Slide 1: Earnings Conference Call Fiscal Q4 and Full Year 2023
Earnings Conference Call Fiscal Q4 and Full Year 2023 November 21, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Safe Harbor Statement Regarding Forward-Looking Statements This presentation contains express or implied "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements
Slide 3: Agenda and Presenters
Agenda and Presenters Today’s topics: Dev Kurdikar Chief Executive Officer embecta Overview FY23 Highlights Revenue Review Jake Elguicze Chief Financial Officer FY24 Strategic Priorities FY23 Financial Highlights and FY24 Guidance Pravesh Khandelwal GLP1 – Market Considerations and Vice
Slide 4: Mission and Vision
Mission To develop and provide solutions that make life better for people living with diabetes Advance every day together Vision A life unlimited by diabetes 4
Slide 5: Fiscal Year 2023 Highlights
Fiscal Year 2023 Highlights Strong execution notwithstanding challenging external environment Won readers choice for MD+DI* 2022 med tech company of the year Established a world-class leadership team with the focus and experience needed to position the business for value creation Implemented
Slide 6: Q4 and Fiscal Year 2023 vs. Fiscal Year 2022 Revenue
Q4 and Fiscal Year 2023 vs. Fiscal Year 2022 Revenue Dollars in Millions Three Months Ended % Increase / Decrease September 30, September 30, As-Reported Foreign Currency Constant Currency 2023 2022 Revenue Growth Impact Revenue Growth U.S. $151.8 $149.9 1.3% ꟷ 1.3% International $130.1 $124.7 4.3%
Slide 7: Strategic Priorities for Fiscal Year 2024
Strategic Priorities for Fiscal Year 2024 Strengthen and optimize core business • Maintain core injection business revenue • Navigate through operating environment; manage costs Separate and stand-up • Complete ERP implementation • Operationalize embecta systems and resources, and exit transition se
Slide 8: Q4 FY23 Financial Highlights
Q4 FY23 Financial Highlights Revenue Q4 FY23 revenue of $281.9 million, up 2.7% on an as-reported basis; up 2.1% on a constant currency basis, as compared to the prior year period Gross Q4 FY23 GAAP gross profit and margin of $181.8 million and 64.5%, compared to $176.9 million and 64.4% in the prio
Slide 9: FY23 Financial Highlights – Guidance Progression
FY23 Financial Highlights – Guidance Progression Dollars in Millions, December 20, 2022 February 14, 2023 May 12, 2023 August 8, 2023 except per share and Final percentages Low High Low High Low High Low High Results Revenue $1,050 $1,073 $1,084 $1,107 $1,101 $1,113 $1,107 $1,113 $1,121 As-Reported
Slide 10: Cash Flow & Net Leverage
Cash Flow & Net Leverage Dollars in Millions, except ratios FY’23 Actual Beginning cash balance $330.9 Net cash provided by operating activities 67.7 Capital expenditures 26.5 Free cash flow $41.2 Dividend payments 34.4 Ending cash balance $326.5 Debt outstanding $1,636 Net leverage ratio 3.5x Note:
Slide 11: Fiscal Year 2024 Financial Guidance
Fiscal Year 2024 Financial Guidance
Slide 12: Fiscal Year 2024 Financial Guidance
Fiscal Year 2024 Financial Guidance Dollars in Millions, except per share and percentages Low High Revenue $1,085 $1,105 As-Reported % (3.0%) (1.0%) Constant Currency % (2.0%) 0.0% F/X % ~ (1.0%) Contract Manufacturing $0 - $5 Adjusted Gross Margin 63.0% - 64.0% Adjusted Operating Margin 23.75% - 24
Slide 13: Market Considerations & Opportunity
Market Considerations & Opportunity
Slide 14: Insulin prescription trends in the US remain consistent despite GLP-1 growth
Insulin prescription trends in the United States have remained relatively consistent, despite the growth of GLP-1 RA and GLP-1 RA/GIP therapy Insulin prescription trends remain stable The number of patients that • Weekly GLP-1 RA drugs have been marketed for several years switch from insulin to week
Slide 15: embecta's insulin injection revenue remained stable as new treatments entered
embecta’s insulin injection revenue remained stable even while multiple new treatments for type 2 diabetes entered the market Our global footprint is expected to continue FY23 Global Revenue2 to provide us with a strong, stable, and recurring revenue base International US 46% • Insulin therapy is a
Slide 16: GLP-1 RA therapies are delivered via pens/pen needles, vials/syringes and autoinjectors
GLP-1 RA and GLP-1 RA/GIP therapies are delivered via pens/pen needles, vials/syringes and autoinjectors Our pen needles are compatible with widely used pen injector devices including those marketed by a variety of companies including1* embecta has segment leadership in diabetes injection devices2
Slide 17: Significant opportunity exists to help people living with diabetes
Significant opportunity exists to help people living with diabetes Injection GLP-1 RA Delivery Devices Partnerships Systems • Some GLP-1 RA and combo • Since our pen needles are • There is a significant type 2 therapies will need pen compatible with widely used pen diabetes population that is needle
Slide 18: Thank you
Thank you
Slide 19: Appendix
Appendix embecta’
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating our operating performance, we supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial measures including (i) earnings before interest, taxes, depreciation, and amortization (“EBITDA”), (ii) Adjusted EBITDA
Slide 21: Adjusted Gross Profit Margin Reconciliation
Adjusted Gross Profit Margin Reconciliation Dollars in Millions, except percentages Three Months Ended Twelve Months Ended September 30, 2023 (1) September 30, 2023 (1) Gross Profit $181.8 $749.9 Gross Profit Margin 64.5% 66.9% Stock-based compensation expense — 0.1 Amortization of intangible assets
Slide 22: Adjusted Operating Income Margin Reconciliation
Adjusted Operating Income Margin Reconciliation Dollars in Millions, except percentages Three Months Ended Twelve Months Ended September 30, 2023 (1) September 30, 2023 (1) GAAP Operating Income $25.8 $221.5 GAAP Operating Income Margin 9.2% 19.8% Amortization of intangible assets (2) 0.8 1.2 One-ti
Slide 23: Adjusted Operating Income Margin Reconciliation – Continued
Adjusted Operating Income Margin Reconciliation – Continued (1) Prior to the Separation on April 1, 2022, the Company’s historical combined financial statements were prepared on a standalone basis. These results did not purport to reflect what the Company’s results of operations, comprehensive incom
Slide 24: Adjusted Net Income and Adjusted Net Income Per Diluted Share Reconciliation
Adjusted Net Income and Adjusted Net Income Per Diluted Share Reconciliation Dollars in Millions, except per share amounts Three Months Ended Twelve Months Ended September 30, 2023 (1) September 30, 2023 (1) Income Before Income Taxes $5.0 $105.7 Adjustments: Amortization of intangible assets (2) 0.
Slide 25: Adjusted Net Income Per Diluted Share Reconciliation – Continued
Adjusted Net Income Per Diluted Share Reconciliation – Continued (1) Prior to the Separation on April 1, 2022, the Company’s historical combined financial statements were prepared on a standalone basis. These results did not purport to reflect what the Company’s results of operations, comprehensive
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Dollars in Millions, except percentages Three Months Ended Twelve Months Ended September September September September 30, 2023 30, 2022 30, 2023 30, 2022 GAAP Net Income $6.0 $(17.2) $70.4 $223.6 Interest expense, net 27.6 21.8 107.0 46.2 Income taxes (1.0) (10.3) 35.
Slide 27: Adjusted EBITDA Reconciliation – Continued
Adjusted EBITDA Reconciliation – Continued (1) Represents stock-based compensation expense incurred during the three and twelve months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023, $4.1 million is recorded in Selling and administrative expense, $0.4
Slide 28: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Dollars in Millions, except percentages Twelve Months Ended September 30, 2023 Net cash provided by operating activities $67.7 Capital expenditures $26.5 Free cash flow $41.2 28
Slide 29: CAGR reconciliation
CAGR reconciliation Dollars in Twelve Months Ended Millions CAGR September September September September September September September Growth Rate 30, 2017 30, 2018 30, 2019 30, 2020 30, 2021 30, 2022 30, 2023 U.S. $546.4 $564.1 $569.5 $562.5 $609.4 $600.3 $601.4 1.6% CMA $15.0 $13.0 U.S. ex CMA $54
Slide 30: Fiscal Year 2024 Financial Guidance Assumptions
Fiscal Year 2024 Financial Guidance Assumptions Dollars in Millions, except percentages Interest Expense, Net ~ $116 Adjusted Tax Rate ~ 22% Weighted Average Shares (in millions) ~ 58.1 Foreign Exchange EUR/USD ~ 1.05 USD/YEN ~ 150 USD/CNY ~ 7.3 30