embc-20220630

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: June 30, 2022


☐			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, Parsippany, New Jersey						07054
(Address of principal executive offices)						(Zip code)

(201) 847-6880

(Registrant’s telephone number, including area code)

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

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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 August 4, 2022 was 57,836,488 shares, par value $0.01 per share.

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Embecta Corp.

Form 10-Q

For the Quarterly Period ended June 30, 2022

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		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	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
Part II. Other Information		33

Item 1A.	Risk Factors	33




Item 6.	Exhibits	33
Signatures		34

-i-

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data.

Condensed Consolidated Statements of Income

Embecta Corp.

(Unaudited)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021

Revenues	$	291.1	$	295.0	$	854.9	$	864.5
Cost of products sold(1)	88.2		92.4		256.9		274.3
Gross Profit	$	202.9	$	202.6	$	598.0	$	590.2
Operating expenses:
Selling and administrative expense	83.8		60.5		212.9		169.5
Research and development expense	14.3		15.7		49.0		43.8
Other operating expenses	7.7		2.1		23.5		2.1
Total Operating Expenses	$	105.8	$	78.3	$	285.4	$	215.4
Operating Income	$	97.1	$	124.3	$	312.6	$	374.8
Interest expense, net	(19.5)		—		(24.4)		—
Other income (expense), net	(4.0)		0.6		(4.1)		3.7
Income Before Income Taxes	$	73.6	$	124.9	$	284.1	$	378.5
Income tax provision	11.2		20.2		43.3		60.6
Net Income	$	62.4	$	104.7	$	240.8	$	317.9

Net Income per common share:
Basic	$	1.08	$	1.81	$	4.17	$	5.50
Diluted	$	1.07	$	1.81	$	4.14	$	5.50

(1)For periods prior to the Separation, this income statement line includes cost of products sold from related party inventory purchases. For the three month period ended June 30, 2021, cost of products sold from related party inventory purchases were $11.4 million. For the nine month periods ended June 30, 2022 and 2021, cost of products sold from related party inventory purchases were $22.1 million and $30.4 million, respectively.

See notes to the 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 June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021

Net Income	$	62.4	$	104.7	$	240.8	$	317.9
Other Comprehensive Loss, net of tax
Foreign currency translation adjustments	(21.4)		—		(37.3)		(3.7)
Other Comprehensive Loss	$	(21.4)	$	—	$	(37.3)	$	(3.7)
Comprehensive Income	$	41.0	$	104.7	$	203.5	$	314.2

See notes to the 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.


	June 30, 2022		September 30, 2021
	(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	292.3	$	—
Trade receivables, net (net of allowance for doubtful accounts of $1.2 million in 2022 and $2.8 million in 2021)	22.2		150.6
Inventories:
Materials	12.0		13.1
Work in process	17.7		21.0
Finished products	100.6		83.9
	$	130.3	$	118.0
Amounts due from Becton, Dickinson and Company	97.0		—
Prepaid expenses and other	38.8		23.2
Total Current Assets	$	580.6	$	291.8
Property, Plant and Equipment, Net	375.7		451.0
Goodwill and Other Intangible Assets	25.0		33.9
Other Assets	68.5		11.3
Total Assets	$	1,049.8	$	788.0
Liabilities and Equity
Current Liabilities
Accounts payable	$	64.3	$	54.2
Accrued expenses	89.6		81.6
Salaries, wages and related items	41.1		28.2
Current debt obligations	9.5		—
Current finance lease liabilities	3.6		—
Income taxes	20.4		—
Total Current Liabilities	$	228.5	$	164.0
Deferred Income Taxes and Other Liabilities	36.8		29.7
Long-Term Debt	1,599.2		—
Non Current Finance Lease Liabilities	32.9		—
Commitments and Contingencies (Note 5)
Embecta Corp. Equity
Common stock, $0.01 par value Authorized - 250,000,000 Issued and outstanding - 57,806,040	0.6		—
Additional paid-in capital	5.8		—
Accumulated deficit	(

SEC Form 10-Q filed by Embecta Corp.