News

Embecta Corp. (EMBC) Q1 2024 Earnings Call Transcript

Embecta Corp. (EMBC)

Q1 2024 Earnings Call Transcript

Company Participants

Pravesh Khandelwal - VP of IR

Dev Kurdikar - President and CEO

Jake Elguicze - CFO

Conference Call Participants

Kallum Titchmarsh - Morgan Stanley

Marie Thibault - BTIG

Michael Polark - Wolfe Research

Presentation

Operator

Welcome ladies and gentlemen to the Fiscal First Quarter 2024 Embecta Earnings Conference Call. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and the recording will be available on the company's website for replay following the completion of this call.

I would now like to hand the call over to your host today, Mr. Pravesh Khandelwal, Vice President of Investor Relations. Please go ahead.

Pravesh Khandelwal

Thank you, operator. Good morning, everyone, and welcome to Embecta's fiscal first quarter 2024 earnings conference call. The press release and slides to accompany today's call and webcast replay details are available on the Investor Relations section of the company's website at www.embecta.com. With me today are Dev Kurdikar, Embecta's President and Chief Executive Officer, and Jake Elguicze, our Chief Financial Officer.

Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today as well as our filings with the SEC, which can be accessed on our website. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not constitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in our press release and conference call presentation.

Our agenda for today's call is as follows. Dev will begin by providing some remarks on the overall performance of our business during the fiscal first quarter of 2024 as well as an overview of our strategic priorities. Jake will then provide a more in-depth review of our Q1 financial results as well as our updated financial guidance for the year. We will then open the call for questions.

With that said, I would now like to turn the call over to our CEO, Dev Kurdikar. Dev?

Dev Kurdikar

Good morning, and thank you for taking the time to join us. With the introduction of the first specialized insulin delivery device in 1924, this year marked the 100th year of our journey to deliver better diabetes care through innovation. Whether you are newly diagnosed, or transitioning to a new line of therapy, our mission is to make a person with diabetes every day experience as comfortable and convenient as possible while advancing towards a new generation of life-changing solutions. We have been one of the leaders in insulin delivery for nearly 100 years. And through our insulin delivery products, we touch an estimated 30 million people living with diabetes in over 100 countries, developing and providing solutions that make life better for people living with diabetes is at the core of everything we do and is what drives our global team.

Turning to our strategic priorities for fiscal year 2024. We will continue to be focused on the same three core strategic priorities that we have had since we became an independent company. These priorities have served as the foundation for our actions and decision-making, driving our company forward, and they include, remaining focused on strengthening our base business while maintaining our global leader position in the category of insulin injection devices, separating ourselves from our former parent in a thoughtful manner to mitigate risk and position us for success as an independent company, and finally, investing in growth, most notably around our insulin patch pump program that is being developed for the Type 2 market as well as seeking M&A and additional partnership opportunities. We are advancing with determination and a sense of urgency in each of these objectives, and I'm very pleased with the progress that we've made in these areas.

Turning to some first quarter highlights. First, we published our 2024 environmental, social and governance report. This report provides a summary of the progress we made in 2023 to develop our ESG strategy, including establishing policies and systems that underscore our commitment to delivering our products and solutions responsibly and with a view towards how our business impacts the broader communities in which we operate. Next, the team's hard work gained recognition, leading to the acceptance of six Embecta abstracts as posters for presentation at the upcoming Advanced Technologies and Treatments for Diabetes or ATTD Conference in March. We believe that poster presentations like these continue to validate our value proposition that a larger insulin reservoir would benefit a person with Type 2 diabetes and potentially facilitate more adults using a single pump for a full three days, resulting in a greater health economic benefit to patients and payers.

Additionally, Embecta is set to host an industry-sponsored symposium at ATTD focused on unlocking the potential of insulin pumps for personalized Type 2 diabetes care. These educational objectives align with our commitment to innovation and improvements in diabetes care. By supporting this symposium, we are excited about the potential for helping advance informed decision-making around insulin pump therapy for patients with Type 2 diabetes.

During Q1, we also notably advanced our separation programs by completing the implementation of our ERP system for approximately 60% of our revenue base and our manufacturing facility within the US, while also operationalizing new shared services capabilities and the distribution network serving the US and Canadian markets. Furthermore, we made significant progress in terms of the development of our insulin patch pumps that are being developed specifically for the Type 2 market, including the filing of a 510(k) premarket application for the open loop version of our insulin patch pump with the FDA. I'll share more about these latter accomplishments in the following slides.

Finally, during the first quarter, solid execution led to financial results that exceeded our internal expectations. And based on these results, coupled with our outlook for the remainder of the year, we are raising our financial guidance ranges for revenue and adjusted earnings per share.

Next, I would like to get into a bit more detail regarding the advancements we made in terms of our separation efforts. As I just mentioned, during Q1, our team made significant progress in the global implementation of our ERP system, shared services capabilities and distribution network. These are complex programs, and we’ve adopted a phased implementation approach to mitigate the separation risks. As of today, we have implemented our ERP system and operationalized shared services capabilities and a new logistics and distribution network to support the US and Canadian markets. In addition, we implemented our own ERP in Suzhou, China and Holdrege, Nebraska, which are two of our three manufacturing plants.

During our fiscal second quarter, we plan to implement our systems, capabilities and processes in additional markets as well as at our remaining manufacturing plant in Ireland. As such, by the end of our fiscal second quarter, we anticipate having slightly more than 85% of our revenue base and all three of our manufacturing locations on our own ERP platform. We anticipate implementation of our ERP system and the relevant shared service capabilities in all markets, excluding those in deferred closing jurisdictions within a few quarters. To facilitate the phased implementation of our ERP solution, distribution network and shared services capabilities, we had requested an extension for certain TSAs and related agreements from BD. BD agreed to provide a limited extension, contingent upon securing additional private letter ruling from the IRS. This ruling would enable us to extend specific TSAs for a limited set of markets until early fiscal year 2025....

]]>

© www.conferencecalltranscripts.org 2020 | Terms of Service