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 98% of our revenue to our own ERP system, shared service capabilities, and distribution infrastructure, with India remaining as our only deferred market. Additionally, the recent launch of our small-pack GLP-1 needles in Germany has gone well, and we are evaluating expanding into other markets,” said Devdatt (Dev) Kurdikar, Chief Executive Officer of embecta.
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 $35 million and $45 million in fiscal year 2025 related to the restructuring plan, consisting of between $25 million and $30 million in pre-tax, cash charges for planned workforce reductions and other associated costs from the discontinuation of the patch pump program, and between $10 million and $15 million in pre-tax, non-cash charges for asset impairments and write-offs. Note, these preliminary estimates may be revised following the completion of the ongoing analysis of the expected additional pre-tax non-cash charges associated with the implementation of the restructuring plan.
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 $60 million and $65 million. Given the organizational restructuring plan, the Company has decided to postpone the previously announced Analyst & Investor Day to Spring 2025.
Fourth Quarter Fiscal Year 2024 Financial Highlights:
Reported Revenues of $286.1 million, up 1.5%;Adjusted Revenues of $290.2 million, up 4.1% on an adjusted constant currency basis U.S. revenues increased 10.3% on both a reported and adjusted constant currency basisInternational revenues decreased 8.8% on a reported basis, and decreased 3.1% on an adjusted constant currency basis Gross profit and margin of $173.8 million and 60.7%, compared to $181.8 million and 64.5% in the prior year periodAdjusted gross profit and margin of $178.3 million and 61.4% compared to $182.6 million and 64.8% in the prior year periodOperating income and margin of $26.2 million and 9.2%, compared to $25.8 million and 9.2% in the prior year periodAdjusted operating income and margin of $61.2 million and 21.1%, compared to $65.2 million and 23.1% in the prior year periodNet 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 periodAdjusted EBITDA and margin of $73.0 million and 25.2%, compared to $79.6 million and 28.2% in the prior year periodAnnounced a dividend of $0.15 per share Twelve Months Ended September 30 Fiscal Year 2024 Financial Highlights:
Reported Revenues of $1,123.1 million, up 0.2%;Adjusted Revenues of $1,127.2 million, up 1.1% on an adjusted constant currency basis U.S. revenues increased 1.0% on both a reported and adjusted constant currency basisInternational revenues decreased 0.7% on a reported basis, and increased 1.3% on an adjusted constant currency basis Gross profit and margin of $735.2 million and 65.5%, compared to $749.9 million and 66.9% in the prior year periodAdjusted gross profit and margin of $740.7 million and 65.7%, compared to $751.2 million and 67.0% in the prior year periodOperating income and margin of $166.8 million and 14.9%, compared to $221.5 million and 19.8% in the prior year periodAdjusted operating income and margin of $296.9 million and 26.3%, compared to $331.5 million and 29.6% in the prior year periodNet 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 periodAdjusted EBITDA and margin of $353.4 million and 31.4%, compared to $378.7 million and 33.8% 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 $4.2 million, or 1.5%, to $286.1 million for the fourth quarter of 2024 as compared to revenues of $281.9 million for the fourth quarter of 2023. Changes in our revenues are driven by the volume of goods that we sell, the prices we negotiate with customers and changes in foreign exchange rates. The increase in revenues was driven by $13.7 associated with favorable changes in price and a $2.3 increase in contract manufacturing revenues related to sales of non-diabetes products to BD. This was partially offset by $5.3 million of unfavorable gross-to-net adjustments primarily attributed to the recognition of incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy, $3.4 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S. dollar, and $3.1 million of unfavorable changes in volume.
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% -%
