Embecta (US:EMBC)2024-08-09 16:50Revenue and Profitability - Revenue decreased by $13.6 million, or 4.8%, to $272.5 million for the three months ended June 30, 2024, compared to $286.1 million for the same period in 2023[63] - Revenue decreased by $1.9 million, or 0.2%, to $837.0 million for the nine months ended June 30, 2024, compared to $838.9 million for the same period in 2023[64] - Gross profit increased by $0.6 million to $190.1 million, with a gross profit margin of 69.8%, up from 66.2% in the prior year[63] - Gross profit decreased by $6.7 million to $561.4 million, with a gross profit margin of 67.1%, down from 67.7% in the prior year[64] - Operating income increased by $4.6 million to $55.9 million for the three months ended June 30, 2024[63] - Operating income decreased by $55.1 million to $140.6 million for the nine months ended June 30, 2024[64] - Net income decreased by $0.5 million to $14.7 million for the three months ended June 30, 2024[63] - Net income for the nine months ended June 30, 2024, was $63.7 million[84] Expenses and Cost Management - Cost of products sold decreased by $14.2 million, or 14.7%, to $82.4 million for the three months ended June 30, 2024, compared to $96.6 million for the same period in 2023[67] - Selling and administrative expenses decreased by $1.9 million, or 2.2%, to $85.7 million for the three months ended June 30, 2024, compared to $87.6 million for the same period in 2023[69] - Research and development expenses decreased by $2.2 million, or 9.7%, to $20.4 million for the three months ended June 30, 2024, compared to $22.6 million for the same period in 2023[71] - Selling and administrative expenses increased by $22.7 million, or 9.2%, to $268.3 million for the nine months ended June 30, 2024, compared to $245.6 million for the same period in 2023[70] - Cost of products sold as a percentage of revenues was 30.2% for the three months ended June 30, 2024, compared to 33.8% for the same period in 2023[67] Cash Flow and Debt - Cash and equivalents and restricted cash were $281.8 million as of June 30, 2024, down from $326.5 million as of September 30, 2023[83] - Net cash provided by operating activities was $9.1 million[84] - Net cash used for investing activities included capital expenditures of $15.8 million[84] - Net cash used for financing activities totaled $36.8 million, primarily due to dividend payments of $25.8 million[85] - Total debt outstanding as of June 30, 2024, was $1,600.3 million, with a weighted average cost of total debt at 7.2%[79] - Interest expense, net increased by $0.8 million to $27.8 million for the three months ended June 30, 2024, compared to $27.0 million for the same period in 2023[74] - A 100 basis points change in interest rates would have impacted interest expense on the Term Loan by $9.3 million annually[95] Operational Challenges - The decrease in revenue for the three months was driven by $24.4 million of unfavorable changes in volume and $2.5 million from negative foreign currency translation[65] - The company continues to face pricing pressures and increased competition in the medical device industry, impacting operating margins[59] - Other income (expense), net was $(1.1) million for the three months ended June 30, 2024, compared to $(4.2) million for the same period in 2023[75] Inventory and Receivables - The change in trade receivables was $(156.2) million, attributed to the implementation of new Business Continuity Processes[84] - The change in inventories was $(32.8) million, driven by increased raw material purchases in anticipation of the ERP system[84] - The company expects inventory levels to decrease during the remainder of fiscal 2024[84] - The company is now responsible for the collection of outstanding trade receivables globally following the termination of the Factoring Agreement with BD[84] Regulatory and Compliance - The company submitted its first 510(k) premarket filing to the FDA for a proprietary disposable insulin delivery system in December 2023[61] - There have been no material changes to the company's contractual obligations outside the ordinary course of business as of June 30, 2024[86] Taxation - The effective tax rate was 45.6% for the three months ended June 30, 2024, compared to 24.4% for the same period in 2023[76]