Embecta (EMBC) - 2024 Q3 - Quarterly Results

Financial Performance - Revenues for Q3 FY2024 were $272.5 million, a decrease of 4.8% year-over-year, with U.S. revenues down 6.7% and international revenues down 2.5%[3] - Gross profit for Q3 FY2024 was $190.1 million, resulting in a gross margin of 69.8%, compared to 66.2% in the prior year period[3] - Adjusted EBITDA for Q3 FY2024 was $99.2 million, with a margin of 36.4%, up from 32.2% in the prior year[3] - For the nine months ended June 30, 2024, total revenues were $837.0 million, a slight decrease of 0.2% year-over-year, with U.S. revenues down 2.2% and international revenues up 2.0%[4] - Net income for the three months ended June 30, 2024, was $63.7 million, slightly down from $64.4 million in the same period of 2023[18] - Adjusted EBITDA for the three months ended June 30, 2024, was $99.2 million, up from $92.2 million in the same period of 2023, representing an increase of 8.1%[22] - Total Revenues for the three months ended June 30, 2024, were $272.5 million, reflecting a decrease of 4.8% compared to $286.1 million in 2023, with a Constant Currency Change of (3.9)%[27] - Adjusted Net Income for the three months ended June 30, 2024, was $43.0 million, up from $39.8 million in 2023, resulting in an Adjusted Net Income per Diluted share of $0.74 compared to $0.69[24] - GAAP Net Income for the three months ended June 30, 2024, was $14.7 million, down from $15.2 million in 2023[24] Guidance and Expectations - The company expects FY2024 revenues to be in the range of $1,111 million to $1,116 million, maintaining previous guidance[10] - Adjusted earnings per diluted share for FY2024 are now expected to be between $2.30 and $2.35, an increase from previous guidance[10] Cash and Debt Management - The company reported $281.8 million in cash and equivalents and $1.629 billion in debt principal outstanding as of June 30, 2024[12] - Cash and equivalents decreased to $275.1 million as of June 30, 2024, from $326.3 million as of September 30, 2023, a decline of 15.7%[17] - The company’s long-term debt remained stable at $1,590.8 million as of June 30, 2024, compared to $1,593.9 million as of September 30, 2023[17] Operational Developments - The implementation of the ERP system is now complete in most regions, with approximately 93% of global revenue operating on the new systems[5] - Progress has been made on the FDA 510(k) premarket filing for the open-loop insulin delivery system and the development of a type 2 closed-loop insulin delivery system[5] - The company declared a quarterly cash dividend of $0.15 per share, payable on September 13, 2024[12] Asset and Liability Changes - Total assets increased to $1,267.5 million as of June 30, 2024, compared to $1,214.4 million as of September 30, 2023, reflecting a growth of 4.4%[17] - Total current liabilities rose to $370.7 million as of June 30, 2024, compared to $353.5 million as of September 30, 2023, an increase of 4.0%[17] - Inventories increased to $185.6 million as of June 30, 2024, compared to $152.1 million as of September 30, 2023, reflecting a growth of 22.0%[17] Compensation and Expenses - Stock-based compensation for the three months ended June 30, 2024, was $20.1 million, up from $16.6 million in the same period of 2023[18] - Stock-based compensation expense for the three months ended June 30, 2024, was $1.2 million, compared to $1.3 million in the same period of 2023[25] Market and Competitive Environment - The company experienced an unfavorable foreign currency translation impact on revenues due to a stronger U.S. dollar compared to the prior-year period[26] - Embecta is focusing on maintaining stability in its core injection business while investing in growth opportunities[31] - The company is working with the FDA to obtain clearance for new products and anticipates product launches in fiscal 2024[31] - Embecta is advancing the development of its closed-loop insulin delivery system, which is a key area of innovation[31] - The company plans to commercialize new product pacts for non-insulin diabetes drugs, expanding its product offerings[31] - There are risks associated with the separation from BD, including potential dis-synergy costs and restructuring expenses[31] - Embecta faces competitive factors that could adversely affect its operations and profitability[31] - The company is addressing challenges related to operating costs, including fluctuations in raw material availability[31] - Changes in reimbursement practices and foreign currency exchange rates could impact financial performance[31] - Embecta's ability to successfully complete clinical trials and obtain regulatory approvals is critical for future product launches[31] - The company is committed to securing distribution channels and obtaining access and reimbursement for its products[31]