Thank you for standing by, and welcome to West Pharmaceutical Services' 4th quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, it will be a question-and-answer session. To ask a question during the session, you will need to press star one-one on your telephone. To remove yourself from the queue, press star one-one again. I would now like to hand the call over to Vice President Strategy and Investor Relations, Quintin Lai. Please go ahead. Thank you, Latif. Good morning and welcome to West's fourth quarter and full-year 2023 conference call. We issued our financial results this morning, and the release has been posted in the investor section on the company's website located at westpharma.com. This morning, we will review our financial results, provide an update on our business, and present an update on our financial outlook for the full year 2024. There is a slide presentation that accompanies today's call, and a copy of the presentation is available on the investor 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 securities law. These statements are based on our beliefs and assumptions, current expectations, estimates, and forecasts. The company's future results are influenced by many factors beyond the control of the company. Actual results could differ materially from past results, as well as those expressed or implied in any forward-looking statement made here. Please refer to today's press release, as well as any other disclosures made by the company regarding the risks to which it is subject, including our 10-K, 10-Q, and 8-K reports. During today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, and adjusted diluted EPS. Reconciliations and limitations of the non-GAAP financial measures to the most comparable financial results prepared in conformity to GAAP are provided in this morning's earnings release. I now turn the call over to our CEO, Eric Green. Thank you, Quintin, and good morning, everyone. Thanks for joining us today. We'll start on slide 5. Last year, we celebrated West's 100th anniversary of groundbreaking healthcare innovation, which is one of many proud highlights shown on this recap slide. I also want to thank our team members who are connected by our strong responsibility and shared values that continue to help us succeed each day. Now, turning to slide 6, where I'll cover three main topics. First, we will examine the drivers of 2023. Second, we will discuss the challenges ahead in 2024. And third, we will talk about the drivers of growth that will return West to a long-term financial construct of sales and margin expansion in 2025. Let's begin with our financial results. I am pleased with the strong base growth in 2023, which more than offset a decline of COVID-19-related sales of approximately $320 million. Excluding pandemic-related sales, we had strong base overall organic sales growth in the mid-teens. Driving this base growth is the expanding customer demand for our high-value product offerings, both components and devices, and for our contract manufacturing services. During the year, we made great strides with our capital expansion plans across our global network. For example, in Kingston, we expanded our footprint with new NovaPure capacity, and we're in the process of a significant expansion in our HVP processing capacity. At our Grand Rapids contract manufacturing site, we brought online new capacity for a customer's injection device in late 2022, which contributed to growth in 2023. We also have been able to successfully address our backlog of long lead times for certain products. This has been a challenge since the start of the pandemic, and thanks to the hard work of our teams through both optimization and capacity expansion, we have exited the year with normalized lead times. Moving to slide 7. As we turn our attention to 2024, we are facing several challenges to our growth model, as indicated in our preliminary outlook from October. With greater visibility of the changing market landscapes, we expect 2%-3% organic sales growth for the full year, or about 5%-6% points lower than our preliminary outlook. This difference comes from four main factors. First, we had expected flat COVID-related sales this year. Instead, demand continues to decline, which resulted in about a 1% point decrease in organic sales. Second, timing of HVP device manufacturing capacity coming online to satisfy customer demand has been pushed out, causing a percentage point of headwind. Third, timing of a customer's upgrade to a higher HVP tier has caused a percentage point of headwind. And finally, fourth, a more widespread destocking is causing approximately 2%-3% points of headwind. Towards the end of the year and into January, the industry inventory management trend that other life science tools companies have been experiencing has now reached our segment of the injectable drug value chain. While we thought we might see some impact in 2024, we were surprised with the breadth, magnitude, and speed at which customers changed their forecast. In several of these cases, customers expressed to us the same sentiment at the amount of forecast changes that were being handed to them. As we look to overall quarterly pacing for 2024, we expect that Q1 will have the largest negative impact due to destocking, as well as timing of new HVP device capacity and customer-led HVP upgrade. We expect in Q1 that proprietary products will be down by a high single-digit decline. We expect some effect, but to a lesser degree in Q2, with positive proprietary products and consolidated organic growth. We expect the second half of the year to have better growth with Q4 in line with our long-term financial construct. As we set our 2024 guidance and quarterly cadence, we see several areas that support our expectations. First, our February order book for the second half of the year has a higher coverage ratio than prior pre-pandemic levels. Second, we have some customers that are expected to be able to produce more drugs as the year progresses. Third, we expect HVP device capacity to improve in the second half of the year as we implement process modifications that were designed to improve manufacturing throughput. I am disappointed that we will not achieve our usual full-year organic sales and margin expansion in 2024. As I've outlined, outside of further COVID demand reduction, some of the impact is time-related to new capacity and timing of customer upgrades. As for destocking, this is an industry-wide situation, not a change in market share or patient demand for drug volumes. Looking beyond 2024, we continue to be bullish on our growth construct. And our teams will have another active year of capital investments in 2024. Moving to slide 8. We will be expanding our industry-leading capacity with major HVP expansion projects in Jersey Shore and Eschweiler, as well as other projects across the global network. Another driver of growth with a bright future comes from our HVP devices, which includes our injection delivery device platforms, Crystal Zenith containment solutions, and admin systems. HVP devices had very strong double-digit organic sales growth in 2023 and now represent 10% of overall sales. West platforms are an integral part of our customers' drug-device combination products that are making a difference to patients. This year, we have had multiple capital expansion projects that will increase capacity for SmartDose, SelfDose, and admin systems, with some expected to come online in the second half of 2024 and fully online in 2025. As mentioned at the outset, contract manufacturing had growth contribution from new capacity at our Grand Rapids site to support a customer's injection device platform. Looking ahead, we're excited to have started a significant expansion at our Dublin facility, which is already dedicated to contracted demand for future injection device manufacturing. We expect to be completed and validated in 2024, which places us in a great position for 2025 growth. I also want to take some time to talk about the dynamics of future demand related to our growth drivers for HVP components. As you know, we have been building HVP capacity for several years and expect it to continue to do so in 2024. We see a robust runway of volume growth over the next few years. As a foundation, we expect volume growth of existing drugs with increasing aging patient populations, expanding geographical reach, and evolving treatment guidelines and market conditions. In addition to overall volume growth, we continue to experience and see certain drugs have breakthrough growth. For example, we're experiencing a similar surge in demand for components associated with drugs treating diabetes and obesity. Our responsibility as the industry leader and primary packaging is to be prepared for incremental jumps in demand. And lastly, the area with the most potential for our future growth is our HVP capacity to support and mix shift. For mix shift, we see a combination of volume from new drugs that enter the market and from legacy drugs that upgrade from either a standard component or lower to a higher HVP category. The mix shift of legacy to HVP has historically been a smaller contributor for us compared to contribution from newly approved drugs. However, with the industry landscape changing, regulators are introducing new regulations for higher quality, lower particulate, and more standardized solutions, and therefore, customers are looking to upgrade their standard primary components. When we look at that over the next few years, we estimate that several billions of our primary containment components in standard form could benefit from a mix shift to our modern formulation and HVP processes. We recognize this mix shift will take time. But we anticipate as new regulation changes are enforced, this adoption will accelerate. By considering our combination of growth drivers from volume, price, and HVP mix shift, we can confidently assert that we'll be well-equipped to navigate the challenges and continue to fuel our long-range financial construct of 7%-9% annual organic sales growth and at least 100 basis points of operating margin expansion per year. Now I'll turn the call over to Bernard. Hey, Bernard. Thank you, Eric, and good morning. Let's review the numbers in more detail. We'll first look at Q4 2023 revenues and profits, where we saw low single-digit organic sales growth and an increase in diluted EPS and operating profit. I will take you through the drivers impacting sales and margin in the quarter, as well as some balance sheet takeaways. Finally, we will review our 2024 guidance. First up, Q4. Our financial results are summarized on slide 9, and the reconciliation of non-GAAP measures are described in slides 17 to 21. We recorded net sales of $732 million in the quarter, representing organic sales growth of 1.4%. COVID-related net revenues are estimated to have been approximately $7 million in the quarter, an approximate $48 million reduction compared to the prior year. Looking at slide 10, proprietary products organic net sales declined by 0.3% in the quarter. As we anticipate it, in addition to the COVID decline, we continue to experience a destocking of inventory by certain of our customers during the fourth quarter. High-value products, which made up approximately 75% of proprietary product sales in the quarter, generated low single-digit growth, led by customer demand for HVP components and devices. Looking at the performance of the market units, the pharma market units had low single-digit growth, led by demand for Daikyo and NovaPure components, partially offset by a reduction in sales related to COVID. The biologics and generics market units experienced low single-digit and mid-single-digit declines, respectively, due to a reduction in sales related to COVID-19 vaccines. Our contract manufacturing segment showed high single-digit net sales growth, led by an increase in sales of medical device and diagnostic products. We recorded $278.2 million in gross profit, which was $16.1 million, or 6.1% higher than Q4 of last year. Our gross profit margin of 38% was a 100 basis point increase from the same period last year. Our adjusted operating profit increased to $159.9 million this quarter, compared to $158.7 million in the same period last year. Our adjusted operating profit margin of 21.8% was a 60 basis point decrease from the same period last year. Finally, adjusted diluted EPS rose 3.4% for Q4. Excluding stock-based compensation tax benefit of $0.01 in Q4, EPS increased by approximately 6.4%. Now let's review the drivers in both our revenue and profit performance. On slide 11, we show the contributions to sales growth in the quarter. Sales price increases contributed $39 million, or 5.5 percentage points of growth in the quarter, as did a foreign currency tailwind of approximately $18.5 million. Offsetting price was a negative mix impact of $29.3 million, primarily due to a reduction in COVID-19-related net demand of $48 million and destocking trends in the sector by certain of our customers. Looking at margin performance on slide 12, proprietary products fourth quarter gross profit margin of 42.7% was 110 basis points higher than the margin achieved in the fourth quarter of 2022. The key driver for the increase in proprietary products gross profit margin related to sales price increases, offset by inflationary pressures at our plants and mixed from the reduction in COVID revenues. Contract manufacturing fourth quarter gross profit margin of 17.9% was 250 basis points greater than the margin achieved in the fourth quarter of 2022. The increase in margin can be attributed to sales price increases and a favorable mix of products sold. Let's look at our balance sheet and review how we've done in terms of generating more cash. On slide 13, we have listed some key cash flow metrics. Operating cash flow was $776.5 million for the year, an increase of $52.5 million compared to the same period last year, a 7.3% increase. Operating cash flow in the period primarily benefited from favorable working capital management. In 2023, we spent $362 million on capital expenditures, a 27.2% increase over 2022. We continue to leverage our CapEx to increase our high-value product manufacturing capacity and our contract manufacturing capacity. Working capital of approximately $1.26 billion decreased by $135.9 million from 2022, primarily due to an increase in our current portion of long-term debt and reduction in our cash balance. Our cash balance at December 31st, $853.9 million was $40.4 million lower than our December 2022 balance. The decrease in cash is primarily due to increased CapEx and share repurchases, offset by our working capital management. Turning to guidance, slide 7 provides a high-level summary. Full year 2024 net sales guidance will be in a range of $3-$3.025 billion. There is an estimated headwind of $8 million based on current foreign exchange rates. We expect organic sales growth to be approximately 2%-3%. We expect our full year 2024 adjusted diluted EPS guidance to be in a range of $7.50-$7.75. Also, our CapEx guidance is $350 million for the year. There are some key elements I want to bring your attention to as you review our guidance. Estimated FX headwinds on EPS has an impact of approximately $0.02 based on current foreign currency exchange rates, and our guidance excludes future tax benefits from stock-based compensation. I would now like to turn the call back over to Eric. Thank you, Bernard. To summarize on slide 14, our proven growth strategy continues to deliver unique value to the breadth of our high-quality product offerings. This is evident by our robust, committed order book. Despite the headwinds and challenges in the sector, our team is committed to overcome these obstacles to meet the anticipated growth expectations. I'm confident and excited about the future for West as we continue to make a difference to patient health across the globe. Latif, we're ready to take questions. Thank you. As a reminder to ask a question, you will need to press star one-one on your telephone. To remove yourself from the question queue, you may press star one-one again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Windley of Jefferies. Your question, please, David. Thanks. Good morning. Thanks for taking my question. I'm going to start with an easier one and then a higher-level one. So, Eric, I appreciate the comments that you gave us around the cadence of recovery or reacceleration in 2024. So if I understood you correctly, you said negative double digits in proprietary products. Could one of you talk to where you think overall growth will be, where organic sales growth will be in Q1 all-in, and then how does that ramp through to the fourth quarter? Sounds like it gets to what you would call normal in the fourth quarter. Thanks. Just want to understand that more precisely. Thank you. Yeah, David, I just want to make one correction. Hopefully, I mean, hopefully it came across clear. The proprietary products' anticipated performance in Q1 is high single-digit decline, just to be clear. I would say the majority of that change in our view has come from destocking. While I mentioned two other factors, the majority is destocking, and it's specifically 75% of that destocking is coming from six customers. So I just wanted to kind of give you a little color around that aspect. Bernard, do you want to cover? Yeah. So on a consolidated basis, we would see the growth between 6%-7% or negative 6%-7% decline in Q1. And then, as we said, we would expect to see growth ramping as we move through the year and getting back to construct in Q4. Okay. That's helpful. Thank you. And then a little more conceptually, Eric, you said in your comments, you were emphatic about not a change in market share, not a change in patient demand. You also, though, later said that in your interactions with clients about the breadth, magnitude, and speed of the changes in their forecasts. I guess I would be curious from what you draw the confidence that it's not a change in patient demand if those customers are changing their own forecasts? So I want to understand that. And then in this destocking, is the destocking still more in lower value, either low-end of high value or bulk standard products, or are you now dealing with destocking kind of up and down the product portfolio? Thank you. Yeah, David. So first of all, in regards to when we have our conversations with customers, what they're finding is a combination of two factors. One is as they look at their inventory levels, they see an opportunity to leverage a little more working capital management. In addition to that, you add on the factor that in the beginning of 2023 and all of 2022, our lead times were significantly higher, probably 3x and 3-4x. And what we've been able to do successfully due to both optimization and capital deployment that now is online and keeping up with the demand, we were able to bring those lead times to well before pre-pandemic levels. And so therefore, if you add those two factors together, it gave them confidence to be able to be more aggressive on inventory management. From a destocking look at our portfolio, you're right. One of the areas that was more pronounced was on the standard and bulk areas, but we're also seeing it in some cases in parts of our HVP portfolio. I would say it's across a broader set, but I would say the primary area has been the bulk and the standard area. Okay. Thank you. I'll drop out. Come back in later. Thanks. Thank you. Thank you. Our next question comes from the line of Paul Knight of KeyBanc Capital Markets. Please go ahead, Paul. Thank you, Eric. On the $250 million of CapEx this year, and then I think it was a little higher last year. When does this, for example, last year's CapEx, when does this translate into revenue? Is it what you're alluding to earlier? Is it second half 2024? Yeah, Paul, thanks and good morning. So last year, we did approximately $362 million of capital. This year, we're forecasting about $350 million. And I would say still that same algorithm, about 70%, approximately 70% is growth and 30% is maintenance, just to give you that kind of context. When we look at the type of capital we're putting in, on the HVP capacity, what we're seeing is a transition. So we got NovaPure completed last year, and now we're in HVP finishing processing, which is important for the broader portfolio. And so that will be in line in 2024 and really some benefit in 2024, but really 2025 and beyond. The other area, it should be clear on, it's called about roughly a third of our capital, growth capital is going into our contract manufacturing business. And we kind of highlighted that we've expanded Grand Rapids already. That is up and running and fully utilized. We have a major project underway in Dublin that will be validated end of 2024. This is a significant facility, 175,000 sq ft, that has demand already committed. So we're pretty confident to get that up and running end of the year and producing product for all of 2025. So it will be a good return in a short period of time. Those are the two, probably the bigger projects that are going on, but yes, it's more near-term than long-term. I guess my follow-up and last question would be, you have guided to a long-term growth rate of 7%-9%. Yet in this same period of the last couple of years or so, GLP-1s have emerged as a significant class of therapeutic. Does that square up with your historical guidance of 7%-9% with this GLP-1 demand out there? Well, Paul, that is an area that we've always talked about is that we do feel that could be an incremental upside as that market evolves. I do feel very confident. We feel very confident that we are participating quite well with our customers that are in that space, not just in our proprietary products. As you think about the different formats, whether it's an auto injector or a pen with multiple uses, so cartridges and prefilled syringes. So we do participate in the proprietary side, but we're also participating on the contract manufacturing side, which is kind of driving some of these large investments that we're making today. So we see that as upside to our long-term construct because we would consider that more of a breakout drug, similar kind of effect that we had during the COVID time period. Okay. Thanks. Thank you. Our next question comes from the line of Jacob Johnson of Stephens. Your question, please, Jacob. Hey, thanks. Good morning. Maybe, Eric, just first, following up on that last comment about contract manufacturing. That's a business maybe we don't have the most visibility into in terms of the future growth outlook, but clearly, you're deploying capital into that segment right now. So should we think about that business growing kind of above its historical range for the next couple of years, or how should we think about their term profile on these investments in capacity you're making there? Yeah, Bernard, would you like to take that one, please? Yeah. So we would expect contract manufacturing to be growing within our construct. The investments that we're making in that area are very specific and tied to specific customers and business. And as Eric said, before we make the investments, we have a level of visibility as to the type of commitment we're going to get, and that does support the long-term growth of that business and ties in with our construct. Now, again, we always say if we can do more and there's opportunity to do more, we will. But we feel at this point, it is important to make these investments. Got it. And then just on the destocking and kind of visibility to this subsiding as we maybe get into the back half of the year, I know your portfolio is a bit different than the bioprocessing peers, but it took a while before we kind of found the bottom of destocking or before really kind of numbers bottomed and kind of accelerated last year. Maybe there's some unique dynamics around that. And I think investors and some of us have scar tissue from this. Can you just talk about your visibility into that destocking, concluding, and maybe kind of how firm the order book is the back half of this year? Yeah. So, Jacob, just on the order book, when we look at the order book for the back half of the year and compare where we are today versus where we were pre-COVID, the order book actually looks stronger. So we're a bit ahead of where we thought we would be on that compared to pre-COVID trends and rates. So that's given us a level of confidence in the back half and seeing that, I won't say rebound, but say acceleration back to or trending back to our normal construct growth rates. And so based on that analysis, we don't see it as being a long-term problem. We would expect we'd get through it this year. And as we said in the back half, trending towards into that construct, particularly in Q4. Got it. Thanks for taking the question, Bernard. Thank you. Thank you. Our next question comes from the line of Derik de Bruin of Bank of America. Your question, please, Derek. Hi. Good morning. Thanks for taking my question. So can we talk a little bit about the margin cadence and just how to think about this? Obviously, you're suffering from some headwinds from Kingston not being fully utilized. It sounds like you're taking some headwind from proprietary products. How should we think about the margin impact and exiting 2024? I mean, assuming that this doesn't linger, to the last analyst question, that this doesn't linger and you do have some visibility in the back half of the year, are we back at a more normalized margin rate exiting the year? Yeah, Derek, that's what we would expect to see. Q1, obviously, is going to be pressured from a margin point of view based on what we're seeing from a revenues perspective. We see a high correlation there. But again, we do see it trending back to more normal rates of operating margin as we progress through the year. And it will be a gradual shift, I think, quarter over quarter. Got it. I mean, but just more on that. That's fine. I'll do that. Then can we talk about pricing? I mean, you've enjoyed better-than-expected pricing for the last couple of years. Is that sustainable, or are you getting pushback from customers? Hey, Derek. I mean, we are going to. I know last year, we were between 5%-6% as we guided in the year before. I think we're between 3%-4%. Before that, as you know, the history of this company, we're probably at 1%-2%. We're not retreating back to the history levels. So we're probably more near the 3%+ mark from a net price contribution. And just to be clear, any mixed shift that occurs, we do not classify that as price. So this is pure net price contribution. Got it. I appreciate the commentary on the 75% of this is tied to six customers. I mean, your level of confidence that you can get sort of the pickup in 2Q that you're seeing and going forward. I mean, just is there a chance that this gets moved out again, that it's not going to take stuff? I mean, since you were surprised this last time, just it seems I mean, you're a little bit more limited than, say, what the bioprocessing vendors are going through just given the breadth of the CDMOs and things are there. So can you just sort of what are your conversations with these people, your level of confidence? I mean, do you get surprised again? Yeah, it's absolutely a continued focus for us, Derek. Absolutely. I mean, we're not pleased with the impact it's had on us. We pride ourselves to have pretty much access to a large part of the market. However, based on the conversations and the data we've been looking at with our customers, there will be some still in Q2 that have some destocking, but not as pronounced in Q1. So it's really most of it that we're seeing is really a Q1 phenomenon. Okay. Thank you. I'll get back in the queue. Thank you. Our next question comes from the line of Matt Larew of William Blair. Please go ahead, Matt. Hi. Good morning. Asking about the order book here, I think one thing we saw on the bioprocessing side is at some point during that saga, companies started referencing green shoots or early indicators of order and demand. And then it just took longer for some of those orders to convert or for sort of the green shoots to turn into dollar signs. So just understanding you said that the order book is outpacing pre-pandemic levels, good coverage. What's sort of the level of confidence, whether that's written contractually or something else, that sort of the order activity today will convert to revenue dollars in the P&L as you see them coming in? Yeah. Once the orders are confirmed at this stage, we've pressure-tested a lot of that. So we have a good level of confidence that they will convert into revenues in that period. So I think we've done a lot of pressure testing here over the last month or two to make sure that is the case. And so that will be our expectation, and that's what we're basing our level of confidence on. Again, the order book will continue to build as we move through the year. But as I said, we are ahead of where we were pre-pandemic. Okay. And then another piece of this was, I think you said 1% from HVP manufacturing capacity. And I think if we dial back to Kingston and bring some of that capacity online, obviously, you end up catching up a little quicker than you initially thought. What's sort of the scope of this capacity expansion and sort of the path here to getting it back to where you want to be? Yeah. So specifically on the 1% down, new lines, also automation we're putting into our HVP devices. These are the proprietary devices that we manufacture like SelfDose and SmartDose for our customers. And these are combination devices approved with a specific drug molecule with our customers. So when you think about that specific area, that's ongoing right now of expansion, additional capacity being brought in. The demand's there in hand, and we need to be able to get caught up to be able to support our customers. And so that is on us to make sure that we execute and get that up and running in 2024 validated. We expect that to actually commercial revenues in the second half of 2024 for those specific products. From a components perspective, Kingston and other sites are lead times are very good. And that was more of last year getting them validated and up and running. The HVP processing that we referenced about this year that will have further completion and validation, that is to really help us support customers as they do a mixed shift to the higher end of HVP and also future drug launches that could have larger volumes than we anticipated due to kind of what we call breakout drugs, right, certain categories. So we're positioning ourselves well to be able to support that growth that we anticipate coming in the near future. Okay. Thank you. Great. Thanks. Thank you. Our next question comes from the line of John Sourbeer of UBS. Your question, please, John. Hi. Thanks for taking the question. Maybe just dialing in on the HVPs there on the last question. I think they were around 75% of mix in 4Q. I mean, is that the right level to think about for 2024, or are there dynamics at play that could make shifts up or down with the destocking and the new capacity for the year? John, it's relatively the same percentage ± because the destocking is kind of across broad categories. When we look at growth in our business, particularly in the proprietary, it is led by the high-value products in the component side. That is leading the growth. As you know, we are in a very attractive injectable market and one of the best, the fastest-growing subsegment within the injectable space is biologics. Our participation rate remains very high, continues to be so. And that's where a lot of the HVP growth is occurring, which is causing a mixed shift on the margins. We anticipate that to be still a robust percentage of our overall portfolio. Appreciate that. And then I guess specific to the destocking trends in the various proprietary product segments, I think pharma and generic saw this impact first, and then now it's more broad in the biologics. Do you expect the pharma side to recover faster followed by biologics, or just any additional details from a segment perspective? Yeah, that's good questions. You're absolutely spot on. But when we look at the destocking effect that's happened for us the first half of this year, it is across multiple customer segments, market segments. So it's not just the generics and pharma, but also in some cases in the biologics. So I would say that for us and where we are in the value chain is pretty much across all three sectors. We talk about biologics, pharma, and generics. I guess just on the recovery there, do you expect them all to come back similarly, or is one you see the green shoots more impacting one segment versus another? Very similar of all three. Very similar staging coming back. Appreciate it. Thanks for taking the questions. Thank you. Thank you. Our next question comes from the line of Justin Bowers of Deutsche Bank. Your line is open, Justin. Thank you. Good morning, everyone. So I have a two-parter here, but first, wanted to clarify the cadence and the prepared remarks. I thought I heard prop products would be positive in 2Q and overall would be positive. So just wanted to clarify that and then sort of the step up from 2Q to 3Q on growth. And then the follow-up question would be just on the order book. You said it has a higher coverage ratio than pre-pandemic levels. Can you just help? Is that sort of like a forward 12-month or forward 6-month, or just how do you guys look at it internally and across which businesses? Help us understand what that. Answering your first question, yeah, we would expect proprietary to return to positive growth in Q2. Now, as we said, it's going to step up over the year, so we're not going to see a huge spike, in our belief. So again, there's still a level of destocking, so it's probably low single-digit growth in proprietary. And then on a consolidated basis, also, we would see returning to growth in Q2. And then looking at the order book, we're really looking at on a 12-month basis, so rolling 12 months. Okay. Thank you. That's helpful. And then just to clarify on the margins too, I'm getting to it looks like if I sort of back into the EPS guide with a normalized tax rate, I'm still getting to roughly 90-100 basis points of margin expansion on the low end. Is that the right math, or is there some other dynamics in play there that I'm missing here? For the year? Yeah. No, we would expect operating margin to be flat year-over-year. Yep. Okay. Thanks. I'll jump back in queue. Thank you. Thank you. Our next question comes from the line of David Windley of Jefferies. Your question, please, David. Thanks. Around the horn here. I wanted to ask a couple of follow-ups. Eric, just to clarify for the broader audience, when you talk about participation rate, I interpret that to mean that you're specced in on the product. You and I have talked about how on big customer, big important products, West likes to be in a position of a sole-source position. Can you help us to translate or translate between participation and share? Yeah. I would say when I say when we say participation rate is that when our customers, when they file their regulatory filings, it is pointing towards the West product that's in their filings. And therefore, we tend to have a pretty, let's say, share, it's usually a very large percentage of that, if not all. Do customers in the market look at a secondary source and/or test for that secondary source? Yes. But when we look at our participation rate, it tends to be a pretty large share of the number of the volume of the doses, basically. So that's what we, when we say, that's what we mean by participation. It's a win rate for us, Dave. And it's pretty consistent historically. And we've been tracking that for both ourselves and our partners, Daikyo, at the molecule level. Absolutely. Got it. And then you've talked about well, your market share is 70%. That's not a number that really has changed in a very long time, maybe even higher than that. You've talked about participation rate in biologics being 90% or better. Just elephant in the room, I suppose, in a competitor's conference call recently, talked about a project that they have been included on of a recently launched large molecule. Sounds GLP-1. Sounds very significant and sounds a little bit like a market share take. I gather that your prepared remarks were kind of addressing that, but I just want to throw it out there and ask for more specificity about your participation rate in GLP-1s. Yeah. No, our participation rate in GLP-1s is very strong. And there might be other components that are used in the final packaging configuration that are provided by someone else in the market that's been historically true. But the way we are positioned with our customers in that particular space is very strong on proprietary components, but also on the contract manufacturing side. So I would say that in all cases, when you look at a final primary package and containment, there's multiple elements that go into it. Hence the reason why we're driving towards more of an integrated system approach as we've been talking about building towards. We would like to have more components than just one or two items on that whole system. So yes, others will probably be participating with their own products, but I feel really comfortable where we are with our position. Got it. And then last question for me. From a capital allocation standpoint, it's maybe a two-parter. I apologize. You've talked about CapEx. You've talked about a lot of that being growth. That CapEx number continues to be relatively high in 2024. I guess I want to kind of understand to what extent you're catching up on capacity. You've talked about long lead times. You talked about demand in hand, things like that. Or is there a risk of some mismatch of capacity as you're spending still aggressively on CapEx? And then in terms of alternative uses of free cash flow, stock's going to get dislocated on this news. You bought back stock in 2023. How aggressively might management want to step in and buy back stock as a sign of confidence in the long-term growth outlook? Thank you. Dave, let me address the first part, and then maybe I'll turn over to Bernard on the second part. When I look at the capital that we have in front of us today for 2024, the $350 million, it is true that we would like to be able to get our capital as percentage of sales back to the high single-digit range. However, while 70%+ of our capital is still around growth, these are commitments that our customers we're working with, whether it's near-term or more mid-term, that we need to be able to support. So in the contract manufacturing side, it's very clear. It's very near-term. These are contracts we have agreed upon for a number of years ahead of us that we need to get the installed capacity in place immediately so we can start producing product for them. On the proprietary side, we are anticipating future growth with new drug launches that are occurring and/or will occur. Based on the volumes that we've been asked to be able to support, these are the types of investments that we need to make. For example, HVP processing is not just a NovaPure play, but it's the ability to be able to take our HVP portfolio and support the growth, not just on the volume, but also new drug launches, any particular categories that are going to have outsized growth rates, and then also on this mix-shift effect that is on us today due to regulatory changes requiring higher quality, lower particulates to meet these regulations that are going in place. So those are the drivers why we feel good, confident about the investments we're making because we know the return on these investments are very positive for us and obviously for our customers. And that's the lens that we currently have. Do you want to, Bernard, touch on the capital? Yeah. David, I think it's important to realize for us to deploy CapEx in this way, it takes time for us to layer in capacity. It takes 12-24 months. So based on just back to Eric's comments, what we're seeing from a demand perspective, we need to layer that in at this time so we don't actually run into long lead times like we experienced in COVID. Then it's difficult to respond to growth in the market and not capture all the opportunities. So that's the thinking behind layering in this capacity. Again, it's around very specific areas. We do expect our CapEx to kind of level off here, possibly after 2024, because we have a lot of the investment done. Again, it's a very deliberate and disciplined approach to capital deployment. We review it on a regular basis based on all the analysis we have, feedback, our input from our customers, but we need to continue deploying as we've outlined in 2024 to be prepped for the next number of years. Was there another part of that question? Share or purchase? Yeah, on the buyback. Yeah. Again, we have a very deliberate process as to how we deploy the buyback. We review that on a quarterly basis to see where we are, and we will continue to do that and to deploy it where and when appropriate. Thank you very much. I think we have time for just one more question. Thank you. All right. Our final question comes from the line of Larry Solow of CJS Securities. Your question, please. There it is. Thank you. Long wait there. Worth the wait. I guess just a couple first of all, Eric, thank you for a really good description on sort of not a great subject, but the impacts of a lower sales outlook. Really appreciate that. I guess kind of just switching gears to a couple of topics. Can you just give us a little more follow-up on a little more color just on the you mentioned an ongoing sort of regulatory shift. Has this accelerated in terms of requirements for lower particulate? And is that something that's going to drive some of the legacy products to have to switch maybe over, or is that just driving more on new products coming to the market? Yeah, Larry, that's a good question. Thanks for that. And thank you for your patience. Absolutely. No, absolutely. So there's a regulatory shift that's occurring called Annex 1. It's really been driven out of Europe, but it's going to obviously be a driver for a lot of the multinationals because of the requirements across the globe. And what that means is that we have a pretty large part of our portfolio we mentioned in the neighborhood of billions of components we produce each year that what we classify as standard that would be required to move up our what we classify as high-value product portfolio to be able to service them higher quality, lower particulates to meet these regulations. Now, when you look at our HVP mix shift historically, we talked about it for a number of years. The success of that mix shift of West for the last several years has been on really new molecules, particularly in the biologics. As more volume and demand goes in that particular segment, it's higher ASP, higher margin. We've been seeing that benefit at West for a number of years. What we're seeing going forward, that will continue and will continue to because of our because of the participation rate that we have with these new launches. We also now, because of regulatory changes that are being enforced and policies are being changed, it will require a mixed shift effect of existing drugs in the market. That's a great opportunity for us to work with our customers where necessary to be able to transition them into a more appropriate packaging configuration that allows them to meet or exceed all the standards. We're quite excited about this opportunity. We will look at some of the investments that we need to make to be able to support it, particularly around the HVP processing. We're very much aligned to where the market's going. And if I would just share one more comment, historically, here at West, when we introduce new products or capabilities, particularly around our elastomeric components, it's usually coincide with a regulatory change. So as regulations have evolved over time, our portfolio has evolved with and exceeded those requirements, which has always put us in a good position from a to be able to support our customers and ultimately their patients. So I'm feeling good about this that we're ready to be able to address this item. But it will take several years. It's not a 1-year event or 2-year event. It does take several years, but we're ready to go on that journey. It sounds like it can layer in some extra growth on an annual basis if it comes to fruition over multiple years, period. If I could squeak one more in just on the devices and reaching 10% of proprietary high-value proprietary sales, I think that's a nice significant milestone. Is that driven more by SmartDose, SelfDose? Is that the combination of the two? What's really driving that growth going forward? It's interesting. It's actually through all of them, but the biggest drivers have been last year, and we're actually quite excited. Our administration systems or admin systems continue to grow well. We just relaunched a new version of our Vial2Bag 13 millimeter, which partners real well with the 20 millimeter into the hospital healthcare market. In the SelfDose, we're seeing a nice uptick of demand in that market. I'm sorry, in that category with discrete customers and their drug launches. And then in SmartDose, it's an area that we've been focused on for a number of years, but we're at a point now of inflection on volume growth that we have to get ahead of the curve. And that is an area that we're laser-focused on right now. We have a dedicated team with new automated equipment coming online so we can remove the manual processes. It allows us to be more efficient, higher volume, higher quality to be able to support the growth of these launches. So it is kind of across multiple areas, and it's exciting to see it starting to gain traction. Great. Thank you for all the call, Eric. I appreciate it. Thank you, Larry. Thank you. I would now like to turn the conference back to Quintin Lai for closing remarks. Sir? Thank you, Latif. 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 for 30 days following this presentation by using the dial-in numbers and conference ID provided at the end of today's earnings release. That concludes today's call. Have a nice day. Thank you for participating. You may now disconnect.