West Pharmaceutical Services, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2021 West Pharmaceutical Services Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during this session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to turn the conference over to your speaker for today, Quentin Lai, Vice President, Investor Relations. You may begin.

Thank you, Tawanda. Good morning and welcome to West's fourth quarter and full year 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 westbarmer.com. This morning, CEO Eric Green and CFO Bernard Burkett will review our financial results and provide an update on our business, and present an update on our financial outlook for the full year 2022. 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 risks 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's CEO and President Eric Green.

Thank you, Quentin, and good morning. And thanks for joining us today. We are excited to discuss our 2021 results and outlook for 2022. We will start on slide five. West delivered a remarkable year of success. As I reflect on the year, three things stand out to me. First, our purpose. We serve to improve patient lives, and we understand the criticality of our role in the containment and delivery of life-saving and life-changing medicines, including the battle against COVID-19. Our team members have rallied together with great sense, strength, and resolve to meet the accelerated customer demand. I want to acknowledge his incredible efforts and say thank you. Second, our proven market-led strategy. We have continued to meet shifting market and customer needs with unique value propositions across our business segments. This is evident in the continued strength of our financial performance in 2021. Lastly, trust. Customers trust West. As a global leader, customers come to West knowing that we will deliver superior value through our high-quality products and solutions. And we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the healthcare industry. As highlighted on slide six, 2021 was an exceptional year of sales and margin expansion driven by strong demand in our base business and accelerated demand for components associated with COVID-19 vaccines and therapeutics. We ended the year with 28% organic sales growth in the fourth quarter, and adjusting for COVID-related sales, our base business grew by mid-teens organically. Our proprietary product segment led the way with 37% organic sales growth, and all of this was fueled by high-value products, resulting in impressive growth and operating margin expansion for the quarter. Looking ahead, we are well positioned with the right growth strategy around execute, innovate, and grow. Our committed order book is at an all-time high. We continue to realize the benefits of the globalization of our operating model and continue capital investments to support the increasing demand driven by the attractive end markets. Turning to slide seven. In addition to our financial momentum, West had several other notable accomplishments in 2021. We shipped over 45 billion components touching billions of patient lives. This was done with the continued safety of our team members as top priority and the importance of ensuring the continuity of supply for our customers. As scientific and technical leaders in the industry, we continue to broaden insights with our expertise through West's Knowledge Center, webinars, published articles, and technical presentations. We launched five product extensions that continue to bring additional value to our customers. and we donated over $2.5 million, but more importantly, over 3,600 volunteer hours were donated by team members to help our local communities with the greatest needs. As we move to slide eight, we strive to be stewards of a sustainable future by factoring environmental considerations into every aspect of our business. In 2021, we expanded our ESG transparency reporting by aligning with the task force for climate-related financial disclosure recommendations. This includes reducing energy dependencies and lessening emission production through renewable and greener energy, developing more carbon-friendly products, and actively engaging with stakeholders to seek out opportunities to have an impact on climate. Aligned with our focus to improving patient lives across the globe through our products, we remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations. Turning to slide nine, in the recent announcement of our collaboration with Corning, As you look across biotech and pharma companies' drug pipelines, there is a growing need to provide system solutions to support increasingly more sensitive and complex molecules. And with that comes a changing and increasing regulatory environment that are setting a high bar of requirements for performance data on combination products at the system level. These regulatory changes are driving drug manufacturers to look to West to reduce risk by specifically specifying a system of packaging rather than individual components. We're excited to have Corning as a key collaborator as we expand our HVP value proposition to lead the industry from components to a truly integrated system that couples elastomer and glass. In response to our customers, This exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning's Valor glass technology. By combining West's industry-leading NovaPure components with Dicul's Fluorotech coating technology and Corning's ValorGlass and Velocity vials, the collaboration will enable new, advanced pharmaceutical packaging solutions. We believe that an integrated system of elastomer and glass under a single drug master file is the next level of high-value products. Our initial focus is addressing the need for complete system offering, and in time, we will offer a broad range of systems from vials to pre-filled syringes to cartridges. As we enter in 2022, we are building on the positive momentum we generated in 2021. We are introducing full-year 2022 financial guidance, that assumes approximately 10% organic sales, led by strong HVP sales, and another strong year of both gross and operating profit margin expansion, well in excess of 100 basis points. This guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems. And with a robust book of committed orders, we see momentum in 2022 and continuing into 2023. As such, we expect to add more capital expansion plans for additional HVP capacity to stay ahead of our customers' demand. We expect these projects to be completed throughout the year and ready for 2023 production. Before I turn the call over to Bernard to review our financial results in detail, I I want to revisit our long-term financial construct. For the past few years, we have set our long-term financial construct as any organic sales growth of 6% to 8% led by HPP sales and annual operating profit margin expansion of 100 basis points per year. Over the past five years, we've had an annual organic sales CAGR of 13%, an annual operating profit margin expansion of 240 basis points per year. Five years ago, Biologics was our smallest market unit. Today, Biologics is our largest marketing unit with customers from emergent biotech to large biopharma coming to West and our partner, Dikyo, which is reinforced by our strong participation rate in recently approved new molecular entities in the U.S. and also in Europe. As we look to the future, we see continued demand growth for our HPP products as we launch a new level of HPP's integrated systems. we are updating our long-term construct to annual sales growth of 7% to 9%. And we continue to expect to expand operating margins by 100 basis points per year over the next few years. Now I'll turn it over to our CFO, Bernard Paquette, who will provide more detail on our financial performance.