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美國
證券交易委員會
華盛頓特區20549
表格 10-Q
（標記一）
☑根據1934年證券交易法第13或15(d)節的季度報告
截至季度結束日期的財務報告2024年9月30日
或者
☐根據1934年證券交易法第13或15(d)節的轉型報告書
在從 到過渡期間
委員會文件號 1-8036
wstlogoq319.jpg
西部藥品服務公司
(根據其章程規定的註冊人準確名稱)
賓夕法尼亞州23-1210010
（公司註冊或組織所在地）（聯邦納稅人識別號）
530 Herman O. West Drive, Exton, 賓夕法尼亞州
19341-1147
，（主要行政辦公地址）(郵政編碼)
公司電話，包括區號：610-594-2900
根據法案第12（b）條註冊的證券：
每一類的名稱交易代碼在其上註冊的交易所的名稱
每股普通股面值爲0.25美元的普通股WST請使用moomoo賬號登錄查看New York Stock Exchange
請通過複選標記表示，註冊人（1）是否已在最近12個月內至少已根據1934年證券交易法第13或15(d)條的規定提交所有必須提交的報告，並且（2）是否在過去的90天裏已受到該等提交要求的約束。 是 ☑ 沒有 ☐
請用複選標記表示，註冊者在過去12個月內（或註冊者被要求提交此類文件的更短期間內）已按照S-t規定第405條規定提交了每個互動數據文件。 是 ☑ 否 ☐
√ 大型快速歸檔人   √加速歸檔人   √非加速歸檔人   ¨較小報告公司   ¨新興成長型公司 請參見《交易所法》第12億.2條中對「大型快速歸檔人」、「加速歸檔人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速報告人☑ 加速文件提交人☐
非加速文件提交人☐較小的報告公司☐
新興成長公司☐
如果是新興成長公司，請勾選，表明公司已選擇不使用根據《交易所法》第13(a)條規定提供的任何新的或修訂的財務會計準則的延長過渡期。 ☐
請在複選標誌處註明公司是否爲殼公司（根據交易所法令第12b-2條的定義）。
是 ☐ 否☑
截至2024年10月22日， 72,422,349 股。

目錄
目錄
  
 
項目1。 
 
 
 
 
 
項目2。
項目3。
項目4。
   
 
項目1。
項目1A.
項目2。
第5項
項目6。
   
   

2
目錄
第一部分。財務信息

項目 1. 基本報表

未經審計的綜合收益表
西部藥品服務公司及其子公司
（單位：百萬美元，除每股數據外）

 三個月之內結束
2020年9月30日		九個月結束
2020年9月30日
 2024202320242023
淨銷售額$746.9 $747.4 $2,144.4 $2,217.8 
貨物和服務出售成本482.2 459.1 1,419.5 1,366.8 
毛利潤264.7 288.3 724.9 851.0 
研發15.5 16.4 50.6 50.0 
銷售，總務及管理費用83.5 89.0 253.2 263.4 
其他費用（收入）（注14）4.4 5.6 10.8 22.5 
營業利潤161.3 177.3 410.3 515.1 
利息費用，淨額0.7 2.9 3.8 7.8 
利息收入(4.6)(8.8)(14.8)(18.6)
其他非營業費用（收入）0.7 (3.8)0.7 (3.9)
所得稅前利潤和關聯公司淨利潤股權164.5 187.0 420.6 529.8 
所得稅費用32.4 29.4 70.7 87.8 
關聯公司淨利潤中的股權(3.9)(3.7)(12.7)(14.4)
淨收入$136.0 $161.3 $362.6 $456.4 
每股淨利潤：   
基本$1.87 $2.17 $4.96 $6.13 
稀釋的$1.85 $2.14 $4.91 $6.05 
加權平均股數：    
基本72.8 74.3 73.1 74.4 
稀釋的73.4 75.3 73.8 75.5 

請參閱附註事項的簡明合併財務報表。
3
目錄
簡明合併綜合收益表（未經審計）
西部藥品服務公司及其子公司
（單位百萬）
 三個月之內結束
2020年9月30日		九個月結束
2020年9月30日
 2024202320242023
淨收入$136.0 $161.3 $362.6 $456.4 
其他綜合收益(損失), 淨額(稅後):   
貨幣翻譯調整，淨額爲$(2.5), $0.4, $(0.8和$1.9 的壞賬準備
74.7 (40.9)6.7 (36.9)
按照稅後淨利潤計算的確定福利養老金和其他養老計劃調整0.2), $0.0, $(0.3)，和($0.5和), 分別爲
(0.8)0.2 (1.2)(1.2)
股權聯營公司累積其他全面收益的淨利潤（損失）淨額，按照稅後淨利潤計算的$0.0, $0.0, $0.0 和 $0.0 的壞賬準備
0.2 — — (0.1)
衍生產品淨收益（損失）淨額，按照稅後淨利潤計算的$1.1, $0.8, $0.7和$0.3和), 分別爲
6.5 1.2 2.0 (1.8)
其他綜合收益（虧損），淨額80.6 (39.5)7.5 (40.0)
綜合收益$216.6 $121.8 $370.1 $416.4 

請參閱附註事項的簡明合併財務報表。
4
目錄
簡化聯合資產負債表（未經審計）
西部藥品服務公司及其子公司
（單位：百萬美元，除每股數據外）2020年9月30日
2024		12月31日
2023
資產  
流動資產：  
現金及現金等價物$490.9 $853.9 
2,687,823 524.3 512.0 
存貨401.2 434.7 
其他資產134.2 135.8 
總流動資產1,550.6 1,936.4 
資產：固定資產2,990.7 2,738.0 
減：累計折舊與攤銷1,419.7 1,324.7 
物業、廠房和設備，淨值1,571.0 1,413.3 
經營租賃權使用資產108.0 99.2 
附屬公司投資217.5 210.0 
商譽108.8 108.5 
無形資產, 淨額12.3 15.1 
延遲所得稅37.6 25.7 
其他非流動資產69.3 21.3 
總資產$3,675.1 $3,829.5 
負債和股東權益  
流動負債:  
應付票據和其他流動債務$— $134.0 
應付賬款224.3 242.4 
應計的工資、工資和福利79.6 105.9 
應付所得稅33.4 16.6 
經營租賃負債19.9 17.7 
其他流動負債159.3 155.2 
流動負債合計516.5 671.8 
長期債務202.6 72.8 
延遲所得稅9.4 12.7 
養老金及其他退休福利30.2 29.6 
經營租賃負債82.3 84.5 
延期薪酬福利15.2 18.6 
其他長期負債66.8 58.5 
總負債923.0 948.5 
承諾和或可能存在的事項（注16）
股東權益：
優先股，3.0億股授權；0已發行並流通股數爲175,262股。
— — 
普通股，每股面值 $，授權股數：百萬股；發行股數：分別爲2024年6月30日和2023年12月31日：百萬股；流通股數：分別爲2024年6月30日和2023年12月31日：百萬股0.25；200.0 萬股已獲得授權；已發行股份：2024年9月30日 - 75.3萬股，2023年12月31日 - 75.3 萬股；流通股份：2024年9月30日 - 72.5萬股，2023年12月31日 - 73.5百萬
18.8 18.8 
超過面值的資本23.3 120.2 
保留盈餘3,856.9 3,523.4 
累計其他綜合損失(136.3)(143.8)
其它股權，成本爲（2024年9月30日 - 2.8萬，2023年12月31日 - 1.8
(1,010.6)(637.6)
總股本2,752.1 2,881.0 
總負債和股權$3,675.1 $3,829.5 
請參閱簡明合併基本報表附註。
5
目錄
未經審核的縮短合併現金流量表
西部藥品服務公司及其附屬公司
(以百萬為單位)
 九個月結束了
九月三十日，
 20242023
經營活動現金流量：  
凈利潤$362.6 $456.4 
調整淨利潤以達經營活動所提供之淨現金流量：
折舊112.0 99.1 
攤銷2.7 2.3 
股份報酬14.4 21.9 
處置廠房虧損— 11.6 
資產減值1.9 6.9 
其他非現金項目，凈額(9.7)(13.5)
資產變動
(20.6)(47.3)
經營活動產生的淨現金流量463.3 537.4 
投資活動之現金流量:  
資本支出(272.1)(253.3)
其他，淨額(1.8)(6.6)
投資活動中使用的淨現金(273.9)(259.9)
來自籌資活動的現金流量:  
長期借款164.7 — 
償還長期債務(169.0)(1.7)
融資租賃的本金償還(23.2)— 
股息支付(43.8)(42.2)
基於股票獎勵的收益24.0 42.6 
員工股票購買計畫的貢獻5.6 5.3 
在股份回購計畫下購製的股份(506.5)(261.3)
為員工稅款而回購的股份(5.5)(12.8)
籌集資金的淨現金流量(553.7)(270.1)
匯率對現金的影響1.3 (3.1)
現金及現金等價物的淨（減少）增加額(363.0)4.3 
期初現金，包括現金及等值物853.9 894.3 
期末現金，包括現金及等值物$490.9 $898.6 

請參閱簡明合併基本報表附註。
6
目錄
簡明綜合財務報表註釋（未經查核）

備註 1:  報告基礎

演示基礎：本報告中包含的簡明合併財務報表均未經審核，並根據美國（「美國」）普遍接受的會計原則（「美國 GAAP」），以供中期財務報告和美國證券交易委員會（「SEC」）規定編製。年終簡明合併資產負債表數據源自經審核的財務報表，但不包括美國 GAAP 要求的所有披露。根據美國 GAAP 撰寫的年度財務報表中通常包含的某些資料和註腳披露已經被簡明或省略。管理層認為，這些財務報表包括所有適當的調整，這些調整為正常經常性質的調整，以便公平報表達成財務狀況、營運結果、現金流和股權變化所需的調整。截至二零二四年九月三十日止三個月及九個月的簡明合併財務報表，應與我們截至 2023 年 12 月 31 日止年度 10-k 表年報中所載之西藥業服務股份有限公司及其大部分擁有子公司（可稱為「西方」、「本公司」、「我們」或「我們」）的綜合財務報表及附註一併閱讀。2023 年度報告」)。任何中期的營運結果並不一定是全年業績的指示。

備註2:  新的會計準則

尚未採納的標準已發布

2023年11月，美國財務會計準則委員會（"FASB"）發佈指引，旨在通過改善可匯報部門披露要求，主要是通過增強對重要部門費用的披露以及增強中期披露要求。此指引將於2023年12月15日後開始的財政年度和2024年12月15日後開始的中期期間生效。公司預計該指引的採納對合併基本報表和披露不會產生重大影響。

2023年12月，FASB發布了旨在增強所得稅披露以提供信息，以更好地評估實體業務及相關稅務風險如何影響其稅率和未來現金流量前景的指引。在所得稅率調和中，修訂要求對超過特定閾值的其他類別和有關調和項目提供更多細節的披露。它還要求將支付的稅款信息進行分解，以便於獲得聯邦、州和外國稅款的資訊，並進一步分解為特定閾值以上的特定司法管轄區。該指引適用於2024年12月15日後開始的會計年度。我們目前正在評估這些指引對我們的基本報表和披露的影響，但我們預計採納這些指引不會對合併基本報表產生實質影響，除了擴大的腳註披露。

7
目錄
Note 3:  Revenue

Our revenue results from the sale of goods or services and reflects the consideration to which we expect to be entitled in exchange for those goods or services. We record revenue based on a five-step model, in accordance with Accounting Standards Codification (“ASC”) 606. Following the identification of a contract with a customer, we identify the performance obligations (goods or services) in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize the revenue when (or as) we satisfy the performance obligations by transferring the promised goods or services to our customers. A good or service is transferred when (or as) the customer obtains control of that good or service.

The following table presents the approximate percentage of our net sales by market group:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Biologics
40 %
40 %
38 %
37 %
Generics
 18 %
19 %
17 %
20 %
Pharma
23 %
22 %
25 %
24 %
Contract-Manufactured Products
19 %
19 %
20 %
19 %
100 %
100 %
100 %
100 %

The following table presents the approximate percentage of our net sales by product category:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
High-Value Product ("HVP") Components
45 %
50 %
46 %
50 %
High-Value Product ("HVP") Delivery Devices
16 %
11 %
12 %
10 %
Standard Packaging
20 %
20 %
22 %
21 %
Contract-Manufactured Products
19 %
19 %
20 %
19 %
100 %
100 %
100 %
100 %

Due to the Company's reassessment of product categories, beginning in the second quarter of 2023, certain product types have been moved from HVP Components to HVP Delivery Devices. No adjustments were made to the product categorization prior to the second quarter of 2023.

The following table presents the approximate percentage of our net sales by geographic location:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Americas
48 %
46 %
44 %
45 %
Europe, Middle East, Africa
44 %
46 %
47 %
46 %
Asia Pacific
8 %
8 %
9 %
9 %
100 %
100 %
100 %
100 %

8
Table of Contents
Contract Assets and Liabilities

The following table summarizes our contract assets and liabilities:
($ in millions)
Contract assets, December 31, 2023
$21.5 
Contract assets, September 30, 2024
42.3 
Change in contract assets - increase (decrease)$20.8 
Deferred income, December 31, 2023
$(53.9)
Deferred income, September 30, 2024
(53.8)
Change in deferred income - decrease (increase)$0.1 

Contract assets are included within other current assets and deferred income is included within other current liabilities and other long-term liabilities. During the nine months ended September 30, 2024, $32.8 million of revenue was recognized that was included in deferred income at the beginning of the year.

The majority of the performance obligations within our contracts are satisfied within one year or less. Performance obligations satisfied beyond one year are not material as of September 30, 2024.

Note 4:  Net Income Per Share

The following table reconciles the shares used in the calculation of basic net income per share to those used for diluted net income per share:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Net income$136.0 $161.3 $362.6 $456.4 
Weighted average common shares outstanding72.8 74.3 73.1 74.4 
Dilutive effect of equity awards, based on the treasury stock method
0.6 1.0 0.7 1.1 
Weighted average shares assuming dilution73.4 75.3 73.8 75.5 

During the three months ended September 30, 2024 and 2023, there were 0.3 million and less than 0.1 million shares, respectively, from stock-based compensation plans not included in the computation of diluted net income per share because their impact was antidilutive. There were 0.3 million and 0.1 million antidilutive shares excluded during the nine months ended September 30, 2024 and 2023, respectively.

9
Table of Contents
In February 2023, the Board of Directors approved a share repurchase program under which we may repurchase up to $1.0 billion in shares of common stock. The share repurchase program does not have an expiration date under which we may repurchase common stock on the open market or in privately-negotiated transactions. The number of shares to be repurchased and the timing of such transactions will depend on a variety of factors, including market conditions. The below table summarizes the details of the Company's repurchases of common stock under this program:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Shares repurchased170,771 77,329 1,409,786 753,399 
Total cost of repurchases ($ in millions)$52.4 $27.8 $506.5 $261.3 
Average price per repurchased share$306.34 $360.25 $359.24 $346.86 

Note 5:  Inventories

Inventories are valued at the lower of cost (on a first-in, first-out basis) or net realizable value. Inventory balances were as follows:
($ in millions)September 30,
2024		December 31,
2023
Raw materials$170.3 $172.3 
Work in process80.0 87.3 
Finished goods150.9 175.1 
 $401.2 $434.7 

Note 6:  Leases

A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: 1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment); and 2) the customer has the right to control the use of the identified asset. Lease payments included in the measurement of the lease right-of-use assets and lease liabilities are comprised of fixed payments (including in-substance fixed payments), variable payments that depend on an index or rate, and the exercise price of a lessee option to purchase the underlying asset if the lessee is reasonably certain to exercise.

The components of lease expense were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Operating lease cost$6.4 $4.3 $18.1 $15.0 
Finance lease - amortization of right-of-use (ROU) assets0.3 — 0.6 — 
Finance lease - interest on lease liabilities0.1 — 0.1 — 
Short-term lease cost0.8 1.9 1.9 4.4 
Variable lease cost2.5 1.4 6.3 4.4 
Total lease cost$10.1 $7.6 $27.0 $23.8 

10
Table of Contents
As of December 31, 2023, finance leases were not material. The following table summarizes the finance lease amounts in the condensed consolidated balance sheets as of September 30, 2024:
September 30,
($ in millions)Balance Sheet Classification2024
ROU assets, netOther noncurrent assets$31.9 
Lease liabilities (current)Other current liabilities$0.9 
Lease liabilities (noncurrent)Other long-term liabilities$2.2 

Supplemental cash flow information related to leases were as follows:
Nine Months Ended
September 30,
($ in millions)20242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$26.3 $14.4 
Financing cash flows from finance leases$23.2 $— 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases$36.8 $6.6 
Finance leases$24.3 $— 

As of September 30, 2024 and December 31, 2023, the weighted average remaining lease term for operating leases was 8.5 years and 9.8 years, respectively. As of September 30, 2024, the weighted average remaining lease term for finance leases was 7.0 years. As of December 31, 2023, finance leases were not material.

As of September 30, 2024 and December 31, 2023, the weighted average discount rate for operating leases was 3.84% and 3.55%, respectively. As of September 30, 2024, the weighted average discount rate for finance leases was 4.92%. As of December 31, 2023, finance leases were not material.

Maturities of the Company's lease liabilities as of September 30, 2024 were as follows:
($ in millions)
YearOperating LeasesFinance Leases
2024 (remaining period as of September 30, 2024)
$6.2 $0.2 
202523.2 0.9 
202620.2 0.9 
202715.5 0.8 
202814.1 0.5 
Thereafter37.2 0.1 
116.4 3.4 
Less: imputed lease interest(14.2)(0.3)
Total lease liabilities$102.2 $3.1 


11
Table of Contents
Note 7:  Affiliated Companies

The following table summarizes the aggregate carrying amounts of our investments in affiliated companies that are accounted for under the equity method and our investments in affiliated companies that are not accounted for under the equity method:
September 30,December 31,
($ in millions)20242023
Aggregate carrying value of investments in affiliated companies:
   Equity method affiliates$210.3 $203.2 
   Non-equity method affiliates7.2 6.8 
Total investments in affiliated companies$217.5 $210.0 
We have elected to record non-equity method investments, for which fair value was not readily determinable, at cost, less impairment, adjusted for subsequent observable price changes. We test these investments for impairment whenever circumstances indicate that the carrying value of the investments may not be recoverable.

The following table summarizes the amounts due to and from affiliates in the condensed consolidated balance sheets:
September 30,December 31,
($ in millions)20242023
Payables due to affiliates$24.8 $25.9 
Receivables due from affiliates$2.7 $1.6 

The following table summarizes the Company's affiliate transactions:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Purchases from (and payments to) affiliates$30.1 $34.4 $83.6 $118.5 
Sales to affiliates$3.5 $2.5 $10.7 $8.5 

The majority of the purchase transactions listed above relate to a distributorship agreement with Daikyo Seiko, Ltd. ("Daikyo") that allows us to purchase and re-sell Daikyo products.

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Note 8:  Debt

The following table summarizes our long-term debt obligations, net of unamortized debt issuance costs and current maturities. The interest rates shown in parentheses are as of the corresponding balance sheet date reflected in the table below.
($ in millions)September 30,
2024		December 31,
2023
Term Loan, due July 2, 2027 (6.67%)
$130.0 $— 
Term Loan, due December 31, 2024 (6.32%)
— 81.0 
Series B notes, due July 5, 2024 (3.82%)
— 53.0 
Series C notes, due July 5, 2027 (4.02%)
73.0 73.0 
203.0 207.0 
Less: unamortized debt issuance costs0.4 0.2 
Total debt202.6 206.8 
Less: current portion of long-term debt— 134.0 
Long-term debt, net$202.6 $72.8 

Credit Facility

On July 2, 2024, the Company entered into the Third Amendment to the Credit Facility Agreement, which amended the Existing Credit Facility Agreement. Among other changes to the existing credit agreement, the Third Amendment established an incremental term loan in the stated principal amount of $130.0 million (the “New Term Loan”), which was fully drawn at closing and matures on July 2, 2027. The entire stated principal amount of the New Term Loan is due at maturity and there is no scheduled amortization prior to such date. Together with cash on hand, proceeds from the New Term Loan were used to repay an outstanding term loan under the Existing Credit Facility Agreement in the principal amount of $79.9 million prior to its December 31, 2024 maturity date and to repay an aggregate principal amount of $53.0 million of the Company’s 3.82% Series B Senior Notes due July 5, 2024 issued under that certain Note Purchase Agreement dated as of July 5, 2012.

At September 30, 2024, the borrowing capacity available under our $500.0 million multi-currency revolving credit facility, including outstanding letters of credit of $2.4 million, was $497.6 million.

Term Loan

At September 30, 2024, we had $130.0 million in borrowings under the New Term Loan which were classified as long-term. Please refer to Note 9, Derivative Financial Instruments, for a discussion of the foreign currency hedge associated with the New Term Loan.

Pursuant to the financial covenants in our debt agreements, we are required to maintain established interest coverage ratios and to not exceed established leverage ratios. In addition, the agreements contain other customary covenants, none of which we consider restrictive to our operations. At September 30, 2024, we were in compliance with all of our debt covenants.

Note 9:  Derivative Financial Instruments

Our ongoing business operations expose us to various risks, such as fluctuating interest rates, foreign currency exchange rates and increasing commodity prices. To manage these market risks, we periodically enter into derivative financial instruments, such as interest rate swaps, options and foreign exchange contracts for periods consistent with, and for notional amounts equal to or less than, the related underlying exposures. We do not purchase or hold any derivative financial instruments for investment or trading purposes. All derivatives are recorded in our condensed consolidated balance sheet at fair value.
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Foreign Exchange Rate Risk

We have entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany loans. As of September 30, 2024 the notional amount of these forward exchange contracts was Singapore Dollar (“SGD”) 421.9 million and $13.4 million. As of December 31, 2023 the notional amount of these forward exchange contracts was SGD 601.5 million and $13.4 million. We have also entered into forward exchange contracts, designated as fair value hedges, to manage our exposure to fluctuating foreign exchange rates on cross-currency intercompany demand notes which were executed at various times throughout 2023 and 2024. As of September 30, 2024, the total notional amounts of these forward exchange contracts were Euro ("EUR") 143.9 million and $47.1 million. As of December 31, 2023, the total notional amounts of these forward exchange contracts were EUR 278.6 million and SGD 94.0 million.

In addition, we have entered into several foreign currency contracts, designated as cash flow hedges, for periods of up to eighteen months, intended to hedge the currency risk associated with a portion of our forecasted transactions denominated in foreign currencies. As of September 30, 2024, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows:

(in millions)Sell
CurrencyPurchaseUSDEuroSGD
EUR24.1 26.5 — — 
Yen6,102.9 28.7 11.4 1.7 
SGD43.4 19.0 12.5 — 

In December 2019, we entered into a cross-currency swap for $90 million, which we designated as a hedge of our net investment in Daikyo. The cross-currency swap had an original maturity date of December 31, 2024, but was extinguished in July 2024. In July 2024, we entered into a new cross-currency swap for $130 million, which we designated as a hedge of our net investment in Daikyo. As of September 30, 2024, the notional amount of the cross-currency swap is ¥17.0 billion ($130.0 million) and the swap termination date is July 2, 2027. Under the cross-currency swap, we receive fixed USD interest rate payments in return for paying fixed JPY interest rate payments.

Additionally, we will periodically enter into forward exchange contracts to mitigate our exposure to fluctuating foreign exchange rates on assets and liabilities, other than the intercompany loans and demand notes referenced above, which are denominated in foreign currencies. The Company has elected not to designate these forward contracts in hedging relationships, and any change in the value of the contracts is recognized in income.

Commodity Price Risk

Many of our proprietary products are made from synthetic elastomers, which are derived from the petroleum refining process. We purchase the majority of our elastomers via long-term supply contracts, some of which contain clauses that provide for surcharges related to fluctuations in crude oil prices. The following economic hedges did not qualify for hedge accounting treatment since they did not meet the highly effective requirement at inception.

From November 2017 through September 2024, we purchased several series of call options for a total of 1,106,908 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regard to a portion of our forecasted elastomer purchases.

As of September 30, 2024, we had outstanding contracts to purchase 187,861 barrels of crude oil from September 2024 to March 2026, at a weighted-average strike price of $85.66 per barrel.

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Effects of Derivative Instruments on Financial Position and Results of Operations

Please refer to Note 10, Fair Value Measurements, for the balance sheet location and fair values of our derivative instruments as of September 30, 2024 and December 31, 2023.

The following table summarizes the effects of derivative instruments designated as fair value hedges on the condensed consolidated statements of income:
Amount of Gain (Loss) Recognized in Income for theAmount of Gain (Loss) Recognized in Income for the
Three Months Ended
September 30,		Nine Months Ended
September 30,		Location on Statement of Income
($ in millions)2024202320242023
Fair Value Hedges:
Hedged item (intercompany loan)
$(16.6)$(1.2)$(6.2)$8.7 Other expense (income)
Derivative designated as hedging instrument
16.6 0.7 6.2 (10.0)Other expense (income)
Amount excluded from effectiveness testing
(1.8)(1.5)(5.3)(0.4)Other expense (income)
Total$(1.8)$(2.0)$(5.3)$(1.7)

We recognize in earnings the initial value of forward point components for hedges of intercompany loans on a straight-line basis over the life of the fair value hedge. The value of forward point components for hedges of intercompany demand notes is recognized currently in earnings using a market approach. The expense recognized in earnings, pre-tax, for forward point components for the three and nine months ended September 30, 2024 was $1.8 million and $5.3 million, respectively. The income recognized in earnings, pre-tax, for forward point components for the three and nine months ended September 30, 2023 was $0.2 million and $1.6 million, respectively.

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The following tables summarize the effects of derivative instruments designated as fair value, cash flow, and net investment hedges on other comprehensive income (“OCI”) and earnings, net of tax:
 Amount of Gain (Loss) Recognized in OCI for theAmount of (Gain) Loss Reclassified from Accumulated OCI into Income for theLocation of (Gain) Loss Reclassified from Accumulated OCI into Income
Three Months Ended
September 30,		Three Months Ended
September 30,
($ in millions)2024202320242023 
Fair Value Hedges:
Foreign currency hedge contracts$0.5 $(0.3)$— $2.3 Other expense (income)
Total$0.5 $(0.3)$— $2.3 
Cash Flow Hedges:     
Foreign currency hedge contracts$0.2 $0.5 $— $0.1 Net sales
Foreign currency hedge contracts5.3 (2.5)0.5 1.1 Cost of goods and services sold
Forward treasury locks— — — — Interest expense
Total$5.5 $(2.0)$0.5 $1.2  
Net Investment Hedges:     
Cross-currency swap$(8.1)$2.9 $— $— Other expense (income)
Total$(8.1)$2.9 $— $—  
 Amount of Gain (Loss) Recognized in OCI for theAmount of (Gain) Loss Reclassified from Accumulated OCI into Income for theLocation of (Gain) Loss Reclassified from Accumulated OCI into Income
Nine Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023 
Fair Value Hedges:
Foreign currency hedge contracts$0.7 $(2.3)$(0.7)$4.2 Other expense (income)
Total$0.7 $(2.3)$(0.7)$4.2 
Cash Flow Hedges:     
Foreign currency hedge contracts$0.3 $(0.4)$(0.2)$1.2 Net sales
Foreign currency hedge contracts(1.3)(6.1)3.1 1.5 Cost of goods and services sold
Forward treasury locks— — 0.1 0.1 Interest expense
Total$(1.0)$(6.5)$3.0 $2.8  
Net Investment Hedges:     
Cross-currency swap$0.3 $10.1 $— $— Other expense (income)
Total$0.3 $10.1 $— $—  
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Refer to the above table which summarizes the effects of derivative instruments designated as fair value hedges within the other expense (income) line in our condensed consolidated statements of income for the three and nine months ended September 30, 2024 and September 30, 2023. The following table summarizes the effects of derivative instruments designated as cash flow and net investment hedges by line item in our condensed consolidated statements of income:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Net sales$— $0.1 $(0.2)$1.2 
Cost of goods and services sold0.5 1.1 3.1 1.5 
Interest expense— — 0.1 0.1 


The following table summarizes the effects of derivative instruments not designated as hedges on the condensed consolidated statements of income:
Amount of (Loss) Gain Recognized in Income for theAmount of Gain (Loss) Recognized in Income for the
Three Months Ended
September 30,		Nine Months Ended
September 30,		Location on Statement of Income
($ in millions)2024202320242023
Commodity call options$(0.5)$0.5 $(0.6)$(0.5)Other expense (income)
Currency Forwards(3.2)— (2.7)(0.2)Other expense (income)
Total$(3.7)$0.5 $(3.3)$(0.7)

For the three and nine months ended September 30, 2024 and 2023, there was no material ineffectiveness related to our hedges.

Note 10:  Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

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The following tables present the assets and liabilities recorded at fair value on a recurring basis:
 Balance atBasis of Fair Value Measurements
($ in millions)September 30,
2024		Level 1Level 2Level 3
Assets:    
Deferred compensation assets$11.3 $11.3 $— $— 
Money market funds128.5 128.5 — — 
Time deposits73.5 — 73.5 — 
Foreign currency contracts19.7 — 19.7 — 
Cross-currency swap15.1 — 15.1 — 
Commodity call options0.2 — 0.2 — 
 $248.3 $139.8 $108.5 $— 
Liabilities:    
Contingent consideration$3.7 $— $— $3.7 
Deferred compensation liabilities11.4 11.4 — — 
Foreign currency contracts9.9 — 9.9 — 
 $25.0 $11.4 $9.9 $3.7 
 Balance atBasis of Fair Value Measurements
($ in millions)December 31,
2023		Level 1Level 2Level 3
Assets:    
Deferred compensation assets$10.2 $10.2 $— $— 
Money market funds404.4 404.4 — — 
Time deposits47.9 — 47.9 — 
Foreign currency contracts5.0 — 5.0 — 
Cross-currency swap18.4 — 18.4 — 
Commodity call options0.6 — 0.6 — 
 $486.5 $414.6 $71.9 $— 
Liabilities:    
Contingent consideration$3.6 $— $— $3.6 
Deferred compensation liabilities10.4 10.4 — — 
Foreign currency contracts2.2 — 2.2 — 
 $16.2 $10.4 $2.2 $3.6 

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Deferred compensation assets are included within other noncurrent assets and are valued using a market approach based on quoted market prices in an active market. Money market funds are included within cash and cash equivalents and are valued based on quoted market prices in active markets, with no valuation adjustment. Time deposits are included within cash and cash equivalents and are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. The fair value of our foreign currency contracts, included within other current and other noncurrent assets, as well as other current and other long-term liabilities, is valued using an income approach based on quoted forward foreign exchange rates and spot rates at the reporting date. The fair value of the cross-currency swap, included within other noncurrent assets, is valued using a market approach. Please refer to Note 9, Derivative Financial Instruments, for further discussion of our derivatives. The fair value of our commodity call options, included within other current and other noncurrent assets, is valued using a market approach. The fair value of the contingent consideration liability, within current and long-term liabilities, related to the SmartDose® technology platform (the “SmartDose® contingent consideration”) was initially determined using a probability-weighted income approach, and is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of this obligation are recorded as income or expense within other expense (income) in our condensed consolidated statements of income. The fair value of deferred compensation liabilities is based on quoted prices of the underlying employees’ investment selections and is included within other long-term liabilities.

Other Financial Instruments

We believe that the carrying amounts of our cash and cash equivalents and accounts receivable approximate their fair values due to their near-term maturities.

The estimated fair value of long-term debt is based on quoted market prices for debt issuances with similar terms and maturities and is classified as Level 2 within the fair value hierarchy. At September 30, 2024, the estimated fair value of long-term debt was $201.6 million compared to a carrying amount of $202.6 million. At December 31, 2023, the estimated fair value of short-term and long-term debt was $204.4 million and the carrying amount was $206.8 million. As of September 30, 2024, all debt is long-term.

Note 11:  Accumulated Other Comprehensive Loss

The following table presents the changes in the components of accumulated other comprehensive income ("AOCI") (loss), net of tax, for the nine months ended September 30, 2024:
($ in millions)DerivativesChange in equity affiliate investment AOCIDefined benefit
pension and other
postretirement plans		Foreign
currency
translation		Total
Balance, December 31, 2023$— $2.3 $(10.1)$(136.0)$(143.8)
Other comprehensive income (loss) before reclassifications(0.3)— (0.6)6.7 5.8 
Amounts reclassified out from accumulated other comprehensive income (loss)2.3 — (0.6)— 1.7 
Other comprehensive income (loss), net of tax2.0 — (1.2)6.7 7.5 
Balance, September 30, 2024$2.0 $2.3 $(11.3)$(129.3)$(136.3)

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The following table presents the changes in the components of accumulated other comprehensive income ("AOCI") (loss), net of tax, for the nine months ended September 30, 2023:
($ in millions)DerivativesChange in equity affiliate investment AOCIDefined benefit
pension and other
postretirement plans		Foreign
currency
translation		Total
Balance, December 31, 2022
$0.2 $1.6 $(9.4)$(175.4)$(183.0)
Other comprehensive (loss) income before reclassifications(8.8)(0.1)(0.1)(36.9)(45.9)
Amounts reclassified out from accumulated other comprehensive (loss) income7.0 — (1.1)— 5.9 
Other comprehensive (loss) income, net of tax(1.8)(0.1)(1.2)(36.9)(40.0)
Balance, September 30, 2023
$(1.6)$1.5 $(10.6)$(212.3)$(223.0)

A summary of the reclassifications out from accumulated other comprehensive loss is presented in the following table:
($ in millions)Three Months Ended
September 30,		Nine Months Ended
September 30,		Location on Statement of Income
Detail of components2024202320242023
Gains (losses) on derivatives:
Foreign currency contracts$— $(0.2)$0.2 $(1.5)Net sales
Foreign currency contracts(0.7)(1.4)(4.1)(2.0)Cost of goods and services sold
Foreign currency contracts— (3.4)1.0 (6.2)Other expense (income)
Forward treasury locks— (0.1)(0.1)(0.2)Interest expense
Total before tax(0.7)(5.1)(3.0)(9.9)
Tax benefit0.2 1.6 0.7 2.9 
Net of tax$(0.5)$(3.5)$(2.3)$(7.0)
Amortization of defined benefit pension and other postretirement plans:
Actuarial gains$0.3 $0.3 $0.8 $1.1 (a)
Other— — — 0.4 
Total before tax0.3 0.3 0.8 1.5 
Tax expense(0.1)(0.1)(0.2)(0.4)
Net of tax$0.2 $0.2 $0.6 $1.1 
Total reclassifications for the period, net of tax$(0.3)$(3.3)$(1.7)$(5.9)

(a) This component is included in the computation of net periodic benefit cost.
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Note 12: Shareholders’ Equity

The following table presents the changes in shareholders’ equity for the nine months ended September 30, 2024:
Common Shares IssuedCommon StockCapital in Excess of Par ValueNumber of Treasury SharesTreasury StockRetained earningsAccumulated other comprehensive lossTotal
(in millions)
Balance, December 31, 202375.3 $18.8 $120.2 1.8 $(637.6)$3,523.4 $(143.8)$2,881.0 
Net income— — — — — 115.3 — 115.3 
Activity related to stock-based compensation— — (65.0)(0.2)79.4 — — 14.4 
Shares purchased under share repurchase program— — — 0.7 (267.0)— — (267.0)
Dividends declared ($0.20 per share)
— — — — — (14.6)— (14.6)
Other comprehensive loss, net of tax— — — — — — (48.5)(48.5)
Balance, March 31, 202475.3 $18.8 $55.2 2.3 $(825.2)$3,624.1 $(192.3)$2,680.6 
Net income— — — — — 111.3 — 111.3 
Activity related to stock-based compensation— — (21.7)(0.1)32.8 — — 11.1 
Shares purchased under share repurchase program— — — 0.5 (187.1)— — (187.1)
Dividends declared ($0.20 per share)
— — — — — (14.5)— (14.5)
Other comprehensive loss, net of tax— — — — — — (24.6)(24.6)
Balance, June 30, 202475.3 $18.8 $33.5 2.7 $(979.5)$3,720.9 $(216.9)$2,576.8 
Net income— — — — — 136.0 — 136.0 
Activity related to stock-based compensation— — (10.2)(0.1)21.3 — — 11.1 
Shares purchased under share repurchase program— — — 0.2 (52.4)— — (52.4)
Other comprehensive income, net of tax— — — — — — 80.6 80.6 
Balance, September 30, 202475.3 $18.8 $23.3 2.8 $(1,010.6)$3,856.9 $(136.3)$2,752.1 

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The following table presents the changes in shareholders’ equity for the nine months ended September 30, 2023:
Common Shares IssuedCommon StockCapital in Excess of Par ValueNumber of Treasury SharesTreasury StockRetained earningsAccumulated other comprehensive lossTotal
(in millions)
Balance, December 31, 202275.3 $18.8 $232.2 1.2 $(370.9)$2,987.8 $(183.0)$2,684.9 
Net income— — — — — 140.0 — 140.0 
Activity related to stock-based compensation— — (50.8)(0.3)61.8 — — 11.0 
Shares purchased under share repurchase program— — — 0.2 (60.1)— — (60.1)
Dividends declared ($0.19 per share)
— — — — — (14.2)— (14.2)
Other comprehensive income, net of tax— — — — — — 14.6 14.6 
Balance, March 31, 202375.3 $18.8 $181.4 1.1 $(369.2)$3,113.6 $(168.4)$2,776.2 
Net income— — — — — 155.1 — 155.1 
Activity related to stock-based compensation— — (23.2)(0.2)41.2 — — 18.0 
Shares purchased under share repurchase program— — — 0.5 (173.4)— — (173.4)
Dividends declared ($0.19 per share)
— — — — — (14.1)— (14.1)
Other comprehensive loss, net of tax— — — — — — (15.1)(15.1)
Balance, June 30, 202375.3 $18.8 $158.2 1.4 $(501.4)$3,254.6 $(183.5)$2,746.7 
Net income— — — — — 161.3 — 161.3 
Activity related to stock-based compensation— — (35.6)(0.2)63.1 — — 27.5 
Shares purchased under share repurchase program— — — 0.1 (27.8)— — (27.8)
Other comprehensive loss, net of tax— — — — — — (39.5)(39.5)
Balance, September 30, 202375.3 $18.8 $122.6 1.3 $(466.1)$3,415.9 $(223.0)$2,868.2 

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Note 13:  Stock-Based Compensation

The West Pharmaceutical Services, Inc. 2016 Omnibus Incentive Compensation Plan (the “2016 Plan”) provides for the granting of stock options, stock appreciation rights, restricted stock awards and performance awards to employees and non-employee directors. A committee of the Board of Directors determines the terms and conditions of awards to be granted. Vesting requirements vary by award. At September 30, 2024, there were 1,338,673 shares remaining in the 2016 Plan for future grants.

During the nine months ended September 30, 2024, we granted 88,588 stock options at a weighted average exercise price of $348.50 per share based on the grant-date fair value of our stock to employees under the 2016 Plan. The weighted average grant date fair value of options granted was $134.33 per share as determined by the Black-Scholes option valuation model using the following weighted average assumptions: a risk-free interest rate of 4.3%; expected life of 6.0 years based on prior experience; stock volatility of 32.0% based on historical data; and a dividend yield of 0.3%. Stock option expense is recognized over the vesting period, net of forfeitures.

During the nine months ended September 30, 2024, we granted 34,188 stock-settled performance share unit (“PSU”) awards at a weighted average grant-date fair value of $348.46 per share to eligible employees. These awards are earned based on the Company’s performance against pre-established targets, including annual growth rate of revenue and return on invested capital, over a specified performance period. Depending on the achievement of the targets, recipients of stock-settled PSU awards are entitled to receive a certain number of shares of common stock. Shares earned under PSU awards may vary from 0% to 200% of an employee’s targeted award. The fair value of stock-settled PSU awards is based on the market price of our stock at the grant date and is recognized as expense over the performance period, adjusted for estimated target outcomes and net of forfeitures.

During the nine months ended September 30, 2024, we granted 8,302 stock-settled restricted share unit (“RSU”) awards at a weighted average grant-date fair value of $342.74 per share to eligible employees. These awards are earned over a specified performance period. The fair value of stock-settled RSU awards is based on the market price of our stock at the grant date and is recognized as expense over the vesting period, net of forfeitures.

Stock-based compensation expense was $5.1 million and $14.4 million for the three and nine months ended September 30, 2024, respectively. For the three and nine months ended September 30, 2023, stock-based compensation expense was $5.9 million and $21.9 million, respectively.

Note 14:  Other Expense (Income)

Other expense (income) consists of:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Foreign exchange transaction losses$4.1 $1.8 $7.3 $3.0 
Contingent consideration1.2 0.7 3.2 1.5 
Asset impairments1.0 3.5 1.9 6.9 
Restructuring and related charges(2.5)— (2.5)(0.8)
Loss on disposal of plant— — — 11.6 
Other items0.6 (0.4)0.9 0.3 
Total other expense (income)$4.4 $5.6 $10.8 $22.5 

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Contingent Consideration

Contingent consideration represents changes in the fair value of the SmartDose® contingent consideration. Please refer to Note 10, Fair Value Measurements, for additional details.

Restructuring and Related Charges

In December 2022, the Company approved a restructuring plan to adjust our operating cost base to better respond to the macroeconomic factors influencing our business. These changes were implemented over a period of approximately twenty-four months from the date of approval. The plan is expected to have annualized savings in the range of $17 million to $19 million. As of September 30, 2024, the Company does not expect additional expenses or payments associated with our 2022 restructuring plan. The following table presents activity related to our restructuring obligations related to our 2022 restructuring plan:
($ in millions)Severance
and benefits		Other chargesTotal
Balance, December 31, 2023$3.0 $— $3.0 
(Credits) Charges(2.5)— (2.5)
Cash payments(0.5)— (0.5)
Balance, September 30, 2024$— $— $— 

Loss on Disposal of Plant

During the nine months ended September 30, 2023, the Company recorded expense of $11.6 million, within other expense (income), as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment during the second quarter of 2023.

Note 15:  Income Taxes

The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items.

The provision for income taxes was $32.4 million and $29.4 million for the three months ended September 30, 2024 and 2023, respectively, and the effective tax rate was 19.7% and 15.7%, respectively. The increase in the effective tax rate is primarily due to a decrease in the tax benefit related to stock-based compensation in the three months ended September 30, 2024 as compared to the same period in 2023, partially offset by a shift in the forecasted geographic earnings mix.

The provision for income taxes was $70.7 million and $87.8 million for the nine months ended September 30, 2024 and 2023, respectively, and the effective tax rate was 16.8% and 16.6%, respectively. The increase in the effective tax rate is primarily due to a decrease in the tax benefit related to stock-based compensation in the nine months ended September 30, 2024, as compared to the same period in 2023, partially offset by a shift in the forecasted geographic earnings mix.

The Company continues to address the change in tax laws enacted pursuant to the Organization for Economic Cooperation and Development (OECD)’s 15% global minimum tax initiative (Pillar 2). The 2024 forecasted impact of Pillar 2 is not expected to be material to the Company.

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Note 16:  Commitments and Contingencies

From time to time, we are involved in product liability matters and other legal proceedings and claims generally incidental to our normal business activities. We accrue for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. While the outcome of current proceedings cannot be accurately predicted, we believe their ultimate resolution should not have a material adverse effect on our business, financial condition, results of operations or liquidity.

There have been no significant changes to commitments and contingencies since December 31, 2023.

Note 17:  Segment Information

Our business operations are organized into two reportable segments, Proprietary Products and Contract-Manufactured Products. Our Proprietary Products reportable segment offers proprietary packaging, containment solutions and drug delivery products, along with analytical lab services and other integrated services and solutions, primarily to biologic, generic and pharmaceutical drug customers. Our Contract-Manufactured Products reportable segment serves as a fully integrated business, focused on the design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and medical device customers.

The Chief Operating Decision Maker ("CODM") evaluates the performance of our segments based upon, among other things, segment net sales and operating profit. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that the CODM considers not representative of ongoing operations. Such items are referred to as other unallocated items and generally include restructuring and related charges, certain asset impairments and other specifically-identified income or expense items. The segment operating profit metric is what the CODM uses in evaluating our results of operations and the financial measure that provides a valuable insight into our overall performance and financial position.

The following table presents information about our reportable segments, reconciled to consolidated totals:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Net sales:    
Proprietary Products$601.4 $602.5 $1,720.6 $1,803.6 
Contract-Manufactured Products145.5 144.9 423.8 414.2 
Consolidated net sales$746.9 $747.4 $2,144.4 $2,217.8 

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The following table provides summarized financial information for our segments:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Operating profit (loss):
Proprietary Products$158.2 $181.6 $415.5 $546.5 
Contract-Manufactured Products21.8 21.0 56.1 53.3 
Total business segment operating profit$180.0 $202.6 $471.6 $599.8 
Corporate and Unallocated
Stock-based compensation expense$(5.1)$(5.9)$(14.4)$(21.9)
Corporate general costs (1)
(14.3)(15.9)(47.2)(47.2)
Unallocated Items:
Loss on disposal of plant (2)
— — — (11.6)
Cost investment impairment (3)
— (3.3)— (3.3)
Restructuring and other charges (4)
0.9 — 0.9 (0.1)
Amortization of acquisition-related intangible assets (5)
(0.2)(0.2)(0.6)(0.6)
Total Corporate and Unallocated(18.7)(25.3)(61.3)(84.7)
Total consolidated operating profit$161.3 $177.3 $410.3 $515.1 
Interest (income) expense and other nonoperating expense (income), net(3.2)(9.7)(10.3)(14.7)
Income before income taxes and equity in net income of affiliated companies$164.5 $187.0 $420.6 $529.8 

(1) Corporate general costs includes executive and director compensation, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments.

(2) During the nine months ended September 30, 2023, the Company recorded expense of $11.6 million within other expense (income), as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment. The transaction closed during the second quarter of 2023.

(3) During the three and nine months ended September 30, 2023, the Company recorded expense of $3.3 million within other expense (income), as a result of an impairment of one of the Company's cost investments.

(4) Restructuring and other charges were a benefit of $0.9 million in the three and nine months ended September 30, 2024. The net benefit represents the impact of two items, the first of which is a $2.5 million benefit recorded within other expense (income) related to revised severance estimates in connection with the Company's 2022 restructuring plan. This benefit was partially offset by $1.6 million of expense recorded within selling, general and administrative expenses in connection with a plan to optimize the legal structure of the Company and its subsidiaries. The expense consists primarily of consulting fees, legal expenses, and other one-time costs directly attributable to this plan. Restructuring and other charges of $0.1 million for the nine months ended September 30, 2023 represent the net impact of an inventory write down of $0.9 million within cost of goods and services sold and a $0.8 million benefit within other expense (income) for revised severance estimates in connection with its 2022 restructuring plan.

(5) During the three and nine months ended September 30, 2024 and September 30, 2023, the Company recorded $0.2 million and $0.6 million, respectively, of amortization expense within operating profit associated with an intangible asset acquired during the second quarter of 2020.

Please refer to Note 14, Other Expense (Income), for further discussion of these items.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with our condensed consolidated financial statements and accompanying notes elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included in our 2023 Annual Report. Our historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks discussed in Part I, Item 1A of our 2023 Annual Report and in Part II, Item 1A of this Form 10-Q.

Throughout this section, references to “Notes” refer to the notes to our condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Form 10-Q, unless otherwise indicated.

Non-U.S. GAAP Financial Measures

For the purpose of aiding the comparison of our year-over-year results, we may refer to net sales and other financial results excluding the effects of changes in foreign currency exchange rates. Organic net sales exclude the impact from acquisitions and/or divestitures and translate the current-period reported sales of subsidiaries whose functional currency is other than USD at the applicable foreign exchange rates in effect during the comparable prior-year period. We may also refer to adjusted consolidated operating profit and adjusted consolidated operating profit margin, which exclude the effects of unallocated items. The unallocated items are not representative of ongoing operations, and generally include restructuring and related charges, certain asset impairments, and other specifically-identified income or expense items. The re-measured results excluding effects from currency translation, the impact from acquisitions and/or divestitures, and excluding the effects of unallocated items are not in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") and should not be used as a substitute for the comparable U.S. GAAP financial measures. The non-U.S. GAAP financial measures are incorporated in our discussion and analysis as management uses them in evaluating our results of operations and believes that this information provides users with a valuable insight into our overall performance and financial position.

Our Operations

We are a leading global manufacturer in the design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. Our products include a variety of primary proprietary packaging, containment solutions, reconstitution and transfer systems, and drug delivery systems, as well as contract manufacturing, analytical lab services and integrated solutions. Our customers include leading biologic, generic, pharmaceutical, diagnostic, and medical device companies around the world. Our top priority is delivering quality products that meet the exact product specifications and quality standards customers require and expect. This focus on quality includes a commitment to excellence in manufacturing, scientific and technical expertise and management, which enables us to partner with our customers in order to deliver safe, effective drug products to patients quickly and efficiently.

Our business operations are organized into two global segments, Proprietary Products and Contract-Manufactured Products. Our Proprietary Products reportable segment offers proprietary packaging, containment solutions and drug delivery systems, along with analytical lab services and other integrated services and solutions, primarily to biologic, generic and pharmaceutical drug customers. Our Contract-Manufactured Products reportable segment serves as a fully integrated business, focused on the design, manufacture, and automated assembly of complex devices, primarily for pharmaceutical, diagnostic, and medical device customers. We also maintain collaborations to share technologies and market products with affiliates in Japan and Mexico.

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Macroeconomic Factors

We have operations based in Israel that conduct research and development activities and manufacture certain components for our devices. Our Israel-based facilities continue to substantially operate as they had prior to the conflict in Israel and surrounding area. We continue to monitor the impact of the conflict in Israel and surrounding areas on our operations and those of our suppliers, the possible expansion of such conflict and potential geopolitical consequences, if any, on our business and operations.

Financial Performance Summary

The following tables present a reconciliation from U.S. GAAP to non-U.S. GAAP financial measures for the three and nine months ended September 30, 2024:
($ in millions, except per share data)Operating ProfitIncome tax expenseNet incomeDiluted EPS
Three months ended September 30, 2024 GAAP
$161.3 $32.4 $136.0 $1.85 
Unallocated items:
Restructuring and other charges (1)
(0.9)(0.3)(0.6)(0.01)
Amortization of acquisition-related intangible assets (2)
0.2 0.1 0.7 0.01 
Three months ended September 30, 2024 adjusted amounts (non-U.S. GAAP)
$160.6 $32.2 $136.1 $1.85 

($ in millions, except per share data)Operating ProfitIncome tax expenseNet incomeDiluted EPS
Nine months ended September 30, 2024 GAAP
$410.3 $70.7 $362.6 $4.91 
Unallocated items:
Restructuring and other charges (1)
(0.9)(0.3)(0.6)(0.01)
Amortization of acquisition-related intangible assets (2)
0.6 0.1 2.1 0.03 
Nine months ended September 30, 2024 adjusted amounts (non-U.S. GAAP)
$410.0 $70.5 $364.1 $4.93 

During the three and nine months ended September 30, 2024, we recorded a tax benefit of $2.7 million and $19.3 million, respectively, associated with stock-based compensation.

The following tables present a reconciliation from U.S. GAAP to non-U.S. GAAP financial measures for the three and nine months ended September 30, 2023:
($ in millions, except per share data)Operating ProfitIncome tax expenseNet incomeDiluted EPS
Three months ended September 30, 2023 GAAP
$177.3 $29.4 $161.3 $2.14 
Unallocated items:
Amortization of acquisition-related intangible assets (2)
0.2 0.1 0.7 0.01 
Legal settlement (3)
— (0.9)(2.9)(0.04)
Cost investment impairment (4)
3.3 — 3.3 0.05 
Three months ended September 30, 2023 adjusted amounts (non-U.S. GAAP)
$180.8 $28.6 $162.4 $2.16 

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($ in millions, except per share data)Operating ProfitIncome tax expenseNet incomeDiluted EPS
Nine months ended September 30, 2023 GAAP
$515.1 $87.8 $456.4 $6.05 
Unallocated items:
Restructuring and other charges (1)
0.1 (0.3)0.4 — 
Amortization of acquisition-related intangible assets (2)
0.6 0.1 2.1 0.03 
Legal settlement (3)
— (0.9)(2.9)(0.04)
Cost investment impairment (4)
3.3 — 3.3 0.05 
Loss on disposal of plant (5)
11.6 (0.7)12.3 0.16 
Nine months ended September 30, 2023 adjusted amounts (non-U.S. GAAP)
$530.7 $86.0 $471.6 $6.25 

During the three and nine months ended September 30, 2023, we recorded a tax benefit of $12.0 million and $31.3 million, respectively, associated with stock-based compensation.

(1)Restructuring and other charges were a benefit of $0.9 million in the three and nine months ended September 30, 2024. The net benefit represents the impact of two items, the first of which is a $2.5 million benefit recorded within other expense (income) related to revised severance estimates in connection with the Company's 2022 restructuring plan. This benefit was partially offset by $1.6 million of expense recorded within selling, general and administrative expenses in connection with a plan to optimize the legal structure of the Company and its subsidiaries. The expense consists primarily of consulting fees, legal expenses, and other one-time costs directly attributable to this plan. Restructuring and other charges of $0.1 million for the nine months ended September 30, 2023 represent the net impact of an inventory write down of $0.9 million within cost of goods and services sold and a $0.8 million benefit within other expense (income) for revised severance estimates in connection with its 2022 restructuring plan.

(2)During the three and nine months ended September 30, 2024 and 2023, the Company recorded $0.2 million and $0.6 million, respectively, of amortization expense within operating profit associated with an intangible asset acquired during the second quarter of 2020. During the three and nine months ended September 30, 2024 and 2023, the Company recorded $0.6 million and $1.6 million, respectively, of amortization expense in association with an acquisition of increased ownership interest in Daikyo.

(3)During the three and nine months ended September 30, 2023, the Company recorded a benefit of $3.8 million within other nonoperating expense (income) as a result of a favorable legal settlement related to a matter not included in our normal operations.

(4)During the three and nine months ended September 30, 2023, the Company recorded expense of $3.3 million within other expense (income), as a result of an impairment of one of the Company's cost investments.

(5)During the nine months ended September 30, 2023, the Company recorded expense of $11.6 million within other expense (income), as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment. The transaction closed during the second quarter of 2023.

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RESULTS OF OPERATIONS

We evaluate the performance of our segments based upon, among other things, segment net sales and operating profit. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that we consider not representative of ongoing operations. Such items are referred to as other unallocated items for which further information can be found above in the reconciliation from U.S. GAAP to non-U.S. GAAP financial measures.

Percentages in the following tables and throughout the Results of Operations section may reflect rounding adjustments.

Net Sales

The following table presents net sales, consolidated and by reportable segment, for the three months ended September 30, 2024 and 2023:
Three Months Ended
September 30,		Percentage Change
($ in millions)20242023As-ReportedOrganic
Proprietary Products$601.4 $602.5 (0.2)%(0.5)%
Contract-Manufactured Products145.5 144.9 0.4 %(0.1)%
Consolidated net sales$746.9 $747.4 (0.1)%(0.5)%

Consolidated net sales decreased by $0.5 million, or 0.1%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $2.9 million. Excluding foreign currency translation effects, consolidated net sales for the three months ended September 30, 2024 decreased by $3.4 million, or 0.5%, as compared to the same period in 2023.

Proprietary Products – Proprietary Products net sales decreased by $1.1 million, or 0.2%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $2.2 million. Excluding foreign currency translation effects, net sales for the three months ended September 30, 2024 decreased by $3.3 million, or 0.5%, as compared to the same period in 2023, due to a decline in sales of certain high-value product offerings due to customer inventory management, primarily FluroTec® products, NovaBrand products, Westar® components and Daikyo® components. These reductions were partially offset by an increase in sales of self-injection device platforms, approximately $19 million in customer incentives in connection with volumes achieved during the three months ended September 30, 2024, as compared to the same period in 2023, and increased sales prices.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $0.6 million, or 0.4%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.7 million. Excluding foreign currency translation effects, net sales for the three months ended September 30, 2024 decreased by $0.1 million, or 0.1%, as compared to the same period in 2023, due primarily to a decrease in sales of healthcare diagnostic devices, offset by growth in self-injection devices for obesity and diabetes.

The following table presents net sales, consolidated and by reportable segment, for the nine months ended September 30, 2024 and 2023:
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Nine Months Ended
September 30,		Percentage Change
($ in millions)20242023As-ReportedOrganic
Proprietary Products$1,720.6 $1,803.6 (4.6)%(4.4)%
Contract-Manufactured Products423.8 414.2 2.3 %2.2 %
Consolidated net sales$2,144.4 $2,217.8 (3.3)%(3.1)%

Consolidated net sales decreased by $73.4 million, or 3.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.2 million. Excluding foreign currency translation effects and removal of the 2023 sales impact related to one of our plants that was disposed of in the second quarter of 2023 of $4.3 million, consolidated net sales for the nine months ended September 30, 2024 decreased by $69.3 million, or 3.1%, as compared to the same period in 2023.

Proprietary Products – Proprietary Products net sales decreased by $83.0 million, or 4.6%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including an unfavorable foreign currency translation impact of $0.4 million. Excluding foreign currency translation effects and removal of the 2023 sales impact related to one of our plants that was disposed of in the second quarter of 2023 of $4.3 million, net sales for the nine months ended September 30, 2024 decreased by $78.3 million, or 4.4%, as compared to the same period in 2023, due to a decline in sales of certain high-value product offerings due to customer inventory management, primarily Westar® components, FluroTec® products and Daikyo® components. These reductions were partially offset by an increase in sales of self-injection device platforms and NovaBrand products, as well as increased sales prices.

Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $9.6 million, or 2.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.6 million. Excluding foreign currency translation effects, net sales for the nine months ended September 30, 2024 increased by $9.0 million, or 2.2%, as compared to the same period in 2023, primarily due to an increase in sales of components associated with injection-related devices and sales price increases.

Gross Profit

The following table presents gross profit and related gross profit margins, consolidated and by reportable segment:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Proprietary Products:  
Gross profit$235.7 $261.4 $649.8 $780.6 
Gross profit margin39.2 %43.4 %37.8 %43.3 %
Contract-Manufactured Products:   
Gross profit$29.0 $26.9 $75.1 $71.3 
Gross profit margin19.9 %18.6 %17.7 %17.2 %
Unallocated items$— $— $— $(0.9)
Consolidated gross profit$264.7 $288.3 $724.9 $851.0 
Consolidated gross profit margin35.4 %38.6 %33.8 %38.4 %

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Consolidated gross profit decreased by $23.6 million, or 8.2%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $1.0 million for the three months ended September 30, 2024, as compared to the same period in 2023. Consolidated gross profit margin decreased by 3.2 margin points for the three months ended September 30, 2024, as compared to the same period in 2023.

Consolidated gross profit decreased by $126.1 million, or 14.8% for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023. Consolidated gross profit margin decreased by 4.6 margin points for the nine months ended September 30, 2024, as compared to the same period in 2023.

Proprietary Products - Proprietary Products gross profit decreased by $25.7 million, or 9.8%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.9 million. Proprietary Products gross profit margin decreased by 4.2 margin points for the three months ended September 30, 2024, as compared to the same periods in 2023, primarily due to a shift in sales mix from HVP Components to HVP Delivery Devices, which have lower profitability. Profit was additionally impacted by lower plant absorption at our HVP Component plants from reduced customer demand. These headwinds were partially offset by approximately $19 million in customer incentives in connection with volumes achieved during the three months ended September 30, 2024, as compared to the same period in 2023, and increased sales prices.

Proprietary Products gross profit decreased by $130.8 million, or 16.8%, for the nine months ended September 30, 2024, as compared to the same period in 2023. Proprietary Products gross profit margin decreased by 5.5 margin points for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to lower plant absorption from reduced customer demand and an unfavorable shift in mix of products sold from HVP Components to HVP Delivery Devices. These headwinds were partially offset by increased sales prices and approximately $22 million in customer incentives in connection with volumes achieved during the nine months ended September 30, 2024, as compared to the same period in 2023.

Contract-Manufactured Products - Contract-Manufactured Products gross profit increased by $2.1 million, or 7.8%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.1 million. Contract-Manufactured Products gross profit margin increased by 1.3 margin points for the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to production efficiencies.

Contract-Manufactured Products gross profit increased by $3.8 million, or 5.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023. Contract-Manufactured Products gross profit margin increased by 0.5 margin points for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to increased sales prices.

Research and Development (“R&D”) Costs

The following table presents consolidated R&D costs:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Consolidated R&D costs$15.5 $16.4 $50.6 $50.0 

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Consolidated R&D costs decreased by $0.9 million, or 5.5%, for the three months ended September 30, 2024, as compared to the same period in 2023. Consolidated R&D costs increased $0.6 million, or 1.2%, for the nine months ended September 30, 2024 as compared to the same period of 2023. Efforts remain focused on the continued investment in elastomeric packaging components, formulation development, drug containment systems, self-injection systems and drug administration consumable.

All of the R&D costs incurred in the three and nine months ended September 30, 2024 and 2023 related to Proprietary Products.

Selling, General and Administrative (“SG&A”) Costs

The following table presents SG&A costs, consolidated and by reportable segment and corporate and unallocated items:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Proprietary Products$56.6 $61.4 $173.4 $176.8 
Contract-Manufactured Products6.7 6.0 19.1 18.1 
Corporate and unallocated items20.2 21.6 60.7 68.5 
Consolidated SG&A costs$83.5 $89.0 $253.2 $263.4 
SG&A as a % of net sales11.2 %11.9 %11.8 %11.9 %

Consolidated SG&A costs decreased by $5.5 million, or 6.2%, for the three months ended September 30, 2024, as compared to the same period in 2023, due primarily to lower annual incentive compensation and decreased costs related to professional services, offset by increased salary and wages.

Consolidated SG&A costs decreased by $10.2 million, or 3.9%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.2 million, due primarily to a decrease in expense related to stock-based compensation and lower annual incentive compensation, offset by increased salary and wages.

Proprietary Products - Proprietary Products SG&A costs decreased by $4.8 million, or 7.8%, for the three months ended September 30, 2024, as compared to the same period in 2023. Proprietary Products SG&A costs decreased primarily due to lower annual incentive compensation and decreased costs related to professional services.

Proprietary Products SG&A costs decreased by $3.4 million, or 1.9%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.2 million. Proprietary Products SG&A costs decreased primarily due to lower annual incentive compensation.

Contract-Manufactured Products - Contract-Manufactured Products SG&A costs increased by $0.7 million, or 11.7%, for the three months ended September 30, 2024, as compared to the same period in 2023, and increased by $1.0 million, or 5.5%, for the nine months ended September 30, 2024, as compared to the same period in 2023, due primarily to increased salary and wages.

Corporate and unallocated items - Corporate SG&A costs decreased by $1.4 million, or 6.5%, for the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to lower annual incentive compensation and a decrease in expense related to stock-based compensation, offset by increased salary and wages.

Corporate SG&A costs decreased by $7.8 million, or 11.4%, for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to a decrease in expense related to stock-based compensation and lower annual incentive compensation, offset by increased salary and wages.

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Other Expense (Income)

The following table presents other income and expense items, consolidated and by reportable segment, corporate and unallocated items:
Expense (Income) Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Proprietary Products$5.4 $2.0 $10.3 $7.3 
Contract-Manufactured Products0.5 (0.1)(0.1)(0.1)
Corporate and unallocated(1.5)3.7 0.6 15.3 
Consolidated other expense (income)$4.4 $5.6 $10.8 $22.5 

Other expense and income items consist of a loss on disposal of plant, asset impairments, foreign exchange transaction gains and losses, contingent consideration and miscellaneous income and charges.

Consolidated other expense (income) changed by $1.2 million for the three months ended September 30, 2024, as compared to the same period in 2023 and changed by $11.7 million for the nine months ended September 30, 2024, as compared to the same period in 2023, due to the factors described below.

Proprietary Products - Proprietary Products other expense (income) changed by $3.4 million for the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to increased losses on foreign exchange transactions, increased asset impairments and increased contingent consideration expense being recorded in the three months ended September 30, 2024, as compared to the same period in 2023.

Proprietary Products other expense (income) changed by $3.0 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to increased losses on foreign exchange transactions and increased contingent consideration expense, offset by a decrease in asset impairments being recorded in the nine months ended September 30, 2024, as compared to the same period in 2023.

Contract-Manufactured Products - Contract-Manufactured Products other expense (income) changed by $0.6 million for the three months ended September 30, 2024, as compared to the same period in 2023 and remained consistent for the nine months ended September 30, 2024, as compared to the same period in 2023.

Corporate and unallocated items - Corporate and unallocated items changed by $5.2 million for the three months ended September 30, 2024, as compared to the same period in 2023, primarily due to the Company recording expense related to impairment of one of the Company's cost investments of $3.3 million in the three months ended September 30, 2023 that did not occur in the same period in 2024. Additionally, the Company recorded a benefit of $2.5 million related to revised severance estimates in connection with the Company's 2022 restructuring plan in the three months ended September 30, 2024 that did not occur in the same period in 2023.

Corporate and unallocated items changed by $14.7 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to the Company recording expense of $11.6 million as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment and the Company recording expense related to impairment of one of the Company's cost investments of $3.3 million in the nine months ended September 30, 2023. Neither of these items occurred in the same period in 2024. Additionally, the Company recorded a benefit of $2.5 million related to revised severance estimates in connection with the Company's 2022 restructuring plan in the nine months ended September 30, 2024, as compared to a benefit of $0.8 million recorded in the same period in 2023.

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Operating Profit

The following table presents adjusted operating profit, consolidated and by reportable segment, corporate and unallocated items:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Proprietary Products$158.2 $181.6 $415.5 $546.5 
Contract-Manufactured Products21.8 21.0 56.1 53.3 
Corporate and unallocated items(18.7)(25.3)(61.3)(84.7)
Consolidated operating profit$161.3 $177.3 $410.3 $515.1 
Consolidated operating profit margin21.6 %23.7 %19.1 %23.2 %
Unallocated items(0.7)3.5 (0.3)15.6 
Adjusted consolidated operating profit$160.6 $180.8 $410.0 $530.7 
Adjusted consolidated operating profit margin21.5 %24.2 %19.1 %23.9 %

Consolidated operating profit decreased by $16.0 million, or 9.0%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.9 million for the three months ended September 30, 2024, as compared to the same period in 2023.

Consolidated operating profit decreased by $104.8 million, or 20.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.3 million for the nine months ended September 30, 2024, as compared to the same period in 2023.

Proprietary Products - Proprietary Products operating profit decreased by $23.4 million, or 12.9%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.8 million, due to the factors described above, most notably lower gross profit driven by lower sales volume and an unfavorable mix of products sold.

Proprietary Products operating profit decreased by $131.0 million, or 24.0%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.2 million, due to the factors described above, most notably lower gross profit driven by lower sales volume and an unfavorable mix of products sold.

Contract-Manufactured Products - Contract-Manufactured Products operating profit increased by $0.8 million, or 3.8%, for the three months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.1 million, due to the factors described above, most notably the increased sales prices.

Contract-Manufactured Products operating profit increased by $2.8 million, or 5.3%, for the nine months ended September 30, 2024, as compared to the same period in 2023, including a favorable foreign currency translation impact of $0.1 million, due to the factors described above, most notably the increased sales prices.

Corporate and unallocated - Excluding the unallocated items, Corporate costs decreased by $2.4 million, or 11.0%, for the three months ended September 30, 2024, as compared to the same period in 2023, due to the factors described above, most notably the lower annual incentive compensation and the decrease in expense related to stock-based compensation.

Excluding the unallocated items, Corporate costs decreased by $7.5 million, or 10.9%, for the nine months ended September 30, 2024, as compared to the same period in 2023, due to the factors described above, most notably the decrease in expense related to stock-based compensation and lower annual incentive compensation.
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For unallocated items, please refer to the Financial Performance Summary section above for detail.

Interest Expense, Net and Interest Income

The following table presents interest expense, net, by significant component:
Three Months Ended
September 30,		Nine Months Ended
September 30,
($ in millions)2024202320242023
Interest expense$5.0 $4.4 $12.2 $11.7 
Capitalized interest(4.3)(1.5)(8.4)(3.9)
Interest expense, net$0.7 $2.9 $3.8 $7.8 
Interest income$(4.6)$(8.8)$(14.8)$(18.6)
Interest expense, net, decreased by $2.2 million, for the three months ended September 30, 2024, as compared to the same period in 2023, and decreased by $4.0 million, for the nine months ended September 30, 2024, as compared to the same period in 2023, due to an increase in capitalized interest.

Interest income decreased by $4.2 million for the three months ended September 30, 2024, as compared to the same period in 2023, and decreased by $3.8 million for the nine months ended September 30, 2024, as compared to the same period in 2023, due primarily to the Company having a lower average cash balance during 2024, as compared to the same periods in 2023.

Income Tax Expense

The provision for income taxes was $32.4 million and $29.4 million for the three months ended September 30, 2024 and 2023, respectively, and the effective tax rate was 19.7% and 15.7%, respectively. The increase in the effective tax rate is primarily due to a decrease in the tax benefit related to stock-based compensation in the three months ended September 30, 2024 as compared to the same period in 2023, partially offset by a shift in the forecasted geographic earnings mix.

The provision for income taxes was $70.7 million and $87.8 million for the nine months ended September 30, 2024 and 2023, respectively, and the effective tax rate was 16.8% and 16.6%, respectively. The increase in the effective tax rate is primarily due to a decrease in the tax benefit related to stock-based compensation in the nine months ended September 30, 2024, as compared to the same period in 2023, partially offset by a shift in the forecasted geographic earnings mix.

Equity in Net Income of Affiliated Companies

Equity in net income of affiliated companies increased by $0.2 million for the three months ended September 30, 2024, as compared to the same period in 2023.

Equity in net income of affiliated companies decreased by $1.7 million for the nine months ended September 30, 2024, as compared to the same period in 2023, due to less favorable operating results at Daikyo.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

The following table presents cash flow data for the nine months ended September 30:
($ in millions)20242023
Net cash provided by operating activities$463.3 $537.4 
Net cash used in investing activities$(273.9)$(259.9)
Net cash used in financing activities$(553.7)$(270.1)

Net Cash Provided by Operating Activities – Net cash provided by operating activities decreased by $74.1 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to a decline in operating results, offset by favorable working capital management.

Net Cash Used in Investing Activities – Net cash used in investing activities increased by $14.0 million for the nine months ended September 30, 2024, as compared to the same period in 2023, due to an increase in capital expenditures for additional manufacturing capacity to meet future customer demand.

Net Cash Used in Financing Activities – Net cash used in financing activities increased by $283.6 million for the nine months ended September 30, 2024, as compared to the same period in 2023, primarily due to an increase in purchases under our share repurchase program in 2024, as compared to 2023.

Liquidity and Capital Resources

The table below presents selected liquidity and capital measures:
($ in millions)September 30,
2024		December 31,
2023
Cash and cash equivalents$490.9 $853.9 
Accounts receivable, net$524.3 $512.0 
Inventories$401.2 $434.7 
Accounts payable$224.3 $242.4 
Debt$202.6 $206.8 
Equity$2,752.1 $2,881.0 
Working capital$1,034.1 $1,264.6 

Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased. Working capital is defined as current assets less current liabilities.

Cash and cash equivalents – Our cash and cash equivalents balance at September 30, 2024 consisted of cash held in depository accounts with banks around the world and cash invested in high-quality, short-term investments. The cash and cash equivalents balance at September 30, 2024 included $80.3 million of cash held by subsidiaries within the U.S., and $410.6 million of cash held by subsidiaries outside of the U.S. During the nine months ended September 30, 2024, we purchased 1,409,786 shares of our common stock under the share repurchase program at a cost of $506.5 million, or an average price of $359.24 per share.

Working capital – Working capital at September 30, 2024 decreased by $230.5 million, or 18.2%, as compared to December 31, 2023, which includes a favorable foreign currency translation impact of $6.2 million. Excluding the impact of currency exchange rates, cash and cash equivalents, total current liabilities and inventories decreased by $365.0 million, $158.0 million and $34.0 million, respectively, while accounts receivable increased by $12.5 million.
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The decrease in cash and cash equivalents was due to capital expenditures and share repurchases, offset by cash from operations during the nine months ended September 30, 2024. The decrease in total current liabilities was primarily due to the Company amending its Credit Facility Agreement during the nine months ended September 30, 2024. As part of this amendment, all current notes payable and debt amounts were repaid. Please refer to Note 8, Debt, for further discussion. Additionally, a decline in accounts payable and the payout of the 2023 annual incentive plan accrual during the nine months ended September 30, 2024 contributed to the decrease in total current liabilities.

The decrease in inventories and the increase in accounts receivable were both due to increased net sales leading up to the September 30, 2024 balance sheet date as compared to the December 31, 2023 balance sheet date.

Debt and credit facilities – The $4.2 million decrease in total debt at September 30, 2024, as compared to December 31, 2023, is due to the net activity of debt repayments and borrowings as mentioned in Note 8, Debt.

Our sources of liquidity include our multi-currency revolving credit facility. At September 30, 2024, we had no outstanding borrowings under the multi-currency revolving credit facility. At September 30, 2024, the borrowing capacity available under the multi-currency revolving credit facility, including outstanding letters of credit of $2.4 million, was $497.6 million. We do not expect any significant limitations on our ability to access this source of funds.

Pursuant to the financial covenants in our debt agreements, we are required to maintain established interest coverage ratios and not to exceed established leverage ratios. In addition, the agreements contain other customary covenants, none of which we consider restrictive to our operations. At September 30, 2024, we were in compliance with all of our debt covenants.

We believe that cash on hand and cash generated from operations, together with availability under our multi-currency revolving credit facility, will be adequate to address our foreseeable liquidity needs based on our current expectations of our business operations, capital expenditures and scheduled payments of debt obligations.

Commitments and Contractual Obligations

A summary of future material cash payments resulting from commitments and contractual obligations was provided in our 2023 Annual Report. During the three months ended September 30, 2024, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.

OFF-BALANCE SHEET ARRANGEMENTS

At September 30, 2024, we had no off-balance sheet financing arrangements other than unconditional purchase obligations incurred in the ordinary course of business and outstanding letters of credit related to various insurance programs, as noted in our 2023 Annual Report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no changes to the Critical Accounting Policies and Estimates disclosed in Part II, Item 7 of our 2023 Annual Report.

NEW ACCOUNTING STANDARDS

There were no new accounting standards adopted during the three months ended September 30, 2024, see Note 2, New Accounting Standards.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Form 10-Q contains some forward-looking statements that are based on management’s beliefs and assumptions, current expectations, estimates and forecasts. We also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Such statements provide our current expectations or forecasts of future events. They do not relate strictly to historical or current facts. We have attempted, wherever possible, to identify forward-looking statements by using words such as “plan,” “expect,” “believe,” “intend,” “will,” “estimate,” “continue” and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance, as well as our strategy for growth, product development, market position and expenditures. All statements that address operating performance or events or developments that we expect or anticipate will occur in the future - including statements relating to sales and earnings per share growth, cash flows or uses, and statements expressing views about future operating results - are forward-looking statements.

Forward-looking statements are based on current expectations of future events. The forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors should realize that, if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements.

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements:
•sales demand and our ability to meet that demand;
•competition from other providers in our businesses, including customers’ in-house operations, and from lower-cost producers in emerging markets, which can impact unit volume, price and profitability;
•customers’ changing inventory requirements and manufacturing plans that alter existing orders or ordering patterns for the products we supply to them;
•interruptions or weaknesses in our supply chain, including from reasons beyond our control such as extreme weather, longer-term climate changes, natural disasters, pandemic, war, accidental damage, or unauthorized access to our or our customers’ information and systems, which could cause delivery delays or restrict the availability of raw materials, key purchased components and finished products;
•the timing, regulatory approval and commercial success of customer products that incorporate our products and systems;
•whether customers agree to incorporate our products and delivery systems with their new and existing drug products, the ultimate timing and successful commercialization of those products and systems, which involves substantial evaluations of the functional, operational, clinical and economic viability of our products, and the rate, timing and success of regulatory approval for the drug products that incorporate our components and systems;
•the timely and adequate availability of filling capacity, which is essential to conducting definitive stability trials and the timing of first commercialization of customers’ products in Crystal Zenith prefilled syringes;
•profitability, or mix, of the products sold in any reporting period, including lower-than-expected sales growth of our high-value proprietary product offerings;
•maintaining or improving production efficiencies and overhead absorption;
•dependence on third-party suppliers and partners, some of which are single-source suppliers of critical materials and products, including our Japanese partner and affiliate, Daikyo;
•the loss of key personnel or highly-skilled employees;
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•the availability and cost of skilled employees required to meet increased production, managerial, research and other needs, including professional employees and persons employed under collective bargaining agreements;
•the successful and timely implementation of price increases necessary to offset rising production costs, including raw material prices, particularly petroleum-based raw materials;
•the cost and progress of development, regulatory approval and marketing of new products;
•our ability to obtain and maintain licenses in any jurisdiction in which we do business;
•the relative strength of USD in relation to other currencies, particularly the Euro, SGD, the Danish Krone, Yen, Colombian Peso, Brazilian Real, and the South Korean Won; and
•the potential adverse effects of global healthcare legislation on customer demand, product pricing and profitability.

This list sets forth many, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all of the factors and should not consider this list to be a complete statement of all potential risks and uncertainties. For further discussion of these and other factors, see the risk factors disclosed in Part I, Item 1A of our 2023 Annual Report as well as Part II, section 1A of this quarterly report.

Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk or the information provided in Part II, Item 7A of our 2023 Annual Report.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO have concluded that, as of September 30, 2024, our disclosure controls and procedures are effective.

Changes in Internal Controls

During the quarter ended September 30, 2024, there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 1A.  RISK FACTORS

There are no material changes to the risk factors disclosed in Part I, Item 1A of our 2023 Annual Report.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table shows information with respect to purchases of our common stock made during the three months ended September 30, 2024 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act:
PeriodTotal number of shares purchased (1)Average price paid per share (1)Total number of shares purchased as part of publicly announced plans or programs (1)Approximate dollar value of shares that may yet be purchased under the plans or programs (1)
July 1 - 31, 2024
55,907 $316.00 55,907 $89,800,000 
August 1 - 31, 2024
59,383 298.76 59,383 72,100,000 
September 1 - 30, 2024
55,481 304.71 55,481 55,200,000 
Total170,771 $306.34 170,771 $55,200,000 

(1)In February 2023, the Board of Directors approved a share repurchase program under which we may repurchase up to $1.0 billion in shares of common stock. The share repurchase program does not have an expiration date under which we may repurchase common stock on the open market or in privately-negotiated transactions. The number of shares to be repurchased and the timing of such transactions will depend on a variety of factors, including market conditions.

ITEM 5.  OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2024, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the period covered by this Report.
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ITEM 6.  EXHIBITS
Exhibit NumberDescription
3.1
3.2
4.1
4.2
4.3
4.4 (1)
Instruments defining the rights of holders of long-term debt securities of West and its subsidiaries have been omitted.
10.1
31.1
31.2
32.1*
32.2*
101.INSThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
104Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

(1) We agree to furnish to the SEC, upon request, a copy of each instrument with respect to issuances of long-term debt of the Company and its subsidiaries.

* Furnished, not filed.
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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, West Pharmaceutical Services, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WEST PHARMACEUTICAL SERVICES, INC.
(Registrant)




By: /s/ Bernard J. Birkett
Bernard J. Birkett
Senior Vice President, Chief Financial Officer



October 24, 2024
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