West Pharmaceutical Services, Inc.

Good day, and thank you for standing by. Welcome to the Q1 2021 West Pharmaceutical Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand today's conference over to your speaker, Quentin Lai, Vice President of Investor Relations. Please go ahead.

Thank you, Stephanie. Good morning and welcome to West's first quarter 2021 conference call. We issued our financial results this morning and the release has been posted in the investor section on the company's website located at westpharma.com. This morning, CEO Eric Green and CFO Bernard Burkett will review our financial results provide an update on our business, and present an update on our full year 2021 financial guidance. There's a slide presentation that accompanies today's call, and a copy of that presentation is available on the investor section of our website. On slide four 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 laws. These statements are based on our beliefs and assumptions, current expectations, estimates, and forecasts. The 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 risk to which it is subject, including our 10-K, 10-Q, and 8-K reports. During today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, 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. I now turn the call over to West CEO and President Eric Green.

Great. Thank you, Quinton, and good morning, everyone. And thank you for joining us today. Starting on slide five, I am pleased to report that we had an exceptional first quarter. This is driven by strong organic sales growth in both our base business and the accelerating demand for products associated with COVID-19. Our high-value products continue to fuel increased growth in operating margins. Together, this has resulted in record EPS for the first quarter. The strength of our performance is demonstrated in our ability to execute the market-led strategy, leverage the power of our global manufacturing network, and rally as a One West team to meet the increased market demand. I am proud of how our team members have focused on our priorities and emphasized the importance of our purpose and values during these times. Turning to slide six, we have highlighted the key drivers of growth in Q1. we continue to see strong uptake of HVP components, including Westar, Floratech, Envision, and NovaPeer offerings, as well as Dykios Crystallizina. Our biologics customers are seeking to use these best-in-industry components to ensure the highest degree of quality and safety for their vaccines and injectable medicines. This has resulted in strong double-digit growth, excluding COVID sales, and continued demand growth for Floratech and Novapyr in our biologics business. Through the first four months of 2021, our participation rate in recently approved new molecular entities in the U.S. and Europe continues to be strong with over 95% growth. of these approvals using either West or Daikyo components. In addition, we experienced strong growth in Westar ready-to-use components with customers seeking the value, quality, and convenience of our Westar wash and sterilized products. And for Envision, we also had significant growth with customers looking for higher quality and better production yields by using our Envision inspected components. Another highlight was strong sales growth in Dicul CZ syringes and vials. Customers prefer CZ for its compatibility with their sensitive molecules and its outstanding track record of quality and reliability. Moving to slide seven. The power of our global manufacturing network continues to support our growth trajectory. we are uniquely positioned as a result of the global operations strategy implemented a few years ago. This has enabled the right capabilities, scale, and flexibility to keep in pace with the increase in demand. As a result of recent capital investments, we have expanded our manufacturing capacity across our high-value product portfolio with additional equipment and validated lines to support our highest HVP growth areas, Westar, Floritech, and Novapeer. We have accelerated the timeline for capacity builds within our existing footprint by working closely with our equipment suppliers and staging installations around the 24-7 plant schedules. Our first phase, which began at the start of the pandemic, is about 75% installed and operational, with expected completion in the second half of the year. Our second phase... we'll see equipment arriving in the back end of the year and operational in 2022. And we are evaluating additional investments for a third expansion phase in response to an increasing possibility of COVID-19 boosters and annual vaccinations required over the next few years. When this occurs, we think that future COVID-19 vaccines could likely be fewer doses per vial than and or in single dose pre-filled syringes. As a result, it may mean higher volume demand of our HVP components compared to what we are experiencing today. I am pleased to share that from my recent visit to our Scottsdale, Arizona facility, we are on schedule with our fully automated line for CZ insert needle syringes. We're in the process of validating the line, which is targeted to commence commercial production for our customers' committed orders during the third quarter of this year. This is our third automated line with another line scheduled for delivery in late 2021. Turning to slide eight. Core to our values at West is being a strong corporate citizen. In 2019, we exceeded our initial five-year environmental, social, and governance, or ESG, initiatives set in 2017 and raised the bar higher with a new set of five-year goals. I'm proud to say that we continue to make significant progress on our ESG priorities with good momentum towards our stated reduction goals for waste, energy, and water usage. We continue to reaffirm our commitment to live by our One West team value that calls on us to respect each other, drive collaboration, and to embrace diversity and inclusion in our workplace. We continue to make strides in this area, from new team members hired at all levels in our manufacturing sites to the diverse representation on our executive leadership team at West. and we continuously look for ways to improve sustainability of our business, and the rigor of our ESG reporting continues to evolve. Last year, we published a supplement, or later this year, we will publish a supplement to our 2020 CR report incorporating the SASB ESG standards. Now I'll turn it over to our CFO, Bernard Burkett, who will provide more detail on our financial performance. Bernard?