Embecta Corp (EMBC) 2024 Q3 法說會逐字稿

Welcome ladies and gentlemen to the fiscal third quarter 2024 Embecta earnings conference call. (Operator Instructions) 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.

歡迎女士們、先生們參加 Embecta 2024 年第三季財報電話會議。（操作員說明）請注意，本次電話會議正在錄音，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。

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

我現在將電話會議交給今天的東道主，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 third 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.

謝謝你，接線生。大家早安，歡迎參加 Embecta 2024 年第三季財報電話會議。今天電話會議的新聞稿和幻燈片以及網路廣播重播的詳細資訊可在公司網站 www.embecta.com 的投資者關係部分取得。

With me today are Dev Kurdikar, Embecta's President and Chief Executive Officer; and Jake Elguicze, our Chief Financial Officer. 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.

今天和我在一起的有 Embecta 總裁兼執行長 Dev Kurdikar；和我們的財務長 Jake Elguicze。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。我們希望提醒您，此類陳述實際上具有前瞻性，並存在風險和不確定性，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出現重大差異的因素包括但不限於我們今天的新聞稿中提到的因素以及我們向 SEC 提交的文件（可以在我們的網站上存取）。

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公認會計原則財務措施，這些措施應被視為根據公認會計原則準備的財務措施的補充，而不是替代。我們的新聞稿和電話會議演示中包含了這些非公認會計準則衡量標準與可比較公認會計準則衡量標準的協調表。

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 third quarter of 2024, as well as an overview of our strategic priorities. Jake will then provide a more in-depth review of our Q3 financial results, as well as our updated financial guidance for the year. We will then open the call for questions.

我們今天的電話會議議程如下，Dev 將首先對 2024 年第三財季我們業務的整體業績發表一些評論，並對我們的策略重點進行概述。然後，傑克將對我們第三季的財務業績以及我們今年更新的財務指引進行更深入的審查。然後我們將開始提問。

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

話雖如此，我現在想將電話轉給我們的執行長 Dev Kurdikar。開發？

Good morning, and thank you for taking the time to join us. Let us start with slide 5, where you will see the three strategic priorities that we’ve executed since our spin-off in April of 2022.

早安，感謝您抽出寶貴時間加入我們。讓我們從投影片 5 開始，您將看到自 2022 年 4 月分拆以來我們執行的三個策略重點。

First, we continue to strengthen our base business, while maintaining our global leadership position in the category of insulin injection devices.

首先，我們繼續加強我們的基礎業務，同時保持我們在胰島素注射設備領域的全球領先地位。

Second, we have made significant progress in our separation and stand-up activities necessary to establish ourselves as an operationally independent company.

其次，我們在分離和獨立活動方面取得了重大進展，這些活動是建立我們作為獨立運營公司所必需的。

And finally, we continue to invest for 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.

最後，我們繼續投資促進成長，尤其是圍繞我們為 2 型市場開發的胰島素貼片幫浦項目，以及尋求併購和其他合作機會。

I am proud of the significant progress we have made within each of these goals. Turning to some third quarter highlights. During the third quarter, our team's disciplined execution led to financial results that were aligned with our prior expectations. We generated revenue of approximately $272.5 million which represented a decrease of 4.8% on an as-reported basis and a decrease of 3.9% on a constant currency basis.

我為我們在每個目標方面取得的重大進展感到自豪。轉向第三季的一些亮點。在第三季度，我們團隊的嚴格執行導致財務表現符合我們先前的預期。我們的營收約為 2.725 億美元，按報告計算下降 4.8%，以固定匯率計算下降 3.9%。

When normalizing for the transient contract manufacturing revenue that we generate based on the sales of non-diabetes products to our former parent, our constant currency core injection business revenue declined by 4.1% as compared to the prior year period.

當我們基於向前母公司銷售非糖尿病產品而產生的臨時合約製造收入正常化時，我們的恆定貨幣核心注入業務收入與上年同期相比下降了 4.1%。

While our revenue during the third quarter was lower year-over-year on a constant currency basis, this was something that we had expected and highlighted on our second quarter earnings call and was primarily due to inventory rebalancing that occurred with some of our distributors following the ERP implementations that occurred during the first six months of our fiscal year. On a year-to-date basis, our core injection business has remained stable, growing 0.4% on a constant currency basis.

雖然我們第三季的營收以固定匯率計算同比有所下降，但這是我們所預期的，並在第二季財報電話會議上強調了這一點，這主要是由於我們的一些分銷商隨後進行了庫存重新平衡。年初至今，我們的核心注塑業務保持穩定，以固定匯率計算成長了 0.4%。

Over the past year, much news has come out regarding GLP-1 and the impact they might have on people with diabetes and insulin delivery. Based on what we have seen over the past several years, our view is that while GLP-1 may delay the onset of becoming insulin dependent, they do not eliminate the need for insulin. In fact, as the method of GLP-1 administration continues to evolve over the next several years from the use of an auto-injector to that of a pen injector, which requires a pen needle, we expect that we will stand to benefit.

在過去的一年裡，關於 GLP-1 及其對糖尿病患者和胰島素輸送可能產生的影響的消息層出不窮。根據我們過去幾年的觀察，我們的觀點是，雖然 GLP-1 可能會延遲胰島素依賴性的發生，但它們並不能消除對胰島素的需求。事實上，隨著 GLP-1 給藥方法在未來幾年中不斷發展，從使用自動注射器到需要筆針的筆式註射器，我們預計我們將從中受益。

To that end, we have identified an opportunity to introduce a new small pack pen needle product that can be used for GLP-1 administration. We intend to first come to market with this product in Germany within the next several months and eventually expand this product offering to other countries in the future. We believe this will help meet the needs of the growing number of people using pens and therefore pen needles for GLP-1 administration.

為此，我們找到了一個機會，推出一種可用於 GLP-1 給藥的新型小包裝筆針產品。我們打算在接下來的幾個月內首先在德國推出該產品，並最終在未來將該產品擴展到其他國家。我們相信，這將有助於滿足越來越多使用筆和筆針進行 GLP-1 給藥的人的需求。

Turning to separation activities. I'm pleased to report that we made significant progress in the implementation of our own ERP system, operationalization of our own distribution network and shared services capabilities. Now our systems and capabilities are operational in regions, which cover approximately 93% of our revenue base. Looking ahead with the exception of a few deferred closing jurisdictions, we remain on track to complete all ERP implementations, distribution network and shared service separation activities by early fiscal year 2025.

轉向分離活動。我很高興地報告，我們在實施自己的 ERP 系統、經營自己的分銷網絡和共享服務能力方面取得了重大進展。現在，我們的系統和功能已在多個地區投入運行，這些地區涵蓋了我們約 93% 的收入基礎。展望未來，除了少數推遲關閉的司法管轄區外，我們仍有望在 2025 財年初完成所有 ERP 實施、分銷網絡和共享服務分離活動。

Once these implementations are complete, the only remaining separation program will be brand transition which entails changing the product packaging from BD's brand to ours. We have been planning this transition since the spin-off and we intend for the execution of this program to begin in phases during fiscal year 2025. Notably, we are not changing the product needs or color schemes associated with our packaging. This is important as people with diabetes will continue to experience the same look and feel on our boxes that they have been accustomed to for many years.

一旦這些實施完成，唯一剩下的分離計劃將是品牌轉型，這需要將產品包裝從 BD 的品牌更改為我們的品牌。自從分拆以來，我們一直在計劃這項過渡，並打算在 2025 財年開始分階段執行該計劃。值得注意的是，我們不會改變與包裝相關的產品需求或配色。這很重要，因為糖尿病患者將繼續在我們的盒子上體驗到他們多年來習慣的相同外觀和感覺。

Regarding our insulin patch pump program, we continue to progress on the open-loop patch pump. As a reminder, we submitted a 510(k) application to the FDA in December of 2023. And earlier this year, we received questions from the FDA concerning that application. We have since responded with the necessary data and await feedback from the FDA. We will continue to provide updates to the investment community on the progress regarding our insulin patch pump at the appropriate times.

關於我們的胰島素貼片幫浦項目，我們繼續在開環貼片幫浦方面取得進展。謹此提醒，我們於 2023 年 12 月向 FDA 提交了 510(k) 申請。今年早些時候，我們收到了 FDA 對申請提出的問題。此後，我們已提供必要的數據並等待 FDA 的回饋。我們將繼續在適當的時候向投資界提供有關胰島素貼片幫浦的最新進展。

Relating to our objective of entering the infusion pump market, we sponsored two abstracts at the American Diabetes Association 84 scientific sessions that point to the potential for adults with type 2 diabetes to better manage insulin delivery through a patch pump with a larger 300-unit insulin reservoir, which could provide longer wear times and fewer disposable patches over time.

與我們進入輸液幫浦市場的目標相關，我們在美國糖尿病協會84 屆科學會議上贊助了兩篇摘要，指出成人2 型糖尿病患者透過具有更大300 單位胰島素的貼片幫浦更好地管理胰島素輸送的潛力隨著時間的推移，它可以提供更長的佩戴時間和更少的一次性貼片。

The data presented reaffirms what we've learned from speaking with people living with diabetes and their health care providers and validates our thesis that there is a critical unmet need among the type two diabetes population for pumps with the larger insulin reservoir.

提供的數據重申了我們從與糖尿病患者及其醫療保健提供者交談中了解到的信息，並驗證了我們的論點，即二型糖尿病人群對具有更大胰島素儲存器的泵存在嚴重的未滿足需求。

So to summarize, we had another good quarter of results and based on the year-to-date performance as well as our expectations for the remainder of the fiscal year we are again raising and tightening our guidance ranges for key financial metrics while reaffirming our revenue guidance range. Now let's review our third quarter and year-to-date revenue performance in a bit more detail.

總而言之，我們又取得了良好的季度業績，根據年初至今的業績以及我們對本財年剩餘時間的預期，我們再次提高和收緊關鍵財務指標的指導範圍，同時重申我們的收入指導範圍。現在讓我們更詳細地回顧一下我們第三季和年初至今的營收表現。

As I mentioned before, during Q3 we generated revenue of $272.5 million, which represented a decrease of 4.8% on an as-reported basis and a decrease of 3.9% on a constant currency basis or 4.1% when normalizing for the impact of year-over-year changes in the revenue of the non-diabetes products that we contract manufacture and sell to BD.

正如我之前提到的，第三季度我們的收入為 2.725 億美元，按報告計算下降 4.8%，按固定匯率計算下降 3.9%，按同比影響正常化後下降 4.1% - 我們向BD 承包生產和銷售的非糖尿病產品收入的年度變化。

Within the US, during the quarter revenue totaled $143.6 million which represented a year-over-year decline of approximately 6.7% on a constant currency basis. When normalizing for year-over-year contract manufacturing revenue, our underlying Q3 constant currency revenue decline within the US was approximately 7.3%.

在美國，本季營收總計 1.436 億美元，以固定匯率計算年減約 6.7%。當合約製造收入較去年同期正常化時，我們在美國的第三季固定貨幣收入下降了約 7.3%。

The lower revenue within the US was expected and was primarily due to distributors normalizing their inventory levels after making advanced purchases ahead of our ERP implementation. As well as our annual price increase that went into effect on April 1. This volume decline was partially offset by favorable price and gross to net adjustments.

美國境內的收入下降是預料之中的，這主要是由於分銷商在我們的 ERP 實施之前進行了提前採購，從而使庫存水準正常化。以及我們於 4 月 1 日生效的年度漲價。銷量下降部分被有利的價格和毛淨值調整所抵消。

Turning to our international business. During Q3, revenue totaled $128.9 million, which equated to a year-over-year constant currency decline of 0.6%. Like the US, the decline in constant currency revenue within International this quarter was expected and was primarily due to the timing of advanced purchases that customers made in advance of our ERP implementation.

轉向我們的國際業務。第三季度，營收總計 1.289 億美元，以匯率計算年比持續下降 0.6%。與美國一樣，本季國際市場固定貨幣收入的下降是預期的，這主要是由於客戶在我們的 ERP 實施之前進行了提前採購。

Importantly, through all separation activities that occurred during fiscal year 2024, our core injection business remained stable, growing 0.4% year-to-date on a constant currency basis. That completes my prepared remarks.

重要的是，透過 2024 財年發生的所有分離活動，我們的核心注入業務保持穩定，以固定匯率計算，今年迄今成長了 0.4%。我準備好的發言就到此結束。

And with that, let me turn the call over to Jake to take you through the third quarter financial results, as well as our updated full year financial guidance in more detail. Jake?

接下來，讓我將電話轉給傑克，向您詳細介紹第三季的財務業績，以及我們更新的全年財務指引。傑克？

Thank you, Dev, and good morning everyone. Given the discussion that has already occurred regarding revenue, I will start my review of Embecta's financial performance for the third quarter at the gross profit-line. GAAP gross profit and margin for the third quarter of fiscal 2024 totaled $190.1 million and 69.8% respectively. This compared to $189.5 million and 66.2% in the prior year period.

謝謝你，Dev，大家早安。鑑於已經就收入進行了討論，我將從毛利線開始回顧 Embecta 第三季度的財務表現。2024 財年第三季 GAAP 毛利和利潤率分別為 1.901 億美元和 69.8%。相比之下，去年同期為 1.895 億美元，成長了 66.2%。

While on an adjusted basis, our Q3 2024 adjusted gross profit and margin totaled $190.3 million and 69.8%. This compared to $189.6 million and 66.3% in the prior year period. The year-over-year increase in adjusted gross profit and margin was primarily driven by the impact of inventory revaluation adjustments which positively impacted year-over-year results by approximately 550 basis points, as well as the impact from favorable changes in price and gross to net adjustments that Dev referred to earlier.

在調整後的基礎上，我們 2024 年第三季調整後的毛利和利潤率總計 1.903 億美元，達到 69.8%。相較之下，去年同期為 1.896 億美元，成長 66.3%。調整後毛利和利潤率的同比增長主要是由於庫存重估調整的影響，該調整對業績同比產生了約550個基點的積極影響，以及價格和毛利率的有利變化的影響Dev 之前提到的淨調整。

This was partially offset by lower product volumes, the impact of inflation on the cost of certain raw materials, direct labor, freight and overhead and the negative impact of foreign currency translation primarily due to the weakening of the US dollar.

這被產品產量下降、通貨膨脹對某些原材料、直接勞動力、運費和間接費用成本的影響以及主要由於美元疲軟造成的外幣換算的負面影響所部分抵消。

Turning to GAAP operating income and margin. During the third quarter, they were $55.9 million and 20.5%, this compared to $51.3 million and 17.9% in the prior year period. While on an adjusted basis, our Q3 2024 adjusted operating income and margin totaled $83.3 million and 30.6%. This compared to $79.8 million and 27.9% in the prior year period. The year-over-year increase in adjusted operating income is primarily due to the adjusted gross profit changes I just discussed.

轉向 GAAP 營業收入和利潤率。第三季的銷售額為 5,590 萬美元，佔 20.5%，而去年同期為 5,130 萬美元，佔 17.9%。在調整後的基礎上，我們 2024 年第三季調整後的營業收入和利潤率總計 8,330 萬美元，佔 30.6%。相比之下，去年同期成長了 7,980 萬美元，成長了 27.9%。調整後營業收入年增主要是由於我剛才討論的調整後毛利變化。

As well as year-over-year decreases in both SG&A and R&D. The year-over-year decline of approximately $2 million in SG&A was primarily due to cost optimization actions taken in the current period as well as lower TSA costs. These reductions were somewhat offset by increased freight and warehousing costs. While the year-over-year decline of approximately $2 million in R&D was primarily due to lower expenses associated with our insulin patch pump platform.

SG&A 和研發費用也較去年同期下降。SG&A 年減約 200 萬美元，主要是由於本期採取的成本優化措施以及 TSA 成本降低。這些減少在一定程度上被貨運和倉儲成本的增加所抵銷。研發費用年減約 200 萬美元，主要是因為我們的胰島素貼片幫浦平台相關費用降低。

Turning to the bottom-line. GAAP net income and earnings per diluted share was $14.7 million and $0.25 during the third quarter of fiscal 2024, which compared to $15.2 million and $0.26 in the prior year period. While on an adjusted basis, net income and earnings per share were $43 million, and $0.74 during the third quarter of fiscal 2024.

轉向底線。2024 財年第三季的 GAAP 淨利和稀釋每股收益分別為 1,470 萬美元和 0.25 美元，去年同期為 1,520 萬美元和 0.26 美元。調整後的淨利潤和每股收益為 4,300 萬美元，2024 財年第三季為 0.74 美元。

This compared to $39.8 million and $0.69 in the prior year period. The increase in year-over-year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I just discussed. As well as a reduction in our adjusted tax rate from approximately 25% in Q3 of 2023 to approximately 22% in Q3 of 2024. This was somewhat offset by an increase in year-over-year interest expense associated with the rise in SOFR and the impact that had on our variable interest rate debt.

相比之下，去年同期為 3,980 萬美元，0.69 美元。調整後淨利和稀釋每股盈餘的年成長主要是由於我剛才討論的調整後營業利潤驅動因素。我們的調整後稅率從 2023 年第三季的約 25% 降至 2024 年第三季的約 22%。這在一定程度上被 SOFR 上升帶來的同比利息支出的增加以及對我們可變利率債務的影響所抵消。

Lastly, from a P&L perspective, for the third quarter of 2024, our adjusted EBITDA and margin totaled approximately $99.2 million and 36.4%. This compared to $92.2 million and 32.2% in the prior year period. Turning to the balance sheet and cash flow. At the end of the third quarter, our cash balance totaled approximately $282 million while our last 12 months net leverage as defined under our credit facility agreement, stood at approximately 3.7 times. As a reminder, our net leverage covenant requires us to stay below 4.75 times.

最後，從損益表的角度來看，2024 年第三季度，我們調整後的 EBITDA 和利潤率總計約為 9,920 萬美元和 36.4%。相比之下，去年同期成長了 9,220 萬美元，成長了 32.2%。轉向資產負債表和現金流量。截至第三季末，我們的現金餘額總計約為 2.82 億美元，而我們過去 12 個月的淨槓桿率（根據信貸安排協議定義）約為 3.7 倍。提醒一下，我們的淨槓桿契約要求我們保持在 4.75 倍以下。

From a cash flow perspective, our cash balance as of June 30, is approximately $45 million lower than the balance that existed as of September 30, and this is largely attributed to cash that has been used related to separation activities. Which include product registration and labeling costs, warehousing and distribution setup costs, legal costs associated with patents and trademark work temporary head count resources within accounting, tax, finance, human resources, regulatory and IT and one-time business integration and IT-related costs, primarily associated with our global ERP implementations.

從現金流的角度來看，我們截至 6 月 30 日的現金餘額比截至 9 月 30 日的餘額減少了約 4500 萬美元，這主要歸因於與離職活動相關的現金。其中包括產品註冊和標籤成本、倉儲和分銷設置成本、與專利和商標工作相關的法律成本、會計、稅務、財務、人力資源、監管和 IT 內的臨時人員資源以及一次性業務整合和 IT 相關成本，主要與我們的全球ERP 實施相關。

We estimate that during the first nine months of fiscal year 2024 and we used approximately $130 million of cash towards the separation activities. Additionally, we now show trade receivables globally on our balance sheet given our previously mentioned ERP implementations. As such, Embecta now collects receivables from customers directly as compared to prior to the ERP implementations, whereby BD factored those receivables on our behalf. I'm pleased to report that following the implementation of our ERP systems and shared service functionality within approximately 93% of our global revenue base cash collections associated with those receivables have continued to trend in a positive direction.

我們估計，在 2024 財年的前 9 個月，我們使用了約 1.3 億美元的現金用於離職活動。此外，鑑於我們之前提到的 ERP 實施，我們現在在資產負債表上顯示全球範圍內的貿易應收帳款。因此，與 ERP 實施前相比，Embecta 現在直接向客戶收取應收帳款，而 BD 則代表我們對這些應收帳款進行保理。我很高興地向大家報告，在我們的 ERP 系統和共享服務功能在我們全球約 93% 的收入基礎中實施後，與這些應收帳款相關的現金收款繼續朝著積極的方向發展。

Consistent with the comments I made on our second quarter earnings conference call, we continue to expect that we will end fiscal year 2024 with a cash balance of roughly $300 million, or comparable to the balance that existed at the end of the second quarter. This includes an expectation that for the full year, we will use approximately $180 million of cash towards separation activities.

與我在第二季財報電話會議上發表的評論一致，我們繼續預計 2024 財年結束時現金餘額約為 3 億美元，或與第二季末的餘額相當。這包括預計我們將在全年使用約 1.8 億美元的現金用於離職活動。

This compares to cash used for separation activities of approximately $145 million during fiscal year 2023. Given that we expect to be largely complete with separation activities by the end of this fiscal year, we expect to see an improvement in our cash balances in fiscal year 2025 and beyond which would allow us additional flexibility in terms of capital allocation, including more material debt repayment. That completes my comments on our fiscal Q3 results.

相較之下，2023 財年用於離職活動的現金約為 1.45 億美元。鑑於我們預計在本財年年底前基本完成分拆活動，我們預計 2025 財年及以後的現金餘額將有所改善，這將使我們在資本配置方面擁有更大的靈活性，包括更多的材料債務償還。我對第三季財報的評論就到此結束。

Next, I will provide an update on our full year 2024 financial guidance. Beginning with revenue. Given our performance during the first nine months of the year, as well as our expectations for the fourth quarter, we are reaffirming our full year constant currency revenue range to be flat to down 0.5% as compared to 2023. Likewise, we are reaffirming our previously provided guidance for foreign currency, which called for foreign currency to be a headwind of about 0.4% versus the prior year. These FX assumptions are based on foreign exchange rates that were in existence in the late July time frame, including a Euro to US dollar exchange rate of approximately $1.08.

接下來，我將提供 2024 年全年財務指引的最新資訊。從收入開始。鑑於我們今年前 9 個月的業績以及對第四季度的預期，我們重申全年固定貨幣收入範圍與 2023 年相比持平或下降 0.5%。同樣，我們重申先前提供的外幣指導，即外幣比上年逆風約 0.4%。這些外匯假設是基於 7 月底的外匯匯率，其中歐元兌美元匯率約為 1.08 美元。

On a combined basis, our as-reported guidance range continues to call for revenue to be down between 0.4% and 0.9% as compared to 2023. We resulting in a revenue guide of between $1.111 billion and $1.116 billion. Turning to margins. We are raising and narrowing our adjusted gross margin guidance from a range of between 64.5% and 65% to a new range of between 65.25% and 65.5%.

綜合來看，我們報告的指導範圍繼續要求收入比 2023 年下降 0.4% 至 0.9%。我們得出的收入指引在 11.11 億美元至 11.16 億美元之間。轉向邊緣。我們正在將調整後的毛利率指引從 64.5% 至 65% 的範圍上調至 65.25% 至 65.5% 的新範圍。

Similarly, from an adjusted operating margin perspective, we are raising and narrowing that guidance from a range of between 25.25% and 25.75% to a new range of between 25.75% and 26%. While in terms of adjusted EBITDA margin, we are narrowing that guidance from a range of between 31% and 31.5% to a new range of between 31.25% and 31.5%.

同樣，從調整後的營業利潤率角度來看，我們正在將該指引從 25.25% 至 25.75% 的範圍上調並縮小至 25.75% 至 26% 的新範圍。而就調整後 EBITDA 利潤率而言，我們正在將指導範圍從 31% 至 31.5% 縮小至 31.25% 至 31.5% 之間的新範圍。

Lastly due to an improved margin outlook, we are increasing and narrowing our adjusted earnings per share guidance from a range of between $2.20 and $2.30 to a new range of between $2.30 and $2.35 and or an increase at the midpoint of approximately $0.08. This completes my prepared remarks.

最後，由於利潤率前景改善，我們將調整後每股盈餘指引從 2.20 至 2.30 美元的範圍提高並縮小至 2.30 至 2.35 美元的新範圍，或中點增加約 0.08 美元。我準備好的發言到此結束。

And at this time, I would like to turn the call over to the operator for questions.

此時，我想將電話轉給接線生詢問。

(Operator Instructions)

（操作員說明）

Marie Thibault, BTIG.

瑪麗蒂博，BTIG。

Good morning. Thanks for taking my questions. And very nice quarter. I wanted to start here a little bit on guidance and specifically the gross margins, they were very strong this quarter. And I think I heard mention of inventory valuation re-adjustments. Can you help me understand exactly what that is specifically? And then what we should be assuming in the implied step down for fiscal fourth quarter on that gross margin metric?

早安.感謝您回答我的問題。非常好的季度。我想從這裡開始一些指導，特別是毛利率，本季它們非常強勁。我想我聽說過庫存估值重新調整。你能幫我準確地理解這具體是什麼嗎？那麼，在第四財季毛利率指標隱含的下降中，我們該假設什麼呢？

Sure, Marie. Thanks. I appreciate the question. So let me start by saying that our adjusted gross margin was slightly better than our prior expectations in the quarter. And that's really what's allowing us to once again increase our full year adjusted gross margin guidance range by about 62.5 basis points at the midpoint of our new full-year guidance range.

當然，瑪麗。謝謝。我很欣賞這個問題。首先我要說的是，本季調整後的毛利率略優於我們先前的預期。這確實使我們能夠將全年調整後毛利率指導範圍在新的全年指導範圍的中點上調約 62.5 個基點。

So during the quarter, the year-over-year increase in adjusted gross margin occurred due to a few factors, the largest of which you mentioned was a benefit from inventory revaluation adjustments or what's referred to as, profit and inventory. And that contributed about a 550 basis points year-over-year increase. And I'll come back to that in a moment as to what that was.

因此，在本季度，調整後毛利率的同比增長是由於幾個因素造成的，其中您提到的最大的因素是庫存重估調整或所謂的利潤和庫存帶來的好處。這使得年比增長約 550 個基點。我稍後會回過頭來談談那是什麼。

In addition to the profit and inventory impact, we also had some favorable year-over-year impact from pricing and the gross to net reserve adjustments. That contributed about 140 basis points of the year-over-year increase. And then that was somewhat offset by some headwinds associated with lower product volumes stemming from the customers rebalancing their inventory levels, following the increased purchases that they made during the second quarter in advance of both our international ERP implementations, as well as the April 1, price increase that went into effect in the US.

除了利潤和庫存影響之外，定價以及毛準備金和淨準備金調整也對我們產生了一些有利的同比影響。這為年成長貢獻了約 140 個基點。然後，這在一定程度上被一些與產品產量下降相關的不利因素所抵消，這些不利因素是由於客戶在第二季度在我們的國際ERP 實施之前以及4 月1 日增加了採購，從而重新平衡了庫存水平，在美國生效的價格上漲。

So those items negatively impacted volumes year-over-year by about 210 basis points. In addition, we also saw some year-over-year headwinds associated with inflation of about 120 basis points. So coming back to the -- to your question on inventory revaluation or profit and inventory.

因此，這些項目對銷量的影響較去年同期下降了約 210 個基點。此外，我們也看到一些與去年同期相比約 120 個基點的通膨阻力。那麼回到你關於庫存重估或利潤和庫存的問題。

So as a result of all the ERP implementations that began in early fiscal year 2024, we had a real concerted effort for us to build up inventory to make sure that there were no issues from a customer standpoint. And that inventory was built in our manufacturing locations in China, in Ireland and in the US. And then we shipped those -- that inventory to a variety of distribution centers and different legal entities.

因此，由於從 2024 財年年初開始實施所有 ERP，我們真正齊心協力建立庫存，以確保從客戶的角度來看不會出現任何問題。該庫存是在我們位於中國、愛爾蘭和美國的製造基地建立的。然後我們將這些庫存運送到各個配送中心和不同的法人實體。

And when that happens, there is intercompany profit that results once things transfer from one legal entity to another. And that intercompany profit needs to be eliminated at a consolidated level, since that product wasn't shipped yet to any type of a third-party customer. So once that inventory is then sold to customers, that profit that was previously on the balance sheet needs to be recognized into the P&L. And that is what happened this quarter. It just so happens that because of all the inventory that we had built up in advance of the ERP implementations, it resulted in a larger amount than what we typically see.

當這種情況發生時，一旦事物從一個法人實體轉移到另一個法人實體，就會產生公司間利潤。公司間的利潤需要在合併層面上消除，因為該產品尚未運送給任何類型的第三方客戶。因此，一旦將庫存出售給客戶，先前在資產負債表上的利潤就需要在損益表中確認。這就是本季發生的情況。碰巧的是，由於我們在 ERP 實施之前建立了所有庫存，因此導致的數量比我們通常看到的要大。

So typically, these profit and inventory adjustments range within a few million dollars every quarter. It just happens to be the fact that because we had built up so much inventory and then recognized and then sold that inventory into the market, we needed to release that profit and inventory from the balance sheet into the P&L. And this was something that was previously contemplated within our prior year full year guidance range. It just happens to be -- it's typically much larger than what we would normally see.

因此，通常情況下，每季的利潤和庫存調整範圍在數百萬美元以內。事實恰好是，因為我們建立瞭如此多的庫存，然後確認並將這些庫存出售到市場上，所以我們需要將資產負債表中的利潤和庫存釋放到損益表中。這是我們之前在去年全年指導範圍內考慮到的事情。它只是碰巧——它通常比我們通常看到的要大得多。

So as we move into the fourth quarter, we're not going to see -- necessarily see that same level of benefit. And if you go from our Q3 performance into our Q4 performance correct. The gross margins, the implied gross margins would step down from Q3 to Q4. And again, that largely has to do with the inventory revaluation or profit and inventory not recurring in the fourth quarter. So that alone is about a 500 basis points move from Q3 to Q4.

因此，當我們進入第四季度時，我們不會看到——一定會看到同樣水平的效益。如果你從我們第三季的表現轉向我們第四季的表現是正確的。毛利率，隱含毛利率將從第三季下降到第四季。同樣，這很大程度上與庫存重估或第四季度利潤和庫存不重複有關。因此，僅此一項就從第三季到第四季上漲了約 500 個基點。

And then additionally, I would say now that we've implemented our ERP systems within 93% of our business, and we only have Latin America and India left. Beginning in Q4, we are going to intentionally start to manufacture less product as we attempt to reduce our overall inventory levels and improve our working capital and improve our cash. But because we are doing that, we're going to see some negative manufacturing variances that impact us in Q4.

另外，我想說的是，現在我們已經在 93% 的業務中實施了 ERP 系統，只剩下拉丁美洲和印度了。從第四季開始，我們將有意開始減少產品的生產，因為我們試圖降低整體庫存水準、改善營運資金和現金。但由於我們正在這樣做，我們將在第四季度看到一些對我們產生影響的負面製造差異。

Again, like the positive benefit to our P&L from the profit and inventory that occurred during Q3 the reduction in the manufacturing volumes was something that we had previously contemplated in our prior year guidance.

同樣，就像第三季度利潤和庫存為我們的損益帶來的積極效益一樣，我們之前在上一年的指導中也考慮到了製造量的減少。

Okay. That all makes sense to me, Jake. Thanks for the level of detail there. Let me ask a follow-up here then on the move to start selling small pen needle packs in Germany for those GLP-1 users. How did you land on starting with that country, Germany. What are the thoughts on marketing those packs? And is there going to be a pricing premium, is there something to look toward on that as well?

好的。這對我來說都很有意義，傑克。感謝您的詳細程度。讓我詢問後續行動，然後開始在德國為那些 GLP-1 用戶銷售小筆針包。您是如何開始從德國這個國家開始的呢？對於行銷這些包有什麼想法？是否會出現定價溢價，是否還有值得關注的地方？

Good morning Marie. We are absolutely excited about our prospects of launching the small pack for GLP-1s in Germany. Germany made sort of a logical first country for us. GLP-1s that are being launched in the form of a pen. So obviously, our pen needles are required. To administer those GLP-1s. The pen needles that we make today are the same pen needles that are required for GLP-1 administration. And so we launched the projects a few months ago to make small packs because as you can imagine, small packs are more patient and customer friendly for GLP-1 administration.

早安，瑪麗。我們對在德國推出 GLP-1 小包裝的前景感到非常興奮。德國對我們來說是一個合乎邏輯的第一個國家。正在以筆的形式推出 GLP-1。顯然，我們需要筆針。管理這些 GLP-1。我們今天製造的筆針與 GLP-1 給藥所需的筆針相同。因此，我們在幾個月前啟動了生產小包裝的項目，因為正如您可以想像的那樣，小包裝對於 GLP-1 給藥更有耐心，對客戶也更友好。

The pricing is, I would say, appropriate for the market and appropriate for the use case. I wouldn't talk specifically about pricing premiums, but let me just say that we are pleased with the price that we expect to get. And look more broadly, we are starting with Germany as pen injectors proliferate and expand for the administration of GLP-1, we’ll certainly be there to provide pen needles.

我想說，定價適合市場和用例。我不會具體談論定價溢價，但我只想說，我們對預期獲得的價格感到滿意。從更廣泛的角度來看，我們從德國開始，隨著筆式註射器的激增和 GLP-1 管理範圍的擴大，我們肯定會在那裡提供筆式註射針頭。

We have the capacity and can ramp up production of these small packs quickly to fill demand. And if you really project out over a number of years, if biosimilars enter the market, certainly again, that provides a tailwind for us. So we are excited about Germany. We're going to be launching that product there imminently here in the coming weeks, maybe a couple of months. And we will see where we go from there.

我們有能力並且可以快速提高這些小包裝的產量以滿足需求。如果你真的預測了幾年，如果生物相似藥進入市場，當然會再次為我們提供順風。所以我們對德國感到興奮。我們將在未來幾週甚至幾個月內立即在那裡推出該產品。我們將看看接下來的發展方向。

Okay. Very good. Thanks for taking the questions.

好的。非常好。感謝您提出問題。

Thanks Marie.

謝謝瑪麗。

Travis Steed, Bank of America Securities.

特拉維斯·斯蒂德，美國銀行證券公司。

Hi, thanks for taking my question. I guess the first question, I would like to start with when you think about the progress you are making on the pump and the investments that you kind of need to launch that product successfully. How should we think about kind of margins and earnings like that the street's got modeled for kind of going forward. Can you guys expand margins next year? Even with the investments required to launch this product? I just want to make sure we get kind of the models correct kind of going forward for this?

您好，感謝您提出我的問題。我想第一個問題是，我想先考慮一下您在泵浦方面取得的進展以及成功推出該產品所需的投資。我們應該如何考慮利潤和收益，就像街道為未來的發展所建模的那樣。明年你們能擴大利潤嗎？即使推出產品所需的投資又如何？我只是想確保我們能得到正確的模型來推進這個工作？

Thanks Travis. Good morning. So just as a quick reminder, right, for the audience here we made that submission in late calendar 2023. We got some questions from the FDA. It is part of the normal process that we responded in a very timely manner, and we've been progressing on the closed-loop solution as well. So first things first, we need and hope to get clearance on the pump. Obviously, I won't comment on the outcome and the timing of the FDA decision. And when it comes to our plans for the commercial launch for the pump and potential implications for fiscal 2025 respectfully, Travis. At this point, we are not ready to comment on 2025 numbers.

謝謝特拉維斯。早安.因此，作為一個快速提醒，對這裡的觀眾，我們在 2023 年晚些時候提交了該內容。我們從 FDA 收到了一些問題。這是正常流程的一部分，我們非常及時地做出了回應，我們也在閉環解決方案上取得了進展。因此，首先，我們需要並希望獲得泵浦的許可。顯然，我不會對 FDA 決定的結果和時間發表評論。當談到我們的泵浦商業推出計劃以及對 2025 財年的潛在影響時，特拉維斯。目前，我們還沒有準備好對 2025 年的數字發表評論。

I’ll repeat what I have said before. We are very mindful of our net leverage levels. We are very mindful of our debt. You've heard us comment in the past that we do have an increasing focus on cash and debt pay down. And so we'll be very measured and thoughtful in our plans. And what we are thinking right now, Travis, that we would hold an Analyst Day later this year, sometime in December. By that time certainly, we'll have clarity on open loop. We will have confirmed our plans on the pump. We will have made progress in the closed loop. And so we can talk about all of this at that time.

我將重複我之前說過的話。我們非常關注我們的淨槓桿水平。我們非常注意我們的債務。您過去曾聽我們評論說，我們確實越來越關注現金和債務償還。因此，我們的計劃將非常謹慎和周到。Travis，我們現在的想法是，我們將在今年稍後（12 月的某個時間）舉辦分析師日活動。當然，到那時我們就會清楚地了解開環。我們將確認我們的泵浦計劃。我們將在閉環中取得進展。所以我們可以在那時談論所有這些。

In the meantime, we are laser focused on obviously closing out and delivering a successful 2025.

同時，我們的重點是明顯地結束並交付成功的 2025 年。

Okay. Great. Thanks for that color. I look forward to the Analyst Day. And I guess the second question I'd ask is just kind of bigger picture. You guys have been a public company now for a while and kind of gotten independent? And just thinking about like how you maximize shareholder value from this forward point? Are there things that you're thinking about differently just to make sure that the value for shareholders is going to be maximized at this point versus what's reflected in public markets today?

好的。偉大的。謝謝那個顏色。我期待分析師日的到來。我想我要問的第二個問題只是更大的圖像。你們作為上市公司已經有一段時間了，現在已經獨立了？只是想想如何從這個角度最大化股東價值？您是否正在以不同的方式思考某些事情，以確保此時股東的價值與當今公開市場所反映的情況相比能夠最大化？

Travis, look, our focus from day one has been on maximizing shareholder value, right, and we continue to look for ways to do that. We laid out pre-spend sort of a three year plan that we've been executing on, we'll certainly continue to execute that. But really, look I mean, from a everyday as a management team, we really think about all the ways that might be available to us to maximize shareholders' value. So that certainly continues to guide us on all the decisions we make.

崔維斯，你看，我們從第一天起就專注於股東價值最大化，對吧，我們將繼續尋找實現這一目標的方法。我們制定了一項我們一直在執行的預支出三年計劃，我們肯定會繼續執行該計劃。但實際上，我的意思是，作為管理團隊的每一天，我們都在認真思考我們可以採取的所有方法來最大化股東價值。因此，這肯定會繼續指導我們所做的所有決定。

All right Dev. Thanks a lot.

好吧，開發者。多謝。

Kristen Stewart, CL King.

克里斯汀·斯圖爾特，CL King。

Hi, thanks for taking the question. I was wondering if you could just focus a little bit on free cash flows. I think, Jake, you had mentioned that separation costs are going to be stepping down here. I was wondering if there's any way that you could quantify that or just provide a little bit more color on the cash flow outlook for the company.

您好，感謝您提出問題。我想知道你是否可以稍微關註一下自由現金流。我想，傑克，你曾經提到這裡的離職成本將會下降。我想知道是否有任何方法可以量化這一點，或者只是為公司的現金流前景提供更多的資訊。

Yeah. So thanks for the question, Kristen. Again coming back to I think this year, we are going to end the year with around $300 million in cash on the balance sheet for the end of the year. That's going to include using around $180 million of cash in terms of separation activities this year, and that's coming on the heels of using around $145 million of cash in 2023.

是的。謝謝你的提問，克里斯汀。再次回到我認為今年，我們將在年底資產負債表上留下約 3 億美元的現金。這將包括在今年的離職活動中使用約 1.8 億美元的現金，而這是繼 2023 年使用約 1.45 億美元的現金之後進行的。

So I think one of the things that as we've gone through the spin here that I think sort of gets masked is really the free cash flow generation capabilities of the company because it really is quite strong. And I think beginning in 2025, you are going to see a much improved free cash flow generation. This isn't the type of franchise that needs a tremendous amount of capital expenditure investment.

因此，我認為，當我們經歷這裡的旋轉時，我認為有點被掩蓋的事情之一實際上是公司的自由現金流生成能力，因為它確實非常強大。我認為從 2025 年開始，您將看到自由現金流的產生大大改善。這不是需要大量資本支出投資的特許經營類型。

Given where we are. I mean we have three highly automated plants that we can put even more capacity through. So as we are thinking about next year, those separation costs are going to materially tick down. So it is going to go from, let's call it somewhere around $180 million this year down to maybe somewhere to the tune of around $50 million or so next year. And that -- the reason why we even have that amount next year largely has to do with the finalization of some brand transition expenses that we are going to have to go through in 2025 and then to a lesser extent in 2026.

鑑於我們所處的位置。我的意思是，我們有三個高度自動化的工廠，我們可以提高產能。因此，當我們考慮明年時，這些離職成本將大幅下降。因此，它將從今年的 1.8 億美元左右下降到明年的 5,000 萬美元左右。而且，我們明年甚至有這筆金額的原因很大程度上與我們必須在 2025 年完成的一些品牌轉型費用的最終確定有關，然後在 2026 年減少一定程度的費用。

But as we move forward here, we should start over the next couple of years, our free cash flow generation should really more closely approximate our adjusted EBITDA as a company. So I'm not going to give you a specific number for 2025, but I would tell you that I think our free cash flow beginning in 2025 is going to materially improve from where we were in 2024.

但當我們向前邁進時，我們應該從未來幾年開始，我們的自由現金流生成應該更接近我們作為一家公司調整後的 EBITDA。因此，我不會向您提供 2025 年的具體數字，但我會告訴您，我認為從 2025 年開始，我們的自由現金流將比 2024 年有實質改善。

Okay. Thank you. And then, Dev any color that you can provide us on the questions that you received back from the FDA if they were expected? Or any sort of color there would be helpful.

好的。謝謝。然後，Dev，您可以就您從 FDA 收到的問題向我們提供任何資訊嗎？或任何類型的顏色都會有幫助。

Hi, Kristen good morning and it's nice to have you on the call and look forward to engaging more with you. Listen, I would say that all the questions we got we were able to, at least from our perspective, adequately and comprehensively respond to and do so in a timely manner. Beyond that, Kristen I wouldn't go into the details, obviously of the feedback. And we are eager to receive the FDA's decision here.

嗨，克里斯汀，早上好，很高興您接聽電話，並期待與您進行更多交流。聽著，我想說的是，我們能夠，至少從我們的角度來看，充分、全面地回應並及時回應所有問題。除此之外，克莉絲汀，我不會透露細節，顯然是回饋的細節。我們迫切希望收到 FDA 的決定。

And would you be prepared to go forward with the closed-loop version as soon as you get approval of the open-loop version? How will that work?

一旦獲得開環版本的批准，您是否準備好繼續使用閉環版本？這將如何運作？

Yeah. We've been working on the closed-loop version in parallel. You remember, we signed an agreement with Tidepool and our team has been busy integrating that algorithm with an open loop. So the work on the closed loop has actually been progressing even as we have been working on responding to the FDA on the open loop.

是的。我們一直在並行開發閉環版本。您還記得嗎，我們與 Tidepool 簽署了一份協議，我們的團隊一直忙於將該演算法與開環整合。因此，即使我們一直在開環方面回應 FDA，閉環方面的工作實際上也在取得進展。

Okay, thank you very much.

好的，非常感謝。

Thanks Kristen.

謝謝克里斯汀。

(Operator Instructions)

（操作員說明）

Michael Polark, Wolfe Research.

邁克爾·波拉克，沃爾夫研究中心。

Hi, good morning. Thank you for taking my questions. I have two. I want to follow up on gross margin and then ask a question about Type 2 pumping. So Jake, I heard your response to Marie. A lot of good color there. But when I do the like 4Q implied gross margin, I get 60% huge step down even taking into account the thematic considerations you flag. It just strikes me as ultra conservative?

嗨，早安。感謝您回答我的問題。我有兩個。我想跟進毛利率，然後詢問有關 2 型泵送的問題。傑克，我聽到了你對瑪莉的回應。那裡有很多很好的顏色。但當我做類似的第四季度隱含毛利率時，即使考慮到您標記的主題考慮因素，我也會大幅下降 60%。我只是覺得這太保守了？

And then when you run that down in the P&L, you see $0.31, $0.32 of EPS for the quarter which is obviously a huge step down versus where you've been. So can you -- it just -- it's tough to fathom. So I want to -- those are the numbers I see, and I want to confirm that those are the numbers you intend to plan for? And is this just ultra conservatism here sequentially?

然後，當你在損益表中進行計算時，你會看到該季度的 EPS 為 0.31 美元、0.32 美元，這顯然與你之前的水平相比是一個巨大的下降。那麼你能嗎——只是——這很難理解。所以我想——這些是我看到的數字，我想確認這些是你打算計劃的數字嗎？這是否只是極端保守主義？

Yeah. So Mike, thanks for the question. I mean, I think your implied math for Q4 is correct. In terms of -- it really is a gross margin story that is occurring largely associated with the PII that I mentioned, that drives around a 500 basis points move from Q3 to Q4. Additionally as I said, I think in my answer to Marie, we are very intentionally looking to try and right-size our inventory levels now that we are through all of these largely through all of the separation activities.

是的。麥克，謝謝你的提問。我的意思是，我認為您對第四季度的隱含數學是正確的。就毛利率而言，這確實是一個主要與我提到的 PII 相關的毛利率故事，推動了從第三季到第四季約 500 個基點的變動。此外，正如我所說，我認為在我對瑪麗的回答中，我們非常有意地嘗試調整我們的庫存水平，因為我們主要透過所有分離活動來完成所有這些工作。

So that is something that we are very intentionally looking to do to drive an improvement in our working capital and what that's going to mean at least in the fourth quarter, is sort of a temporary headwind associated with manufacturing variances. So we're not going to have the same level of absorption.

因此，我們非常有意地尋求這樣做，以推動我們的營運資本的改善，這意味著至少在第四季度，這是與製造差異相關的暫時逆風。所以我們不會有同樣的水平吸收。

Now all of this was contemplated in our prior guidance and obviously now in our current guidance. and yet we are still able to raise our gross margin guidance by about 62.5 basis points from the midpoint from our prior guide. And that raise really comes down to a few things. It comes down to our ability to continue to drive positive pricing and pricing being a little bit better than what we had previously expected. And then that guidance raise at the gross margin line also comes down to mix, both from a geographic and a product standpoint.

現在，所有這些都在我們之前的指導中得到考慮，顯然現在也在我們當前的指導中。然而，我們仍然能夠將毛利率指引從先前指引的中點上調約 62.5 個基點。這種加薪實際上取決於幾件事。這取決於我們繼續推動積極定價的能力，並且定價比我們之前的預期要好一些。然後，從地理和產品的角度來看，毛利率指引的提高也歸結為混合因素。

So Additionally, I would just say we are also trying to take cost out in terms of regulatory freight and some manufacturing costs. So I think our team has done a tremendous job of trying to drive cost out of the system. That's allowing us to raise our full year guide. But as you think about going from kind of Q3 to Q4. There is some transient things going on, one related to PII, which moving forward isn't going to occur at that same level. And then likewise, from a manufacturing standpoint, a real concerted effort by us to try and reduce inventory levels now that the separation has gone really well.

此外，我只想說，我們也試圖在監管運費和一些製造成本方面降低成本。因此，我認為我們的團隊在努力降低系統成本方面做了巨大的工作。這使我們能夠提高全年指南。但當你考慮從第三季到第四季時。正在發生一些暫時性的事情，其中​​之一與 PII 相關，這些事情的發展不會在同一水平上發生。同樣，從製造的角度來看，既然分離進展得非常順利，我們就真正齊心協力嘗試降低庫存水準。

I mean, Mike if you think about this base business, on a full year basis. And there is been noise post spin for the last 2.5 years as we've had to go through all of the separation work. I think as we get into 2025, it is going to -- what you are going to end up seeing is a much more stable quarter-to-quarter performance from the business.

我的意思是，麥克，如果你考慮全年的基礎業務。在過去 2.5 年裡，旋轉後一直存在噪音，因為我們必須完成所有分離工作。我認為，當我們進入 2025 年時，您最終將看到業務的季度業績更加穩定。

And certainly from an annual standpoint. I mean, if you think about what this during 2024, if you look at the different components of the business and you sort of break-down and go from consolidated impact and you look at -- we have a very small contract manufacturing business. That generates around $5 million to $10 million per year in revenue back to BD, that is at gross margins that are around, let's call it, 12%.

當然從年度的角度來看。我的意思是，如果你想想 2024 年的情況，如果你看看業務的不同組成部分，你會發現，你會看到，我們的合約製造業務非常小。這每年將為 BD 帶來約 500 萬至 1,000 萬美元的收入，毛利率約為 12%。

We have we spend around $60 million to $65 million a year in our insulin pump program. And then you have the core injection business which is a very stable, low to mid-60s typically gross margin business that then at the operating margin line is somewhere in the low 30s. So a much more stable business, I think, is what you should expect as we sort of move forward from 2024 into 2025.

我們每年在胰島素幫浦計畫上花費約 6,000 萬至 6,500 萬美元。然後是核心注塑業務，該業務非常穩定，毛利率通常在 60 多歲左右，營業利潤率則在 30 多歲左右。因此，我認為，隨著我們從 2024 年邁入 2025 年，您應該期待業務會更加穩定。

Mike and if I can just sort of zoom back a little bit, right? I mean FY '24 has been marked with ERP implementations in dozens and dozens of countries right? We went to 93% of our revenue in the background, what that involves is moving products from BD's distribution network into new distribution centers. And you can imagine the inventory that has to be placed in new locations, working with customers to make sure in case there was any disruption, we didn't disrupt product continuity for our patients and customers.

麥克，如果我能把鏡頭拉回來一點，對嗎？我的意思是 24 財年已經在數十個國家實施了 ERP，對吧？我們將 93% 的收入放在了後台，這涉及到將產品從 BD 的分銷網絡轉移到新的分銷中心。您可以想像必須將庫存放置在新地點，與客戶合作以確保在出現任何中斷的情況下，我們不會破壞患者和客戶的產品連續性。

And so this year has been particularly lumpy quarter-to-quarter. No question. But I'm very pleased that we had incorporated our thoughts around this in the full year guidance. And frankly, our team has been executing to that. And so while it might appear certainly, the quarter-to-quarter variance that you are seeing, I certainly would urge you to zoom back and look at it over a full year basis and really just look at the performance of this business over a full year basis. So I just wanted to provide a little bit of that context.

因此，今年的季度環比情況尤其不穩定。毫無疑問。但我很高興我們在全年指導中融入了對此的想法。坦白說，我們的團隊一直在執行這一點。因此，雖然您所看到的季度與季度之間的差異可能看起來肯定存在，但我當然會敦促您回過頭來看看全年的情況，實際上只是看看該業務在整個年度的表現。年為基礎。所以我只想提供一些背景資訊。

Appreciate all that color. Thank you. I want to ask on Type 2 pumping. So obviously, you have the program you are interested in this market. I've heard the update loud and clear today, but I'm curious how you internally expect the Type 2 pump market to develop Type 1s, 40%, 45% penetrated in the US grinding higher. It is a trend that's been in place for a while now.

欣賞所有這些顏色。謝謝。我想問一下關於2型幫浦的問題。顯然，您有對這個市場感興趣的計劃。我今天聽到了響亮而清晰的更新，但我很好奇您內部如何期望 2 型泵市場發展 1 型泵，在美國滲透率達到 40%、45% 並不斷走高。這種趨勢已經存在了一段時間了。

Type 2 is sub-5% pump penetrated insulin gearing up for the AID push into this market next year. And I'm curious how quickly do you think that ramps? How do you model the curve? Do you follow the Type 1 cadence? Do you think it could be faster, slower? I'd be interested in any color that you'd have to provide on that topic. Thank you so much.

2 型是幫浦滲透率低於 5% 的胰島素，為明年 AID 進入該市場做好準備。我很好奇你認為這種上升速度有多快？如何對曲線進行建模？你遵循類型 1 的節奏嗎？你認為它可以更快、更慢嗎？我對您必須提供的有關該主題的任何顏色感興趣。太感謝了。

Yeah. Thanks, Mike. Look, it's too early for us to provide sort of any quantitative guidance with respect to what the penetration on Type 2 will be. And while we expect competitors entering Type 2 market as well. I mean I just want to remind everybody that ours would be a disposable platform with 300 units, and that has I would argue, some specific applicability for Type 2 customers. And also, we have designed it with simplicity in mind, which also makes it applicable.

是的。謝謝，麥克。看，我們現在就 Type 2 的滲透率提供任何定量指導還為時過早。我們預期競爭對手也會進入 2 類市場。我的意思是，我只是想提醒大家，我們的平台將是一個擁有 300 個單元的一次性平台，我認為這對於 2 類客戶具有一些特定的適用性。而且，我們在設計它時考慮到了簡單性，這也使其適用。

So having said all of that, this and we will talk more about our Type 2 plans at this Investor Day, we are planning in December. By that time, as I said we expect to have a FDAs decision. We'll have made some more progress on the closed-loop. So respectfully, Mike, I understand the eagerness to do now our Type 2 plans more, but I suggest we wait until later this year.

說了這麼多，我們將在本次投資者日更多地討論我們的 2 類計劃，我們計劃在 12 月進行。到那時，正如我所說，我們預計 FDA 會做出決定。我們將在閉環方面取得更多進展。麥克，我很榮幸地理解現在我們迫切需要做更多的 2 型計劃，但我建議我們等到今年晚些時候。

Got it. Thank you.

知道了。謝謝。

Thank you. There are no further questions at this time. I'd like to turn the call back over to Dev for closing remarks.

謝謝。目前沒有其他問題。我想將電話轉回給 Dev 進行結束語。

Thank you, Michel. As we wrap up this call, I do want to extend my heartfelt appreciation to all my colleagues at Embecta across the globe. Our global team has in this year, executed on complex major separation-related programs while never wavering from our mission of developing and providing solutions that make life better for people living with diabetes. And as I mentioned during the call, we look forward to engaging with all of you at our Analyst and Investor Day in mid-December. Thank you all for attending the call and for your interest in our business.

謝謝你，米歇爾。在我們結束這次電話會議時，我確實想向全球 Embecta 的所有同事表示衷心的感謝。今年，我們的全球團隊執行了與分離相關的複雜的重大項目，同時從未動搖過我們開發和提供解決方案的使命，讓糖尿病患者的生活變得更好。正如我在電話會議中提到的，我們期待在 12 月中旬的分析師和投資者日與大家互動。感謝大家參加電話會議以及對我們業務的興趣。

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone have a great day.

感謝您的參與。這確實結束了程序，您現在可以斷開連接。每個人都度過了美好的一天。