embc-20240331

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, 2024


☐			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)

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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 every Interactive Data File required to be submitted 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 2, 2024 was 57,670,209 shares, par value $0.01 per share.

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Embecta Corp.

Form 10-Q

For the Quarterly Period ended March 31, 2024

Table of Contents


		Page
Part I. Financial Information		1
Item 1.	Financial Statements (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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
Part II. Other Information		28

Item 1A.	Risk Factors	28




Item 6.	Exhibits	28
Signatures		29

-i-

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Statements of Income

Embecta Corp.

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023

Revenues	$	287.2	$	277.1	$	564.5	$	552.8
Cost of products sold	101.8		87.3		193.2		174.2
Gross Profit	$	185.4	$	189.8	$	371.3	$	378.6
Operating expenses:
Selling and administrative expense	92.3		85.2		182.6		158.0
Research and development expense	18.4		22.1		38.6		39.0

Other operating expenses	35.5		26.9		65.4		37.2
Total Operating Expenses	$	146.2	$	134.2	$	286.6	$	234.2
Operating Income	$	39.2	$	55.6	$	84.7	$	144.4
Interest expense, net	(27.8)		(26.8)		(55.5)		(52.4)
Other income (expense), net	(1.5)		(4.3)		(5.0)		(11.4)
Income Before Income Taxes	$	9.9	$	24.5	$	24.2	$	80.6
Income tax provision (benefit)	(19.0)		10.5		(24.8)		31.4
Net Income	$	28.9	$	14.0	$	49.0	$	49.2

Net Income per common share:
Basic	$	0.50	$	0.24	$	0.85	$	0.86
Diluted	$	0.50	$	0.24	$	0.85	$	0.85

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Comprehensive Income

Embecta Corp.

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023

Net Income	$	28.9	$	14.0	$	49.0	$	49.2
Other Comprehensive Income (Loss), net of tax
Foreign currency translation adjustments	(2.4)		2.7		9.2		28.7
Total Other Comprehensive Income (Loss), net of tax	$	(2.4)	$	2.7	$	9.2	$	28.7
Comprehensive Income	$	26.5	$	16.7	$	58.2	$	77.9

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Balance Sheets

Embecta Corp.


	March 31, 2024		September 30, 2023
	(Unaudited)
Assets
Current Assets
Cash and equivalents	$	299.8	$	326.3
Restricted cash	6.7		0.2
Trade receivables, net (net of allowance for doubtful accounts of $1.6 million and $1.0 million as of March 31, 2024 and September 30, 2023, respectively)	123.7		16.7
Inventories:
Materials	37.4		32.1
Work in process	10.5		8.1
Finished products	105.3		111.9
Total Inventories	$	153.2	$	152.1
Amounts due from Becton, Dickinson and Company	43.3		142.4
Prepaid expenses and other	83.3		111.4
Total Current Assets	$	710.0	$	749.1
Property, Plant and Equipment, Net	293.2		300.2
Goodwill and Intangible Assets	24.1		24.7
Deferred Income Taxes and Other Assets	172.3		140.4
Total Assets	$	1,199.6	$	1,214.4
Liabilities and Equity
Current Liabilities
Accounts payable	$	52.6	$	53.5
Accrued expenses	119.7		118.1
Amounts due to Becton, Dickinson and Company	38.5		73.1
Salaries, wages and related items	58.5		62.1
Current debt obligations	9.5		9.5
Current finance lease liabilities	3.7		3.6
Income taxes	27.9		33.6
Total Current Liabilities	$	310.4	$	353.5
Deferred Income Taxes and Other Liabilities	36.2		57.2
Long-Term Debt	1,591.8		1,593.9
Non Current Finance Lease Liabilities	30.8		31.5
Commitments and Contingencies
Embecta Corp. Equity
Common stock, $0.01 par value Authorized - 250,000,000 Issued and outstanding - 57,661,433 as of March 31, 2024 and 57,333,353 as of September 30, 2023	$	0.6	$	0.6
Additional paid-in capital	39.7		27.9
Accumulated deficit	(510.0)		(541.1)

Accumulated other comprehensive loss	(299.9)		(309.1)
Total Equity	$	(769.6)	$	(821.7)
Total Liabilities and Equity	$	1,199.6	$	1,214.4

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Equity

Embecta Corp.

(Unaudited)


	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total
Balance at January 1, 2023	57,213,757	$	0.6	$	12.7	$	(550.5)	$	(298.9)	$	(836.1)


Net income	—	—		—		14.0		—		14.0
Other comprehensive income, net of taxes	—	—		—		—		2.7		2.7
Stock-based compensation plans	—	—		5.6		—		—		5.6
Dividends declared ($0.15 per share)	—	—		—		(8.6)		—		(8.6)
Issuance of shares related to stock-based compensation plans	73,780	—		(0.2)		—		—		(0.2)
Balance at March 31, 2023	57,287,537	$	0.6	$	18.1	$	(545.1)	$	(296.2)	$	(822.6)

Balance at January 1, 2024	57,573,497	$	0.6	$	33.4	$	(530.0)	$	(297.5)	$	(793.5)


Net income	—	—		—		28.9		—		28.9
Other comprehensive loss, net of taxes	—	—		—		—		(2.4)		(2.4)
Stock-based compensation plans	—	—		6.5		—		—		6.5
Dividends and dividend equivalents declared ($0.15 per share)	—	—		0.3		(8.9)		—		(8.6)
Issuance of shares related to stock-based compensation plans	87,936	—		(0.5)		—		—		(0.5)
Balance at March 31, 2024	57,661,433	$	0.6	$	39.7	$	(510.0)	$	(299.9)	$	(769.6)

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total
Balance at October 1, 2022	57,055,327	$	0.6	$	10.0	$	(577.1)	$	(324.9)	$	(891.4)



Net income	—	—		—		49.2		—		49.2
Other comprehensive income, net of taxes	—	—		—		—		28.7		28.7
Stock-based compensation plans	—	—		11.1		—		—		11.1
Dividends declared ($0.30 per share)	—	—		—		(17.2)		—		(17.2)
Issuance of shares related to stock-based compensation plans	232,210	—		(3.0)		—		—		(3.0)
Balance at March 31, 2023	57,287,537	$	0.6	$	18.1	$	(545.1)	$	(296.2)	$	(822.6)

Balance at October 1, 2023	57,333,353	$	0.6	$	27.9	$	(541.1)	$	(309.1)	$	(821.7)



Net income	—	—		—		49.0		—		49.0
Other comprehensive income, net of taxes	—	—		—		—		9.2		9.2
Stock-based compensation plans	—	—		13.8		—		—		13.8
Dividends and dividend equivalents declared ($0.30 per share)	—	—		0.7		(17.9)		—		(17.2)
Issuance of shares related to stock-based compensation plans	328,080	—		(2.7)		—		—		(2.7)
Balance at March 31, 2024	57,661,433	$	0.6	$	39.7	$	(510.0)	$	(299.9)	$	(769.6)

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Cash Flows

Embecta Corp.

(Unaudited)


	Six Months Ended March 31,
	2024		2023
Operating Activities
Net income	$	49.0	$	49.2
Adjustments to net income to derive net cash provided by operating activities:
Depreciation and amortization	17.8		15.2
Amortization of debt issuance costs	3.2		3.2

Amortization of cloud computing arrangements	1.6		—
Stock-based compensation	13.8		11.1

Deferred income taxes	(39.6)		1.2
Change in operating assets and liabilities:
Trade receivables, net	(106.7)		4.3
Inventories	2.0		(30.7)
Due from/due to Becton, Dickinson and Company	64.3		(14.9)
Prepaid expenses and other	36.5		(16.0)
Accounts payable, accrued expenses and other current liabilities	0.4		19.7
Income and other net taxes payable	(7.0)		10.6
Other assets and liabilities, net	(24.1)		(5.5)
Net Cash Provided by Operating Activities	$	11.2	$	47.4
Investing Activities
Capital expenditures	$	(6.1)	$	(10.5)

Net Cash Used for Investing Activities	$	(6.1)	$	(10.5)
Financing Activities

Payments on long-term debt	$	(4.8)	$	(4.8)


Payments related to tax withholding for stock-based compensation	(2.7)		(3.0)
Payments on finance lease	(0.6)		(1.8)
Dividend payments	(17.2)		(17.2)


Net Cash Used for Financing Activities	$	(25.3)	$	(26.8)
Effect of exchange rate changes on cash and equivalents and restricted cash	0.2		5.4
Net Change in Cash and equivalents and restricted cash	$	(20.0)	$	15.5
Opening Cash and equivalents and restricted cash	326.5		330.9
Closing Cash and equivalents and restricted cash	$	306.5	$	346.4

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Notes to Unaudited Condensed Consolidated Financial Statements

Embecta Corp.

Note 1 — Background

Embecta Corp. ("Embecta" or the "Company") is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes. The Company has a broad portfolio of marketed products, including a variety of pen needles, syringes and safety devices, which are complemented by a proprietary digital application designed to assist people with managing their diabetes. The Company primarily sells products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients.

Note 2 — Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by GAAP for complete consolidated financial statements are not included herein. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company's opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. All intercompany transactions and accounts within Embecta have been eliminated. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Embecta's Annual Report on Form 10-K for the year ended September 30, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates or assumptions affect reported assets, liabilities, revenues and expenses, depreciable and amortizable lives, sales returns and allowances, rebate accruals, inventory reserves and taxes on income as reflected in the Condensed Consolidated Financial Statements. Actual results could differ from these estimates.

Recently Adopted Accounting Standards

There were no new material accounting standards adopted in the second first quarter of 2024.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the Financial Account Standard Board issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments. This update is effective for the Company beginning with its fiscal year 2025 reporting and for interim reporting beginning with its fiscal year 2026. As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. This update is effective for the Company beginning with its fiscal year 2026 reporting. As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

Reclassification

Certain prior period amounts have been reclassified to conform to the current year presentation.

Note 3 — Third Party Arrangements and Related Party Disclosures

On April 1, 2022, Embecta and Becton, Dickinson and Company ("BD") entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement"). Pursuant to the Separation and Distribution Agreement, BD agreed to spin off its diabetes care business (the "Diabetes Care Business") into Embecta, a new, publicly traded company (the "Separation").

In connection with the Separation, the Company entered into the Separation and Distribution Agreement, which contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of Embecta and BD (including certain deferred assets and liabilities) as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of Embecta's business with Embecta and financial responsibility for the obligations and liabilities of BD’s remaining businesses with BD, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation among Embecta and BD of rights and


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

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obligations under existing insurance policies with respect to occurrences prior to completion of the Separation, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Embecta’s and BD’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of BD’s business and Embecta’s business.

Agreements that Embecta entered into with BD that govern aspects of Embecta's relationship with BD following the Separation include, but are not limited to the Transition Services Agreements ("TSA"), Trade Receivables Factoring Agreements ("Factoring Agreements"), Distribution Agreements, Cannula Supply Agreement, Tax Matters Agreement, Logistics Services Agreement ("LSA"), employee matters agreement, an intellectual property matters agreement, local support services agreements, certain other manufacturing arrangements and a process services agreement and lease agreement for a manufacturing facility located in Holdrege, Nebraska. For details on the rights and responsibilities of the parties under these agreements refer to Note 4 to the audited Consolidated Financial Statements in Embecta’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the Securities and Exchange Commission on November 29, 2023 (the “2023 Form 10-K”).

On March 28, 2024, we entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD. Pursuant to the TSA and the LSA, originally entered into in connection with the Separation, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, the Business Continuity Processes. Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, a limited extension until November 1, 2024 of certain services in a limited set of markets to support the Business Continuity Processes.

As of March 31, 2024, all factoring agreements between Embecta and BD have expired and terminated as a result of the Company's implementation and onboarding of certain systems and services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource planning (“ERP”) systems (“Business Continuity Processes”) in North America, and certain jurisdictions in Europe and Asia.

The amount due from BD under the above agreements was $43.3 million at March 31, 2024 and is included in Amounts due from Becton, Dickinson and Company. The amount due to BD under these agreements was $38.5 million at March 31, 2024 and is included in Amounts due to Becton, Dickinson and Company.

The closing of the transfers of certain assets and liabilities related to the Diabetes Care Business in certain jurisdictions, including China, Mexico, Taiwan, India, Brazil, and Colombia as contemplated by the Separation and Distribution Agreement did not occur at Separation. The transfers of the relevant local assets and liabilities in these certain jurisdictions are expected to close at a future date. As of March 31, 2024, the Company estimates that amounts due from BD related to certain assets and liabilities in these certain jurisdictions are $18.9 million and are reflected in Prepaid expenses and other. As of March 31, 2024, the Company estimates that amounts due to BD related to certain assets and liabilities in these certain jurisdictions is $7.0 million and are reflected in Accrued expenses.

Note 4 — Collaboration Agreement

In March 2023, the Company entered into a collaboration agreement with a third-party to develop and commercialize an interoperable automated glycemic controller ("iAGC") to complement the Company's insulin patch pump currently in development. The Company believes that both parties are active participants in the operating activities of the collaboration and exposed to certain risks and rewards depending on commercial success. The transaction included an upfront payment of $2.5 million for project costs, which was expensed to Research and development expense during the six month period ended March 31, 2023. Upon successful commercialization of the iAGC, the Company will be responsible for the sales and marketing effort and would pay a royalty to the third-party based on future product sales to customers. The Company expects that it will be the principal in the end customer sale and 100% of product sales will be included in Revenues and any royalty payments and continued project costs after commercialization will be included in Cost of products sold as they are incurred.

Note 5 — Other Operating Expenses

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $32.6 million and $59.0 million during the three and six months ended March 31, 2024, respectively, and incurred separation and stand-up costs of approximately $25.6 million and $35.5 million during the three and six months ended March 31, 2023, respectively. The costs incurred primarily consist of costs associated with accounting, auditing, legal services, marketing, supply chain, employee retention, the implementation of the Company's new ERP system, and certain other costs to


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

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establish certain Business Continuity Processes and stand-alone functions to assist with the transition to being a stand-alone entity.

Note 6 — Contingencies

The Company was not a party to any material legal proceedings at March 31, 2024 or September 30, 2023, nor is it a party to any material legal proceedings as of the date of issuance of these Condensed Consolidated Financial Statements.

Note 7 — Revenues

The Company’s policies for recognizing revenue have not changed from those described in the 2023 Form 10-K. The Company sells syringes, pen needles and other products used in the management of diabetes which are primarily sold to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients. End-users of the Company’s products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public.

Measurement of Revenues

Payment terms extended to the Company’s customers are based upon commercially reasonable terms for the markets in which the Company’s products are sold. Because the Company generally expects to receive payment within one year or less from when control of a product is transferred to the customer, the Company does not generally adjust its revenues for the effects of a financing component. The Company’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables. Such estimated credit losses are determined based on historical loss experiences, customer specific credit risk, and reasonable and supportable forward-looking information, such as country or regional risks that are not captured in the historical loss information. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. The allowance for doubtful accounts for trade receivables is not material to the Company’s Condensed Consolidated Financial Statements.

The Company’s gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, sales discounts, and sales returns. Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates provided by the Company are based upon prices determined under the Company’s agreements primarily with its end-user customers. Additional factors considered in the estimate of the Company’s rebate liability include the quantification of inventory that is either in stock at or in transit to the Company’s distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates.

The Company’s liability attributed to variable consideration at March 31, 2024 and September 30, 2023 was $177.2 million and $36.4 million, respectively. Sales deductions recorded as a reduction of gross revenues for the three months ended March 31, 2024 and 2023 were $138.5 million and $95.2 million, respectively. Sales deductions recorded as a reduction of gross revenues for the six months ended March 31, 2024 and 2023 were $265.2 million and $187.8 million, respectively.

Disaggregation of Revenues

Disaggregation of revenue by geographic region is provided within Note 8.

Contract Assets and Liabilities

The Company does not have contract liabilities. Contract assets consist of the Company’s right to consideration that is conditional upon its future performance pursuant to private label agreements and are presented within Prepaid expenses and other in the Condensed Consolidated Balance Sheets.

The Company’s contract asset balance was $1.2 million as of both March 31, 2024 and September 30, 2023.

Note 8 — Segment and Geographical Data

Operating segments are identified as components of an enterprise in which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding assessing business performance and allocating resources and capital. Management has concluded that the Company operates in one segment based upon the information used by the CODM in evaluating the performance of the Company’s business and allocating resources and capital.

Disaggregation of Revenues

The Company has distribution agreements with regional or national distributors (including wholesalers and medical suppliers) to ensure broad availability of its products as well as a direct sales force in certain countries and regions around


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

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the world. In the United States and Canada, the Company utilizes its large and small key account managers that call on payers, retailers, wholesalers and institutional customers, and field-based territory managers that call on health care providers and pharmacies. In certain markets within Europe, the Company has dedicated sales representatives and in certain regions of the Middle East and Africa, the Company has distribution agreements. In Asia, the Company has distribution agreements, and in China the Company relies on its own commercial team to support sales execution. In Latin America, the Company maintains distribution agreements and direct sales representatives.

The Company disaggregates its revenue by geography as management believes this category best depicts how the nature, amount, and timing of revenues and cash flows are affected by economic factors.

Revenues by geographic region are as follows:


	Three months ended March 31,				Six months ended March 31,
	2024		2023		2024		2023
United States	$	147.6	$	146.4	$	296.2	$	295.7
International(1)	139.6		130.7		268.3		257.1
Total	$	287.2	$	277.1	$	564.5	$	552.8

(1)For the three and six months ended March 31, 2024 and 2023, no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

Note 9 — Stock-Based Compensation

Stock-Based Compensation Expense

Total stock-based compensation expense for the three and six months ended March 31, 2024 and 2023 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statements of Income are as follows:


	Three months ended March 31,				Six months ended March 31,
	2024		2023		2024		2023
Cost of products sold	$	1.1	$	0.6	$	2.0	$	1.2
Selling and administrative expense	4.9		4.7		10.8		9.3
Research and development expense	0.5		0.5		1.1		0.8
Total Stock-Based Compensation Expense	$	6.5	$	5.8	$	13.9	$	11.3
Tax benefit associated with stock-based compensation costs recognized	$	0.5	$	0.7	$	1.2	$	1.5

The following table summarizes the Company's total stock-based compensation expense by classification of award for the three and six months ended March 31, 2024 and 2023:


	Three months ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Equity Awards	$	6.5	$	5.6	$	13.8	$	11.1
Liability Awards	—		0.2		0.1		0.2
Total	$	6.5	$	5.8	$	13.9	$	11.3


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

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The following table summarizes the Company's total stock-based compensation expense by award type for the three and six months ended March 31, 2024 and 2023:


	Three months ended March 31,				Six Months Ended March 31,
	2024		2023		2024		2023
Time-Vested Restricted Stock Units (TVUs)	$	5.2	$	4.0	$	10.6	$	8.1
Performance-Based Restricted Stock Units (PSUs)	0.4		0.6		1.3		0.7
Stock Appreciation Rights (SARs)	0.9		1.2		2.0		2.5
Total	$	6.5	$	5.8	$	13.9	$	11.3

Time Vested Restricted Stock Units ("TVUs")

During the six months ended March 31, 2024, Embecta granted 1,393,808 restricted stock units ("RSUs") in the form of TVUs to employees. TVUs vest on a graded basis over a period of three years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.

A summary of TVUs outstanding as of March 31, 2024 and changes during the six months ended March 31, 2024 are as follows:


	RSUs (in thousands)	Weighted Average Grant Date Fair Value
Nonvested at October 1	1,188.8	$	29.42
Granted*	1,393.8	17.42
Distributed**	(479.7)	28.70
Forfeited, canceled or expired	(38.2)	23.51
Nonvested at March 31	2,064.7	$	21.59
Expected to vest at March 31	1,954.6	$	21.64

*Includes accumulated nonvested dividend equivalents
**The RSUs distributed include shares withheld for taxes that are not formally issued to the market.

The weighted average grant date fair value of TVUs granted during the six months ended March 31, 2024 is $17.42 and the total fair value of TVUs vested during the six months ended March 31, 2024 is $13.8 million.

At March 31, 2024, the weighted average remaining vesting term of TVUs is 2.1 years.

Performance Based Restricted Stock Units ("PSUs")

During the six months ended March 31, 2024, Embecta awarded 541,958 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years, subject to continued employment of the recipients and the achievement of certain performance metric targets. The Company has identified certain performance metrics associated with these awards and certain targets will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception date precedes the accounting grant date, the Company recognizes stock-based compensation expense for each separately-vesting tranche over the requisite service period based on the fair value at each reporting date. The requisite service period is equal to the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. As of March 31, 2024, there were 725,912 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.


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

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As of both March 31, 2024 and September 30, 2023, there were approximately 57.8 thousand nonvested PSUs for which a grant date has been established with a weighted average grant date fair value of $

SEC Form 10-Q filed by Embecta Corp.