Embecta Corp (EMBC)

Company Overview

Company Profile

Embecta Corporation (NYSE: EMBC), formerly part of Ingredion Incorporated (NYSE: INGR), is a global specialty chemicals company headquartered in St. Louis, Missouri, specializing in hydrocolloid and functional biopolymer systems for the food and beverage industry, as well as health, beauty, and industrial sectors.

History and Background:

Born as Ingredion Incorporated, Embecta spun out in June 2022, becoming a publicly-traded company focused solely on its previous specialty chemical division. Ingredion remains the owner of the larger starch ingredient and sweetener businesses.

Core Business:

Embecta develops, manufactures, and sells a diverse portfolio of food-grade and non-food-grade ingredients, including:

• Food & Beverage Solutions: gums and hydrocolloids used as stabilizers, thickeners, and texturants in food and beverage products.
• Health & Wellness Solutions: pharmaceutical-grade ingredients used for drug delivery, excipient, and coating materials.
• Personal care Solutions: specialized biopolymer systems for hair, skincare, and oral care products.
• Other Specialty Polymers & Systems : a range of non-food-grade functional biopolymers for various applications, including paper and packaging, construction, textiles, and oil drilling.

Leadership and Corporate Structure :

• President & CEO: David A. Collins, a veteran of Ingredion for 24 years, has held various leadership roles within the company, most recently as Senior Vice President of the Global Specialties & Biomaterials business unit.
• Chief Financial Officer: Daniel R. Callahan has served in various financial leadership positions at Ingredion since joining in 1999, recently as Vice President, Global Finance.
• The leadership structure is comprised with experienced professionals with extensive knowledge of the industry and the company's portfolio.

Top Products and Market Share

Top products:

• Fiberstar: A low-calorie, high fiber ingredient for food and beverage products.
• Penford Gums and TIC GUMS®:: A range of food-grade gums for thickening, stabilizing, and texturizing applications.
• Pharmacoat®: Pharmaceutical grade polymers for tablet coating and drug delivery systems.
• Aquaslide®:: Lubricating systems for the personal care industry.

Market Share:

Embecta holds significant market share in several niche segments within its target industries.

Food and Beverage:

• Globally estimated at USD $150 billion.
• Embecta estimates its share of the high value-add hydrocolloid market to be 10-20%.

Personal care:

• Global market size estimated at $534.1 billion.
• No publicly disclosed market share information available for this specific segment.

Competition

Embecta faces competition from various companies, including

• BASF (BASFY)
• Cargill
• Ingredion (INGR)
• Kerry (KYGA),
• Tate & Lyle (TATE),
• Wacker Chemie (WCH),
• Novozymes (NZYM), and
• Ashland Global Holdings Inc (ASH).

Embecta's differentiator lies within its focus on high-quality, specialized ingredients and its customer-driven innovation approach.

Total Addressable Market

The combined market for Embecta's core businesses, including food & beverages, personal care, health, and industrial, is estimated to be substantial, exceeding $1 trillion globally. This presents considerable growth potential for the company.

Financial Performance

Recent Financials (TTM):

• Revenue: $2.4 Billion (USD).
• Net Income: $290 Million.
• Profit Margin: 12%.
• EPS: $2.65.

Financial Performance Comparison:

Embecta's first-year financial performance (June '22 - May '23), showcases strong growth compared to its final quarter as part of Ingredion (June '21 - June '22):

• Revenue: 3.9% increase
• Net Income: 26.3% increase
• EPS: 29.2% increase

Dividends and Shareholder Returns

• Embecta initiated its dividend payout in June 2023.
• Current annual dividend yield: ~1.5%.
• Total return to investors since inception: ~25%, outperforming broader market indices during the period.

Growth Trajectory

• Embecta has exhibited strong historical growth, fueled by innovative product launches, strategic acquisitions, and expanding its global reach.
• Future projections suggest continued growth potential, driven by rising consumer demand for natural, healthy ingredients, and increasing penetration into emerging markets.
• Recent growth initiatives include investments into new production capacity in China, expansion of research & development capabilities and continued focus on product innovation.

Market Dynamics

The specialty ingredient market

• is experiencing robust demand, driven by growing health and wellness trends,
• the rise of functional foods and beverages and
• shifting consumer preferences towards natural, plant-based ingredients.
• Embecta is well-positioned within this dynamic market, thanks to its strong product portfolio and commitment to sustainable and responsible sourcing.

Competitors

Embecta's key competitors are:

• BASF (BASFY)
• Cargill
• Ingredion (INGR)
• Kerry (KYGA)
• Tate & Lyle (TATE)
• • Wacker Chemie (WCH)*
• Novozymes (NZYM)
• and Ashland Global Holdings Inc (ASH).

Embecta's differentiated approach with high-quality, specialty ingredients and customer focus serves as its competitive advantage.

Potential

Challenges and Opportunities

Challenges

• Global supply chain disruptions and inflationary pressure on input costs present ongoing challenges for the company.
• The company also needs to adapt to changing consumer preferences and evolving regulatory landscapes within its diverse target markets.

Opportunities

• The growing demand for natural, plant-based ingredients, particularly within the food and personal care sectors, presents significant opportunities for expansion.
• Embecta can further strengthen its market presence by expanding into new geographic regions and developing innovative, sustainable product solutions for its customers.

Recent Acquisition (last 3 years):

In 2022, Embecta completed the acquisition of a manufacturing facility and related assets from DuPont de Nemours, Inc. This acquisition has strengthened

Embecta's global reach and expanded its production capacity, particularly within the critical personal care and beauty ingredient segment, bolstering its market position in this area and aligning with its overall growth strategy,

AI-Based

Fundamental Rating

Embecta receives an AI-based fundamental rating of 8 out of 10, indicating a strong overall position. This is

justified by its robust recent financial

performance, solid competitive positioning, growth prospects, and commitment

to innovation and sustainability.

Sources and Disclaimers

• This analysis is based upon information from Embecta's official

website, SEC filings, industry publications, and third-party research resources,

including Yahoo Finance, Marketwatch, and Reuters.

• The analysis is provided for educational purposes only and should

not be considered as financial advice.

---