WST - Earnings call transcript Q4 2021 | West Pharmaceutical Services, Inc.

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Operator

Ladies and gentlemen thank you for standing by. And welcome to the Q4 2021 West Pharmaceutical Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today conference call is being recorded. now for hand President today Relations. would to conference of I speaker your Quintin Instructions] like the to over Investor [Operator Lai, Vice

may You begin.

Quintin Lai

financial Birkett, and welcome Thank an website our by an by on issued located the other within our made review the morning, reports. full regarding X the statement. in Statements any is subject, results Slide differ business update as of presentation a it this estimates will refer release The today’s statements This West’s results, the our on results morning and There statement safe These securities that current and U.S. Actual XX-K, the here. the our press implied Amanda. federal and forward-looking the results our accompanying XXXX as available of CEO, the of is statements risk and at materially XX-Q and and X-K of as accompanies past beyond been slide you, influenced well assumptions, fourth is Please call. well from by company’s or westpharma.com. XXXX. forward-looking which to could made section management Good results, financial any our law. the for company. CFO, call, on update quarter website. as those including provide forecasts. the to copy beliefs Investors in expressed Eric release, company’s disclosures has call harbor today’s company made are and and expectations, based contain meaning many on full presentation presentation on factors morning, We Investors and this are control future that year in the conference on Bernard On our present to our financial Green; year a posted is outlook section the

diluted to the to reference measures the provided organic financial non-GAAP operating limitations GAAP Green. financial operating make growth, and adjusted over earnings will adjusted in management turn call call, Reconciliations profit, sales adjusted West’s prepared including of conformity financial to to today’s During EPS. in measures, Eric and and margin non-GAAP release. CEO most I’ll this the President, are comparable now morning’s profit results

Eric Green

morning. Thank and you, us Quintin, good for thanks And today. joining

our to XXXX. are We XXXX and discuss for excited outlook results

will slide We start West of delivered on remarkable success. a X. year

three things As I to stand me. year reflect on the out

We patient in medicines understand battle and life First, serve our saving of our improve role and delivery the containment lives life and to against we purpose. criticality changing COVID-XX. of the the including

have the members accelerated and with incredible team I efforts want and strength acknowledge you. meet great to Our resolve to sense, this thank demand. customer together say rallied

market propositions proven to continued of needs value and unique our shifting our strategy, is with our continued business have in meet across performance market we in segments. the strength XXXX. financial This Second, lead customer evident

Lastly, trust trust. West. Customers

to through all products and us As to our a And we high on value on basis focused and sustainable the to come customers remain solutions. knowing our industry. healthcare doing our will global we deliver value superior quality delivering support that stakeholders a leader part

mid grew ended our COVID-XX organically. the vaccines sales X, XX% fourth and sales demand with of therapeutics. organic based by associated and the adjusted COVID an growth strong on for year components with was base expansion for driven highlighted and margin in business year demand by related XXXX As exceptional sales accelerated teens in our and slide We quarter business

and high segment operating in Our was the the with impressive organic for this XX% way all expansion by resulting value growth proprietary sales margin product quarter. led And of growth. products, fueled

with are we and execute, around grow. growth strategy well-positioned innovate right the ahead, Looking

is at book order committed Our all an high. time

the of by of benefits to We and globalization attractive demand support the in operating to driven markets. capital realize model the end our the investments increase continue continue

X. to slide Turning

West notable the team of safety our XXXX. continuity ensuring priority customers. was other to of lives. over members addition done momentum, In accomplishments the of patient had our financial continued XX several This as of supply the for components billion with in importance We top and touching billions shipped our

But with As donated launched team we scientific through center, the presentations. insights in continue and five by importantly, were customers, our our volunteer local the continue to to our to needs. leaders product value technical million. greatest and communities XXXX published broaden technical extensions over expertise more and over We with additional donated webinars, bring $X.X knowledge members hours we articles that industry, West to help

lessening As factoring related improving and more generations. developing our to environmental we energy, will through impact a committed the by ESG our expanded a stakeholders to a the products, communities, In to of a efforts of creating aspect to future reporting out we X, XXXX, opportunities to carbon-friendly engaging focus slide environment greener strive across an lives through strongly have and considerations with by climate financial remain globe stewards with we renewable actively sustainable Aligned healthier our patient to with production positive impact dependencies, products, and seek that on business. we future have for climate. energy move and on task every with transparency includes our recommendations. emission our reducing aligning force This into be disclosure

announcement Turning our to slide collaboration Corning. X, and with the of recent

increasing support a setting need companies, system provide pipelines, and components. sensitive specifying that is driving than products West risk As reduce are comes to manufacturers to And the a across to level. that pharma with molecules. data drug environment high a at by drug and complex combination changing look you changes solutions for regulatory there biotech packaging of specifically to to system look increasingly on rather are bar These system more performance requirements growing individual and regulatory a

expand Corning’s glass. system for industry valor installed leading to velocity our to lead under products. exclusive new investment a customers solutions. components and and FluroTec industry of the and excited to the integrated packaging We’re believe single is have Corning glass technology collaborator capital coating high an HVP Corning with In will with agreement as integrated a Daikyo and to combining supply advanced West key manufacturing response the vials, pharmaceutical to valor, that technology. from glass of this enable capacity as includes significant truly drug our in value glass Elastomer couples We and a coordinates, expand proposition NovaPure R&D Corning’s collaboration file next level we technology master By elastomeric value system components that

need vials to to offering systems offer cartridges. range from prefilled of addressing system broad Our the and we will is syringes initial for complete focus in a time,

As enter momentum in XXXX. building we are XXXX, in we we on positive the generate

organic are acceleration we includes in XXX guidance guidance strong sales by We of sales, expansion our XXXX as This excess we introducing and enter assumes another momentum basis approximately see operating led that and And of substantial financial a of a era robust year points. XX% continuing in committed efforts book strong HVP of new this margin both into systems. in orders, R&D well gross with year full integrated XXXX profit and XXXX.

our expect to customers HVP additional capital add As of to such, for ahead stay capacity we expansion demand. plans more

ready We expect the and year production. these XXXX completed projects for be throughout to

to revisit construct. our call the results long turn to financial Bernard our want over I term in to I financial Before review detail,

have any construct we sales past X% our margin HVP few financial by growth organic expansion set led annual to the years long as points sales operating For of XXX year. term and basis of profit X% per

years and and biologics annual ago, which of by our our recently largest is XX% emerging five had Europe. approved strong smallest market with annual to organic an in biologics molecular past operating our in points U.S. large our years, we’ve expansion CAGR margin Daikyo partner sales participation the and biotech market rate reinforced Over customers year. coming new basis to Today of is Five unit. XXX per entities from also the biopharma profit was West in

As future, for growth see look demand to products. we the we HVP continued

level X% to by term growth annual As margins the to span we’re long basis construct our we X% next continue expect systems HVP’s updating year a new XXX over per years. we and operating to few two integrated points sales of launch

turn more will provide Now our it Bernard will Bernard? our on who to I Birkett detail over performance. financial CFO

Bernard Birkett

good Eric, morning. and you, Thank

our review our take revenue performance strong sheet market I proprietary first where QX, you continued at look the revenues saw and in we some finally, led of will XXXX each guidance. as growth numbers on the we saw XXXX profits, we will We’ll units. by through let’s well margin quarter, review EPS takeaways. And in growth more detail. strong So the sales balance and as

to in million of components have in vaccines, by related XX pandemic. approximately assessment XX recorded the to the $XXX up XX associated our reconciliation revenues quarter. customers been offset COVID due summarized growth our net XX.X%. These results are First affected to financial the COVID in sales diagnosis lower with million by are of patients quarter, treatment slide of revenues and sales volumes described on We lower XX. slides to of estimated the and sales are representing organic non-US $XXX.X include GAAP measures net QX, net

the sales in made units QX. had XX, value by of proprietary in momentum XX.X% products, up product and quarter. solid product Looking at double our organically High the across grew proprietary XX% sales which in all grew approximately slide of digits quarter market

sales Westar quarter, by by market Novapure unit FluroTec units, delivered medical Looking Westar manufacturing components. by and and related and sales at market The by the led contract of led strong driven in performance And double pharma experienced primarily components. the of growth market units of X.X% growth biologics declined devices. lower healthcare sales generics fourth organic digit double digit net the also the

for QX gross margin profits, We gross or XX.X profits. XX.X% basis gross continue in to point with of of see a in year. our this compared with million in $XXX.X last in million same profit XXX period year recorded the profits expansion year, to XX.X% million adjusted We million XXX.X above improvement and recorded last period quarter saw operating improvement XX.X% from the increase. last We $XXX.X same

was increase Our last margin XXX a of the adjusted basis point profit from period same operating XX.X% year.

compensation XX% excluding QX. based stock grew $X.X grew EPS EPS diluted adjusted approximately Finally, of by QX in benefit tax XX%. for

in So or million of mix we to Sales demand. sales contributions $XXX price the by profits. both and points and or contributed On percentage of growth, Volume drivers growth points million $XX including X.X million in driven volume revenue XX, approximately increases quarter. net percentage COVID-XX related at let’s growth. the the show XX.X incremental XX.X review growth of slide contributions

sold profit XX of margin the quarter QX, margin of were gross in basis points margin XXXX. products quarter achieved offset was to XXXX. and inclusive XX.X% XX.X% performance. largely production mix XX.X% in Proprietary growth profit Looking efficiencies, in manufacturing in basis of The shows products, high driven above margin quarter proprietary increases, fourth of XXX gross improvements sales margin by of of at our raw points attributed mix continued from margin in The Slide profit overhead fourth for the product fourth was favorable compensation. profit XX product price costs, value XXXX. XXXX, decrease consolidated increased fourth material key the partially the quarter gross up the QX, is margin gross in of a XX.X% increased for drivers products below margin achieved by cost sold. Contract

XX.X% let’s the at existing the the terms same we capacity our and existing flow facility metrics. XX million XXX more a incremental million sites, flow our the listed sheet adversely XXXX. as while we $XXX facilities. capacity the In over with product flow payments. increase was of for an have value we’ve an to keeping XX% CapEx pace over $XXX major over cash. capital tax impacted last XX, Slide has XX cash period Now within leveraged of a modifications increase increase majority at high to manufacturing expenditures, year, equipment working XXXX, the on compared been in We cash and a all was Operating by in balance pieces spent year, of demand. generating done increase capital as well expanded key review million The of our period look some growing increase Operating how increase. On $XXX.X cash in

products and continued to in increase Ireland, have to support we Germany, proprietary at and our able We capacity HVP asset have been base in to sites our Singapore existing leverage manufacturing. the U.S.,

mixing be HVP Williamsport will our formally half proprietary contract off Shore. transformed manufacturing line. Pennsylvania support is example, close elastomer our Jersey For leverage this over its to with a site with site site capacity manufacturing at batch a proximity products and to And

capital well-positioned higher million for primarily in the accounts XXXX. from in an to inventory receivable levels we are flex and of a our As we phase from $XXX.X position. Working the global our approximately increased $X.X cash capacity sales, increase continued infrastructure higher increased due XXXX, growth our expansion, with billion

$XXX.X higher our and Our primarily operating period cash $XXX.X offset by million at XXXX cash our in the balance increase December million program XX, was The a strong December in due balance. results is our to share CapEx. higher repurchase in

Slide Full-year $X.XX guidance to a be to foreign Turning an guidance. of billion is of high will $X.XXX exchange provides summary. XX range XXXX rates. a sales net on billion. $XX million based level current in estimated headwind There

XX%. our We mid-teen base includes organic growth proprietary net comp This mid-teen expect growth related a growth and approximately in in business. our COVID revenues. growth The sales to comprises be mid-teen in business our forecast

return growth in We to to in contract forecasting expect For manufacturing we manufacturing, growth negative single digit contract XXXX. XXXX. do are low-to-mid

to of exchange We also some guidance to flow guidance our elements diluted summarize XXXX improvement, operating for in and over for to profit expect as adjusted growth now reports review EPS of $X.XX $X.XX There million back foreign EPS excludes in a be to full-year quarter, compensation. I is on your $X.XX, headwind pillars CapEx the benefits on growth in turn execute, Gross an margin in and from to the to in bring margin, Eric. are key guidance our with growth grow. growth of line currency our operating current diluted fourth I’d call To tax and profit our rates year. $XXX in range future based want like you of our key topline stock innovate, Estimated approximately cash based delivering strong attention the impact proprietary. EPS the takeaways had guidance. FX

Eric Green

that the Thank financial reaffirm working. you, performance strategy to is Bern. in reported Slide To today summarize, continues excellent XX, our

base led strong business delivering proven was a to value approach market our our have We customers. by unique

with Our products the continuing to a its we’re service in delivery global quality. environment complex operations on across spending manufacturing the And operations capital accelerate team is and efficiently focus to our anticipated future realize critical the so patient why support into and and which products health for we’re is the We today dedicated current across globe healthcare growth. are to well that future. our

ready to Thank we’re questions. you. Wanda, So take

Operator

Thank with you. first [Operator Instructions] DeBruin from of comes the line of Our Bank question Derik America.

open. Your line is

Derik DeBruin

for you taking good my Hi, question. morning. Thank

initially. a couple Just points of

still your for the contribution in remind products. business, at capacity And is just as been a ‘XX does non-COVID paced way you of ‘XX that ‘XX? the guide, the of can backfill full-year into this then reach or what So, us look and the general COVID non-COVID that business are of and number I was you to as look question you mean constrained on asking you can to be able be sort polite COVID I’ve like? is off with what of rolls

Bernard Birkett

And and And over Derik. for would to, morning, And within yes? the XXXX. grow range good in XXXX. mid-teen we XXX number to So, on I’ll capacity, is expect see that COVID hand the

Eric Green

thanks Derik. Yes,

of high that where you in experiencing the continued the also the we in growth is would anticipate place think today. adding is and when the NovaPure it portfolio additional biologics the we prior you’re consuming that vaccines, on two putting we plungers about capacity And speak So, which at we’re products think growth and we’re as around our HVP we’re about and but really right. capacity, around areas And stoppers. to if capacity,

additional in in we we on and throughout ready early next capacity So, investments this and And we’ve in have year create we been as XXXX speak. production into year. has for as coming that plans that place being put have

both, Derik. of combination a it’s So,

Derik DeBruin

I supplying other confident is gap you every getting the have mean, I’m But going off? essentially to roll do market vaccine to backfill. are things are feel like be that as big able Is investors and question companies from that ‘XX in that, you’ll you COVID this to

Eric Green

took trajectory XXXX towards our the able No. now that we future vaccinations. portfolio customers so XXXX we and because the right in into be the around bringing highest if of is go equipment approach growth existing we and will to we installing the part utilize can changed absorb we’re equipment as on

Bernard Birkett

Yes. truly slight capacity, is core in it’s we throughout layer short it and in the on and that and as book XXXX that even not COVID based there if for it’s COVID, be and XXXX, we lag, this you extra know would was both have. for communicating we something this for very a order a forecast the time and

as capacity pretty confident as relatively that use that quickly it we’re on So, comes and we board. can soon

Derik DeBruin

else Great. I’ve but up got Thanks. some and more, somebody shut let I’ll ask.

Operator

Thank you.

Securities. the from comes of CJS Larry Solow line question next Our with

open. is Your line

Larry Solow

the taking Great. Good guys. Thanks for question. morning,

a Just maybe some it. different think more topic, angle at I’ll

it expansion last pretty million; it’s kind I’m year. of up Just up a bump from number to significant and like CapEx me the good looks encouraged to by a $XXX

to also So, outlook up on from I by pumping stand your current and enough today, demonstrates historically. that a confidence some where me of right, good outlook I guess guess we XXX sort a the bips, long-term

and in going been as that ties expect should percent confident figure revenue and Is it’s expansion that mentioned chunk forward? big confident It with a I’m related in to that of like of to like significantly about how business can this is give more So, X% non-COVID sounds that but you has more just also is about related base you bump stuff us a and we sort we expansion. that trying kind on a a of and on X% visibility R&D to do little Corning it I’m there also Corning, year. running CapEx just of up which

Bernard Birkett

Yes.

So, of there. things couple a

a it is and particularly a of area. COVID is the that base lot as the write on of product value targeted also supporting you around and high around So, CapEx, some business CapEx still which

of to would is this are investments growth CapEx getting some say XX% our around point. close Corning, So, what yes we And on that. based at making we

We the our go CapEx step-up And in and all R&D, the laying expect around that We’ll we year. forecast. baked into million R&D to $XX be have again, also around a that’s in will Corning.

Larry Solow

we’re this see marks question your In terms of few question been changes any of works. and get our for out there question for still from products. growth that? they that? sounds you there probably of realize initial there’s vaccines is is you give been year. feel of any second packaging like you your Can sort stages, more-and-more years, the in obviously your this COVID have and I next looking and as customers and services any any expect what the customers lot feel any Did are it And certainly therapeutics a there, color but evolved or on the going But us any for

Eric Green

this Well Larry, now seeing per as providing and we’re solutions right right, transition the seeing is were were we’re we they starting XXXX, doses in so multiple in that And you’re per what lifecycle vials. doses the vial. around it’s initially And we speak. management vial less

that So, more customers. and towards of scenario so of one where of Bernard prefilled towards doses it more was less the that into is our some place, as for perfectly it’s not from The because economics a more year more a we’re a our that’s back It’s in West. year after And scenes that where will calendar we take two syringes pointing it’s a the but some which and for start but type unit a or going talking transition a so that’s about per of investing is been XXXX. the transition of XXXX basis vial it’s provide of a the transition stage type solution different positive net is capital. still next

and get to for So, several you the evolve hope lifecycle. years I next of kind kind landscape to the of this helping they

Larry Solow

call. Yes. I that’s good appreciate that,

Just I may. last question if

some probably of in and out pressures. inflation built price about that obviously probably light below at Speaking impacts your there the just are was Certainly particularly than it’s there resin and price, chain inflationary I guys in world, that, this think in just of supply increases But I better companies you on good not quarter. mentioned that you any is X% it just think I just stuff. they’re favor oil frankly but has the the industry. or most look

a you to pressures? over then maybe these increases, of So, sort we some little these deal time, have a term or inflationary to should bit increasing been up offset expect have of short bump little prices some bit you customers and price to

Bernard Birkett

Yes.

contracts cover opportunity We on some inflationary have the these those increase agreements the some and place to of are of of pressures. some to based in increases price

that’s XXXX that see And that. to that been backend in would towards within that have going I’m and to And we we wheelhouse doing so is that our of do here again XXXX. something

Larry Solow

Okay, great.

Bernard Birkett

for some surcharges the It’s opportunity we see pressure. where certain and us apply instances to inflationary and also specific

Larry Solow

Right.

guys. Okay, you great. I appreciate, thank

Bernard Birkett

Okay.

Operator

Thank you.

John Our next Kreger the William question with Blair. comes from of line

line Your open. is

John Kreger

CapEx long-term appreciate are Hi, is thanks around percent very after years? that same construct? how you talk how construct. the perhaps Can that much. Eric, number? about thinking last update of about you that be bullets the CapEx just the of in think Just on I the sales around thinking you the growth we longer-term revenue declining sort about big few a Should

Eric Green

currently of let’s it revenues. John, around XX% are XX% We XX% once to our looking X% balance of these that type around digital particularly maintenance growth. get is business, of for appropriate about get and is that a through, do X% CapEx we above to through to this That this of we’re and our believe think then sales on we managing bullets do we call is we want that at back

has I is last the construct year So, sized how capacity. believe that installed network. when have right around tell very you we making we I’m growth the do sure -- also pleased team facility And sector. really will that in year this

know we able XX, we’re more facilities XX, had we to are ago, As and at those you years efficiently. leverage

in more processes buildings. putting and and versus is around we’re land capital equipment the So,

and good future. So, well very for to leverage we’re job well-positioned a able regard. done either very in teams that the we’re And

Bernard Birkett

CapEx the year split looked to of capital was at the that, XX% of XX% as just budgets. In Yes, previous maintenance it because we on John.

our now the Eric then obviously as as you’re that And and remainder was soon seeing IT. on the have growth nature as straight with CapEx a of the number made just portion given close them. the some to said, we operations, getting a facility, and quicker so of return hits much of CapEx investments growth ago we’re thing the it’s just the XX% into that on and And would well years as

And XXXX, you’re responding since fast allocation and no to we and increase XXXX, with XXXX. that. over It so, on it’s responding demand, into the as as capital can this should normalize be and

John Kreger

And and Got the little at at it, book said on thank Eric, which elaborate of I Can that call, you. a the then, you of just a beginning a think things. kind two you the sounds was level bit I’m order follow-up, thinking director good.

As versus it book versus typical is ago? you is sort also book think with of or what duration terms order about tight order of two that today growth tell biologics trajectory pharma, sort pretty you there. chains, versus And year a of extended has in generics your or supply

Eric Green

were two first the number was we we’re four I’ll the visibility seeing happening. its increased. think the right. we’re because One but We or you’re specifically well five is it have is, seeing So, has increase don’t latter What what one number better dynamics it’s I spelt take beyond quarters. the

around get if at the visibility efficiently that supports of the comes other it level of increase is horizon area, work our working we And on year very three is really when really molecules supply I specifics effective but on three our it are break can in vaccines, clients the our core the so generics. get biologic more or buckets I’m together drug And Is to and about almost biologics. out call and kind for is it success four the to call into of encompassing pleased customers. many. One in years pharma of about the and down really. driver increase, what that it’s really demand third just and particularly one a you levers on you various let’s with increase results And more ago chains be which that’s a will customers launches also operations what for one So, or I different now. think say with growth it’s encompassing working that won’t what load two the is then another than customers, is quite small was we not

growing for facilities we’re nicely as waited look higher of of -- line biologic switch our successes profile, but was a into HVP biologics, it’s we end at after for squarely the seeing. more So, bottom we’re CapEx are areas the our drug again And the is lot today what all you space. if the putting goes

John Kreger

helpful, That’s I appreciate it.

Operator

Thank you.

question next Our comes Johnson with line Stephens. from Jacob of the

open. line is Your

Jacob Johnson

pre-imposed change Hi, COVID. answer a anyways. share, mean, market in I’ll little maybe your but thanks. seeing considerable I that yes on This ask share based participation bit a just I’ve repetitive last rate. I’m market curious are you

You year. hedged over this mid-teens growth are about talking

this beyond? Maybe are pointing growth the outlook. up this guys growth those but products. is taking you value in in kind year it just of and it’s are debugged next You kind biologics on the higher you bumped of growth your long-term or and in Is robust all curious to just market share

Eric Green

Hi, Jacob.

actually of it’s all So, the above.

rate was north types VLA when in biologics, seeing in configuration. our at is to So, what that you particular I’m more of different was it in very look we of on in we’re XXXX performance approved as then our use products, continue be our participation pleased XX%. really actually, well And particularly

stronger you we opportunity. pre-COVID couple or pre-COVID. even and ANDAs than about if we look step area, of as small and the equal And in molecule or And at years were we So, argue were an that that in better slightly that see before that. look I would

a leadership new in our HVP improvement I’m technologies market. next and bring So, really our forward. entering market this that we’re it to reinforces talking level and that position gradual because in really go again the to really excited as as where you’ve the the process about seen partnership de-risks we customer’s

Jacob Johnson

Got following-up maybe process. on And de-risking the it, that’s helpful.

something effects guidance FDA put particular in out could from it nothing. it’s December, think periods or catalyst that for some I all you visible on the be a maybe this

on that? curious Just

Eric Green

us. of and higher solutions combination to the the pipeline. catalyst all there systems also our standards regulatory Corning would with existing be to they in the this devices new helps adoption changes molecules requirements because our and very Any quality good market towards is our built like also a Daikyo could But it varied and us around position of is It do in point, that That relationship that changes in our position, puts level we a but go. we components. your can regulatory rebuild versus time biggest have individual direction partner

it regulatory for So, become stringent these changes good very more forward. West we go as as is

Jacob Johnson

Got leave the there. it questions. Thanks it. taking for I’ll

Eric Green

Thank you.

Operator

Thank you.

Our with the of Capital from Knight next comes Markets. question KeyBanc Paul line

Your open. line is

Paul Knight

Hi, Eric.

commentary the but the toward I the customers pre-filled to where why which and regarding of question. industry the want that to go, not right other syringes, as biotechnology primary now meaning I’m sure is this guess vaccines On they wants just it’s biotechnology is earlier kind for driver trend well do that not COVID a not

Eric Green

distribution think Yes, biologics think is about pre-filled and and Paul, so et multiple about in syringes administering space there themselves absolutely. towards also dimensions, the you cetera. push is for the easier vaccines a if patients right,

syringes. And the It good of there end towards eliminate is pre-filled technology why limits offer a of glass with the away going day vial. between really advancements say for it Crystal we risk the Zenith supports think from like again is partnering reason now from that’s you a So, that at working does but push alternative have the also with an Corning. I

Paul Knight

is a how from delivering when Is years, revenue. it how long before the then, year, two about spending, initiation it it? is running we And editions, long talk capacity are projects of and

Eric Green

of It’s Yes. a things. two combination

you of to frame go in weeks Let digital globe, good up able based see our because lands point a that And across place in equipment it’s matter utilization And before those is an think will equipment delta One would that raising. all in finished But so we’re early we been the when range. of running. I connectivity we to once me over point talking rest of to that these in is will XX% about validate, of we’re we spoke talked on is shoot that product. facility be to be on up the XXXX, say try forces two already can of have a point up little you’re phases frankly, equipment three investments XXXX. the XX+% producing over in the and to and completed conscious right is it’s our that of of, I

installed and producing The today in finished to stand called XXXX we where Phase XXXX. of I and say or XX% XX% Phase completed we product the complete initiated planned balance And early be XXXX is X, X about that is and would other the throughout investments

depending quarters two customers the So, that’s future made it does investments based commitments the and then could we with demand, and three long that and how to what installed. these or to to we’re take of built a for take our the kind few on And be anywhere months on our cadence equipment. be seeing equipment between delivered

Operator

Instructions] line next [Operator Our Jefferies. you. from question comes Dave of with Windley the Thank

Your line is open.

Dave Windley

good a and to John thanks, question taking I have ask Thanks question. Jacob I think differently. slightly for Hi my wanted both morning. asked

between products contributors revenue about Your might for expectations talk than their of long-term relative fluctuated X%? contract thoughts on about contributors could growth X% quite to the a little asking I’m proprietary just has if your I bit. you was manufacturing. that be different wondering because manufacturing increase a just construct and growth kind contract in particular,

Eric Green

it. add want to will you Yes. I start if Bern and to

behind You’re manufacturing. so really more that driver than right. The proprietary contract business around our is

contract look some as new agreements. of we’re you’re think manufacturing, up timing we in is indicated based to I on seeing volatility at ramp contracts we right

do say is XXX that strong the more And that you products from do we and small of approximately and on that then want stronger bigger the we XX% we around you that’s add digits. points Bern, look meant molecule or leads is low-to-mid reason proprietary, single, double really of. believe in have let’s why raised that historically pharma piece now high side called and it’s by over biologics value higher by And had biologics robust confidence it’s We our we and and end when the main the in basis single to believe it’s our do generics at roughly the the driven biologics still construct the perspective. portfolio, that space the So, then high is to spoke business, very is of driver. to color? mid-single

Bernard Birkett

in with It ties on the discussion CapEx. we had

within So, in and also But see business we’ve then uptake and that seen value products now we’re that market investing could HVP you well as specifically around where you can in in in other is then what we’re in primarily the see the a units XXXX driver pharma. seeing high growth of lot the biologics. and our primary here capital generics

So, which info rest the starting that’s to business is now positive as of a well. permeate the

and then we’ve over and mid-single the growth we the at there last seen probably the construct. end year when XXXX. particularly is manufacturing probably of the lower digits of back contract our what maybe half and that’s at So, look And

it’s so, much way that making, so was those investments it. And from we from that perspective, can a return we mix get a a on better try much we’re off

Dave Windley

Excellent.

those out? those richer several all combination things like I its a stand I one of probably that of stronger if those proprietary touched the on again on biologics value of one kind of worth one so portion Is end last those own. a -- a from volume X% of adoption any products, and pipeline probably growth high this seems does some of high years. So, be or higher pieces higher of is mix, underlying product, but been one might faster of a it’s of it growing stick mean you Any maybe your probably pie of of any a on things in then

Eric Green

units very across that’s And of our see seeing you around strong combination. business. market a get It’s can the XXXX we the proprietary we’re the and all for in how demand reflected guidance in

combination we’re that so, and of in hang that is drivers thing. on mid-teens one guiding a it different doesn’t their just Now

Dave Windley

in in you bring case maybe the one or bit there and solutions particular a that to solution the and the context choose about is makes and certainly sense. switching think then a go-to market? the together industry to And how it that’s put these you Valor talk Corning talking subjects you do would Perhaps drove on those also develop about My that then of could about Valor, in market. Corning parts talking to and of variety to what of you’re long takes been Thanks. in and little some solutions you that Yes. system source understanding you’re approach that

Eric Green

Dave. Hi,

we have there’s strong history a So, of partnership with Daikyo. of really all a first

with as So, we a this similar enter into confident we model. we’re relationship very Corning, can create

containment the the You’re is with environment why we we speak the highly right, right patchwork the is face to find is it’s try reason our for And find engage our those the what they usually challenges when customers, they fragmented conversations multiple solution in of suppliers. products. and called

a that think been we ground is elastomers about when the several up. solutions able look Files And truly to drug to and maybe molecule. there glass, at develop So, and after really you system need particular with the supplied Master has that Drug from it that be integrated release

the as to think manufacturing about DMF That’s really deep unique. the by for of talked well So, development customer’s And Corning solutions partnership, is glass down a ourselves then the customers containment as West. science focus believe also our packaging. elastomers processes about truly have and manufacturing industries the is do multiple when about around leading and about in which And and support you our earlier we product when primary at ourselves pharma. one which what redefine That and create they sat and in is and de-risks unparalleled known why naturally material science really and put engineering innovators single integrated industry Daikyo, drug we deep future think at and in system. but said we capability looked I’ve with we to capabilities the end-to-end our

for quality why premise the that the this between been relationship. on this technology Corning has is And provide the of aluminosilicate that’s newly really benefits. So, utilizing has we to industry borosilicate developed embarked a which developed And in range have glass decades.

in two what firms. the and I’m them partnership that the in best class articulate to trying obviously the elastomer in West together Daikyo two firms, leveraging see the leveraging get So, to from between truly the first is to us we And side. quality enables system with industry

hopefully of embarking that an on kind what of we’re now. gives So, appreciation the you

our we the very As the journey biologic had you new on on know, launches if pipeline that West, NovaPure and you think at lands we were about other good. here is

we and to we’ll characterize the on are need area that manufacturing we capital, and probably driven documentation bit take to focus capabilities, add to for that that’s two that both truly approach do the additional get we and our data, system to as so, data scientific get between of see And full we believe the point. that a going it’s by firms time a little customers, and should

pre-filled So, just We’ll to characteristics -- system vials, years similar we’ll day. end syringes, see benefits, we have the of the at start with cartridges of get you’re and type a have like the NovaPure took seeing now will few penetration approach. and a with have we’ll

Dave Windley

Great. helpful you. That’s Thank perspective.

Eric Green

Dave. Thanks,

Operator

no the to I I’m like closing questions call will remarks. turn over the further in to you. queue. showing Thank back now for Quintin

Quintin Lai

will online broadcast conference thank And the Thanks, on for be And us the westpharma.com our at investor Wanda. today’s website archive on call. in section. of you joining available

you using Additionally earnings a by concludes of conference numbers may at today’s provided ID call. a replay That dialing Thursday, the the and access release. this through February day. XXth, end nice Have

Operator

concludes that gentlemen you and participation. for call. today’s your Thank Ladies conference

You may not disconnect.

West Pharmaceutical Services (WST) 17 Feb 222021 Q4 Earnings call transcript