Embecta Corp (EMBC) 2023 Q2 法說會逐字稿

Welcome, ladies and gentlemen, to the Fiscal Second Quarter 2023 Embecta Earnings Conference Call. (Operator Instructions) Please note that this conference call is being recorded and that 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 conference call over to your host today, Mr. Pravesh Khandelwal, Vice President of Investor Relations. Please go ahead.

女士們，先生們，歡迎參加 Embecta 2023 財年第二季度收益電話會議。 （操作員說明）請注意，此電話會議正在錄製中，錄音將在公司網站上提供，以便在本次電話會議結束後重播。我現在想將電話會議轉交給今天的主持人，投資者關係副總裁 Pravesh Khandelwal 先生。請繼續。

Thank you, operator. Good morning, everyone, and welcome to Embecta's Fiscal Second Quarter 2023 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 Chief Executive Officer; and Jake Elguicze, our Chief Financial Officer.

謝謝你，運營商。大家早上好，歡迎來到 Embecta 的 2023 財年第二季度收益電話會議。今日電話會議和網絡廣播重播的新聞稿和幻燈片詳情可在公司網站 www.embecta.com 的“投資者關係”部分獲取。今天和我在一起的是 Embecta 的首席執行官 Dev Kurdikar；和我們的首席財務官 Jake Elguicze。

Before we begin, I'd 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.

在我們開始之前，我想提醒您，電話會議中討論的一些事項將包含有關我們幻燈片中概述的未來事件的前瞻性陳述。我們謹提醒您，此類陳述實際上具有前瞻性，並受風險和不確定性的影響，實際事件或結果可能存在重大差異。可能導致實際結果或事件發生重大差異的因素包括但不限於我們今天的新聞稿以及我們向美國證券交易委員會提交的文件中提到的因素，這些文件可以在我們的網站上訪問。

In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to, and not a substitute 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.

此外，我們將在本次電話會議上討論某些非 GAAP 財務措施，這些措施應被視為對根據 GAAP 編制的財務措施的補充，而不是替代。這些非 GAAP 措施與可比的 GAAP 措施的對賬包含在我們的新聞稿和電話會議演示中。

Our agenda for today's call is as follows: Dev will begin by providing an overview of Embecta, our strategic priorities for 2023, and some remarks on the overall performance of our business during the second quarter. Jake will then provide a more in-depth review of Q2 financial results as well as our updated financial guidance for the year. We will then open the call for questions.

我們今天電話會議的議程如下：Dev 將首先概述 Embecta、我們 2023 年的戰略重點，以及對我們第二季度業務整體績效的一些評論。然後，傑克將對第二季度的財務業績以及我們今年更新的財務指南進行更深入的審查。然後我們將打開問題電話。

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

話雖如此，我現在想把電話轉給我們的首席執行官 Dev Kurdikar。開發？

Good morning, everyone, and thank you for joining us today. The end of the last quarter marked 1 year since we officially launched Embecta and kicked off a whole new chapter for a company that has been integral to the evolution of diabetes care over the past century. It has been a remarkable year, from ringing the bell at NASDAQ twice to transitioning our global employees from BD's HR systems to our own Embecta's systems, moving into approximately 30 offices around the world, attending more than 30 conferences and symposiums and serving an estimated 30 million people in 100-plus countries. For all those milestones, it's that last number, the 30 million people with diabetes who use our products that motivates our global Embecta team.

大家早上好，感謝您今天加入我們。上個季度末標誌著我們正式推出 Embecta 1 年，並為一家在過去一個世紀對糖尿病護理髮展不可或缺的公司開啟了全新的篇章。這是不平凡的一年，從兩次在納斯達克敲響鐘聲，到將我們的全球員工從 BD 的人力資源系統轉移到我們自己的 Embecta 系統，進入全球約 30 個辦事處，參加 30 多個會議和座談會，並為大約 30 個100 多個國家/地區的 100 萬人。對於所有這些里程碑，正是最後一個數字，即使用我們產品的 3000 萬糖尿病患者激勵著我們的全球 Embecta 團隊。

As you know, our mission is to develop and provide solutions that make life better for people living with diabetes, and we're proud to have a role in helping them live their lives with fewer limitations. We're are mainly driven by a sense of urgency to accelerate the journey to better diabetes care, something we've been doing for nearly 100 years now. Our accomplishments in the first year since our spin-off from BD have made me even more excited for what the future holds for us and for people living with diabetes.

如您所知，我們的使命是開發和提供改善糖尿病患者生活的解決方案，我們很自豪能夠幫助他們過上更少限制的生活。我們的主要動力是加速改善糖尿病護理的緊迫感，這是我們近 100 年來一直在做的事情。我們從 BD 分拆出來後第一年取得的成就讓我對我們和糖尿病患者的未來更加興奮。

Our strategic priorities for fiscal year 2023 are shown on Slide 5. First we're focused on strengthening our base business, while maintaining our global leadership position in the category of insulin injection devices. Second, we want to finish the work to operationally stand up and separate Embecta as an independent company. And finally, we intend to continue investing in R&D, most notably around our patch pump that is being developed for the Type 2 market as well as seek M&A and additional partnership opportunities.

我們 2023 財年的戰略重點如幻燈片 5 所示。首先，我們專注於加強我們的基礎業務，同時保持我們在胰島素注射設備類別中的全球領導地位。其次，我們希望完成將 Embecta 獨立為一家獨立公司的運營工作。最後，我們打算繼續投資研發，尤其是圍繞我們為 2 型市場開發的貼片泵，以及尋求併購和其他合作機會。

Moving to Slide 6. During the first 6 months of our fiscal year, we have made progress in each one of those strategic priorities, yielding results that have exceeded our internal expectations. In terms of solidifying our base business, we have continued to deepen our partnerships with key customers, resulting in winning preferred brand status, implementing growth initiatives and signing multiyear agreements with major retailers and payers. These strengthened partnerships are in addition to us being awarded exclusive preferred status on the Express Scripts National Preferred Formulary as well as pen needle and insulin syringe contract wins from the U.S. Department of Veterans Affairs, as noted last quarter.

轉到幻燈片 6。在本財年的前 6 個月，我們在每一項戰略優先事項上都取得了進展，取得了超出我們內部預期的結果。在鞏固我們的基礎業務方面，我們繼續深化與主要客戶的合作夥伴關係，贏得了首選品牌地位，實施了增長計劃，並與主要零售商和付款人簽署了多年協議。正如上個季度所述，除了我們在 Express Scripts National Preferred Formulary 以及筆針和胰島素注射器合同中贏得美國退伍軍人事務部的合同外，這些加強的合作夥伴關係也是如此。

Additionally, we're helping patients shift behavior to clinically recommended best practices through a dedicated media campaign, educational materials and retail pharmacy programs, thereby helping raise awareness of the importance of using a new needle with each insulin injection and maintaining an adequate supply of needles. And recently, we held our first industry-sponsored educational symposium at the Advanced Technologies & Treatments for Diabetes conference.

此外，我們正在通過專門的媒體宣傳、教育材料和零售藥房計劃幫助患者將行為轉變為臨床推薦的最佳做法，從而幫助提高人們對每次注射胰島素時使用新針頭和保持足夠針頭供應的重要性的認識.最近，我們在糖尿病先進技術與治療會議上舉辦了第一次由行業贊助的教育研討會。

Second, we continue to make progress in our separation efforts as demonstrated by the exit of several transition service agreements as we continue to build up our internal organization, systems and processes. We also published our inaugural ESG strategy report, providing a summary of how we're managing environmental, social and governance issues. This initial report sets the stage for how we operate our business, engage with our stakeholders and drive results that we believe will support the sustainability and strength of Embecta well into the future.

其次，隨著我們繼續建立內部組織、系統和流程，我們在分離工作方面繼續取得進展，正如我們退出幾項過渡服務協議所證明的那樣。我們還發布了首份 ESG 戰略報告，總結了我們如何管理環境、社會和治理問題。這份初步報告為我們如何經營我們的業務、與我們的利益相關者互動以及推動我們相信將支持 Embecta 的可持續性和實力的結果奠定了基礎。

And we signed a co-promotion collaboration agreement with PolyPhotonix under which our commercial streams in the U.K. and Ireland will promote

我們與 PolyPhotonix 簽署了聯合推廣合作協議，根據該協議，我們在英國和愛爾蘭的商業流將推廣

PolyPhotonix's sleep mask used for the management of 2 common sight-threatening complications associated with diabetes as well as entered into an agreement with Tidepool to help develop automated insulin delivery solutions for people with Type 2 diabetes using our proprietary patch pump.

PolyPhotonix 的睡眠面罩用於管理與糖尿病相關的 2 種常見的威脅視力的並發症，並與 Tidepool 達成協議，幫助使用我們專有的貼片泵為 2 型糖尿病患者開發自動胰島素輸送解決方案。

Our global team has continued to execute our key commercial programs, which is allowing us once again to raise our guidance for key financial metrics. Before I discuss our revenue performance, I'd like to share some additional details regarding our recently announced partnership with Tidepool.

我們的全球團隊繼續執行我們的關鍵商業計劃，這使我們能夠再次提高對關鍵財務指標的指導。在我討論我們的收入表現之前，我想分享一些關於我們最近宣布的與 Tidepool 合作的額外細節。

Our collaboration agreement with Tidepool is focused on the development of an automated insulin delivery system for people living with Type 2 diabetes, a population that we believe could be better served by an AID system tailored to meet their unique needs. Under terms of the agreement, Embecta will leverage Tidepool's expertise in diabetes management software to develop an AID algorithm for our closed loop patch pump system that is being designed with the specific needs of people living with Type 2 diabetes. The recent FDA clearance of the Tidepool Loop for Type 1 diabetes and algorithm technology that started as a patient-led initiative affirms that Tidepool's approach to AID system development combines patients insights with a robust diabetes management solution.

我們與 Tidepool 的合作協議側重於為 2 型糖尿病患者開發自動胰島素輸送系統，我們認為，為滿足他們獨特需求而量身定制的 AID 系統可以更好地為這一人群提供服務。根據協議條款，Embecta 將利用 Tidepool 在糖尿病管理軟件方面的專業知識，為我們的閉環貼片泵系統開發 AID 算法，該系統的設計符合 2 型糖尿病患者的特定需求。最近 FDA 批准了用於 1 型糖尿病的 Tidepool Loop 和算法技術，該技術最初是一項以患者為主導的倡議，這證實了 Tidepool 的 AID 系統開發方法將患者的洞察力與強大的糖尿病管理解決方案相結合。

We're excited to be able to work with the team at Tidepool and to collaborate on the development of a patient-centric Type 2 automated insulin delivery system.

我們很高興能夠與 Tidepool 的團隊合作，並合作開發以患者為中心的 2 型自動胰島素輸送系統。

Next, let's review our second quarter and first half of the year revenue performance in a bit more detail. During Q2, we generated revenues of $277.1 million, which represented an increase of 0.9% on an as-reported basis and 4% on a constant currency basis. These results exceeded our internal expectations and included U.S. revenues, which totaled $146.4 million and grew 3.6% as well as international revenues, which totaled $130.7 million, and grew 4.4% on a constant currency basis.

接下來，讓我們更詳細地回顧一下我們第二季度和上半年的收入表現。在第二季度，我們的收入為 2.771 億美元，按報告基礎增長 0.9%，按固定匯率計算增長 4%。這些結果超出了我們的內部預期，包括美國收入總計 1.464 億美元，增長 3.6% 以及國際收入總計 1.307 億美元，按固定匯率計算增長 4.4%。

The year-over-year growth in the U.S. was primarily driven by the contract manufacturing and sale of certain nondiabetes products to BD, which did not occur in the prior year period and accounted for approximately 2.5% of the year-over-year growth, an adjustment to our rebate reserves, which contributed approximately 1% of the year-over-year growth, and favorable pricing dynamics. This was partially offset by the unwinding of the previously communicated timing benefit of certain distributor orders in Q1.

美國的同比增長主要是由某些非糖尿病產品的合同製造和銷售給 BD 推動的，這在去年同期沒有發生，約占同比增長的 2.5%，對我們的退稅準備金的調整，這貢獻了約 1% 的同比增長，以及有利的定價動態。這部分被第一季度某些分銷商訂單的先前傳達的時間優勢的解除所抵消。

Turning to our performance outside of the U.S. During Q2, the year-over-year growth within our international business was primarily due to an increase in product volumes, which were aided by a competitive product supply shortage in certain regions and a timing benefit of certain orders, which we expect to unwind during the remainder of the year. As we have communicated before, it is not uncommon for us to get timing benefits from distributor orders in any particular quarter that get unwound in succeeding quarters.

談到我們在美國以外的表現在第二季度，我們國際業務的同比增長主要是由於產品數量的增加，這得益於某些地區的競爭性產品供應短缺和某些時間優勢訂單，我們預計將在今年剩餘時間解除。正如我們之前所傳達的那樣，我們從任何特定季度的分銷商訂單中獲得時間優勢的情況並不少見，這些訂單在隨後的季度中解除。

Turning to our revenue performance for the first 6 months of the year. We generated revenues of $552.8 million, which represented a decrease of 2.0% on an as-reported basis, but an increase of 2.3% on a constant currency basis. The year-over-year constant currency growth was due to a combination of contract manufacturing revenue, which contributed approximately 1.3% and our base business performance, which contributed approximately 1.0%.

轉向我們今年前 6 個月的收入表現。我們產生了 5.528 億美元的收入，與報告相比下降了 2.0%，但按固定匯率計算增長了 2.3%。同比穩定的貨幣增長是由於合同製造收入（貢獻約 1.3%）和我們的基本業務績效（貢獻約 1.0%）的結合。

That completes my prepared remarks. And with that, let me turn the call over to Jake to discuss our Q2 financial results in a bit more detail as well as provide our updated fiscal 2023 financial guidance and underlying assumptions. Jake?

我準備好的發言到此結束。因此，讓我把電話轉給傑克，更詳細地討論我們第二季度的財務業績，並提供我們更新的 2023 財年財務指導和基本假設。傑克？

Thank you, Dev, and good morning, everyone. Before I discuss the financial results for the 3-month period ending March 31, I would like to remind the investment community that Embecta was spun off from BD on April 1, 2022. And that the financial results during the pre-spin periods were based on carve-out accounting principles and do not reflect what Embecta's financial results would have been had Embecta operated as a stand-alone public company. Therefore, the financial results for the 3- and 6-month periods ending March 31, 2023, and March 31, 2022, are not meaningfully comparable.

謝謝 Dev，大家早上好。在我討論截至 3 月 31 日的 3 個月期間的財務業績之前，我想提醒投資界，Embecta 於 2022 年 4 月 1 日從 BD 分拆出來。分拆前期間的財務業績是基於根據分拆會計原則，不反映 Embecta 作為獨立上市公司運營時的財務業績。因此，截至 2023 年 3 月 31 日和 2022 年 3 月 31 日止的 3 個月和 6 個月期間的財務結果不具有可比性。

Given the discussion that has already occurred regarding revenue, I'll start my review of Embecta's financial performance for the second quarter at the gross profit line. GAAP gross profit and margin for the second quarter of fiscal 2023 totaled $189.8 million and 68.5%, respectively. This compares to $191.2 million and 69.7% in the prior year period. The year-over-year decline in GAAP gross profit and margin was driven by the negative impact of inflation, the impact of low-margin contract manufacturing revenue that was not in the prior year period, and incremental standup and separation costs, including the markup on the purchase of Cannula from BD.

考慮到已經發生的關於收入的討論，我將從毛利潤線開始審查 Embecta 第二季度的財務業績。 2023 財年第二季度的 GAAP 毛利和利潤率分別為 1.898 億美元和 68.5%。相比之下，去年同期為 1.912 億美元和 69.7%。 GAAP 毛利和利潤率的同比下降是由於通貨膨脹的負面影響、去年同期沒有的低利潤合同製造收入的影響，以及包括加價在內的增量站立和離職成本從 BD 購買插管。

While on an adjusted basis, gross profit and margin for the second quarter of 2023 was $190.1 million and 68.6%, respectively. The adjusted gross margin performance during the second quarter was better than we previously expected due to a greater-than-anticipated benefit from pricing as well as favorable product mix. Additionally, adjusted gross margin during the quarter was also aided by 2 items that are not expected to reoccur during the second half of the year. These 2 items relate to the adjustment to our rebate reserves, which Dev mentioned, and a year-to-date true-up of certain charges from our former parent that, when taken together, positively impacted adjusted gross margin by approximately 200 basis points as compared to our previous expectations.

在調整後的基礎上，2023 年第二季度的毛利潤和利潤率分別為 1.901 億美元和 68.6%。由於定價帶來的收益超出預期以及有利的產品組合，第二季度調整後的毛利率表現好於我們之前的預期。此外，本季度調整後的毛利率也得益於 2 項預計不會在下半年再次出現的項目。這兩個項目與 Dev 提到的我們的退稅準備金的調整以及我們前母公司某些費用的年初至今調整有關，這些費用加在一起對調整後的毛利率產生了大約 200 個基點的積極影響，因為與我們之前的預期相比。

Turning to GAAP operating income and margin. During the second quarter, they were $55.6 million and 20.1%, respectively. This compared to the operating income and margin of $98.9 million and 36%, respectively, in the prior year period. The decline in year-over-year GAAP operating income and margin is primarily due to an increase in selling and administrative expenses associated with separating and standing up Embecta to operate as a stand-alone publicly traded company as well as an increase in research and development expenses, including amounts paid in connection with the collaboration agreement signed with Tidepool to develop and commercialize an interoperable automated glycemic controller to complement our insulin patch pump currently in development.

轉向 GAAP 營業收入和利潤率。在第二季度，它們分別為 5560 萬美元和 20.1%。相比之下，去年同期的營業收入和利潤率分別為 9890 萬美元和 36%。同比 GAAP 營業收入和利潤率下降主要是由於與 Embecta 分離和成立作為獨立上市公司運營相關的銷售和管理費用增加，以及研發費用增加費用，包括與 Tidepool 簽署的合作協議相關支付的金額，以開發和商業化可互操作的自動血糖控制器，以補充我們目前正在開發的胰島素貼片泵。

While on an adjusted basis, during the second quarter of 2023, operating income and margin totaled $84.9 million and 30.6%, respectively. The adjusted operating income and margin performance was better than we previously expected due to the overachievement at the gross profit and margin line that I referenced earlier.

在調整後的基礎上，2023 年第二季度營業收入和利潤率分別為 8490 萬美元和 30.6%。調整後的營業收入和利潤率表現好於我們之前的預期，原因是我之前提到的毛利和利潤率線超額完成。

Turning to the bottom line. GAAP net income and earnings per diluted share was $14 million and $0.24 during the second quarter of fiscal 2023. This compares to $79.6 million and $1.38 in the prior year period. As I mentioned at the outset, because the financials for pre-spin periods were prepared on a carve-out accounting basis, the comparisons of pre-spin to post-spin periods are not meaningfully comparable. One example of this is the additional operating expenses necessary for us to operate as a stand-alone entity, while another is interest expense, which burdened our P&L in the current year by $26.8 million, but was only $4.9 million in the prior year period. While on an adjusted basis, net income and earnings per share were $43.3 million and $0.75 during the second quarter of fiscal 2023.

轉向底線。 2023 財年第二季度的 GAAP 淨收入和攤薄後每股收益分別為 1400 萬美元和 0.24 美元。上年同期為 7960 萬美元和 1.38 美元。正如我在一開始提到的，因為分拆前的財務數據是在分拆會計基礎上編制的，分拆前和分拆後期間的比較沒有有意義的可比性。這方面的一個例子是我們作為獨立實體運營所需的額外運營費用，而另一個例子是利息費用，它在本年度給我們的損益帶來了 2680 萬美元的負擔，但在去年同期僅為 490 萬美元。在調整後的基礎上，2023 財年第二季度的淨收入和每股收益分別為 4330 萬美元和 0.75 美元。

Lastly, from a P&L perspective, for the second quarter of 2023, our adjusted EBITDA and margin totaled approximately $96.7 million and 34.9%. Like our adjusted operating profit, due to the revenue and gross profit overachievement in the quarter, our adjusted EBITDA during the second quarter also exceeded our previous expectations.

最後，從損益的角度來看，2023 年第二季度，我們調整後的 EBITDA 和利潤率總計約為 9670 萬美元和 34.9%。與我們調整後的營業利潤一樣，由於本季度的收入和毛利潤超額完成，我們第二季度調整後的 EBITDA 也超出了我們之前的預期。

Finally, with respect to our balance sheet and financial condition at quarter end. As of March 31, 2023, we held approximately $346 million in cash and cash equivalents and approximately $1.64 billion in debt, which, taken together with our last 12 months adjusted EBITDA, resulted in a net leverage ratio of approximately 3.1x.

最後，關於我們在季度末的資產負債表和財務狀況。截至 2023 年 3 月 31 日，我們持有約 3.46 億美元的現金和現金等價物以及約 16.4 億美元的債務，加上我們過去 12 個月調整後的 EBITDA，淨槓桿率約為 3.1 倍。

That completes my prepared remarks as it relates to Embecta's financial results for the second quarter of fiscal 2023. Next, I'd like to discuss Embecta's updated 2023 financial guidance and certain underlying assumptions.

這就是我準備好的關於 Embecta 2023 財年第二季度財務業績的評論。接下來，我想討論 Embecta 更新的 2023 年財務指南和某些基本假設。

Beginning with revenue. Given our performance during the first half of the year, we're once again increasing our constant currency revenue guidance range as we're now calling for full year 2023 constant currency revenue growth of between 0% and 1%. This is an increase as compared to our previous guidance range, which had called for a decline of 1.5% on the low end to 0.5% of growth on the upper end. This new range translates into a second half of the year constant currency revenue range of between flat to down approximately 2%. The low end of our new constant currency revenue range assumes no additional contract manufacturing revenue during quarters 3 and 4, which would result in a headwind of approximately 3% during the second half of fiscal 2023.

從收入開始。鑑於我們上半年的表現，我們再次提高了固定貨幣收入指導範圍，因為我們現在呼籲 2023 年全年固定貨幣收入增長在 0% 到 1% 之間。與我們之前的指導範圍相比，這是一個增長，該範圍要求低端下降 1.5%，高端增長 0.5%。這一新範圍轉化為今年下半年固定貨幣收入範圍在持平到下降約 2% 之間。我們新的固定貨幣收入範圍的低端假設在第 3 季度和第 4 季度沒有額外的合同製造收入，這將導致 2023 財年下半年出現約 3% 的逆風。

As you may recall, we generated approximately $15 million of contract manufacturing revenue during the second half of fiscal 2022. The headwind from the lack of additional contract manufacturing revenue is expected to be somewhat offset by our base business growing at approximately 1% were consistent with the performance achieved during the first half of the year. While the high end of our new constant currency revenue range assumes a modestly smaller headwind associated with contract manufacturing revenue and a slight improvement during the second half of the year in terms of our base business performance as compared to the first half of the year, largely attributed to our anticipated performance in both the U.S. and China.

您可能還記得，我們在 2022 財年下半年產生了大約 1500 萬美元的合同製造收入。由於缺乏額外的合同製造收入而帶來的逆風預計將在一定程度上被我們的基礎業務增長約 1% 所抵消，這與上半年取得的業績。雖然我們新的固定貨幣收入範圍的高端假設與合同製造收入相關的逆風略小，並且與上半年相比，我們的基本業務績效在下半年略有改善，但在很大程度上這歸因於我們在美國和中國的預期表現。

And while we continue to make progress in this area, our updated constant currency revenue guidance range continues to assume an immaterial amount of revenue associated with any recently announced partnership agreements.

雖然我們在這一領域繼續取得進展，但我們更新的固定貨幣收入指導範圍繼續承擔與最近宣布的任何合作協議相關的微不足道的收入。

Turning to our thoughts on FX. They remain unchanged from our previous expectations, and as such, our updated guidance continues to call for a foreign currency headwind of approximately 2.5% during 2023. Our updated FX assumptions were based on foreign exchange rates that were in existence in the early May time frame. On a combined basis, we're raising our full year as-reported revenue guidance from a range, which called for a decline of between 2% and 4% to a new range, which calls for a decline of between 1.5% and 2.5%. In dollar terms, this equates to a revenue range of between $1.101 billion and $1.113 billion.

談談我們對外彙的看法。它們與我們之前的預期保持不變，因此，我們更新後的指引繼續要求在 2023 年出現約 2.5% 的外匯逆風。我們更新後的外匯假設是基於 5 月初時間框架內存在的匯率.綜合來看，我們將全年報告的收入指引從一個範圍提高到一個新範圍，該範圍要求下降 2% 到 4% 之間，要求下降 1.5% 到 2.5% 之間.以美元計算，這相當於收入在 11.01 億美元至 11.13 億美元之間。

Lastly, concerning revenue, we currently anticipate a sequential decline from Q2 to Q3 in terms of our as-reported revenue dollars due to the timing benefits and rebate reserve adjustments that positively impacted Q2 that are not expected to reoccur during the third quarter, coupled with lower contract manufacturing revenue.

最後，關於收入，我們目前預計我們報告的收入美元從第二季度到第三季度連續下降，這是由於時間優勢和退稅準備金調整對第二季度產生了積極影響，預計不會在第三季度再次發生，再加上合同製造收入減少。

Moving to margins. Based on the performance that was achieved during the first half of the year, we're raising our expectations for adjusted gross, adjusted operating and adjusted EBITDA margins as we now anticipate that our adjusted gross margin will be approximately 64.5%, up from our prior guidance of approximately 63.5%. Our adjusted operating margin is expected to be approximately 28%, up from our prior guidance of approximately 26.5%. While our adjusted EBITDA margin is now projected to be approximately 32.5% for the full year 2023, up from our previous guidance of approximately 31.5%.

移動到邊緣。根據今年上半年取得的業績，我們提高了對調整後的毛利率、調整後的運營利潤率和調整後的 EBITDA 利潤率的預期，因為我們現在預計調整後的毛利率約為 64.5%，高於我們之前的預期指引約為 63.5%。我們調整後的營業利潤率預計約為 28%，高於我們之前的指導值約 26.5%。雖然我們現在預計 2023 年全年調整後的 EBITDA 利潤率約為 32.5%，高於我們之前的約 31.5% 的指導。

Consistent with the comments we made on our first quarter earnings conference call, this implies a step down in our margin profile from the first half of the year to the second half of the year. And it's due to a combination of factors, including the revaluation of our inventory that occurred at the beginning of our current fiscal year curve, which we will sell at a higher standard cost during the second half of the year. Positive absorption that was achieved during the first half of the year as we manufactured additional product in advance of our planned temporary suspension of our manufacturing operations in our facility in Suzhou, China, later this year that are associated with the corresponding regulatory approvals and transitions there, as well as total operating expenses as a percentage of revenue that during the second half of the year are expected to be similar to that which occurred during the second quarter.

與我們在第一季度收益電話會議上發表的評論一致，這意味著我們的利潤率從今年上半年到下半年有所下降。這是由於多種因素的綜合作用，包括在當前財政年度曲線開始時對我們的庫存進行重估，我們將在下半年以更高的標準成本出售這些庫存。今年上半年實現了積極吸收，因為我們在計劃於今年晚些時候暫停中國蘇州工廠的製造業務之前製造了額外的產品，這與那裡的相應監管批准和過渡有關，以及下半年總運營費用佔收入的百分比預計與第二季度相似。

Continuing down the P&L. We currently expect that our net interest expense will be approximately $113 million or slightly favorable as compared to our previous expectation, which called for interest expense of approximately $115 million during 2023. Our assumptions regarding our non-GAAP tax rate and weighted average shares remain unchanged at approximately 25% and 57.7 million shares, respectively. At the bottom line, this translates into our new full year 2023 adjusted earnings per diluted share range of between $2.50 and $2.60, which is an increase from our previous range of between $2.20 and $2.35, or a raise of approximately $0.27 at the midpoint.

繼續降低損益。我們目前預計我們的淨利息支出將約為 1.13 億美元，或與我們之前的預期相比略有優勢，之前的預期要求 2023 年的利息支出約為 1.15 億美元。我們對我們的非 GAAP 稅率和加權平均股份的假設保持不變分別約為 25% 和 5770 萬股。歸根結底，這意味著我們新的 2023 年全年調整後每股攤薄收益範圍在 2.50 美元至 2.60 美元之間，比我們之前 2.20 美元至 2.35 美元的範圍有所增加，或者中點增加了約 0.27 美元。

In closing, during the first half of the year, Embecta made good progress in each of our 3 major strategic priorities, including strengthening our base business, separating and standing ourselves up as an independent entity and investing in growth. We generated solid financial performance during the first half of the year, and we're pleased to be able to raise several of our financial metrics yet again. That said, we're mindful that we're only halfway through our first full fiscal year as an independent entity.

最後，在今年上半年，Embecta 在我們的 3 個主要戰略重點中都取得了良好進展，包括加強我們的基礎業務、分離並作為一個獨立實體站穩腳跟，以及投資於增長。我們在今年上半年取得了穩健的財務業績，我們很高興能夠再次提高我們的多項財務指標。也就是說，我們注意到我們作為一個獨立實體的第一個完整財政年度才剛剛過半。

And as we look ahead, we still have some important separation activities in front of us, including the implementation of our ERP system, managing through the anticipated temporary suspension of manufacturing operations at our facility in Suzhou, China, and setting up our own distribution network.

展望未來，我們仍然有一些重要的分離活動擺在我們面前，包括實施我們的 ERP 系統，管理我們在中國蘇州工廠的預期臨時停產，以及建立我們自己的分銷網絡.

That completes my prepared remarks. And at this time, I would like to turn the call over to the operator for questions. Operator?

我準備好的發言到此結束。而這時候，我想把電話轉給接線員提問。操作員？

(Operator Instructions) Our first question comes from Cecilia Furlong with Morgan Stanley.

（操作員說明）我們的第一個問題來自摩根士丹利的 Cecilia Furlong。

Congrats on the quarter. I wanted to ask specifically as we think about just 2Q, some of the benefits you called out, whether it was OUS competitor dynamics or competitor issues as well as some of the stocking dynamics that you called out, how we should think about the impact 2Q to 3Q and into the back half of the year? And then coupled with that, too, just any update to how you're thinking about timing associated with the China manufacturing shutdown and impact both on top line as well as gross margins?

祝賀這個季度。我想具體問一下，因為我們只考慮第二季度，你提到的一些好處，無論是 OUS 競爭對手動態還是競爭對手問題，以及你提到的一些庫存動態，我們應該如何考慮第二季度的影響到第三季度和下半年？然後再加上這一點，關於您如何考慮與中國製造業停工相關的時間以及對收入和毛利率的影響的任何更新？

Yes. Thanks, Cecilia. So while our second quarter results were certainly aided by some things, which we don't expect to reoccur in the second half of the year, we were really pleased with the performance by the team in the second quarter. About 1/3 of our constant currency revenue growth in Q2 was due to the combined impact of the rebate reserve adjustment and the timing of orders from distributors internationally. So in the quarter, we booked a rebate reserve adjustment of about $5 million. In the second quarter of last year of 2022, we booked a rebate reserve adjustment of about $4 million. So the net impact was only about $1 million year-over-year. But the total amount, which we didn't expect coming into this quarter was about $5 million during the quarter.

是的。謝謝，塞西莉亞。因此，雖然我們第二季度的業績肯定受到某些因素的幫助，但我們預計下半年不會再次出現這種情況，但我們對第二季度團隊的表現感到非常滿意。我們第二季度持續貨幣收入增長的大約 1/3 是由於退稅準備金調整和國際分銷商訂單時間的綜合影響。因此，在本季度，我們預訂了約 500 萬美元的返利準備金調整。在 2022 年第二季度，我們預訂了約 400 萬美元的返利準備金調整。因此，同比淨影響僅為 100 萬美元左右。但是我們沒想到本季度的總金額約為 500 萬美元。

In terms of the distributor impact the orders internationally that was around $3 million benefiting us in the quarter. And that, again, we would also expect to unwind in the third quarter of the year. The other 1/3, I would say, of our constant currency revenue growth in Q2 was due to the contract manufacturing revenue. And that's really just a function of the fact that we generated about $3.5 million of contract manufacturing revenue in the second quarter of this year, and we didn't have any of that in the second quarter of last year.

就分銷商影響而言，本季度約有 300 萬美元的國際訂單使我們受益。而且，我們也希望在今年第三季度放鬆。另外 1/3，我想說，我們第二季度貨幣收入的持續增長是由於合同製造收入。這實際上只是因為我們在今年第二季度產生了約 350 萬美元的合同製造收入，而去年第二季度我們沒有任何收入。

And then the remaining 1/3 of our constant currency revenue growth was due to our base business, which is performing better than we had previously expected. And I'll turn the call to Dev, maybe he can answer the question that you had on Suzhou.

然後，我們持續的貨幣收入增長的其餘 1/3 歸功於我們的基礎業務，該業務的表現好於我們之前的預期。我會把電話轉給 Dev，也許他可以回答你關於蘇州的問題。

Cecilia. So as you remember, China was a deferred entity for us at close. And as we go through the process of transferring the Suzhou entity from BD to us, there is a variety of steps we have to go through to get a variety of manufacturing and business licenses, quality audits and so on. And so during that process, the plant has to seize operations for a period of time. It can come back up to produce product -- the manufacture of that plant that is used for markets outside of China, but it does have to shut down for a period of time. And what we're planning to do is implement our ERP solutions at the same time, taking advantage of the fact that the plant is going to be shutting down. And so obviously, there is a connection between Suzhou transition and ERP implementation. And our plan right now is to implement that ERP, not just when we're technically ready, but certainly, when customers are ready as well. And so that's some of the things that we're working through.

塞西莉亞。所以你還記得，中國對我們來說是一個延遲的實體。在我們完成將蘇州實體從 BD 轉移到我們的過程中，我們必須經過各種步驟才能獲得各種製造和營業執照、質量審核等。因此，在這個過程中，工廠必須在一段時間內暫停運營。它可以恢復生產產品——用於中國以外市場的工廠的製造，但它確實必須關閉一段時間。我們計劃做的是同時實施我們的 ERP 解決方案，利用工廠將要關閉的事實。很明顯，蘇州轉型與 ERP 實施之間存在聯繫。我們現在的計劃是實施該 ERP，不僅是在我們技術上準備就緒時，當然，當客戶也準備好時。這就是我們正在努力解決的一些問題。

What we have done, though, is we've built up inventory that we need to accommodate the transfer of the plant and the shutdown of the plant and all of that has been incorporated into guidance. With respect to specifics on timing, you can imagine, it's a bit of a sensitive topic, both from a competitive reason, but also we don't want to get ahead of the regulatory authorities here. So we'll provide an update on that at an appropriate time, Cecilia. Suffice to say that our team has been working pretty hard, both locally in China as well as from an ops perspective to do what we can to have a pretty smooth transition.

不過，我們所做的是建立了我們需要的庫存，以適應工廠的轉移和工廠的關閉，所有這些都已納入指導。關於時間的細節，你可以想像，這是一個有點敏感的話題，既出於競爭原因，但我們也不想在這裡領先於監管機構。 Cecilia，我們會在適當的時候提供更新。可以說我們的團隊一直在非常努力地工作，無論是在中國本地還是從運營的角度來看，盡我們所能來實現相當平穩的過渡。

Great. And if I could follow up to -- on your pump program as well, just the announcement in partnership with Tidepool. How we should think about next steps, what you'll disclose from a timing standpoint? And also just from a pipeline standpoint, is it still the open lead system first followed by closed loop? Just any color broadly would be helpful.

偉大的。如果我能跟進 - 關於你的泵計劃，以及與 Tidepool 合作的公告。我們應該如何考慮下一步，您將從時間的角度披露什麼？而且從管道的角度來看，它仍然是先開放先導系統然後再閉環嗎？廣泛地使用任何顏色都會有所幫助。

Sure, Cecilia. So yes, we're still thinking about an open loop system first and a closed loop. We're pretty excited about our partnership with Tidepool. Tidepool, as you may know, recently got 510(k) clearance for their algorithm, albeit it was for Type 1. And as we looked at our options and as we looked at the fact that certainly, we wanted to develop a closed loop system as well after an open-loop system, it seems like the right time to combine, if you will, forces with Tidepool. They bring a patient centricity as well as expertise in diabetes management software so that together, we could work on an algorithm that was really specific for the needs of Type 2 people. And in fact, our teams are already collaborating with each other.

當然，塞西莉亞。所以是的，我們仍然首先考慮開環系統和閉環系統。我們對與 Tidepool 的合作感到非常興奮。您可能知道，Tidepool 最近獲得了他們算法的 510(k) 許可，儘管它是針對類型 1 的。當我們審視我們的選擇並審視一個事實時，我們當然希望開發一個閉環系統在開環系統之後，現在似乎是將力量與 Tidepool 結合的合適時機。他們帶來了以患者為中心的理念以及在糖尿病管理軟件方面的專業知識，因此我們可以共同開發一種真正針對 2 型人群需求的算法。事實上，我們的團隊已經在相互合作。

With respect to time lines, Cecilia, respectfully, I'm going to stick with what we've said and what we've demonstrated today. We'll make announcements when we hit critical milestones like we did with Tidepool. But for now, all I'd say is we'll still stick to our previous commentary about not having any revenue included in the projections that we had laid out pre-spin all the way through 2024 -- fiscal 2024.

關於時間表，Cecilia，恭敬地，我將堅持我們今天所說的和我們展示的內容。當我們達到關鍵里程碑時，我們會發佈公告，就像我們對 Tidepool 所做的那樣。但就目前而言，我要說的是，我們仍將堅持我們之前的評論，即我們在 2024 財年（2024 財年）之前製定的預測中沒有任何收入。

Our question comes from Marie Thibault with BTIG.

我們的問題來自 BTIG 的 Marie Thibault。

This is Sam Eiber on for Marie. Maybe I can start, Jake, on gross margins, very high this quarter even after taken to account the 200 bps of nonrecurring items there. I guess how should we think about that for the rest of the year? And more specifically, the 3 dynamics between the China shutdown, any inflationary pressures and then also the revalued higher cost inventory?

這是瑪麗的山姆艾伯。傑克，也許我可以從毛利率開始，即使考慮到那裡 200 個基點的非經常性項目，本季度的毛利率也非常高。我想在今年餘下的時間裡我們應該如何考慮這個問題？更具體地說，中國停工、任何通脹壓力以及重估的高成本庫存之間的 3 個動態？

Yes, sure. Thanks, Sam. So you're right. I mean gross margins came in, again, very strong for the second quarter in a row, sort of in the upper 60s. If you recall, on our first quarter earnings call, we had told the investment community that we expected our adjusted gross margins to sort of trend into the mid-60s during the second quarter of the year and then into the low 60s in the second half of the year. And really, the only change from our standpoint is what occurred in the second quarter. And that really has to do with the onetime benefits that we saw from the rebate reserve reversals as well as some of the cost true-ups that we had in the quarter from our former parent.

是的，當然。謝謝，山姆。所以你是對的。我的意思是毛利率再次連續第二個季度非常強勁，大約在 60 年代以上。如果您還記得，在我們第一季度的財報電話會議上，我們曾告訴投資界，我們預計調整後的毛利率將在今年第二季度進入 60 年代中期，然後在下半年進入 60 年代的低點的一年。實際上，從我們的角度來看，唯一的變化是第二季度發生的事情。這確實與我們從回扣準備金逆轉中看到的一次性收益以及我們在本季度從前母公司那裡獲得的一些成本調整有關。

So absent that, adjusted gross margin would have been around 200 basis points lower, probably still slightly favorable as compared to what we had previously thought largely due to the fact that we continue to execute well on pricing initiatives, which seem to be sticking as well as the fact that we benefited from some favorable product mix. But absent that, I think it would largely have been maybe just slightly favorable to what we had previously expected. Kind of consistent with our prior thoughts, the second half of the year guidance range really sort of indicates and implies low 60s around 61-ish percent-or-so adjusted gross margin in the second half of the year, which is all very consistent with our previous thoughts.

因此，如果沒有，調整後的毛利率將降低約 200 個基點，與我們之前的預期相比可能仍然略有優勢，這主要是因為我們繼續在定價計劃方面執行良好，這些計劃似乎也很有效因為我們受益於一些有利的產品組合。但如果沒有，我認為它在很大程度上可能只是略微有利於我們之前的預期。與我們之前的想法有點一致，今年下半年的指導範圍確實表明並暗示下半年調整後毛利率在 60% 左右的低 60 左右，這與我們之前的想法。

And if you think about what the sequential drivers are of that margin shift from the first quarter -- the first half of 2023 to the second half of 2023, it really does come down to those previously mentioned items. The inventory revaluation being the largest component of it. I would say the rebate reserves that -- and cost true-ups that positively impacted our adjusted gross margin in the second quarter is probably the next largest item. And then, lastly, it's the favorable absorption from manufacturing the product in advance of the temporary shutdown in Suzhou. So I would rank them really in those -- in that order.

如果你考慮一下從第一季度到 2023 年上半年到 2023 年下半年的利潤率變化的連續驅動因素是什麼，它確實歸結為前面提到的那些項目。庫存重估是其中最大的組成部分。我想說的是，對我們第二季度調整後的毛利率產生積極影響的返利準備金和成本調整可能是下一個最大的項目。然後，最後，這是在蘇州臨時停產之前製造產品的有利吸收。所以我會按照這些順序對它們進行真正的排名。

Got it. Yes, that all makes sense. And I appreciate the added detail there. Maybe I can ask my follow-up here on the TSAs. It sounds like you guys are making some progress here in this quarter. I guess, is $60 million still about the right assumption in terms of TSA expense for this year? And does 2024, March '24 still feel like the right time line to work through most of these TSAs?

知道了。是的，這一切都是有道理的。我很欣賞那裡增加的細節。也許我可以在這裡詢問關於 TSA 的後續行動。聽起來你們在本季度在這裡取得了一些進展。我想，就今年的 TSA 費用而言，6000 萬美元是否仍然是正確的假設？ 2024 年 3 月 24 日是否仍然是完成大部分 TSA 的正確時間線？

Yes. So I would say the $60 million number for TSAs is still something that we think is a reasonable number for the entirety of this year. In the second quarter -- the way I think that you should sort of think about the trend of the TSA expense, we generated probably around $17 million or so in the first quarter of the year. That stepped down into the second quarter of the year to probably around $16 million. And then in the second half of the year, obviously, we continue to expect the TSA expenses to continue to trend lower than the first half of the year. Now that's going to get offset by some additional standup cost of our own. That's going to impact our P&L. But still feel like a $60 million-ish number for the entirety of 2023 is the right TSA amount.

是的。所以我想說 TSA 的 6000 萬美元數字仍然是我們認為今年全年的合理數字。在第二季度——我認為你應該考慮 TSA 費用趨勢的方式，我們在今年第一季度產生了大約 1700 萬美元左右。到今年第二季度，這一數字可能下降到大約 1600 萬美元。然後在今年下半年，顯然，我們繼續預計 TSA 費用將繼續低於上半年的趨勢。現在，這將被我們自己的一些額外站立成本所抵消。這將影響我們的損益。但仍然感覺 2023 年全年 6000 萬美元左右的數字是正確的 TSA 數額。

(Operator Instructions) Our next question comes from Travis Steed with Bank of America Securities.

（操作員說明）我們的下一個問題來自美國銀行證券公司的 Travis Steed。

Maybe, Jake, I'll start with a high-level question. So investors still learning your guidance philosophy as a new company. And early -- I don't know if it's a reflection, you've had 2 good quarters in a row, more of a reflection of early on, things are just harder to predict like the contract manufacturing revenue or things that just going a lot better than you expected? Or is this more of you making sure to set a kind of conservative guidance at this point, just kind of high level how you think about the guidance and the upside the last couple of quarters?

也許，傑克，我將從一個高級問題開始。所以投資者仍然在學習你們作為一家新公司的指導理念。而早期——我不知道這是否反映了，你已經連續兩個季度表現良好，更多的是早期的反映，事情更難預測，比如合同製造收入或剛剛發生的事情比你預期的好很多？還是你們中的更多人確保在這一點上設定一種保守的指導，只是您對過去幾個季度的指導和上行的看法有點高？

And then longer term, the margins beyond '23, I'd love to kind of high-level thoughts on how you're thinking about some kind of regular cadence of operating margin expansion or more of a reinvestment phase, if you will?

然後從長遠來看，23 年後的利潤率，如果你願意的話，我很樂意就你如何考慮某種定期的營業利潤率擴張節奏或更多的再投資階段進行一些高層思考？

Yes. So maybe I'll start with the last question first, Travis. I think nothing has changed right now in terms of our thoughts as to what the longer-term kind of fiscal 2024 financial objectives are for the company as compared to what it is that we would have put out there sort of pre spin. So we remain very committed to the achievement of those targets, including an adjusted EBITDA number of 30%. So that remains consistent with even the pre-spin periods.

是的。所以也許我會先從最後一個問題開始，特拉維斯。我認為，就我們對公司 2024 財年長期財務目標的看法與我們在那裡提出的預估相比，我認為目前沒有任何改變。因此，我們仍然非常致力於實現這些目標，包括 30% 的調整後 EBITDA 數字。因此，這甚至與預旋轉時期保持一致。

I'm not going to -- I'm going to refrain from talking about how we did, if you will, in comparison to sort of consensus estimates. But rather, I'd sort of answer your question by saying that I think we're a new management team who wants to develop a track record of consistency with the street in terms of meeting the previously provided financial objectives that we would have put out there. So I think that's very important to us and certainly not lost on us.

我不會——如果你願意的話，我不會談論我們是如何做的，與某種共識估計相比。相反，我會這樣回答你的問題，我認為我們是一個新的管理團隊，他們希望在滿足我們之前提供的財務目標方面建立與街道一致的記錄那裡。所以我認為這對我們非常重要，而且我們當然不會迷失。

And in relation to our updated guidance, I'd say that from a revenue standpoint, we certainly increased the midpoint of our full year constant currency revenue range by about 1% or $11 million. Again, about half of that was due to the -- sort of the onetime rebate reserve adjustment, the other half was just due to the fact that I think our team is really doing an excellent job just strengthening that base business, which is really one of our key kind of strategic objectives for 2023. And that's both in terms of the U.S. and international.

關於我們更新的指導，我想說，從收入的角度來看，我們肯定會將全年不變貨幣收入範圍的中點增加了約 1% 或 1100 萬美元。同樣，其中大約一半是由於——某種一次性回扣準備金調整，另一半只是因為我認為我們的團隊在加強基礎業務方面做得非常出色，這確實是一個我們 2023 年的關鍵戰略目標。這既是針對美國的，也是針對國際的。

And then from a margin standpoint, I'm really pleased with the performance that we've been able to exhibit for the first 6 months of the year. So we've been able to raise our -- from our original guidance ranges, we've been able to raise our adjusted gross margin and adjusted EBITDA margin by about 250 basis points each, and our operating margins by about 300 basis points. So I think we're doing a nice job in the first year -- first full year, I should say, post-spin of trying to manage that cost base.

然後從保證金的角度來看，我對我們今年前 6 個月的表現感到非常滿意。因此，我們已經能夠提高我們的——從我們最初的指導範圍，我們已經能夠將調整後的毛利率和調整後的 EBITDA 利潤率分別提高約 250 個基點，並將我們的營業利潤率提高約 300 個基點。所以我認為我們在第一年做得很好——我應該說，第一年是在試圖管理該成本基礎的旋轉後。

That's helpful. Go Ahead.

這很有幫助。前進。

If I may just add a little bit of color, right, with respect to where we're versus where we thought we would be when we first gave our guidance for the year, besides the fact that it was a new management team. Certainly, when we first gave guidance for the year, you remember, China, which is an important part of our emerging markets growth story, had just lifted COVID restrictions. We weren't quite sure how that was going to play out. We weren't quite sure how inflation was going to moderate, which obviously has an important impact on our results. And then finally, we are, have been and will be for a while in the midst of a lot of separation work. So we try to take all those factors into account.

如果我可以添加一點顏色，正確的，關於我們所處的位置與我們第一次給出年度指導時我們認為的位置，除了它是一個新的管理團隊這一事實。當然，當我們第一次給出今年的指導時，你還記得，作為我們新興市場增長故事的重要組成部分的中國剛剛解除了 COVID 限制。我們不太確定結果如何。我們不太確定通貨膨脹將如何緩和，這顯然對我們的結果有重要影響。最後，我們現在、過去和將來都會在大量的分離工作中進行一段時間。因此，我們嘗試將所有這些因素都考慮在內。

Having said all of that, obviously, very pleased with where we are. And what we've done in this new updated guidance just thematically is to take all the overperformance in Q2 and just sort of roll it forward in the guidance. And the second thing I would say we've done thematically is tightened our range of expectations towards the mid- to upper end of our expectations. And so that's what we've tried to do. Obviously, pleased that we've been able to do that.

說了這麼多，顯然，我們對自己的現狀非常滿意。我們在這個新的更新指南中所做的只是主題性的，就是把第二季度的所有超常表現都拿走，然後在指南中將其向前推進。我要說的第二件事是我們在主題上所做的是將我們的期望範圍收緊到我們期望的中高端。這就是我們試圖做的。顯然，很高興我們能夠做到這一點。

That's super helpful response. And on the Tidepool, maybe a little bit of additional color on kind of what's required to do the Type 2 algo? If you're converting the loop algo or you're starting fresh? And the FDA path, is that pathway you can go a little faster than the loop pathway did? And if it's fair to think that if you're working on algo integration, if the hardware pump design is mostly complete at this point?

這是超級有用的回應。在 Tidepool 上，可能需要一些額外的顏色來說明執行 Type 2 算法需要什麼？如果您正在轉換循環算法或者您正在重新開始？而 FDA 路徑，你可以比環路路徑快一點嗎？如果您正在從事算法集成，硬件泵設計此時是否已基本完成，是否公平？

So, Travis, we literally just signed the agreement. So I don't want to get too far ahead of the team in terms of what the regulatory pathway would look like. But I think, suffice to say, what we do expect is to be able to use the expertise they had in developing the loop Type 1 algo towards an algorithm that is going to be designed specifically for Type 2. And our teams have just started collaborating. So as that work progresses, we'll certainly provide more updates on that. And then I appreciate the question on the status of the pump design, but respectfully, I want to refrain, Travis, from answering that.

所以，特拉維斯，我們實際上剛剛簽署了協議。因此，我不想在監管途徑方面領先於團隊太多。但我認為，可以這麼說，我們確實期望能夠利用他們在開發循環 Type 1 算法方面的專業知識，開發一種專門為 Type 2 設計的算法。我們的團隊剛剛開始合作.因此，隨著工作的進展，我們肯定會提供更多更新。然後我很欣賞關於泵設計狀態的問題，但尊敬的是，特拉維斯，我不想回答這個問題。

I have said and I said on this call, too, it is still our intent to do the open loop before the closed loop. And I must say I'm very -- continue to be very pleased with the progress that we're making.

我已經說過，我在這次電話會議上也說過，我們仍然打算在閉環之前進行開環。我必須說我非常——繼續對我們正在取得的進展感到非常高興。

Right. That's fair. And then one quick kind of modeling clarification question. And so the onetime restructuring standup cost in the quarter, just a little bit of color on that, and how that's going to play out going forward?

正確的。這還算公平。然後是一種快速的建模澄清問題。因此，本季度的一次性重組站立成本，只是一點點顏色，以及未來將如何發揮作用？

And then the CapEx requirements for the new ERP system. I think before we were thinking about $90 million to $100 million. Kind of curious what the CapEx requirements are going to be on that?

然後是新 ERP 系統的資本支出要求。我想在我們考慮 9000 萬到 1 億美元之前。有點好奇資本支出要求是什麼？

Yes. So as far as the onetime costs are concerned, I would say that largely, they're coming in around what it is that we would have previously expected. So no real change in terms of the onetime cost in a material way from what we had previously thought. And then in terms of the CapEx associated with the ERP implementation and really any of the kind of standup activities, I would say, during the course of 2023, we may spend and use anywhere from $125 million to $150 million or so of cash associated with these kind of onetime activities. I would tell you that probably about half of that during the course of 2023 is going to be sort of onetime OpEx that we would then kind of add back for non-GAAP purposes. And then the other half is the CapEx associated with a lot of the standup activities, probably most notably the ERP system.

是的。因此，就一次性成本而言，我想說的是，它們在很大程度上與我們之前的預期相符。因此，與我們之前的想法相比，一次性成本在物質方面沒有真正的變化。然後就與 ERP 實施相關的資本支出以及任何類型的站立活動而言，我想說，在 2023 年期間，我們可能會花費和使用 1.25 億美元至 1.5 億美元左右的現金這些一次性的活動。我會告訴你，在 2023 年期間，其中大約一半可能是一次性的 OpEx，然後我們會出於非 GAAP 目的將其加回去。然後另一半是與許多站立活動相關的資本支出，可能最引人注目的是 ERP 系統。

So I think that's one thing that I think the investment community should be aware of is that when looking at our net leverage levels and certainly the free cash flow that we generate, I mean -- this is a very, very strong free cash flow generating business that I think this year, in 2023, is going to be somewhat masked by the fact that we do need to spend a fair amount of cash on the separation activities. And that moving forward, that free cash flow generation will then largely just fall to the balance sheet, which we can then use for our own capital deployment. So I'll pause there.

所以我認為投資界應該意識到的一件事是，在查看我們的淨槓桿水平以及我們產生的自由現金流時，我的意思是 - 這是一個非常非常強大的自由現金流產生我認為今年，也就是 2023 年，我們確實需要在離職活動上花費大量現金這一事實將在某種程度上掩蓋這些業務。展望未來，自由現金流的產生將主要落入資產負債表，然後我們可以將其用於我們自己的資本配置。所以我會在那裡暫停。

We have a question from Anthony Petrone with Mizuho Securities.

瑞穗證券的 Anthony Petrone 提出了一個問題。

Congrats on the execution out of the gate. One question on utilization. This pen needle and safety needle utilization, Dev, you mentioned in your comments. And maybe just overall where that sits per user today? What are some of the initiatives to get utilization per needle down? And what should we be thinking about just in terms of timing of some of those initiatives taking hold in the P&L? And I'll have 1 follow-up.

祝賀你被執行死刑。一個關於利用率的問題。這個筆針和安全針的使用，Dev，你在評論中提到了。也許只是今天每個用戶的總體位置？有哪些舉措可以降低每針的利用率？就損益表中某些舉措的時間安排而言，我們應該考慮什麼？我將進行 1 次跟進。

Thanks, Anthony. So you are referring to the reuse rate which we've mentioned previously and the fact that even though pen needles are single-use devices, they are often reused. What we're doing there is a couple of things, Anthony. One is, working on a -- if you will, a direct-to-patient, direct-to-consumer media campaign, to remind folks of the need to use 1 needle per injection that is absolutely the appropriate thing to do. But the second thing we're doing is working with certain retailers, especially in the U.S. so that when a patient goes to the pharmacy and gets a supply, a month's supply of insulin, they leave with an adequate supply of pen needles as well. Now, we provide almost 8 billion devices around the world. Half of our sales are outside the U.S., almost half of them are outside the U.S. So in terms of when we can actually see these initiatives play out into the P&L, Anthony, I'll tell you, I mean, it's going to take some time.

謝謝，安東尼。所以你指的是我們之前提到的重複使用率，以及儘管筆針是一次性設備，但它們經常被重複使用的事實。安東尼，我們正在做的有幾件事。一個是，如果你願意的話，開展一項直接面向患者、直接面向消費者的媒體宣傳活動，提醒人們每次注射需要使用一根針頭，這絕對是正確的做法。但我們正在做的第二件事是與某些零售商合作，尤其是在美國，這樣當患者去藥房並獲得供應時，一個月的胰島素供應，他們也會有足夠的筆針供應。現在，我們在全球提供近 80 億台設備。我們有一半的銷售額在美國以外，其中幾乎有一半在美國以外 所以就我們何時能真正看到這些舉措在損益表中發揮作用而言，安東尼，我會告訴你，我的意思是，這需要一些時間時間。

We're talking about changing human behavior. But in some of the pilot work that we've done in the U.S., the results have been fairly encouraging. And so our approach is to try a few things. We're actually changing human behavior, so try a few things pilot and then gradually expand that. And so that's where we are in the process.

我們談論的是改變人類行為。但在我們在美國進行的一些試點工作中，結果相當令人鼓舞。所以我們的方法是嘗試一些事情。我們實際上正在改變人類行為，所以嘗試一些試點，然後逐漸擴大。這就是我們在這個過程中所處的位置。

Very helpful. And the follow-up here would be on the M&A comments. We've seen some activity from Embecta. The debt ratio sits a little bit north of 3. Maybe just a refresh on the M&A strategy, the types of assets potentially that would be good adjacencies to the core insulin delivery business? And then maybe just scale of deals. It sounds like certainly it will be -- tuck-ins are on the table, but would a scale transaction actually be also something that Embecta contemplates?

很有幫助。而這裡的後續行動將是關於併購的評論。我們已經看到 Embecta 的一些活動。債務比率略高於 3。也許只是對併購策略的更新，哪些資產類型可能與核心胰島素輸送業務相鄰？然後可能只是交易規模。聽起來肯定會是——小費擺在桌面上，但大規模交易實際上也是 Embecta 考慮的事情嗎？

Yes, absolutely, Anthony. So with respect to our M&A/business development strategy, we're looking for assets that allow us to use some of the strength that we have, right? So high-volume manufacturing. We have a world-class operations team that produces high-quality 8 billion units a day in 3 plants around the world. Second thing is we have a well-established retail channel in multiple countries around the world. And third is, certainly for a country -- a company of our size, we have great emerging market infrastructure. And the needs in emerging markets for people with diabetes are somewhat different in the products they use because of cost and affordability concerns.

是的，當然，安東尼。因此，關於我們的併購/業務發展戰略，我們正在尋找能夠讓我們利用我們擁有的一些實力的資產，對吧？所以大批量生產。我們擁有世界一流的運營團隊，在全球 3 個工廠每天生產 80 億件高質量產品。其次，我們在全球多個國家擁有完善的零售渠道。第三，當然對於一個國家——像我們這樣規模的公司，我們擁有強大的新興市場基礎設施。由於成本和負擔能力問題，新興市場對糖尿病患者的需求在他們使用的產品上有所不同。

So we want to be able to leverage one of these 3 things. In the partnerships that we've done so far, we've been leveraging our sales channels. The PolyPhotonix one that we announced today is really a good example. It's very specific to the U.K. just because of the way NHS and general practices work in the U.K. But these are the kinds of things that we're doing to leverage one of the 3 strengths that we have.

所以我們希望能夠利用這三件事之一。在我們迄今為止所做的合作夥伴關係中，我們一直在利用我們的銷售渠道。我們今天發布的 PolyPhotonix 就是一個很好的例子。這對英國來說非常具體，只是因為 NHS 和一般做法在英國的運作方式。但這些是我們正在做的事情，以利用我們擁有的 3 大優勢之一。

With respect to M&A specifically, obviously, we want to be careful of the capital constraints of the balance sheet that we have. And so tuck-ins are likely, but you never say never. This is a fast evolving space. We're in a great position with the infrastructure we have with almost 650 now commercial people all around the world. But we also want to be mindful of the work we have to do in front of us, right? We have a lot of separation work to do, implementing a new ERP, implementing a new distributions network.

具體到併購，顯然，我們要小心資產負債表的資本限制。所以塞進去是可能的，但你永遠不會說永遠。這是一個快速發展的空間。我們在全球擁有近 650 名商業人士的基礎設施方面處於有利地位。但我們也想注意我們必須在我們面前做的工作，對嗎？我們有很多分離工作要做，實施新的 ERP，實施新的分銷網絡。

So while we're vigorously looking for M&A, we're going to be thoughtful with respect to the work we have in front of us with respect to our capital constraints as well as making sure that we leverage the spends that we have.

因此，在我們大力尋找併購的同時，我們將考慮我們面前的工作，考慮我們的資本限制，並確保我們利用現有的支出。

And I'm showing no other questions in the queue. I'd like to turn the call back to Dev Kurdikar for closing remarks.

我不會在隊列中顯示其他問題。我想將電話轉回給 Dev Kurdikar 以作結束語。

Thank you, Catherine. Before we conclude the call, I would like to express my gratitude to all my Embecta colleagues for the immense amount of work they have been doing over the past year to stand up Embecta as an independent company, even as they fulfill our mission of developing and providing solutions for people with diabetes. Thank you all for attending the call and your interest in our business. And Happy Mother's Day this coming weekend to all of you and the mothers in your lives. Thank you.

謝謝你，凱瑟琳。在我們結束電話會議之前，我要感謝我所有的 Embecta 同事，感謝他們在過去一年中為使 Embecta 成為一家獨立公司所做的大量工作，即使他們履行了我們發展和發展的使命。為糖尿病患者提供解決方案。感謝大家參加電話會議以及對我們業務的興趣。祝你們所有人和你們生活中的母親們在即將到來的周末母親節快樂。謝謝。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。