embc-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-41186

EMBECTA CORP.

(Exact name of registrant as specified in its charter)


Delaware						87-1583942
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)

300 Kimball Drive, Suite 300, Parsippany, New Jersey						07054
(Address of principal executive offices)						(Zip code)

(862) 401-0000

(Registrant’s telephone number, including area code)

Table of Contents

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.01 per share

EMBC

The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Emerging growth company

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Embecta Corp. common stock outstanding as of May 3, 2023 was 57,293,549 shares, par value $0.01 per share.

Table of Contents

Embecta Corp.

Form 10-Q

For the Quarterly Period ended March 31, 2023

Table of Contents


		Page
Part I. Financial Information		1
Item 1.	Financial Statements and Supplementary Data (Unaudited)	1
	Condensed Consolidated Statements of Income	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
Part II. Other Information		29

Item 1A.	Risk Factors	29




Item 6.	Exhibits	29
Signatures		30

-i-

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data.

Condensed Consolidated Statements of Income

Embecta Corp.

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022

Revenues	$	277.1	$	274.5	$	552.8	$	563.8
Cost of products sold(1)	87.3		83.3		174.2		168.7
Gross Profit	$	189.8	$	191.2	$	378.6	$	395.1
Operating expenses:
Selling and administrative expense	85.2		66.9		158.0		129.1
Research and development expense	22.1		18.0		39.0		34.7

Other operating expenses	26.9		7.4		37.2		15.8
Total Operating Expenses	$	134.2	$	92.3	$	234.2	$	179.6
Operating Income	$	55.6	$	98.9	$	144.4	$	215.5
Interest expense, net	(26.8)		(4.9)		(52.4)		(4.9)
Other income (expense), net	(4.3)		(0.1)		(11.4)		(0.1)
Income Before Income Taxes	$	24.5	$	93.9	$	80.6	$	210.5
Income tax provision	10.5		14.3		31.4		32.1
Net Income	$	14.0	$	79.6	$	49.2	$	178.4

Net Income per common share:
Basic	$	0.24	$	1.38	$	0.86	$	3.09
Diluted	$	0.24	$	1.38	$	0.85	$	3.09

(1)For periods prior to the Separation, this income statement line includes cost of products sold from related party inventory purchases. For the three and six month periods ended March 31, 2022, cost of products sold from related party inventory purchases were $10.6 million and $22.1 million, respectively.

See notes to the Unaudited Condensed Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.

Table of Contents

Condensed Consolidated Statements of Comprehensive Income

Embecta Corp.

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022

Net Income	$	14.0	$	79.6	$	49.2	$	178.4
Other Comprehensive Income (Loss), net of tax
Foreign currency translation adjustments	2.7		(7.1)		28.7		(15.9)
Other Comprehensive Income (Loss)	$	2.7	$	(7.1)	$	28.7	$	(15.9)
Comprehensive Income	$	16.7	$	72.5	$	77.9	$	162.5

See notes to the Unaudited Condensed Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.

Table of Contents

Condensed Consolidated Balance Sheets

Embecta Corp.


	March 31, 2023		September 30, 2022
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	346.4	$	330.9
Trade receivables, net (net of allowance for doubtful accounts of $1.1 million and $1.3 million as of March 31, 2023 and September 30, 2022, respectively)	19.1		22.2
Inventories:
Materials	29.9		23.4
Work in process	8.7		5.6
Finished products	119.0		93.8
Total Inventories	$	157.6	$	122.8
Amounts due from Becton, Dickinson and Company	133.6		110.9
Prepaid expenses and other	99.6		77.9
Total Current Assets	$	756.3	$	664.7
Property, Plant and Equipment, Net	313.5		301.6
Goodwill and Other Intangible Assets	24.0		24.6
Deferred Income Taxes and Other Assets	116.2		95.5
Total Assets	$	1,210.0	$	1,086.4
Liabilities and Equity
Current Liabilities
Accounts payable	$	52.5	$	41.4
Accrued expenses	146.6		104.3
Amounts due to Becton, Dickinson and Company	74.3		66.5
Salaries, wages and related items	35.7		48.5
Current debt obligations	9.5		9.5
Current finance lease liabilities	3.6		3.6
Income taxes	35.5		27.2
Total Current Liabilities	$	357.7	$	301.0
Deferred Income Taxes and Other Liabilities	46.9		46.1
Long-Term Debt	1,596.0		1,598.1
Non Current Finance Lease Liabilities	32.0		32.6
Commitments and Contingencies
Embecta Corp. Equity
Common stock, $0.01 par value Authorized - 250,000,000 Issued and outstanding - 57,287,537 as of March 31, 2023 and 57,055,327 as of September 30, 2022	$	0.6	$	0.6
Additional paid-in capital	18.1		10.0
Accumulated deficit	(545.1)		(577.1)

Accumulated other comprehensive loss	(296.2)		(324.9)
Total Equity	$	(822.6)	$	(891.4)
Total Liabilities and Equity	$	1,210.0	$	1,086.4

See notes to the Unaudited Condensed Consolidated Financial Statements.


Dollar amounts are in millions except per share amounts or as otherwise specified.

Table of Contents

Condensed Consolidated Statements of Equity

Embecta Corp.

(Unaudited)


	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Net Investment from Becton, Dickinson and Company		Accumulated Other Comprehensive (Loss) Income		Total
Balance at January 1, 2022	—	$	—	$	—	$	—	$	829.8	$	(279.3)	$	550.5
Net income attributable to Diabetes Care Business	—	—		—		—		79.6		—		79.6
Other comprehensive loss, net of taxes	—	—		—		—		—		(7.1)		(7.1)
Net transfers to Becton, Dickinson and Company	—	—		—		—		(1,590.5)		—		(1,590.5)
Balance at March 31, 2022	—	$	—	$	—	$	—	$	(681.1)	$	(286.4)	$	(967.5)

Balance at January 1, 2023	57,213,757	$	0.6	$	12.7	$	(550.5)	$	—	$	(298.9)	$	(836.1)


Net income attributable to Embecta Corp.	—	—		—		14.0		—		—		14.0
Other comprehensive income, net of taxes	—	—		—		—		—		2.7		2.7
Stock-based compensation plans	—	—		5.6		—		—		—		5.6
Common dividends ($0.15 per share)	—	—		—		(8.6)		—		—		(8.6)
Issuance of shares related to stock-based compensation plans	73,780	—

SEC Form 10-Q filed by Embecta Corp.