We’ve done significant work on preparing the filings. We’ve been closely cooperating with BD and providing them with all the necessary information. We anticipate that the filing will be made soon. And certainly, we work with them to make sure that our filing is well positioned. Obviously, I don’t want to comment on the review or outcome. We don’t want to get in front of the IRS. But suffice to say that we have contingency plans, and we’ve incorporated or tried to be prudent in our guidance in contemplating the range of potential outcomes that can occur in ERP implementations of this sort.
Marie Thibault: That’s all really helpful. Thank you, Dev.
Operator: Thank you. [Operator Instructions] Our next question comes from Michael Polark with Wolfe Research. Your line is open.
Michael Polark: Hey, good morning. Thank you. I have two, one boring one on the balance sheet and then a question on the patch pump. On the balance sheet, Jake, really appreciated the comments about the factoring agreement. We noticed the step-up in AR. Is $100 million a good level of AR for Embecta to carry or would you expect that this number to change one way or the other as you move through the transition?
Jake Elguicze: Yeah, Michael. I mean, I think there could be a little bit of variability in the coming quarters just as we bring on for first, obviously, 60% of our revenue in the US and Canada and then the remaining 40% over the next several quarters. So we could see some variability from quarter-to-quarter. But I think right now, our expectation is that as we move throughout the year, we start to, in a more meaningful way, start to collect that cash that is now sort of sitting on the balance sheet in terms of AR during the remaining quarters of the year.
Michael Polark: The follow-up on the patch pump program. The question is on the production side. Marie asked about R&D. I appreciate the comments there. But I imagine in parallel, you’re thinking about how to create a production environment to make a lot of patch pumps and been looking at some of the incumbents here. It’s a very exquisite process and takes a long time in dollars. Where are you in that? I know you’re not — you’re reluctant to comment on timing of all this, but I have to imagine there’s some kind of planning going on for commercial production of this product. And I’d love to get a flavor for how you’re thinking about that and if you’re putting CapEx dollars to work today on a project like that?
Dev Kurdikar: Mike, this is Dev. Good morning, thank you. And you’re absolutely right. We have been working on commercial production of the product for a while now, actually even before the submission was made. I would say there are three specific things that we focused on. Number one is recognizing that there is expertise in production that may be not inherent in the company, we went through an RFP process and selected a contract manufacturer that could help us with production. That’s sort of point number one. And we’re working with that contract manufacturer now for over a year. The second thing I would point out is as we were designing the pump and going through the product development process, we were well aware that manufacturing of a very complex precision engineered medical device is going to be something that is going to be critical to the long-term commercial success of the product.
And so we embedded design for manufacturability thinking in the product development process itself. And the third thing I would say is at our R&D side, we actually established a pilot production line and manufactured ourselves, I won’t give you a specific number, but let me just say, a fair number of devices that we used in the testing that was used to generate the data as part of our FDA submission. With respect to capital, I’ll let Jake comment on it. But obviously, there was some capital spent on the production lines that I mentioned — at the pilot production lines that I mentioned at the R&D center, but nothing unusual. Jake, do you want to comment anything more?
Jake Elguicze: Yeah, I would agree, Dev. And, Mike, I think from a CapEx standpoint, for our fiscal 2024, we would expect total CapEx, and this is sort of inclusive of the spending that occurs as it relates to ERP to be somewhere between, let’s call it, $50 million to $60 million in 2024. And that’s probably 60% or so focused on sort of the Software as a Service capital cash spend that actually shows up as a reduction of cash flow from operations in our cash flow statement. And then the remaining 40% of that is showing up and appearing on the CapEx line within our cash flow statement. So somewhere between $50 million to $60 million in total CapEx, I think, for 2024.
Michael Polark: Thanks for the color.
Operator: Thank you. There are no further questions at this time. I’d like to turn the call back over to Dev for any closing remarks.
Dev Kurdikar: Thank you, Michelle. Before we conclude the call, I would like to express my gratitude to all my colleagues around the world. Our results truly are a testament to their continued relentless focus who are developing and providing solutions that make life better for people in with diabetes. Thank you all for attending our fiscal earnings call — Q2 earnings call and for your interest in our business.
Operator: Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.
