West Pharmaceutical Services, Inc. Q2 FY2025 earnings call

• Q2 2025 performance exceeded expectations, driven by solid growth in HVP components, including robust GLP-1 elastomer growth. • Proprietary Products segment grew 8.4% organically, with HVP components up 11.3%, and 370 Annex-1 HVP Upgrade projects. Biologics expected to be a long-term growth contributor. • Contract Manufacturing segment saw 0.5% organic revenue increase in Q2, with Dublin facility ramping up. • HVP Delivery Devices had 30% revenue growth in Q2, with SmartDose being evaluated and a new automated line expected in early 2026. • Standard Products have a strong regulatory moat and ongoing pipeline for HVP conversions.

Proprietary Products segment had organic net sales growth of 8.4% in Q2 2025, driven by HVP volumes and positive sales price. High-value products, making up 74% of Proprietary Product sales, increased 12.6%. Contract Manufacturing segment saw 0.5% net sales growth in Q2, primarily due to increased sales in self-injection devices for obesity and diabetes. HVP Delivery Devices, representing ~13% of total company sales, had revenues increase 30% in Q2, driven by strength in Daikyo Crystal Zenith containment and administration systems. Standard Products had revenues up 0.4%, with a strong regulatory moat and ongoing pipeline for HVP conversions.

• Increased full-year 2025 net sales guidance to $3.04 billion to $3.06 billion from prior $2.945 billion to $2.975 billion. • Organic sales growth expected to be approximately 3% to 3.75% vs prior 2% to 3%. • Adjusted diluted EPS guidance increased to $6.65 to $6.85 from $6.15 to $6.35. • Tariff impact for FY 2025 expected to be $15 million to $20 million vs prior $20 million to $25 million. • Third quarter 2025 revenue expected to be $785 million to $795 million, adjusted diluted EPS $1.65 to $1.70.

• Tariffs: Uncertainty around retaliatory tariffs and other factors, impact on business estimated at $15 million to $20 million for FY 2025. • Labor constraints in HVP plants in Europe, though efforts are underway to ramp up labor.

Q: Paul Knight with KeyBanc asked about Crystal Zenith driving growth.

A: Eric Green said it's driven by customer demand on a particular drug launch.

Q: Justin Bowers with Deutsche Bank asked about generics destocking and market conditions for durable growth.

A: Eric Green said generics destocking continues, but momentum in second quarter, and high-value product components are key growth drivers.

Q: Larry Solow with CJS Securities asked about Annex-1 translating to revenue growth.

A: Eric Green said Annex-1 is a multiyear process, with 370 projects secured, and expected to contribute 150 basis points in 2025.

Q: Daniel Markowitz with Evercore ISI asked about Annex-1 project growth and revenue contribution.

A: Bernard Birkett said HVP components were expected to have stronger growth in second half, with Q2 beat passing through and positive on second half, particularly HVP components.

Q: Douglas Schenkel with Wolfe Research asked about returning to normalized growth and tariffs.

A: Eric Green and Bernard Birkett discussed normalization of growth with momentum in HVP components and tariffs based on current rates with monitoring.

Q: Matt Larew with William Blair asked about timing to resolve labor constraints in HVP facility.

A: Eric Green said labor ramp-up is ongoing, with growth from multiple angles and expectation to deliver mid- to high single-digit growth for HVP components.