Summary of West Pharmaceutical Services Q3 2025 Conference Call Company Overview - **Company**: West Pharmaceutical Services (NYSE: WST) - **Date of Conference**: November 11, 2025 Key Points Q3 Performance - The company reported a **5% organic growth** in Q3, exceeding guidance [5][6] - The **HVP (High-Value Products) component business**, which constitutes approximately **48%** of total business, achieved a **13.3% organic growth** [5][6] - Strong margins were noted, with earnings per share growth surpassing targets [5][6] - The performance in Q3 is seen as an acceleration from Q2, with expectations for continued growth into Q4 and 2026 [5][6] GLP-1 Market Insights - The GLP-1 category is highlighted as a significant therapeutic area for HVP components [7][20] - Non-GLP-1 revenue showed **mid-single-digit growth** in Q3, with expectations for a return to **high single-digit growth** in Q4 as destocking issues are resolved [13][19] - The company maintains a **90% participation rate** in new biologics products, indicating strong market presence [13][20] - The recent announcement by Eli Lilly and Novo Nordisk regarding pricing strategies is viewed positively, as it may increase access and sales volume for West [20][22] Biologics and Drug Delivery - The biologics business grew **8%** in Q3, with GLP-1s contributing to nearly half of this growth [30] - The SmartDose drug delivery device is under evaluation for its long-term position within the portfolio, with ongoing cost improvements [33][34] - The company is exploring opportunities in drug delivery devices, including SmartDose and other products [32][33] Regulatory Impact - The **Annex 1** regulation in Europe presents an opportunity to transition standard products to higher-value offerings, with an expected **200 basis points** revenue improvement [37][38] - The company has **371 active projects** aimed at upgrading products, with a potential market of **6 billion components** for conversion [38][46] Pricing Strategy - Pricing in Q3 was slightly below the target of **2-3%**, but the company remains optimistic about future pricing strategies [53][55] - A portfolio approach to pricing is being developed to enhance value and incentivize customers to shift to higher-value products [55][58] Contract Manufacturing - The company is actively seeking to replace approximately **$40 million** in lost CGM revenue by ramping up other programs, including drug handling [61][63] - The contract manufacturing business is seen as a way to provide more comprehensive services across the injectable continuum [64][66] Margin Improvement - Key drivers for margin improvement include product mix and pricing strategies, with expectations for at least **100 basis points** margin expansion through the end of the decade [70][71] - The company is focusing on optimizing production efficiency and logistics to enhance gross margins [68][70] Future Outlook - The company is optimistic about growth in the high-value component business, which is expected to continue into 2026 [80][82] - Destocking issues are largely resolved, and the company anticipates normalized ordering patterns moving forward [82] Strategic Considerations - The company is considering more deliberate capital allocation strategies, including potential M&A opportunities to enhance growth [72][73] - The launch of the **Synchrony S1 prefillable syringe** is seen as a significant opportunity to improve customer offerings [73][75] Conclusion West Pharmaceutical Services is positioned for continued growth, particularly in high-value components and biologics, with strategic initiatives in pricing, product development, and regulatory compliance expected to drive future performance. The company is actively addressing challenges while capitalizing on emerging opportunities in the market.

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $805 million, representing a 5% increase on an organic basis and a 7.7% increase on a reported basis [5][14] - Adjusted operating margins were 21.1%, while adjusted EPS was $1.96, up 6% compared to the prior year [5][17] - Year-to-date operating cash flow increased by 9% to $504 million, and free cash flow rose by 54% to $294 million [17] Business Line Data and Key Metrics Changes - Proprietary product segment revenues were $648 million, up 5.1% organically, driven by HVP components which saw a 13% organic growth [7][14] - HVP delivery device revenues declined by 16.7% year-on-year to $99 million, primarily due to a prior year incentive payment [10][14] - Contract manufacturing segment revenues were $157 million, growing by 4.9% organically [11][16] Market Data and Key Metrics Changes - Biologics revenue was $329 million, up 8.3% organically, while pharma revenue rose 1.4% to $183 million [15] - GLP-1 elastomers now account for 9% of total company sales, indicating strong growth in this area [8][44] Company Strategy and Development Direction - The company is increasing its guidance for 2025 due to strong performance and expects continued momentum in its business [6][18] - Focus on high-value product components, particularly in the GLP-1 and Annex 1 markets, is expected to drive future growth [21][46] - The company is actively working on optimizing its manufacturing network and enhancing operational efficiencies [77][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of growth in HVP components, driven by biologics and biosimilars [24][30] - The company anticipates a transition period in 2026 as it exits the CGM contract, but is optimistic about backfilling with higher-margin business [35][36] - Management highlighted the importance of maintaining strong relationships with customers to navigate market dynamics [66][81] Other Important Information - The company has appointed a new CFO and CTO to strengthen its leadership team and drive innovation [6][7] - The company is ramping up production in its Dublin facility, expecting to add approximately $20 million in revenue next year [12][56] Q&A Session Summary Question: Long-term growth prospects for 7% to 9% - Management believes they are on track to achieve long-term growth targets, driven by HVP components and biologics [24][25] Question: Sustainability of HVP components growth - Management is confident in the double-digit growth trajectory for HVP components, supported by strong order trends and market normalization [28][30] Question: Visibility on CGM contract exit - Management is engaged in discussions with potential customers to replace the CGM business, expecting healthy revenues and margins [35][36] Question: Margin opportunities - Management sees opportunities for margin expansion through operational efficiencies and higher-value product offerings [34][60] Question: Impact of Annex 1 on customer decisions - Management noted that increased regulatory conversations are accelerating project timelines and conversions related to Annex 1 [54][56]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $805 million, representing a 5% increase on an organic basis and a 7.7% increase on a reported basis [5][14] - Adjusted operating margins were 21.1%, while adjusted EPS was $1.96, up 6% compared to the prior year [5][17] - Year-to-date operating cash flow reached $504 million, up 9%, and free cash flow was $294 million, a 54% increase from last year [17][18] Business Line Data and Key Metrics Changes - Proprietary product segment revenues were $648 million, up 5.1% organically, driven by HVP components, which saw a 13% organic growth [7][14] - HVP delivery device revenues declined to $99 million, down 16.7% year-on-year organically, primarily due to a prior year incentive payment [10][14] - Contract manufacturing segment revenues were $157 million, growing by 4.9% organically [11][15] Market Data and Key Metrics Changes - Biologics revenue was $329 million, up 8.3% organically, while pharma revenue rose 1.4% to $183 million [15] - GLP-1s accounted for 9% of total company sales, with strong growth expected to continue [8][12] - The company is experiencing a normalization in demand trends for biologics and biosimilars, with a participation rate above 90% year-to-date [8] Company Strategy and Development Direction - The company is increasing its guidance for 2025 due to strong performance and improving business momentum [5][18] - Focus on high-value product components, particularly in the GLP-1 and Annex 1 markets, is expected to drive future growth [21][46] - The company is actively working on optimizing its manufacturing network and consolidating operations to enhance efficiency [75][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of positive trends due to strong execution and improving market conditions [22][66] - The company anticipates that destocking is largely behind them, with demand expected to improve for key growth drivers [21][66] - There are ongoing discussions with customers regarding new business opportunities to replace the CGM contract expected to conclude in mid-2026 [35][36] Other Important Information - The company has appointed a new CFO and CTO to strengthen its leadership team and drive innovation [6][7] - The company is ramping up production in its Dublin facility for drug handling, expected to add approximately $20 million in revenue next year [12][56] Q&A Session Summary Question: Long-term growth outlook for 7%-9% - Management believes they are on track to achieve long-term growth targets, driven by HVP components and biologics [24][25] Question: Sustainability of HVP components growth - Management is confident in the sustainability of double-digit growth for HVP components, supported by GLP-1s and Annex 1 [28][30] Question: Visibility on CGM contract exit - Management is engaged in discussions with potential customers to fill the gap left by the CGM contract, expecting healthy revenues and margins [35][36] Question: Margin opportunities - Management sees opportunities for margin expansion through operational efficiencies and higher-value products [34][60] Question: Impact of Annex 1 on customer decisions - Annex 1 projects are accelerating, with more conversations with EU regulators, leading to increased customer interest [54][56] Question: Growth in GLP-1s - Management expects continued healthy growth in GLP-1s, driven by market dynamics and new approvals [42][45]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $805 million, representing a 5% increase on an organic basis and a 7.7% increase on a reported basis [4][12] - Adjusted operating margins were 21.1%, while adjusted EPS was $1.96, up 6% compared to the prior year [4][16] - Year-to-date operating cash flow increased by 9% to $504 million, and free cash flow rose by 54% to $294 million [16] Business Line Data and Key Metrics Changes - Proprietary product segment revenues were $648 million, up 5.1% organically, driven by HVP components, which saw a 13% organic growth [5][12] - HVP delivery device revenues declined by 16.7% year-on-year to $99 million, primarily due to a prior year incentive payment [13] - Contract manufacturing segment revenues were $157 million, growing by 4.9% organically, supported by self-injected devices for obesity and diabetes [10][15] Market Data and Key Metrics Changes - Biologics revenue was $329 million, up 8.3% organically, while pharma revenue rose 1.4% to $183 million [14] - GLP-1 elastomers accounted for 9% of total company sales, indicating strong growth in this area [6][40] Company Strategy and Development Direction - The company is focused on expanding its HVP components business, particularly through GLP-1s and Annex 1 upgrades, which are expected to drive long-term growth [19][41] - The company is also working on optimizing its manufacturing network and consolidating operations to improve efficiency [67][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of positive trends due to strong execution and improving market conditions [21][58] - The company anticipates continued demand for HVP components and expects to mitigate tariff-related costs in 2025 [17][72] Other Important Information - The company has made notable executive appointments, including a new CFO and CTO, to strengthen its leadership team [5] - The company is ramping up production in its Dublin facility, expecting to add approximately $20 million in revenue next year [20][48] Q&A Session Summary Question: Long-term growth prospects for 2026 - Management believes the key drivers for growth are HVP components, biologics, and GLP-1s, with a foundation laid for double-digit growth [23][26] Question: Sustainability of HVP components growth - Management is confident in the momentum of HVP components, expecting low to mid-teens growth in Q4 [25][27] Question: CGM contract and backfill visibility - Management is engaged in discussions with customers to identify replacement business for the CGM contract, expecting healthy revenues and margins [30][32] Question: Headwinds and tailwinds for high-value components in 2026 - Management identified GLP-1s and Annex 1 as tailwinds, while timing of new drug approvals could present headwinds [38][41] Question: Capital allocation priorities - The company is focused on investing in high-value product components while maintaining a strong balance sheet and improving free cash flow [68][74]