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Embecta structures balance sheet to fund both organic growth and M&A
By Devika Patel
Knoxville, Tenn., Aug. 15 – Embecta Corp. plans to keep its balance sheet flexible and able to fund both organic growth as well as potential mergers or acquisitions as the company establishes itself as an independent company.
On April 1, the company completed its spinoff from Becton, Dickinson and Co.
“As we created our initial capital structure and leverage levels, we tried to be mindful of our current financial profile, the need to increase the level of investment into the business and shareholder returns,” senior vice president and chief financial officer Jake Elguicze said on the company’s third quarter ended June 30 earnings conference call on Monday.
“We have a balance sheet that we can use to invest both organically as well as use for M&A and partnerships opportunities.
“Embecta continues to be very well positioned to exit fiscal year 2022 with a strong financial profile as we complete our first six months as an independent company,” he said.
Cash and cash equivalents were $292.3 million as of June 30 and long-term debt was $1,599,200,000, with the company’s last 12 months net leverage ratio standing at approximately 2.8x.
On March 23, the Franklin Lakes, N.J.-based medical technology company priced a $200 million issue of 6¾% eight-year senior secured notes (Ba3/B+) at 98.517 to yield 7% in a drive-by.
The yield printed in the middle of yield talk in the 7% area but wide to initial guidance in the high-6% area.
Morgan Stanley & Co. LLC was the left bookrunner.
The notes become callable after five years at par plus 25% of the coupon.
Proceeds were used to fund the spinoff from Becton, Dickinson.
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