Embecta Corp. Price & Performance (EMBC)

I'm also pleased to announce that we are continuing to advance our efforts to co package our pen needles with potential generic GLP-one drugs as well as making our pen needles available in retail packaging appropriate for use with branded GLP one drugs delivered by pen injectors. We expect this will enable us to expand into a fast growing market while leveraging our world class distribution and commercial expertise. We have received several purchase orders from generic manufacturers to co package our [indiscernible] And we look forward to sharing more details about these partnerships and the market potential at our upcoming Analyst and Investor Day. We have completed the majority of the steps required to implement the discontinuation of our insulin patch program and the associated restructuring plan announced in November 2024. This progress has occurred within our previously expected timeline. Additionally, our stand up activities are largely complete, with only India yet to be transitioned to our ERP system in network within the next few months. Therefore, we continue to be focused on reducing our cost structure. And during the second quarter, we initiated a separate restructuring plan aimed at streamlining our organization. We expect the plan to be substantially complete by the end of fiscal year twenty twenty five.

As a result, we anticipate incurring total pretax charges of between 4,000,000 to 5,000,000 the majority of which are expected to be cash related. This action is expected to drive meaningful efficiencies with estimated pretax cost savings of between 7 to $8,000,000 during the second half of fiscal twenty twenty five. Turning to the next slide. In line with our commitment to enhancing financial flexibility, we continue to reduce our debt making an aggregate principal payment of approximately $27,000,000 on our Term Loan B facility during the quarter. While on a year to date basis, we have reduced debt by approximately $60,000,000 which puts us well on track to achieve our goal of reducing debt by approximately a and $10,000,000, during fiscal twenty twenty five. Finally, as we reflect on our second quarter results and look ahead to the remainder of the year, we are updating our fiscal twenty twenty five guidance. While our teams delivered slightly better than expected financial performance during the first six months of the year, We are adjusting our full year 2025 constant currency revenue outlook to account for lower projected US volumes primarily associated with reductions in customer inventory levels tied to store closures at a specific US retail pharmacy customer.

That said, our as reported revenue guidance remains largely intact. Supported by favorable foreign exchange movements as compared to our previously provided guidance. In terms of gross margins, we have updated our guidance to reflect the lower constant currency revenue expectations as well as the estimated impact of currently implemented incremental tariffs. Which are expected to be a headwind of approximately 25 basis points to our full year adjusted gross margin. However, even with these headwinds, we are raising our guidance ranges for adjusted operating and adjusted EBITDA margins for the year. Due to disciplined expense management and the initiation of the previously mentioned restructuring plan in the second quarter. We are also reaffirming our adjusted earnings per share outlook for fiscal year twenty twenty five. Turning to the next slide, I would like to provide an update on our brand plan and walk through the key elements of its execution. This initiative has been in planning since our spin. And I'm pleased to report that the transition is now underway in The US and Canada. We are executing the program in phases as intended, and are preparing to transition most of the remaining markets in the next fiscal year.

In line with our original plan. We continue to expect the global transition to be completed within the next couple of years. On the slide, you will see an example of the new Embecta branded packaging contrasted with the legacy nano second gen packaging. Importantly, product names and color cues will remain unchanged. A deliberate decision informed by customer research. At the same time, we are introducing a modern refresh look while maintaining the visual elements that health care providers and people with diabetes easily recognize our products. We remain focused on ensuring operational readiness along the supply chain, including inventory management, customer communication, and regulatory compliance. This thoughtful phased approach is designed to ensure a smooth transition while preserving the trust of those who rely on our products every day.

Now, let's review our revenue performance for the second quarter. During the second quarter of fiscal year twenty twenty five, Embecta generated $259,000,000 in revenue, reflecting a 9.8% decline year over year on an as reported basis or a 7.7% decline on an adjusted constant currency basis. Within The U. S, revenue for the quarter totaled $135,200,000 reflecting a year over year decline of 8.4% on an adjusted cost currency basis. The year over year decline was expected and is primarily due to two factors. Both of which relate to the timing of price increases that went into effect. First, in advance of a price increase that went into effect on April first of twenty twenty four, we saw certain customers purchase additional products that positively impacted our second quarter of twenty twenty four results. Similarly, in advance of a price increase that went into effect on January first of twenty twenty five, we saw certain customers purchase additional products and that positively impacted our first quarter of twenty twenty five results. And resulted in an offsetting reduction in the second quarter. As such, the combination of these two factors led to a difficult comparable for our US business. Turning to our international business, During q two, revenue totaled hundred and $23,800,000 which equated to a 7% and a $10,000,000 decline on an adjusted constant currency basis as compared to the prior year period.

Like The US, this decline was expected and due to certain customers purchasing additional products in advance of implementations in certain regions, in the prior year period. While from a product revenue perspective, during the quarter, thin needle revenue declined approximately 12.1% Syringe revenue grew by approximately 1.7%. Safety products grew approximately 4.2%. And contract manufacturing grew approximately 73%. The decline in year over year pen needle revenue was primarily driven by the timing issues associated with price increases that went into effect within The US coupled with the unfavorable prior year comparison, stemming from ERP related inventory builds within our international markets. Turning to our syringe product, they grew in the quarter by 1.7% driven by international markets, specifically Latin America and Asia. While our safety products grew 4.2% as to the prior year period, due to the annualization of share gains resulting from a competitor discontinuing their product and exiting the market. That completes my prepared remarks. And with that, let me turn the call over to Jake to review other Q2 financial highlights well as provide our updated financial guidance for fiscal year twenty twenty five. Jake?

Thank you, Deb.

And good morning, everyone. Given the discussion that has already occurred regarding revenue, I'll start my review of Embecta's second quarter financial performance at the gross profit line. GAAP gross profit and margin for the second quarter of fiscal twenty twenty five totaled 164,100,000.0 and sixty three point four percent, respectively. This compared to 185400000.064.6% in the prior year period. While on an adjusted basis, our Q2 twenty twenty five adjusted gross profit and margin totaled 165000063.7%. This compared to 185.864.7% in the prior year period. The year over year decline in adjusted gross profit and margin was primarily driven by the impact of net changes in profit and inventory adjustments, as well as the lower year over year revenue.

That Deb mentioned earlier. These headwinds were partially offset by manufacturing cost improvement programs lower supply chain functional spend, lower freight costs, and our ability to drive year over year price increases. Turning to GAAP operating income and margin. During the second quarter, they were 62,900,000.0 and twenty four point three percent. This compared to 39200000.013.6% in the prior year period. While on an adjusted basis, our Q2 twenty twenty five adjusted operating income and margin totaled 81400000.031.4%. This compared to 74900000.026.1% in the prior year period. The year over year increase in adjusted operating income and margin is primarily due to lower R and D expenses associated with the discontinuation of our insulin patch pump program as well as lower SG and A expenses primarily driven by lower TSA costs as well as lower compensation and marketing expenses. This was offset by the adjusted gross profit changes I just outlined Turning to the bottom, GAAP net income and earnings per diluted share were 23,500,000.0 and $0.40 during the second quarter of fiscal twenty twenty five. As compared to 28,900,000.0 and 50¢ in the prior year period. While on an adjusted basis, during the second quarter of fiscal twenty twenty five, net income and earnings per share were 40.7 and 70¢.

As compared to $38,900,000 and $0.67 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 interest expense. This was partially offset by an increase in our adjusted tax rate from approximately 18% in Q2 of twenty twenty four to approximately 25% in Q2 of twenty twenty five. Lastly, from a P and L perspective, for the second quarter of twenty twenty five, our adjusted EBITDA and margin totaled approximately 97,100,000.0 and thirty seven point five percent as compared to 90,800,000.0 and thirty one point six percent in the prior year period. Turning to the balance sheet and cash flow. At the end of the second quarter, our cash balance totaled approximately $212,000,000 While our last twelve months net leverage as defined under our credit facility agreement, stood at approximately 3.7 times. As a reminder, our net leverage requires us to stay below 4.75 times. As Deb mentioned earlier, we continue to be focused on more aggressively delevering. And during the second quarter, we paid down 27,400,000.0 of Term Loan B debt. I'm pleased to say that we remain on track to achieve our goal of reducing our gross debt.

By 110,000,000 during fiscal twenty twenty five. As well as getting our net leverage levels to approach approximately three times by year end.

That completes my prepared remarks on our second quarter twenty twenty five results. Next, I would like to discuss Embecta's updated 2025 financial guidance. And certain underlying assumptions. Before I begin, I want to acknowledge the evolving tariff landscape and provide some important context regarding our global operations. As a reminder, we manufacture our products across three key facilities: Dunleary, Ireland Holderidge, Nebraska and Suzhou, China. We do not perform any manufacturing in either Canada or Mexico. It's important to note that tariff regulations extend beyond manufacturing location and require detailed analysis of trade classifications and rules of origin to determine potential exposure. As it relates to our global operations, we have now incorporated the impact of tariffs currently in effect Notably, the incremental 125% tariffs for raw material, and finished goods being imported into China with The US as the country of origin. The incremental 145% tariffs for imports into The US from China. And incremental baseline 10% tariffs for imports into The US from certain other countries.

We have also assumed that certain exemptions are applicable certain materials and finished goods being imported into The US. We have not incorporated the potential incremental tariffs that may be implemented after the current pause on tariffs has expired. Given the uncertainty surrounding the evolving global trade our estimates remain subject to change. And we will continue to monitor the situation and provide updates when appropriate. As always, we remain committed to mitigating potential impact where possible. To make sure we continue supporting our customers and the people living with diabetes who rely on our products. Now let me discuss our updated guidance. Beginning with revenue. On an adjusted constant currency basis, we are lowering our previously provided guidance range. By 150 basis points on both the low and high ends As we now call for revenue to decline between 2.54% as compared to 2024. At the low end of the we estimate that volume will be a headwind of approximately 3% and that pricing will be a headwind of approximately 1%. Meanwhile, at the high end of our constant currency revenue guidance range, we estimate that volume will be a headwind of approximately 1.5% And that pricing will be a headwind of approximately 1%.

As Deb noted earlier, the additional 1.5% volume headwind which we have incorporated into our outlook is driven by lower projected U. S. Volumes. Primarily associated with anticipated reductions in customer inventory levels tied to store closures at a specific US retail pharmacy customer. We believe this is transitory and does not reflect any fundamental change in the stability of our base business. Turning to our thoughts on FX. Since we provided our updated fiscal twenty twenty five financial guidance in early February, the US dollar has weakened against most currencies. And as a result, we currently expect FX to be a headwind of approximately 0.8% As compared to our prior guidance, which called for FX to be a headwind of approximately 2.2%. Additionally, our as reported 2025 GAAP revenue will not be impacted by the 2015 through 2023 amount that we needed to accrue associated with the Italian payback measure which impacted our 2024 as reported GAAP revenue. This equates to a tailwind of approximately 0.4%. On a combined basis, our as reported revenue guidance remains largely unchanged at a range of between 1,073,000,000.000 and 1,090,000,000.

Turning to adjusted gross margin. We are lowering our previously provided guidance range.

By 50 basis points and now expect adjusted gross margin to be in the range of between 62.7563.75%. The reduction in our current versus prior adjusted gross margin guidance is primarily due to the reduction in our constant currency revenue as well as the incremental impact of tariffs. This is somewhat offset by favorable profit and inventory adjustments. And cost improvement actions we are taking. Within cost of sales. While from an adjusted operating margin standpoint, we are raising our guidance from a range of between 29.530.5% to a new range of between 29.7530.75%. This improvement in adjusted operating margin is primarily driven by the expected cost savings associated with the restructuring plan announced this quarter. Moving to earnings. Our better than expected second quarter earnings performance coupled with the restructuring plan we announced today as well as favorable shifts in foreign exchange. Are enabling us to absorb the impact of the lower adjusted constant currency revenues and incremental tariffs. Thereby allowing us to maintain our previously provided adjusted diluted earnings per share guidance range. Of between $2.7 and $2.9 Our updated guidance range continues to assume that our annual net interest expense will be approximately 107,000,000 that our annual adjusted tax rate will be approximately 25%.

And that our weighted average diluted shares outstanding will be approximately 58,900,000.0.

Dollars Our guidance also continues to that we will use between 50 and 60,000,000 of cash during fiscal twenty twenty five associated with separation costs largely related to brand transition. While as it relates to capital expenditures, we now expect to incur approximately $15,000,000 during the year, down from our prior estimate of approximately 20 for cash usage associated with the discontinuation of insulin patch pump program, our guidance now assumes we will use between 20 and 25 As compared to our previous estimates, of between 25 and 30,000,000. Lastly, for the same reasons we increased our adjusted operating margin guidance range, we are also raising our adjusted EBITDA margin guidance range. From a range of between 3637% to a new range of between 36.2537.25%. And before I turn the call over to the operator, I wanted to take a moment to remind that we will be hosting our inaugural Analyst and Investor Day on May 22, in New York City. We are looking forward to providing a deeper look into our portfolio value creation opportunities, and long term financial objectives. We hope to see many of you there. Please RSVP by following the instructions on this slide. With that, I would like to now turn the call over to the operator for questions.

Operator? Thank you. At this time, we'll conduct a question and answer session.

As a reminder to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please limit yourself to one question and a follow-up. Please stand by while we compile the q and a, or Our first question comes from line of Callum Tush Marsh of Morgan Stanley. Your line is now open.

Great. Thank you, guys. Good morning. Would love for you to maybe dig a bit deeper into kind of growth and demand dynamics across pen and syringes. Just walk us through what you're seeing domestically and internationally how we should think about modeling these products for the remainder of the year Kind of most keen to get a bit more color on some of those moving parts in The U. S. You called out the customer inventory bits and store closures. Are you now comfortable that they are kind of isolated issues and and behind you? Thanks a lot.

Good morning, Calum, and thanks for the question. So maybe some context is in order here. As you may remember, fiscal twenty twenty four we had a number of rolling ERP implementations throughout the year. US and Canada went live in the first quarter, then we had EMEA and Asia in quarter two. And then we had China and Latin America in the following quarters, Latin America as recent as Q1 twenty twenty five.

And our goal as we did that was to ensure that we maintain product continuity. As you know, these implementations in our case coupled with changes in distribution network and setting up new shared services are pretty complex. So we were very careful to make sure that distributors to which our products flow had enough inventory of these products that they could maintain continuity of supply in case were any hiccups. Now the executions went very well. We did not have hiccups. But that leads to unfavorable year over year comparisons for both our U. S. Business and our international business. That was obviously further compounded by the fact that at the end of last year, as we mentioned on prior calls, there was a looming port strike. And so particularly in The U. S, some distributors purchased products ahead of that port strike in September. And certainly, that impacted our Q1 twenty twenty five results and year to date 2025 results. And then finally, the third effect that just to keep in mind because it does impact certainly geographic year over year comparisons as well as comparisons for product family was their shift in price increases, which obviously from a business standpoint, is a good thing.

Last year, which is in fiscal twenty twenty four, we had a U. S. Price increase on the 04/01/2024 and this year we had it in on 01/01/2025. Certainly that's going to help us through the remainder of the year, but again leads to unfavorable comp comparisons. So those were the dynamics that really drive both for the quarter and the year to date comparisons for adjusted revenue by geography and in total. And you can imagine with pen needles being you know, approximately 76%, of our total revenue, that impacts the pen revenue business quite significantly, particularly when you think about the ERP implementations in which regions they occurred because in certain regions, they are primarily a pen needle business. So those are really the factors. With syringes, we are again, seeing some strength in both Latin America and Asia. And we have the opportunity to optimize our pricing in The US. And that has helped our syringe results as well. The second part of your question was about the adjustments that we've made for store closures. So maybe some background there. You know, obviously, are aware of some planned store closures at a major US retail pharmacy chain.

But I do want to point out that we sell product to a third party distributor. That serves that aforementioned pharmacy chain but also serves other customers. Now, obviously, we don't have any particular insight into the time timing of the plant store closures. But what we did notice was in the late Q2, we noticed a change in the ordering pattern [indiscernible] we supply product to. Now, we believe it's linked. To the plant store closures. And so what we've tried to do is estimate and be prudent in the incorporation of that impact into full year guidance. I should also note that in case of store closures, obviously you know, the pharmacy chain is going to obviously try to retain those patients within their own network. Sometimes these patients might leave and go to other pharmacy chains, but at the end of the day, our products are chronic use, medically necessary products And so we do expect that these patients if they're not purchasing it from a store that they used to but is now closed, will go into other retail outlets to purchase these products. And and given our strength, in The U. S, it is quite possible that those patients will continue using our products.

There might be a timing lag here as I mentioned, the product flows through distributors and it takes time for the demand signals to adjust.

So look, I mean, [indiscernible] to sort of sum it up, we've tried to be as prudent as we can in estimating this. We recognize it's early. In the process of store closures, and certainly we'll update as we go along here.

Great. Just a follow-up there. I think the streets kind of shaking out at I think, 7%, 8% quarter over quarter growth into fiscal year Q3. Are you happy with that given guide card? Where should we be taking that little guide cut out of our numbers for the for the year? Thanks a lot.

Yes, Callum. Thanks for the This is Jake. Maybe I'll jump in here. I think what if you think about our guide, the first half of the year, we always thought for the reasons that Dev outlined that the second half of the year was going to be stronger than the first half of the year. And really nothing has necessarily changed in that thought pattern in terms of second half strength versus the first half because of just all the one off items that sort of impacted the first half of twenty twenty four in terms of the ERP go lives and whatnot. So we were down on a six month I think our constant currency revenues were down around 6.3%. And in the second half of the year, I think it's probably reasonable to think that we would sort of see flat to slightly positive overall constant currency revenue growth. In the second half of the year. And probably, I would say low single digit constant currency revenue growth, if you will, particularly in the third quarter? So hopefully that gives a little bit more context into sort of our thoughts in the second half of the year regarding constant currency revenue.

So we certainly expect to see despite the 150 basis point call down, if you will, to our full year constant currency revenue guidance range. We certainly do expect there to be an improvement and see some momentum as we move throughout the second half of the year. Appreciate it, guys. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Marie Thibault of BTIG. Your line is now open.

Hi, good morning. Thank you for taking the questions. I wanted to ask my first one here on tariffs. I heard you say 25 bps of full year adjusted a full year adjusted impact to adjusted gross margins there. Wanted to get a little bit more detail on some of this. How much of that impact is coming from sort of The U. S. China tariffs as we get those trade talks hopefully started here this weekend. And you know, in terms of annualizing some of this, given you're kind of on a a different fiscal year, how should we think about this, in the the next fiscal year? Of understand there will be mitigation and a lot of fluid dynamics here.

Yeah, Marie, thanks for the question. Yeah, so you're correct. I mean, right now, just given given our manufacturing foot and the way that our products flow, we are thinking that there is going to be around a $3,000,000 or 25 basis point impact to our full year margins, 3,000,000 of incremental expense associated with these tariffs in the second half of the year That does relate to exactly what you were referring to. The dynamic between China and The U. S. And the reciprocal tariffs with each of those countries. Right now, obviously, we're going to try and and do whatever it is that we can. In order to offset those impacts to the extent possible, whether that's taking costs out of the system or potentially trying to find ways to pass along any of those cost increases in the form of pricing. You know, based on what we know right now, if we had to provide, you know, sort of an estimate, you know, for maybe an annualized impact And again, in mind, this is obviously very, very fluid just even given some of the news coming out this morning regarding the talks this weekend. But if we to think about like an annualized I think it's probably reasonable to think that we would see maybe around call it 8,000,000 to $9,000,000 impact in 2026.

Based on what we know right now. And that's obviously a gross number, right? That doesn't take into consideration any potential offsets that we would try and do. And only really relates to sort of the The US China dynamic it doesn't take into consideration if you will any of the tariffs that have sort of been put on pause right now?

Yeah. Incredibly helpful, Jake. Thank you for that detail. And and then I guess I'll ask my follow-up. I I heard you say that Embecta had received several POs from generic GLP-one makers, very exciting to see that step. What does that actually mean, a PO? Does that mean they've sort of said, hey, we want to work with you and we need to understand how your packaging will work so we can put this together for the regulators? Or is it a step further than that? I'm not sure exactly where this falls in kind of the pharma regulatory process.

Yeah. Good morning, Marie. So it is a very exciting and a really important milestone in this process. As we've commented before, we've been in discussions with multiple genetic drug manufacturers as they are pursuing the generic GLP-one entry in markets around the world. And this is a substantive step forward of them several of them, actually sending purchase orders for bulk pen needles that will then acquire and use for their own internal purposes including any testing they might have to do as part of their regulatory submissions. So we are very excited about it. It's a very tangible and specific milestone. That has been accomplished. And we'll certainly share more about all of this at our Investor Day coming up here in a couple of weeks.

Okay. Very good. Looking forward to it. Thanks so much. Thank you, Marie.

Thank you. One moment for our next question. Our next question comes from the line of Anthony Petrone of Mizuho Financial Group. Your line is now open. Thank you, and good morning. Maybe just a follow-up on tariffs. Just in terms of pull forward of of stockpiling, did you notice any of that in the first quarter any of the retail chains sort of buying ahead And did that sort of flow through to in terms of the revenue performance in the first quarter here. And then I'll have a couple of of follow ups. Thanks.

Yeah. Anthony, maybe I'll I'll take that. So specifically about I assume you're specifically talking about The US here. A couple points to note. Right? The tariffs that we have incorporated into our guidance are really US China related. For the majority of the impact, vast majority of the impact. In The U. S, we have historically benefited from certain exemptions that apply to finished goods that apply to our category of finished goods. So we don't really pay a tariff currently. On those products given they are for chronic medical use. We did not see any stockpiling in The US as a result of potential tariff impact.

And let me also point out that really the product that's coming from China into The US is very, very limited to begin with. I mean, it's a low single digit percent of our US revenue. So for all those reasons, you know, finished good product being imported into China just being being imported from China into US has been a low, low number in our US of our U. S. Business and the fact that we do benefit from certain exemptions.

Help us That's helpful. Maybe follow-up would be just on the Type two market specifically. And add the pump companies out there with a decent quarter here. Last night, one reported earlier last week reported. Maybe just like an update on the dynamic between multiple daily injection and pumps, what you're seeing there, And if you could segment the market in type two you know, where MDI is is more sticky, You know, is there a specific segment where you really just see durability there?

Thanks. And thanks thanks for taking the questions.

Yeah. Anthony, the best indicator that we track internally to see what's going on for our pen needle business in particular is the TRXs for insulin pens. Right? That's something that we've been tracking for a long period of time.

And so far, we've seen stability. In The US. Both in insulin pens as well as what we believe the underlying needle market to be and obviously be a better data on insulin pens. Than the pen needle market. Just given that we are such a large portion of the pen needle market. I mean, we see our numbers it's hard to get total total market numbers. And so I would say that's the best indicator. Obviously, we follow what market participants are saying. Also want to point out just the vastness of the numbers, right? We're talking about 15,000,000,000 people on injection. In The US. And you compare to pump numbers, they're typically talking about maybe tens of thousands. So it's gonna take some time. Before any big change.

In before any big changes get reflected in our numbers. Not to mention, that the incidence of type two diabetes, that's still a growth factor here, right? So all these things wash out, which is why the indicator that we most closely track is the total prescriptions for insulin pens. We've seen stability so far.

Thank you very much, Steph.

Yeah. Thank you. One moment for our next question. And our next question comes from the line of Michael Borlaug of Wolfe Research. Your line is now open.

Hey. Good morning. Thank you.

I have two. I wanna follow-up first on the retail pharmacy store closure callout. I feel like US retail pharmacies have been closing stores for a long time.

So I guess what's different about this? Is it simply the scale? And I'm curious if you might name the name. I know Walgreens has announced 1,200 store closures expected over the next three years, but CVS also has a large program too. And and Rite Aid, I think, is dealing with BK. So if it's worth spiking out the brand, I would I would appreciate that. But any further color on why this is different given kind of long running trend of of store wind downs?

Yeah, Mike. I think it's the scale.

Respectfully, I'll avoid naming any specific customers. But it's really the scale and the pace at which it could happen That's the reason why we called it out. And like I said, we saw a change in the buying pattern for this distributor that serves that particular chain. As well as serves other customers. And we just wanted to make sure that we were prudent in reflecting that as we thought about our guidance for the rest of the year. Now, as you saw in our guidance, I mean, in spite of that, we did raise our adjusted operating margins and adjusted EBITDA margins guidance either So everything that we can control to ensure that we still pursue our priorities of maintaining profitability and paying down debt we are absolutely going to execute on.

For the follow-up, I want to ask on the new efficiency program that was discussed here. Where is it is it focused? What are you doing? And the, the savings number, 7 to 8,000,000, in the second half, is it fair to you know, multiply that by two to get a full year impact as we think about fiscal twenty six?

You so much.

Yes, Mike.

So regarding the new restructuring program, I think if you step back, over the last several years as we've sort of been separating from from our former parent and standing ourselves up, you know, very, very intentionally. We did not make any you know, material changes to the organization. And we've always talked about how we would look for opportunities to continue to sort of right size the organization to continue to take cost out of the organization. And I think now that we are largely complete, with all of the major separation activities, We're continuing to look for ways just to become more efficient. And we're certainly going to continue to do that moving forward as well. So if you think about the cost that we're able to take out, it's it's largely I would say, in sort of the SG and A area. And I think this year as we said, we would expect to see savings of between 7,000,000 to $8,000,000 in the second half of the And I do think it's reasonable on an annualized basis to think about something in or around that kind of $15,000,000 mark as we sort of walk into 2026.

Thank you. Thank you.

You. I'm showing no further questions at this time. I'll now turn it back to CEO, Dev Kuttigar, for closing remarks.

Thank you. As we close the call, I just want to express my sincere gratitude to my colleagues at Embecta around the world. Our global team remains focused on executing the priorities we've laid out. Even as uncertainty exists in the macroeconomic and the global trade environments And then finally, look forward to engaging with all of you at our upcoming conferences and at our Investor Day on May 22. We will share more about our vision for Embecta. Thanks again for calling in and for your interest in Embecta.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.