Earnings call transcript Q4 2022

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Operator

Good day, and thank you for standing by. Welcome to West Pharmaceutical Services Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Quintin Lai, Vice President, Investor Relations. Please go ahead.

Quintin Lai

Shannon. you, Thank welcome XXXX and Fourth and Quarter Good Call. to Year Conference Full morning, West's

We call, of a results on our our the Green results, posted located issued full for provide financial westpharma.com. presentation and in our has the at and slide review that on the section been Bernard release an on Birkett Investors our presentation morning, update outlook section This the the business will copy present of website financial an this company's Eric and morning financial accompanies available is our today's XXXX. that update There's a on Investors year website. and

harbor of U.S. on in our the any risks differ Slide subject, well as or which today's as These company. release expressed from influenced made made forward-looking disclosures our presentation those including estimates as by by many Statements based contain past made the XX-Q this federal statements beyond results The implied within are as press assumptions, control results forward-looking reports. Please XX-K, materially the are refer Actual well here. and company to is statement regarding On and safe future X-K management other meaning the securities forecasts. by any accompanying is company's the could statements to X laws. of statement. expectations, the it current call our beliefs on and factors in results and

and EPS. and non-GAAP to results operating measures, conformity comparable organic will the call, prepared the sales morning's release. management financial diluted financial GAAP growth, today's provided adjusted Reconciliations margin adjusted profit most earnings make are profit, in including of to measures financial reference this non-GAAP to in limitations operating During adjusted

call over Eric the Green. turn CEO, our to now I'll

Eric Green

and morning, Thanks Thank for joining today. you, Quintin, everyone. us good

Slide start X. will on We

so people. over For mean so West to to name years, come much many the XXX has

containment primary delivery to the components from This remains grown today. have manufacturing same systems. manufacturing designing We expanded and and

and evolution options industry global are the evolving improving of of hospital complexity market years a the members and today our with remain doesn't shifting to of health and needs We the growing partnerships to of patient industry, the home to setting. define have changing past care the been by that our in the As are from lives. still The the address scientific stand few XX,XXX-plus treatment and leader to team committed innovation needs the into who future. reminder a world continues motivated pursuit

X. to Slide Moving

the overall growth, report of actually despite customers I'm growth at to generated pandemic-related a a XXXX expecting in but West in This our and year, sales. decline instead COVID-XX shifting demand back volume that from started orders delivered landscape. in pleased XX% Looking growth pandemic approximately organic decline rapidly resulted We was sales X%.

to growth globe. COVID-XX, return QX growth Excluding This double of drugs, as was high-value products, result is members for ended growth both in performance sales we our a relentless legacy base demand and of and a the across launched dedication offerings organic for is product this well low proprietary our estimate growth mid-teens digit, driving base in that our with year contract recently as in we the focus with team and manufacturing. the

want connected thank us to help and are say each you. these continue responsibility succeed We a to and by that values efforts shared strong acknowledge I day.

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

demand markets. the address and attractive order devices by criticality of of growing investments to West's driven demand, committed continue we reinforces the deploy components increase Our solid orders capital and end injectable support customers' our drug the to in book to

X. to Turning Slide

lives. billion In accomplishments other in close XX of We XXXX. to components notable addition several shipped patient were there to our touching financial momentum, billions

leaders our technical solve customers and their industry, in scientific to expect problems. As us help the

expertise Corning ml X a CZ We presentations. biologics SmartDose with market our published articles additional as bring and continue syringe to We and FDA-approved partnered customers. We secured additional using value launched insert webinars, build needle to the technical Daikyo our next-generation our to X.XX through we leading support broaden to continue our with insights elastomer-glass system. to drugs technology

Lastly, continue local greatest importantly, their more we help donated members the volunteer to our $X.XX team needs. with million, our but communities to time

Syria, provided with those through are impacted UNICEF. all aid in where thoughts the and heartfelt have earthquake by devastating Our Turkey we

to X. Shifting Slide

We of considerations continue business. to every into aspect environmental factor our

defined the of Over target the our landfills. I'm newly pleased waste to areas being past X that X years, and made we're not tremendous across operational indicators. priority strides on XX% performance we have sent with

has in our aided to reduction. with pursuit We the published spring. be alternatives in efforts recognized have positive accolades renewable in responsibility to in energy ESG These corporate impact emission XXXX. forward numerous sharing detail the in a Our of more report look been

to X. Turning Slide

of this a partnership. reduces Pharma with of recent with product eliminates delivery the meet best-in-class the meeting, in drug vials. filling introduced to that proposition today's be increased will the is particulate and solution. sensitive new regulatory many ready-to-use and delivery vial containment with needs like value lines. containment available vial for market ensures volume growing products innovations One performance molecules. the products the our and risk solutions. our This a Pack Corning West address Ready several Valor complete glass The to complex of Corning's It continue Pack expectations large combination these products first complete from bulk is we We At with delamination

Moving to Slide XX.

on and levels. This also West and We our guidance strong by biosimilars. approvals, especially well based in are reinforced It's trends in Daikyo our drug participation rate as demand biologics as capacity current introducing XXXX full year guidance. financial is

X% decline a in We expect organic full year growth year-over-year includes which of sales. approximately overall sales $XXX million pandemic-related to X%,

manufacturing. mid-teens Excluding this in in organic and overall with growth expect products growth growth teens the sales base single-digit proprietary impact, we high high contract

posted our this year for profile with our above pre-pandemic from HVPs. significantly the our margin annual year levels. XXXX as of strength expected we per period. In a XXXX, That for more headwind an a represent In basis or XXXX operating operating transition This underscores points XXXX, of financial approximately XX.X%. margins we basis XXX margin XX% points see increase are year. represent a over would of of X-year will of said, expansion which construct we COVID-XX expect XXX margin XX%, to margin

program prior Also, repurchase. today has a year. for billion program repurchase of not plan authorized that We Board to this $X share was date. is last as of Directors new does we a have completed announced plan specified share the This authorized that up note new our end

strategy, continuation And on at was program as of million share our provide for $X program our buybacks. This XX-month at XX-month $XXX new market of million various billion in completed XXXX, our our XXXX We such repurchases XXXX, assumed which in for full comparison, As conditions. will financial completed $XXX will count-neutral buybacks. in factors was program guidance. a incremental year believe depending this share economic is provide flexibility also program and of

Slide XX. Turning to

see for drug current additional you momentum launches. XXXX, base planning can from preparing growth for of biologics a continued success customers we our seek are their portfolio further our guidance, expanded and As in as we're and

the address growth other accommodate to HVPs Together installation plungers. expansions, across installation additional the to Kinston, new the picture recent capacity. we such, to efforts. of HVP of the was our The plans our On equipment the of support shows see it manufacturing impressive forward for space drive of visit progression ongoing As to this additional and continue complete capital future expansion our to site global manufacturing added will network. demand to my with

Now I'd like Bernard. turn to call over to the

Bernard Birkett

Thank you, Eric, and good morning.

our and through revenues as sales and where at We margin we we a in and drivers XXXX impacting and guidance. XXXX sales will as will EPS. first you take in single-digit diluted look will organic the saw I the finally, And quarter operating sheet some takeaways. low profits, balance QX well profit decline growth review

off, First QX.

summarized $XX financial $XXX.X to and COVID-related organic XX. the reconciliation of XX in sales quarter, are described the net million of with by growth affected on diagnosis been of sales lower the results lower revenues have treatment to of offset are GAAP measures million XX to X.X%. in by non-U.S. estimated sales are pandemic. recorded prior net compared Our approximately an net Slides our due revenues representing the reduction We include approximate million vaccines, customers quarter, Slide These volumes assessment patients, COVID-XX and the associated year. components to in $XX to of

were Looking flat prior of revenues. at compared High-value reduction approximately Products quarter XX. the quarter. in sales in sales Proprietary Slide grew by net the organically to up products, to made the COVID-related in Product the due year Proprietary X.X% which XX%

NovaPure pharma COVID-XX decline growth performance and to delivered Looking vaccine. led a market led the experienced at unit unit due high units, the market components. to market in a the admin by the mid-single-digit systems, the generics single-digit growth related And sales market by reduction saw double-digit ambition biologics components unit Westar and of while

Our experienced care-related X% Contract of devices. by sales sales medical primarily health of driven segment Manufacturing the in fourth growth net quarter,

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

EPS diluted QX. declined adjusted Finally, XX.X% for

of $X.XX Excluding EPS QX, declined compensation approximately XX.X%. in stock-based tax benefit by

review profit the and Now let's in drivers performance. revenue both our

net increases sales On approximately quarter. million was to the Sales a of reduction a Offsetting of mix demand. points of growth million in contributions or the million, due impact in foreign we contributed $XX.X Slide growth. show COVID-XX-related percentage currency price a X.X and headwind to negative XX, price $X.X primarily $XX.X

The for of performance, gross in were XXXX. related margin the from materials, sales inflationary increases. margin points basis the continued a XXXX. by Contract XXXX. Proprietary XX.X% The offset Looking in points largely pressures margin achieved QX XX.X% at of consolidated attributed profit margin basis and mix costs, achieved QX shows sales the quarter of profit of in than raw overheads. Slide labor sold. on The Products XX quarter quarter gross XXXX, was fourth vaccine mix fourth the our plant gross of in Proprietary drivers profit margin headwinds including XX% Manufacturing were lower reduction below margin profit down decline decrease to is key price fourth gross unfavorable was in partially XXX XX.X% to our from margin of in for quarter COVID-XX fourth products and XXX the margin Products

sheet of terms look we've more at how let's done review in balance and generating our Now cash.

the improvement. compared metrics. in year, $XXX $XXX increase. $XXX a period we we increase working for was capital XX, have Operating the expenditures, from an XX% on of key Operating year, the XXXX. spent XX% last million our a flow flow increase million Slide same XXXX, cash to capital million listed benefited In over period cash cash On flow some over

higher to increase Working Singapore. $XXX.X capital Germany, and receivable continue existing our of leverage in higher facilities from levels position. capacity Ireland XXXX, $X.X an primarily million We high-value due U.S., inventory increase increased within CapEx and our manufacturing approximately cash our in accounts by product to our to billion from sales, increased the our

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

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

expect We to to be approximately growth sales X%. organic X%

$XXX our of the full guidance guidance EPS in year. $X.XX. is adjusted CapEx for year Also, diluted to a our expect $X.XX to We XXXX be range million

impact headwind as on to FX some current based are guidance. on foreign exchange approximately elements EPS key of to our currency your bring rates. attention I you There an Estimated want has review $X.XX

full tax related future excludes compared COVID-XX to to $XX benefits XXXX. from million be approximately net our And million stock-based sales year in We compensation. guidance expect $XXX

turn back Eric. to to call the I'd like over now

Eric Green

To Bernard. our financial to today you, summarize performance that growth XX, strategy working. solid Thank Great. the reaffirm shared is Slide on continues

unique proven customers. durable which our our delivering We have approach a by market-led base to is business value

is care and in across our And innovations realize global team future environment health to products capital health globe and is well current in efficiently this We continuing spending operations on delivering with service critical which anticipated meet scientific that manufacturing the support why today our to the patient operations and a across focus complex we're we're Our of are quality. so committed progress products into growth. pursuit and to future. to

Shannon, to questions. Thank you. take we're ready

Operator

Instructions]. [Operator

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

Lawrence Solow

the obviously will, the than of HVP, up Eric, it I -- of of mean, if of sort send to on good several NovaPure mentioned volume expected. particularly maybe the more and in you a kind you higher over growing a you the quarter. on and quarter, and could just the I could in as some curve, basis Congrats the you HVP you next speak margin, the faster years? discuss opportunities long-range But know XX% outlook. better revenue volume we

Eric Green

No, you're Yes. Thanks, Larry. right.

think about the sites units you So our of But around to pointed part of HVP is if spectrum growth the from in roughly total higher our And amount the high-value the about up way NovaPure. manufacturing is volume. as FluroTec of was right out, it quarter. you produced coming XX% product our sales the now, rightly XX% of last all from the that portfolio of

So NovaPure the the is number Obviously, element a solution more response. very COVID-XX But of major meaningful. NovaPure customers. becoming was a is for it with launches, attractive of our becoming biologic the

to of investments of Shore say that HVP Kinston, early. around future plungers Jersey launches. other it's plungers NovaPure types So making, plants would The are I our we're in address particularly and

is end growth is we as really portion speak. HVP where the the So of out coming higher from that's

Lawrence Solow

-- sorry. how ahead, go And Okay. I'm about just yes,

Bernard Birkett

look that as guidance well and improvements. that really of is support products. much around CapEx XX% growth And productivity that at you is high-value initiatives the number to approximately CapEx If of

in the that putting years capacity that we in that number for the with next So would of outlook see place. ties

Lawrence Solow

Has industry, just there the macro biologics been the a drugs. few And the have I trends outlook that in on Or are obviously years? than level? faster over what generally what's about accelerated growing last trend the general like know overall

Eric Green

to Yes. launches. for space is the area We biologics the biosimilar drug believe fastest-growing and going new be

small of into and interesting If market. biologics I see molecules those fast the area think be and in however, have fastest a the was fortunately, number space. And in forward, you the think we approved kind areas biosimilars though, see also last strong position ANDAs you the our about also. year, growth you'll it But still to of if

Lawrence Solow

next not sort you could much you're don't update a us at know but years? But just and as if well. on the maybe talked And brief you year, all, sort had on side piece cost, a be speak stand know qualitatively, sure it's what how just we you few last the just this bit spending a lastly, even can outlook we called this where to on of R&D. sort call, sure over of I I it. incremental just could stand there? just the then Got pretty revenue Corning a and give little big had R&D about -- the think I out of year I'm the where but how you

Eric Green

that a it's West of which Larry, announce this to were vials, Valor partnership, product strong launch our first Yes, Pack stopper really Corning's and the we're or this -- just a month, combining our pleased in earlier really we kind able we label that program remind as seed molecules. what we new Ready NovaPure of seeder is in solution. use everyone And to of development a that our

testament It's solution. in us past. this a successful a combination So together firms been forward. this great going between the leveraging the product X very on this as introduce bringing to the of complete really for channel has the We're focus

this more so we work And while saw early, do. to is

a we that XXXX, XXXX. with to have we in X complete is a the Ultimately, scheduled, where whether master of to We vial. drug want number have launches it's solution get

complete So it's fully a characterized system.

that investments. required we'll so continue And

incremental that our the portion And it and so up, partnership. in if look XXXX, West-Corning R&D piece will of slightly be a around be at good spend you will

Operator

[Operator Instructions].

from with Matt Larew Our next question comes Blair. William

Matthew Larew

the excuse of book. of in years start folks FluroTec I does part? demand that obviously, NovaPure customers the guess to go few like, a today choosing maybe the engaging I'm what I like just look the does in the sort ago? you what up and NovaPure with, you FluroTec referenced if on versus side, the who just order curious out book pre-COVID, question potential just is, committed conversion NovaPure what on Maybe look terms versus -- me, compare ultimately terms like? of ask with end the non-COVID who the of wanted to perhaps look conversion composition of you order And

Eric Green

Yes. the question. you for Thank

that's we're the a order high-value order kind but end the perspective, COVID then versus in from out it -- at just right HVP. products, book order and When other we're driven overall, by our were composite sector, point not is characteristics book -- categories and NovaPure at it's look where that healthy So we at the HVPs, time. particularly strip so seeing higher look order net in growth of the an plungers, a in committed that increase of the in growth book, when I the pre-pandemic the the the now. of seeing of piece, really you But

In it's high. quite regards actually to the adoption rate,

rate, is very, participation the that's we're in we very for strong. that is commercialization, our NovaPure go And with Better is customers, obviously, in portfolio. particularly phase are once into biosimilars they the compatibility the end molecule. biologics in, better the with outcomes the what locked development doing So our and drug result. seeding And as through

very continuation of these excited why to NovaPure transition vials prefilled place, to hence putting from we're and in plungers. we're we're syringes will see investments that our and seeing more reason the of require So adoption of which the that's a

it's but HVPs. So the growth end very we of higher very, that's where of a are, profile healthy

Matthew Larew

call. maybe referenced How cleanup equipment first stand on things halfway do where just of on quarter the one to the issues expectations that results relative a now fourth 'XX? does up of impacting the then third And you into end quarter quarter

Eric Green

Yes.

in, in done issues that great characterized up That get able of facilities team little validated, are to be issues part job the production. say, support The really part mid our resolved. bit QX, manufacturing commercial I'd later the back of was did a and Fully a So quarter. online. those to and resolve

at the that that right point have backlog year. And I'm now up to QX. allow in parts excited out some get we're early So of of the this we us to this in caught full

Operator

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

Jacob Johnson

nice that on Congrats a last quarter. of up Maybe on following question. kind

Just of maybe of COVID you margin progression, toughest when year anything have you'll terms Bernard, as in revenue can you comps throughout the about you'd those we remind that from plays us just lines, XXXX? the out, kind highlight think seasonality the same along from lapping or And be progression how year?

Bernard Birkett

Yes.

is out bit pre-COVID from think I we levels back would from lighter, the COVID kind perspective, XXXX. a QX. QX think quarter in been second would the picks then we So of perspective, half in a bit first And and seen quarter have comp going up a what lot a cadence to and first in of little had a would I where have have revenues the usually of

So that's QX some to that's then that then where, comps from obviously perspective, and I and in challenges, biggest won't the where be but in say are going lighter QX.

Jacob Johnson

to it. in there, manufacturing, growth to contract And the on see in Got then quarter. return uptick a nice revenue

And think, of in business this some I you that year XXXX? down XXXX. robust you're think again for and on driving Were growth in what's pretty you're Can just kind investments pointing related, was what sequentially. along growth to, gross margin same there making hit maybe I drove lines, both? the the in

Bernard Birkett

Yes.

we of through shift think within were you'll a remember, really we the -- face around as and a X, in manufacturing XXXX, contract mainly X I their is business. customer challenges lot X when talking

we where growth. of And then demand back base tailed going have probably to us the bit increase quarter. saw from allows have into return towards be to anticipated actually existing to little of of would ahead end the it kind that fourth the as we so And our year, off a customer able

manufacturing positive new for we then be was in time. existing what expect will contract same at that as seeing growth and layering our And XXXX to would move on into the that business business our mid-single-digit So again see. we we

So we continue area. make some that to investments in

Operator

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

Paul Knight

I what now? The less the other QX, is QX. biggest manufacture probably on market right? then prefilled QX, regarding starts really then as this question That's the flow you're guess, And product in then seeing would that is, question it, one. And COVID I more touched right be opportunity they syringe is

Eric Green

Paul, a good Yes. question. that's

is looking granular -- spread. of know, think than approximately So when we the evenly We that the it's point. get now, can't this much COVID, first any that is XXXX part than relatively more you about about kind higher But that right last for $XX at we as year. we're were million

capabilities we accordingly. the to do have manufacture So

that about of to prefilled is regards when actually anticipation we prefilled additional Kinston, as area. the syringe, growth in -- my and is couple little investments, really think of prepared which is the in our I higher And the last you -- around particularly that launches plungers. coming in years speak. around about lot we're the space plungers, there the equipment remarks anticipating of mentioned in a obviously a some In online bit is supports in with syringe geared working equipment

the we excited the see I'm continue growth. as so that market high support to to And of build part syringe with expand market prefilled

to that, we're really So we're today. investments and play in that's where on prepared it, going focused for are and

Operator

from comes Bank question of America. line Bruin, Derik next of Our De the

Derik De Bruin

talk you higher -- in taking about How pricing? like bit a got think about know that we can sort you in of pricing. about X% debating So you You should some were Are I 'XX? XQ. little

forward. I any And done your that? And you dynamics your at have You're have customers? as are seen are you looking guess, going pushback things pricing from -- you

Eric Green

question. Thanks Yes. for the

right. you're So

We customers our in have discussions quarter obviously, XXXX, the about of XXXX year. the implemented fourth with calendar

obviously go reasons, in Our for is some inflationary XXXX, net faced of the so all industries that price with. will think all are increase and I with and challenges being that the particularly forth up right

so contracts, I So limitations. responded did the do team very appropriately. We certain I approach. well-balanced customers we have believe some took have we -- think a on very

see the strategy couple and a starting we're pay in team overall, of we pricing However, that place put ago, new off. with to years

want speak be do be and that? this we will to provide on that rolling more will out already quarter color as you So Bernard, rolling throughout and But XXXX.

Bernard Birkett

Yes.

we did We're price about pricing. we on think we move X% I in So to through XXXX. our targeting X.X% fourth said the as of X% quarter, --

of to also account pressures said, last been bit cost So increase. a and up. step and on increases the over see Eric into it And approaching the as That's inflationary of number of part we're the is years that our trajectory But how can take the seeing. a also is you that. that price we're

Derik De Bruin

Great.

of a never What question. rates bit stock-based tailwind initial year. the up accounting with And tax for end little in was the an Just 'XX? from what you are comp being your full

comparable it So think reasonable think to you is it -- a get is to comparable benefit 'XX? in

Bernard Birkett

without it. We it very for hard guide it's because to us estimate

If it -- at last you year, was about I believe. look $X.XX,

-- without reason a it's so control. So of of kind predict to hard because for guide for we our it outside it is that's us

Derik De Bruin

one can with more lot on disease, squeeze should revenues those that? Got units? it. I like don't How us mind. out associated syringes? I of to like about profitability the drugs give new contribution mean for for something if your just the should -- economics ballpark of And how obviously, what coming some prefilled we about could And mean, the And revenue be on your you potential or your of we obesity. in, a sort think what think there's way if one I metabolic

Eric Green

Yes.

it, NovaPure, very -- pretty are you think of NovaPure, HVPs range over about syringe the you between, other on talk the it's about to it unit. we the let's call we area $X.XX not large $X.XX if But a per $X types -- if a it's the unit. So have comparable to it's depends plungers, and if prefilled

could that if again, So a in. we're see XX% anywhere you that range can From margin the range to HVP it is operating perspective, XX%. between

what's particularly on thesis processes requirements. and facilities, somewhat range same very molecules is the plungers the So all not I'm giving a you our equipment investment fungible. around because good the our have But in broad that are

also we're So of existing into drug we potential current assets areas can but leverage launches, growth. the anticipated the putting the

well. we're So positioned

Operator

John line with UBS. Our comes next question from Sourbeer of the

John Sourbeer

the there I coming the guess equipment maybe on color bit for the then in just on the in little in just follow-up CapEx. Any the on new and pacing online year? more a And digging delays a capacity XQ.

that's a was this the that million well? month up, a as assume is month $XX Can that now headwind. around we think million I around $XX contributing

Bernard Birkett

Yes. volume go The And on vary impact in we through as each million. QX quarter. mix that was depending $XX may about

all hard It Eric to that would QX that it's to of those difficult in $XX we have happened each point. it's at So QX. in be kind we commit this much as But through and about had talked been say, that of as of that million problems resolved, quarter. to saying progressed earlier,

the on we of as that XXXX. through CapEx, And layering in will new happen move pacing

will of we through new in be of sites. once. at all the year, in end not it's installed in Kinston, we we the equipment as as We'll particularly HVP with running So and progress where into other some up the our there layered second see getting the then quarter equipment it the get back of facility are parts we've that And there.

John Sourbeer

where then you think any looks further see much down do Got guess lowered How just I drop you guess from it. like slightly. just COVID And thoughts coming XXXX? you guidance go the on here? just I more there levels endemic beyond it. I it maybe from appreciate that COVID, on

Bernard Birkett

to well, included going It's on have drop on -- tried we think hard and to Like best we've estimate in any would what it's that's today, we today. see was further, have given we out. where the going it that estimate that. But based we the to our thought based If play information guidance. we we've that to

Operator

of Jefferies. with the David from line comes question next Windley Our

David Windley

business kind you me. asking a level I are units if can you couple would hear set of of the is wanted those got sizing of -- of wanted kind start work are normal. where with directions hope we with end a down, of off to of X kind base to the your biologics I've segments I just follow-ups, What's strong the so year a of to relative generics market having of? have the opposite but and I than

Bernard Birkett

Yes.

reducing look drop impact the within is revenues XXXX, the or biologics biggest segment. at as being -- we go of you into biggest biologics if So the COVID

But for contract do high see then reduction we earlier, and actually we're And back we generics, through if 'XX single segment growth, then out, said on we would to strong pharma, as mid-single-digit growth biologics there. very early manufacturing, as we business. within high growth. that single-digit, digits again, you seeing So double-digit core progress the a be looking double-digit see our

David Windley

those, the just correction percentages XX%? with And I looking it for about was biologics those Okay. for to so the percentages kind I it's think kind COVID to of looking to. like XX%. XX% to the of apply should I'm to I'm Bernard, apply so is just growth closer think that

Bernard Birkett

-- come mid-XXs. was a bit. to back It's Yes. slight It's going biologics

So you're pharma XX%. about and probably then contract And was XX% to XX%. XX% or --

David Windley

I fine. That's follow offline. up can

of that the fungible lines? On Eric, that last is it vary you that, across month more even volume elaborate and talked how in and equipment kind process, specifically was So of -- and guess that that equipment in the equipment maybe under based misunderstood $XX I what on perhaps the maybe question I washing the I NovaPure your that varies that further on please? specifically mix, product will that million we a could answered impression plunger Kinston, but installation equipment, about the Bernard's was NovaPure

Eric Green

Yes. No, absolutely.

specifically equipment about just not specifically QX, So operations, ongoing was that we've the that NovaPure. discussed

that is product for see So to portfolio. the washers equipment you washing capability wash The that high-value that were you -- you have NovaPure. washing vision that that pharmaceutical the -- able really supports

is Kinston, effect elements really fungible, we're that making all But the range about is. that again, So part equipment in up the having, is around investments -- that based FluroTec the And growth heavy of of the core not a mix off at equipment was to you that's, looked of the saw NovaPure. some to equipment the the There's way you it's it. in products. the high-value future wide of that some we're NovaPure. but

David Windley

Okay.

high that So that where the wanted margin make Management one, I that, my $XXX-ish margin, million. incremental losing been high point and revenue. COVID has you're go the has last made year-over-year I'll very to gross with this is

some But me XQ, was put like remarks, the equipment the potential about we now transition factors seems that from answer you transition But on revenue And the margin, so this think, that as not place losing that you've on better. in in this unlocks not I the that of are neighborhood thinking to mind understand understand last COVID that that contributes in that hold that coming as that up margin revenue again, to that off? Eric, just you're be revenue the rich in keeping equipment that that and as perhaps you of could your prepared that that's creates, maybe helps mentioned the influence coming me. is revenue your year in in is margin it that COVID. for is confirm guess I I that any should as other rich quite that COVID, as

Bernard Birkett

question Yes. to just back going to Dave, split, your just And I'll up. last on take that. the that clear

So the to of the mid-XXs a generics, -- then and split. mid-XXs, get a will XX% you percentage and sales, in pharma like as that proprietary low range, is biologics

one as product simple going as not another it's margin, in. out on question and your product coming to regard With

it been also got And the a looking products. cost off have higher-margin revenues where with our falling mix obviously, we're impact, we've impact of the So and on inflation at COVID they there's base.

you've normally earlier business. talked alluded headwinds. about as we above that in in So to, seeing then And price we is is what we we're X those see increase the got our would

margin some offset that this helps of pressure. So

management. a business, cost delivering a cost number looking within and we That us. at perspective specific operations both of is then on really and for an have very then efficiencies from and cost SG&A R&D, initiatives our manufacturing And control

challenges, of a back that us margin back is -- that to not to So or helps actually the holding We're not we're we but some maintaining it on levels. And we improvements them. pre-COVID earlier, then point margin the the stepping to the lot all made. goes of or gains to not made overcome that of

Operator

comes line question Bowers Justin Deutsche next from of with Our the Bank.

Justin Bowers

ratable? can be that's loaded? Or understand And Can maybe question. phases help then profile help on Is capacity new C-XX business? it to us respect online margin Dave's sort on second in? half color piggybacking of more coming is you the range understand is us how a Any there and with it Just XXXX, what the helpful. it's in you that the of would

Bernard Birkett

of was on have that higher would the lot the our at end the been NovaPure. margin products because COVID margin So a range of

that a to range we and when in, then year of see But able speak. and so So piece more in you lot the as could has the looking on it fully operational on impact plus. XX% we're will be -- been CapEx of have of volume the it through. back of commissioned been to in at the it's put layered half of And being to layered a it's XX% lot

Justin Bowers

progression on there? plants the just a the Understood. on status X that Maybe how China. And the over thoughts update then impacts a any one And quick on of year?

Eric Green

we the quite China, of in China. overall that for In -- is we're is low. our lot business the do for West A China manufacturing activity Yes. impact

And corporation on is strong market. value more team that that there to profits team or share our on there our very so low. capture within facility the Qingpu very a revenues And the -- to in to is we really our small. export But overall have reliance in continues and again,

So that's China. in our impact

chain, not that about good supply part materials, on are a manufacturing procuring Many to The really of you if the our products job. is our co-located team sites. world. dependent Our heavily has done of think

our supply we've how set and materials. that's So of chain up raw procurement

Operator

to conference turn Quintin Lai back for remarks. I would now like closing to the over

Quintin Lai

on of the website be available and An Shannon, Investors Thanks, of all conference section. on online westpharma.com today's thank our broadcast the joining you us in call. at will for archive

release. of day. presentation access That a by nice this a XX may ID you Have at the replay using today's dial-in for earnings the numbers Additionally, concludes call. this and following days provided end conference

Operator

This participating. conference concludes Thank today's for call. you

disconnect. You may now

West Pharmaceutical Services (WST) 16 Feb 232022 Q4 Earnings call transcript