Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $805 million, up 5% on an organic basis, with adjusted operating margins at 21.1% and adjusted EPS of $1.96, reflecting a 6% increase compared to the prior year [5][17][22] - Total revenues increased by 7.7% on a reported basis, with currency contributing a positive 2.7 percentage points, resulting in organic growth of 5% [17][22] - Year-to-date operating cash flow reached $504 million, up 9%, while free cash flow was $294 million, a 54% increase from the previous year [23] Business Line Data and Key Metrics Changes - Proprietary Products segment revenues were $648 million, up 5.1% organically, driven by HVP components, which saw a 13% organic increase in Q3 [8][18] - Contract Manufacturing segment revenues were $157 million, growing by 4.9% organically, supported by increased sales of self-injected devices for obesity and diabetes [13][20] - HVP delivery devices revenues declined by 16.7% year-on-year, primarily due to a prior year incentive payment [12][19] Market Data and Key Metrics Changes - Biologics revenue was $329 million, up 8.3% organically, with growth driven by laminated technology and strength in Westar and Envision [20] - GLP-1 elastomers now account for 9% of total company sales, reflecting strong growth and partnerships with customers launching new GLP-1 molecules [9][60] - The company is experiencing a normalization in demand for biologics and biosimilars, with participation rates above historical levels [10] Company Strategy and Development Direction - The company is increasing its guidance for 2025 due to strong performance and improving business momentum [6][24] - Focus on high-value product components, particularly in biologics and biosimilars, is expected to drive double-digit growth [31][38] - The company is actively working on expanding its manufacturing capacity and optimizing its operations to support future growth [11][100] 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 [28][86] - The company is cautious about potential risks and is focused on increasing visibility and reducing uncertainties in the market [84][86] - There is optimism regarding the growth of GLP-1s and the impact of Annex One upgrades on future revenues [60][62] Other Important Information - The company is ramping up production in its Dublin facility, expecting to add approximately $20 million in revenue next year [27][70] - Management highlighted the importance of maintaining a strong balance sheet and cash flow while considering capital allocation strategies [99][106] Q&A Session Summary Question: Long-term growth expectations for 2026 - Management believes that the foundation is laid for achieving long-term growth targets, particularly through HVP components and biologics [31][32] Question: Sustainability of HVP component growth - Management is confident in the momentum of HVP components, expecting low to mid-teens growth in Q4 [36][40] Question: Visibility into filling the CGM contract gap - Management is engaged in late-stage discussions with customers to identify suitable business to replace the CGM contract, expecting healthy revenues and margins [47][48] Question: Margin expansion opportunities - Management sees opportunities for margin expansion through improved efficiencies and a favorable product mix [41][78] Question: Impact of tariffs and regionalization on customer decisions - Management is actively discussing with customers how to drive down costs and improve efficiencies, with less focus on pricing [101][102]

Financial Data and Key Metrics Changes - The company reported net sales of $766.5 million, representing an organic sales increase of 6.8% compared to the same quarter last year [21] - Adjusted diluted EPS increased by 21.1% for Q2, with an improvement of 26.4% when excluding stock-based compensation tax benefits [22] - Gross profit margin improved to 35.7%, a 290 basis point increase year-over-year [22] Business Line Data and Key Metrics Changes - Proprietary Products segment saw an organic net sales increase of 8.4%, driven primarily by HVP components, which increased by 11.3% [10][21] - Standard Products revenues increased by 0.4%, with ongoing conversions to HVP [15] - HVP delivery devices business revenues increased by 30%, mainly due to strength in Daikyo Crystal Zenith systems [16] Market Data and Key Metrics Changes - The Biologics market unit delivered high single-digit organic net sales growth, driven by increased sales of NovaChoice and Daikyo CZ products [21] - The pharma and generics market units both experienced high single-digit increases, primarily due to Westar product sales [21] - Contract manufacturing segment saw a 0.5% organic revenue increase, driven by the ramp-up of the Dublin facility for auto injectors and pens [18] Company Strategy and Development Direction - The company aims to leverage competitive strengths to support customer growth in commercialized products and new drug launches [9] - Continued focus on HVP components is expected to drive long-term growth, with a significant contribution anticipated from the biologics market [12][31] - The company is executing initiatives to expand capacity and improve production efficiency in response to increased demand [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to normal ordering patterns in the generics market, despite ongoing destocking challenges [12] - The company expects continued momentum in HVP components and a favorable foreign exchange environment to positively impact full-year guidance [19][27] - Management highlighted the importance of the Annex One projects as a multi-year growth opportunity [11][42] Other Important Information - The company announced the appointment of a new CFO, Bob McPan, who previously served as CFO of Agilent Technologies [19] - Capital expenditures are expected to return to a normal level of 6% to 8% of revenues to support long-term growth [14] - The company is monitoring tariff impacts, estimating a potential $15 million to $20 million impact for FY 2025 [28] Q&A Session Summary Question: What was driving the growth in Crystal Zenith? - The growth was driven by customer demand related to a particular drug launch [34] Question: What is the current state of destocking in the generics market? - Continued destocking effects are expected in the second half of the year, but there is momentum in the second quarter [37][38] Question: How is the Annex One project translating into revenue growth? - The Annex One process is multi-year, and while interest has increased, revenue recognition will take time [42][43] Question: What is embedded in the guidance for tariffs? - Guidance is based on current rates, and the company is monitoring the situation for any changes [68][69] Question: What is the current revenue capacity of the Dublin facility for auto injectors? - The facility is in the ramp-up phase, with full optimization expected to take nine to twelve months [74] Question: How is the margin expected to evolve in the second half of the year? - A slight step down in margins is anticipated due to seasonality and plant shutdowns [85]