West Pharmaceutical Services, Inc.

Good day and thank you for standing by. Welcome to the West Pharmaceutical Services first quarter 2025 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 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Sweeney, Vice President of Investor Relations. Please go ahead.

Good morning and welcome to West's first quarter 2025 earnings conference call. We issued our financial results early this morning, and the release has been posted in the investor section of the company's website located at westfarmer.com. On the call today, we will review our financial results, provide an update for our business, and present our financial outlook for FY25. There's a slide presentation that accompanies today's call, and a copy of the presentation is available on the investor page of West's website. On slide four, there's a safe harbor statement, and statements made by management of the call and in the accompanying presentation contain forward-looking statements from the meaning of the U.S. federal securities law. 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 statements 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. Limitations and reconciliations of the non-GAAP financial measures for the most comparable financial results prepared in conformity to GAAP are provided in this morning's earnings release. I'll now turn the call over to our CEO, Eric Green. Eric.

Thank you, John, and good morning, everyone. Thanks for joining us today. I'll begin today's remarks with our performance in the first quarter. Then I'll provide some context on the trends we are seeing and share how the company is positioned for long-term growth. followed by Berner's detailed financial review. I will then wrap up with some closing thoughts. Starting on slide five, I'm pleased to report that we delivered a solid start to the year as both revenues and adjusted EPS exceeded our expectations. This was largely driven by solid contributions from GLP-1s and a reduced impact from industry-wide destocking. Our results reflect the West team's operating execution in the areas where we maintain competitive advantages and strong customer relationships. Moving to slide six, our proprietary products business, which includes HPP components, standard products, and HPP delivery devices, was up 0.6% or up 2.4% on an organic basis. In the past five years, HVP components have grown at a CAGR of 13%. And overall, we expect HVP components revenues to grow mid-single digits in 2025, down from our previous expectations of mid- to high-single digits, a change driven by mix and timing. A key driver of HVP components growth is our ability to capitalize on the significant opportunities in the GLP-1 market. Our HVP GLP-1 Elastomer business is performing well, growing to about 7% of total revenues in the first quarter. Furthermore, we continue to make progress with our Biologics customers, solidifying our position as the global leader in this space. There are two parts to our Biologics business that I would like to address individually. First, delivery devices is a small portion of the portfolio within Biologics and is the current source of growth as we installed a new production line in Q3 of 2024. However, the growth will reverse the second half of 2025 when we comp against the significant incentive payments we received in Q3 and Q4 of last year. Then the largest portion of the portfolio within Biologics is HVP components, and this has a positive trend. These are pacing negative in the first and second quarters of 2025, a function of tail-end destocking. We anticipate that this trend will reverse and expect a high single-digit growth rate in the second half of 2025 for Biologics HVP components. On an aggregate basis, we expect biologics growth of low single digits in 2025. We are encouraged with the progress we're making with Annex 1. In Q1, Annex 1 revenues were about 200 basis points of total revenues. This was stronger than our expectation of 100 to 150 basis points for the full year, driven by favorable Q1 timing. To date, we have approximately 340 Annex 1 projects in various stages with our customers. Up from the 280 we mentioned in the last earnings call. Importantly, Annex 1 increases the value proposition of our HVP portfolio with a positive mix shift. Moving on to a discussion of our HVP delivery devices business on slide 7. The growth in this area was driven by a continued volume ramp in smart dose in the first quarter of 2025. We have a two-fold strategy for this area of our business. First, we're working hard to drive significant margin improvement as we move forward. This incorporates driving scale for the business. introducing an automated line later in 2025 to early 2026, and we're working to improve the economics around this business in the near term. Second, we continue to evaluate the best path forward for this business, and all options remain on the table. Finally, standard products were relatively flat year over year. Overall, we are seeing improvements in the proprietary products business driven by strength in GLP-1s in line with our expectations in 2025. In our contract manufacturing segment on slide 8, revenue growth in our GLP-1 auto injector business is offsetting the CGM contract exits. We continue to work towards filling the space and onboarding new contracts as we continue to execute on this business. We believe that for the full year, our investments in GLP-1 facilities will continue to deliver low single-digit growth for this segment. Our goal is to continue growing our contract manufacturing business and move it into drug handling, which we believe will be higher margin and comes with lower capital intensity. In the near term, we are executing on our capital allocation strategy, which involves investing in the overall business to drive future performance, returning capital to shareholders through our stock repurchase program and dividends. Before I turn the call over to Bernard, I'm sure you have seen the press release this morning regarding the executive leadership changes. I know that Vernon's decision was not made lightly, and we appreciate the notes he has given the company in order for us to seek a successor and ensure a smooth transition of his role. Vernon has been an invaluable partner and advisor to me and the entire organization. His contributions and leadership over the past seven years have been instrumental to our success. He will be missed. We have initiated a search process to identify Berner's successor, and he has committed to be part of the selection process where his insights will be beneficial. Additionally, I am pleased to highlight an outstanding new addition to our executive leadership team. Shane Campbell is joining us as the senior vice president of chief proprietary segment officer. He comes to us from Carlisle Company, where he served as the chief commercial officer of the construction materials business. As an accomplished leader, including a 20-year career at DuPont, Shane brings extensive global management experience in areas of elastomers, polymers, building materials, chemicals, and packaging. We look forward to working with him and the vast experience he'll bring to West. I'll now hand the call over to Bernard. Bernard?