||
| Total Revenues | $ | 272.5 | $ | 286.1 | (4.8 | )% | (0.9 | )% | (3.9 | )% | ||||
| Nine months ended June 30, | ||||||||||||||
| Dollars in millions | 2024 | 2023 | Total Change | Estimated FX Impact | Constant Currency Change | |||||||||
| Total Revenues | $ | 837.0 | $ | 838.9 | (0.2 | )% | (0.3 | )% | 0.1 | % | ||||
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, Instagram and Twitter.
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, achievements, and anticipated product clearances, approvals and launches. 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,” “intends,” “plans,” “pursue,” “will” or similar expressions, we are making forward-looking statements. For example, embecta is using forward-looking statements when it discusses its fiscal 2024 financial guidance, standing embecta up as independent company, maintaining stability with its core injection business and investing in growth, including with respect to working with the FDA to obtain clearance for new and anticipated products and launches, advancing the development of its closed loop insulin delivery system, and its intention to commercialize 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 replace the services provided by BD under the Transition Services Agreement, the Logistics Services Agreement and other 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, such as the COVID-19 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) risks associated with not completing strategic collaborative partnerships and acquisitions for innovative technologies, complementary product lines, and new markets; (xvi) embecta’s ability to obtain clearance from the FDA of any product; (xvii) its ability to market and sell such products successfully; (xviii) its ability to anticipate the needs of people with diabetes; (xix) its ability to successfully complete clinical trials, obtain regulatory clearance and obtain approvals for its products; (xx) its ability to manufacture such products in a cost-effective manner, obtain appropriate intellectual property protection for such products, gain and maintain market acceptance of such products, secure distribution channels, and obtain access, coverage and reimbursement for such products; (xxi) future business decisions made by embecta and its competitors; and (xxii) 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
FAQ
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