West Pharmaceutical Services (WST) 24 Oct 242024 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the Q3 2024 West Pharmaceutical Services Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, John Sweeney, VP of Investor Relations with West Pharmaceutical. Please go ahead.

Good morning and welcome to West's Third Quarter 2024 Earnings Conference Call. results in morning, the the located westpharma.com. financial has the company's our at posted been Investors issued earlier and this release website We section on

an Statements the Investors we'll forward-looking assumptions, the contain our those updated copy control an materially section outlook the any the of risks of Please could and on presentation for by XXXX. financial Slide On call website. On the that and is statement. any subject, the estimates results year forward-looking financial from meaning by presentation on reports. review regarding company in as full as beliefs expectations, past future and refer our the company's XX-Q safe other results which the disclosures implied a as based call it our of business securities presentation today, as results, XX-K, and X and the a of provide beyond There's update influenced expressed the The release press statements our including by accompanies on to factors is well harbor results or differ are and present U.S. call, our X-K available today's statements made within accompanying made to on management slide federal current is company. the These laws. today's Actual many forecasts. here. our are well made statements

adjusted Eric? Reconciliations limitations the make the financial call prepared turn profit, to our Green. operating Eric including sales most non-GAAP in operating organic financial earnings now call, EPS. measures are adjusted management in measures, and results will and margin release. I'll comparable growth, provided During this to to reference GAAP over the to CEO, financial morning's non-GAAP today's conformity of profit adjusted diluted

members take like performance, and Thanks to John, a Thank recent for good quarterly would the today. support our us by thoughts issues. weather-related to our communities express and you, I heartfelt moment our affected discussing to and Prior and team everyone. hurricanes to morning, joining all

of Milton. thanks and For our Hurricane were to ensure precautionary team extend I of Florida One the storm members, those closed our want site affected culture. manufacturing our team members ahead West as my measures truly we the to by they who represent to safety

truly West disruption. that no our efforts plant, Pete was have many there members While team serve St. I'm of damage to proud without customers their enabled to faced personal our our seamlessly of challenges.

the expectations. a at turn Slide end with QX and had higher of Now EPS quarter performance. solid adjusted let's We X in to third and our revenues the coming

result team Our execute purpose at our meet collaboration our a and the strong schedule. across requirements, close West quarter improving The of continues performance by high our was lives. execution This level customers' patient cases, of solid our ahead with of to customers. to us in a some globe motivated allowed demand

continue guidance growth attractive to As proven a This strategy our year. we we capabilities QX, confidence for potential. reinforces in EPS the execution deliver are and adjusted result of increasing my long-term as West's full our market-led

also remains Turning very West only where strong in not for biologics, current X. injectables, have launches in the market segment the fastest-growing rate participation to to our a Slide position within but drugs new continues high. for drug

and critical most areas, therapeutic obesity. rare immunology, components HVP Our are diseases including oncology, addressing the

our they complex leadership and of evolving continue requirements the the ramp of experts. needs in We devices. A biologics meet regulatory self-injection address some improvement growth Through development scientific expect thought customers. wearable is to and aspect of to and valuable to strategy continued by market our in QX the needs leaders team West's see the technical to key driven process in insights,

of delivery injectable the dialogues As and market our continue conferences. at medicines, the to industry have with key productive we in customers leader containment

strong about and podium We weakest critical its at process. link, third-party a know recent pipelines drug strategy is Worldwide their manufacturer's HVP experts contamination only that We well strategy making as contamination control a the West as materials of support packaging quality of our with X. our the example, control our customers' held remain for conference, CPHI For the in positioned control to EU factors Annex part primary the presentation to future. from suppliers capabilities GMP as

and starting to we're in drive particularly our new Contract leadership to strength Manufacturing, long-term Products are increased opportunities. capacity serve addition, initiatives, long-standing Proprietary address to traction continued our and growth with making we In see how market with these GLP-Xs in we With early our investments customers. meaningful

this progress ramping making fourth The quarter self-injection into ramp-up improved on in driven delivery the We utilization as production body's was increase the are also line. expansion anticipate quarter combination strong during the up devices. continue a new was a our devices HVP plans. of production of significant to we and We of investment, execute by capital implementation on

efficiency process in scaling have place our through including the margin, initiatives We to customer to fulfill and driving automation optimizing improve manufacturing demand.

destocking factor with Now our this let remains me customers. a shift as to

getting shift to now are and closer interest in near-term continued discussions, with and their the order destocking devices some gives us observed we signs our trend. stabilization point with This have starting recent by ramp-up XXXX. in of driven customers we're a that We business, see some in expect in trends our to business of biologics increasing customers We confidence continued destocking into a the in within delivery customer levels. positive normalization pharma turning generic improving signs in showing

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

Eric, good morning. you, and Thank

profits, declines compared We'll QX organic to saw in look and the where we single-digit review low as diluted profit first decline at provide guidance. finally, the detail. a XXXX update third you sales the takeaways. drivers more EPS as an in will as XXXX. operating of our sheet revenues take margin will we sales in XXXX well well quarter numbers Let's quarter and the balance impacting and through I to as some And in

QX. up, First

Our net million, to recorded sales sales summarized GAAP reconciliation in X, an X.X%. results $XXX.X organic Slide are financial and We described Slides non-U.S. decline XX. of are of on the measures of XX representing

Slide X. in quarter. X.X% quarter, of our of organic in Nova sales devices. and delivery Products, made net sales digits High-Value approximately offset brand at our in products, Proprietary which an Products to Proprietary sales by XX% of by low the drug destocking Looking declined up the due Products increase decreased primarily single FluroTec, Westar

destocking market to driven units. performance devices. unit systems. NovaPure administrative our a at of mid-single a low single-digit Westar the brand Nova the by FluroTec, the of biologics increase Looking and products. sales driven And pharma saw The volumes in and Nova brand mid-single-digit an offset products, products market an primarily due increase increase market primarily of market experienced generics by in digits in lower declined decline the unit by drug delivery The

was segment constant currency basis for with third on revenue last Contract performance Our a the Manufacturing of consistent quarter our year.

Our a XXX adjusted from last was period profit point same margin operating year. basis of XX.X% the decrease

Finally, QX. declined XX.X% for adjusted diluted EPS

compensation stock-based EPS Excluding benefit, tax decreased XX%. by

HVP volume volume from review percentage and was period tailwind incentive the sales increases as More a contribution show based levels. quarter, primarily caused and the than in the a let's we offsetting contributed approximately price is negative mix million the components sales a currency performance. points Sales customer by Slide drug in a delivery organic did On Included a mix $XX.X lower $XX.X X, impact and price associated achieving in price FX profit Now revenue X.X demand. to million, foreign shift due our growth of decisions $XX sales with customer quarter. decline of $X.X the customer inventory and drivers in both to devices management volume million of in on to million.

mentioned was Slide profit profit XX.X% lower-margin margin in increased shift basis XX price down XXXX, increase of XX.X% time reductions in the XXXX. mix the devices, margin drug incentives. Contract points margin than third expect gross consolidated shows margin of achieved production quarter quarter performance. points high-margin efficiencies. in Products profit the our of quarter decline components gross our of QX HVP for delivery a margin quarter the the in we XXX Products than yield Manufacturing with of due gross XX.X% margin at which gross greater production profit margin sales third QX XXXX. Proprietary lower automation. was to third lower XXX were drivers basis achieved for These previously volumes inclusive were of to by customer third and offset improvements from XXXX in key XX.X% margin from Proprietary The the over to partly Looking primarily

decrease business. flow listed cash sheet our year, XXXX, for September we've a Now a same was balance some X million due Operating primarily for review $XXX.X to Slide cash last of of and ended XX.X% compared period let's the the in cash terms On decline done months million operating results. generating decrease flow in look $XX.X metrics. the we have to a XX, how key at

For quarter XXXX million million, period was the than higher capital $XXX.X year-to-date third $XX.X spending last year. same

our approximately due to from billion and Contract capital CapEx capacity. Working XXXX, reduction our million both to XX, to our December in $X.XXX by XXXX, a increase XX, High-Value balance. Products continue We primarily September leverage of Manufacturing at decreased cash $XXX.X

of $XXX.X in expenditures our Our by than cash share primarily capital due $XXX cash XXXX XX, from decrease offset balance operations. our million and at is balance. of was million The $XXX.X XXXX, September lower cash December million repurchases to

XX a high-level summary. Slide provides guidance. to Turning

We $X.XXX XXXX our of headwind from exchange estimated XXXX full reflecting sales impact $X.XXX are guidance range current billion $X.X based to There of $X rates. increasing exchange. foreign million a approximately to billion, full foreign net to of a billion of year on year is prior billion range an $X.XX the

organic X.X% sales decline approximately X%. expect an to of We

be FX from also to the is range $X.XX the includes from headwind. $X.XX Full $X.XX $XXX stock-based guidance. the adjusted elements CapEx which to guidance. There want of attention prior first to your key XXXX raising compensation. X range guidance a remains headwind $X.XX. are with adjusted range EPS bring associated compared of some guidance prior million, $X.XX $X.XX the is of diluted guidance decrease prior to which tax our unchanged an updated compared prior year in I year, EPS diluted benefits at EPS of full of you review guidance XXXX as are from guidance our of to The We a year $X.XX Also, to includes months to XXXX our a

compensation. I call Our stock-based guidance benefits the from excludes back tax would to Eric. now over like to future turn

focused had solid QX you, with high XX, To summarize Bernard. Slide Thank execution a a level on we of on purpose. our performance

leader We an even market position in are biologics. the in stronger injectables with

take to in higher-growth long-term financial our areas in construct market Thank I'm we're future And and margins focus We questions. demand market-led flow. once execution, that our will with a with confident investing growth achieve strategy drivers. Operator, cash the ready are expanded and we you. capital on normalizes, proven

our And Instructions] Jacob comes [Operator from with Stephens. Johnson first question

the organic Congrats on quarter. first I guess on just the growth guidance.

realize guys lower And along had growth but proverbial expectations really of organic fee the there of just out? the XQ, I the prior you about called talking a $XX is that got prior did a end out, your then worse quarter? Or the was XX was million of there. this strong you bps that something versus in you anything lines contemplated range. You we're But guys that can obviously kind good narrow that guide call guidance, guidance? was towards that

that. take I'll Jacob,

achieved contemplated. second question, to we based the with agreement on that. achieve that an the part It million $XX customer, had On volumes our we obviously and was of was the

to surprise we a So it -- wasn't us.

the change. we itself, expectations. The orders really real change and guide difference QX some a really On rounding so is on QX it's material timing when to from delivered customers' no QX, for on just

on again, the year. outlook real So no to change our

with levels? your getting intra-quarter, into how post Can your it. of Got return talk sticking you that back to quickly about once you could just those XXXX for to profile to you, to you the kind LRP and to to maybe margin levels destocking margin profile And potential back return of you mentioned kind growth. visibility get

Yes.

get we LRP, also down XXXX mix the When demand back levels. business to to and really then it's our to normalizes. to that get point normalizes we back within adjust and our margins the So when

So normalization. and it's impact really of a then that mix level demand

question next from Solow with comes Larry CJS Our Securities.

obviously, destocking? little slower the I the And bit parse was especially all pretty demand the it the sound good guess relative guess, any timing on customer little out? on side? first quarter, quarter to expectations. end too. more itself, bit question, just higher solid the a like it And that of Or just driven more guy of way I Was kind a on in was a there's to does of, quarter, maybe

really that was customers. QX continue in a made in to with observed we that commitments And secondly is around couple what a we absolutely, of No, Larry. Yes, customers they is and our a on for our have and One few within of execution, deliver deliver factors. some accelerated ahead were us cases, they programs little of are planned contemplated half the to second of their asked -- already XXXX. schedule, but the

it's us QX. So given has additional really around growth mostly timing that in

at Got year look putting least but Eric, get it's does we normalized feel But actual could guys a have year. full you more fully know does like much you. of don't forward? you an it normal without too the it number maybe look recovery, confident And for out, do for not to I that -- you going out you we or kind that like relatively destocking XXXX, to demand a on begin inventory as guys are perhaps early at least little sound feel like it,

Yes, is of in areas the and continue traction that business we very very there. our factors focus attractive very number is Larry. underlying There's a is a strong, One in the to flight, around of positive. very, couple initiatives are and and of participate

kind particularly we believe about consistent the speak. That in earlier, call, destocking, the mostly as what's happening. quarter the pharma what going was to what -- we our we have do kind of seeing felt We're last highlighted in we out that's said to basically, of in been We play speaking And we which normalized is business. has consistent XXXX. on

return that QX to say And did little in QX. throughout biologics, would in that kind that, of a bit we see be can you a trends area. We're of in particular growth little improving seeing but so that bit and

we out So as play some out we And do did is. see generic into still XXXX. go then with and that that to customers we do call continue destocking

the our so because a even time. tends today, be positive this my to consistent I let's 'XX in through around it's more little But signs business the about we QX were with in before of customers what see with conversations and -- we there was to So starting point comment at stabilization having conversations. those to get comment

appreciate Great. I that really color.

one feel year thoughts forward. question, like 'XX I peak this plans just is if Just squeeze of can roughly. could CapEx on Any Does this be going or Bernard? similar last sort a that,

seeing those CapEx, that where to we for February. is review based to 'XX would a again, we're add see programs. growth, trend see, -- we But level give demand, guidance -- we're we continue are get XX increases It's that need of that continue next, the and Yes. we'll to capacity that's But over and to on think I at CapEx on where be looking it in something and to say, we back the we'll the more looking the what will to months, Larry. I normalized starting add, to we'll XX

And question our next with Paul from KeyBanc. comes Knight

built and the Grand Phoenix devices, follow-up could we comment Michigan line get as on Dublin is is, injection producing? an well? mean Rapids, kind of does a the update and And about that Eric, facility wearable then

Paul, Yes. the question. thanks for

really I'm to facility the twofold, expectations, SmartDose, on product brand-new the high-quality just correct. That producing commercial and did together the put has that in you're now into approval of of from receive and FDA a proud manufacturing ramp-up our started Phoenix market. first market. that's They're the excited meeting we're where team On And really ramp-up. that go the about QX, really going team that the a particularly level one capability to facility, for been new of we and

ramp-ups a these we and time. start-ups pleased. And take as you very of I'm do know, lot -- So

what regards we the Contract to -- Manufacturing to throughput. are get facilities very peak initial be customers to the up support GLP-Xs. is results that So facilities these investments Grand ramping X I call to are Dublin, speak. the are that Rapids, going as On and take on positive. In focused But really able still to Grand to our and quarters Michigan, it's very, several in Rapids

producing phase. We is it are but in product, commercial ramp-up still

get you X-stage levels quarters bit we of This a what a As the expect X our a kind it's ours probably customers throughput. On good approach. longer. little expect really know, that takes to Dublin, to X to that and is

The that shortly, GLP-Xs. Manufacturing, that commence manufacturing Contract drug for communicated And is just devices also again, ramps but before, And up, first in the as adding probably handling. XXXX. the will of early reiterate, we're already facility, that to

device We're on really Product our contained with that that and the going So for us taking finished because we'll and services customers. product or focus help our particular manufacture a not we're to also -- High-Value but high-value complete really Manufacturing, excited a expand that playing it's drug be our just there it margin a about so solution out business. adding revenue that Contract capabilities that's in put

lines. time executing and I'm see planned, now. They're are production right sites. on future different us as they're near excited from So full The teams both the in to within --

the added of also line, X as we're Just another product. implementing to the drive production progress we've then currently semi-automated to XXXX, customer side, that's levels meet and Phoenix greater be that What also for of efficiencies, in is through that's manual we'll we demand phases. a what line utilization automated fully ramping. And on kind and

that will happen XXXX. throughout So

next expect we in XX see X to to improvements So that margin line the months. product over

next America. question of comes Michael Our Bank from Ryskin with

comments from on schedule. back to benefiting some some Going of some ahead meeting timing, your XQ of customers

destocking curious little in terms Or of fall of X or normalizing timing can is the that or in pharma and of in Was Was other delivered backfill? into it X in a to broader you've dig about was where if terms benefit? more queue the of are you those backlog? And it large you you behind sort in that. bit there them to XQ, orders? Just -- there into orders biologics? talked work now that customer behind And other completed them are there it

thank primarily our you in the the I isolate for customers X question. it was won't areas Michael, Yes, it customers, X or and did to that with The is of somewhat we work broad. biologics pharma. and

schedules specific customers specific already able it, plans, support brought production they were requests. meet these our And so but and these We their but needs are be demand. in our to products, our obviously on reasons their had there's behind to forward to

think into later we continue we as comment do this customers. won't quarter see in will as right versus the about QX. if orders, replenish little their into speak those to our orders now, we the of bit reason products But come why in be QX But as we particular obviously, a year, those call to for Now you obviously XXXX. out of that's earlier delivery we rest customers QX for ready respond particular the

the That's top quick talked changes the Okay. for follow-up helpful. And the line you in on the -- a through guide.

think operational. the $X.XX you I you comp, $X.XX, $X.XX by the EPS, million that third Is benefit, $X.XX but -- quarter? that's of was by For the $XX talk driven the saw through that the there. FX, stock-based in was the $X.XX us raised one-time midpoint $X.XX mix, incremental Just

things. this. driven of number Mix of a It's by part was

little initially than operating bit was anticipated. margin we would Our have a stronger

also one and thing. an not just business And managing ongoing costs so it's within to mix our margin on in improvement drive EPS, improvement that and basis really managing

with from David Windley And question Jefferies. comes next our

used asking also And the in Nova-brand your simple think the also today, we comments in At that. the And about the heard conference a that's I that first, guess, noted that quarter, brand first you had I question, a commentary in I NovaPure. know noted time of you did I use today. you've I talked but risk at --

headwind category. of how maybe you be or in it Nova source same some includes, parts is, to broad seem that of brand the is they distinctly And talk different it in what about others? is what the and it new how So Could source the it? of is growth

for good Thanks a us Dave. joining Yes, this question. It's morning.

is version highest-quality the in And Nova then FluroTec; encompasses laminated the -- pharmaceutical more of the in NovaPure in the what that the quality And is coding. NOVACHOICE. find adopted you'll tends nonlaminated is One area NovaPure, So is highly product. called be version our is what's principles brand to and the adopted require which doesn't design area. biologics with NOVACHOICE

the so that's products. nomenclature of And the

it on NOVACHOICE, Now depends segment. the

is, that some QX. our biologics, occur support in NOVACHOICE, So the NovaPure as we and out as really We us know, key had bit that's adopted little you called the We again, anticipate throughout for GLP-Xs then mentioned, of customers. where into is XXXX. I the a destocking in in solutions that QX. to going one And well

really our the And to so able as we're that customers starting our rate of support also see Westar we're area. with that RU ramp-up the you participation high can that in we imagine, to them and in GLP-Xs, provide NOVACHOICE

how it's the So defined, X. Dave, that's between

If helpful. I'm squeeze ask to -- could going follow-ups. Very I X

please? So is? pricing on or of So you've NovaPure? what talk then in How And is willing on think which wallet rate your I your to specced look remaining definition to just is in be about, terms similar rate answered, that you share and comments So and dual-sourced the participation share, NOVACHOICE in very on NOVACHOICE rate? wallet you high, would your the about just you're the Eric, participation been then about does very price participation you versus otherwise what sold product. are consistent secondly, believe

is margin XX% between NOVACHOICE $X.XX XX% per ASP, on $X.XX PV Dave, unit of kind Yes, to to perspective.

there that changed. percentage and we these the our hasn't to we the you examples, and the molecule, which seeing a where -- the mean we that sourcing. -- So code of differentiator, is cases a barrier on of right, few participation need of significant high is in is very drug between are that do rate, see we in drug specced we And user and dual NovaPure, in nonbarrier. And regards the the a see you're -- what barrier from key quite and product. to particular do as are basis the continue -- filings at between FluroTec far we difference But look our companies is of I are again, as

volume If we're all particular like that player you're from -- talking about a in GLP-X, a perspective. key really area space from

and that's more -- dual-sourcing on more not is launches, consistent on existing as capabilities, the So Yes, frequent, areas. testing other biologics not -- as some it's new look molecules in in we but at it's the that's pretty there for and marketplace. for

next Our comes William from question Matt Blair. Larew with

I Gross ask Manufacturing. were basis about nearly points wanted to margins Contract up there XXX sequentially.

referenced scaling of capabilities -- in or the and X margin also Rapids story new side. higher Grand been years the and with obviously Proprietary expansion Dublin adding X You've capacity over at call revenue Most it, margin potential. last, on has the Products

Just moving wonder quarter Manufacturing what for window potential could as this the if you is Contract into maybe a forward. using

Matt. Yes,

think is us I slight scale bit a little the Contract for our is handling profile business Manufacturing But comes over see XX out that different months, XX a uptick of to that as like Manufacturing for on on to Contract next you're board the because time. to going if business. looking very we take drug a margin

So anticipate bit be variability of to quarters that that's product pretty I they work level mix now. We teens. or with Contract and what little a within Manufacturing consistent the DA of That's between of would kind get engineering relatively are involved. consistent depending the on high margins around

step-up see CM. where in a So it's longer significant would the term within we margins like more

Okay.

the your of the a strong you versus from extent union As to where the in compare It's of terms reporting. bit to in also follow-up, And can hard cadence you outside opportunity? times of today the and of again, to of from you the that today, you sales updated go-forward of their some number the growth destocking, GLPs any to share themselves guys called companies sort we on to your drug offset benefit see state Could some the a market of what see as size might a as space. that? you to of thoughts maybe a quantify out an business

that Correct? sure just clarify, make just focused Matt, heard on I GLP-Xs. want correctly. specifically to just to I we're

Correct, Yes, correct. Eric.

Great. Matt. Okay. Thanks,

just Sorry, absolutely. I sure heard I correctly. want make to Yes,

how X proprietary, would Contract we our and a agreements we demand are in the is refer take not So we then the in play, will areas: about elastomers which future we positioned, one look we place But area's market. seals; our in demands of and on them at of the talk play in GLP-Xs I the and are we where Manufacturing. customers. if -- the the the to other

Let on I'll move participate, for example, I do me earlier the mentioned to investments that proprietary. around, Grand then just and Manufacturing quickly, auto-injectors manufacture in to touch and Contract Dublin back pens. we as assemble in and In also Rapids area, the

in want take we that. projects is -- capital-intensive. what So competitive. on do participate But you heavily that selective it's as on or we We're it's highly can tell, initiatives because to

selective. we're with so it that in And participating and area, does but it's very support us our large customers,

dependent it's be and consumption, the growth, whether on a pen patient the by auto-injector. will so proprietary On that -- way, side

or it it's obviously vial been, in then stoppers, side, a proprietary have their there the we're we And On is will with configuration, continue producing configuration. to if if very high we the pen do we as that be. auto-injector, as we is also an and on forward. insulin needed, are that if far sheeting, volumes going their the And provide a plungers

We have really we forecast dimensioned, -- haven't Matt.

Jersey very what really called already support is put capital it's similar out of in. need we that We more really other investments require, We what we which that types a in that haven't at forward lot that we like as Eschweiler. to to finishing need, starting around installed, do do forecast Kinston. we but the of area look time, into we looking with HVP on are on to to a finishing the the to looking at. We're able putting you as are it HVP. And fungible the to area, based be maybe we working with our that's biologics If put it over up some and positive. customers growth, it's pick also specific know, is is in But we that Shore customers

But fortunately, needed. thesis where our we investments supports the So really growth area years, that's this be, over particular last will going the when forward. investment and have in of kind because of the few if

from comes question next Our Justin with DB. Bowers

finish at with line around you, versus And to standard some different year. Can are we're just just amongst the in high NovaPure the respect think FluroTec? to others decrementals then closer talk inning had versus level, versus be components, this you you margins. maybe there the let's part high say, about are would the two a what pretty -- And destocking? you've then like,

normalize, incrementals above way to the begin volumes construct? greater on is back As have up any there you wouldn't and reason why maybe

Yes.

me Justin, been equal Bernard, entire by But take the and/or portfolio. the the the that portfolio part. with that you by the way, think really the of communicating first and not the we are to consistently mind, don't I then, driven let customer area, where kind is part regards -- In destocking we've product product portfolio the way second it's across market is if segments.

been we've that clear pharma that area, more we've seen pretty normalize so And recently. the small in the molecule,

year the end, about see QX. bit been we in a going few that's conversations view, getting the closer take And in you drug patterns it delivery for our containment, more QX. continue positive the customers demand, the you we clear the XXXX. QX. in at through to do used spectrum, with to see and normalization the to first we there off consistent is do the very while it's of is believe end, customer from our we first mentioned, to about book part in devices outlook. If -- see of point And so the we more let's say. area, that to the as forward, -- future XXXX. Biologics, about for see particular think that believe a that table particularly if discussion we'll go if update from last as we'll continue that we a some we We destocking feel, conversations, our to that look products order let's of we And the to we at but future starting -- part little it's we've pretty biologics, So you closer look going we're order want of

deliver it, out how aggregate it it's on a we look on as at and but started mix make call. didn't -- total customer on quarterly it view. that's keep you it's point destocking about And So that is And the give I we an eye segments. that, let's to based the we sure we from playing and pretty think last call that we going as forward. reassess an communicate, we'll of

conversation, margin that? the cover Bernard, So can you

Yes.

our through XXX where year, per at tend go the and generics, is if we would we was grow basis mix and product you 'XX, typically So normalizes the back to over margin cost expansion mix what that's HVP margin, then and levels by our on what get that sales. into look that would within -- and HV demand margin prior back pharma. I lot XXXX saw in when we we what look seen and occurred destocking has a that biologics seen expect at see our would points that. this long year to destocking of driven we impact normalizes to 'XX, more off When than growth operating of And and term, the have and been of much within we've would margin shift. obviously, then kind greater we that of would when the XXXX

the like the expect back to get engine to need that that. of of first and biologics expand. start starts that time. margin And happen over construct we start So levels that growing will when And power that confident off levels growing shows again margin then normalized we growth, is see pre-XXXX of we We're have. and thing back to to would to gets you

from comes Research. DeBourcy Thomas Nephron with question next Our

[indiscernible]? kind around, a terms I if individuals you customer wondering cadence seen back have are had guess I also orders. if guess, generalized question of market, customers that or just others, maybe in seen through behavior Was change a frequently more in bioprocessing [indiscernible] [indiscernible]. of customers you've I the could versus go they've how ordering

a speak hearing microphone it move the little to question. up, your having maybe to just We're be trouble Would a please? or apologize. little I closer possible

Sorry, me? you hear can

Thank Yes, you. better. much

Okay. and doing way. from chain customers was, kind supply ordering smaller question I companies in versus, orders are more some that I more of of customer cadence guess, cadence and it you kind at apologize. and you of kind all -- to wondering seen whether We've go a of general kind My typical bioprocessing to historical I guess, there? orders expect or was had their there if any timing to of specifically around frequently heard changes that back

the the our time in it's at thanks order customers, with line period. pattern for And with look question. more -- we pre-COVID as No, right when Yes. we now

customers than give to much fashion, the our that, am pandemic. When Products, like and or times out, It's to secondly think -- in than to order. capital, it, able more the And on of the period weeks better -- as pointing starting we're the support the have core higher so of with invested but if to they the -- of in pandemic is to equal different recall XXXX of did the get for customized. But High-Value normalized end our if particularly not lead during you're proud idea, of XXXX. drivers use more And there's team that. last, you is we on pandemic to make were I I on during just I an the more also into time, highly X we multiple materials -- because online also timely in XX how time call you to a that's going have demand we the with and or the say X then as I capacity the the environment. with business, not One, sites, our with think pre-pandemic. is, very stabilized normalized it significantly

during reaching and pandemic, -- weeks. to XX the we were XX So

a So it is difference. significant

because seeing ability effect confident are just times each our the product order and every from deliver highlight to one pharmaceutical X we're and that time I today our lead there's to their chain more why So really customers request factors market one and time, in comfortable it. was other want they that the from much change: supply patterns multiple sites on

are but change. So hopefully, seeing a I your addressed question, we

I'm John remarks. further Sweeney I closing this time. to to would like at showing it no back for questions turn now

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