西式醫藥服務 (WST) 2023 Q4 法說會逐字稿

Thank you for standing by, and welcome to West Pharmaceutical Services Fourth Quarter 2023 Earnings Conference Call. (Operator Instructions)

感謝您的耐心等待，歡迎參加 West Pharmaceutical Services 2023 年第四季財報電話會議。 （操作員說明）

I would now like to hand the call over to Vice President, Strategy and Investor Relations, Quintin Lai. Please go ahead.

我現在想將電話轉交給策略和投資者關係副總裁 Quintin Lai。請繼續。

Thank you, Latif. Good morning, and welcome to West's Fourth Quarter and Full Year 2023 Conference Call. We issued our financial results this morning, and the release has been posted in the Investors section on the company's website located at westpharma.com.

謝謝你，拉蒂夫。早上好，歡迎參加 West 2023 年第四季和全年電話會議。我們今天早上發布了財務業績，該新聞稿已發佈在公司網站 westpharma.com 的投資者部分。

This morning, we will review our financial results, provide an update on our business and provide -- present an update on our financial outlook for the full year 2024. There's a slide presentation that accompanies today's call, and a copy of the presentation is available on the Investors section of our website.

今天早上，我們將回顧我們的財務業績，提供我們業務的最新情況，並提供我們 2024 年全年財務前景的最新情況。今天的電話會議附帶一個幻燈片演示，並且可以提供演示文稿的副本在我們網站的投資者部分。

On Slide 4 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 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 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.

第 4 張投影片是我們的安全港聲明。管理階層在本次電話會議和隨附簡報中發表的聲明包含美國聯邦證券法意義內的前瞻性聲明。這些陳述是基於我們的信念和假設、目前的期望、估計和預測。公司未來的業績受到許多公司無法控制的因素的影響。實際結果可能與過去的結果以及此處所做的任何前瞻性聲明中明示或暗示的結果有重大差異。請參閱今天的新聞稿以及本公司就其面臨的風險所做的任何其他揭露，包括我們的 10-K、10-Q 和 8-K 報告。

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.

在今天的電話會議上，管理階層將參考非公認會計準則財務指標，包括有機銷售成長、調整後營業利潤、調整後營業利潤率和調整後稀釋每股收益。今天早上的收益報告中提供了非公認會計原則財務指標與按照公認會計原則編制的最具可比性的財務結果的調節和限制。

I now turn the call over to our CEO, Eric Green.

我現在將電話轉給我們的執行長 Eric Green。

Thank you, Quintin, and good morning, everyone. Thanks for joining us today.

謝謝你，昆汀，大家早安。感謝您今天加入我們。

We'll start on Slide 5. Last year, we celebrated West's 100th anniversary of groundbreaking health care innovation, which is one of many proud highlights shown on this recap slide. I also want to thank our team members who are connected by our strong responsibility and shared values that continue to help us succeed each day.

我們將從幻燈片 5 開始。去年，我們慶祝了 West 開創性的醫療保健創新 100 週年，這是這張回顧幻燈片上展示的眾多令人自豪的亮點之一。我還要感謝我們的團隊成員，他們因強烈的責任感和共同的價值觀而緊密相連，繼續幫助我們每天取得成功。

Now turning to Slide 6, where I'll cover 3 main topics: first, we will examine the drivers of 2023. Second, we will discuss the challenges ahead in 2024. And third, we will talk about the drivers of growth that will return West to long-term financial construct of sales and margin expansion in 2025.

現在轉向投影片 6，我將討論 3 個主要主題：第一，我們將研究 2023 年的驅動因素。第二，我們將討論 2024 年面臨的挑戰。第三，我們將討論將回歸的成長驅動因素West 計劃在2025 年實現銷售和利潤擴張的長期財務結構。

Let's begin with our financial results. I am pleased with the strong base growth in 2023, which more than offset a decline of COVID-19-related sales of approximately $320 million. Excluding pandemic-related sales, we had strong base overall organic sales growth in the mid-teens. Driving this base growth is the expanding customer demand for our high-value product offerings, both components and devices and for our contract manufacturing services.

讓我們從我們的財務表現開始。我對 2023 年強勁的基數成長感到高興，這足以抵消與 COVID-19 相關的銷售額約 3.2 億美元的下降。排除與大流行相關的銷售，我們的整體有機銷售成長基礎強勁，處於十幾歲左右。推動這一基礎成長的是客戶對我們高價值產品（包括組件和設備）以及我們的合約製造服務的需求不斷擴大。

During the year, we made great strides with our capital expansion plans across our global network. For example, in Kinston, we expanded our footprint with new NovaPure capacity, and we're in the process of a significant expansion in our HVP processing capacity. At our Grand Rapids contract manufacturing site we brought online new capacity for a customer's injection device in late 2022, which contributed to growth in 2023. We also have been able to successfully address our backlog of long lead times for certain products. This has been a challenge since the start of the pandemic, and thanks to the hard work of our teams through both optimization and capacity expansion, we have exited the year with normalized lead times.

在這一年裡，我們在全球網路的資本擴張計畫中取得了長足進步。例如，在金斯頓，我們透過新的 NovaPure 產能擴大了我們的足跡，並且我們正在大幅擴大 HVP 處理能力。在我們的大急流城合約製造工廠，我們於2022 年末為客戶的注射設備提供了新產能，這為2023 年的成長做出了貢獻。我們也成功解決了某些產品交貨時間較長的積壓問題。自從疫情爆發以來，這一直是一個挑戰，由於我們團隊透過優化和產能擴張的辛勤工作，我們以正常的交貨時間結束了這一年。

Moving to Slide 7. As we turn our attention to 2024, we are facing several challenges to our growth model as indicated in our preliminary outlook from October. With greater visibility of the changing market landscape, we expect 2% to 3% organic sales growth for the full year or about 5 to 6 percentage points lower than our preliminary outlook. This difference comes from 4 main factors. First, we had expected flat COVID-related sales this year. Instead, demand continues to decline, which resulted in about 1% point decrease in organic sales.

轉到幻燈片 7。當我們將注意力轉向 2024 年時，正如 10 月的初步展望所示，我們的成長模式面臨一些挑戰。隨著市場格局變化的可視化，我們預計全年有機銷售將成長 2% 至 3%，比我們的初步預期低約 5 至 6 個百分點。這種差異主要來自4個因素。首先，我們預計今年與新冠病毒相關的銷售額將持平。相反，需求持續下降，導致有機銷售額下降約 1%。

Second, timing of HVP device manufacturing capacity coming online, to satisfy customer demand has been pushed out, causing a percentage point of headwind. Third, timing of a customer's upgrade to a higher HVP tier has caused a percentage point of headwind. And finally; fourth, a more widespread destocking is causing approximately 2 to 3 percentage points of headwind.

其次，為滿足客戶需求而推出的HVP設備產能投產時間被推遲，造成了一個百分點的逆風。第三，客戶升級到更高 HVP 等級的時機造成了一定的阻力。最後；第四，更廣泛的去庫存造成約2至3個百分點的逆風。

Towards the end of the year and into January, the industry, inventory management trend that other life science tools companies have been experiencing has now reached our segment of the injectable drug value chain. While we thought we might see some impact in 2024, we were surprised with the breadth, latitude and speed at which customers change their forecast. In several of these cases, customers express to us the same sentiment at the amount of forecast changes that were being handed to them.

今年底和一月份，其他生命科學工具公司所經歷的產業庫存管理趨勢現在已影響我們注射藥物價值鏈的部分。雖然我們認為我們可能會在 2024 年看到一些影響，但我們對客戶改變預測的廣度、範圍和速度感到驚訝。在其中一些案例中，客戶對我們收到的預測變更量表達了相同的看法。

As we look to overall quarterly pacing for 2024, we expect that Q1 will have the largest negative impact due to destocking as well as timing of new HVP device capacity and customer-led HVP upgrade. We expect in Q1 that proprietary products will be down by high single decline. We expect some effect, but to a lesser degree in Q2 with positive proprietary products and consolidated organic growth. And we expect the second half of the year to have better growth with Q4 in line with our long-term financial construct.

當我們展望 2024 年的整體季度節奏時，我們預計第一季將因庫存減少以及新 HVP 設備產能和客戶主導的 HVP 升級的時機而產生最大的負面影響。我們預計第一季自營產品將出現高單降幅。我們預計第二季會產生一些影響，但影響程度較小，因為專有產品積極，有機成長得到鞏固。我們預計下半年第四季將有更好的成長，這符合我們的長期財務結構。

As we set our 2024 guidance and quarterly cadence, we see several areas that support our expectations. First, our February order book for the second half of the year has a higher coverage ratio than prior pre-pandemic levels. Second, we have some customers that are expected to be able to produce more drugs as the year progresses. Third, we expect HVP device capacity to improve in the second half of the year as we implement process modifications that were designed to improve manufacturing throughput.

當我們制定 2024 年指導方針和季度節奏時，我們看到幾個領域支持我們的預期。首先，我們下半年2月份的訂單覆蓋率高於疫情前的水平。其次，我們有一些客戶預計隨著時間的推移能夠生產更多的藥品。第三，隨著我們實施旨在提高製造吞吐量的製程修改，我們預計 HVP 設備產能將在今年下半年提高。

I am disappointed that we're not -- we will not achieve our usual full year organic sales and margin expansion in 2024. As I've outlined, outside of further COVID demand reduction, some of the impact is time related to new capacity and timing of customer upgrades. As for destocking, this is an industry-wide situation. not a change in market share or patient demand for drug volumes.

我很失望的是，我們不會——我們將無法在2024 年實現通常的全年有機銷售和利潤率擴張。正如我所概述的，除了新冠疫情需求進一步減少之外，一些影響與新產能和時間相關。客戶升級的時機。至於去庫存，這是全行業的情況。不是市場份額或患者對藥品數量的需求的變化。

Looking beyond 2024, we continue to be bullish on our growth construct. And our teams will have another active year of capital investments in 2024.

展望 2024 年後，我們繼續看好我們的成長結構。 2024 年，我們的團隊將迎來另一個資本投資活躍的一年。

Moving to Slide 8. We will be expanding our industry-leading capacity with major HVP expansion projects in Jersey Shore and Eschweiler as well as other projects across the global network. Another driver of growth with a bright future comes from our HVP devices, which includes our injection delivery device platforms, Crystal Zenith containment solutions in the admin systems. HVP devices had very strong double-digit organic sales growth in 2023 and now represent 10% of overall sales. West's platforms are an integral part of our customers' drug device combination products that are making a difference to patients. And this year, we have had multiple capital expansion projects that will increase capacity for SmartDose, SelfDose and admin systems, with some expected to come online in the second half of 2024 and fully online in 2025. As mentioned at the outset, contract manufacturing had growth contribution from new capacity at our Grand Rapids site to support our customer's injection device platform.

前往投影片 8。我們將透過澤西海岸和埃施韋勒的主要 HVP 擴建項目以及全球網路中的其他項目來擴大我們領先業界的產能。另一個前景光明的成長動力來自我們的 HVP 設備，其中包括我們的注射輸送設備平台、管理系統中的 Crystal Zenith 遏制解決方案。 HVP 設備在 2023 年將實現非常強勁的兩位數有機銷售額成長，目前佔總銷售額的 10%。 West 的平台是我們客戶的藥物器材組合產品不可或缺的一部分，這些產品正在為患者帶來改變。今年，我們有多個資本擴張項目，這些項目將增加SmartDose、SelfDose 和管理系統的容量，其中一些項目預計將在2024 年下半年上線，並在2025 年全面上線。正如一開始提到的，合同製造業已經我們大急流城工廠的新產能對成長的貢獻是支持我們客戶的注射設備平台。

Looking ahead, we're excited to have started a significant expansion at our Dublin facility, which is already dedicated to contracted demand for future injection device manufacturing. We expect it to be completed and validated in 2024, which places us in a great position for 2025 growth. I also want to take some time to talk about the dynamics of future demand related to our growth drivers for HVP components. As you know, we have been building HVP capacity for several years and expect it to continue to do so in 2024. We see a robust runway of volume growth over the next few years. As a foundation, we expect volume growth of existing drugs with increasing aging patient populations, expanding geographical reach and evolving treatment guidelines and market conditions.

展望未來，我們很高興開始在都柏林工廠進行重大擴建，該工廠已經致力於滿足未來注射設備製造的合約需求。我們預計該項目將於 2024 年完成並驗證，這使我們在 2025 年的成長中處於有利地位。我還想花一些時間談談與我們 HVP 組件成長驅動力相關的未來需求動態。如您所知，我們多年來一直在建立 HVP 產能，並預計在 2024 年將繼續這樣做。我們預計未來幾年銷售將出現強勁成長。作為基礎，我們預計隨著老齡化患者群體的增加、地理覆蓋範圍的擴大以及治療指南和市場條件的不斷變化，現有藥物的銷售量將會成長。

In addition to overall volume growth, we continue to experience and see certain drugs have breakthrough growth. For example, we are experiencing a similar surge in demand for components associated with drugs treating diabetes and obesity. Our responsibility as the industry leader in primary packaging is to be prepared for incremental jumps in demand.

除了整體銷售成長外，我們還繼續經歷並看到某些藥物取得突破性成長。例如，我們對治療糖尿病和肥胖症的藥物相關成分的需求也出現了類似的激增。作為初級包裝產業的領導者，我們的責任是為需求的增量躍升做好準備。

And lastly, the area with the most potential for our future growth is our HVP capacity to support and mix shift. For mix shift, we see a combination of volume from new drugs that enter the market and from legacy drugs that upgrade from either a standard component or lower to a higher HVP category. The mix shift of legacy to HVP has historically been a smaller contributor for us compared to contribution from newly approved drugs. However, with the industry landscape changing, regulators are introducing new regulations for higher quality, lower particulate and more standardized solutions. And therefore, customers are looking to upgrade their standard primary components. When we look at that -- over the next few years, we estimate that several billions of our primary containment components in standard form could benefit from a mix shift to our modern formulation and HVP processes.

最後，我們未來成長最有潛力的領域是我們的 HVP 支持和混合轉變的能力。對於混合轉變，我們看到了進入市場的新藥和從標準成分或較低 HVP 類別升級到較高 HVP 類別的傳統藥物的銷售組合。與新核准藥物的貢獻相比，傳統藥物向 HVP 的混合轉移歷來對我們的貢獻較小。然而，隨著產業格局的變化，監管機構正在引入新的法規，以提供更高品質、更低顆粒和更標準化的解決方案。因此，客戶希望升級他們的標準主要組件。當我們看到這一點時，在接下來的幾年裡，我們估計數十億個標準形式的主要安全殼組件可以從我們現代配方和 HVP 製程的混合轉變中受益。

We recognize this mix shift will take time, but we anticipate as new regulation changes are enforced. This adoption will accelerate. By considering our combination of growth drivers from volume, price and HVP mix shift, we can confidently assert that we will be well equipped to navigate the challenges and continue to fuel our long-range financial construct of 7% to 9% annual organic sales growth and at least 100 basis points of operating margin expansion per year.

我們認識到這種混合轉變需要時間，但我們預計隨著新的法規變化的實施。這種採用將會加速。透過考慮銷售、價格和HVP 組合轉變等成長動力的組合，我們可以自信地斷言，我們將做好充分準備來應對挑戰，並繼續推動我們的長期財務結構，即年度有機銷售額增長7% 至9 %每年營業利益率至少成長 100 個基點。

Now I'll turn the call over to Bernard. Bernard?

現在我將把電話轉給伯納德。伯納德？

Thank you, Eric, and good morning.

謝謝你，艾瑞克，早安。

Let's review the numbers in more detail. We'll first look at Q4 2023 revenues and profits, where we saw low single-digit organic sales growth and an increase in diluted EPS and operating profit. I will take you through the drivers impacting sales and margin in the quarter as well as some balance sheet takeaways. And finally, we will review our 2024 guidance.

讓我們更詳細地回顧一下這些數字。我們將首先關注 2023 年第四季的收入和利潤，其中我們看到較低的個位數有機銷售成長以及攤薄後每股收益和營業利潤的成長。我將向您介紹影響本季銷售額和利潤率的驅動因素以及一些資產負債表要點。最後，我們將回顧 2024 年的指導方針。

First up Q4. Our financial results are summarized on Slide 9 and the reconciliation of non-U.S. GAAP measures are described in Slides 17 to 21. We recorded net sales of $732 million in the quarter, representing organic sales growth of 1.4%. COVID-related net revenues are estimated to have been approximately $7 million in the quarter and approximately $48 million reduction compared to the prior year.

首先是第四季。投影片 9 總結了我們的財務業績，投影片 17 至 21 介紹了非美國公認會計準則衡量標準的調節。本季我們的淨銷售額為 7.32 億美元，有機銷售額成長 1.4%。本季與新冠病毒相關的淨收入預計約為 700 萬美元，比前一年減少約 4,800 萬美元。

Looking at Slide 10. Proprietary Products organic net sales declined by 0.3% in the quarter. As we anticipated, in addition to the COVID decline, we continue to experience a destocking of inventory by certain of our customers during the fourth quarter. High-value products, which made up approximately 75% of Proprietary Products sales in the quarter, generated low single-digit growth, led by customer demand for HVP components and devices.

請看投影片 10。該季度專有產品有機淨銷售額下降了 0.3%。正如我們預期的那樣，除了新冠肺炎疫情造成的下降外，我們的某些客戶在第四季度繼續減少庫存。高價值產品約佔本季專有產品銷售額的 75%，在客戶對 HVP 組件和設備的需求帶動下，實現了低個位數成長。

Looking at the performance of the market units, the pharma market unit had low single-digit growth led by demand for Daikyo and NovaPure components, partially offset by a reduction in sales related to COVID. The biologics and generics market units experienced low single-digit and mid-single-digit declines, respectively, due to a reduction in sales related to COVID-19 vaccine.

從市場部門的表現來看，製藥市場部門在 Daikyo 和 NovaPure 組件的需求帶動下實現了較低的個位數成長，但部分被與新冠病毒相關的銷售額減少所抵消。由於 COVID-19 疫苗相關的銷售減少，生物製劑和仿製藥市場單位分別經歷了低個位數和中個位數下降。

Our Contract Manufacturing segment showed high single-digit net sales growth, led by an increase in sales of medical device and diagnostic products. We recorded $278.2 million in gross profit, which was $16.1 million or 6.1% higher than Q4 of last year. And our gross profit margin of 38% was a 100 basis point increase from the same period last year. Our adjusted operating profit increased to $159.9 million this quarter compared to $158.7 million in the same period last year. Our adjusted operating profit margin of 21.8% was a 60 basis point decrease from the same period last year. Finally, adjusted diluted EPS rose 3.4% for Q4. Excluding stock-based compensation tax benefit of $0.01 in Q4, EPS increased by approximately 6.4%.

在醫療設備和診斷產品銷售成長的帶動下，我們的合約製造業務呈現出高個位數的淨銷售額成長。我們錄得毛利 2.782 億美元，比去年第四季增加 1,610 萬美元，成長 6.1%。我們的毛利率為38%，比去年同期成長了100個基點。本季調整後營業利潤增至 1.599 億美元，去年同期為 1.587 億美元。調整後營業利益率為 21.8%，比去年同期下降 60 個基點。最後，第四季調整後攤薄每股收益成長 3.4%。剔除第四季 0.01 美元的股票補償稅優惠，每股盈餘成長約 6.4%。

Now let's review the drivers in both our revenue and profit performance. On Slide 11, we show the contributions to sales growth in the quarter. Sales price increases contributed $39 million or 5.5 percentage points of growth in the quarter as did a foreign currency tailwind of approximately $18.5 million. Offsetting price was a negative mix impact of $29.3 million, primarily due to a reduction in COVID-19-related net demand of $48 million and destocking trends in the sector by certain of our customers.

現在讓我們回顧一下我們的收入和利潤表現的驅動因素。在投影片 11 中，我們展示了對本季銷售成長的貢獻。銷售價格上漲為本季貢獻了 3,900 萬美元，即 5.5 個百分點的成長，外幣推動因素也貢獻了約 1,850 萬美元。抵銷價格是 2,930 萬美元的負面混合影響，主要是由於與 COVID-19 相關的淨需求減少了 4,800 萬美元，以及我們的某些客戶在該行業的去庫存趨勢。

Looking at margin performance on Slide 12. Proprietary Products fourth quarter gross profit margin of 42.7% is 110 basis points higher than the margin achieved in the fourth quarter of 2022. The key driver for the increase in proprietary products gross profit margin related to sales price increases, offset by inflationary pressures at our plants and mix from the reduction in COVID revenues. Contract Manufacturing fourth quarter gross profit margin of 17.9% was 250 basis points greater than the margin achieved in the fourth quarter of 2022. The increase in margin can be attributed to sales price increases and a favorable mix of products sold.

檢視投影片12 的利潤率表現。自營產品第四季毛利率為42.7%，比2022 年第四季實現的利潤率高出110 個基點。自營產品毛利率成長的主要驅動力與銷售價格相關成長，被我們工廠的通膨壓力和新冠疫情收入減少所抵銷。合約製造第四季毛利率為 17.9%，比 2022 年第四季實現的利潤率高出 250 個基點。利潤率的成長可歸因於銷售價格上漲和銷售產品的有利組合。

And let's look at our balance sheet and review how we've done in terms of generating more cash. On Slide 13, we have listed some key cash flow metrics. Operating cash flow was $776.5 million for the year, an increase of $52.5 million compared to the same period last year, a 7.3% increase. Operating cash flow in the period primarily benefited from favorable working capital management. In 2023, we spent $362 million on capital expenditures, a 27.2% increase over 2022. We continue to leverage our CapEx to increase our high-value product manufacturing capacity and/or contract manufacturing capacity.

讓我們看看我們的資產負債表，回顧一下我們在創造更多現金方面的表現。在投影片 13 上，我們列出了一些關鍵的現金流量指標。全年營運現金流為7.765億美元，較去年同期增加5,250萬美元，成長7.3%。本期經營現金流量主要受惠於良好的營運資金管理。 2023 年，我們的資本支出為 3.62 億美元，比 2022 年增長 27.2%。我們繼續利用資本支出來提高我們的高價值產品製造能力和/或合約製造能力。

Working capital of approximately $1.26 billion decreased by $135.9 million from 2022, primarily due to an increase in our current portion of long-term debt and reduction in our cash balance. Our cash balance at December 31st, $853.9 million was $40.4 million, lower than our December 2022 balance. The decrease in cash is primarily due to increased CapEx and share repurchases, offset by our working capital management.

營運資金約 12.6 億美元，較 2022 年減少 1.359 億美元，主要是由於我們長期債務的流動部分增加和現金餘額減少。截至 12 月 31 日，我們的現金餘額為 8.539 億美元，為 4,040 萬美元，低於 2022 年 12 月的餘額。現金減少主要是由於資本支出和股票回購增加，但卻被我們的營運資本管理所抵銷。

Turning to guidance. Slide 7 provides a high-level summary. Full year 2024 net sales guidance will be in a range of $3 billion to $3.025 billion. There is an estimated headwind of $8 million based on current foreign exchange rates. We expect organic sales growth to be approximately 2% to 3%. We expect our full year 2024 adjusted diluted EPS guidance to be in a range of $7.50 to $7.75. Also, our CapEx guidance is $350 million for the year.

轉向指導。幻燈片 7 提供了高級摘要。 2024 年全年淨銷售額指引將在 30 億美元至 30.25 億美元之間。根據目前外匯匯率，預計阻力為 800 萬美元。我們預計有機銷售額成長約為 2% 至 3%。我們預計 2024 年全年調整後稀釋每股盈餘指引將在 7.50 美元至 7.75 美元之間。此外，我們今年的資本支出指引為 3.5 億美元。

There are some key elements I want to bring your attention to as you review our guidance. Estimated FX headwind on EPS has an impact of approximately $0.02 based on current foreign currency exchange rates and our guidance excludes future tax benefits from stock-based compensation.

當您查看我們的指南時，我想提請您注意一些關鍵要素。根據當前外幣匯率，預計外匯逆風對每股收益的影響約為 0.02 美元，並且我們的指導不包括基於股票的薪酬的未來稅收優惠。

I would now like to turn the call back over to Eric.

我現在想把電話轉回給艾瑞克。

Thank you, Bernard. To summarize on Slide 14, our proven growth strategy continues to deliver unique value, the breadth of our high-quality product offerings. This is evidenced by a robust committed order book. Despite the headwinds and challenges in the sector, our team is committed to overcome these obstacles to meet the anticipated growth expectations. I'm confident and excited about the future for West as we continue to make a difference to patient health across the globe.

謝謝你，伯納德。總結投影片 14，我們行之有效的成長策略將繼續提供獨特的價值以及我們高品質產品的廣度。強勁的承諾訂單證明了這一點。儘管該行業面臨逆風和挑戰，我們的團隊仍致力於克服這些障礙，以滿足預期的成長預期。我對 West 的未來充滿信心和興奮，因為我們將繼續為全球患者的健康做出貢獻。

Latif, we're ready to take questions. Thank you.

拉蒂夫，我們準備好回答問題了。謝謝。

(Operator Instructions) Our first question comes from the line of David Windley of Jefferies.

（操作員說明）我們的第一個問題來自 Jefferies 的 David Windley。

I'm going to start with an easier one and then a higher level one. So Eric, I appreciate the comments that you gave us around the cadence of recovery or reacceleration in '24. Just -- so if I understood you correctly, you said negative double digits in proprietary products. Could you talk to -- because one of you talked to where you think overall growth, like where will organic sales growth be in 1Q all in? And then how does that ramp through to the fourth quarter? It sounds like it gets to what you would call normal in the fourth quarter. Just want to understand that more precisely.

我將從一個簡單的開始，然後是一個更高級別的。艾瑞克，我很感謝您就 24 年復甦或重新加速的節奏向我們提供的評論。只是——如果我理解正確的話，你說的是專有產品中的負兩位數。您能否談談—因為你們中的一位談到了你們認為整體成長的方向，例如第一季的有機銷售成長將在哪裡？那麼這種情況如何延續到第四季呢？聽起來第四季的情況就達到正常水準了。只是想更準確地理解這一點。

Yes, Dave, I just want to make one correction. And hopefully -- I'm hopeful it [will become] clear. The proprietary products anticipated performance in Q1 is high single-digit decline, just to be clear. And I would say majority of that -- the change in our view has come from destocking. While I mentioned 2 other factors, majority is destocking, and it's specifically -- 75% of the destocking coming from 6 customers. So I just want to kind of give you a little color around that aspect.

是的，戴夫，我只想糾正一處。希望——我希望事情會變得清晰。需要明確的是，第一季專有產品的預期業績將會出現高單位數下降。我想說，其中大部分——我們觀點的改變來自於去庫存。雖然我提到了另外 2 個因素，但大多數是去庫存，具體來說，75% 的去庫存來自 6 個客戶。所以我只是想跟大家介紹一下這方面的狀況。

Bernard, do you want to cover?

伯納德，你想掩護嗎？

Yes. On a consolidated basis, we would see the growth between 6% to 7% or negative 6% to 7% decline in Q1. And then as we said, we would expect to see growth ramping as we move through the year and getting back to construct in Q4.

是的。綜合來看，我們預計第一季的成長將在 6% 至 7% 之間，或下降 6% 至 7%。然後，正如我們所說，我們預計隨著這一年的推移，成長將加速，並在第四季度恢復建設。

Okay. That's helpful. And then a little more conceptually, Eric, you said in your comments, you were emphatic about not a change in market share, not a change in patient demand. You also, though, later said that in your interactions with clients about the breadth, magnitude and speed of the changes in their forecasts. I guess I would be curious from what you draw the confidence that it's not a change in patient demand if those customers are changing their own forecast. So I want to understand that. And then in this destocking, is the destocking still more in lower value, either low end of high-value or bulk standard products, or are you now dealing with destocking kind of up and down the product portfolio?

好的。這很有幫助。然後從概念上講，艾瑞克，你在評論中說，你強調的不是市場佔有率的變化，也不是病人需求的變化。不過，您後來在與客戶的互動中也談到了他們預測變化的廣度、幅度和速度。我想我會很好奇您從什麼中得出的信心，如果這些客戶改變了自己的預測，這並不是患者需求的改變。所以我想了解這一點。那麼在這次去庫存中，去庫存是否更多是針對低價值產品，無論是高價值的低端產品還是大宗標準產品，還是您現在正在處理產品組合上下的去庫存？

Yes, David. So first of all, in regards to -- when we have our conversations with customers, what they're -- it's a combination of 2 factors. One is, as they look at their inventory levels, they see an opportunity to leverage a little more working capital management. In addition to that, you add on the factor that in the beginning of 2023 and -- in all of 2022, our lead times, we were significantly higher, probably 3x and -- 3 to 4x. And what we've been able to do successfully due to both optimization and capital deployment that now is online and keeping up with the demand. We were able to bring those lead times to well before pre-pandemic levels.

是的，大衛。首先，當我們與客戶對話時，他們是什麼——這是兩個因素的結合。一是，當他們審視庫存水準時，他們看到了利用更多營運資金管理的機會。除此之外，您還添加了一個因素，即在 2023 年初以及 2022 年全年，我們的交貨時間明顯更高，可能是 3 倍、3 到 4 倍。我們之所以能夠成功做到這一點，是因為優化和資本部署現在已經上線並滿足了需求。我們能夠將這些交貨時間縮短到大流行前的水平。

And so therefore, if you add those 2 factors together, it gave them confidence to be able to be more aggressive on inventory management. From a destocking, look at our portfolio, you're right. One of the areas that was more pronounced was on the standard and bulk areas, but we're also seeing it in some cases in parts of our HVP portfolio. So it is -- I would say, it's across a broader set, but I would say the primary area has been the bulk and of the standard area.

因此，如果將這兩個因素加在一起，他們就有信心能夠更積極地進行庫存管理。從去庫存看我們的投資組合，你是對的。更明顯的領域之一是標準和散裝領域，但在某些情況下，我們在 HVP 產品組合的部分領域也看到了這一點。所以它是 - 我想說，它跨越了更廣泛的範圍，但我想說主要區域是大部分區域和標準區域。

Our next question comes from the line of Paul Knight of KeyBanc Capital Markets.

我們的下一個問題來自 KeyBanc Capital Markets 的 Paul Knight。

Eric, on the $250 million of CapEx this year, and then I think it was a little higher last year, when does this, like, for example, last year's CapEx, when does this translate into revenue? Is it what you're alluding to earlier? Is it second half '24?

艾瑞克（Eric），關於今年 2.5 億美元的資本支出，然後我認為去年有點高，例如去年的資本支出什麼時候轉化為收入？這就是你之前提到的嗎？是24年下半年嗎？

Yes. Paul, thanks. So last year, we did approximately $362 million of capital. This year, we're forecasting about $350 million. And I would say still that same algorithm about 70% -- approximately 70% is growth and 30% is maintenance just to give you that kind of context. When we look at the type of capital we're putting in on the HVP capacity, what we're seeing is a transition. So we got NovaPure completed last year. And now we're in HVP finishing processing, which is important for the broader portfolio. And so that is in line -- will be in line in 2024 and really some benefit in '24, but really '25 and beyond.

是的。保羅，謝謝。去年，我們投入了約 3.62 億美元的資金。今年，我們預測約為 3.5 億美元。我仍然想說，同樣的演算法大約 70%——大約 70% 是成長，30% 是維護，只是為了給你這樣的背景。當我們審視在 HVP 產能上投入的資本類型時，我們看到的是一種轉變。所以我們去年完成了 NovaPure。現在我們正在進行 HVP 精加工處理，這對於更廣泛的產品組合非常重要。因此，這將在 2024 年實現，並且在 24 年確實會帶來一些好處，但在 25 年及以後確實會帶來一些好處。

The other area I should just be clear on, it's called about roughly 1/3 of our capital, growth capital is going into our contract manufacturing business. We kind of highlighted that we've expanded Grand Rapids already that is up and running and fully utilized. We have a major project underway in Dublin that will be validated at the end of 2024. This is a significant facility, 175,000 square feet that has demand already committed. So we're pretty confident to get that up and running the end of the year and producing product for all of 2025. So it will be a good return in a short period of time. Those are the 2 probably bigger projects that are going on. But yes, it's more near term than long term.

我應該澄清的另一個領域是，我們大約 1/3 的資本、成長資本將進入我們的合約製造業務。我們強調，我們已經對大急流城進行了擴建，該項目已經啟動、運行並充分利用。我們在都柏林正在進行一個大型項目，該項目將於 2024 年底得到驗證。這是一個重要的設施，佔地 175,000 平方英尺，需求已得到滿足。因此，我們非常有信心在今年年底啟動並運行並生產 2025 年全年的產品。因此，這將在短時間內獲得良好的回報。這些是正在進行的兩個可能更大的項目。但是，是的，這是短期的而不是長期的。

I guess my follow-up and last question would be, you've guided to a long-term growth rate of 7% to 9%, yet in the same period of the last couple of years or so, GLP-1s have emerged as a significant class of therapeutic. Does that square up with your historical guidance of 7% to 9% with this GLP-1 demand out there?

我想我的後續行動和最後一個問題是，你們指導了 7% 到 9% 的長期成長率，但在過去幾年左右的同一時期，GLP-1 已經成為一類重要的治療方法。這是否符合您對 GLP-1 需求的 7% 至 9% 的歷史指引？

Well, Paul, that is an area that we've always talked about is that we do feel that could be an incremental upside as that market evolves. I do feel very confident -- we feel very confident that we are participating quite well with our customers that are in that space, not just in our proprietary products. As you think about the different formats, whether it's an auto-injector or a pen with multiple uses, so cartridges and prefilled syringes.

保羅，這是我們一直在談論的一個領域，我們確實認為隨著市場的發展，這可能會帶來增量上行空間。我確實非常有信心——我們非常有信心我們與該領域的客戶很好地合作，而不僅僅是我們的專有產品。當您考慮不同的格式時，無論是自動注射器還是多用途筆，例如墨盒和預填充注射器。

So we do participate in the proprietary side, but we're also participating on the contract manufacturing side, where -- which is kind of driving some of these large investments that we're making today. So we see that is upside to our long-term construct because we would consider that more of a breakout drug, a similar kind of effect that we had during the COVID time period.

因此，我們確實參與了專有方面，但我們也參與了合約製造方面，這在某種程度上推動了我們今天正在進行的一些大型投資。因此，我們認為這對我們的長期結構有好處，因為我們會認為它更像是一種突破性藥物，與我們在新冠疫情期間產生的效果類似。

Our next question comes from the line of Jacob Johnson of Stephens.

我們的下一個問題來自史蒂芬斯的雅各布·約翰遜。

Maybe, Eric, just first following up on that last comment about contract manufacturing. That's a business, maybe we don't have the most visibility into in terms of the future growth outlook. But clearly, you're deploying capital into that segment right now. So should we think about that business growing kind of above its historical range for the next couple of years, or how should we think about their term profile on these investments and capacity you're making there?

也許，埃里克，只是首先跟進有關合約製造的最後評論。這是一門生意，也許我們對未來的成長前景沒有最大的了解。但顯然，您現在正在將資本部署到該領域。那麼，我們是否應該考慮該業務在未來幾年內的成長是否會超出其歷史範圍，或者我們應該如何考慮他們在這些投資和產能方面的期限概況？

Yes. Bernard, would you like to take that one, please?

是的。伯納德，你想要那個嗎？

Yes. So we would expect contract manufacturing to be grown within our construct. The investments that we're making in that area are very specific and tied to specific customers and business. And as Eric said, before we make the investments, we have a level of visibility as this type of commitment we're going to get and that does support the long-term growth of that business and ties in with our construct. Now again, we always say if we can do more, and there's opportunity to do more, we will. And what we feel at this point, it is important to make these investments.

是的。因此，我們預計合約製造將在我們的架構內發展。我們在該領域進行的投資非常具體，並且與特定的客戶和業務相關。正如艾瑞克所說，在我們進行投資之前，我們對我們將獲得的此類承諾有一定程度的了解，這確實支持該業務的長期成長並與我們的架構聯繫在一起。現在，我們總是說，如果我們能做得更多，並且有機會做得更多，我們會的。我們目前的感受是，進行這些投資很重要。

Got it. And then just on the destocking and kind of visibility to this subsiding as we maybe get into the back half of the year. I know your portfolio is a bit different than the bioprocessing peers, but it took a while before we kind of found the bottom of destocking before really kind of numbers bottomed and kind of accelerated last year maybe there's some unique dynamics around that. And I think investors and some of us have [scar tissue] from this. Can you just talk about your visibility into that destocking concluding and maybe kind of the order book, how firm the order book is the back half of this year?

知道了。然後，隨著我們可能進入今年下半年，去庫存和這種消退的可見性就會出現。我知道你們的投資組合與生物加工同行有點不同，但我們花了一段時間才找到去庫存的底部，然後去年數字才真正觸底並加速，也許這其中存在一些獨特的動態。我認為投資者和我們中的一些人因此而留下了[疤痕組織]。您能否談談您對去庫存結束以及訂單簿的看法，今年下半年訂單簿的堅挺程度如何？

Yes. So Jacob, just on the order book, when we look at the order book for the back half of the year and compare where we are today versus where we were pre-COVID. The order book actually looks stronger, and so we're a bit ahead of where we thought we would be on that compared to pre-COVID trends and rates.

是的。所以雅各布，就在訂單簿上，當我們查看下半年的訂單簿並比較我們今天的情況與新冠疫情之前的情況時。訂單簿實際上看起來更強勁，因此與新冠疫情之前的趨勢和價格相比，我們的預期有點領先。

So that's giving us a level of confidence in the back half and seeing that I won't say a rebound, but the acceleration back to -- or trending back to our normal constant growth rates. And so that -- based on that analysis, we don't see it as being a long-term problem. We would expect we get through it this year. And as we said in the back half trending toward -- into that construct, particularly in Q4.

因此，這給了我們對後半段的信心，我不會說反彈，而是加速回到——或者趨勢回到我們正常的恆定成長率。因此，根據該分析，我們認為這不是一個長期問題。我們希望今年能渡過難關。正如我們在後半段所說的那樣，趨勢是進入這種結構，特別是在第四季。

Our next question comes from the line of Derik De Bruin of Bank of America.

我們的下一個問題來自美國銀行的 Derik De Bruin。

So can we talk a little bit about the margin cadence and just how to think about this and obviously, you're suffering from some headwinds from Kinston not being fully utilized. It sounds like you're taking some headwind from proprietary products. How should we think about the margin impact and exiting 2024, I mean, assuming that this doesn't linger to the last analyst question that this doesn't linger and you do have some visibility in back half of the year. Are we back at a more normalized margin rate exiting the year?

那麼我們可以談談邊際節奏以及如何思考這個問題嗎？顯然，您正遭受金斯頓未充分利用的一些阻力。聽起來您似乎從專有產品中受到了一些阻力。我的意思是，我們應該如何考慮利潤率影響和退出 2024 年，假設這不會持續到最後一個分析師的問題，即這不會持續，並且你在今年下半年確實有一些可見性。今年我們是否會回到更正常化的利潤率？

Yes. Derik, that's what we would expect to see. Q1, obviously, is going to be pressured from a margin point of view based on what we're seeing from a revenue perspective, we see a high correlation there. But again, we do see it trending back to more normal rates of operating margin as we progress through the year. And it will be a gradual shift, I think, quarter-over-quarter.

是的。 Derik，這就是我們期望看到的。顯然，根據我們從收入角度看到的情況，從利潤角度來看，第一季將面臨壓力，我們看到那裡有很高的相關性。但同樣，隨著今年的進展，我們確實看到營業利潤率恢復到更正常的水平。我認為這將是一個逐季度逐步轉變的過程。

Got it. I mean -- but just more on the -- just sort of any help, that's fine. I'll do that. And then can we talk about pricing? I mean, you've enjoyed better-than-expected pricing for the last couple of years? Is that sustainable, or are you getting pushback from customers?

知道了。我的意思是——但更多的是——只要有任何幫助，就可以了。我會去做。然後我們可以談談定價嗎？我的意思是，您在過去幾年中享受了好於預期的定價？這是可持續的嗎？還是您受到了客戶的抵制？

Derik, I mean we are going to -- I know last year, we were between 5% to 6% as we guided the year before. I think we're between 3% and 4%. Before that, as you know, the history of this company, we're probably 1% or 2%. We're not returning back to the history levels. So we're probably more near the 3-plus mark from a pricing -- net price contribution. And just to be clear, any mix shift that occurs, we do not classify that as price. So this is pure price -- net price contribution.

Derik，我的意思是我們將——我知道去年，我們的目標是前一年指導的 5% 到 6% 之間。我認為我們的比例在 3% 到 4% 之間。在此之前，如你所知，從這家公司的歷史來看，我們可能是1%或2%。我們不會回到歷史水平。因此，從定價——淨價格貢獻來看，我們可能更接近 3+ 的水平。需要明確的是，任何發生的混合轉變，我們都不會將其歸類為價格。所以這是純價格——淨價格貢獻。

Got it. And I appreciate the commentary on the 75% of this is tied to 6 customers. I mean, your level of confidence that you can get sort of like the pickup in 2Q that you're seeing and going forward? I mean just like is there a chance that this gets moved out again that there is not going to take stuff. I mean, since you were surprised as last time, just it seems -- I mean, you're a little bit more limited and say what the bioprocessing vendors are going through just given the breadth of the CDMOs and things are there. So can you just sort of like what are your conversations with these people, your level of confidence? I mean do you get surprised again?

知道了。我很欣賞關於 75% 與 6 位客戶相關的評論。我的意思是，您對自己能像第二季度看到的並繼續前進的那樣有信心嗎？我的意思是，就像有沒有機會再次將其移出一樣，不會拿走任何東西。我的意思是，既然你像上次一樣感到驚訝，那麼看起來——我的意思是，你的局限性有點多，並且只考慮到CDMO 的廣度和現有的東西，你就說生物加工供應商正在經歷什麼。那麼，您能否了解您與這些人的對話以及您的自信程度？我的意思是你又感到驚訝了嗎？

Yes, it's absolutely a continued focus for us, Derik. Absolutely. I mean this -- we're not pleased with the impact it's had on us. We pride ourselves we have pretty much access to a large part of the market. And however, based on the conversations and the data we've been looking at with our customers, there will be some still in Q2 that has some destocking, but not as pronounced in Q1. So it's really -- most of it that we're seeing is really a Q1 phenomenon.

是的，這絕對是我們持續關注的焦點，德瑞克。絕對地。我的意思是——我們對它對我們的影響並不滿意。我們很自豪我們幾乎可以進入大部分市場。然而，根據我們與客戶的對話和數據，第二季仍然會有一些庫存減少，但不像第一季那麼明顯。所以我們看到的大部分確實是第一季的現象。

Our next question comes from the line of Matt Larew of William Blair.

我們的下一個問題來自威廉布萊爾的馬特拉魯（Matt Larew）。

Asking about the order book here. I think one thing we saw on the bioprocessing side is at some point during that saga company started referencing green shoots or early indicators of ordering demand and then just took longer for some of those orders to convert or for sort of the green shoots to turn into a dollar signs. So just understanding that the order book is outpacing pre-pandemic levels, good coverage. What sort of the level of confidence, whether that's written contractually or something else that sort of order activity today will convert to revenue dollars in the P&L as you see them coming in.

在這裡詢問訂單簿。我認為我們在生物加工方面看到的一件事是，在傳奇公司開始參考新芽或訂單需求的早期指標的某個時刻，然後只是需要更長的時間才能將其中一些訂單轉換或將某種新芽轉變為一個美元符號。因此，只要知道訂單量超過了大流行前的水平，就可以得到良好的覆蓋。什麼樣的信心水平，無論是合約上寫的還是其他什麼，今天的訂單活動都會在你看到它們進來時轉化為損益表中的收入美元。

Yes. Once the orders are confirmed at this stage, we've pressure tested a lot of that. So we have a good level of confidence that they will convert into revenues in that period. So I think we've done a lot of pressure testing here over the last month or 2 to make sure that is the case, so that will be our expectation, and that's what we're basing our level of confidence on. Again, the order book will continue to build as we move through the year. But as I said, we are ahead of where we were pre-pandemic.

是的。一旦訂單在這個階段得到確認，我們就會進行很多壓力測試。因此，我們非常有信心它們將在此期間轉化為收入。所以我認為我們在過去一兩個月已經做了很多壓力測試，以確保情況確實如此，所以這將是我們的期望，這就是我們信心水平的基礎。同樣，隨著今年的進展，訂單簿將繼續增加。但正如我所說，我們已經領先於大流行前的水平。

Okay. And then another piece of this was, I think, you said 1% from HVP manufacturing capacity. And I think if we dial back to Kinston and bringing some of that capacity online, obviously, you end up catching up a little quicker than you initially thought. What sort of the scope of this capacity expansion and sort of the past year to get it back to where you want to be?

好的。我想，其中的另一部分是您所說的 HVP 製造能力的 1%。我認為，如果我們回撥到金斯頓並將部分容量上線，顯然，您最終會比您最初想像的要快一些。這次產能擴張的範圍如何，以及過去一年如何讓它回到您想要的水平？

Yes. So specifically on the -- 1% down is new lines, also automation or putting it into our HVP devices. These are the proprietary devices that we've manufactured like SelfDose and SmartDose for our customers, and these are combination devices approved with a specific drug molecule with our customers. So when you think about that specific area that's going to be -- that's ongoing right now of expansion, additional capacity being brought in the demand is there in hand, and we need to be able to get caught up to build to support our customers. And so that is on us to make sure that we execute and get that up and running in 2024 validated. We expect that to actually -- commercial revenues in the second half of 2024 for those specific products.

是的。因此，特別是 - 1% 的下降是新生產線、自動化或將其放入我們的 HVP 設備中。這些是我們為客戶製造的專有設備，例如 SelfDose 和 SmartDose，而這些是經客戶批准使用特定藥物分子的組合設備。因此，當你想到即將到來的特定領域時——目前正在進行的擴張，需求帶來的額外產能就在眼前，我們需要能夠趕上來建立以支持我們的客戶。因此，我們有責任確保在 2024 年執行並驗證該計劃並運行。我們預計這些特定產品將在 2024 年下半年實現商業收入。

From a from a components perspective, Kinston and other sites, our lead times are very good, and that was more of last year, getting them validated and up and running. The HVP processing that we referenced about this year that we'll have further completion and validation. That is to really help us support customers as they do a mix shift to the higher end of HVP and also future drug launches that could have larger volumes than we anticipated due to kind of what we call breakout drugs, right, certain categories. So we're positioning ourselves well to be able to support that growth that we anticipate coming in the near future.

從組件的角度來看，金斯頓和其他站點，我們的交貨時間非常好，這比去年的時間更長，讓它們得到驗證、啟動和運行。我們今年提到的 HVP 處理將得到進一步的完成和驗證。這是為了真正幫助我們支持客戶，因為他們正在向HVP 的高端產品進行混合轉型，而且未來的藥物上市量可能會比我們預期的要大，因為我們稱之為突破性藥物，對，某些類別。因此，我們對自己進行了很好的定位，以便能夠支持我們預計在不久的將來出現的成長。

Our next question comes from the line of John Sourbeer of UBS.

我們的下一個問題來自瑞銀集團的約翰·索爾比爾。

Maybe just dialing in on the HVPs there on the last question. I think they were around 75% of mix in 4Q. I mean, is that the right level to think about for 2024? Or are there dynamics in play that could mix shift up or down with the destocking and the new capacity for the year?

也許只是撥通 HVP 的最後一個問題。我認為第四季的混合比例約為 75%。我的意思是，這是 2024 年考慮的正確水平嗎？或者是否存在一些動態因素，可能會隨著今年的去庫存和新增產能而上下變化？

John, it's relatively the same percentage, plus or minus, because the destocking is kind of across broad categories. And when we look at growth in our business, particularly in the proprietary, it is led by the high-value products in the component side. That is leading to growth. As you know that we are in a very attractive injectable market and one of the best, the fastest-growing subsegment within the injectable space is biologics. Our participation rate remains very high, continues to be so. And that's where a lot of the HVP growth is occurring, which is causing a mix shift on the margin. So we anticipate that to be still robust percentage of our overall portfolio.

約翰，百分比相對相同，無論是加還是減，因為去庫存是跨廣泛類別的。當我們審視我們的業務成長時，尤其是專有業務的成長，它是由組件方面的高價值產品引領的。這會帶來成長。如您所知，我們正處於一個非常有吸引力的注射劑市場，而注射劑領域中最好、成長最快的細分市場之一是生物製劑。我們的參與率仍然非常高，並且將繼續如此。這就是大量 HVP 成長發生的地方，這導致了利潤率的混合變化。因此，我們預計這在我們的整體投資組合中仍佔很大比例。

Appreciate that. And then I guess, specific to the destocking trends in the various proprietary product segments, I think pharma and generics saw this impact for us and then now it's more broad in the biologics. Do you expect the pharma side to recover faster followed by biologics, or just any additional details on a -- from a segment perspective.

感謝。然後我想，具體到各個專有產品領域的去庫存趨勢，我認為製藥和仿製藥對我們產生了這種影響，現在它在生物製劑中更加廣泛。您是否期望製藥方面的恢復速度更快，其次是生物製劑，或者只是從細分市場的角度來看任何其他細節。

Yes. That's good questions. You're absolutely spot on. But when we look at the destocking effect that's happened for us in the first half of this year, it is across multiple customer segments -- market segments. So it's both -- it's not just the generics and pharma, but also in some cases, in the biologics. So I would say that for us and where we are in the value chain, is pretty much across the -- all 3 sectors, we talk about biologics, pharma and generics.

是的。這是個好問題。你絕對是對的。但當我們審視今年上半年發生的去庫存效應時，會發現它涉及多個客戶群——細分市場。所以它是兩者兼而有之——不僅僅是仿製藥和製藥，在某些情況下，還包括生物製劑。所以我想說，對我們來說，我們在價值鏈中所處的位置，幾乎涵蓋了所有三個領域，我們談論生物製劑、製藥和仿製藥。

I guess just on the recovery there, which would you -- do you expect them all to come back similarly, or is one you see the big green shoots more impacting 1 segment versus another?

我想就那裡的復甦而言，您會希望他們都以類似的方式回歸，還是您看到的大綠芽對一個細分市場的影響比另一個細分市場更大？

Very similar of all 3, very similar staging coming back.

三個都非常相似，回來的舞台也非常相似。

Our next question comes from the line of Justin Bowers of Deutsche Bank.

我們的下一個問題來自德意志銀行的賈斯汀·鮑爾斯。

So I have a 2-parter here. But first, I wanted to clarify the cadence in the prepared remarks. I thought I heard products would be positive in 2Q and overall would be positive. So just wanted to clarify that. And then sort of the step-up from 2Q to 3Q on growth? And then the follow-up question would be just on the order book. You said it has a higher coverage ratio than pre-pandemic levels. Can you just help, is that sort of like a forward 12-month or forward 6 months, or just how do you guys look at it internally and across which businesses? Help us understand what that.

所以我這裡有一個 2 個人。但首先，我想先澄清一下準備好的發言的節奏。我以為我聽說第二季的產品將會是正面的，整體來說也會是正面的。所以只是想澄清這一點。然後從第二季到第三季的成長是否有所加快？然後後續問題就在訂單簿上。你說它的覆蓋率比大流行前的水平要高。您能否幫忙，這有點像遠期 12 個月或遠期 6 個月，或者您如何在內部和哪些業務中看待它？幫助我們理解那是什麼。

Answering your first question, yes, we would expect proprietary to return to positive growth in Q2. Now it's -- as we said, it's going to step up over the years, so we're not going to see a huge spike, I believe. So again, there's still a level of destocking. So probably low single-digit growth in proprietary. And then on a consolidated basis, also, we would see returning to growth in Q2. And then looking at the order book, we're really looking at on a 12-month basis. So rolling 12 months.

回答你的第一個問題，是的，我們預期自營業務將在第二季恢復正成長。現在，正如我們所說，多年來它將繼續上升，所以我相信我們不會看到巨大的飆升。再次強調，庫存仍存在一定程度的去化。因此，專有業務的成長可能較低。然後，在綜合基礎上，我們也將看到第二季恢復成長。然後查看訂單簿，我們實際上是在 12 個月的基礎上查看。就這樣滾了12個月。

Okay. That's helpful. And then just to clarify on the margins, too. I'm getting to, it looks like if I sort of back into the EPS guide, with a normalized tax rate, I'm still getting to roughly 90 to 100 basis points of margin expansion on the low end. Is that the right math? Or is there some other dynamics in play there that I'm missing here?

好的。這很有幫助。然後也只是在邊緣進行澄清。我發現，如果我回到每股盈餘指南，採用標準化稅率，我仍然會在低端實現大約 90 到 100 個基點的利潤擴張。這是正確的數學嗎？或者還有其他一些我在這裡忽略的動力在發揮作用嗎？

For the year?

今年？

Yes.

是的。

No, we would expect operating margin to be flat year-over-year, yes.

不，我們預計營業利潤率將同比持平，是的。

Our next comes from the line of David Windley of Jefferies.

我們的下一個來自傑富瑞 (Jefferies) 的大衛溫德利 (David Windley)。

Around the horn here. I wanted to ask a couple of follow-ups. Eric, just to clarify for the broader audience. When you talk about participation rate, I interpret that to mean that you're expecting on the product. You and I have talked about how on big customer, big important products West likes to be in a position of a sole-source position. Can you help us to translate or translate between participation and share.

在這裡的喇叭周圍。我想問幾個後續問題。埃里克，只是為了向更廣泛的受眾澄清。當您談論參與率時，我將其解釋為您對產品的期望。你和我已經討論過，在大客戶、重要的大產品上，西方喜歡處於獨家來源的位置。你能幫我們翻譯一下參與和分享之間的翻譯嗎？

Yes. I would say -- when I say -- when we say participation rate is that when we are -- our customers when they file their regulatory filings, it is pointing towards the West product that's in their filings. And therefore, we tend to have a pretty, let's say, share, it's usually a very large percentage of that, if not all. Do customers in the market look at a secondary source and/or test for that secondary source? Yes. But when we look at our participation rate, it tends to be a pretty large share of the number -- of the volume of the doses basically. So that's what we -- when we say -- that's what we mean by participation. It's a win rate for us, Dave. And it's pretty consistent historically, and we've been tracking that. for both ourselves and our partners, Daikyo, at the molecule level, absolutely.

是的。我想說——當我說——當我們說參與率是當我們——我們的客戶提交監管文件時，它指的是他們文件中的西方產品。因此，我們傾向於分享相當多的份額，即使不是全部，通常也佔很大比例。市場上的客戶是否會考慮二手來源和/或測試該二手來源？是的。但當我們觀察我們的參與率時，它往往佔劑量的相當大的份額。這就是我們所說的參與的意思。這是我們的勝率，戴夫。從歷史上看，它非常一致，我們一直在跟踪這一點。對於我們自己和我們的合作夥伴 Daikyo，在分子層面上，絕對是如此。

Got it. And then you've talked about -- well, your market share is 70%. That's not a number that really has changed in a very long time, maybe even higher than that. You've talked about participation by logic being 90% or better. Just elephant in the room, I suppose, in a competitor's conference call recently talked about a project that they have been included on of a recently launched large molecule -- sounds GLP-1, sounds very significant and sounds a little bit like a market share take. I gather that your prepared remarks were kind of addressing that, but I just want to throw it out there and ask for more specificity about your participation rate in GLP-1s.

知道了。然後你談到——嗯，你的市佔率是 70%。這個數字在很長一段時間內都沒有真正改變過，甚至可能更高。您談到邏輯參與率達到 90% 或更高。我想，這只是房間裡的大象，在競爭對手最近的電話會議上談到了他們最近推出的一個大分子的一個項目——聽起來是GLP-1，聽起來非常重要，聽起來有點像市場份額拿。我認為您準備好的評論是在某種程度上解決這個問題，但我只是想把它扔在那裡，並要求您更具體地了解您對 GLP-1 的參與率。

Yes. No, our participation rate in GLP-1 is very strong. And there might be other components that are used in the final packaging configuration that are provided by someone else in the market that's been historically true. But the way we are positioned for our -- with our customers in that particular space is very strong on our proprietary components but also on the contract manufacturing side. So I would say that in all cases, when you look at a final primary packaging containment, there's multiple elements that go into it. Hence, the reason why we're driving towards more of an integrated system approach as we've been talking about building towards. We would like to have more components than just 1 or 2 items on that whole system. So yes, others will probably be participating with their own products, but I'm pretty -- I feel really comfortable where we are with our position.

是的。不，我們對 GLP-1 的參與率非常高。最終的包裝配置中可能會使用其他組件，這些組件是由市場上其他人提供的，這在歷史上是真實的。但是，我們在該特定領域與客戶的定位方式不僅在我們的專有組件方面非常強大，而且在合約製造方面也是如此。所以我想說，在所有情況下，當您查看最終的初級包裝容器時，都會發現其中包含多個元素。因此，正如我們一直在談論的那樣，我們正在推動更多的整合系統方法的原因。我們希望整個系統上有更多的組件，而不僅僅是 1 或 2 個項目。所以，是的，其他人可能會用他們自己的產品參與其中，但我很漂亮——我對我們所處的位置感到非常滿意。

Got it. And then -- last question for me. From a capital allocation standpoint, you've -- is maybe a 2-parter, I apologize. You've talked about CapEx. You've talked about a lot of that being growth. That CapEx number continues to be relatively high in 2024. I guess I want to kind of understand to what extent you're catching up on capacity. You've talked about long lead times, you talked about demand in hand things like that, or is there a risk of some mismatch of capacity as you're spending still aggressively on CapEx? And then in terms of alternative uses of free cash flow, stock is going to get dislocated on this news. You bought back stock in 2023. How aggressively might management want to step in and buy back stock as a sign of confidence in the long-term growth outlook.

知道了。然後——我的最後一個問題。從資本分配的角度來看，您可能是兩人合作的，我很抱歉。您談到了資本支出。你已經談到了很多關於成長的內容。到 2024 年，資本支出數字仍然相對較高。我想我想了解一下您在產能方面的追趕程度。您談到了較長的交貨時間，您談到了現有需求之類的問題，或者由於您仍在積極地投資於資本支出，因此是否存在產能不匹配的風險？然後就自由現金流的其他用途而言，股票將因這一消息而混亂。您在 2023 年回購了股票。管理層希望以多大的力度介入併回購股票，以此作為對長期成長前景充滿信心的標誌。

Dave, let me address the first part and then maybe I'll turn it over to Bernard on the second part. When I look at the capital that we have in front of us today for 2024, the $350 million, it is true that we would like to be able to get our capital as a percentage of sales back to the high single-digit range. However, while 70-plus percent of our capital is still around growth. These are commitments that our customers were working with, whether it's near term or more midterm, that we need to build support.

戴夫，讓我談談第一部分，然後也許我會把第二部分交給伯納德。當我看到我們今天所擁有的 2024 年資本（3.5 億美元）時，我們確實希望能夠將我們的資本佔銷售額的百分比恢復到較高的個位數範圍。然而，儘管我們 70% 以上的資本仍處於成長階段。這些是我們的客戶正在努力實現的承諾，無論是近期或中期，我們都需要建立支援。

So in the contract manufacturing side, it's very clear, it's very near term. These are contracts we have agreed upon for a number of years ahead of us that we need to get the installed capacity in place immediately so we can start producing product for them. On the proprietary side, we are anticipating future growth with new drug launches that are occurring and/or will occur. And based on the volumes that we've been asked to be able to support, these are the types of investments we need to make. So, for example, HVP processing is not just a NovaPure play, but it's the ability to build -- take our HVP portfolio and support the growth not just on the volume, but also new drug launches, any particular categories that are going to have outsized growth rates.

因此，在合約製造方面，很明顯，這是非常近期的事情。這些是我們提前幾年就達成的合同，我們需要立即到位裝機容量，以便我們可以開始為他們生產產品。在專有方面，我們預計未來的成長將伴隨著正在發生和/或將要發生的新藥上市。根據我們被要求能夠支持的數量，這些是我們需要進行的投資類型。因此，舉例來說，HVP 處理不僅僅是 NovaPure 的遊戲，而且是構建的能力——採用我們的 HVP 產品組合，不僅支持數量的增長，還支持新藥的發布、任何特定類別的增長巨大的增長率。

And then also on this mix shift effect that is on us today due to regulatory changes requiring higher quality, lower particulates to meet these regulations that are going in place. So those are the drivers why we feel good, confident about the investments we're making because we know the return on these investments are very positive for us and obviously for our customers. And that's the lens that we currently have. Do you want to, Bernard, touch on the capital?

然後，由於監管變化要求更高品質、更低顆粒物以滿足正在實施的這些法規，我們今天也受到了這種混合轉變的影響。因此，這些就是我們對正在進行的投資感覺良好和充滿信心的驅動因素，因為我們知道這些投資的回報對我們來說非常積極，顯然對我們的客戶也是如此。這就是我們目前擁有的鏡頭。伯納德，你想去首都嗎？

Yes. Dave, I think it's important to realize the -- for us to deploy CapEx in this way, it takes time for us to layer in capacity. It takes 12 to 24 months. And so based on just back to Eric's comments, what we're seeing from a demand perspective, we need to layer that in at this time. So we don't actually run into long lead times like we experienced in COVID and then it's difficult to respond to growth in the market and not capture all the opportunities.

是的。戴夫，我認為重要的是要認識到這一點——對於我們以這種方式部署資本支出來說，我們需要時間來分層容量。需12至24個月。因此，根據艾瑞克的評論，我們從需求角度看到的情況，我們現在需要將其分層。因此，我們實際上不會遇到像新冠疫情那樣的漫長交付週期，因此很難對市場的成長做出反應，也無法抓住所有機會。

So that's thinking behind layering in this capacity. And again, it's around very specific areas. And we do expect our CapEx to kind of level off here possibly after 2024 because we have a lot of the investment done. And again, it's a very deliberate and disciplined approach to capital deployment. We review it on a regular basis. And based on all the analysis we have feedback or input from our customers, but we need to continue deploying as we've outlined in 2024 to be prepped for the next number of years. Was there another part of that question?

這就是這種能力分層背後的想法。再說一次，它是圍繞著非常具體的領域進行的。我們確實預期我們的資本支出可能會在 2024 年後趨於平穩，因為我們已經完成了大量投資。再說一遍，這是一種非常審慎和嚴格的資本配置方法。我們定期對其進行審查。根據所有分析，我們收到了客戶的回饋或意見，但我們需要繼續按照 2024 年概述的部署進行部署，為未來幾年做好準備。這個問題還有其他部分嗎？

Share repurchase.

股份回購。

Yes. On the buyback, again, we have a very deliberate process as to how we deploy the buyback. And we review that on a quarterly basis to see where we are, and we will continue to do that. and to deploy it where and when appropriate.

是的。在回購方面，我們對於如何部署回購有一個非常深思熟慮的過程。我們每季都會對此進行審查，看看我們的進展情況，我們將繼續這樣做。並在適當的地點和時間部署它。

We have time for just 1 more question.

我們還有時間再問 1 個問題。

Our final question comes from the line of Larry Solow of CJS Securities.

我們的最後一個問題來自 CJS 證券公司的 Larry Solow。

There it is. Long wait there, worth the wait. I guess just a couple -- first of all, Eric, thank you for a really good description of sort of not a great subject, but the impact of the lower sales outlook. Really appreciate that. I guess kind of just switching gears to a couple of topics. Can you just give us a little more follow-up on -- a little more color just on the -- you mentioned an ongoing sort of regulatory shift. Has this accelerated in terms of requirements for low particulate. And is that something that's going to drive some of the legacy products to have to switch maybe over, or is that just driving more on new products coming to the market?

就在那裡。在那裡等了很久，值得等待。我想只有幾個 - 首先，埃里克，謝謝你對這不是一個很好的主題的非常好的描述，而是銷售前景下降的影響。真的很感激。我想只是切換到幾個主題。您能否給我們更多的後續資訊—您提到的正在進行的監管轉變？這是否加速了對低顆粒物的要求？這是否會推動一些傳統產品必須轉換，或只是推動更多新產品進入市場？

Yes, Larry, it's a good question, thanks for that, and thanks for your patience.

是的，拉里，這是一個很好的問題，謝謝你的提問，也謝謝你的耐心。

Absolutely.

絕對地。

No, absolutely. So there's a regulatory shift that's occurring called Annex 1, really being driven out of Europe, but it's going to obviously be a driver for a lot of the multinationals because of the requirements across the globe. And what that means is that we have a pretty large part of our portfolio. We mentioned in the neighborhood of billions of components we produce each year that when we classify a standard that would be required to move up our -- what we classify as high-value product portfolio to be able to service some higher quality lower particulates to meet these regulations.

不，絕對是。因此，正在發生一種稱為附件 1 的監管轉變，實際上正在被逐出歐洲，但由於全球各地的要求，它顯然將成為許多跨國公司的推動力。這意味著我們擁有相當大一部分的投資組合。我們在每年生產的數十億個組件中提到，當我們對一個標準進行分類時，需要提升我們的高價值產品組合，以便能夠為一些更高品質的低顆粒物提供服務，以滿足這些規定。

Now when you look at our HVP mix shift historically, we talked about it for a number of years. The success of that mix shift of West for the last several years has been on really new molecules, particularly in the biologics as more volume and demand goes in that particular segment, it's higher ASP, higher margin. And we've been seeing that benefit at West for a number of years. What we're seeing going forward, that will continue and will continue to because of our -- because of the participation rate that we have with these new launches. We also now, because the regulatory changes are being enforced and policies are being changed it will require a mix shift effect of existing drugs in the market.

現在，當您回顧我們的 HVP 組合轉變歷史時，我們已經討論了很多年。過去幾年西方的混合轉型的成功在於真正的新分子，特別是在生物製劑領域，因為該特定領域的銷售和需求量更大，平均售價更高，利潤率更高。多年來我們已經在 West 看到了這種好處。我們所看到的未來​​將會繼續下去，並且會繼續下去，因為我們——因為我們對這些新產品的參與率。我們現在也是如此，因為監管變革正在執行，政策正在改變，這將需要市場上現有藥物的混合轉變效應。

So that's a great opportunity for us to work with our customers where necessary to be able to transition them into a more appropriate packaging configuration that allows them to meet or exceed all the standards. So we're quite excited about this opportunity. We look at some of the investments that we need to make, to be able to support it, particularly on the HVP processing. We're very much aligned to where the market is going. And if I would just share one more comment, historically here at West, when we introduce new products or capabilities particularly on our elastomeric components, it's usually coincides with the regulatory change. So as the regulations have evolved over time, our portfolio has evolved with and exceeded those requirements, which has always put us in a good position from a -- to be able to support our customers and ultimately their patients. So I'm feeling good about this that we're ready to be able to address this item, but it will take several years. It's not a 1-year event or a 2-year event. It does take several years, but we're ready to go on that journey.

因此，這對我們來說是一個很好的機會，可以在必要時與客戶合作，將他們轉變為更合適的包裝配置，使他們能夠滿足或超過所有標準。所以我們對這個機會感到非常興奮。我們會考慮需要進行的一些投資，以便能夠支持它，特別是在 HVP 處理方面。我們非常符合市場的發展方向。如果我想再分享一個評論，歷史上在 West，當我們推出新產品或功能，特別是在我們的彈性體組件上時，通常與監管變化同時發生。因此，隨著法規隨著時間的推移而發展，我們的產品組合也隨著這些要求而發展並超越了這些要求，這始終使我們處於有利地位，能夠支持我們的客戶並最終支持他們的患者。所以我對此感覺很好，我們已經準備好能夠解決這個問題，但這需要幾年的時間。這不是一年期活動或兩年期活動。這確實需要幾年的時間，但我們已經準備好踏上這段旅程。

It sounds like you can layer in some extra growth on an annual basis if it comes to fruition over a multiple years period. But if I could squeak 1 more in, just on the devices and reaching 10% of proprietary high-value price sales. I think that's a nice significant milestone. Is that driven more by SmartDose, SelfDose, is that the combination of 2? What's really driving that growth going forward?

聽起來，如果在多年的時間內取得成果，您可以每年增加一些額外的成長。但如果我能再多賺 1 筆錢，就在設備上，並達到專有高價值價格銷售額的 10%。我認為這是一個很好的重要里程碑。這更多是由 SmartDose、SelfDose 驅動的，還是兩者的結合？真正推動這種成長的因素是什麼？

It's actually -- it's interesting. It's actually through all of them, but the biggest drivers have been last year, and we're actually quite excited. Our administration systems, our admin systems continue to grow well. We just relaunched a new version of our Vial2Bag 2-millimeter, which partners real well with 20-millimeter into the hospital health care market. In the SelfDose, we're seeing a nice uptick of demand in that market -- I'm sorry, in that category with discrete customers and their drug launches. And then in SmartDose is an area that we've been focused on for a number of years, but we're at a point now of inflection on volume growth that we have to get ahead of the curve. And that is an area that we're laser focused on right now. We have a dedicated team with new automated equipment coming online so we can remove the manual processes, allows us to be more efficient, higher volume, higher quality to be able to support these -- the growth of these launches. So it is kind of across multiple areas, and it's exciting to see it starting to gain traction.

事實上，這很有趣。實際上是透過所有這些因素實現的，但最大的推動因素是去年，我們實際上非常興奮。我們的管理系統，我們的管理系統持續發展良好。我們剛剛重新推出了新版本的 Vial2Bag 2 毫米，它與 20 毫米在醫院醫療保健市場上的合作非常好。在 SelfDose 中，我們看到該市場的需求大幅上升 - 抱歉，在該類別中，客戶及其藥物的發布都比較分散。然後，SmartDose 是我們多年來一直關注的一個領域，但我們現在正處於銷售成長的轉折點，我們必須走在前面。這是我們現在重點關注的一個領域。我們有一個專門的團隊，配備了新的自動化設備，讓我們可以消除手動流程，使我們能夠更有效率、更高產量、更高品質來支援這些產品的成長。所以它是跨多個領域的，看到它開始受到關注是令人興奮的。

Thank you. I would now like to turn the conference back to Quintin Lai for closing remarks. Sir?

謝謝。現在我想請昆汀‧賴 (Quintin Lai) 致閉幕詞。先生？

Thank you, Latif, and thank you for joining us on today's conference call. An archive -- online archive of the broadcast will be available on our website at westpharma.com in the Investors section. Additionally, you may access a replay for 30 days following the presentation by using the dial-in numbers and conference ID provided at the end of today's earnings release. That concludes today's call. Have a nice day.

謝謝拉蒂夫，也謝謝您參加我們今天的電話會議。廣播的存檔 - 線上存檔將在我們的網站 westpharma.com 的投資者部分提供。此外，您還可以使用今天收益發布結束時提供的撥入號碼和會議 ID 來觀看演示後 30 天內的重播。今天的電話會議到此結束。祝你今天過得愉快。

Thank you for participating. You may now disconnect.

感謝您的參與。您現在可以斷開連線。