NYSE:WST West Pharmaceutical Services Q3 2023 Earnings Report $247.18 +1.73 (+0.71%) Closing price 08/29/2025 03:59 PM EasternExtended Trading$246.98 -0.20 (-0.08%) As of 08/29/2025 05:33 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast West Pharmaceutical Services EPS ResultsActual EPS$2.16Consensus EPS $1.86Beat/MissBeat by +$0.30One Year Ago EPS$2.03West Pharmaceutical Services Revenue ResultsActual Revenue$747.40 millionExpected Revenue$750.31 millionBeat/MissMissed by -$2.91 millionYoY Revenue Growth+8.80%West Pharmaceutical Services Announcement DetailsQuarterQ3 2023Date10/26/2023TimeBefore Market OpensConference Call DateThursday, October 26, 2023Conference Call Time9:00AM ETUpcoming EarningsWest Pharmaceutical Services' Q3 2025 earnings is scheduled for Thursday, October 23, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by West Pharmaceutical Services Q3 2023 Earnings Call TranscriptProvided by QuartrOctober 26, 2023 ShareLink copied to clipboard.Key Takeaways Third quarter organic net sales grew 5.7% year-over-year, with over 20% base organic growth in both the Enterprise and Proprietary Products segments despite a $78 million decline in COVID-related sales. Full year 2023 net sales guidance was trimmed to $2.95–2.96 billion (from $2.97–2.995 billion) and organic growth lowered to 2–3% due to slower restocking and customer inventory management. Fourth quarter organic sales are now expected at 2–3% as large pharma and generic customers optimize safety stocks and delay orders for standard products. Proprietary Products saw strong base demand for HVP components and devices, led by double-digit growth in the Biologics unit and restocking of long-lead HVP components following capacity expansions. Looking ahead to 2024, West anticipates hitting its long-term financial construct of 7–9% organic sales growth and 100bps operating margin expansion, with pandemic-era sales integrated into base performance. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallWest Pharmaceutical Services Q3 202300:00 / 00:00Speed:1x1.25x1.5x2xThere are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Third Quarter 2023 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 Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Quintin Mike, VP of Investor Relations. Operator00:00:35Please go ahead. Speaker 100:00:38Thank you, Michelle. Good morning and welcome to West's Q3 20 Conference Call. We issued our financial results this morning and the release has been posted in the Investors section on the company's website located at westpharma.com. This morning, we will review our financial results, provide an update on our business and present an update on our financial outlook for the full year 2023. There is a slide presentation that accompanies today's call And a copy of that presentation is available on the Investors section of our website. Speaker 100:01:15On Slide 4 is our Safe Harbor statement. Statements made by management on this call and in the accompanying presentation contain forward looking statements within the meaning of U. S. Federal Securities Law. These statements are based on our beliefs and assumptions, current expectations, estimates and forecasts. Speaker 100:01:35The company's future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results as well as those expressed or implied in any forward looking statement made here. Please refer to today's press release as well as any other disclosures made by the company regarding the risks to which it is subject, including our 10 ks, 10 Q and 8 ks reports. During today's call, management will make reference to non GAAP and adjusted diluted EPS. Reconciliations and limitations of the non GAAP financial measures to the most comparable financial results Prepared in conformity to GAAP are provided in this morning's earnings release. Speaker 100:02:32I now turn over the call to our CEO, Eric Green. Speaker 200:02:36Great. Thank you, Quentin, and good morning, everyone. Thanks for joining us today. Due to an unexpected family emergency back in Ireland, Bernard cannot participate today. I appreciate your understanding. Speaker 200:02:50Quintin will step in for Bernard. We'd like to begin By addressing the ongoing situation in Israel, our top priority and focus remains on the safety and well-being of our team members And their families that live and work in the region. Now let's turn us to Slide 5 and the Q3 performance. I am pleased to report that our team delivered a solid Q3. Our ongoing success can be attributed for a well established market led growth strategy, which allows us to take full advantage of our solid base customer demand and recent capacity expansions. Speaker 200:03:32And it is the strength of our OneWest team, who I'd like to thank, that make a meaningful difference to ensuring our customers have a reliable supply of components necessary to deliver drugs to patients. In the Q3, we had solid organic net sales growth of 5.7 percent With an approximate $78,000,000 year over year decrease in COVID-nineteen related sales, Our base organic sales growth exceeded 20% for both the Enterprise and our Proprietary Products segment. Shifting to Slide 6. In Proprietary Products, We had strong base demand of HVP components and devices. We continue to see certain customers experiencing Strong uptake of their drugs as they accelerate and increase their replenishment orders with us. Speaker 200:04:35The greater than 20% growth in our base business was again led by our Biologics market unit, which had very strong double digit growth in the quarter, excluding the impact of COVID-nineteen related sales. And as we have seen through much of the year, we also had accelerated growth from restocking long lead time HVP components that we've been able to produce through our capacity expansions. This fueled growth in our generics and pharma market units. During September October, we have started to see an increase in inventory management trends by certain large pharma And generic customers, especially for our standard products, as they manage their safety stocks for the remainder of the year. These issues have led us to temper our 4th quarter organic sales growth to 2% to 3%. Speaker 200:05:36Excluding COVID related sales, we expect double digit overall organic sales growth and double digit proprietary product sales growth for the quarter. And we continue to monitor the situation in Israel and currently do not expect any impact on our ability to manufacture and ship out of the country. As in prior years, we will provide our formal 2024 guidance on our upcoming February Q4 call. In a bit of a preview, despite the inventory management we are seeing by some of our large customers, we continue to expect to deliver Our financial construct of 7% to 9% organic sales growth and 100 basis points of operating margin expansion. In addition, we anticipate that our pandemic related sales are at a point where we will no longer Have to separate out base performance in 2024. Speaker 200:06:39Lastly, a key aspect of our growth strategy and market leadership is West's team of scientific thought leaders and technical experts. They continue to advance the care for patients with our customers through valuable insights to address the changing needs of more complex molecules and combination products. For example, At the recent PDA Conference and CPHI Worldwide Conference, several of our West experts Delivered insightful presentations about the revised regulatory standards and emphasis on the development of sustainable products. Now I'll turn the call over to Quintin, who will go into more detail from the quarter. Quintin? Speaker 100:07:23Thank you, Eric, and good morning. Let's review the numbers in more detail. We'll first look at Q3 2023 revenues and profits, where we saw a mid single digit increase in organic net sales growth, an increase in diluted EPS and a decline in operating profit compared to the Q3 of 2022. I will also take you through the drivers impacting sales and margin in the quarter as well as some balance sheet takeaways. And finally, we'll provide an update to our 2023 guidance. Speaker 100:07:55First up, Q3. Our financial results are summarized on Slide 7 The reconciliation of non U. S. GAAP measures are described in Slide 16 to 20. We recorded net sales of 700 and $47,400,000 representing organic sales growth of 5.7%. Speaker 100:08:17COVID related net revenues Submitted to have been approximately $18,000,000 in the quarter, a decline of $78,000,000 compared to the same period last year. Looking at Slide 8, Q3 Proprietary Products organic net sales increased 3.2%. High value products, which made up approximately 76% of proprietary product segment sales, grew by mid single digits led by customer demand for HVP components and devices. Taking a look at the performance of the market units, including the negative impact from a reduction of COVID-nineteen related sales, The generics market unit delivered high single digit growth and the pharma market unit experienced low single digit growth, both led by Westar Components and Advent Systems. The Biologics market unit also saw low single digit growth, driven by sales of Flurotech components and self injection delivery devices. Speaker 100:09:19Our Contract Manufacturing segment experienced double digit Net sales organic sales growth led by an increase in components and sales of components related to injection related devices and Healthcare Diagnostic Devices. Our adjusted operating profit margin of 24.2% was a 290 basis point decrease from the same period last year. Finally, adjusted diluted EPS increased 6.4% for Q3, excluding stock based compensation, tax benefit, adjusted diluted EPS increased by 1% Now let's review the drivers in both our revenue and profit performance. On Slide 9, We show the contribution to organic sales growth in the quarter. Sales price increases contributed $46,200,000 were 6.8 percentage points of growth in the quarter. Speaker 100:10:17Foreign currency tailwind was approximately $25,100,000 3.7 percentage points of growth. Overall mix and volume negatively impacted sales by $7,300,000 This includes an approximate $78,000,000 reduction in COVID-nineteen related net demand, partially offset by positive volume and mix Contribution from our non COVID based business. Looking at margin performance, Slide 10 shows our consolidated gross profit margin of 38.6 percent for Q3, down from 39.0% in the same period last year. Proprietary Products 3rd quarter gross profit margin of 43.4% was 20 basis points lower than margin achieved in the same period last year. The key driver for the decline in proprietary products gross profit margin was an unfavorable mix From a reduction in sales related to COVID-nineteen vaccines, offset by sales price increases that offset inflationary cost pressures in our plants. Speaker 100:11:26Contract Manufacturing. 3rd quarter gross profit margin of 18.6% was 130 basis points higher and the margin achieved in the Q3 of last year due to a favorable mix of products sold and increased sale prices offset by Inflationary pressures on our plant labor costs. Now let's look at our balance sheet and review how we've done in terms of generating Cash for the business. On Slide 11, we have listed some key cash flow metrics. Operating cash flow was $537,400,000 for the 1st 9 months of 2023, an increase of $44,200,000 compared to the same period last A 9% increase primarily due to improvement in working capital. Speaker 100:12:15Our Q3 2023 year to date capital spending was $253,300,000 $63,600,000 higher than the same period last year. We continue to leverage our CapEx to increase our high value product manufacturing capacity. Working capital of approximately $1,440,000,000 at September 30, 2023 increased by $38,300,000 from December 31, 2022, primarily due to growth in our current assets, offset by an increase in our current portion of long term debt. Our cash balance at September 30, 2023 was $898,600,000 and was $4,300,000 higher than our December 2022 balance. The small increase in cash is primarily driven by Positive operating results offset by increased repurchases under our share repurchase program and higher CapEx. Speaker 100:13:21Turning to guidance, Slide 12 provides a high level summary. We're updating our full year 2023 net sales to be in a range of $2,950,000,000 to $2,960,000,000 compared to a prior guidance range of $2,970,000,000 to $2,995,000,000 There is an estimated Full year 2023 tailwind of $20,000,000 based on current FX rates unchanged from prior guidance. We expect organic sales to be approximately 2% to 3% for the full year compared to the prior guidance range of 3% to 4%. We are raising our full year 2023 adjusted diluted EPS guidance to be in a range of $7.95 to $8 compared to a prior range of $7.65 to $7.80 Also, our CapEx guidance is $350,000,000 for the year, unchanged from prior guidance. There are some key elements I want to bring to your attention. Speaker 100:14:31We have lowered our revenue guidance to reflect a recent trend with certain pharma and generic customers Slowing their restocking of inventory and increased inventory management as we head into the end of the year. We expect full year COVID-nineteen related sales to be approximately $68,000,000 compared to prior guide of $60,000,000 Net sales guidance also includes a reduction of $8,000,000 resulting from a divestiture of a European facility that produced standard proprietary products, And this is unchanged from prior guidance. Full year 2023 adjusted diluted EPS range includes an FX tailwind of approximately $0.07 based on current FX exchange rates, compared to prior guidance of a tailwind of $0.05 The updated guidance also includes EPS of $0.41 associated with year to date 2023 tax benefits from stock based comp. Our guidance excludes future tax benefits from stock based compensation. I would like to highlight that over the last 5 years, Our base business growth excluding COVID-nineteen has been within or above our construct of annual Organic revenue growth of 7% to 9%. Speaker 100:15:50And over the same time period, we've averaged Our annual operating margin expansion of over 100 basis points. As Eric mentioned earlier, we are providing a preliminary look to 2024. Based on current trends in demand, we anticipate that Wes will again be within our long range financial construct of organic sales growth and operating profit margin expansion. As usual, we'll provide more detailed guidance on 2024 in our February call. I'd like to turn the call back over to Eric. Speaker 200:16:24Thank you, Quintin. To summarize Slide 13, we had a solid Q3 performance and are on track for double digit base organic sales growth in Q4. Our base business remains strong, which is a testament to the durability of the foundation we have built over time. We are proud to serve as a valuable trusted partner for customers to And look forward to continue to play a critical role in delivering healthcare well into the future. Michelle, we're ready to take questions. Speaker 200:16:57Thank you. Operator00:16:59Thank Our first question is going to come from the line of Paul Knight with KeyBanc Capital Markets. Your line is open. Please go ahead. Speaker 300:17:30Hi Eric. Hi Quintin. You mentioned this stocking issue was kind of in the standard products Category, which leads to the question of in the high value product category, Are you obviously, we know you're supplying GLP-one products, but are you capacity constrained on that side of the business, if you could talk to that issue and how big is GLP-one, if you can or will? And then lastly, these CapEx numbers, what facilities open next year? Thanks. Speaker 200:18:11Great. Thank you for the question, Paul, and good morning. Let's start with the GLP-one question. If you look at, we serve that space In both areas of our business, proprietary products with our elastomer components, specifically in that space, you'll see HVP plungers. And then in the contract manufacturing space, we support that our customers in the GLP-1s with Auto Injectors. Speaker 200:18:42So I would say today from our perspective, we're not capacity constrained. We're able to Re leveraged some of the assets that we had, that we put in place for COVID, a lot of that technology. And We also leverage our global network. And so we'll see we'll be able to continue to ramp, particularly on the last summer space, HPP Plunger is to support our customers as new drug molecules are approved and launched across the globe. On the Centimeters side, we have we are currently producing auto injectors into the market And we've been asked to expand capacity, which we've actually put expansions in place And they're ongoing. Speaker 200:19:29It will take several quarters to get completed and validated throughout, let's call it, throughout 2020 And particularly those sites that we're referring to, Paul, is Dublin and also Grand Rapids, Michigan. On the and from a market size perspective of GLP-one, we don't we haven't commented. We still will not. We would say that from a volume perspective, I would focus from our customers on how they communicate their expectations. But I can assure you that we're working with them to ensure that we are not and will not be the bottleneck as we continue to grow In that space for a number of years to come. Speaker 200:20:15In regards to the restocking, you're absolutely correct. It's not As much in the HVP area, it tends to be it is really around our standard products. It's in categories around disposable medical devices. This tends to be the standard elastomer components, and we're being asked to divert Some of those orders into 2024. So that's the cadence. Speaker 200:20:42It's not a loss to share. And we continue to have a very healthy win ratio of new Prove molecules, particularly in biologics. And so our position from a market position hasn't changed, But it is just the timing of inventory management with a few select customers. Operator00:21:08Thank you. And we'll move on to our next question. One moment please. Our next question is going to come from the line of Larry Solow with CJS Securities. Your line is open. Operator00:21:23Please go ahead. Speaker 400:21:25Good morning, guys. Thanks for taking the questions and wish all luck to Bernard. I guess first question, Eric, is just A little bit of a slowdown in Proprietary Products just seasonally. And I know you guys were increasing capacity. So I'm just curious, I thought we were going to kind of trend up. Speaker 400:21:42Is there just a little bit more of a return to some seasonality you're seeing? I know Q3 historically, pre COVID was kind of a little bit slower. The last few years have obviously been kind of I think that's been throughout the window. But are we kind of getting back to some of that and maybe that kind of goes in hand with The inventory management too where now supply chains are maybe somewhat normalized, so some of the larger customers have the ability to Manage your inventory better as well. Speaker 200:22:11Yes. Larry, thanks for the question. First of all, I'll pass on your remarks to Bernard a little bit later. In regards to the inventory management, what we're seeing, it's not really it's not seasonality or It's more around timing of orders. So if we think about the investments we're making and I know Paul earlier asked about specific Capital investments, in different plants. Speaker 200:22:36And most of our investments, about 2 thirds, let's call it 2 thirds of our CapEx is around growth orientation. Right now, there's a heavy emphasis around HVP, particularly around plungers. And also in the Centimeters side, it's been a little bit larger than typical because of the supporting some of the new drug launches coming down the road. But we're seeing some of the and so those investments are going to be at our major HVP sites and I already commented on which sites for Centimeters. In regards to timing of the orders, it's not seasonality. Speaker 200:23:15It also is timing of customer action schedules. So what I would look at is Q3 with the 20% base organic growth and the comments that biologics give the number, but was Led that, so it's obviously above. That is really new molecules in the market and success of those Existing components, I'm sorry, molecules in the market already. And so the demand continues to be layered on top. We've and Kinstant site as an example, We've installed new capacity for NovaPure plungers. Speaker 200:23:52We've been ramping that up through Q3 and we'll also do that through Q4. And we should be able to relieve the back order situation by the end of this year and we'll be in a very good position To be able to service our customers effectively throughout 2024 in the fastest area of growth. So hopefully that gives you some context, Larry, What we're seeing is really their own product standard products in the market. Speaker 400:24:20Got you. Great. Just shifting gears for just one follow-up, just on the hard die solutions, I think you kind of gave me good leeway into that. Obviously, that continues to be The driver and it sounds like there hasn't been much slowdown there. Just in terms of just I I think you said it was grading 75% in the quarter for revenue. Speaker 400:24:40Can you remind us approximately what it was last year? And more importantly, Just I know it's a lot lower on volume, can you give us a kind of a guesstimate on where it is on a volume basis? And I imagine NovaPure still remains a minority piece of that and that sounds like that's potentially the fastest growing piece going forward. So any color there will be great. Thanks. Speaker 100:25:05Yes, Larry. I can't Call, I'll have to get back to you on what it was as a percent of sales last year, somewhere around 70 or plus or minus. We have seen growth year on year and it's a combination of volume, mix and price that have driven the year on year growth. And If you think about it, when some of the new drugs that Eric has mentioned, that incremental volume Of those drug successes typically come at our higher end of HVP like NovaPure. And so therefore, it has a bigger impact. Speaker 100:25:55So it may not have as big a volume as much as a mix impact for us. Speaker 200:26:01And one additional comment, the algorithm, Larry, of you think about the growth of HVP in the double digits, That requires about 100 basis points increase year over year of volume for HBP. So we're still in the 20 3 24 percent corridor, from a volume perspective, but as because the way that Quentin articulated the ASP margins, it's Quite significant impact on the overall portfolio. Speaker 400:26:31Got it. Great. I appreciate the color. Thanks. Thanks, Larry. Speaker 400:26:35Thanks, Larry. Operator00:26:36Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Jacob Johnson with Stephens. Your line is open. Please go ahead. Speaker 500:26:50Hey, thanks. Good morning and my best to Bernard as well. I guess I'll stick with the popular subject of the morning. Maybe just first going back to the restocking dynamic, you call it out as a slowdown in restocking trends. I'm just curious I do about this. Speaker 500:27:07Is it a lack of restocking and customers not going to as high of safety stock as you would have expected? Or is it some destocking not Speaker 600:27:15to get Too caught up Speaker 500:27:16in the vernacular here. And then the other piece of that is just, Eric, you mentioned growing next year despite that inventory management. How should we how long should we think about this dynamic persisting? Speaker 200:27:28You want to cover the Speaker 100:27:29first part? Sure. Jacob, I'll give you an example. We At the start of the year, we had customers putting orders in for Q4 That based on where we were in our capacity and our ability to deliver, we said we're going to have to get it to you next year. I mean, that's the lead time issue that we had and we had those types of discussions. Speaker 100:28:01As our team have done a fantastic job Getting at it and increasing the capacity, we got over the issues that we had last year in terms of some of The issues of installing that some of the HPV processing capacity in one of our sites, we built on new facilities And in other areas, we were able to start to clear some of that backlog And then we were able to go to those customers and said, hey, we're going to be able to now deliver like you said originally for the end of the year. And what they came back to us and said, no, we're good. We've already reset our manufacturing schedules. We're going to just take it here in 2024 instead. And What we thought we were going to be able to do and handle it because now we've got that additional capacity and help restock them, Now it's just a matter of timing. Speaker 100:29:05So that just gives you an example of some of the things that we've seen as the years Congrats? Speaker 200:29:14Yes, absolutely. And I think the last aspect around this is that if you think about the dynamics of this long term, What we're speaking with customers on it is really is the rescheduling of their production lines and the need of the product. So That's why we are we've given indication and we're not giving we're not giving the full guidance today, but we're giving indication that 7%, 9% Corridor of the top line growth is being led by HVP and it's being led by Biologics. And we're putting COVID into the number. So it gives you kind of dynamics that we're seeing right now. Speaker 200:29:53So we should This is a temporary situation. Speaker 500:29:58Okay. That's helpful. And then Eric, you were just talking about the Kinston capacity ramping in 3Q and 4Q and you kind of mentioned that you would Catch up on maybe some back orders or something like that, if I heard you correctly. I'm just curious as it relates to that market, do you think containment solutions have been A bottleneck for the ramp of some of these drugs and is this something that as you get caught up on, We should expect Kinston to ramp pretty well in 4Q and maybe in the early next year. Speaker 200:30:33Yes, I would say no, we're not the bottleneck, To be clear, in some of these drug launches, we would state that we have been able to Navigate and manage through. And I was just before this call, we were just kind of do another review of The customers that are coming out of that Kinston plant for particularly NovaPure Plungers and it's Quite a few customers. So it's not one molecule, it's not one customer. It's multiple and there's ramping up for 2024 campaigns. So we're excited about where we are. Speaker 200:31:10But I would say right now we're not a bottleneck. It just goes back to what we spoke about earlier is that We would like to they would like to see better stronger safety stocks at their own in their own pipeline. But we do know that there's some other issues that we see, but that's not for us to discuss of some of these launches. I would say we're not the bottleneck. We got the investments put in place. Speaker 200:31:36It's validated. The customers are very satisfied with the quality of the product From our Kinston facility and we have capacity to continue to grow and support frankly the biologic launches. And These are the areas around oncology, autoimmune, immunology. I mean these are exciting areas for us and I think we're well positioned for the future, particularly out of that plant. Speaker 500:31:58Got it. Thanks for taking the questions. Speaker 200:32:01Thank you. Operator00:32:03Thank you. And one moment while we move to our next question. And our next question is going to come from the line of Jon Sauerbeer with UBS. Your line is open. Please go ahead. Speaker 700:32:17Good morning and best of Bernard. I guess just starting off on GLP-1s, just Any additional color or even maybe broader biologics, but how do you see this market evolving maybe between auto injectors and multi dose pens and Maybe GeoOne's more specifically, just any thoughts on potential transition to more oral products there? Speaker 200:32:41Yes. No, it's I don't want to be putting speaking on behalf of my customers. I got to be careful here. So what we're prepared to do for them We'll continue to be the primary, the key manufacturer of elastomeric components That go into several of these auto injectors and other modalities. And so from a last part position, we're very Encouraged with our HPP plunger portfolio and we're able to support them on the demand And then actually stay ahead of the demand with our manufacturing capabilities. Speaker 200:33:19We mentioned a little bit earlier today that some of the assets We put in for COVID are actually fungible for this, not just for GLP-one, but for HVP in general. I think in regards to multiuse pens, again, I would refer to our customers in that discussion. But from our point of view, We participate in all. And we are the market leader in injectable medicines. Now we don't participate in oral. Speaker 200:33:48And that is the uptake of oral, the effectiveness of oral, those are all discussions I would Really encouraged you to speak with our customers on it directly. But as the injectable space continues to grow in GLP-one, As new molecules are approved and launched, we're and the investments we're making, both on the proprietary and Centimeters side, We have a good visibility of cadence of what we're being asked to build support through our global network to support the demand. I'll just be clear. One other aspect is that on the proprietary side, we always enjoy a very high, participation rate. On the Centimeters side, we've been very clear that our customers are looking at multiple suppliers to support them and we're one of them. Speaker 200:34:36So we're positioned very well on both sides of the business. Hopefully, it gives you some context of what we're seeing. Speaker 700:34:43Yes. Thanks. Appreciate the color there. And also just looking to the high level framing around next year, You had pretty strong pricing this year, I think in the 5% to 6% range. Just any color on what you think pricing could look shake out to for 2024? Speaker 200:34:59Yes. I won't give exact at this point because we are still working through our details and we have been in discussions with customers. I think one thing to think about, you're right, this year we were communicating between 5% to 6% net price realization. I think we're clearly in that corridor on the upper end, and which is positive when you think about the inflationary pressures that all of us around the world are faced with, and we're able to offset majority of that pressure. We are taking consideration of additional inflation if what that would look like next year. Speaker 200:35:37So just to give you a little context of how we look at this And that will help us inform our decision about exactly what corridor we're going to be in. But I would say, I can say here that the store, I can talk to you years ago, when we were at sub-one percent or between 1% 2%, I believe that's behind us. We do think we're in a better position to capture more price going forward. Speaker 700:36:06Thanks, Eric. And then the last one just on my end. On COVID, it sounds like you're no longer going to break that out next year. There was an increase in the guidance for this year. Anyway, just to think about what is the endemic level there on COVID going forward? Speaker 200:36:19Yes. I think the just based on the guidance Quentin articulated and I think both Bernard and Quinta have been clear on. We're looking at about $68,000,000 for this year. So it would basically If you do the delta, it's about $8,000,000 in the 4th quarter. And that means compare that to $388,000,000 prior year. Speaker 200:36:40A little bit more of that the previous year to that. It's hard to predict and but we're in the last two quarters we've been basically between $10,000,000 $20,000,000 a quarter. And so the way we look at it is, yes, that could potentially be a headwind. There's less doses that are Administered or it could be a tailwind if there's more doses depending on how this pandemic evolves. But we're just we're going to right now, our thinking is to put it into the base and run the business as a whole, because at this point, it's becoming A very small portion of overall West. Speaker 200:37:18So yes, we'll be clear for the balance of this year, but then we'll give Better clarity in February if we think if we do need to still call it out, but our thinking right now is to eliminate that. Speaker 700:37:32Thanks for taking the questions. Speaker 100:37:34Thank you. Operator00:37:35Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Matt Larew with William Blair. Your line is open. Please go ahead. Speaker 600:37:52Good morning. Obviously, the focus in terms of the contract manufacturing and auto injector investments right now are around GLP-1s, but there's growing is just I think more broadly in new delivery modalities and obviously you have your SmartDose platform. So just curious if you can maybe update us on either the interest, the funnel pipeline or more generally What discussions with customers are like in more of the device category that you've been investing in? Speaker 200:38:24Matt, thank you for the question. Excellent question. Quentin, do you want to start? Speaker 100:38:29Yes. So, Matt, Let me clarify. So when we think about injection delivery platforms, we at West can participate in 2 ways. 1, if the customer has the IP, then we can manufacture on behalf of that Customer and that's where our contract manufacturing is. We're really good at it. Speaker 100:38:58We're not the only ones that will be there though. As we've said in the past, the customers with the IP will typically outsource to 2 to 3. And if it's a very big project, it could be up to 5 to 6 different players. So that's how we participate. And very often, those customers also happen to be key proprietary product elastomer customers. Speaker 100:39:29And then on the SmartDose side, there that is proprietary to us. That is our design And that's when customers come to us and work with us to spec in that device with their drug To make a drug device combination therapy. And there we're seeing really active We are up to 4 now drug approvals using our SmartDose platform and we have a very active pipeline of customers That are evaluating the platform. Speaker 200:40:03Excellent. Thank you Quintin. Speaker 400:40:06Okay. Thanks, Speaker 600:40:09Quinn. And then next on capacity, obviously, sort of Kinston is ramping to full capacity. I think you'd referenced Maybe adding to the Waterford site in 24. So I guess just as we think about where capital is moving next From an investment perspective, is it Waterford, are there other sites or particular categories you have in mind? And as you're doing that, I know you've referenced building additional automation and to know where it builds. Speaker 600:40:39Are those things that can help Speed time to ramp or Mortis benefits at steady state? Speaker 200:40:47Yes. So the two points, if you think about the first one in regards to their network and where we're investing our capital, particularly on HVP, It's heavily concentrated between Kinston, a little bit in Jersey Shore up in Pennsylvania. But in Europe, it's Waterford and Echewyler. And we're also looking at additional expansion in Singapore to be able to support the Asia market. But the priority has been really around the U. Speaker 200:41:16S. Europe and we'll continue to invest. And it's interesting the growth that we're experiencing with HPP to build support that. It is really around, you think about the pharma washing, sterilization and vision, that is helping us to drive the HVP conversion. So I'm excited about where we are, but also the investments are in flight, what that will give us and also give us the ability to do uplift on the additional demand that we expect. Speaker 200:41:48The automation is ongoing and I'm actually pleased With some of the recent progress we made on new technology for West that allows us to be more efficient, Improve quality, in my mind, I'm always looking at improved safety and also allows us to scale up faster When we started thinking about to support various areas, whether it's biologics, what I mentioned earlier about oncology, immunology or autoimmune, it was also thinking about How do we support this scale up on GLP-one? And so this automation that we're working on with a couple of our external partners, I need to get over to Europe recently to see some new investments that we put in place. I'm excited for what the engineering team has been doing And it's going to give us the ability to scale faster, but more importantly, I think the automation is going to provide a better product that continues to differentiate West in the marketplace. That's what I'm really excited about. Yes, we'll get efficiencies. Speaker 200:42:51Yes, we'll get more throughput. But reality is and Main focus is a higher quality product that differentiates the market. Speaker 600:43:03Okay. Thank you. Speaker 200:43:04Thank you. Operator00:43:06Thank you. And one moment as we move to our next question. And our next question is going to come from the line of David Windley with Jefferies. Your line is open. Please go ahead. Speaker 800:43:20Hi, good morning. Thanks for taking my questions and best to Bert and his family. I wanted to start On stocking and just to understand some moving parts a little bit better. I'm understanding, I think, well that you're talking today Within elastomers or components, the destocking is mostly standard. I think Early in the year, we had understood that you had some areas that Post pandemic, maybe Westar, for example, post pandemic had not gotten the Capital allocation, the growth allocation and were understocked and catching up. Speaker 800:44:05And so I guess I wanted to try to understand better If those two factors were both at play and offsetting in the quarter or maybe the Westar was already done and therefore the standard destocking now is what we're It feels like there have been through the year moving parts in both directions, and I just wanted to understand those and the cadence of them. Thanks. Speaker 200:44:27It's a good question, David. Yes. Speaker 100:44:29Hey, Dave. So maybe it's just a definition or just Maybe when you say destocking, we think of it more as customers That are having a demand issue like in COVID-nineteen and what they're doing is they're not reordering And they're taking down their safety stock and consuming their safety stock. And that's certainly happening in COVID-nineteen, which we're seeing year over year declines. The other impact is the fact that we have been behind In terms of delivering because of our capacity constraints and then as we've been able to restock, the Base growth that you've seen in generics and pharma is well above the financial construct. So that has been going on for the 1st part of this year. Speaker 100:45:34What we're seeing now is that, that base growth is going to temper. It's not declining. It's just not going to be as high as we thought it was going to be in Q4. That's why we're calling it A slowing of a restock is not necessarily a destock situation. And again, A lot of it happens to the fact that we've done a really good job of clearing the backlog. Speaker 100:46:02We've been we've gone to our customers. We said, hey, We have that capacity to deliver product and they said no, given where we are in the year, given where our manufacturing schedules are, We would rather it be delivered next year instead of Q4. Speaker 800:46:22Okay, helpful. Thank you. In thinking about your initial comments on 2024 and admittedly the I appreciate your answers to Paul's question to start on GLP-1s. And I I think we all know that the attention there is probably overwrought, but in so much As there's a lot of enthusiasm for that particular class, I think your folks that are paying attention to West believe that that Can be a very strong driver for you, perhaps in excess of your long term construct. Would you Tell us that that is that our assessment of that is too enthusiastic or is it that The pace at which that comes on is perhaps not as quick as we think? Speaker 800:47:21Or is it that other parts of the business are off setting and those things net you into that 7% to 9% target range? Thanks. Speaker 100:47:30So Again, understanding your question, here's our philosophy. We need to be ready for whatever the customers need from us. And so we have That's why our teams have such great communication with the customers. We have cited that we have customers that are doing really well And are increasing their reorders. In the event that those things change to the positive, That's where our global network is ready. Speaker 100:48:11We are so we're in position for that. We've got the global network to do that. And so now what happens to that class of drug? That's really better addressed by Our customers, all we can say is that we'll be ready and Continuing to be ready and that's why we've got so much capital projects going on right now. Speaker 200:48:39Eric? So Dave, in addition to that, Vincent's right, it's If you think about the growth for, we're really confident with the growth of biologics, it continues to be strong. And when we speak about biologics, we're not really We're bringing in GLP-one conversations in that mix. And so the growth we're We talked about 7% to 9% construct, we have to be led by HPP, it's led by biologics. That really isn't part of the GLP-one conversation. Speaker 200:49:10As demand comes in for GLP-one when the drugs are approved and as for the launches And the whole supply chain is working effectively and efficiently. We'll be in a very good position to support that scale up. Exact timing, exact cadence of that aspect, I would probably refer more to our customers on that. But we're positioned well to absorb The elastomer side and also the investments we're making, we'll take some time to get the buildings and validate in addition to what we have already. That will be Centimeters is a little bit longer term, but we're ready to address that, Dave. Speaker 800:49:50Appreciate that answer. If I could just clarify, Eric, on what you just said. When you say you're not bringing GLP-1s in on that statement, does that mean that GLP-1s are categorized, say, in pharma, not biologics? Or are you just saying that You're enthusiastic about the biologics pipeline notwithstanding whatever GLP-1s due to that pipeline. Speaker 200:50:13Yes, it's really it's latter. It's I tend to focus on what's approved or about to get approved in the market And that's around the biologics space. We have a diverse portfolio of customers, diverse portfolio approved drugs in the market and about to be approved. And yes, we as an organization are going to Fully support and be ready and available to support the any GLP-one launches that are beyond what we see today. We're excited to be part of that participation and we'll lead in the front like we have. Speaker 200:50:53And there's no reason why we can't deliver Like we did around COVID, it's the same model frankly. We think about really the number of SKUs, number of assets that are That we're leveraging their existing operations. We're very confident we can deliver. But I would say, I just want to be clear, I'm very excited about biologics Without saying that this growth can be driven by GLP-one. Speaker 800:51:22Understood. Thanks for the clarification. Thank you. Thanks. Operator00:51:26Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Justin Bowers with Deutsche Bank. Your line is open. Please go ahead. Speaker 900:51:40Hey, good morning, everyone. Just a 2 parter on the outlook for 2024, which I think we all appreciate. Wanted to clarify that the 7% to 9% organic does include The $68,000,000 of it's on top of the COVID or the $68,000,000 of COVID. And then Number 2, sort of can you help us understand the visibility that you have now into that Growth, is there a level of commitments from customers? Are you already talking about sort of like Project planning in the pipeline for next year, just investors And the space has been very skittish around visibility. Speaker 900:52:34So any framing there would be helpful. Speaker 200:52:37Yes. No, great questions. The first one is It's pretty clear. Yes. When we talk about 7% to 9% top line, 100 basis point margin expansion, that is inclusive Of the COVID, dollars 68,000,000 that we guided for 2023 in that number. Speaker 200:52:55So And if there's a drastic change between now February, we'll communicate that. But based on what we're seeing, The answer is yes. It's part of that equation. The second part about visibility, just it's interesting our business is make to order for the most So our customers are coming to us and giving us campaigns, whether it's 3 quarters, 6 quarters, 5 quarters, And we're able to support them on whether it's new drug launches or existing drug launches. And there's always going to be some variability On each and every molecule. Speaker 200:53:31And so but on aggregate, we have pretty good lens what type of volume we need for our SKUs and what investments we need to make. On the Centimeters side, it tends to be very long Contracts with specific assets in CapEx installed That will take a little time to ramp, but once we're operating, we pretty much know what the capacity and output will be day over day. On the last for side, there's more volatility, more variability. And again, it depends on how successful the drugs are in the marketplace. And so therefore, we're able to move a little bit up and down quarter to quarter. Speaker 200:54:15So we do have visibility. Is it 100%? No. But this business has tremendous amount of, I'll call it, annuity like Repeat year over year. It's not 100%, but it's very high. Speaker 200:54:32And that gives us confidence on how we can plan existing growth, but also future launches working with our customers. So There's a little bit of both in there in that answer. Speaker 900:54:47Got it. And then just a quick follow-up on Sean, sort of the margins this year or this quarter, is that sort of a good go forward Great, just given sort of the commentary on the longer visibility of that business. Speaker 100:55:10Yes. I think that this quarter we did have some benefit from some pricing that we did take Through some of our contracts, we think longer term, we're looking 16% to 17%. Speaker 900:55:26Okay. That's all for me. Thank you. Speaker 200:55:29Yes. Thank you. Operator00:55:31Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Derik De Bruin with Bank of America. Your line is open. Please go ahead. Operator00:55:45Hey, Speaker 1000:55:47thanks for taking my question. So the margin guide that's implied for the 4th quarter, I mean to get to your EPS number that is basically and sort of using your organic perimeter of guides and everything you put in there, to get to that Your EPS number for the year, even if we don't assume you're going to get any of that stock based compensation, it looks like you're going to take a pretty big step Down sequentially Q3 to Q4. I'm just very curious what's going on. Is it validation of lines? Why is there such why is this sort of the implied margin step down so big between the quarters? Speaker 1000:56:24Thanks. Speaker 100:56:26Hey, Derek. Thanks for the question. Really, it's just utilization and absorption. Given that we're Probably going to have lower volumes through our facilities in the Q4. We just want to make sure that we have a reasonable WAG gross margin. Speaker 100:56:49And then we're going to continue to manage our costs on the SG and A and R and D line. But so that's where the margin impact is really going to be reflected, especially in proprietary products margin for the quarter. Speaker 1000:57:04Got it. So gross margin on proprietary products, you expect to be down sequentially just given the utilization? Speaker 200:57:11That's right. Speaker 100:57:11And then Centimeters to get back down to kind of that 16%, 16.5% range. Speaker 1000:57:17Got it. Okay. And so How long does that sort of like I mean, how long does that sort of like drag on proprietary products as we start thinking about building out our quarterly models Our quarterly estimates for next year? Speaker 100:57:31No, no. I mean, look, I mean, we're in the process of Formalizing kind of the plans for 2024. But as we look at it, next year with the top line growth that we get Led by HVP, you're going to see gross margins improve year on year. Speaker 400:57:51Got it. Speaker 1000:57:52Okay. That's great. And just going back, I mean, I know we've talked about the guide and its questions have been asked. But I mean, I've covered this stock for a while and you're right. I mean, you historically are doing better than your 7% to 9% construct. Speaker 1000:58:08I mean, why wouldn't you do at least behind of that range next year? I mean, given you've got pricing, You've got demand, you've got some orders that got pushed from this year to next year. I mean, why wouldn't COVID is normalizing, why wouldn't that be Just like, why wouldn't that be a reasonable 9% or better? Speaker 100:58:31Well, Derek, look, We're sitting here in October. We're putting our plans together. We're trying to give you kind of a preview of next year. And we're also doing it cognizant of the fact that we're hearing other life science tools companies upstream of us talk about Softness and tougher times. We don't have some of the high exposure That they have in certain areas like emerging bio and pre commercial companies and Things like that, but still we just want to be again, we want to be We acknowledge that there are uncertainties out there. Speaker 100:59:20So as we sit there and put all that in And that's how we come up with that preliminary guide. And we'll provide a lot more detail in February Because we'll have a lot more information then and we're happy to come back and talk to you then. Speaker 200:59:39Yes. And I think we've been consistent on the message that that's just To us, we want to continuously hit or exceed. So that's where we sit right now with the visibility we have. Speaker 1000:59:52Great. Thanks a lot. Appreciate it. Speaker 200:59:54You bet. Speaker 100:59:55Good talking to you, Derek. Operator00:59:57Thank you. And I would like to hand the conference back over to Clinton Lai for any further remarks. Speaker 101:00:03Thanks, Michelle. Thank you for joining us on today's conference call. An online archive of the broadcast will be available on our WebRead morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) West Pharmaceutical Services Earnings HeadlinesWest Pharmaceutical Stock: Is Wall Street Bullish or Bearish?August 27 at 12:27 AM | finance.yahoo.comQ2 Earnings Recap: West Pharmaceutical Services (NYSE:WST) Tops Drug Development Inputs & Services StocksAugust 25, 2025 | msn.com[No Brainer Gold Play]: “Show me a better investment.”A Historic Gold Announcement Is About to Rock Wall Street? For months, sharp-eyed analysts have watched the quiet buildup behind the scenes. Now, in just days, the floodgates are set to open. The greatest investor of all time could validate what Garrett Goggin has been saying for months: Gold is entering a once-in-a-generation mania. Front-running Buffett has never been more urgent — and four tiny miners could be your ticket to 100X gains.August 30 at 2:00 AM | Golden Portfolio (Ad)Will a US$494 Million Shelf Registration Shift the Capital Strategy Narrative for West Pharmaceutical Services (WST)?August 24, 2025 | finance.yahoo.comBrokerages Set West Pharmaceutical Services, Inc. (NYSE:WST) Price Target at $320.71August 23, 2025 | americanbankingnews.comWest to Participate in Upcoming Investor Conferences in September 2025August 21, 2025 | prnewswire.comSee More West Pharmaceutical Services Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like West Pharmaceutical Services? Sign up for Earnings360's daily newsletter to receive timely earnings updates on West Pharmaceutical Services and other key companies, straight to your email. Email Address About West Pharmaceutical ServicesWest Pharmaceutical Services (NYSE:WST) is a global leader in the design and manufacturing of drug packaging and delivery solutions for the pharmaceutical and biotechnology industries. The company specializes in elastomeric and polymer components that ensure the integrity and safety of injectable medicines, including vial stoppers, syringe plungers, cartridge-based delivery systems and complete safety-engineered administration devices. With a product portfolio that spans containment and delivery platforms, West supports both traditional small-molecule injectables and advanced biologics. Its offerings include prefillable syringe systems, custom-engineered polymer components and integrated safety systems designed to reduce needlestick injuries and enhance patient compliance. The company also provides design, testing and regulatory support to help customers accelerate development timelines and meet stringent global quality standards. Founded in 1923 and headquartered in Exton, Pennsylvania, West has grown into a multinational enterprise serving more than 200 customers in over 50 countries. The company operates manufacturing facilities, R&D centers and technical service laboratories across North America, Europe and Asia-Pacific. This global footprint enables close collaboration with leading pharmaceutical and biotech firms at every stage of drug development and commercialization. Under the leadership of President and Chief Executive Officer Eric P. Green, West continues to invest in innovation, quality assurance and sustainability initiatives. The company’s long-standing relationships with top global drug makers, combined with its emphasis on engineering excellence and regulatory compliance, have positioned West as a trusted partner in advancing injectable therapies worldwide.Written by Jeffrey Neal JohnsonView West Pharmaceutical Services ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles DICKS’s Sporting Goods Stock Dropped After Earnings—Is It a Buy?NVIDIA's Earnings Show a Green Light for Taiwan Semiconductor After Earnings Miss, Walmart Is Still a Top Consumer Staples PlayRoyal Caribbean Earnings Beat Fuels Strong 2025 OutlookDLocal Stock Soars 43% After Earnings Beat and Raised GuidanceGreen Dot's 30% Rally: Turnaround Takes Off on Explosive EarningsElbit Systems Jumps on Record Earnings and a $1.6B Contract Upcoming Earnings Salesforce (9/3/2025)Broadcom (9/4/2025)Oracle (9/8/2025)Synopsys (9/9/2025)Adobe (9/11/2025)FedEx (9/18/2025)Micron Technology (9/23/2025)AutoZone (9/23/2025)Cintas (9/24/2025)Costco Wholesale (9/25/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Third Quarter 2023 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 Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Quintin Mike, VP of Investor Relations. Operator00:00:35Please go ahead. Speaker 100:00:38Thank you, Michelle. Good morning and welcome to West's Q3 20 Conference Call. We issued our financial results this morning and the release has been posted in the Investors section on the company's website located at westpharma.com. This morning, we will review our financial results, provide an update on our business and present an update on our financial outlook for the full year 2023. There is a slide presentation that accompanies today's call And a copy of that presentation is available on the Investors section of our website. Speaker 100:01:15On Slide 4 is our Safe Harbor statement. Statements made by management on this call and in the accompanying presentation contain forward looking statements within the meaning of U. S. Federal Securities Law. These statements are based on our beliefs and assumptions, current expectations, estimates and forecasts. Speaker 100:01:35The company's future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results as well as those expressed or implied in any forward looking statement made here. Please refer to today's press release as well as any other disclosures made by the company regarding the risks to which it is subject, including our 10 ks, 10 Q and 8 ks reports. During today's call, management will make reference to non GAAP and adjusted diluted EPS. Reconciliations and limitations of the non GAAP financial measures to the most comparable financial results Prepared in conformity to GAAP are provided in this morning's earnings release. Speaker 100:02:32I now turn over the call to our CEO, Eric Green. Speaker 200:02:36Great. Thank you, Quentin, and good morning, everyone. Thanks for joining us today. Due to an unexpected family emergency back in Ireland, Bernard cannot participate today. I appreciate your understanding. Speaker 200:02:50Quintin will step in for Bernard. We'd like to begin By addressing the ongoing situation in Israel, our top priority and focus remains on the safety and well-being of our team members And their families that live and work in the region. Now let's turn us to Slide 5 and the Q3 performance. I am pleased to report that our team delivered a solid Q3. Our ongoing success can be attributed for a well established market led growth strategy, which allows us to take full advantage of our solid base customer demand and recent capacity expansions. Speaker 200:03:32And it is the strength of our OneWest team, who I'd like to thank, that make a meaningful difference to ensuring our customers have a reliable supply of components necessary to deliver drugs to patients. In the Q3, we had solid organic net sales growth of 5.7 percent With an approximate $78,000,000 year over year decrease in COVID-nineteen related sales, Our base organic sales growth exceeded 20% for both the Enterprise and our Proprietary Products segment. Shifting to Slide 6. In Proprietary Products, We had strong base demand of HVP components and devices. We continue to see certain customers experiencing Strong uptake of their drugs as they accelerate and increase their replenishment orders with us. Speaker 200:04:35The greater than 20% growth in our base business was again led by our Biologics market unit, which had very strong double digit growth in the quarter, excluding the impact of COVID-nineteen related sales. And as we have seen through much of the year, we also had accelerated growth from restocking long lead time HVP components that we've been able to produce through our capacity expansions. This fueled growth in our generics and pharma market units. During September October, we have started to see an increase in inventory management trends by certain large pharma And generic customers, especially for our standard products, as they manage their safety stocks for the remainder of the year. These issues have led us to temper our 4th quarter organic sales growth to 2% to 3%. Speaker 200:05:36Excluding COVID related sales, we expect double digit overall organic sales growth and double digit proprietary product sales growth for the quarter. And we continue to monitor the situation in Israel and currently do not expect any impact on our ability to manufacture and ship out of the country. As in prior years, we will provide our formal 2024 guidance on our upcoming February Q4 call. In a bit of a preview, despite the inventory management we are seeing by some of our large customers, we continue to expect to deliver Our financial construct of 7% to 9% organic sales growth and 100 basis points of operating margin expansion. In addition, we anticipate that our pandemic related sales are at a point where we will no longer Have to separate out base performance in 2024. Speaker 200:06:39Lastly, a key aspect of our growth strategy and market leadership is West's team of scientific thought leaders and technical experts. They continue to advance the care for patients with our customers through valuable insights to address the changing needs of more complex molecules and combination products. For example, At the recent PDA Conference and CPHI Worldwide Conference, several of our West experts Delivered insightful presentations about the revised regulatory standards and emphasis on the development of sustainable products. Now I'll turn the call over to Quintin, who will go into more detail from the quarter. Quintin? Speaker 100:07:23Thank you, Eric, and good morning. Let's review the numbers in more detail. We'll first look at Q3 2023 revenues and profits, where we saw a mid single digit increase in organic net sales growth, an increase in diluted EPS and a decline in operating profit compared to the Q3 of 2022. I will also take you through the drivers impacting sales and margin in the quarter as well as some balance sheet takeaways. And finally, we'll provide an update to our 2023 guidance. Speaker 100:07:55First up, Q3. Our financial results are summarized on Slide 7 The reconciliation of non U. S. GAAP measures are described in Slide 16 to 20. We recorded net sales of 700 and $47,400,000 representing organic sales growth of 5.7%. Speaker 100:08:17COVID related net revenues Submitted to have been approximately $18,000,000 in the quarter, a decline of $78,000,000 compared to the same period last year. Looking at Slide 8, Q3 Proprietary Products organic net sales increased 3.2%. High value products, which made up approximately 76% of proprietary product segment sales, grew by mid single digits led by customer demand for HVP components and devices. Taking a look at the performance of the market units, including the negative impact from a reduction of COVID-nineteen related sales, The generics market unit delivered high single digit growth and the pharma market unit experienced low single digit growth, both led by Westar Components and Advent Systems. The Biologics market unit also saw low single digit growth, driven by sales of Flurotech components and self injection delivery devices. Speaker 100:09:19Our Contract Manufacturing segment experienced double digit Net sales organic sales growth led by an increase in components and sales of components related to injection related devices and Healthcare Diagnostic Devices. Our adjusted operating profit margin of 24.2% was a 290 basis point decrease from the same period last year. Finally, adjusted diluted EPS increased 6.4% for Q3, excluding stock based compensation, tax benefit, adjusted diluted EPS increased by 1% Now let's review the drivers in both our revenue and profit performance. On Slide 9, We show the contribution to organic sales growth in the quarter. Sales price increases contributed $46,200,000 were 6.8 percentage points of growth in the quarter. Speaker 100:10:17Foreign currency tailwind was approximately $25,100,000 3.7 percentage points of growth. Overall mix and volume negatively impacted sales by $7,300,000 This includes an approximate $78,000,000 reduction in COVID-nineteen related net demand, partially offset by positive volume and mix Contribution from our non COVID based business. Looking at margin performance, Slide 10 shows our consolidated gross profit margin of 38.6 percent for Q3, down from 39.0% in the same period last year. Proprietary Products 3rd quarter gross profit margin of 43.4% was 20 basis points lower than margin achieved in the same period last year. The key driver for the decline in proprietary products gross profit margin was an unfavorable mix From a reduction in sales related to COVID-nineteen vaccines, offset by sales price increases that offset inflationary cost pressures in our plants. Speaker 100:11:26Contract Manufacturing. 3rd quarter gross profit margin of 18.6% was 130 basis points higher and the margin achieved in the Q3 of last year due to a favorable mix of products sold and increased sale prices offset by Inflationary pressures on our plant labor costs. Now let's look at our balance sheet and review how we've done in terms of generating Cash for the business. On Slide 11, we have listed some key cash flow metrics. Operating cash flow was $537,400,000 for the 1st 9 months of 2023, an increase of $44,200,000 compared to the same period last A 9% increase primarily due to improvement in working capital. Speaker 100:12:15Our Q3 2023 year to date capital spending was $253,300,000 $63,600,000 higher than the same period last year. We continue to leverage our CapEx to increase our high value product manufacturing capacity. Working capital of approximately $1,440,000,000 at September 30, 2023 increased by $38,300,000 from December 31, 2022, primarily due to growth in our current assets, offset by an increase in our current portion of long term debt. Our cash balance at September 30, 2023 was $898,600,000 and was $4,300,000 higher than our December 2022 balance. The small increase in cash is primarily driven by Positive operating results offset by increased repurchases under our share repurchase program and higher CapEx. Speaker 100:13:21Turning to guidance, Slide 12 provides a high level summary. We're updating our full year 2023 net sales to be in a range of $2,950,000,000 to $2,960,000,000 compared to a prior guidance range of $2,970,000,000 to $2,995,000,000 There is an estimated Full year 2023 tailwind of $20,000,000 based on current FX rates unchanged from prior guidance. We expect organic sales to be approximately 2% to 3% for the full year compared to the prior guidance range of 3% to 4%. We are raising our full year 2023 adjusted diluted EPS guidance to be in a range of $7.95 to $8 compared to a prior range of $7.65 to $7.80 Also, our CapEx guidance is $350,000,000 for the year, unchanged from prior guidance. There are some key elements I want to bring to your attention. Speaker 100:14:31We have lowered our revenue guidance to reflect a recent trend with certain pharma and generic customers Slowing their restocking of inventory and increased inventory management as we head into the end of the year. We expect full year COVID-nineteen related sales to be approximately $68,000,000 compared to prior guide of $60,000,000 Net sales guidance also includes a reduction of $8,000,000 resulting from a divestiture of a European facility that produced standard proprietary products, And this is unchanged from prior guidance. Full year 2023 adjusted diluted EPS range includes an FX tailwind of approximately $0.07 based on current FX exchange rates, compared to prior guidance of a tailwind of $0.05 The updated guidance also includes EPS of $0.41 associated with year to date 2023 tax benefits from stock based comp. Our guidance excludes future tax benefits from stock based compensation. I would like to highlight that over the last 5 years, Our base business growth excluding COVID-nineteen has been within or above our construct of annual Organic revenue growth of 7% to 9%. Speaker 100:15:50And over the same time period, we've averaged Our annual operating margin expansion of over 100 basis points. As Eric mentioned earlier, we are providing a preliminary look to 2024. Based on current trends in demand, we anticipate that Wes will again be within our long range financial construct of organic sales growth and operating profit margin expansion. As usual, we'll provide more detailed guidance on 2024 in our February call. I'd like to turn the call back over to Eric. Speaker 200:16:24Thank you, Quintin. To summarize Slide 13, we had a solid Q3 performance and are on track for double digit base organic sales growth in Q4. Our base business remains strong, which is a testament to the durability of the foundation we have built over time. We are proud to serve as a valuable trusted partner for customers to And look forward to continue to play a critical role in delivering healthcare well into the future. Michelle, we're ready to take questions. Speaker 200:16:57Thank you. Operator00:16:59Thank Our first question is going to come from the line of Paul Knight with KeyBanc Capital Markets. Your line is open. Please go ahead. Speaker 300:17:30Hi Eric. Hi Quintin. You mentioned this stocking issue was kind of in the standard products Category, which leads to the question of in the high value product category, Are you obviously, we know you're supplying GLP-one products, but are you capacity constrained on that side of the business, if you could talk to that issue and how big is GLP-one, if you can or will? And then lastly, these CapEx numbers, what facilities open next year? Thanks. Speaker 200:18:11Great. Thank you for the question, Paul, and good morning. Let's start with the GLP-one question. If you look at, we serve that space In both areas of our business, proprietary products with our elastomer components, specifically in that space, you'll see HVP plungers. And then in the contract manufacturing space, we support that our customers in the GLP-1s with Auto Injectors. Speaker 200:18:42So I would say today from our perspective, we're not capacity constrained. We're able to Re leveraged some of the assets that we had, that we put in place for COVID, a lot of that technology. And We also leverage our global network. And so we'll see we'll be able to continue to ramp, particularly on the last summer space, HPP Plunger is to support our customers as new drug molecules are approved and launched across the globe. On the Centimeters side, we have we are currently producing auto injectors into the market And we've been asked to expand capacity, which we've actually put expansions in place And they're ongoing. Speaker 200:19:29It will take several quarters to get completed and validated throughout, let's call it, throughout 2020 And particularly those sites that we're referring to, Paul, is Dublin and also Grand Rapids, Michigan. On the and from a market size perspective of GLP-one, we don't we haven't commented. We still will not. We would say that from a volume perspective, I would focus from our customers on how they communicate their expectations. But I can assure you that we're working with them to ensure that we are not and will not be the bottleneck as we continue to grow In that space for a number of years to come. Speaker 200:20:15In regards to the restocking, you're absolutely correct. It's not As much in the HVP area, it tends to be it is really around our standard products. It's in categories around disposable medical devices. This tends to be the standard elastomer components, and we're being asked to divert Some of those orders into 2024. So that's the cadence. Speaker 200:20:42It's not a loss to share. And we continue to have a very healthy win ratio of new Prove molecules, particularly in biologics. And so our position from a market position hasn't changed, But it is just the timing of inventory management with a few select customers. Operator00:21:08Thank you. And we'll move on to our next question. One moment please. Our next question is going to come from the line of Larry Solow with CJS Securities. Your line is open. Operator00:21:23Please go ahead. Speaker 400:21:25Good morning, guys. Thanks for taking the questions and wish all luck to Bernard. I guess first question, Eric, is just A little bit of a slowdown in Proprietary Products just seasonally. And I know you guys were increasing capacity. So I'm just curious, I thought we were going to kind of trend up. Speaker 400:21:42Is there just a little bit more of a return to some seasonality you're seeing? I know Q3 historically, pre COVID was kind of a little bit slower. The last few years have obviously been kind of I think that's been throughout the window. But are we kind of getting back to some of that and maybe that kind of goes in hand with The inventory management too where now supply chains are maybe somewhat normalized, so some of the larger customers have the ability to Manage your inventory better as well. Speaker 200:22:11Yes. Larry, thanks for the question. First of all, I'll pass on your remarks to Bernard a little bit later. In regards to the inventory management, what we're seeing, it's not really it's not seasonality or It's more around timing of orders. So if we think about the investments we're making and I know Paul earlier asked about specific Capital investments, in different plants. Speaker 200:22:36And most of our investments, about 2 thirds, let's call it 2 thirds of our CapEx is around growth orientation. Right now, there's a heavy emphasis around HVP, particularly around plungers. And also in the Centimeters side, it's been a little bit larger than typical because of the supporting some of the new drug launches coming down the road. But we're seeing some of the and so those investments are going to be at our major HVP sites and I already commented on which sites for Centimeters. In regards to timing of the orders, it's not seasonality. Speaker 200:23:15It also is timing of customer action schedules. So what I would look at is Q3 with the 20% base organic growth and the comments that biologics give the number, but was Led that, so it's obviously above. That is really new molecules in the market and success of those Existing components, I'm sorry, molecules in the market already. And so the demand continues to be layered on top. We've and Kinstant site as an example, We've installed new capacity for NovaPure plungers. Speaker 200:23:52We've been ramping that up through Q3 and we'll also do that through Q4. And we should be able to relieve the back order situation by the end of this year and we'll be in a very good position To be able to service our customers effectively throughout 2024 in the fastest area of growth. So hopefully that gives you some context, Larry, What we're seeing is really their own product standard products in the market. Speaker 400:24:20Got you. Great. Just shifting gears for just one follow-up, just on the hard die solutions, I think you kind of gave me good leeway into that. Obviously, that continues to be The driver and it sounds like there hasn't been much slowdown there. Just in terms of just I I think you said it was grading 75% in the quarter for revenue. Speaker 400:24:40Can you remind us approximately what it was last year? And more importantly, Just I know it's a lot lower on volume, can you give us a kind of a guesstimate on where it is on a volume basis? And I imagine NovaPure still remains a minority piece of that and that sounds like that's potentially the fastest growing piece going forward. So any color there will be great. Thanks. Speaker 100:25:05Yes, Larry. I can't Call, I'll have to get back to you on what it was as a percent of sales last year, somewhere around 70 or plus or minus. We have seen growth year on year and it's a combination of volume, mix and price that have driven the year on year growth. And If you think about it, when some of the new drugs that Eric has mentioned, that incremental volume Of those drug successes typically come at our higher end of HVP like NovaPure. And so therefore, it has a bigger impact. Speaker 100:25:55So it may not have as big a volume as much as a mix impact for us. Speaker 200:26:01And one additional comment, the algorithm, Larry, of you think about the growth of HVP in the double digits, That requires about 100 basis points increase year over year of volume for HBP. So we're still in the 20 3 24 percent corridor, from a volume perspective, but as because the way that Quentin articulated the ASP margins, it's Quite significant impact on the overall portfolio. Speaker 400:26:31Got it. Great. I appreciate the color. Thanks. Thanks, Larry. Speaker 400:26:35Thanks, Larry. Operator00:26:36Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Jacob Johnson with Stephens. Your line is open. Please go ahead. Speaker 500:26:50Hey, thanks. Good morning and my best to Bernard as well. I guess I'll stick with the popular subject of the morning. Maybe just first going back to the restocking dynamic, you call it out as a slowdown in restocking trends. I'm just curious I do about this. Speaker 500:27:07Is it a lack of restocking and customers not going to as high of safety stock as you would have expected? Or is it some destocking not Speaker 600:27:15to get Too caught up Speaker 500:27:16in the vernacular here. And then the other piece of that is just, Eric, you mentioned growing next year despite that inventory management. How should we how long should we think about this dynamic persisting? Speaker 200:27:28You want to cover the Speaker 100:27:29first part? Sure. Jacob, I'll give you an example. We At the start of the year, we had customers putting orders in for Q4 That based on where we were in our capacity and our ability to deliver, we said we're going to have to get it to you next year. I mean, that's the lead time issue that we had and we had those types of discussions. Speaker 100:28:01As our team have done a fantastic job Getting at it and increasing the capacity, we got over the issues that we had last year in terms of some of The issues of installing that some of the HPV processing capacity in one of our sites, we built on new facilities And in other areas, we were able to start to clear some of that backlog And then we were able to go to those customers and said, hey, we're going to be able to now deliver like you said originally for the end of the year. And what they came back to us and said, no, we're good. We've already reset our manufacturing schedules. We're going to just take it here in 2024 instead. And What we thought we were going to be able to do and handle it because now we've got that additional capacity and help restock them, Now it's just a matter of timing. Speaker 100:29:05So that just gives you an example of some of the things that we've seen as the years Congrats? Speaker 200:29:14Yes, absolutely. And I think the last aspect around this is that if you think about the dynamics of this long term, What we're speaking with customers on it is really is the rescheduling of their production lines and the need of the product. So That's why we are we've given indication and we're not giving we're not giving the full guidance today, but we're giving indication that 7%, 9% Corridor of the top line growth is being led by HVP and it's being led by Biologics. And we're putting COVID into the number. So it gives you kind of dynamics that we're seeing right now. Speaker 200:29:53So we should This is a temporary situation. Speaker 500:29:58Okay. That's helpful. And then Eric, you were just talking about the Kinston capacity ramping in 3Q and 4Q and you kind of mentioned that you would Catch up on maybe some back orders or something like that, if I heard you correctly. I'm just curious as it relates to that market, do you think containment solutions have been A bottleneck for the ramp of some of these drugs and is this something that as you get caught up on, We should expect Kinston to ramp pretty well in 4Q and maybe in the early next year. Speaker 200:30:33Yes, I would say no, we're not the bottleneck, To be clear, in some of these drug launches, we would state that we have been able to Navigate and manage through. And I was just before this call, we were just kind of do another review of The customers that are coming out of that Kinston plant for particularly NovaPure Plungers and it's Quite a few customers. So it's not one molecule, it's not one customer. It's multiple and there's ramping up for 2024 campaigns. So we're excited about where we are. Speaker 200:31:10But I would say right now we're not a bottleneck. It just goes back to what we spoke about earlier is that We would like to they would like to see better stronger safety stocks at their own in their own pipeline. But we do know that there's some other issues that we see, but that's not for us to discuss of some of these launches. I would say we're not the bottleneck. We got the investments put in place. Speaker 200:31:36It's validated. The customers are very satisfied with the quality of the product From our Kinston facility and we have capacity to continue to grow and support frankly the biologic launches. And These are the areas around oncology, autoimmune, immunology. I mean these are exciting areas for us and I think we're well positioned for the future, particularly out of that plant. Speaker 500:31:58Got it. Thanks for taking the questions. Speaker 200:32:01Thank you. Operator00:32:03Thank you. And one moment while we move to our next question. And our next question is going to come from the line of Jon Sauerbeer with UBS. Your line is open. Please go ahead. Speaker 700:32:17Good morning and best of Bernard. I guess just starting off on GLP-1s, just Any additional color or even maybe broader biologics, but how do you see this market evolving maybe between auto injectors and multi dose pens and Maybe GeoOne's more specifically, just any thoughts on potential transition to more oral products there? Speaker 200:32:41Yes. No, it's I don't want to be putting speaking on behalf of my customers. I got to be careful here. So what we're prepared to do for them We'll continue to be the primary, the key manufacturer of elastomeric components That go into several of these auto injectors and other modalities. And so from a last part position, we're very Encouraged with our HPP plunger portfolio and we're able to support them on the demand And then actually stay ahead of the demand with our manufacturing capabilities. Speaker 200:33:19We mentioned a little bit earlier today that some of the assets We put in for COVID are actually fungible for this, not just for GLP-one, but for HVP in general. I think in regards to multiuse pens, again, I would refer to our customers in that discussion. But from our point of view, We participate in all. And we are the market leader in injectable medicines. Now we don't participate in oral. Speaker 200:33:48And that is the uptake of oral, the effectiveness of oral, those are all discussions I would Really encouraged you to speak with our customers on it directly. But as the injectable space continues to grow in GLP-one, As new molecules are approved and launched, we're and the investments we're making, both on the proprietary and Centimeters side, We have a good visibility of cadence of what we're being asked to build support through our global network to support the demand. I'll just be clear. One other aspect is that on the proprietary side, we always enjoy a very high, participation rate. On the Centimeters side, we've been very clear that our customers are looking at multiple suppliers to support them and we're one of them. Speaker 200:34:36So we're positioned very well on both sides of the business. Hopefully, it gives you some context of what we're seeing. Speaker 700:34:43Yes. Thanks. Appreciate the color there. And also just looking to the high level framing around next year, You had pretty strong pricing this year, I think in the 5% to 6% range. Just any color on what you think pricing could look shake out to for 2024? Speaker 200:34:59Yes. I won't give exact at this point because we are still working through our details and we have been in discussions with customers. I think one thing to think about, you're right, this year we were communicating between 5% to 6% net price realization. I think we're clearly in that corridor on the upper end, and which is positive when you think about the inflationary pressures that all of us around the world are faced with, and we're able to offset majority of that pressure. We are taking consideration of additional inflation if what that would look like next year. Speaker 200:35:37So just to give you a little context of how we look at this And that will help us inform our decision about exactly what corridor we're going to be in. But I would say, I can say here that the store, I can talk to you years ago, when we were at sub-one percent or between 1% 2%, I believe that's behind us. We do think we're in a better position to capture more price going forward. Speaker 700:36:06Thanks, Eric. And then the last one just on my end. On COVID, it sounds like you're no longer going to break that out next year. There was an increase in the guidance for this year. Anyway, just to think about what is the endemic level there on COVID going forward? Speaker 200:36:19Yes. I think the just based on the guidance Quentin articulated and I think both Bernard and Quinta have been clear on. We're looking at about $68,000,000 for this year. So it would basically If you do the delta, it's about $8,000,000 in the 4th quarter. And that means compare that to $388,000,000 prior year. Speaker 200:36:40A little bit more of that the previous year to that. It's hard to predict and but we're in the last two quarters we've been basically between $10,000,000 $20,000,000 a quarter. And so the way we look at it is, yes, that could potentially be a headwind. There's less doses that are Administered or it could be a tailwind if there's more doses depending on how this pandemic evolves. But we're just we're going to right now, our thinking is to put it into the base and run the business as a whole, because at this point, it's becoming A very small portion of overall West. Speaker 200:37:18So yes, we'll be clear for the balance of this year, but then we'll give Better clarity in February if we think if we do need to still call it out, but our thinking right now is to eliminate that. Speaker 700:37:32Thanks for taking the questions. Speaker 100:37:34Thank you. Operator00:37:35Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Matt Larew with William Blair. Your line is open. Please go ahead. Speaker 600:37:52Good morning. Obviously, the focus in terms of the contract manufacturing and auto injector investments right now are around GLP-1s, but there's growing is just I think more broadly in new delivery modalities and obviously you have your SmartDose platform. So just curious if you can maybe update us on either the interest, the funnel pipeline or more generally What discussions with customers are like in more of the device category that you've been investing in? Speaker 200:38:24Matt, thank you for the question. Excellent question. Quentin, do you want to start? Speaker 100:38:29Yes. So, Matt, Let me clarify. So when we think about injection delivery platforms, we at West can participate in 2 ways. 1, if the customer has the IP, then we can manufacture on behalf of that Customer and that's where our contract manufacturing is. We're really good at it. Speaker 100:38:58We're not the only ones that will be there though. As we've said in the past, the customers with the IP will typically outsource to 2 to 3. And if it's a very big project, it could be up to 5 to 6 different players. So that's how we participate. And very often, those customers also happen to be key proprietary product elastomer customers. Speaker 100:39:29And then on the SmartDose side, there that is proprietary to us. That is our design And that's when customers come to us and work with us to spec in that device with their drug To make a drug device combination therapy. And there we're seeing really active We are up to 4 now drug approvals using our SmartDose platform and we have a very active pipeline of customers That are evaluating the platform. Speaker 200:40:03Excellent. Thank you Quintin. Speaker 400:40:06Okay. Thanks, Speaker 600:40:09Quinn. And then next on capacity, obviously, sort of Kinston is ramping to full capacity. I think you'd referenced Maybe adding to the Waterford site in 24. So I guess just as we think about where capital is moving next From an investment perspective, is it Waterford, are there other sites or particular categories you have in mind? And as you're doing that, I know you've referenced building additional automation and to know where it builds. Speaker 600:40:39Are those things that can help Speed time to ramp or Mortis benefits at steady state? Speaker 200:40:47Yes. So the two points, if you think about the first one in regards to their network and where we're investing our capital, particularly on HVP, It's heavily concentrated between Kinston, a little bit in Jersey Shore up in Pennsylvania. But in Europe, it's Waterford and Echewyler. And we're also looking at additional expansion in Singapore to be able to support the Asia market. But the priority has been really around the U. Speaker 200:41:16S. Europe and we'll continue to invest. And it's interesting the growth that we're experiencing with HPP to build support that. It is really around, you think about the pharma washing, sterilization and vision, that is helping us to drive the HVP conversion. So I'm excited about where we are, but also the investments are in flight, what that will give us and also give us the ability to do uplift on the additional demand that we expect. Speaker 200:41:48The automation is ongoing and I'm actually pleased With some of the recent progress we made on new technology for West that allows us to be more efficient, Improve quality, in my mind, I'm always looking at improved safety and also allows us to scale up faster When we started thinking about to support various areas, whether it's biologics, what I mentioned earlier about oncology, immunology or autoimmune, it was also thinking about How do we support this scale up on GLP-one? And so this automation that we're working on with a couple of our external partners, I need to get over to Europe recently to see some new investments that we put in place. I'm excited for what the engineering team has been doing And it's going to give us the ability to scale faster, but more importantly, I think the automation is going to provide a better product that continues to differentiate West in the marketplace. That's what I'm really excited about. Yes, we'll get efficiencies. Speaker 200:42:51Yes, we'll get more throughput. But reality is and Main focus is a higher quality product that differentiates the market. Speaker 600:43:03Okay. Thank you. Speaker 200:43:04Thank you. Operator00:43:06Thank you. And one moment as we move to our next question. And our next question is going to come from the line of David Windley with Jefferies. Your line is open. Please go ahead. Speaker 800:43:20Hi, good morning. Thanks for taking my questions and best to Bert and his family. I wanted to start On stocking and just to understand some moving parts a little bit better. I'm understanding, I think, well that you're talking today Within elastomers or components, the destocking is mostly standard. I think Early in the year, we had understood that you had some areas that Post pandemic, maybe Westar, for example, post pandemic had not gotten the Capital allocation, the growth allocation and were understocked and catching up. Speaker 800:44:05And so I guess I wanted to try to understand better If those two factors were both at play and offsetting in the quarter or maybe the Westar was already done and therefore the standard destocking now is what we're It feels like there have been through the year moving parts in both directions, and I just wanted to understand those and the cadence of them. Thanks. Speaker 200:44:27It's a good question, David. Yes. Speaker 100:44:29Hey, Dave. So maybe it's just a definition or just Maybe when you say destocking, we think of it more as customers That are having a demand issue like in COVID-nineteen and what they're doing is they're not reordering And they're taking down their safety stock and consuming their safety stock. And that's certainly happening in COVID-nineteen, which we're seeing year over year declines. The other impact is the fact that we have been behind In terms of delivering because of our capacity constraints and then as we've been able to restock, the Base growth that you've seen in generics and pharma is well above the financial construct. So that has been going on for the 1st part of this year. Speaker 100:45:34What we're seeing now is that, that base growth is going to temper. It's not declining. It's just not going to be as high as we thought it was going to be in Q4. That's why we're calling it A slowing of a restock is not necessarily a destock situation. And again, A lot of it happens to the fact that we've done a really good job of clearing the backlog. Speaker 100:46:02We've been we've gone to our customers. We said, hey, We have that capacity to deliver product and they said no, given where we are in the year, given where our manufacturing schedules are, We would rather it be delivered next year instead of Q4. Speaker 800:46:22Okay, helpful. Thank you. In thinking about your initial comments on 2024 and admittedly the I appreciate your answers to Paul's question to start on GLP-1s. And I I think we all know that the attention there is probably overwrought, but in so much As there's a lot of enthusiasm for that particular class, I think your folks that are paying attention to West believe that that Can be a very strong driver for you, perhaps in excess of your long term construct. Would you Tell us that that is that our assessment of that is too enthusiastic or is it that The pace at which that comes on is perhaps not as quick as we think? Speaker 800:47:21Or is it that other parts of the business are off setting and those things net you into that 7% to 9% target range? Thanks. Speaker 100:47:30So Again, understanding your question, here's our philosophy. We need to be ready for whatever the customers need from us. And so we have That's why our teams have such great communication with the customers. We have cited that we have customers that are doing really well And are increasing their reorders. In the event that those things change to the positive, That's where our global network is ready. Speaker 100:48:11We are so we're in position for that. We've got the global network to do that. And so now what happens to that class of drug? That's really better addressed by Our customers, all we can say is that we'll be ready and Continuing to be ready and that's why we've got so much capital projects going on right now. Speaker 200:48:39Eric? So Dave, in addition to that, Vincent's right, it's If you think about the growth for, we're really confident with the growth of biologics, it continues to be strong. And when we speak about biologics, we're not really We're bringing in GLP-one conversations in that mix. And so the growth we're We talked about 7% to 9% construct, we have to be led by HPP, it's led by biologics. That really isn't part of the GLP-one conversation. Speaker 200:49:10As demand comes in for GLP-one when the drugs are approved and as for the launches And the whole supply chain is working effectively and efficiently. We'll be in a very good position to support that scale up. Exact timing, exact cadence of that aspect, I would probably refer more to our customers on that. But we're positioned well to absorb The elastomer side and also the investments we're making, we'll take some time to get the buildings and validate in addition to what we have already. That will be Centimeters is a little bit longer term, but we're ready to address that, Dave. Speaker 800:49:50Appreciate that answer. If I could just clarify, Eric, on what you just said. When you say you're not bringing GLP-1s in on that statement, does that mean that GLP-1s are categorized, say, in pharma, not biologics? Or are you just saying that You're enthusiastic about the biologics pipeline notwithstanding whatever GLP-1s due to that pipeline. Speaker 200:50:13Yes, it's really it's latter. It's I tend to focus on what's approved or about to get approved in the market And that's around the biologics space. We have a diverse portfolio of customers, diverse portfolio approved drugs in the market and about to be approved. And yes, we as an organization are going to Fully support and be ready and available to support the any GLP-one launches that are beyond what we see today. We're excited to be part of that participation and we'll lead in the front like we have. Speaker 200:50:53And there's no reason why we can't deliver Like we did around COVID, it's the same model frankly. We think about really the number of SKUs, number of assets that are That we're leveraging their existing operations. We're very confident we can deliver. But I would say, I just want to be clear, I'm very excited about biologics Without saying that this growth can be driven by GLP-one. Speaker 800:51:22Understood. Thanks for the clarification. Thank you. Thanks. Operator00:51:26Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Justin Bowers with Deutsche Bank. Your line is open. Please go ahead. Speaker 900:51:40Hey, good morning, everyone. Just a 2 parter on the outlook for 2024, which I think we all appreciate. Wanted to clarify that the 7% to 9% organic does include The $68,000,000 of it's on top of the COVID or the $68,000,000 of COVID. And then Number 2, sort of can you help us understand the visibility that you have now into that Growth, is there a level of commitments from customers? Are you already talking about sort of like Project planning in the pipeline for next year, just investors And the space has been very skittish around visibility. Speaker 900:52:34So any framing there would be helpful. Speaker 200:52:37Yes. No, great questions. The first one is It's pretty clear. Yes. When we talk about 7% to 9% top line, 100 basis point margin expansion, that is inclusive Of the COVID, dollars 68,000,000 that we guided for 2023 in that number. Speaker 200:52:55So And if there's a drastic change between now February, we'll communicate that. But based on what we're seeing, The answer is yes. It's part of that equation. The second part about visibility, just it's interesting our business is make to order for the most So our customers are coming to us and giving us campaigns, whether it's 3 quarters, 6 quarters, 5 quarters, And we're able to support them on whether it's new drug launches or existing drug launches. And there's always going to be some variability On each and every molecule. Speaker 200:53:31And so but on aggregate, we have pretty good lens what type of volume we need for our SKUs and what investments we need to make. On the Centimeters side, it tends to be very long Contracts with specific assets in CapEx installed That will take a little time to ramp, but once we're operating, we pretty much know what the capacity and output will be day over day. On the last for side, there's more volatility, more variability. And again, it depends on how successful the drugs are in the marketplace. And so therefore, we're able to move a little bit up and down quarter to quarter. Speaker 200:54:15So we do have visibility. Is it 100%? No. But this business has tremendous amount of, I'll call it, annuity like Repeat year over year. It's not 100%, but it's very high. Speaker 200:54:32And that gives us confidence on how we can plan existing growth, but also future launches working with our customers. So There's a little bit of both in there in that answer. Speaker 900:54:47Got it. And then just a quick follow-up on Sean, sort of the margins this year or this quarter, is that sort of a good go forward Great, just given sort of the commentary on the longer visibility of that business. Speaker 100:55:10Yes. I think that this quarter we did have some benefit from some pricing that we did take Through some of our contracts, we think longer term, we're looking 16% to 17%. Speaker 900:55:26Okay. That's all for me. Thank you. Speaker 200:55:29Yes. Thank you. Operator00:55:31Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Derik De Bruin with Bank of America. Your line is open. Please go ahead. Operator00:55:45Hey, Speaker 1000:55:47thanks for taking my question. So the margin guide that's implied for the 4th quarter, I mean to get to your EPS number that is basically and sort of using your organic perimeter of guides and everything you put in there, to get to that Your EPS number for the year, even if we don't assume you're going to get any of that stock based compensation, it looks like you're going to take a pretty big step Down sequentially Q3 to Q4. I'm just very curious what's going on. Is it validation of lines? Why is there such why is this sort of the implied margin step down so big between the quarters? Speaker 1000:56:24Thanks. Speaker 100:56:26Hey, Derek. Thanks for the question. Really, it's just utilization and absorption. Given that we're Probably going to have lower volumes through our facilities in the Q4. We just want to make sure that we have a reasonable WAG gross margin. Speaker 100:56:49And then we're going to continue to manage our costs on the SG and A and R and D line. But so that's where the margin impact is really going to be reflected, especially in proprietary products margin for the quarter. Speaker 1000:57:04Got it. So gross margin on proprietary products, you expect to be down sequentially just given the utilization? Speaker 200:57:11That's right. Speaker 100:57:11And then Centimeters to get back down to kind of that 16%, 16.5% range. Speaker 1000:57:17Got it. Okay. And so How long does that sort of like I mean, how long does that sort of like drag on proprietary products as we start thinking about building out our quarterly models Our quarterly estimates for next year? Speaker 100:57:31No, no. I mean, look, I mean, we're in the process of Formalizing kind of the plans for 2024. But as we look at it, next year with the top line growth that we get Led by HVP, you're going to see gross margins improve year on year. Speaker 400:57:51Got it. Speaker 1000:57:52Okay. That's great. And just going back, I mean, I know we've talked about the guide and its questions have been asked. But I mean, I've covered this stock for a while and you're right. I mean, you historically are doing better than your 7% to 9% construct. Speaker 1000:58:08I mean, why wouldn't you do at least behind of that range next year? I mean, given you've got pricing, You've got demand, you've got some orders that got pushed from this year to next year. I mean, why wouldn't COVID is normalizing, why wouldn't that be Just like, why wouldn't that be a reasonable 9% or better? Speaker 100:58:31Well, Derek, look, We're sitting here in October. We're putting our plans together. We're trying to give you kind of a preview of next year. And we're also doing it cognizant of the fact that we're hearing other life science tools companies upstream of us talk about Softness and tougher times. We don't have some of the high exposure That they have in certain areas like emerging bio and pre commercial companies and Things like that, but still we just want to be again, we want to be We acknowledge that there are uncertainties out there. Speaker 100:59:20So as we sit there and put all that in And that's how we come up with that preliminary guide. And we'll provide a lot more detail in February Because we'll have a lot more information then and we're happy to come back and talk to you then. Speaker 200:59:39Yes. And I think we've been consistent on the message that that's just To us, we want to continuously hit or exceed. So that's where we sit right now with the visibility we have. Speaker 1000:59:52Great. Thanks a lot. Appreciate it. Speaker 200:59:54You bet. Speaker 100:59:55Good talking to you, Derek. Operator00:59:57Thank you. And I would like to hand the conference back over to Clinton Lai for any further remarks. Speaker 101:00:03Thanks, Michelle. 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