Q4 2021 West Pharmaceutical Services Inc Earnings Call

Okay.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 West Pharmaceutical services earnings conference call at.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 West Pharmaceutical Services Earnings Conference Call.

At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 1 on your telephone. Please be advised that today's session will be recorded.

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 the question. During this session you will need to press Star then one on your telephone.

Please be advised that today's conference is being recorded.

If you require any further assistance, please press stop and zero.

If you require any further assistance. Please press star then zero.

I would now like to turn the conference over to your speaker for today, Quintin Lai Vice President Investor Relations you may begin.

I would now like to turn the conference over to your speaker for today, Quinton Lai, Vice President, Investor Relations.

Thank you, Twanda. Good morning and welcome to West's fourth quarter and full year 2021 conference call.

Good morning, and welcome to West fourth quarter, and full year 2021 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 West pharma Dot com.

We issued our financial results this morning and the release has been posted in the investor section on the company's website located at www.westbarma.com.

This morning, CEO , Eric Green and CFO , Bernard Birkett will review our financial results provide an update on our business and present, an update on our financial outlook for the full year 2022.

This morning CEO Eric Green and CFO Bernard Burkett will review our financial results, provide an update on our business, and present an update on our financial outlook for the full year 2022. There's a slide presentation that accompanies today's call and a copy of that presentation is available on the investor section of our website.

There is a slide presentation that accompanies today's call and a copy of that presentation is available on the investors section of our website.

On slide four is our safe Harbor statement statements.

statements made by management on this call and in the accompanying presentation contain forward looking statements within the meaning of US Federal Securities.

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 portraits.

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.

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 board-looking statement made by the company.

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.

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 10k, 10q and 8k results.

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.

During today's call management will make reference to non-GAAP financial measures, including organic sales growth adjusted operating profit adjusted operating margin and adjusted diluted EPS.

Reconciliations and limitations of the non-GAAP financial measures to the most comfortable financial results prepared in conforming the GAAP are provided in this morning's running.

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.

I'll now turn the call over to <unk>, CEO and President Eric Green.

I now turn the call over to West CEO and President Eric.

Thank you Quintin and good morning, and thanks for joining US today, we are excited to discuss our 2021 results and outlook for 2022, we will start on slide five.

Thank you, Quentin. Good morning. And thanks for joining us today. We are excited to discuss our 2021 results and outlook for 2022. We will start on slide 5. Wes delivered a remark

Once delivered a remarkable year of success.

As I reflect on the year, three things stand out to me. First, our purpose. We serve to improve patient lives, and we understand the criticality of our role in the containment and delivery of life-saving and life-changing medicines, including the battle against COVID-19.

As I reflect on the year three standout to me.

First our purpose, we serve to improve patient lives and we understand the criticality of our role in the containment and delivery of lifesaving and life changing medicines, including the battle against COVID-19.

Our team members have rallied together with great sense, strength, and resolve to meet the accelerated customer demand. I want to acknowledge his incredible efforts and say thank you.

Our team members have rallied together with great.

Strength and resolve to meet the accelerated customer demand I want to acknowledge he has incredible efforts.

Second our proven market led strategy, we have continued to meet shifting market and customer needs with unique value propositions across our business segments. This was evident in the continued strength of our financial performance in 2021.

Second, our proven market-led strategy. We have continued to meet shifting market and customer needs with unique value propositions across our business segments. This is evident in the continued strength of our financial performance in 2021.

Lastly, trust. Customers trust West. As a global leader, customers come to West knowing that we will deliver superior value through our high quality products and solutions. And we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the healthcare industry.

Lastly trust customers Trust West as the global leader customers come to us knowing that we will deliver superior value through our high quality products and solutions and we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the health care.

Our industry.

As highlighted on slide six to 2021 was an exceptional year of sales and margin expansion driven by strong demand in our base business and accelerated demand for components associated with COVID-19, vaccines and therapeutics, we ended the year with <unk>.

As highlighted on slide six, 2021 was an exceptional year of sales and margin expansion, driven by strong demand in our base business and accelerated demand for components associated with COVID-19 vaccines and therapeutics.

We ended the year with 28% organic sales growth in the fourth quarter, and adjusting for COVID-related sales, our base business grew by mid-teens organically.

8% organic sales growth in the fourth quarter and adjusted for Covid related sales our base business grew by mid teens organically.

Our proprietary product segment led the way with 37% organic sales growth.

Our proprietary products segment led the way with 37% organic sales growth.

and all of this was fueled by high value products, resulting in impressive growth and operating margin expansion for the quarter.

And all of this was fueled by high value products, resulting in an impressive growth and operating margin expansion for the quarter. Looking ahead, we are well positioned with the right growth strategy around execute innovate and grow our committed order book is at an all time high we continue to.

Looking ahead, we are well positioned with the right growth strategy around execute, innovate and grow. Our committed order book is at an all-time high.

We continue to realize the benefits of the globalization of our operating model and continue capital investments.

Realize the benefits of the globalization of our operating model.

And continued capital investments to support the increasing demand driven by the attractive end markets.

to support the increasing demand driven by the attractive end market.

Turning to slide seven in addition to our financial momentum.

Turning to slide seven, in addition to our financial momentum, let's have several other notable accomplishments in 2021. We shipped over 45 billion components touching billions of patient lives. This was done with the continued safety of our team members as top priority and the importance of ensuring the continuity of supply for our customers.

Has several other notable accomplishments in 2021, we shipped over 45 billion components touch billions of patient lives. This was done with the continued safety of our team members is top priority and the importance of ensuring the continuity of supply for our customers.

As scientific and technical leaders in the industry, we continue to broaden and insights with their expertise through Wes knowledge Center, Webinars published articles and technical presentations.

As scientific and technical leaders in the industry, we continue to broaden insights with our expertise through WES' Knowledge Center, webinars, published articles, and technical presentations.

We launched five product extensions that continue to bring additional value to our customers. And we donated over $2.5 million dollars, but more importantly, over 3600 volunteer hours were donated by team members to help our local communities with the greatest needs.

We launched five product extensions that continued to bring additional value to our customers and we don't need it over $2 $5 million, but more importantly over 3600 hours.

Onto your hours were dominated by team members to help our local communities with the greatest needs.

As we move to slide 8, we strive to be stewards of a sustainable future by factoring environmental considerations into every aspect of our business. In 2021, we expanded our ESG transparency reporting by aligning with the task force for climate-related financial disclosure recommendations. This includes reducing energy dependencies and lessening emission production through renewable and greener energy.

As we move to slide eight we strive to be stewards of a sustainable future by factoring environmental considerations into every aspect of our business in 2021, we expanded our ESG transparency reporting by aligning with the task force for climate related financial disclosure recommendations.

This includes reducing the energy dependencies, and lessening the emission production through renewable and greener energy.

Developing more carbon friendly products and actively engaging with stakeholders to seek out opportunities to have an impact on climate.

developing more carbon-friendly products, and actively engaging with stakeholders to seek out opportunities to have an impact on climate.

Aligned with our focus to improving patient lives across the globe through our products, we remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations.

Aligned with our focus to improve improving patient lives across the globe through our products. We remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations.

Turning to slide nine, in their recent announcement of our collaboration with Corning, as you look across biotech and pharma companies' drug pipelines, there is a growing need to provide system solutions to support increasingly more sensitive and complex molecules.

Turning to slide nine and their recent announcement of our collaboration with Corning.

As you look across biotech and pharma companies as drug pipelines. There is a growing need to provide system solutions to support increasingly more sensitive and complex molecules.

And with that comes a changing and increasing regulatory environment that are setting a high bar of requirements for performance data on combination products at the system level.

And with that comes a changing and increasing regulatory environment. There are setting a high bar requirements for performance data on combination products at the system level.

These regulatory changes are driving drug manufacturers to look to west to reduce risk.

These regulatory changes are driving drug manufacturers to look to west to reduce risk by specifically specifying a system of packaging rather than individual components.

Specifically specifying our system, our packaging rather than individual components.

We're excited to have Corning as a key collaborator as we expand our HVP value proposition to lead the industry from components to a truly integrated system that couples elastomer andria.

We're excited to have Corning as a key collaborator as we expand our <unk> value proposition to lead the industry from components to a truly integrated system that couples of last summer and glass.

In response to our customers this exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning Valor glass technology.

In response to our customers, this exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning's Valor Glass technology.

By combining <unk> industry, leading Nova peer components with <unk> coating technology, and corning's valor glass and velocity vials. The collaboration will enable new advanced pharmaceutical packaging solutions.

By combining West's industry-leading Novapyr components with Dicule's Flurotech coating technology and Corning's Valor Glass and Velocity vials, the collaboration will enable new, advanced pharmaceutical packaging solutions.

We believe that an integrated system of elastomer and glass under a single drug master file is the next level of high value products. Our initial focus is addressing the need for complete system offering and in time we will offer a broad range of systems from vials to prefilled syringes to cartridges.

We believe that an integrated system of last spring glass under a single drug Master file is the next level of high value products. Our initial focus is addressing the need for complete system offering and in time, we will offer a broad range of systems from vials to pre filled syringes to cartridges.

As we entered 2022, we are building on the positive momentum we generated in 2021, we are introducing full year 2022 financial guidance that assumes approximately 10% organic sales led by strong <unk> sales and another strong year of both growth.

As we enter in 2022, we are building on the positive momentum we generated in 2021. We are introducing full year 2022 financial guidance that assumes approximately 10% organic sales led by strong HVP sales and another strong year of both gross and operating profit margin expansion, well in excess of 100 basis points.

And operating profit margin expansion well in excess of 100 basis points. This guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems.

This guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems.

And with a robust book of committed orders, we see momentum in 2022 and continue into 2023. As such, we expect to add more capital expansion plans for additional HVP capacity to stay ahead of our customers' demand. We expect these projects to be completed throughout the year and ready for 2023 production.

And with a robust book of committed orders, we see momentum in 2022 and continuing into 2023 as such we expect to add more capital expansion plans for additional HCP capacity to stay ahead of our customers' demand. We expect these projects to be completed throughout the year.

And ready for 2023 production.

Before I turn the call over to Bernard to review, our financial results in detail I want to revisit our long term financial construct for the past few years, we have set our long term financial construct as any organic sales growth of 6% to 8% led by <unk> sales.

Before I turn the call over to Bernard to review our financial results in detail, I want to revisit our long-term financial construct. For the past few years, we have set our long-term financial construct as annual organic sales growth of 6 to 8 percent led by HPP sales and annual operating profit margin expansion of 100 basis points per year.

And annual operating profit margin expansion of 100 basis points per year.

Over the past five years, we've had an annual organic sales kegger of 13%, an annual operating and profit margin expansion of 240 basis points per year.

Over the past five years, we've had an annual organic sales CAGR of 13% and annual operating profit margin expansion of 240 basis points per year.

Five years ago, Biologics was our smallest market unit. Today, Biologics is our largest market unit with customers from emerging biotech to large biopharma coming to West and our partner, Dikeo, which is reinforced by our strong participation rate in recently approved new molecular entities in the US and also in Europe .

Five years ago Biologics was our smallest market unit today biologics is our largest market with customers from emerging biotech to large biopharma coming to west and our partner <unk>, which is reinforced by our strong participation rate and recently approved new molecular entities in the U S and also.

So in Europe .

As we look to the future we see continued demand growth for our <unk> products as we launched a new level of <unk> integrated systems. We are updating our long term construct to annual sales growth of seven 9% and we continue to expect to expand operating margins by 100 basis points per year.

As we look to the future, we see continued demand growth for HVP products as we launch a new level of HVP's integrated systems. We are updating our long-term construct to annual sales growth of 7-9% and we continue to expect to expand operating margins by 100 basis points per year over the next few years.

<unk> over the next few years.

Now I'll turn it over to our CFO , Bernard Prickett, who will provide more detail on our financial performance. Bernard? Thank you, Eric, and good morning. So let's review the numbers in more detail.

Now I'll turn it over to our CFO , Bernard Birkett, who will provide more detail on our financial performance Bernard Thank you, Eric and good morning, So let's review the numbers in more detail.

We will first look at Q4 2021 revenues and profit.

We'll first look at Q4 2021 revenues and profit.

where we saw continued strong sales and EPS growth, led by strong revenue performance in each of our proprietary market units.

We saw continued strong sales and EPS growth.

Strong revenue performance in each of our proprietary market units.

I will take you through the margin growth we saw in the quarter, as well as some balance sheet takeaways. And finally, we will review our 2022 guidance.

I will take you through the margin growth, we saw in the quarter as well as some balance sheet takeaways.

And finally, we will review our 2022 guidance.

First up Q4.

Our financial results are summarized on slide 10 and the reconciliation of non-US GAAP measures are described in slides 19 to 22.

Our financial results are summarized on slide 10, the reconciliation of non U S. GAAP measures are described in slides 19 to 22.

We recorded net sales of $730.8 million in the quarter, representing organic sales growth of 28.3%.

We recorded net sales of $738 million in the quarter.

Representing organic sales growth of 28, 3%.

Covid related net revenues are estimated to have been approximately $124 million in the quarter.

COVID related net revenues are estimated to have been approximately $124 million in the quarter.

These net revenues include our assessment of components associated with vaccines, treatment and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.

Net revenues include our assessment of components associated with vaccines treatment and diagnosis of COVID-19 patients offset by lower sales to customers affected by lower volumes due to the pandemic.

Looking at slide 11, proprietary product sales grew organically by 36.8% in the quarter.

Looking at slide 11 proprietary.

<unk> product sales grew organically by 36, 8% in the quarter.

High value products, which made up approximately 74% proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q4.

High value products, which made up approximately 74% of proprietary product sales in the quarter, grew double digits and had solid momentum across all of our market units in Q4.

Looking at the performance of the market units.

Looking at the performance of the market units, the Biologics market unit delivered strong, double-digit growth laid by Novapure and Westar components.

<unk> market unit delivered strong double digit growth led by Novo pure and westar components.

The generics and pharma market units also experienced double-digit growth led by sales of Floratech and Westar components.

The generics and pharma market units also experienced double digit growth led by sales of Florida Tech and Westar components.

And contract manufacturing organic net sales declined by two 1% in the fourth quarter, primarily driven by lower sales of healthcare related medical devices.

and contract manufacturing organic net sales declined by 2.1% in the fourth quarter, primarily driven by lower sales of healthcare-related medical devices.

We continue to see improvement in gross profit.

We continue to see improvement in gross profit. We recorded $300.6 million in gross profit, 89.5 million or 42.4% above Q4 of last year.

We recorded $306 million in gross profit.

$89 5 million or 42, 4% above Q4 of last year.

And our gross profit margin of 41.1% was a 470 basis point expansion from the same...

And our gross profit margin of 41, 1% with a 470 basis point expansion from the same.

Period last year we.

period last year. We saw improvement in adjusted operating profit with $189.2 million recorded this quarter compared to $119.1 million in the same period last year for a 58.9% increase.

We saw improvement in adjusted operating profit with $189 2 million recorded this quarter compared to $119 1 million in the same period last year for 58, 9% increase.

Our adjusted operating profit margin of 25, 9% was at 540 basis point increase from the same period last year.

or adjusted operating profit margin of 25.9% with a 540 basis point increase from the same period last.

Finally, adjusted diluted EPS grew 52% for Q4, excluding stock-based compensation tax benefit of $0.06 in Q4, EPS grew by approximately 58%. So let's review the growth drivers.

Finally, adjusted diluted EPS grew 52% for Q4, excluding stock based compensation tax benefit of <unk> in Q4, EPS grew by approximately 58%.

So let's review the growth drivers in both revenue and profits on slide 12, we show the contributions to sales growth in the quarter.

Slide 12, we show the contributions to sales growth in the quarter.

Volume and mix contributed $153 million or 26, four percentage points of growth <unk>.

Volume and mix contributed $153 million or 26.4 percentage points of growth, including approximately $78 million of incremental volume driven by COVID-19 related net demand.

Including approximately $78 million of incremental volume driven by COVID-19 related net demand.

Sales price increases contributed $11 3 million, a one nine percentage points of growth.

Sales price increases contributed 11.3 million or 1.9 percentage points of growth.

Looking at margin performance slide.

Slide 13 shows our consolidated gross profit margin of 41.1% for Q4 2021, up from 36.4% in Q4 2020.

Slide 13 shows our consolidated gross profit margin.

A 41, 1% for Q4 2021 up from 36, 4% in Q4 2020.

Proprietary products fourth quarter gross profit margin 46.3 percent

Proprietary products fourth quarter gross profit margin of 46, 3% was.

It was 460 basis points above the margin achieved in the fourth quarter of 2020.

460 basis points above the margin achieved in the fourth quarter of 2020.

The key drivers for the continued improvements in proprietary products gross profit margin were favorable mix of products sold driven by growth in high value products.

The key drivers for the continued improvement in proprietary products, gross profit margin were favorable mix of products sold, driven by growth in high-value products, production efficiencies, sales price increases, partially offset by increased overhead costs, inclusive compensation.

<unk> efficiencies sales price increases, partially offset by increased overhead costs inclusive compensation.

Contract manufacturing fourth quarter gross profit margin of 16, 5% was 70 basis points below the margin achieved in the fourth quarter of 2020.

Contract manufacturing, fourth quarter gross profit margin of 16.5%, with 70 basis points below the margin achieved in the fourth quarter of 2020.

The decrease in margin is largely attributed to increased raw material costs and a mix of products sold.

The decrease in margin is largely attributed to increased raw material costs and the mix of products sold.

Now, let's look at our balance sheet and review, how we've done in terms of generating more cash.

Now let's look at our balance sheet and review how we've done in terms of generating more cash.

On slide 14, we have listed some key cash flow metrics.

On slide 14, we have listed some key cash flow metrics.

Operating cash flow was $584 million for the year, an increase of $111.5 million compared to the same period last year, a 23.6% increase.

Operating cash flow was $584 million for the year, an increase of $111 5 million compared to the same period last year at 23, 6% increase.

Operating cash flow in the period was adversely impacted by a working capital increase as well as an increase in tax paying.

Operating cash flow in the period was adversely impacted by a working capital increase as well as an increase in tax payment.

In 2021, we spend over $253 million on capital expenditures.

In 2021, we spent over $253 million on capital expenditures. A 45% increase in capital expenditures is a significant increase in capital expenditures.

45% increase over 2020.

The majority of the incremental capex has been leveraged to increase our high-value product manufacturing capacity within our existing facilities.

The majority of the incremental Capex has been leveraged to increase our high value product manufacturing capacity within our existing facilities.

We expanded capacity at 13 existing sites, with 30 major facility modifications and over 400 pieces of equipment, all while keeping pace with the

We expanded capacity at 13 existing sites with Turkey major facility modifications and over 400 pieces of equipment.

All while keeping pace with the growing demand.

We have continued to increase capacity at our <unk> sites in the U S, Germany, Ireland and in Singapore.

We have continued to increase capacity at our HVP sites in the U.S., Germany, Ireland, and in Singapore.

And we have been able to leverage our existing asset base to support proprietary products manufacturing.

And we have been able to leverage our existing asset base to support proprietary products manufacturing.

For example, a Williamsport, Pennsylvania site, formerly a contract manufacturing site, will be transformed with over half its manufacturing capacity to support proprietary products with elastomer mixing and batch offline.

For example, our Williamsport, Pennsylvania site, formerly a contract manufacturing sites will be transformed with over half its manufacturing capacity to support proprietary products with elastomer mixing and batch offline.

and this leverages the close proximity to our HVP site at Jersey Shore.

And this leverages the close proximity to our <unk> site at Jersey shore.

As we flex our global infrastructure with the phased capacity expansions, we are well positioned for the continued growth in 2022.

As we flex our global infrastructure with the phased capacity expansion, we are well positioned for the continued growth in 2022.

Working capital of approximately $1 1 billion increased by $277 6 million from 2020.

working capital of approximately $1.1 billion increased by $277.6 million from 2020.

primarily due to higher accounts receivable from our increased sales, higher inventory levels and an increase in our cash position.

Primarily due to higher accounts receivable from our increased sales higher inventory levels and an increase in our cash position.

Our cash balance at December 31.

Our cash balance at December 31st of $762.6 million was $147.1 million higher than our December 2020 balance.

$762 6 million.

It was $147 $1 million higher than our December 2020 balance.

The increase in cash is primarily due to our strong operating results in the period offset by our share repurchase program and higher capex. Turning to guidance.

The increase in cash is primarily due to our strong operating results in the period offset by our share repurchase program and higher Capex.

Turning to guidance.

Slide 15 provides a high level summary.

Full year 2022 net sales guidance.

Full year 2022 net sales guidance will be in a range of $3.05 billion to $3.075 billion.

Sales guidance will be in a range of 3.05 billion to 3.075 billion.

There is an estimated headwind of $70 million based on current foreign exchange rates.

There is an estimated headwind of $70 million based on current foreign exchange rates.

We expect organic sales growth to be approximately 10%.

We expect organic sales growth to be approximately 10%.

This.

This comprises a mid-team growth in our proprietary business.

Comprises a mid teen growth in our proprietary business to.

forecast includes mid-teen growth in our base business and mid-teen growth in our net COVID-related revenue.

The forecast includes mid teen growth in our base business and mid teen growth in our net COVID-19 related revenues.

For contract manufacturing, we are forecasting low to mid-single-digit negative growth in 2020.

Our contract manufacturing, we are forecasting low to mid single digit negative growth in 2020.

'twenty two.

We do expect contract manufacturing to return to growth in 2023.

We do expect contract manufacturing to return to growth in 2023.

We expect our full year 2022 reported diluted EPS guidance to be in a range of $9 20 to $9 35.

We expect our full year 2022 reported diluted EPS guidance to be in a range of $9.20 to $9.35.

Also, our CAPEX guidance is $380 million for the year.

Also our Capex guidance is $380 million for the year.

There are some key elements I want to bring your attention to as you review our guidance.

There are some key elements I want to bring your attention to as you review our guide.

estimated FX headwinds on EPS as an impact of approximately 21 cents based on current foreign currency exchange rates.

Estimated FX headwind on EPS as an impact of approximately 21.

Based on current foreign currency exchange rates.

and our guidance excludes future tax benefits from stock-based compensation.

Our guidance excludes future tax benefits from stock based compensation.

To summarize the key takeaways for the fourth quarter strong topline growth in proprietary gross profit margin improvement growth in operating profit margin growth in adjusted diluted EPS and growth in operating cash flow.

To summarize the key takeaways for the fourth quarter, strong top line growth and proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS and growth in operating cash flow, delivering in line with our pillars of execute, innovate and grow. I'd now like to turn the call back over to Eric. Thank you, Bernard.

Leverage in line with our pillars of execute innovate and grow.

I would like.

I'd now like to turn the call back over to Eric.

Thank you Bernard.

Summarized on slide 16.

The excellent financial performance reported today continues to reaffirm that our strategy is working. We have a strong base business proven by our market-led approach, with delivering unique value to our customers. Our global operations team is efficiently manufacturing and delivering products in this complex environment with a focus on service and quality. And we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth.

Excellent financial performance reported today continues to reaffirm that our strategy is working we have a strong base business proven by our market led approach was delivering unique value to our customers. Our global operations team is efficiently manufacturing and delivering products in this complex environment with a focus on service.

And quality and we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth. We realized that our products are critical for health care across the globe, which is why we're so dedicated to support patient health today and well into the future to Wanda.

we realize that our products are critical for health care across the globe, which is why we're so dedicated to support patient health today and well into the future. So, Wanda, we're ready to take questions. Thank you.

We're ready to take questions. Thank you.

Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star then 1 on your telephone. To withdraw your question, press the pound key. Again, that's star 1 to ask.

To withdraw your question press the pound key.

Again, Thats star one to ask a question.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Derik de Bruin with.

Our first question comes from the line of Derek Duproon with Bank of America. Your line is open.

Bank of America. Your line is open.

Hey, good morning. Thank you for taking my question. Just a couple of points initially. So, can you remind us with the full year?

Hey, good morning, Thank you for taking the mic.

Question.

Just a couple of points. Initially so can you remind us what the full year.

COVID contribution number was for 21. And, you know, as you sort of look at the 22 guy, and just in general the business, I mean, are you capacity constrained?

Covid contribution number wise for 'twenty, one and.

As you sort of look at the 22 Guy.

And just in general the business I mean are you capacity constrained.

on your non-COVID products. I mean, basically this is a polite way of asking that as COVID sort of rolls off, are you gonna be able to backfill that with non-COVID business? And this leads into the question of, what does 23 look like?

On your non carbon products IV basically this is a polite way of asking that is as COVID-19 sort of rolls off are you going to able to backfill that with.

With non Covid business.

This leads into the question of what is 23 look like.

Good morning, Derek. On the COVID number, it was 459 for 2021. We would expect to see that grow in the mid-teen range within 2022.

Good morning, Derek on the Covid number was 459 or 2021, and we would expect to see that grow in the mid teen range and within 2022.

And.

On the capacity I'll hand over to.

Yes, yes, thanks, Derrick so on the capacity Youre right, when we think about where we're adding the capacity.

Yeah, thanks Derek. So on the capacity, you're right, when we think about where we're at in the capacity, it is really around HVP products, Floratec, Novapeer, Plungers and Stoppers.

It is really around HCP products, Florida, Novo peer Plunger's and stoppers and if you think about the two areas of high growth that we're experiencing we anticipate continued growth.

And if you think about the two areas of high growth that we are experiencing and we anticipate continued growth around the vaccines, but also in our biologics portfolio, which would

Around the vaccines, but also in our biologics portfolio, which would.

and is consuming the additional capacity that we're putting in place as we speak today.

And is consuming the additional capacity that we're putting in place as we speak today.

So we have plans that we've created investments in 2020, and that is being put in place and being.

So we have plans that we have.

Create investments in 2020.

And that has been put in place and being.

ready for production as we speak, and we have additional capacity coming on throughout this year and then into early next year. So it's a combination of both.

Ready for production as we speak and we have additional capacity coming on throughout this year and then into early next year.

It's a combination of both.

But you do feel confident that you'll be able to backfill. But I mean, essentially every question I'm getting from investors is like, are you and other companies that are supplying to the COVID vaccine market going to have this big gap in 23 as things roll off?

But you do feel confident that you'll be able to backfill.

I mean, essentially every question I'm getting from investors is like are you and other companies that are supplying into the COVID-19 vaccine market going to have this big gaps in 'twenty three as things roll off.

No, we will be able to utilize the existing equipment and future equipment we're installing right now because the approach we took.

No. We will we will be able to utilize the existing equipment and future equipment. We're installing right now because of the approach we took.

on bringing customers towards the highest part of our growth in the portfolio so we can absorb that as we go into 2023 and 2024 if trajectories change around vaccinations. Yeah this is something that we you know have been communicating throughout 2020 and 2021 as we layer in this extra capacity.

On bringing customers towards the highest part of our growth in the portfolio. So we can absorb that as we go into 2023 and 2024, if trajectories change around vaccinations.

This is something that we have been communicating throughout 2020 and 2021 as we layer in this extra capacity.

it's not purely for COVID, it's for both core and COVID.

It's not surely for coal, but it's for both core and Covid.

<unk>.

Even if there was a slight lag it will be for a very short time based on the order book and the forecast that we have so we're relatively confident that we can use that capacity.

Even if there was a slight lag, it would be for a very short time based on the order book and the forecast that we have. So we're relatively confident that we can use that capacity pretty quickly as soon as it comes on board.

Pretty quickly as soon as it comes on board.

Great I've got some more but ill shut up and let somebody else out. Thanks.

Great. I've got some more, but I'll shut up and let somebody else ask. Thanks.

Thank you. Our next question comes from Ilana Glari-Solo with CJS Securities.

Thank you. Our next question comes from the last Larry Solow with CJS Securities. Your line is open.

Great Good morning, guys.

Great. Good morning, guys. Thanks for taking the question. Similar topic. I'll take maybe a different angle at it. To me, it looks like I'm kind of encouraged by the CapEx expansion up to 380 million. It's a pretty significant number and a good bump up from last year. So to me, that demonstrates.

Thanks for taking the question.

Similar.

Topic, I'll take maybe a different angle at it just.

To me it looks like I'm kind of encouraged by the Capex expansion up to $380 million, it's a pretty significant number and a good bump up from last year. So to me.

That demonstrates some good confidence.

good confidence in your outlook and pumping up.

In your outlook and also like is bumping up to the long term outlook by 100 bps, I guess and Thats sort of from a current where we stand today right now historically.

The long-term outlet by 100 bps, I guess, and that's sort of from a current, where we stand today, right now, historically. So I'm kind of, you know, confident by that, but I'm just trying to figure out this CapEx expansion. It sounds like it's more non-COVID-related, base business stuff, and is it also, is there a big chunk of that related to corning? Can you give us a little more visibility on corning and also how that ties in with the...

I guess I'm kind of.

Confident by that but I'm, just trying to figure out this capex expansion. It sounds like it's more non COVID-19 related base business stuff.

Is it also is a big chunk of that related to Corning can you give us a little more visibility on Corning and also how that ties in with the you.

You sort of mentioned expansion on R&D, which has been like 2%, running about 2% a year. We expect that to bump up significantly as a percentage of revenue going forward.

You sort of mentioned expansion on R&D.

Which has been like 2% running about 2% a year is that do we should we expect that's a bump up significantly as a percentage of revenue going forward.

Yes, so couple of things there so on the Capex.

Yeah, so a couple of things there. So on the CapEx, some of the

Some of that Capex.

is still around COVID. A lot of it, you're right, is around also supporting the base business and it's particularly targeted at the high value product area. So we would say getting close to 70% of our CapEx is growth-based at this point. On Corning, yeah we are making some investments around that. We expect that to be around $50 million CapEx in the year.

It's still around Covid.

A lot of it you are right is around also supporting the base business and is particularly targeted at high value product area. So we would say getting close to 70% of our Capex is grows based at this point.

On Corning, Yes, we are making some investments around that we expect that to be around $50 million.

Capex in the year.

And then our R&D, we will have a step up in R&D also around corning and again that's all baked into the forecast.

Okay.

And then our R&D, we will have.

<unk> and R&D also.

Around Corning and again, that's all baked into the forecast.

Okay. In terms of COVID, and I realize...

Okay in terms of Covid I realize.

There's still a lot of question marks but.

This is a lot of question marks, but it sounds like you certainly expect growth this year.

It sounds like Youre, you certainly expect growth this year.

Did you get any feel for what your customers see going out of the next few years, obviously, there's a lot of question marks.

Do you get any feel for what your customers see going out in the next few years? Obviously, there's a lot of question marks, but any feel for that? And second question there, has there been any, as the therapeutics and more importantly the vaccines have evolved, has there been any changes in packaging from sort of initial stages or are your customers looking more and more for your services and products? Can you give us any color on that?

But any feel for that in a second question. There has there been any.

Is that.

<unk> therapeutics and more importantly, the vaccines have evolved.

Is there any been any changes in packaging from sort of initial stages are they are your customers looking more and more for your services and products can you give us any kind of color on that.

Yeah Larry, so what we're seeing right now is that you're right, we were initially providing solutions around the vials.

Yes, Larry So what we're seeing right now is that you're right. We were initially providing solutions around the vials.

and they were multiple doses per vial. And we're seeing this transition in life cycle management as we speak, and starting in 2022, it's gonna be less doses per vial. So it's a different type of solution that we provide, similar economics from a unit basis, but it's more of a transition, less doses per vial, which is a net positive for West.

And there were multiple doses per vial and we're seeing this transition lifecycle management as we speak.

Starting in 2020 twos will be less doses for <unk>. So it's a different type of solution that we provide similar economics from.

From a unit basis, but.

It's more of a transition less doses for <unk>, which is a net positive for west and that transition will take place.

And that transition will take place, it's not perfectly in the calendar year, but it's in 2022 going into 2023. The next stage after that, and that's where Bernard was talking about some of the capital, is still pointed towards vaccines, is more towards pre-filled syringes.

Perfectly in the calendar year, but it is in 2022 going into 2023. The next stage after that and that's where burner was talked about some of the capital.

As Phil pointed towards vaccines.

As more towards <unk>.

Pre filled syringes.

And so that is an area where we're still investing because that's more of a one or two year out type of the start of a transition for our customers. So I hope that can use a kind of landscape and how things will evolve over the next several years through the life cycle. Yeah, I appreciate that. That's a good call. Just last question, if I may, sneaking a third here. Because on the price increases you mentioned, I think it was about.

And so that is an area, where we're still investing because that's more of a one or two year out type of a start of a transition for our customers. So I hope that kind of get you to just kind of landscape and how things will evolve over the next several years through the lifecycle.

And I appreciate it that's good color just last question if I may sneak in a third here just.

Our price increases you mentioned I think it was about.

just below 2% price in your favor this quarter. I just look at that in light of supply chain impacts, inflationary pressures.

Just below 2% price.

In your favor this quarter.

Just look at that in light of I think supply chain impacts inflationary pressures.

Certainly you guys are probably built has good or better than.

Certainly you guys are probably built as good or better than most companies, frankly, in the world today, not just in your industry.

Most companies frankly, probably debt.

The royalty and not just in your industry, but.

You know, obviously, there is some inflation out there, particularly with oil and resin and stuff. So do your price increases, should we expect these to maybe bump up a little bit over time? Have you, you know, in the short term or have you been increasing prices a little bit to some customers to sort of offset some of these inflationary pressures?

Obviously, there is some inflation out there, particularly with oil and resin and stuff. So.

To your price increases should we expect these type maybe bumped up a little bit over time have you and then short term or how do you.

Increasing prices a little bit to some customers to sort of offset some of these inflationary pressures.

Yeah, we had the opportunity based on the contracts and agreements are in place to.

Yes, we have the opportunity based on some of the contracts and agreements are in place too.

increase some of those price increases to cover some of these inflationary pressures and so that's within our wheelhouse to do that and that is something that we have been doing towards.

<unk> some of those price increases to cover some of these inflationary pressures.

So that's within our wheelhouse to do that.

And that is something that we have been doing towards.

Back end of 2021, and we would.

back end of 2021. And we would, you know, I'm going to see that here again.

We're going to see that here again in 2022.

And we also have those are the opportunity for us to apply surcharges in certain instances where we see some specific inflationary pressure. Right. Okay. Great. I appreciate it.

And we also have okay great.

There's also the opportunity for us too.

And our place surcharges in certain instances, where we see some specific inflationary pressures.

Okay, Great I appreciate it thank you guys.

Thank you.

Our next question comes from the line of John Kreger with William Blair. Your line is open.

Our next question comes from Alana John Krieger with Wham! Blair. Alana.

Hey, Thanks, very much Eric I appreciate the update on our long term growth contract can you just talk about how you think about longer term capex.

Hey, thanks very much. Eric, appreciate the update on the long-term growth construct. Can you just talk about how you think about longer-term CapEx around that same construct? Should we be thinking about CapEx as sort of a percent of revenue, growing with sales, perhaps declining after the big bolus in the last few years? Just how are you thinking about that?

Around that same construct should we be thinking about capex as a percent of revenue Brian Ms sales, perhaps declining after the big bolus in the last few years, just how are you thinking about that number.

Yes, John we are looking at once we get through this bolus that we're currently managing through we.

Yeah, John , we are looking at a once we get through those bullets that we're currently managing through Uh, we do want to get back to the six to seven percent of sales of revenues

We do want to get back to the 6% to 7% of sales of revenues we.

Uh, we do believe that is appropriate for our type of business

We do believe that is appropriate for our type of business, particularly when you think about.

particularly when you think about about 30% of our capex is around maintenance.

About 30% of our Capex is around maintenance.

Let's call it 10-15% around our digital and the balance of design growth. We do believe that.

Okay.

Call. It 10, 15% around our digital and the balance of it is on growth. So we do believe that.

Construct.

Uh, last year, this year is really around the growth sector and making sure that we have installed capacity. I will tell you what I'm also very pleased and how the team has right size.

Last year. This year is really around the growth sector.

And making sure that we have installed capacity I will tell you what I'm also very pleased how the team is right sized our facility network.

our facility network. As you know years ago we had 29 we're at 25 and we're able to leverage those facilities more efficiently so the capital we're putting in is more around equipment and processes versus land and buildings. So I think the team's done a very good job in that regard and we're able to leverage and we're well positioned for the future.

As you know years ago, we had $29 25, and we're able to leverage those facilities more efficiently. So the Apple we're putting in is more around equipment and processes versus land and buildings. So I think the team has done a very well very good job in that regard and we're able to leverage and we're well positioned for the future.

Yes, just on that John .

Just on that, John , in previous years if you looked at the split of capital maintenance with 40 to 50% of the CapEx budget.

In previous years, because we looked at the split of capital maintenance with 40% to 50% of the Capex budget.

and so they obviously the remainder was on growth and IT and now you're seeing the growth portion close to 70% and the thing with that as well as Eric just said as soon as that CapEx hits our facilities.

So they obviously the remainder was on growth and now you're seeing the growth portion close to 70% and the thing with that as well as Eric just said as soon as that Capex hits our facilities it straight into operation. So we're getting a return on it much quicker.

straight into operation, so we're getting a return on it much quicker than some of the CapEx investments we would have made a number of years ago, just given the nature of the

And some of the Capex investments, we would have made a number of years ago with just given the nature of them.

And so it's responding to demand, essentially responding as fast as we can, with this increased capital allocation over 2020, 2021 and into 2022. But it should normalise beyond that.

So it is responding to demand essentially responding as fast as we can.

This increased capital allocation over the 2000 22021 and into into 2022.

But it should normalize.

Beyond that.

Got it. Thank you and then a follow up.

Got it. Thank you. And then a follow-up, Eric, I think you said at the beginning of the call the order book was at a record level, which sounds good. Can you just elaborate a little bit on that? And I'm thinking kind of two things. As you think about biologics versus generics versus pharma, what does that order book sort of tell you in terms of growth trajectory there? And also, with tight supply chains, has your order book duration sort of extended, or is it pretty typical today versus a year or two ago?

Eric I think you said at the beginning of the call. The order book was at a record level, which sounds good can you just elaborate a little bit on that and we're thinking kind of two things.

As you think about biologics versus generics versus pharma.

That order book sort of tell you in terms of growth trajectory there.

Also with tight supply chain is your order book duration sort of extended or is it pretty typical today versus a year or two ago.

So there's two dynamics that are happening. One is I'll take the latter one first because I think you're right. What we're seeing is while the number has increased, we don't specifically spell out the number, but it's increased. What we're seeing is we have better visibility beyond the four or five quarters.

So.

<unk> are happening one is I'll take the latter one first because I think you are right. What we're seeing is while the number has increased.

Specifically has felt the number but it has increased what we're seeing it's.

We have better visibility beyond the four or five quarters.

So it's more of almost a two-year horizon now. And one of the levers that we're working with customers on is working with our supply chains working together to get that visibility, so we can level load our operations more efficiently and be more effective, and supports our customers. I think the other area, when you think about...

So it's more of almost.

Two year Horizon, now and one of the levers that we're working with customers on is working with our supply chain is working together to get that visibility. So we can level load our operations more efficiently and be more effective in.

<unk> supports our customers I think the other area when you think about.

If you kind of break it out of the increase, it really comes down to three buckets really. One is increase on the demand around vaccines.

What if you can.

Kind of break it out of the increase it really comes down to three buckets really one is increase on the demand around vaccines.

Another increase which I'm very pleased about is quite different than it was, let's say, three or four years ago, particularly in biologics.

Increase which I'm very pleased about is quite different than it was let's say three or four years ago, particularly in biologics is really the success of various drug launches for our clients our customers. So I won't get into specifics and thats not just one but it's many and then the third driver really is what I call the core growth in that.

is really the success of various drug launches for our clients or customers. I won't get into specifics and that's not just one but many. And then the third driver really is what I call the core.

growth and that is encompassing biologics but it's also encompassing what we call pharma or small molecules and also generics.

Encompassing biologics, but it's also encompassing.

We call pharma or small molecules <unk> of generics. So bottom line is all areas are growing nicely.

So bottom line is all areas are growing nicely. It's a little more heavy-weighted to where biologics with a lot of drug successes we're seeing. But again, if you look at our CAPEX profile of what we're putting into our facilities today, it's the higher end of HPPs, which squarely goes after the biologic space.

The weighted towards biologics was a lot of drug successes, we are seeing and but again if you look at our capex profile of what we're putting into our facilities today, it's the higher end of Hep's, which squarely goes after the biologics space.

That's helpful. I appreciate it.

Thank you.

Our next question comes from the line of Jacob Johnson with Stevens, your line is open.

Our next question comes from the line of Jacob Johnson with Stephens. Your line is open.

Hey, thanks.

This may be a little bit repetitive based on that last answer, but I'll ask anyways. I mean, you guys have considerable participation rate. I'm just curious if you've seen any change in your market share pre and post-COVID. You're talking about mid-teens growth ex-COVID this year. You just bumped up your long-term growth outlook.

This may be a little bit repetitive based on that last answer, but I'll ask anyways. I mean, you guys have considerable participation rate I'm. Just curious have you seen any change in market share your market share pre and post COVID-19 .

Talking about mid teens growth ex Covid. This year, you just bumped up your long term growth outlook.

Is this the market in biologics or are you taking chair and is it kind of growth in those higher value products? Maybe it's all of the above, but just curious kind of on the robust growth you guys are pointing to in this next year and beyond.

Is this the market in biologics, where are you taking share and kind of growth in those higher value products, maybe it's all day, Bob but just curious kind of on the robust growth you guys are pointing to in this next year and beyond.

Jacob, so it's actually all of above. So what we're seeing with our participation rate is in biologics, we continue to be well north of 90%.

Jacob.

It's actually all of above so what we're seeing there.

Our participation rate is in biologics, we continue to be well north of 90%.

And actually, I'm very pleased on our performance in 2021, particularly when you look at a particular BLA that was approved that didn't really use our types of products. It was more in a different configuration, so we look at that as an opportunity.

And actually I'm very pleased on our performance in 2021, particularly when you look at particularly our BLA was approved.

Didn't really use our types of products. It was more of a different configuration. So we look at that as an opportunity.

And in the small molecule area, and we think about A and BAs, were equal or slightly better than we were.

In the small molecule area and when you think about andas will equal or slightly better.

We were.

And I would argue that

Recall that.

And I would argue that.

Pre-COVID, if you look at step a couple years before that, we're even stronger than that. So you see a gradual improvement as we go forward. And I'm really excited about this partnership and where we're taking HVPs to the next level. Because that again, reinforces our leadership position and really bringing new technologies to the market that really de-risks our customers process and entering the market.

Pre COVID-19 if you look at a couple of years before that were even stronger than that so as you have seen a gradual improvement as we go forward.

And I'm really excited about this partnership and where we're taking <unk> to the next level because that again reinforces our leadership position and really bringing new technologies to the market that.

Really de risks our customers.

Process and entry market.

Got it. That's helpful. And maybe following up on de-risking the process, I think in December , the FDA put out some guidance on visible particulates. I'm just curious if that's something that could be a catalyst for you all, or maybe it's nothing. I'm just curious on that. Well, it helps us.

Got it that's helpful and maybe following up on Derisking the.

Process.

In December the FDA put out some guidance on.

Is that ballpark particulate. So I'm just curious if thats something that that could be a catalyst for you all or maybe maybe it's nothing I'm just curious on that.

It helps us anytime there is higher level quality requirements and or regulatory changes our direction that they would like to go.

higher level quality requirements and or regulatory changes or direction that they would like to go, that puts us in a very good position. Also our partner, Dikyo, in a very good position because we do have solutions that can meet those standards. And it could be adoption of existing molecules in the market but also the new pipeline.

That puts us in a very good position also our partner <unk> in a very good position because we do have solutions.

That can meet those standards and it could be adoption of existing molecules in the market, but also the new pipeline.

But to your point, the biggest catalyst of this relationship we've built with Corning is all around regulatory changes towards combination devices and or systems versus individual components. So it is very good for West as these regulatory changes become more stringent as we go forward. All in all,ELD Synchrolytes is one city of Toronto's most important place forainely to live in the Autolift Sabine]. There are 100 hospitals around the world and the highest quality unyne llets

But to your point.

The biggest catalyst of this relationship we built with.

Corning is all around regulatory changes towards combination devices and our systems versus individual components. So it is very good for west as these regulatory changes become more stringent as we go forward.

Got it I'll leave it there thanks for taking the questions.

Yes.

Thank you.

Our next question comes from the line of Paul Knight with Keybanc capital market. Your line is open.

Our next question comes from the line of Paul Knight with KeyBank Capital Market.

Hi, Eric. On the commentary earlier regarding the trend toward free-filled syringes, is this not where the biotechnology industry wants to go, meaning, you know, the it's not just COVID vaccines, which I'm sure they want to do that as well, but is that not kind of a primary?

Hi.

On the commentary earlier regarding the trend toward <unk>.

Pre filled syringe is this not where the biotechnology industry wants to go meaning.

It's not just COVID-19 vaccines, which I'm sure they want to do that as well, but is that not kind of a.

Primary.

driver for biotechnology customers right now and why I guess the other question.

Driver for biotechnology customers right now and why I guess the other question yes.

Yeah, absolutely. So there's a push towards pre-filled fringes and multiple dimensions, right? If you think about the biologic space.

Yes, absolutely.

There is a push towards pre filled syringes in multiple dimensions right. If you think about the biologics space.

And also you think about the vaccines themselves for easier distribution, administering patients, and et cetera. So there is a push towards technology that supports advancements of pre-filled syringes. And I think, again, that's the reason why we have a really good offering now between Crystal Zenith.

And also you think about the vaccines themselves are easier distribution administering patients and et cetera. So there is a there is a push towards technology that supports advancement of Prefilled syringes.

And I think again.

That's the reason why we have a really good operating now between Crystal Zenith.

as an alternative to glass, but also with working, partnering with

As an alternative to glass, but also with working and partnering with.

with uh corny it does eliminate at the end of the day like you said eliminates risk

With the cornea it does eliminate at the end of the day like you said eliminates risk.

uh... uh... from from going away from the vial

From from going away from the vial.

Okay and then.

Okay, and then when we talk about capacity additions, from the initiation of

We talk about capacity additions from the initiation of.

spending, how long before projects are running and delivering revenue? Is it a year? Is it two years? How long is it?

Spending how long before.

<unk> are running in delivering revenue as the year is it two years, how long is it.

Yeah, it's a combination of two things. Let me try to frame that because I think it's a good point you're raising. One point is, once the piece of equipment lands in our facility and we're able to validate, we're talking a matter of weeks.

Yes, it's a combination of two things, let me try to frame that because I think it's a good point you raised and one one point is once the equipment lands in our facility and were able to validate we're talking a matter of weeks before we have.

before we have the equipment up and running. And frankly, based on our digital connectivity to all our equipment across the globe, we can see that utilization go shoot up right up to the 80 plus percent range. But the point that we need to be conscious of is that when we talked about investments in 2020, I think there's two phases we spoke of.

Equipment up and running and frankly based on our digital connectivity to all our equipment across the globe. We can see that utilization go shoot up right up to the 80 plus percent range.

But the point that we need to be conscious of is that when we talked about investments in 2020, I think there's two phases, we spoke of.

I would say a little over three-fourths of over 75% of those already in place and producing finished product.

I would say a little over three fourths of over 75% of those already in place and produce and finished product.

and the rest of that delta is going to be completed early on in 2022. The other investments we initiated in 2021, called phase three and phase four, I would say today where we stand is about 15 percent complete or 20 percent installed and producing finished product and a balance of that is planned to be completed throughout 2022 and early 2023. So based on our commitments

And the rest of that Delta is can be completed in early on in 2022. The other investments we initiatives 2021 call it phase III and phase four.

I would say today, where we stand is about 15% complete or 20% install.

Installed in producing finished product and the balance of that is planned to be completed throughout 2022 and the early 2023. So based on our commitments that we made in our customers.

that we made and our customers' future demand, that's kind of the cadence we're seeing with these investments and how long does it take for the equipment to be built, to be delivered, and then installed. And that could take anywhere between a few months to two or three quarters, depending on the equipment.

Future demand.

That's kind of the cadence, we're seeing with these investments and how long does it take for the equipment to be built to be delivered and installed.

And that could take anywhere between a few months to two or three quarters, depending on the equipment.

Okay. Thank you.

Thank you.

As a reminder, ladies and gentlemen, that's star one to ask the question. Our next question comes from...

As a reminder, ladies and gentlemen, Thats star one to ask a question.

Our next question comes from the line of Dave Windley with Jefferies. Your line is open.

Hi, thanks. Good morning. Thanks for taking my question. I wanted to ask a question I think John and Jacob have both asked slightly differently. Your long-term growth construct on revenue in particular, could you talk about

Hi, Thanks. Good morning, Thanks for taking my question I wanted to ask a question I think John and Jacob both asked slightly differently. Your your long term growth construct on revenue in particular could you talk about.

uh... contributors or expectations for growth between proprietary products and contract manufacturing is asking his contract manufacturing is kind of fluctuated

Contributors our expectations for growth between proprietary products and contract manufacturing I'm, just asking because contract manufacturing has kind of fluctuated.

uh... quite a bit and i'm wondering if if your thoughts about the relative contributors to that one percent increase uh... might be a little different than just one percent

Quite a bit and I'm wondering if your thoughts about the relative contributors to that 1% increase.

Might be a little different than just 1%.

Yes.

Yeah, I'll start and burn if you want to add to it. You're right, the driver behind that really is wrong or proprietary.

And Brian if you want to add to it.

You are right the driver behind that really is around our proprietary <unk>.

business more so than contract manufacturing. I think we look at contract manufacturing, you're right, we're seeing, as we indicated, some volatility and it's based on contracts and timing and ramp up of new agreements. So when we look at proprietary, we do believe that it's stronger, more robust than we had historically and it's really around the biologic.

More so than contract manufacturing I think we look at contract manufacturing you are right. We are seeing as we indicated some.

Some volatility and is based on contracts and timing of ramp up of new new.

New agreements so when we look at it proprietary we do believe that stronger more robust than we had historically and it's really around the biologics.

the main driver. We do still believe in the small molecule space roughly, you know, let's call it low to mid-single, mid-single from the pharma side, and the generics is mid to high single from a construct perspective, and then biologics is in the double digits. And now that biologics is a bigger piece of our business.

Is the main driver we do still believe in the small molecule space.

Roughly.

Let's call it low to mid single mid single from the pharma side and the generics is mid to high single from a construct perspective and then biologics is.

In the double digits and Allied biologics is a bigger piece of our business approximately over 40%, let's say.

approximately over 40%, let's say, and it's driven by high-value products, the higher end of that portfolio. That's the reason why we have very strong confidence to at least raise it by that 100 basis points that we spoke of. Bernard, do you want to add more? It ties in with the discussion we had on CapEx, so you can see...

And it's driven by high value products, a higher end of that portfolio. That's the reason why we have very strong confidence to ability to raise it by by that 100 basis points that we spoke of burn do you want to add.

As in.

Question, we had on Capex. So you can see where we're investing a lot of capital around high value products and that is now primarily primary growth driver within the business and then specifically within biologics, but you could also see.

lot of our capital around high value products and that is now the primary growth driver within the business and then specifically within biologics. But you could also see in what we've seen here in 2021 that we're seeing HVP uptake in the other market units as well in generics and pharma. So that's now starting to permeate the rest of the business which is a positive thing for us as well. So when we then look at contract manufacturing

And what we've seen here in 2021 that we are seeing <unk> uptake in the other market units as well in generics and pharma. So that's now starting to permeate the rest of the business, which is a positive thing for us as well. So when we then look at contract manufacturing.

the growth there is probably mid-single digits, maybe at the lower end of our construct, and that's what we've seen particularly over the last year and probably the back half of 2020. And so from a mixed perspective, we get a much better return from those investments.

The growth there is probably mid single digits.

Maybe at the lower end of our construct.

That's what we've seen particularly over the last year and over the back half of 2020, and so from a mix perspective.

We get a much.

So much better return on those investments we're making.

Down contract.

Excellent. So if I then if and then stick on the proprietary products and again, you've probably touched on pieces of this but.

Excellent. So if I then stick on the proprietary products, and again, you probably touched on pieces of this, but...

Probably any one of those as any.

probably any one of those is, any one of biologics being a higher portion of that pie and growing faster, higher adoption of the high end of your high value products, so kind of richer mix.

Any one of biologics being a higher portion of that pie.

And growing faster higher.

Higher adoption of of the high end of your high value products, so kind of a richer mix.

Maybe some underlying volume growth from a stronger pipeline in the last several years. Any one of those seems like it's probably, you know, might be worth 1% on its own. Is it a combination of all of those things, or does one of those things stand out?

Maybe some underlying volume growth from a stronger pipeline in the last several years any one of those seems like it's probably might.

It might be worth 1% on its own is it is it a combination of all of those things are just one of those things stand out.

It's a combination.

It's a combination. We are seeing the very, very strong demand across all of the market units. And you can see that's reflected in the guidance that we've given for...

We are seeing.

Very very strong demand across all of the market units and you can see thats reflected in the guidance that we've given for.

2022 around our proprietary business that we're guiding in their mid-teens. So it is a combination of different drivers. It just doesn't hang on one.

2022 around our proprietary business that we are guiding in their mid teens and so it is a combination of.

Different drivers of just doesn't hang on one thing.

Yeah, and then switching subjects a little bit on Corning and Valor.

And then and then switching subjects a little bit on <unk>.

Corning and valor.

uh... certainly the system approach that you're talking about make some sense my understanding is that

Certainly the system approach that you're talking about makes some sense my understanding is that.

Maybe that's been the case in the industry that you would source a variety of solutions or parts of solutions and put those together and go to market.

Maybe that's.

That's been the case in the industry.

That you would source a variety of of solutions or parts of solutions and put those together and go to market.

Perhaps you could talk about the context, there and then also what.

perhaps you could talk about the context there and then also what what drew you to choose corning and valor in particular uh... and how long do you think it takes to develop one of these solutions that you're talking about to bring the market

What drew you to choose Corning valor in particular.

And how long do you think it takes to develop one of the solutions that you are talking about to bring to market.

Yes. So first of all we have a history of a really strong partnership with data so as we enter into this.

Yeah, Dave, so there's, you know, first of all, we have a history of a really strong partnership with Dyke, you know, so as we enter into this relationship with Corning, we're very confident we can create a similar model. You know, you're right, the reason why we engage in this conversation is when we speak with our customers, the challenges they face is really trying to find the right, call it the containment solution.

As ship with corn and we're very confident we can we can create a similar model.

You're right.

The reason why we engaged in this conversation is when we speak with our customers. The challenges. They face is really trying to find the right.

Called the containment solutions.

for their products and what they're finding is it's highly fragmented and it's, to use the word, patchwork environment of multiple suppliers. So we really

For their products.

Finding is highly fragmented.

These were patchwork environment of multiple suppliers. So we really think about it.

and you look at the elastomers in glass, there's several drug master files submissions that need to be supplied with that particular drug molecule.

When you look at the last one was in glass.

Several drug master files submissions that need to be.

Supplied.

That particular drug molecule.

And there really isn't anybody out there that has been able to develop a truly integrated system from ground up. So when we looked at

There really isn't anybody out there that has been able to develop a truly integrated system from ground up so when we looked at.

If you think about ourselves in Dikyo, we do believe we put ourselves as the leading

You think about ourselves and <unk>, we do believe we put ourselves as the leading.

innovators around elastomers and primary packaging.

Innovators around elastomers and primary packaging.

And when you think about unparalleled glass science, you know, the deep materials science capability at Corning, which is well known in multiple industries, but in our industry.

And when you think about unparalleled glass science deep materials capability at Corning, which is well known.

In multiple industries, but in our industry and the pharma.

And they also have deep manufacturing and engineering capabilities, which is truly unique. That's why, as we sat down and talked about a partnership, the focus is really to redefine the future of containment solutions.

And they also have deep manufacturing and engineering capabilities, which is truly unique.

That's why as we sat down and talked about a partnership the focus is really to redefine the future of.

Containment solutions.

and then really create a truly integrated system that de-risks what I said earlier about our customers' drug development.

And then really creating a truly integrated system that de risks, what I've said earlier about our customers' drug development.

and manufacturing processes with a single product, one DMF, and end-to-end support for our customers by West.

And manufacturing processes with a single product one DMF.

And support for our customers by West.

So that's the premise why we have embarked on this relationship. And this is utilizing glass technology between borosilicate, which has been in the industry for decades, and the newly developed aluminosilicate that Corning has developed, really to provide a range of quality benefits. So what I'm trying to articulate is the leveraging that partnership.

So that's that's the premise of why we have embarked on this relationship.

And this is the utilizing glass technology between Boral silicate, which has been in the industry for.

Decades, and newly developed aluminum silicate that Corning has developed.

To provide a range of quality benefits.

So what I'm trying to articulate is the leveraging that partnership.

with them truly enables us to get to the best in quality, first in class.

With them truly enables us to get to the best in quality first in class.

system in the industry between the two firms, and leveraging obviously two firms, FedQ and West, together from the Elastomer side. So hopefully that gives you a kind of appreciation of what we're embarking on. Now, as you know, if you think about the Novapeer journey that we were on and other new launches we had here at West, our lens on the biologic pipeline is

System in the industry.

Between the two firms.

And leveraging obviously when two firms. Thank you in the west together.

From elastomer side, so hopefully it gives you.

It kind of appreciation of what we're embarking on now as you know if you think about the Andover peer journey that we're on and other new launches we had here at west.

Our lens on the biologics pipeline is very good.

and so that's the area that we'll focus on and as we characterize and truly get to that system approach with between the two firms we need to add additional capital manufacturing capability

So that's the area that we'll focus on and as we characterize and truly get to the system approach.

Between the two firms we need to add additional capital.

<unk> capabilities full dossier of documentation and driven by data scientific data for our customers. We do believe it's going to take a little bit of time to have that to finally get to that point. So just like Novo peer took a few years to get.

full dossier of documentation and driven by data, scientific data for our customers, we do believe it's going to take a little bit of time to finally get to that point.

So just like Novapir took a few years to get penetration, and now you're seeing the benefits.

Penetration and now you're seeing the benefits.

We see similar type of characteristics with a system approach.

We see similar type of characteristics with a system approach, we'll start with will have buyers will have pre filled syringes will have cartridges at the end of the day.

We'll start with, we'll have vials, we'll have pre-filled syringes, and we'll have cartridges at the end of the day. Great, that's helpful.

Great. That's helpful perspective, thank you.

Thanks, Dave.

Thank you.

I'm showing no further questions in the queue. I would now like to turn the call back over to Quentin for closing.

I'm showing no further questions in the queue I would now like to turn the call back over to Quentin for closing remarks.

Thanks to Wanda.

Thanks Tawanda. And thank you for joining us on today's conference call. An online archive of the broadcast will be available on our website at westfarma.com in the investor section. Additionally, you may access a replay through Thursday, February 24th by using the dial-in numbers and conference ID provided at the end of today's earnings release. That concludes this call.

And thank you for joining us on today's conference call an online archive of the broadcast will be available on our website at west pharma Dot com in the investors section. Additionally, you may access a replay through Thursday February 24th by using the dial in numbers and conference I'd provided at the end of today's earnings release that.

Concludes this call have a nice day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now.

Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

?Outro Music?

[music] annually.

Okay.

Yes.

[music].

Yes.

Sure.

Okay.

[music].

Okay.

[music].

On the call.

[music].

The.

Yes.

Yes.

[music].

Yes.

Yes.

Sure.

[music].

Sure.

Yes.

Yes.

Yes.

[music].

Okay.

Yes.

Okay.

Okay.

Uh huh.

[music].

Yes.

Sure.

Opinion.

Sure.

Yes.

Okay.

[music].

??? ??? ??? ??? ???

Okay.

Okay.

Okay.

Okay.

Okay.

Yes.

Okay.

Yes.

Okay.

Okay.

Sure.

Yes.

Okay.

Okay.

Yes.

Yes.

Okay.

Yes.

Sure.

Yes.

Okay.

Okay.

Okay.

[music].

[music].

you

[music].

I.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 West Pharmaceutical Services Earnings Conference Call.

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 West Pharmaceutical services earnings Conference call.

At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 1 on your telephone. Please be advised that today's session will be recorded.

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 the question. During this session you will need to press Star then one on your telephone.

Please be advised that today's conference is being recorded.

If you require any further assistance, please press star then zero.

If you require any further assistance. Please press star then zero.

I would now like to turn the conference over to your speaker for today, Quentin Lye, Vice President, Investor Relations. You may begin.

I would now like to turn the conference over to your speaker for today, Quintin Lai Vice President Investor Relations you may begin.

Thank you, Jawanda. Good morning and welcome to West's fourth quarter and full year 2021 conference call.

Thanks, Good morning, and welcome to Us fourth quarter and full year 2021 conference call.

We issued our financial results this morning and the release has been posted in the investor section on the company's website located at www.westbarma.com.

We issued our financial results. This morning, and the release has been posted in the investors section on the company's website located at West pharma Dot com.

This morning, CEO Eric Green and CFO Bernard Burkett will review our financial results, provide an update on our business, and present an update on our financial outlook for the full year 2022. There's a slide presentation that accompanies today's call, and a copy of that presentation is available on the investor section of our website.

This morning, CEO , Eric Green and CFO , Barbara will review, our financial results provide an update on our business and present, an update on our financial outlook for the full year 2022.

There is a slide presentation that accompanies today's call and a copy of that presentation is available on the investors section of our website.

On slide four 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 Security

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 portraits.

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.

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 risk to which it is subject, including our 10-K, 10-Q, and 8-Q.

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.

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...

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.

I now turn the call over to West CEO and President Harris.

I'll now turn the call over to West's CEO and President Eric Green.

Thank you, Quinton, and good morning, and thanks for joining us today. We are excited to discuss our 2021 results and outlook for 2022. We will start on slide five. Wes delivered a remarkable

Thank you Quintin and good morning, and thanks for joining US today, we are excited to discuss our 2021 results and outlook for 2022, we will start on slide five.

<unk> delivered a remarkable year of success.

As I reflect on the year, three things stand out to me. First, our purpose. We serve to improve patient lives, and we understand the criticality of our role in the containment and delivery of life-saving and life-changing medicines, including the battle against COVID-19.

As I reflect on the year three standout to me.

First our purpose will serve to improve patient lives and we understand the criticality of our role in the containment and delivery of life saving and life changing medicines, including the battle against COVID-19.

Our team members have rallied together with great sense, strength, and resolve to meet the accelerating customer demand. I want to acknowledge these incredible efforts and say thank you.

Our team members have rallied together with great strength.

Strength and resolve to meet the accelerated customer demand I want to acknowledge he has incredible efforts.

You.

Second our proven market led strategy, we have continued to meet shifting market and customer needs with unique value propositions across our business segments. This was evident in the continued strength of our financial performance in 2021.

Second, our proven market-led strategy. We have continued to meet shifting market and customer needs with unique value propositions across our business segments. This is evident in the continued strength of our financial performance in 2021.

Lastly, trust. Customers trust West. As a global leader, customers come to West knowing that we will deliver superior value through our high-quality products and solutions. And we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the health care industry.

Lastly trust customers Trust West as the global leader customers come to us knowing that we will deliver superior value through our high quality products and solutions and we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the health care.

Our industry.

As highlighted on slide six, 2021 was an exceptional year of sales and margin expansion, driven by strong demand in our base business and accelerated demand for components associated with COVID-19 vaccines and therapeutics.

As highlighted on slide six to 2021 was an exceptional year of sales and margin expansion driven by strong demand in our base business and accelerated demand for components associated with COVID-19, vaccines and therapeutics, we ended the year with <unk>.

We ended the year with 28% organic sales growth in the fourth quarter, and adjusting for COVID-related sales, our base business grew by mid-teens organically.

8% organic sales growth in the fourth quarter and adjusted for Covid related sales our base business grew by mid teens organically.

Our proprietary product segment led the way with 37% organic sales growth.

Our proprietary products segment led the way with 37% organic sales growth.

And all of this was fueled by high value products, resulting in impressive growth and operating margin expansion for the quarter.

And all of this was fueled by high value products, resulting in an impressive growth and operating margin expansion for the quarter. Looking ahead, we are well positioned with the right growth strategy around execute innovate and grow our committed order book is at an all time high we continue to <unk>.

Looking ahead, we are well positioned with the right growth strategy around execute, innovate and grow. Our committed order book is at an all-time high.

We continue to realize the benefits of the globalization of our operating model and continue capital investments.

Realize the benefits of the globalization of our operating model.

And continued capital investments to support the increasing demand driven by the attractive end markets.

to support the increasing demand driven by the attractive end market.

Turning to slide seven in addition to our financial momentum, let's has several other notable accomplishments in 2021, we shipped over 45 billion components touch billions of patient lives. This was done with the continued safety of our team members is top priority and the importance of ensuring the continuity.

Turning to slide seven, in addition to our financial momentum, let's have several other notable accomplishments in 2021. We shipped over 45 billion components touching billions of patient lives. This was done with the continued safety of our team members as top priority and the importance of ensuring the continuity of supply for our customers.

<unk> supply for our customers.

As scientific and technical leaders in the industry, we continue to broaden insights with our expertise through WEST's Knowledge Center, webinars, published articles, and technical presentations.

As scientific and technical leaders in the industry, we continue to broaden and insights with their expertise through Wes knowledge Center, Webinars published articles and technical presentations.

We launched five product extensions that continue to bring additional value to our customers. And we donated over $2.5 million, but more importantly, over 3,600 volunteer hours were donated by team members to help our local communities with the greatest needs.

We launched five product extensions that continued to bring additional value to our customers and we don't need it over $2 5 million, but more.

Partly over 3600 hours.

Onto your hours were dominated by team members to help our local communities with the greatest needs.

As we move to slide 8, we strive to be stewards of a sustainable future by factoring environmental considerations into every aspect of our business. In 2021, we expanded our ESG transparency reporting by aligning with the Task Force for Climate-Related Financial Disclosure Recommendations. This includes reducing energy dependencies and lessening emission production through renewable and greener energy.

As we move to slide eight we strive to be stewards of a sustainable future by bacterin environmental considerations into every aspect of our business in 2021, we expanded our ESG transparency reporting by aligning with the task force for climate related financial disclosure recommendations.

This includes reducing the energy dependencies, and lessening emission production through renewable and greener energy developing.

Developing more carbon-friendly products and actively engaging with stakeholders to seek out opportunities to have an impact on climate

Developing more carbon friendly products and actively engaging with stakeholders to seek out opportunities to have an impact on climate.

Aligned with our focus to improving patient lives across the globe through our products, we remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations.

Aligned with our focus to improving improving patient lives across the globe through our products. We remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations.

Turning to slide nine and their recent announcement of our collaboration with Corning as you look across biotech and pharma companies drug pipelines. There is a growing need to provide system solutions to support increasingly more sensitive and complex molecules.

Turning to slide nine, in their recent announcement of our collaboration with Corning, as you look across biotech and pharma companies' drug pipelines, there is a growing need to provide system solutions to support increasingly more sensitive and complex molecules.

And with that comes a changing and increasing regulatory environment that are setting a high bar of requirements for performance data on combination products at the system level.

And with that comes a changing and increasing regulatory environment. There are setting a high bar requirements for performance data on combination products at the system level.

These regulatory changes are driving drug manufacturers to look to West to reduce risk by specifically specifying a system of packaging rather than individual components.

These regulatory changes are driving drug manufacturers to look to west to reduce risk by <unk>.

Specifically specifying our system, our packaging rather than individual components.

We're excited to have Corning as a key collaborator as we expand our HVP value proposition to lead the industry from components to a truly integrated system that couples elastomer and meat exercises within the SP Wells family and arc system.

We're excited to have Corning as a key collaborator as we expand our <unk> value proposition to lead the industry from components to a truly integrated system that couples of last summer and glass.

In response to our customers, this exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning's Valor Glass technology.

In response to our customers.

This exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning Valor glass technology.

By combining <unk> industry, leading Nova peer components with <unk> coating technology, and corning's valor glass and velocity vials. The collaboration will enable a new advanced pharmaceutical packaging solutions.

We believe that an integrated system of elastomer and glass under a single drug master file is the next level of high-value products. Our initial focus is addressing the need for complete system offering, and in time, we will offer a broad range of systems from vials to prefilled syringes to cartridges.

We believe that an integrated system of last burning glass under a single drug Master file is the next level of high value products. Our initial focus is addressing the need for complete system offering and in time, we will offer a broad range of systems from vials to pre filled syringes to cartridges.

As we enter in 2022, we are building on the positive momentum we generated in 2021. We are introducing full year 2022 financial guidance that assumes approximately 10% organic sales led by strong HPP sales and another strong year of both gross and operating profit margin expansion well in excess of 100 basis points.

As we entered 2022, we are building on the positive momentum we generated in 2021, we are introducing full year 2022 financial guidance that assumes approximately 10% organic sales led by strong <unk> sales and another strong year of both growth.

And operating profit margin expansion well in excess of 100 basis points. This guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems.

This guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems.

And with a robust book of committed orders, we see momentum in 2022 and continue into 2023. As such, we expect to add more capital expansion plans for additional HVP capacity to stay ahead of our customers' demand. We expect these projects to be completed throughout the year and ready for 2023 production.

And with a robust book of committed orders, we see momentum in 2022 and continued into 2023 as such we expect to add more capital expansion plans for additional HCP capacity to stay ahead of our customers' demand. We expect these projects to be completed throughout the year.

And ready for 2023 production.

Before I turn the call over to Bernard to review, our financial results in detail I want to revisit our long term financial construct for the past few years, we have set our long term financial construct as Andy organic sales growth of 6% to 8% led by <unk> sales.

Before I turn the call over to Bernard to review our financial results in detail, I want to revisit our long-term financial construct. For the past few years, we have set our long-term financial construct as annual organic sales growth of 6% to 8% led by HPP sales, and annual operating profit margin expansion of 100 basis points per year.

And annual operating profit margin expansion of 100 basis points per year.

Over the past five years, we've had an annual organic sales CAGR of 13% and annual operating profit margin expansion of 240 basis points per year.

Over the past five years, we've had an annual organic sales CAGR of 13 percent and annual operating profit margin expansion of 240 basis points per year.

Five years ago, Biologics was our smallest market unit. Today, Biologics is our largest market unit, with customers from emerging biotech to large biopharma coming to West and our partner, Dikeo, which is reinforced by our strong participation rate in recently approved new molecular entities in the US and also in Europe .

Five years ago Biologics was our smallest market unit today biologics is our largest market with customers from emerging biotech to large biopharma coming to west and our partner <unk>, which is reinforced by our strong participation rate and recently approved new molecular entities in the U S and also.

So in Europe .

As we look to the future, we see continued demand growth for HVP products as we launch a new level of HVP's integrated systems. We are updating our long-term construct to annual sales growth of 7 to 9 percent and we continue to expect to expand operating margins by 100 basis points per year over the next few years.

As we look to the future we see continued demand growth for our <unk> products as we launch a new level of <unk> integrated systems. We are updating our long term construct to annual sales growth of 7% to 9%.

And we continue to expect to expand operating margins by 100 basis points per year over the next few years.

Now I'll turn it over to our CFO , Bernard Burkett, who will provide more detail on our financial performance. Bernard? Thank you, Eric, and good morning. So let's review the numbers in more detail.

Now I'll turn it over to our CFO , Bernard Birkett, who will provide more detail on our financial performance Bernard Thank you, Eric and good morning, So let's review the numbers in more detail.

We'll first look at Q4 2021 revenues and profit.

We'll first look at Q4, 2021 revenues and profits, where we saw continued strong sales and EPS growth led by strong revenue performance in each of our proprietary market units.

where we saw continued strong sales and EPS growth, led by strong revenue performance in each of our proprietary market units.

I will take you through the margin growth we saw in the quarter, as well as some balance sheet takeaways. And finally, we will review our 2022 guidance.

I will take you through the margin growth, we saw in the quarter as well as some balance sheet takeaways.

And finally, we will review our 2022 guidance.

First up Q4.

Our financial results are summarized on slide 10 and the reconciliation of non-US GAAP measures are described in slides 19 to 22.

Our financial results are summarized on slide 10, the reconciliation of non U S. GAAP measure are described in slides 19 to 22.

We recorded net sales of $730.8 million in the quarter, representing organic sales growth of 28.3%.

We recorded net sales of $738 million in the quarter.

Representing organic sales growth of 28, 3%.

COVID-related net revenues are estimated to have been approximately $124 million in the quarter.

Covid related net revenues are estimated to have been approximately $124 million in the quarter.

These net revenues include our assessment of components associated with vaccines, treatment and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.

These net revenues include our assessment of components associated with vaccines treatments and diagnosis of COVID-19 patients offset by lower sales to customers affected by lower volumes due to the pandemic.

Looking at slide 11, proprietary product sales grew organically by 36.8% in the quarter.

Looking at Slide 11 proprietary products sales grew organically by 36, 8% in the quarter.

High-value products, which made up approximately 74% of proprietary product sales in the quarter, grew double digits and had solid momentum across all of our market units in Q4.

High value products, which made up approximately 74% of proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q4.

Looking at the performance of the market units, the Biologics market unit delivered strong double digit growth laid by Novapure and Westar components.

Looking at the performance of the market units.

<unk> market unit delivered strong double digit growth led by Novo pure and westar components.

The generics and pharma market units also experienced double-digit growth led by sales of Floratech and Westar components.

The generics and pharma market units also experienced double digit growth led by sales of Florida Tech and Westar components.

and contract manufacturing organic net sales declined by 2.1% in the fourth quarter, primarily driven by lower sales of healthcare-related medical devices.

And contract manufacturing organic net sales declined by two points, 1% in the fourth quarter, primarily driven by lower sales of health care related medical devices.

We continue to see improvement in gross profit. We recorded $300.6 million in gross profit, 89.5 million or 42.4% above Q4 of last year.

We continue to see improvement in gross profit.

We recorded $306 million in gross profit.

$89 5 million or 42, 4% above Q4 of last year.

And our gross profit margin of 41.1% was a 470 basis point expansion from the same...

And our gross profit margin of 41, 1% with a 470 basis point expansion from the same.

period last year. We saw improvement in adjusted operating profit with $189.2 million recorded this quarter compared to $119.1 million in the same period last year for a 58.9% increase.

Period last year we.

We saw improvement in adjusted operating profit with $189 2 million recorded this quarter compared to $119 1 million in the same period last year for 58, 9% increase.

Our adjusted operating profit margin of 25, 9%.

or adjusted operating profit margin of 25.9% with a 540 basis point increase from the same period last year.

540 basis point increase from the same period last year.

Finally, adjusted diluted EPS grew 52% for Q4, excluding stock-based compensation tax benefit of six cents in Q4, EPS grew by approximately 58%. So let's review the growth driver.

Finally, adjusted diluted EPS grew 52% for Q4, excluding stock based compensation tax benefit of <unk> <unk> in Q4, EPS grew by approximately 58%.

So let's review the growth drivers in both revenue and profits on slide 12, we show the contributions to sales growth in the quarter.

Slide 12, we show the contributions to sales growth in the quarter.

Volume and mix contributed $153 million or 26.4 percentage points of growth, including approximately $78 million of incremental volume driven by COVID-19 related net demand.

Volume and mix contributed $153 million or 26, four percentage points of growth.

Including approximately $78 million of incremental volume driven by COVID-19 related net demand.

Sales price increases contributed $11.3 million, or 1.9 percentage points of growth.

Sales price increases contributed $11 3 million, a one nine percentage points of growth.

Looking at margin performance slide.

Slide 13 shows our consolidated gross profit margin of 41.1% for Q4 2021, up from 36.4% in Q4 2020.

Slide 13 shows our consolidated gross profit margin of 41, 1% for Q4 2021.

From 36, 4% in Q4 2020.

Proprietary products fourth quarter gross profit margin 46.3 percent.

Proprietary products fourth quarter gross profit margin of 46, 3%.

460 basis points above the margin achieved in the fourth quarter of 2020.

It was 460 basis points above the margin achieved in the fourth quarter of 2020.

The key drivers for the continued improvement in proprietary products, gross profit margin were favorable mix of products sold, driven by growth in high-value products, production efficiencies, sales price increases, partially offset by increased overhead costs, inclusive compensation.

The key drivers for the continued improvement in proprietary products gross profit margin were favorable mix of products sold driven by growth in high value products.

Function efficiencies sales price increases, partially offset by increased overhead costs inclusive of compensation.

Contract manufacturing fourth quarter gross profit margin of 16, 5%.

Contract manufacturing, fourth quarter gross profit margin of 16.5%, with 70 basis points below the margin achieved in the fourth quarter of 2020.

70 basis points below the margin achieved in the fourth quarter of 2020.

The decrease in margin is largely attributed to increased raw material cost and a mix of products sold.

The decrease in margin is largely attributed to increased raw material costs and the mix of products sold.

Now let's look at our balance sheet and review how we've done in terms of generating more cash.

Now, let's look at our balance sheet and review, how we've done in terms of generating more cash.

On slide 14, we have listed some key cash flow metrics.

On slide 14, we have listed some key cash flow metrics.

Operating cash flow was $584 million for the year, an increase of $111.5 million compared to the same period last year, a 23.6% increase.

Operating cash flow was $584 million for the year, an increase of $111 5 million compared to the same period last year at 23, 6% increase.

Operating cash flow in the period was adversely impacted by a working capital increase as well as an increase in tax payments.

Operating cash flow in the period was adversely impacted by a working capital increase as well as an increase in tax payments.

In 2021, we spent over $253 million on capital expenditures. A 45% increase in capital expenditures is a significant increase in capital expenditures.

In 2021, we spend over $253 million on capital expenditures.

<unk>, 45% increase over 2020.

The majority of the incremental capex has been leveraged to increase our high-value product manufacturing capacity within our existing facilities.

The majority of the incremental Capex has been leveraged to increase our high value product manufacturing capacity within our existing facilities.

We expanded capacity at 13 existing sites, with 30 major facility modifications and over 400 pieces of equipment, all while keeping pace with

We expanded capacity at 13 existing sites.

With Turkey major facility modifications and over 400 pieces of equipment.

All while keeping pace with the growing demand.

We have continued to increase capacity at our HVP sites in the U.S., Germany, Ireland, and in Singapore.

We have continued to increase capacity at our <unk> sites in the U S, Germany, Ireland and in Singapore and.

and we have been able to leverage our existing asset base to support proprietary products manufacturing.

And we have been able to leverage our existing asset base to support proprietary products manufacturing.

For example, a Williamsport, Pennsylvania site, formerly a contract manufacturing site, will be transformed with over half its manufacturing capacity to support proprietary products with the last summer mixing and batch offline.

For example, our Williamsport, Pennsylvania site, formerly a contract manufacturing sites will be transformed with over half of its manufacturing capacity to support proprietary products with elastomer mixing and batch offline.

and this leverages the close proximity to our HVP site at Jersey Shore.

And this leverages the close proximity to our <unk> site at Jersey shore.

As we flex our global infrastructure with the phased capacity expansions, we are well positioned for the continued growth in 2022.

As we flex our global infrastructure with the face capacity expansions, we are well positioned for the continued growth in 2022.

working capital of approximately $1.1 billion increased by $277.6 million from 2020.

Working capital of approximately $1 1 billion increased by 277 $6 million from 2020 Pri.

primarily due to higher accounts receivable from our increased sales, higher inventory levels and an increase in our cash position.

Primarily due to higher accounts receivable from our increased sales.

Higher inventory levels and an increase in our cash position.

Our cash balance at December 31st of $762.6 million was $147.1 million higher than our December 2020 balance.

Our cash balance at December 31 of.

$762 6 million.

It was $147 1 million higher than our December 2020 balance.

The increase in cash is primarily due to our strong operating results in the period offset by our share repurchase program and higher capex. Turning to guidance.

The increase in cash is primarily due to our strong operating results in the period offset by our share repurchase program and higher Capex.

Turning to guidance.

Slide 15 provides a high level summary.

Full year 2022 net sales guidance will be in a range of $3.05 billion to $3.075 billion.

Full year 2022, net sales guidance sales guidance will be in a range of 3.05 billion to 3.075 billion.

There is an estimated headwind of $70 million based on current foreign exchange rates.

There is an estimated headwind of $70 million based on current foreign exchange rates.

We expect organic sales growth to be approximately 10%.

We expect organic sales growth to be approximately 10%.

This comp comprises a mid-teen growth in our proprietary business.

This comprises a mid teen growth in our proprietary business.

forecast includes mid-team growth in our base business and mid-team growth in our net COVID-related revenue.

The forecast includes mid teen growth in our base business and mid teen growth in our net COVID-19 related revenues.

For contract manufacturing, we are forecasting low to mid-single digit negative growth in 2020.

For contract manufacturing, we are forecasting low to mid single digit negative growth in 2020.

'twenty two we.

We do expect contract manufacturing to return to growth in 2023.

We do expect contract manufacturing to return to growth in 2023.

We expect our full year 2022 reported diluted EPS guidance to be in a range of $9.20 to $9.35.

We expect our full year 2022 reported diluted EPS guidance to be in a range of $9 20 to $9 35.

Also, our CAPEX guidance is $380 million for the year.

Also our Capex guidance is $380 million for the year.

There are some key elements I want to bring your attention to as you review our guidance.

There are some key elements I want to bring your attention to as you review our guidance.

estimated FX headwind on EPS as an impact of approximately 21 cents based on current foreign currency exchange rates.

Estimated FX headwind on EPS as an impact of approximately 21.

Based on current foreign currency exchange rates.

and our guidance excludes future tax benefits from stock-based compensation.

And our guidance excludes future tax benefits from stock based compensation.

To summarize the key takeaways for the fourth quarter, strong top line growth in proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS and growth in operating cash flow.

To summarize the key takeaways for the fourth quarter strong topline growth in proprietary gross profit margin improvement growth in operating profit margin growth in adjusted diluted EPS and growth in operating cash flow.

delivering in line with our pillars of execute, innovate, and grow. I'd now like to turn the call back over to Eric.

Delivering in line with our pillars of execute innovate and grow.

I would like.

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

Thank you Bernard.

Summarized on slide 16, the excellent financial performance reported today continues to reaffirm that our strategy is working we have a strong base business proven by our market led approach was delivering unique value to our customers. Our global operations team is efficiently manufacturing and delivering products in this complex.

The excellent financial performance reported today continues to reaffirm that our strategy is working. We have a strong base business proven by our market-led approach, with delivering unique value to our customers. Our global operations team is efficiently manufacturing and delivering products in this complex environment with a focus on service and quality. And we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth.

Environment with a focus on service and quality and we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth. We realized that our products are critical for health care across the globe, which is why we're so dedicated to support patient health today.

we realize that our products are critical for healthcare across the globe, which is why we're so dedicated to support patient health today and well into the future. To Wanda, we're ready to take questions. Thank you.

And well into the future to Wanda, we're ready to take questions. Thank you.

Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star then 1 on your telephone. To withdraw your question, press the pound key. Again, that's star 1 to ask.

Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press Star then one on your telephone.

To withdraw your question press the pound key.

Again, Thats star one to ask the question.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Derek DeBruin with the Bank of America. Your line is open.

Our first question comes from the line of Derik de Bruin with Bank of America. Your line is open.

Yeah.

Hey, good morning. Thank you for taking my question. Just a couple of points initially. So can you remind us with a full year?

Hey, good morning, Thank you for taking that Mike.

Question.

Just a couple of points. Initially so can you remind us what the full year.

COVID contribution number was for 21. And, you know, as you sort of look at the 22 guide, and just in general, the business, I mean, are you capacity constrained?

Covid contribution number wise through 'twenty, one and.

As you sort of look at the 22 Guy.

And just in general the business I mean are you capacity constrained.

on your non COVID products. I mean, basically, this is a polite way of asking that is as COVID sort of rolls off, are you gonna be able to backfill that with, you know, with with non COVID business? And, you know, this leads into the question of, you know, what does 23 look like?

On your non Covid products IV basically this is a polite way of asking that is as COVID-19 sort of rolls off or are you going to able to backfill that with.

With non Covid business.

This leads into the question of what is 23 look like.

Well, good morning, Derek. On the COVID number, it's 459 for 2021. We would expect to see that grow in the mid-teen range within 2022.

Good morning, Derek on the Covid number was 459 or 2021, and we would expect to see that grow in the mid teen range and within 2022.

And.

On the capacity I'll hand over to.

Yeah yeah thanks Derek. So on the capacity you're right when we think about where we're at in the capacity it is really around HVP products, Floratec, Novapeer, plungers, and stoppers.

Yes, yes, thanks, Eric so on the capacity Youre right and when we think about where we're adding the capacity.

It is really around HCP products, Florida Tech Novo peer Plunger's and stoppers and if you think about the two areas of high growth that we're experiencing and we anticipate continued growth.

If you think about the two areas of high growth that we are experiencing and we anticipate continued growth around the vaccines, but also in our biologics portfolio, which would

Around the vaccines, but also in our biologics portfolio, which would.

and is consuming the additional capacity that we're putting in place as we speak today.

And is consuming the additional capacity that we're putting in place as we speak today.

So we have plans that we've created investments in 2020, and that is being put in place and being.

So we have plans that we have.

Create investments in 2020.

And that has been put in place and being.

Ready for production as we speak and we have additional capacity coming on throughout this year and then into early next year So it's a combination of both Derek

Ready for production as we speak and we have additional capacity coming on throughout this year and then into early next year. So it's a combination of both.

But you do feel confident that you'll be able to backfill.

But you do feel confident that you'll be able to backfill. But I mean, you know, essentially every question I'm getting from investors is like, are you and other companies that are supplying into the COVID vaccine market going to have this big gap in 23 as things roll off?

I mean, essentially every question I'm getting from investors is like are you and other companies that are supplying into the COVID-19 vaccine market is going to have this big gap in 'twenty three as things roll off.

No, we will be able to utilize the existing equipment and future equipment we're installing right now because the approach we took.

No. We will we will be able to utilize the existing equipment and future equipment, we're installing right now.

Because of the approach we took.

on bringing customers towards the highest part of our growth in the portfolio so we can absorb that as we go into 2023 and 2024 if trajectories change around vaccinations. Yeah this is something that we you know have been communicating throughout 2020 and 2021 as we layer in this extra capacity.

On bringing customers towards the highest part of our growth in the portfolio. So we can absorb that as we go into 2023 and 2024, if trajectories change around vaccinations.

This is something that we have been communicating throughout 2020 and 2021 as we layer in this extra capacity.

It's not purely for COVID, it's for both core and COVID.

It's not purely for Covid, it's for both core and Covid.

<unk>.

Even if there was a slight lag, it would be for a very short time based on the order book and the forecast that we have. So we're relatively confident that we can use that capacity pretty quickly as soon as it comes on board.

Even if there was a slight lag it will be for a very short time based on the order book and the forecast that we have so we're relatively confident that we can use that capacity.

No pretty quickly as soon as it comes on board.

Great I've got some.

Great. I've got some more, but I'll shut up and let somebody else ask. Thanks.

But I'll I'll shut up and let somebody else out thanks.

Okay.

Thank you. Our next question comes from Ilana Glari-Solo with CJS Securities.

Thank you. Our next question comes from the last Larry Solow with CJS Securities. Your line is open.

Great. Good morning, guys. Thanks for taking the question. Similar topic, I'll take maybe a different angle at it. To me, it looks like I'm kind of encouraged by the CapEx expansion up to $380 million. It's a pretty significant number and a good bump up from last year. To me, that demonstrates.

Great. Good morning, guys. Thanks for taking the question.

Similar.

Topic, I'll take maybe a different angle at it just.

To me it looks like I'm kind of encouraged by the the Capex expansion up to $380 million is a pretty significant number and a good bump up from last year. So to me.

That demonstrates that some good confidence.

good confidence, your outlook and also like is pumping up.

On your outlook and also like as bumping up.

The long-term outlet by 100 bps, I guess, and that's sort of from where we stand today, not historically. So I'm kind of confident by that, but I'm just trying to figure out this CapEx expansion. It sounds like it's more non-COVID-related-based business stuff, and is there a big chunk of that related to corning? Can you give us a little more visibility on corning and also how that ties in with the

The long term outlook by 100 bps, I guess enough sort of from a current where we stand today right now historically.

So I guess I'm kind of.

Confident by that but I'm just trying to figure out does this capex expansion. It sounds like it's more non COVID-19 related base business stuff.

And is it also is a big chunk of that related to Corning can you give us a little more visibility on Corning and also how that ties in with the <unk>.

You sort of mentioned expansion on R&D, which has been like 2%, running about 2% a year. Should we expect that to bump up significantly as a percentage of revenue going forward?

You sort of mentioned expansion on R&D, which has been like 2% running about 2% a year is that do we should we expect that to bump up significantly as a percentage of revenue going forward.

Um, yeah, so a couple of things there. So on the CapEx, some of...

Yes, so couple of things there so on the Capex some of that Capex.

is still around COVID. A lot of it, you're right, is around also supporting the base business and it's particularly targeted at the high-value product area. So we would say getting close to 70% of our CapEx is growth-based at this point. On Corning, yeah, we are making some investments around that. We expect that to be around $50 million CapEx in the year.

It's still around Covid.

But you are right is around also supporting the base business and is particularly targeted at the high value product area. So we would say getting close to 70% of our Capex is grows based at this point.

<unk>.

On Corning, Yes, we are making some investments around that we expect that to be around $50 million.

Capex in the year.

And then our R&D, we will have a step up in R&D also around corning and again that's all baked into the forecast.

And then our R&D, we will have a step up in R&D also.

Around Corning and again, that's all baked into the forecast.

Okay. In terms of COVID, and I realize...

Okay in terms of Covid I realize.

There's still a lot of question marks, but it sounds like you certainly expect growth this year.

There's still a lot of question marks but.

Sounds like Youre, you certainly expect growth this year.

Do you get any feel for what your customers see going out in the next few years? Obviously, there are a lot of question marks, but any feel for that? And second question there, has there been any, as the therapeutics and more importantly the vaccines have evolved, has there been any changes in packaging from initial stages or are your customers looking more and more for your services and products? Can you give us any color on that?

Do you get any feel for what your customers see going out of the next few years, obviously, there's a lot of question marks.

But any feel for that in a second question. There has there been any.

The.

Therapeutics and more importantly, the vaccines have evolved.

Is there any been any changes in packaging from sort of initial stages are they are your customers looking more and more for your services and products can you give us any kind of color on that.

Yeah, Larry. So what we're seeing right now is that you're right. We were initially providing solutions around the vials.

Yes, Larry So what we're seeing right now is that you're right. We were initially providing solutions around the vials.

and there were multiple doses per vial and we're seeing this transition in life cycle management as we speak and starting in 2022 it's going to be less doses per vial so it's a different type of solution that we provide similar economics from a unit basis but it's more of a transition less doses per vial which is a net positive for West.

And there were multiple doses per vial and we're seeing this transition lifecycle management as we speak.

And starting in 2020 twos will be less doses for <unk>. So it's a different type of solution that we provide similar economics from a unit basis, but.

It's more of a transition less doses for bio which is a net positive for west and that transition will take place and its not perfectly in the calendar year, but it is in 2022 going into 2023. The next stage after that and that's where burner was talked about some of the capital.

And that transition will take place, it's not perfectly in the calendar year, but it's in 2022 going into 2023. The next stage after that, and that's where Berner was talking about some of the capital, is still pointed towards vaccines, is more towards pre-filled syringes.

As bill pointed towards vaccines as.

As more towards.

Pre filled syringes.

and so that is an area where we're still investing because that's more of a one or two year out type of the start of a transition for our customers. So I hope that can give you this kind of landscape and how things will evolve over the next several years through the life cycle management. I appreciate that, that's a good call. Just last question if I may, speaking of therapy, just on the price increases you mentioned, I think it was about a

And so that is an area, where we're still investing because that's more of a one or two year out type of the start of a transition for our customers. So hopefully I can hit you just kind of landscape and how things will evolve over the next several years through the lifecycle.

I appreciate it that's good color just last question if I may sneak in a third here just on the.

And our price increases you mentioned I think it was about.

just below 2% price in your favor this quarter. Just look at that in light of, you know, I think supply chain impacts, inflationary pressures.

Just below 2% price.

In your favor this quarter.

Just look at that in light of I think supply chain impacts inflationary pressures.

Certainly you guys are probably built as good or better than most companies, frankly, in the world, not just in your industry.

Certainly you guys are probably built has good or better than.

Most companies frankly, probably dead.

In the world not just in your industry, but.

Obviously, there is some inflation out there, particularly with oil and resin and stuff. So.

You know, obviously, there is some inflation out there, particularly with oil and resin and stuff. So do your price increases, should we expect these to maybe bump up a little bit over time? Have you, you know, or in the short term, or have you been increasing prices a little bit to some customers to sort of offset some of these inflationary pressures?

To your price increases should we expect these type maybe bump up a little bit over time have you and then short term or have you been increasing prices a little bit to some customers to sort of offset some of these inflationary pressures.

Yeah, we had the opportunity based on some of the contracts and agreements are in place to.

Yes, we had the opportunity based on some of the contracts and agreements are in place to <unk>.

increase some of those price increases to cover some of these inflationary pressures. And so that's within our wheelhouse to do that. And it is something that we have been doing towards.

<unk> some of those price increases to cover some of these inflationary pressures.

So that's within our wheelhouse to do that.

And that is something that we have been doing towards.

back end of 2021. And we would, you know, I'm going to see that here again.

Back end of 2021, and we would.

I'm going to see that here again in 2022.

And we also have the opportunity for us to apply surcharges in certain instances where we see some specific inflationary pressure. Right. Okay, great. I appreciate it. Thank you, guys.

And we also have okay great.

It's also the opportunity for us too.

Place surcharges in certain instances, where we see some specific inflationary pressures.

Right, Okay, great I appreciate it thank you guys.

Thanks.

Our next question comes from the line of John Krieger with William Blair.

Our next question comes from the line of John Kreger with William Blair. Your line is open hey, Thanks, very much Eric I appreciate the update on our long term growth contract can you just talk about how you think about longer term capex.

Hey, thanks very much. Eric, appreciate the update on the long-term growth construct. Can you just talk about how you think about longer-term CapEx around that same construct? Should we be thinking about CapEx as sort of a percent of revenue, growing with sales, perhaps declining after the big bolus in the last few years? How are you thinking about that?

Round that same construct should we be thinking about capex as a percent of revenue growing the sales perhaps declining after the big bolus in the last few years, just how are you thinking about that number.

Yeah, John , we are looking at a once we get through this bullet that we're currently managing through Uh, we do want to get back to the six to seven percent of sales of revenues

Yes, John we are looking at once we get through this bolus that we're currently managing through we.

We do want to get back to the 6% to 7% of sales of revenues we.

We do believe that is appropriate for our type of business.

We do believe that is appropriate for our type of business, particularly when you think about.

particularly when you think about about 30% of our capex is around maintenance.

About 30% of our Capex is around maintenance.

Let's call it 10, 15% around our digital and the balance of design growth. So we do believe that.

Okay.

Call. It 10, 15% around our digital and the balance of his on growth. So we do believe that.

Construct.

uh last year this year is really around the growth sector and and making sure that we have installed capacity i will tell you what i'm also very pleased and how the team has right size

Last year. This year is really around the growth sector.

And making sure that we have installed capacity I will tell you what I'm also very pleased how the team is right sized our facility network.

our facility network. As you know years ago we had 29 we're at 25 and we're able to leverage those facilities more efficiently so the capital we're putting in is more around equipment and processes versus land and buildings. So I think the team's done a very good job in that regard and we're able to leverage and we're well positioned for the future.

As you know years ago, we had $29 25, and we're able to leverage those facilities more efficiently. So the Apple we're putting in is more around equipment and processes versus land and buildings. So I think the team has done very well very good job in that regard and we're able to leverage and we are well positioned for the future.

Just on that, John , in previous years if you looked at the split of capital maintenance was probably, you know, 40 to 50 percent of the capex budget.

Yes, just on that John .

In previous years, if you looked at the split of capital maintenance with 40% to 50% of the Capex budget.

and so they obviously the remainder was on growth and IT and now you're seeing the growth portion close to 70% and the thing with that as well as Eric just said as soon as that CapEx hits our facilities.

So the obviously the remainder was on growth and now you're seeing the growth portion close to 70% and the thing with that as well as Eric just said as soon as that Capex hits hits, our facilities it straight into operation. So we're getting a return on it much quicker.

straight into operations. We're getting a return on it much quicker than some of the capex investments we would have made a number of years ago, just given the nature of it.

And some of the Capex investments, we would have made a number of years ago, just given the nature of them.

And so it's responding to demand, essentially responding as fast as we can with this increased capital allocation over 2020, 2021 and into 2022. But it should normalize beyond that.

So it is responding to demand essentially responding as fast as we can with it.

This increased capital allocation over the 2000 22021 and into the into 2022.

But it should normalize.

Beyond that.

Got it. Thank you. And then a follow-up, Eric, I think you said at the beginning of the call, the order book was at a record level, which sounds good. Can you just elaborate a little bit on that? And I'm thinking kind of two things. As you think about biologics versus generics versus pharma, what does that order book sort of tell you in terms of growth trajectory there? And also, with tight supply chains, has your order book duration sort of extended, or is it pretty typical today versus a year or two ago?

Got it. Thank you and then a follow up.

Eric I think you said at the beginning of the call. The order book was at a record level, which sounds good can you just elaborate a little bit on that and we're thinking kind of two things.

As you think about biologics versus generics versus pharma.

That order book sort of telling you in terms of growth trajectory there.

And also with tight supply chain is your order book duration sort of extended or is it pretty typical today versus a year or two ago.

So those two dynamics are happening one is I'll take the latter one first because I think youre right. What we're seeing is while the number has increased.

So there's two dynamics that are happening, one is, I'll take the latter one first because I think you're right, what we're seeing is while the number has increased, we don't specifically spell out the number, but it's increased, what we're seeing is we have better visibility beyond the four or five quarters.

Specifically this felt the number but it's increased what we're seeing as.

We have better visibility beyond the four or five quarters.

So it's more of almost a two-year horizon now. And one of the levers that we're working with customers on is working with our supply chains working together to get that visibility so we can level load our operations more efficiently and be more effective and supports our customers. I think the other area, when you think about

So it's more of a almost.

Two year Horizon, now and one of the levers that we're working with customers on is working with our supply chain is working together to get that visibility. So we can level load our operations more efficiently and be more effective in.

And supports our customers I think the other area when you think about.

If you kind of break it out of the increase, it really comes down to three buckets really. One is increase on the demand around vaccines.

What if you can.

Kind of break it out of the increase it really comes down to three buckets really one is increase on the demand on around vaccines.

Another increase, which I'm very pleased about, is quite different than it was three or four years ago, particularly in biologics.

Another increase which I'm very pleased about is quite different than it was let's say three or four years ago, particularly in biologics is really the success of various drug launches for our clients our customers. So I won't get into specifics and thats not just one but many and then the third driver really is what I call the core growth.

is really the success of various drug launches for our clients or customers. I won't get into specifics and that's not just one but many. And then the third driver really is what I call the core.

growth and that is encompassing biologics but it's also encompassing what we call pharma or small molecules and also generics.

And that is encompassing biologics, but it's also encompassing.

We call pharma or small molecule analysis of generics. So bottom line is all areas are growing nicely.

Bottom line is all areas are growing nicely. It's a little more weighted toward biologics with a lot of drug successes we're seeing. But again, if you look at our CapEx profile of what we're putting into our facilities today, it's the higher end of HPPs, which squarely goes after the biologic space.

It's a little more weighted.

Weighted towards biologics with a lot of drug successes, we are seeing and but again, if you look at our capex profile of what we're putting into our facilities today, it's the higher end of Hep's, which squarely goes after the biologic space.

That's helpful. I appreciate it.

Thank you.

Our next question comes from the line of Jacob Johnson with Stephens. Your line is open.

Our next question comes from the line of Jacob Johnson with Stevens, your line is open.

Hey, thanks.

This may be a little bit repetitive based on that last answer, but I'll ask anyways. I mean, you guys have considerable participation rate. I'm just curious if you've seen any change in your market share pre and post-COVID. You're talking about mid-teens growth ex-COVID this year. You just bumped up your long-term growth outlook.

This may be a little bit repetitive based on that last answer, but I'll ask anyways. I mean, you guys have considerable participation rate I'm. Just curious have you seen any change in market share your market share pre and post COVID-19 and Youre talking about mid teens growth ex Covid. This year, you just bumped up your long term growth outlook.

Is this the market and biologics or are you taking chair and is it kind of growth in those higher value products? Maybe it's all of the above, but just curious kind of on the robust growth you guys are pointing to in this next year and beyond.

Is this the market in biologics or are you taking share.

Growth in those higher value products, maybe Paul D. Bob, but just curious kind of on the robust growth you guys are pointing to in this next year and beyond.

Jacob so it's it's actually all of above so what we're seeing with our participation rate is in biologics. We continue to be Well north of 90%

So it's actually all of above so what we're seeing.

Our participation rate is in biologics, we continue to be well north of 90%.

And actually, I'm very pleased on our performance in 2021, particularly when you look at, particularly our BLA was approved that didn't really use our types of products. It was more in different configurations. So we look at that as an opportunity.

And actually I'm very pleased on our performance in 2021, particularly when you look at particularly our BLA is approved that didn't really use our types of products, who is more of a different configuration. So we look at that as an opportunity.

And in the small molecule area, we think about ANDAs, we're equal or slightly better than we were.

In the small molecule area and when you think about andas will equal or slightly better than we were.

Recall that.

And I would argue that.

And I would argue that.

pre-COVID, if you look at a step a couple of years before that, we're even stronger than that. So you're seeing a gradual improvement as we go forward. And I'm really excited about this partnership and where we're taking HPPs to the next level because that, again, reinforces our leadership position and really bringing new technologies to the market that really de-risks our customers' process in entering the market.

Pre COVID-19 if you look at a couple of years before that were even stronger than that so as you have seen a gradual improvement as we go forward.

And I'm really excited about this partnership and where we're taking <unk> to the next level because that again reinforces our leadership position and really bringing new technologies to the market that.

Really de risks our customers.

Process and entering new markets.

Got it. That's helpful. And maybe following up on de-risking the process. I think in December , the FDA put out some guidance on visible particulates. I'm just curious if that's something that could be a catalyst for you all or maybe it's nothing. Just curious on that. Well, it helps us.

Got it that's helpful and maybe following up on Derisking the.

The process I think.

In December the FDA put out some guidance on.

Is that ballpark particulate I'm, just curious if thats something that that could be a catalyst for you all or maybe maybe it's nothing I'm just curious on that.

It helps us anytime there is higher level quality requirements and or regulatory changes our direction that they would like to go.

higher level quality requirements and or regulatory changes or direction that they would like to go, that puts us in a very good position. Also our partner Dicyo in a very good position because we do have solutions that can meet those standards and it could be adoption of existing molecules in the market but also the new pipeline.

That puts us in a very good position also our partner <unk> in a very good position because we do have solutions.

Can meet those standards and it could be adoption of existing molecules in the market, but also the new pipeline.

But to your point, the biggest catalyst of this relationship we've built with Corning is all around regulatory changes towards combination devices and or systems versus individual components. So it is very good for West as these regulatory changes become more stringent as we go forward. Got it. I'll leave it.

But to your point.

The biggest catalyst of this relationship we built with.

Corning is all around regulatory changes towards combination devices and our systems versus individual components. So it is very good for west as these regulatory changes become more stringent as we go forward.

Got it I'll leave it there thanks for taking the questions.

Good.

Thank you.

Our next question comes from the line of Paul Knight with Keybanc capital market. Your line is open.

Our next question comes from the line of Paul Knight with KeyBank Capital Market.

Hi, Eric. On the commentary earlier regarding the trend toward free-filled syringes, is this not where the biotechnology industry wants to go? Meaning, it's not just COVID vaccines, which I'm sure they want to do that as well, but is that not kind of a primary...

Hi.

On the commentary earlier regarding the trend toward <unk>.

Pre filled syringe is this not where the biotechnology industry wants to go meaning.

It is not just COVID-19 vaccines, which I'm sure they want to do that as well, but is that not kind of a.

Primary.

driver for biotechnology customers right now and why I guess the other question.

Driver for biotechnology customers right now and why I guess the other question yes.

Yeah, absolutely. So there's a push towards pre-filled fringes and multiple dimensions, right? If you think about the biologic space.

Yes, absolutely so.

There is a push towards prefilled syringes in multiple dimensions right. If you think about the biologics space.

and also you think about the vaccines themselves for easier distribution, administering patients and etc. So there is a push towards technology that supports advancements of pre-filled syringes. And I think again, that's the reason why we have a really good offering now between Crystal Zenith.

And also you think about the vaccines themselves for easier distribution administrative patients and et cetera. So there is a there is a push towards technology that supports advancement of Prefilled syringes.

And I think again.

That's the reason why we have a really good operating now between Crystal Zenith.

As an alternative class but also with working partnering with with

As an alternative to glass, but also with working partnering with.

with Corney. It does eliminate at the end of the day like you said eliminates risk.

With the cornea it does eliminate at the end of the day like you said eliminates risk.

uh... uh... from from going away from the vial

From from going away from the vial.

Okay. And then when we talk about capacity additions from the initiation of

Okay and then.

When we talk about capacity additions from the initiation of.

spending, how long before projects are running and delivering revenue? Is it a year? Is it two years? How long is it?

Spending how long before.

<unk> are running in delivering revenue as the year is it two years, how long is it.

Yeah, it's a combination of two things. Let me try to frame that because I think it's a good point you're raising. One point is, once the piece of equipment lands in our facility and we're able to validate, we're talking a matter of weeks.

Yes, it's a combination of two things, let me try to frame that because I think it's a good good point, you're raising $1. One point is once the equipment lands in our facility and were able to validate we're talking a matter of weeks before we have.

before we have the equipment up and running. And frankly, based on our digital connectivity to all our equipment across the globe, we can see that utilization go shoot up right up to the 80 plus percent range.

Equipment up and running and frankly based on our digital connectivity to all our equipment across the globe. We can see that utilization go shoot up right up to the 80 plus percent range.

But the point that we need to be conscious of is that when we talked about investments in 2020, there's two phases we spoke of.

But the point that we need to be conscious of is that when we talked about investments. In 2020 is I think there is two phases, we spoke of.

I would say a little over three-fourths or over 75% of those are already in place and producing finished product.

I would say a little over three fourths of over 75% of those already in place and produce and finished product.

and the rest of that delta is going to be completed early on in 2022. The other investments we initiated in 2021, called phase three and phase four, I would say today where we stand is about 15 percent complete or 20 percent installed and producing finished product and a balance of that is planned to be completed throughout 2022 and early 2023. So based on our commitments

And the rest of that Delta is can be completed in early on in 2022. The other investments. We initially in 2021 call it phase III and phase four.

I would say today, where we stand is about 15% complete or 20% install.

Installed in producing finished product and the balance of that is planned to be completed throughout 2022 and the early 2023. So based on our commitments that we've made in our customers.

that we made and our customers' future demand, that's kind of the cadence we're seeing with these investments and how long does it take for the equipment to be built, to be delivered and then installed. And that could take anywhere between a few months to two or three quarters, depending on the equipment.

Future demand.

That's kind of the cadence, we're seeing with these investments and how long does it take for the equipment to be built to be delivered and installed.

And that could take anywhere between a few months to two or three quarters, depending on the equipment.

Okay. Thank you.

Thank you.

As a reminder, ladies and gentlemen, that's star one to ask the question. Our next question comes from a

As a reminder, ladies and gentlemen, Thats star one to ask a question.

Our next question comes from the line of Dave <unk> with Jefferies. Your line is open.

Hi, thanks. Good morning. Thanks for taking my question. I wanted to ask a question I think John and Jacob have both asked slightly differently. Your long-term growth construct on revenue in particular, could you talk about

Hi, Thanks. Good morning, Thanks for taking my question I wanted to ask a question I think John and Jacob both asked slightly differently. Your your long term growth construct on revenue in particular could you talk about.

uh... contributors or expectations for growth between proprietary products and contract manufacturing is asking his contract manufacturing is kind of fluctuated

Contributors our expectations for growth between proprietary products and contract manufacturing I'm, just asking because contract manufacturing has kind of fluctuated.

uh... quite a bit and i'm wondering if if your thoughts about the relative contributors to that one percent increase uh... might be a little different than just one percent

Quite a bit and I'm wondering if your thoughts about the relative contributors to that 1% increase.

Might be a little different than just 1%.

Yeah, I'll start and burn if you want to add to it. You're right, the driver behind that really is around our proprietary.

Yes, I'll start and burn if you want to add to it.

Youre right the driver behind that really is around our proprietary.

business more so than contract manufacturing. I think we look at contract manufacturing, you're right, we're seeing as we indicated some volatility and it's based on contracts and timing a ramp up of new agreements. So when we look at proprietary we do believe that's stronger, it's more robust than we had historically and it's really around the biologic.

Business more so than contract manufacturing I think we look at contract manufacturing you are right. We are seeing as we indicated some.

Some volatility and is based on contracts and timing of ramp up of new new.

New agreements so when we look at it proprietary we do believe that stronger more robust than we had historically and it's really around the biologics.

is the main driver. We do still believe in the small molecule space.

Is the main driver we do still believe in the small molecule space.

Roughly, you know, let's call it low to mid-single, mid-single from the pharma side, and the generics is mid to high-single from a construct perspective, and then biologics is in the double digits. And now that biologics is a bigger piece of our business.

Roughly.

Let's call it low to mid single mid single from the pharma side and the generics is mid to high single from a construct perspective and then biologics is is in the double digits and Allied biologics is a bigger piece of our business approximately over 40%, let's say.

approximately over 40 percent, let's say, and it's driven by high-value products, the higher end of that portfolio. That's the reason why we have very strong confidence to be able to at least raise it by that 100 basis points that we spoke of. Bernard, do you want to add more? It ties in with the discussion we had on CapEx, so you can see what's going on.

And it's driven by high value products, a higher end of that portfolio. That's the reason why we have very strong confidence to beliefs raise it by by that 100 basis points that we spoke of burn do you want to add.

It ties in with the discussion we had on Capex. So you can see where we're investing.

lot of our capital around high-value products and that is now the primary growth driver within the business and then specifically within biologics. But you could also see in what we've seen here in 2021 that we're seeing HVP uptake in the other market units as well in generics and pharma. So that's now starting to permeate the rest of the business which is a positive thing for us as well. So when we then look at contract manufacturing

Lot of our capital around high value products and that is now primarily primary growth driver within the business and then specifically within biologics, but you could also see.

And what we've seen here in 2021 that we are seeing <unk> uptake in the other market units as well in generics and pharma. So that's now starting to permeate the rest of the business, which is a positive thing for us as well. So when we then look at contract manufacturing.

The growth there is probably mid-single digits, maybe at the lower end of our construct, and that's what we've seen particularly over the last year and probably the back half of 2020. So from a mixed perspective, we get a much better return from those investments.

The growth there is probably mid single digits.

Maybe at the lower end of our construct.

What we've seen particularly over the last year in the back half of 2020, and so from a mix perspective.

We get a much.

So much better return on those investments will make it so that that down can trail.

Excellent. So if I then stick on the proprietary products, and again, you probably touched on pieces of this, but...

Excellent. So if I then if I then stick on the proprietary products and again, you've probably touched on pieces of this but.

Probably any one of those is, any one of biologics being a higher portion of that pie and growing faster, higher adoption of the high end of your high value products, so kind of richer mix.

Probably any one of those is in.

Any one of biologics being a higher portion of that pie.

And growing faster.

Higher adoption of of the high end of your high value products, so kind of a richer mix.

maybe some underlying volume growth from a stronger pipeline in the last several years. Any one of those seems like it's probably, you know, might be worth 1% on its own. Is it a combination of all of those things or does one of those things stand out?

Maybe some underlying volume growth from a stronger pipeline in the last several years any one of those seems like it's probably might.

It might be worth 1% on its own is it is it a combination of all of those things are just one of those things standout.

It's a combination.

It's a combination. We are seeing very, very strong demand across all of the market units and you can see that's reflected in the guidance that we've given for.

We are seeing.

Very very strong demand across all of the market units and you can see thats reflected in the guidance that we've given for.

2022 around all proprietary business that we're guiding in their mid-teens and so it is a combination of Different drivers that just doesn't hang on one

2022 around our proprietary business, although we are guiding in their mid teens and.

So it is a combination of <unk>.

Different drivers of just doesn't hang on one thing now and then and then switching subjects a little bit on on Corning Valor.

yeah and then and then switching subjects a little bit on on corning and valor

uh... certainly the system approach that you're talking about make some sense my understanding is that

Certainly the system approach that you're talking about makes some sense my understanding is that.

Maybe that's been the case in the industry that you would source a variety of solutions or parts of solutions and put those together and go to market.

Maybe that's.

That's been the case in the industry.

That you would source a variety of of solutions or parts of solutions and put those together and go to market.

<unk>.

perhaps you could talk about the context there and then also what what drew you to choose corning and valor in particular uh... and how long do you think it takes to develop one of these solutions that you're talking about to bring the market

Perhaps you could talk about the context, there and then also what what drew you to choose Corning valor in particular.

And how long do you think it takes to develop one of these solutions that you are talking about to bring to market. Thanks.

Yeah Dave, so there's, you know, first of all, we have a history of a really strong partnership with Daikyo. So as we enter into this relationship with Corning, we're very confident we can create a similar model. You know, you're right. The reason why we engage in this conversation is when we speak with our customers, the challenges they face is really trying to find the right containment solution.

Yes. So first of all we have a history of a really strong partnership with data so as we enter into this.

Our relationship with corner, we're very confident we can we can create a similar model.

You're right.

The reason why we engaged in this conversation is when we speak with our customers. The challenges. They face is really trying to find the right called the containment solutions.

for their products, and what they're finding is it's highly fragmented and it's a patchwork environment of multiple suppliers.

For their products and what they're finding is highly fragmented.

These oil patch work environment of multiple suppliers.

So we really think about it.

and you look at the elastomers in glass, there's several drug master files, submissions that need to be supplied with that particular drug molecule.

When you look at the last rooms in glass.

Several drug master files submissions that need to be.

Supplied.

That particular drug molecule.

And there really isn't anybody out there that has been able to develop a truly integrated system from ground up. So when we looked at

There really isn't anybody out there that has been able to develop a truly integrated system from ground up so when we looked at.

If you think about ourselves in Dikyo, we do believe we put ourselves as the leading

You think about ourselves and <unk>, we do believe we put ourselves as the leading.

innovators around elastomers and primary packaging.

Innovators around elastomers and primary packaging.

And when you think about unparalleled glass science and the deep materials science capability at Corning, which is well known in multiple industries, but in our industry.

And when you think about unparalleled glass science.

The materials science capability that Corning, which is well known.

And in multiple industries, but in our industry in pharma and.

And they also have deep manufacturing and engineering capabilities, which is truly unique. That's why, as we sat down and talked about a partnership, the focus is really to redefine the future of containment solutions.

And they also have deep manufacturing and engineering capabilities, which is truly unique.

That's why as we've sat down and talked about a partnership the focus is really to redefine the future of.

Containment solutions.

And then really creating a truly integrated system that de risks, what I've said earlier about our customers' drug development.

And manufacturing processes with a single product one DMF.

And support for our customers by West.

So that's the that's the premise of why we have embarked on this relationship.

And this is the utilizing glass technology.

Boral silicate, which has been in the industry for.

Decades, the newly developed aluminum silicate that Corning has developed.

Really to provide a range of quality benefits.

So what I'm trying to articulate is the leveraging that partnership.

with them truly enables us to get to the best in quality, first in class.

With them truly enables us to get to the best in quality first in class system in the industry between the two firms.

system in the industry between the two firms, and leveraging obviously two firms, FedQ and West, together from the Elastomer side. So hopefully that gives you a kind of appreciation of what we're embarking on. Now, as you know, if you think about the NOVApeer journey that we were on and other new launches we had here at West, our lens on the biologic pipeline

Leveraging obviously when you see two firms. Thank you on the west together.

The elastomer side, so hopefully that gives you the.

Kind of appreciation of what we're embarking on now as you know if you think about the Andover peer journey that we're on and other new launches we had here at west.

Our lens on the biologic pipeline is very good.

And so that's the area that we'll focus on. And as we characterize and truly get to that system approach with between the two firms, we need to add additional capital.

So that's the area that we'll focus on and as we characterize and truly get to the system approach.

Between the two firms we need to add additional capital manufacturing capabilities full dossier of documentation and driven by data scientific data for our customers. We do believe it's going to take a little bit of time to have that to finally get to that point. So just like Novo period took a few years to get.

manufacturing capabilities, full dossier of documentation, and driven by data, scientific data for our customers, we do believe it's going to take a little bit of time to have that to finally...

So just like Novapir took a few years to get penetration, and now you've seen the benefits.

Penetration and now you've seen the benefits.

We see similar type of characteristics with a system approach.

We see similar type of characteristics with a system approach, we will start with we'll have <unk>, we'll have pre filled syringes will have cartridges at the end of the day.

We'll start with, we'll have vials, we'll have pre-filled syringes, and we'll have cartridges at the end of the day. Great, let's hope we'll per-

Great. That's helpful perspective, thank you.

Thanks, Dan.

Thank you.

I'm showing no further questions in the queue. I would now like to turn the call back over to Quentin for closing.

I'm showing no further questions in the queue I would now like to turn the call back over to Quentin for closing remarks.

Thanks, Tawanda, and thank you for joining us on today's conference call. An online archive of the broadcast will be available on our website at westpharma.com in the investor section. Additionally, you may access a replay through Thursday, February 24th by using the dial-in numbers and conference ID provided at the end of today's earnings release. That concludes this call.

Thanks to Wanda.

And thank you for joining us on today's conference call an online archive of the broadcast will be available on our website at west pharma Dot com in the investors section. Additionally, you may access a replay through Thursday February 24th by using the dial in numbers and conference I'd provided at the end of today's earnings release that.

Includes this call have a nice day.

Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now.