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What changed in West Pharmaceutical Services's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of West Pharmaceutical Services's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+158 added−175 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in West Pharmaceutical Services's 2024 10-K

158 paragraphs added · 175 removed · 138 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe own or license intellectual property rights, including know-how and issued patents and pending patent applications in the U.S. and in other countries, that relate to various aspects of our business. In 2023, more than 190 patents were issued to West across the globe. Certain key value-added and proprietary products and processes are exclusively licensed from Daikyo.
Biggest changeRisk Factors . 5 Intellectual Property Our intellectual property, including patents, patent applications, trademarks, copyrights, know-how and trade secrets, is important to our business. We own or license intellectual property rights, including know-how and issued patents and pending patent applications in the U.S. and in other countries, which relate to various aspects of our business.
There were no required material capital expenditures for environmental controls in our facilities in 2023 and there are currently no needed or planned material expenditures for 2024. 6 Marketing Our Proprietary Products customers primarily include many of the major biologic, generic, and pharmaceutical drug companies in the world, which incorporate our components and other offerings into their injectable products for distribution to the point of care and ultimate end-user, the patient.
There were no required material capital expenditures for environmental controls in our facilities in 2024 and there are currently no needed or planned material expenditures for 2025. 6 Marketing Our Proprietary Products customers primarily include many of the major biologic, generic, and pharmaceutical drug companies in the world, which incorporate our components and other offerings into their injectable products for distribution to the point of care and ultimate end-user, the patient.
Compliance with these laws, rules and regulations did not require material capital expenditures in 2023 and is not expected to have a material effect on our capital expenditures, results of operations and competitive position in 2024 as compared to prior periods. For more information on the potential impacts of government regulations affecting our business, see "Item 1A. Risk Factors ".
Compliance with these laws, rules and regulations did not require material capital expenditures in 2024 and is not expected to have a material effect on our capital expenditures, results of operations and competitive position in 2025 as compared to prior periods. For more information on the potential impacts of government regulations affecting our business, see "Item 1A. Risk Factors .
These products include a variety of custom contract-manufacturing and assembly solutions, which use technologies such as multi-component molding, in-mold labeling, ultrasonic welding, clean room molding and device assembly. We manufacture customer-owned components and devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.
These products include a variety of custom contract-manufacturing and assembly solutions, which use technologies such as multi-component molding, in-mold labeling, ultrasonic welding, clean room molding, device assembly, and drug handling capabilities. We manufacture customer-owned components and devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.
We have vast expertise in product design and development, including in-house mold design, process design and validation and high-speed automated assemblies. This reportable segment has manufacturing operations in North America and Europe. Please refer to Item 2, Properties , for additional information on our manufacturing and other sites.
We have vast expertise in product design and development, including in-house mold design, process design and validation and high-speed automated assemblies. This reportable segment has manufacturing facilities in North America and Europe. Please refer to Item 2, Properties , for additional information on our manufacturing and other sites.
These packaging products also includes syringe and cartridge components, including custom solutions for the specific needs of injectable drug applications, as well as administration systems that can enhance the safe delivery of drugs through advanced reconstitution, mixing and transfer technologies.
These packaging products also include syringe and cartridge components, including custom solutions for the specific needs of injectable drug applications, as well as administration systems that can enhance the safe delivery of drugs through advanced reconstitution, mixing and transfer technologies.
There were no required material capital expenditures for adherence to our government-led regulatory standards in our facilities in 2023 outside the normal course of business, and there are currently no needed or planned material expenditures for 2024.
" There were no required material capital expenditures for adherence to our government-led regulatory standards in our facilities in 2024 outside the normal course of business, and there are currently no needed or planned material expenditures for 2025.
During 2023, we continued to increase internal and external awareness of our ESG commitment by expanding our education and communication regarding our ESG program and initiatives and more closely integrating ESG considerations into our business processes.
During 2024, we continued to increase internal and external awareness of our ESG commitment by expanding our education and communication regarding our ESG program and initiatives and more closely integrating ESG considerations into our business processes.
In Part III of this Form 10-K, we incorporate by reference certain information from parts of other documents filed with the SEC and from our Proxy Statement for the 2024 Annual Meeting of Shareholders (“2024 Proxy Statement”), which will be filed with the SEC within 120 days following the end of our 2023 fiscal year.
In Part III of this Form 10-K, we incorporate by reference certain information from parts of other documents filed with the SEC and from our Proxy Statement for the 2025 Annual Meeting of Shareholders (“2025 Proxy Statement”), which will be filed with the SEC within 120 days following the end of our 2024 fiscal year.
Our 2024 Proxy Statement will be available on our website under the caption Investors - Financial - Annual Reports & Proxy when complete.
Our 2025 Proxy Statement will be available on our website under the caption Investors - Financial - Annual Reports & Proxy when complete.
We offer resources such as our tuition reimbursement program and our online learning catalog, with approximately 43,000 courses available. We centrally manage and organize on-the-job training, instructor-led trainings and online trainings in many different languages and topics through our global Learning Management System.
We offer resources such as our tuition reimbursement program and our online learning catalog, with more than 46,000 courses available. We centrally manage and organize on-the-job training, instructor-led trainings and online trainings in many different languages and topics through our global Learning Management System.
Our HSE and employee well-being can also be seen in our focus on quality implementation of proactive Leading Indicator programs and metrics to drive improved Lagging Indicator performance. 9 Environmental, Social and Governance (“ESG”) Commitment West has been committed to ESG topics for many years.
Our HSE and employee well-being can also be seen in our focus on quality implementation of proactive Leading Indicator programs and metrics, and team-member-led Hazard Identification programs that help to drive improved Lagging Indicator performance. 9 Environmental, Social and Governance (“ESG”) Commitment West has been committed to ESG topics for many years.
International We have significant operations outside of the United States (“U.S.”), which are managed through the same business segments as our U.S. operations – Proprietary Products and Contract-Manufactured Products. Sales outside of the U.S. accounted for 58.0% of our net sales in 2023.
International We have significant operations outside of the United States (“U.S.”), which are managed through the same business segments as our U.S. operations – Proprietary Products and Contract-Manufactured Products. Sales outside of the U.S. accounted for 57.5% of our net sales in 2024.
Human Ca pital Management Our People As of December 31, 2023, we employed approximately 10,600 people, excluding contractors and temporary workers, in our operations throughout the world. During 2023 , West hired approximately 2,100 new team members and experienced an attrition rate of approximately 21%.
Human Ca pital Management Our People As of December 31, 2024, we employed approximately 10,600 people, excluding contractors and temporary workers, in our operations throughout the world. During 2024 , West hired approximately 1,800 new team members and experienced an attrition rate of approximately 17%.
Every team member is required to undergo Code of Conduct and mutual respect in the workplace training annually. Our focus on talent acquisition, performance management, resource planning and leadership assessment are strongly aligned with our diversity, equity and inclusion strategies. We understand that diversity leads to greater innovation, more opportunities, better access to talent and stronger business performance.
Every team member is required to undergo Code of Conduct and mutual respect in the workplace training annually. Our focus on talent acquisition, performance management, resource planning and leadership assessment are strongly aligned with our inclusion, collaboration, and innovation strategies, all of which lead to more opportunities, better access to talent and stronger business performance.
Our long-term strategic priorities include focus on talent attraction, retention and engagement (including efforts to increase the diversity, equity and inclusivity of our workforce to reflect the communities in which we live and work); a climate and greenhouse gas ("GHG") reduction strategy that incorporates renewable energy and reduced absolute and intensity emissions; developing a more sustainable and responsible supply chain; research and development that focuses on issues of sustainability including secondary packaging, beneficial reuse and recyclability; and, reduction of waste and water in our operational processes.
Our long-term strategic priorities include focus on talent attraction, retention and engagement; a climate and greenhouse gas ("GHG") reduction strategy that incorporates renewable energy and reduced absolute and intensity emissions; developing a more sustainable and responsible supply chain; research and development that focuses on issues of sustainability including secondary packaging, beneficial reuse and recyclability; and, reduction of waste and water in our operational processes.
Although the general business processes are similar to the domestic business, international operations are exposed to additional risks. These risks include currency fluctuations relative to the U.S.
Although the general business processes are similar to the domestic business, international operations are exposed to additional risks. These risks include currency fluctuations relative to the U.S. Dollar (“USD”) and multiple tax jurisdictions.
Our ten largest customers accounted for 41.4% of our consolidated net sales in 2023, and one of these customers, individually accounted for more than 10% of consolidated net sales, at 10.9% or $322.1 million, contributing to net sales in both the Proprietary and Contract Manufacturing reporting segments.
Our ten largest customers accounted for 43.4% of our consolidated net sales in 2024, and one of these customers, individually accounted for more than 10% of consolidated net sales, at 12.3% or $356.4 million, contributing to net sales in both the Proprietary and Contract Manufacturing reporting segments.
We are also expanding our philanthropic scope to include more sustainability related initiatives. We solicit input from our employees on ways to improve in these and other ESG areas and see continued progress in these areas as critical to maintaining an engaged and responsible workforce. Available Information We maintain a website at www.westpharma.com .
We are also expanding our philanthropic scope to include more sustainability related initiatives. We solicit input from a variety of stakeholders including employees, customers, and suppliers on ways to improve in these and other ESG areas and see continued progress in these areas as critical to maintaining an engaged and responsible workforce.
Proprietary Products Segment 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.
Proprietary Products Segment Our Proprietary Products reportable segment offers elastomers & primary containment, drug delivery devices, integrated solutions, and analytical lab services, primarily to biologic, generic, and pharmaceutical drug customers.
To date, we have been able to manage these conditions without significant disruption to our business. 5 While we work closely with our suppliers, no assurance can be given that these efforts will be successful, and there may be events that cause supply interruption, reduction or termination that adversely impact our ability to manufacture and sell certain products.
While we work closely with our suppliers, no assurance can be given that these efforts will be successful, and there may be events that cause supply interruption, reduction or termination that adversely impact our ability to manufacture and sell certain products. See further discussion of the risks related to the supply chain and raw materials in Item 1A.
West’s global HSE team is also a critical component in leading the safety efforts at our sites. Each manufacturing location has dedicated and trained HSE professionals, responsible for general safety oversight and regulatory compliance at the site. Our Recordable Injury Rate in 2023 was 0.74 per 100 employees.
West’s global HSE team is also a critical component in leading the safety efforts at our sites. Each manufacturing location has dedicated and trained HSE professionals, responsible for general safety oversight and regulatory compliance at the site. Through our SEE-DO-SAY program, we train, empower, and expect our team members to proactively identify and mitigate risk before an incident occurs.
Heightened inflation may result in unfavorable conditions, inclusive of an increase in raw material cost.
Heightened inflation may result in unfavorable conditions, inclusive of an increase in raw material cost. To date, we have been able to manage these conditions without significant disruption to our business.
The following table presents the approximate percentage of our employees by region: North America 44% Europe 40% Asia Pacific 13% South America 3% Total 100% As of December 31, 2023, the following table presents the approximate percentage of our employees by business unit: Global Operations 84% Corporate 5% Sales and Marketing 4% Digital & Technology (D&T) 4% Research & Development 3% Total 100% As of December 31, 2023, we had the following global gender demographics: Men Women West Global Employees 64% 36% Diversity, Equity and Inclusion We actively foster an inclusive and collaborative culture and positive employee experiences for our team members where different views and perspectives are welcomed and valued at West.
The following table presents the approximate percentage of our employees by region: North America 44% Europe 41% Asia Pacific 12% South America 3% Total 100% As of December 31, 2024, the following table presents the approximate percentage of our employees by business unit: Global Operations 84% Corporate 6% Sales and Marketing 4% Digital & Technology (D&T) 4% Research & Development 2% Total 100% As of December 31, 2024, we had the following global gender demographics: Men Women West Global Employees 63% 37% 8 Training, Compliance and Talent Development We strongly encourage our team members to engage in continuous learning and provide development opportunities to strengthen individual skills and gain new experiences with the goal to build talent from within.
We believe, however, that neither our business nor any business segment is wholly dependent on a single intellectual property asset, license, or technology, by itself.
In 2024, more than 170 utility and design patents were issued to West across the globe. Certain key value-added and proprietary products and processes are exclusively licensed from Daikyo. We believe, however, that neither our business nor any business segment is wholly dependent on a single intellectual property asset, license, or technology, by itself.
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Dollar (“USD”), multiple tax jurisdictions and, particularly in South America, Eastern Europe, Israel, China and the Middle East, uncertain or changing regulatory regimes, or political and social issues, which could destabilize local markets and affect the demand for our products.
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Going forward, the ESG program will have an increased focus on compliance, given the increased regulatory requirements, as well as advancing our long-term strategic priorities.
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See further discussion of the risks related to the supply chain and raw materials in Item 1A. Risk Factors . Intellectual Property Our intellectual property, including patents, patent applications, trademarks, copyrights, know-how and trade secrets, is important to our business.
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Available Information We maintain a website at www.westpharma.com .
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We are convinced that this approach brings forth innovation, learning and growth for our team members on a global basis. The Chief Executive Officer ("CEO") and the executive team members review diversity, equity and inclusion objectives throughout the year to ensure continuous focus and drive improvement.
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As of December 31, 2023, four out of the ten members of West's Leadership Team are women, while six out of the ten members are women and/or people of color. 8 Training, Compliance and Talent Development We strongly encourage our team members to engage in continuous learning and provide development opportunities to strengthen individual skills and gain new experiences with the goal to build talent from within.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur declaration and payment of future dividends is subject to risks and uncertainties, including deterioration of our financial condition or position; inability to declare a dividend in compliance with applicable laws or debt covenants; an increase in our cash needs or decrease in available cash; and the business judgment of the Board of Directors that a declaration of a dividend is not in our best interest. 17 If we fail to comply with our obligations under our distributorship or license agreements with Daikyo or the agreements are terminated early or not renewed, we could lose license rights and access to certain product and technology that are important to our business.
Biggest changeOur declaration and payment of future dividends is subject to risks and uncertainties, including deterioration of our financial condition or position; inability to declare a dividend in compliance with applicable laws or debt covenants; an increase in our cash needs or decrease in available cash; and the business judgment of the Board of Directors that a declaration of a dividend is not in our best interest.
Significant developments in U.S. policies could have a material adverse effect on our business and/or results of operations. We earn a substantial portion of our income in foreign countries and, as such, we are subject to the tax laws in the United States and numerous foreign jurisdictions.
Significant developments in U.S. tax policies could have a material adverse effect on our business and/or results of operations. We earn a substantial portion of our income in foreign countries and, as such, we are subject to the tax laws in the United States and numerous foreign jurisdictions.
We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and any alleged impact of our operations on climate change. We, along with other companies in many business sectors have been implementing and expanding ESG and sustainability strategies, specifically ways to track and reduce GHG emissions.
We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and any alleged impact of our operations on climate change. 20 We, along with other companies in many business sectors have been implementing and expanding ESG and sustainability strategies, specifically ways to track and reduce GHG emissions.
The results of audits or related disputes could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made. 19 For example, we and our subsidiaries are also engaged in a number of intercompany transactions across multiple tax jurisdictions.
The results of audits or related disputes could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made. For example, we and our subsidiaries are also engaged in a number of intercompany transactions across multiple tax jurisdictions.
If additional legislation or regulations were enacted, we could incur increased energy, environmental, administrative and other costs and capital expenditures to comply with the limitations. 20 Failure to comply with these regulations could result in fines and could affect our business, financial condition, results of operations and cash flows.
If additional legislation or regulations were enacted, we could incur increased energy, environmental, administrative and other costs and capital expenditures to comply with the limitations. Failure to comply with these regulations could result in fines and could affect our business, financial condition, results of operations and cash flows.
The functioning of our manufacturing and distribution assets and systems could be disrupted for reasons either within or beyond our control, including, without limitation: extreme weather, water scarcity and other longer-term climatic changes; natural or man-made disasters; pandemic; war; accidental damage; disruption to the supply of material or services; product quality and safety issues; systems failure; workforce actions; or environmental matters.
The functioning of our manufacturing and distribution assets and systems could be disrupted for reasons either within or beyond our control, including, without limitation: extreme weather, water scarcity and other longer-term climatic changes; natural or man-made disasters; pandemic; war; accidental damage; disruption to the supply of material or services; product quality and safety issues; power outages; systems failure; workforce actions; or environmental matters.
Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business and financial condition. The recent and potential future disruptions in access to bank deposits or lending commitments due to bank failure could materially and adversely affect our liquidity, our business and financial condition.
Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business and financial condition. Potential future disruptions in access to bank deposits or lending commitments due to bank failure could materially and adversely affect our liquidity, our business and financial condition.
We may be unable to identify suitable targets, opportunistic or otherwise, for acquisitions or other strategic transactions in the future.
However, we may be unable to identify suitable targets, opportunistic or otherwise, for acquisitions or other strategic transactions in the future.
We rely on patent, trademark, copyright, trade secret, and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our proprietary products, information, technologies and processes. We also have obligations with respect to the non-use and non-disclosure of third-party intellectual property.
Our patents, trademarks and other intellectual property are important to our business. We rely on patent, trademark, copyright, trade secret, and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our proprietary products, information, technologies and processes. We also have obligations with respect to the non-use and non-disclosure of third-party intellectual property.
Those conditions could negatively affect demand for our products due to customers decreasing their inventories in the near-term or long-term, reduction in sales due to raw material shortages, reduction in research and development efforts, our inability to sufficiently hedge our currency and raw material costs, insolvency of suppliers or customers, and exacerbate some of the other risks that affect our business, financial condition and results of operations.
Those conditions could negatively affect demand for our products due to customers decreasing their inventories in the near-term or long-term, reduction in sales due to raw material shortages, reduction in research and development efforts, our inability to sufficiently hedge our currency and raw material costs, insolvency of suppliers or customers, and exacerbate some of the other risks that affect our business, financial condition and results of operations. 11 Unauthorized access to our or our customers’ information and systems could negatively impact our business.
We may be unable to increase capacity or efficiency at our own manufacturing facilities, which could adversely affect our business, financial condition, and results of operations. We must adjust our production capacity as customer demand changes and are focused on increasing capacity at various facilities through our capital strategy.
We may be unable to increase capacity or efficiency at our own manufacturing facilities, which could adversely affect our business, financial condition, and results of operations. We must adjust our production capacity in accordance with customer demand changes and remain focused on increasing capacity at various facilities through our capital strategy.
Sales outside of the U.S. accounted for 58.0% of our consolidated net sales in 2023 and we anticipate that sales from international operations will continue to represent a significant portion of our net sales in the future.
Sales outside of the U.S. accounted for 57.5% of our consolidated net sales in 2024 and we anticipate that sales from international operations will continue to represent a significant portion of our net sales in the future.
Although we believe we have clearly reflected the economics of these transactions and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates.
Although we believe we have clearly reflected the economics of these transactions and the proper local transfer pricing documentation is in place, tax authorities may propose and sustain adjustments that could result in changes that may impact our mix of earnings in countries with differing statutory tax rates. 19 We are subject to stringent and changing obligations related to data privacy and security.
If the applicable regulations were to be modified in a way that reduced the level of data and information needed to prove equivalency for a change from one supplier’s components or devices to those made by another, it is likely that the competitive pressure would increase and adversely affect our sales and profitability.
If the applicable regulations were to be modified in a way that reduced the level of data and information needed to prove equivalency for a change from one supplier’s components or devices to those made by another, it is likely that the competitive pressure would increase and adversely affect our sales and profitability. 18 If we are not successful in protecting our intellectual property rights, our ability to compete may be affected.
Competition for experienced employees, particularly for persons with specialized skills, can be intense. Our ability to recruit such talent will depend on a number of factors, including compensation and benefits, work location and work environment. If we cannot effectively recruit and retain qualified executives and employees, our business could be adversely affected.
Our ability to recruit such talent will depend on a number of factors, including compensation and benefits, work location and work environment. If we cannot effectively recruit and retain qualified executives and employees, our business could be adversely affected.
Key value-added and proprietary products and processes are licensed from our affiliate, Daikyo, including but not limited to, Crystal Zenith, FluroTec ® and B2-coating technologies. Our rights to these products and processes are licensed pursuant to agreements that expire in 2027. However, if the agreements are terminated early or not renewed, our business could be adversely impacted.
Key value-added and proprietary products and processes are licensed from our affiliate, Daikyo, including but not limited to, Crystal Zenith, FluroTec ® and B2-coating technologies. Our rights to these products and processes are licensed pursuant to agreements that expire in 2027.
Legal and Regulatory Risks We are subject to regulation by governments around the world, and if these regulations are not complied with, existing and future operations may be curtailed, and we could be subject to liability.
However, if the agreements are terminated early or not renewed, our business could be adversely impacted. 17 Legal and Regulatory Risks We are subject to regulation by governments around the world, and if these regulations are not complied with, existing and future operations may be curtailed, and we could be subject to liability.
We are subject to stringent and changing obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm and other adverse business consequences.
Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm and other adverse business consequences. In addition to our own sensitive and proprietary business information, we handle transactional and personal information worldwide.
In some circumstances, such adverse events could also cause delays in new product approvals. 16 A loss of key personnel or highly skilled employees could disrupt our operations. Our future success depends, in large part, on our ability to retain key employees, including our executive officers and individuals in technical, marketing, sales, and research positions.
In some circumstances, such adverse events could also cause delays in new product approvals. 16 A loss of or inability to attract key personnel or highly skilled employees could disrupt our operations.
We may not succeed in finding and completing acquisitions or other strategic transactions, which could have an adverse effect on our business and results of operations. We have historically engaged in acquisition activity, and we may in the future engage in acquisitions or other strategic transactions, such as joint ventures or investments in other entities.
We may not succeed in finding and completing acquisitions or other strategic transactions, which could have an adverse effect on our business and results of operations. We expect to continue to seek acquisition opportunities that compliment and expand our existing operations.
There is no certainty that any regulatory approval may be obtained or maintained indefinitely, and our ability to launch products to the market and maintain market presence is not guaranteed. 18 Changes in the regulation of drug products and devices may increase competitive pressure and adversely affect our business.
The time required to obtain approval for sale internationally may be longer or shorter than that required for FDA approval. There is no certainty that any regulatory approval may be obtained or maintained indefinitely, and our ability to launch products to the market and maintain market presence is not guaranteed.
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Both domestic and international markets experienced inflationary pressures in fiscal year 2023 and inflation rates in the U.S., as well as in other countries in which we operate, could continue at elevated levels for the near-term.
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Our future success depends, in large part, on our ability to attract and retain key employees, including our executive officers and individuals in technical, marketing, sales, and research positions. Competition for experienced employees, particularly for persons with specialized skills, can be intense.
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In addition, the Federal Reserve in the U.S. and other central banks in various countries have raised, and may again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.
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If we fail to comply with our obligations under our distributorship or license agreements with Daikyo or the agreements are terminated early or not renewed, we could lose license rights and access to certain product and technology that are important to our business.
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Interest rate increases or other government actions taken to reduce inflation could also result in recessionary pressures in many parts of the world. 11 Unauthorized access to our or our customers’ information and systems could negatively impact our business.
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Changes in the regulation of drug products and devices may increase competitive pressure and adversely affect our business.
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The time required to obtain approval for sale internationally may be longer or shorter than that required for FDA approval.
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If we are not successful in protecting our intellectual property rights, our ability to compete may be affected. Our patents, trademarks and other intellectual property are important to our business.
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In addition to our own sensitive and proprietary business information, we handle transactional and personal information worldwide.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, our ERM function monitors cybersecurity risk and provides regular updates to the Audit Committee of our Board of Directors, annual updates to the Board of Directors, and regular reporting to the West Leadership Team on risk mitigation and response efforts.
Biggest changeAdditionally, our ERM program enables a portfolio view of the risks inherent in our business, including cybersecurity. The ERM function monitors and reports on these top risks with periodic updates to the Audit Committee and our Board of Directors, annual updates to the Board of Directors, and regular reporting to the West Leadership Team on risk mitigation and response efforts.
Our plan covers various cyber incidents like ransomware attacks, cyber-intrusions, data loss, denial of service, insider threats, malware attacks, and others. In a material cybersecurity incident, our D&T team, inclusive of our Chief Information Officer and VP of Cybersecurity and Infrastructure Support, address the threat via established escalation procedures, roles, responsibilities, and communication.
Our plan covers various cyber incidents like ransomware attacks, cyber-intrusions, data loss, denial of service, insider threats, malware attacks, and others. In a material cybersecurity incident, our D&T team, inclusive of our Chief Information Officer and our VP of Cybersecurity and Infrastructure Support, address the threat via established escalation procedures, roles, responsibilities, and communication.
The cybersecurity program is led by our Chief Information Officer and VP of Cybersecurity and Infrastructure Support, who provide quarterly updates to the Audit Committee of our Board of Directors, annual updates to the Board of Directors, and regular reports to the West Leadership Team about the program, including information about cyber risk management governance and the status of ongoing efforts to strengthen cybersecurity effectiveness.
The cybersecurity program is led by our Chief Information Officer and our VP of Cybersecurity and Infrastructure Support, who provide periodic updates to the Audit Committee of our Board of Directors, annual updates to the Board of Directors, and regular reports to the West Leadership Team about the program, including information about cyber risk management governance and the status of ongoing efforts to strengthen cybersecurity effectiveness.
Security begins at the top of our organization, where Company leadership consistently communicates the requirements for vigilance and compliance throughout the organization, and then leads by example. Our diligence and assessment extends beyond West, as the Company performs a cybersecurity assessment when third-party vendors and service providers are onboarded.
Security begins at the top of our organization, where Company leadership consistently communicates the requirements for vigilance and compliance throughout the organization, and then leads by example. Our diligence and assessment extend beyond West, as the Company performs a cybersecurity assessment when third-party vendors and service providers are onboarded.
In addition, we retain an external cybersecurity consultant to assist with a cybersecurity event as needed and maintain appropriate cybersecurity liability insurance. The Company also educates and shares best practices globally with its employees to raise awareness of cybersecurity threats.
In addition, we retain an external cybersecurity consultancy company to assist when a cybersecurity event arises, as needed and, in addition we maintain appropriate cybersecurity liability insurance. The Company also educates and shares best practices globally with its employees to raise awareness of cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeType of Facility/ Country Location Segment Manufacturing: North America United States of America Phoenix, AZ (2) Contract Manufactured Products and Proprietary Products Scottsdale, AZ (1) (2) Proprietary Products Tempe, AZ (2) Contract Manufactured Products St.
Biggest changeType of Facility/ Country Location Segment Manufacturing: North America United States of America Scottsdale, AZ (1) (2) Proprietary Products Tempe, AZ (2) Contract Manufactured Products and Proprietary Products St.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeVice President and Corporate Controller since October 2019. Prior to joining West, he served as Senior Vice President of Finance & Accounting and Controller of Amneal Pharmaceuticals, Inc., a specialty pharmaceutical company. Prior to Amneal, he held roles of increasing responsibility at the Chemours Company, UGI Corporation, and PricewaterhouseCoopers LLP. 26 PART II
Biggest changeVice President, Chief Accounting Officer and Corporate Controller from May 2020 to February 2024. Vice President and Corporate Controller from October 2019 to May 2020. Prior to joining West, he served as Senior Vice President of Finance & Accounting and Controller of Amneal Pharmaceuticals, Inc., a specialty pharmaceutical company.
Prior to joining West, she spent more than 25 years at IBM Corporation, an information technology services company, in a number of strategic and global human resources roles, including Vice President, Global Talent Management, Vice President of Human Resources for Worldwide Software Sales, and Human Resources Leader for the company’s Southwest European Region, based out of Spain. Eric M.
Prior to joining West, she spent more than 25 years at IBM Corporation, an information technology services company, in a number of strategic and global human resources roles, including Vice President, Global Talent Management, Vice President of Human Resources for Worldwide Software Sales, and Human Resources Leader for the company’s Southwest European Region, based out of Spain. 25 Eric M.
Prior to joining West, he spent more than 20 years at Merit Medical Systems, Inc., a leading manufacturer of disposable medical devices, where he served in a number of senior global leadership roles, including Chief Financial Officer and Treasurer, Controller for Europe, Middle East and Africa (EMEA) and Vice President of International Finance. 25 Annette F.
Prior to joining West, he spent more than 20 years at Merit Medical Systems, Inc., a leading manufacturer of disposable medical devices, where he served in a number of senior global leadership roles, including Chief Financial Officer and Treasurer, Controller for Europe, Middle East and Africa (EMEA) and Vice President of International Finance. Annette F.
Prior to Segal, she served for over 15 years in a variety of Legal leadership roles for Novartis, a global healthcare company, including Head of U.S. Legal for Novartis Business Service. Cindy Reiss-Clark 50 Chief Commercial Officer since May 2022. Senior Vice President, Global Markets and Commercial Solutions since November 2019.
Prior to Segal, she served for over 15 years in a variety of Legal leadership roles for Novartis, a global healthcare company, including Head of U.S. Legal for Novartis Business Service. Cindy Reiss-Clark 51 Chief Commercial Officer since May 2022. Senior Vice President, Global Markets and Commercial Solutions since November 2019.
Green 54 Chair of the Board since May 2022. Chief Executive Officer since April 2015 and President since December 2015. Prior to joining West, he was Executive Vice President and President of the Research Markets business unit at Sigma-Aldrich Corporation from 2013 to 2015.
Green 55 Chair of the Board since May 2022. Chief Executive Officer since April 2015 and President since December 2015. Prior to joining West, he was Executive Vice President and President of the Research Markets business unit at Sigma-Aldrich Corporation from 2013 to 2015.
Favorite 59 Senior Vice President and Chief Human Resources Officer since October 2015.
Favorite 60 Senior Vice President and Chief Human Resources Officer since October 2015.
Kimberly Banks MacKay 58 Senior Vice President, General Counsel and Corporate Secretary since December 2020. Prior to joining West, from April 2019 to November 2020, she served as Senior Vice President, General Counsel and Corporate Secretary at the Segal Group in New York, a privately held firm specializing in employee benefits and investment consulting.
Prior to joining West, from April 2019 to November 2020, she served as Senior Vice President, General Counsel and Corporate Secretary at the Segal Group in New York, a privately held firm specializing in employee benefits and investment consulting.
From January 2016 to September 2017, served as Lonza Pharma and Biotech, Senior Vice President of Global Sales. Prior to Lonza, she served for over 15 years in a variety of Commercial leadership roles at SAFC, a division of Sigma-Aldrich Company. Chad R. Winters 45 Vice President, Chief Accounting Officer and Corporate Controller since May 2020.
From January 2016 to September 2017, served as Lonza Pharma and Biotech, Senior Vice President of Global Sales. Prior to Lonza, she served for over 15 years in a variety of Commercial leadership roles at SAFC, a division of Sigma-Aldrich Company. Chad R. Winters 46 Vice President, Finance & Chief Accounting Officer since February 2024.
Additionally, executive officers may be elected upon hire or due to a promotion. Name Age Position Silji Abraham 52 Senior Vice President, Chief Technology Officer since December 2020. Senior Vice President, Chief Digital and Transformation Officer from February 2018 to December 2020.
Additionally, executive officers may be elected upon hire or due to a promotion. Name Age Position Bernard J. Birkett 56 Senior Vice President and Chief Financial Officer since April 2024. Senior Vice President and Chief Financial and Operations Officer from July 2022 to April 2024. Senior Vice President and Chief Financial Officer from June 2018 to July 2022.
Bernard J. Birkett 55 Senior Vice President and Chief Financial and Operations Officer since July 2022. Senior Vice President and Chief Financial Officer from June 2018 to July 2022. In addition, Treasurer from June 2018 to December 2019 and Principal Accounting Officer from October 2019 to April 2020.
In addition, Treasurer from June 2018 to December 2019 and Principal Accounting Officer from October 2019 to April 2020.
From 2009 to 2013, he served as Vice President and Managing Director, International, where he was responsible for Asia Pacific and Latin America, and prior thereto, held various commercial and operational roles. Quintin J. Lai 57 Vice President, Strategy and Investor Relations since January 2016. In addition, Corporate Development responsibilities from January 2016 to September 2021.
From 2009 to 2013, he served as Vice President and Managing Director, International, where he was responsible for Asia Pacific and Latin America, and prior thereto, held various commercial and operational roles. Kimberly Banks MacKay 59 Senior Vice President, General Counsel and Corporate Secretary since December 2020.
Removed
Prior to joining West, he most recently served as Executive Vice President and Chief Information Officer of MilliporeSigma, a subsidiary of Merck KGaA, Darmstadt, Germany. Prior to this role, he served as Chief Information Officer at Sigma-Aldrich Corporation, a leading life science and technology company, and worked in various leadership roles at Invensys Operations Management, ArvinMeritor and Chrysler Group.
Added
Prior to Amneal, he held roles of increasing responsibility at the Chemours Company, UGI Corporation, and PricewaterhouseCoopers LLP. 26 PART II
Removed
Prior to joining West, he was Vice President of Investor Relations and Corporate Strategy at Sigma-Aldrich Corporation from 2012 to 2015. From 2002 to 2012, he was at Robert W. Baird & Company, where he held various roles, including Managing Director and Senior Equity Research Analyst of the Life Science Tools and Diagnostic sector and Associate Director of Equity Research.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−3 removed3 unchanged
Biggest changeWhen considering whether to declare a dividend, our Board of Directors will take into account: • general economic and business conditions; • our financial condition and operating results; • our available cash and current and anticipated cash needs; • our capital requirements; • contractual, legal, tax and regulatory restrictions on the payment of dividends by us; and • such other factors as our Board of Directors may deem relevant Issuer Purchases of Equity Securities The following table shows information with respect to purchases of our common stock made during the three months ended December 31, 2023 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act: Period Total 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) October 1 - 31, 2023 — $ — — $ 738,700,000 November 1 - 30, 2023 261,080 339.86 261,080 650,000,000 December 1 - 31, 2023 251,182 351.49 251,182 561,700,000 Total 512,262 $ 345.56 512,262 $ 561,700,000 (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.
Biggest changeIssuer Purchases of Equity Securities The following table shows information with respect to purchases of our common stock made during the three months ended December 31, 2024 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act: Period Total 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) October 1 - 31, 2024 65,531 $ 297.81 65,531 $ 35,700,000 November 1 - 30, 2024 52,917 321.15 52,917 18,700,000 December 1 - 31, 2024 54,798 326.64 54,798 800,000 Total 173,246 $ 314.06 173,246 $ 800,000 (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 cumulative shareholder return on our common stock is based on an investment of $100 on December 31, 2018 and is compared to the cumulative total return of the S&P indices mentioned above over the period with a like amount invested. *Five year total return data obtained from NASDAQ IR Insight ITEM 6. RESERVED 28
The cumulative shareholder return on our common stock is based on an investment of $100 on December 31, 2019 and is compared to the cumulative total return of the S&P indices mentioned above over the period with a like amount invested. *Five year total return data obtained from NASDAQ IR Insight ITEM 6. RESERVED 28
Dividends We paid a quarterly dividend of $0.18 per share on our common stock in each of the first three quarters of 2022; $0.19 per share in the fourth quarter of 2022 and each of the first three quarters of 2023; and $0.20 per share in the fourth quarter of 2023.
Dividends We paid a quarterly dividend of $0.19 per share on our common stock in each of the first three quarters of 2023; $0.20 per share in the fourth quarter of 2023 and each of the first three quarters of 2024; and $0.21 per share in the fourth quarter of 2024.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “WST.” As of January 25, 2024, we had 574 shareholders of record, which excludes beneficial owners whose shares were held by brokerage firms, depositaries and other institutional firms in “street names” for their customers.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “WST.” As of February 6, 2025, we had 523 shareholders of record, which excludes beneficial owners whose shares were held by brokerage firms, depositaries and other institutional firms in “street names” for their customers.
During the three months ended December 31, 2023, we purchased 512,262 shares of our common stock under the program at a cost of $177.0 million, or an average price of $345.56 per share.
During the three months ended December 31, 2024, we purchased 173,246 shares of our common stock under the program at a cost of $54.4 million, or an average price of $314.06 per share.
Performance Graph The following performance graph compares the cumulative total return to holders of our common stock with the cumulative total return of the Standard & Poor’s 500 Index (“S&P 500”) and the Standard & Poor's 500 Health Care Index, for the five years ended December 31, 2023.
During the year ended December 31, 2024, we purchased 1,583,032 shares of our common stock under the program at a cost of $560.9 million, or an average price of $354.30 per share. 27 Performance Graph The following performance graph compares the cumulative total return to holders of our common stock with the cumulative total return of the Standard & Poor’s 500 Index (“S&P 500”) and the Standard & Poor's 500 Health Care Index, for the five years ended December 31, 2024.
Removed
During the year ended December 31, 2023, we purchased 1,265,661 shares of our common stock under the program at a cost of $438.3 million, or an average price of $346.34 per share. 27 In December 2021, our Board of Directors approved a share repurchase program for calendar-year 2022 authorizing the repurchase of up to 650,000 shares of our common stock from time to time on the open market or in privately-negotiated transactions.
Added
When considering whether to declare a dividend, our Board of Directors will take into account: • general economic and business conditions; • our financial condition and operating results; • our available cash and current and anticipated cash needs; • our capital requirements; • contractual, legal, tax and regulatory restrictions on the payment of dividends by us; and • such other factors as our Board of Directors may deem relevant.
Removed
The number of shares to be repurchased and the timing of such transactions depended on a variety of factors, including market conditions. This share repurchase program was completed by December 31, 2022. There were no shares purchased during the three months ended December 31, 2022 under the calendar-year 2022 program.
Removed
During the year ended December 31, 2022, we purchased 563,334 shares of our common stock under the calendar-year 2022 program at a cost of $202.8 million, or an average price of $360.03 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+10 added−18 removed49 unchanged
Biggest changeAll of the R&D costs incurred during 2023, 2022 and 2021 related to Proprietary Products. 34 Selling, General and Administrative (“SG&A”) Costs The following table presents SG&A costs, consolidated and by reportable segment and corporate and unallocated items: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Proprietary Products $ 240.6 $ 212.6 $ 244.8 13.2 % (13.2 %) Contract-Manufactured Products 24.4 20.9 15.9 16.7 % 31.4 % Corporate and unallocated items 88.4 83.4 102.1 6.0 % (18.3 %) Consolidated SG&A costs $ 353.4 $ 316.9 $ 362.8 11.5 % (12.7 %) SG&A as a % of net sales 12.0 % 11.0 % 12.8 % Consolidated SG&A costs increased by $36.5 million, or 11.5%, in 2023, primarily due to higher annual incentive compensation, increased compensation costs, an increase in fees related to professional services and an unfavorable foreign currency translation impact of $1.6 million.
Biggest changeAll of the R&D costs incurred during 2024, 2023 and 2022 related to Proprietary Products. 34 Selling, General and Administrative (“SG&A”) Costs The following table presents SG&A costs, consolidated and by reportable segment and corporate and unallocated items: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Proprietary Products $ 231.5 $ 240.6 $ 212.6 (3.8 %) 13.2 % Contract-Manufactured Products 26.2 24.4 20.9 7.4 % 16.7 % Corporate and unallocated items 80.8 88.4 83.4 (8.6 %) 6.0 % Consolidated SG&A costs $ 338.5 $ 353.4 $ 316.9 (4.2 %) 11.5 % SG&A as a % of net sales 11.7 % 12.0 % 11.0 % Consolidated SG&A costs decreased by $14.9 million, or 4.2%, in 2024, including a favorable foreign currency translation impact of $0.5 million, primarily due to lower annual incentive compensation and a decrease in expense related to stock-based compensation, partially offset by increased salary and wages.
($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2022 GAAP $ 734.0 $ 114.7 $ 585.9 $ 7.73 Unallocated items: Restructuring and other charges (3) 23.8 2.0 21.8 0.29 Pension settlement (6) — 20.6 31.6 0.42 Amortization of acquisition-related intangible assets (4) 0.7 0.1 2.8 0.04 Cost investment activity (2) 3.5 — 3.5 0.05 Royalty acceleration (7) — 1.3 (1.3) (0.02) Tax law changes (8) — (5.7) 5.7 0.07 Year ended December 31, 2022 adjusted amounts (non-U.S.
($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2022 GAAP $ 734.0 $ 114.7 $ 585.9 $ 7.73 Unallocated items: Restructuring and other charges (1) 23.8 2.0 21.8 0.29 Amortization of acquisition-related intangible assets (2) 0.7 0.1 2.8 0.04 Cost investment activity (4) 3.5 — 3.5 0.05 Pension settlement (6) — 20.6 31.6 0.42 Royalty acceleration (7) — 1.3 (1.3) (0.02) Tax law changes (8) — (5.7) 5.7 0.07 Year ended December 31, 2022 adjusted amounts (non-U.S.
The after-tax excess earnings are then discounted to present value using the respective discount rates. Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, and reviewed for impairment whenever circumstances indicate that the carrying value of these assets may not be recoverable.
The after-tax excess earnings are then discounted to present value using the respective discount rates. 40 Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives and reviewed for impairment whenever circumstances indicate that the carrying value of these assets may not be recoverable.
The Company previously entered into a material supply agreement for butyl polymers used as a principal raw material in a broad range of the Company’s polymer-based pharmaceutical packaging products. • Our long-term debt obligations, net of unamortized debt issuance costs including fixed and variable-rate debt, is further discussed in Note 10, Debt . • Our operating lease obligations primarily related to land, buildings, and machinery and equipment, with lease terms through 2047 further discussed in Note 6, Leases . • Our various tax-qualified and non-qualified defined benefit pension plan obligations in the U.S. and other countries that cover employees and former employees who meet eligibility requirements is further discussed in Note 15, Benefit Plans . 39 CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis addresses consolidated financial statements that are prepared in accordance with U.S.
The Company previously entered into a material supply agreement for butyl polymers used as a principal raw material in a broad range of the Company’s polymer-based pharmaceutical packaging products. • Our long-term debt obligations, net of unamortized debt issuance costs including fixed and variable-rate debt, is further discussed in Note 10, Debt . • Our lease obligations primarily related to land, buildings, and machinery and equipment, with lease terms through 2269 further discussed in Note 6, Leases . • Our various tax-qualified and non-qualified defined benefit pension plan obligations in the U.S. and other countries that cover employees and former employees who meet eligibility requirements is further discussed in Note 15, Benefit Plans . 39 CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis addresses consolidated financial statements that are prepared in accordance with U.S.
GAAP financial measures: ($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2023 GAAP $ 676.0 $ 122.3 $ 593.4 $ 7.88 Unallocated items: Loss on disposal of plant (1) 11.6 (0.7) 12.3 0.16 Cost investment activity (2) 4.3 — 4.3 0.06 Restructuring and other charges (3) (2.0) (0.9) (1.1) (0.02) Amortization of acquisition-related intangible assets (4) 0.7 0.1 2.8 0.04 Legal settlement (5) — (0.9) (2.9) (0.04) Year ended December 31, 2023 adjusted amounts (non-U.S.
($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2023 GAAP $ 676.0 $ 122.3 $ 593.4 $ 7.88 Unallocated items: Restructuring and other charges (1) (2.0) (0.9) (1.1) (0.02) Amortization of acquisition-related intangible assets (2) 0.7 0.1 2.8 0.04 Loss on disposal of plant (3) 11.6 (0.7) 12.3 0.16 Cost investment activity (4) 4.3 — 4.3 0.06 Legal settlement (5) — (0.9) (2.9) (0.04) Year ended December 31, 2023 adjusted amounts (non-U.S.
Working capital is defined as current assets less current liabilities. Cash and cash equivalents – Our cash and cash equivalents balance at December 31, 2023 consisted of cash held in depository accounts with banks around the world and cash invested in high-quality, short-term investments.
Working capital is defined as current assets less current liabilities. Cash and cash equivalents – Our cash and cash equivalents balance at December 31, 2024 consisted of cash held in depository accounts with banks around the world and cash invested in high-quality, short-term investments.
(3) During 2023, the Company recorded a benefit to restructuring and other charges of $2.0 million, which represents the net impact of a $2.8 million benefit within other expense (income) for revised severance estimates in connection with its 2022 restructuring plan and an inventory write down of $0.8 million within cost of goods and services sold.
During 2023, the Company recorded a benefit to restructuring and other charges of $2.0 million, which represents the net impact of a $2.8 million b enefit within other expense (income) for revised severance estimates in connection with its 2022 restructuring plan and an inventory write down of $0.8 million within cost of goods and services sold.
At December 31, 2023, we were in compliance with all of our debt covenants, and we expect to continue to be in compliance with the terms of these agreements throughout 2024.
At December 31, 2024, we were in compliance with all of our debt covenants, and we expect to continue to be in compliance with the terms of these agreements throughout 2025.
Other Expense (Income) The following table presents other expense and income items, consolidated and by reportable segment and corporate and unallocated items: Year Ended December 31, ($ in millions) 2023 2022 2021 Proprietary Products $ 14.9 $ (2.2) $ 0.2 Contract-Manufactured Products (0.5) 1.6 0.7 Corporate and unallocated items 17.0 27.4 7.0 Consolidated other expense (income) $ 31.4 $ 26.8 $ 7.9 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.
Other Expense (Income) The following table presents other expense and income items, consolidated and by reportable segment and corporate and unallocated items: Year Ended December 31, ($ in millions) 2024 2023 2022 Proprietary Products $ 22.1 $ 14.9 $ (2.2) Contract-Manufactured Products (0.5) (0.5) 1.6 Corporate and unallocated items (0.6) 17.0 27.4 Consolidated other expense (income) $ 21.0 $ 31.4 $ 26.8 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.
Discussion of the year-over-year changes for the fiscal year ended December 31, 2022 compared to the fiscal year ended December 31, 2021 and the results of operations and cash flows for the fiscal year ended December 31, 2021 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Result of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 21, 2023, and is incorporated herein by reference.
Discussion of the year-over-year changes for the fiscal year ended December 31, 2023 compared to the fiscal year ended December 31, 2022 and the results of operations and cash flows for the fiscal year ended December 31, 2022 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Result of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 20, 2024, and is incorporated herein by reference.
If, based upon our qualitative assessment, we determined that it was not more likely than not that the fair value of each of our reporting units was less than its carrying amount, then it would not be necessary to perform the quantitative goodwill impairment test.
If, based upon our qualitative assessment, we determined that it was not more likely than not that the fair value of each of our reporting units was less than its carrying amount, then it would not be necessary to perform the quantitative goodwill impairment test. We elected to follow this guidance for our annual impairment test.
We believe that cash on hand and cash generated from operations, together with availability under our 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 to continue to meet customer demand.
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.
GAAP, these purchase obligations are not reflected in the accompanying consolidated balance sheets. At December 31, 2023, our outstanding unconditional contractual commitments, including for the purchase of raw materials and finished goods, amounted to $298.3 million, of which $76.8 million is due to be paid in 2024. These purchase commitments are in the normal course of business.
GAAP, these purchase obligations are not reflected in the accompanying consolidated balance sheets. At December 31, 2024, our outstanding unconditional contractual commitments, including for the purchase of raw materials and finished goods, amounted to $200.7 million, of which $46.7 million is due to be paid in 2025. These purchase commitments are in the normal course of business.
Income Taxes The provision for income taxes was $122.3 million, $114.7 million, and $107.2 million for the years 2023, 2022, and 2021, respectively, and the effective tax rate was 17.5%, 16.9%, and 14.3%, respectively.
Income Taxes The provision for income taxes was $107.5 million, $122.3 million, and $114.7 million for the years 2024, 2023, and 2022, respectively, and the effective tax rate was 18.4%, 17.5%, and 16.9%, respectively.
The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments. 33 Gross Profit The following table presents gross profit and related gross margins, consolidated and by reportable segment and by unallocated: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Proprietary Products: Gross profit $ 1,034.0 $ 1,053.3 $ 1,093.9 (1.8 %) (3.7 %) Gross profit margin 43.1 % 43.8 % 47.2 % Contract-Manufactured Products: Gross profit $ 96.0 $ 82.9 $ 83.8 15.8 % (1.1 %) Gross profit margin 17.4 % 17.3 % 16.3 % Unallocated items $ (0.8) $ — $ (1.9) Consolidated gross profit $ 1,129.2 $ 1,136.2 $ 1,175.8 (0.6 %) (3.4 %) Consolidated gross profit margin 38.3 % 39.4 % 41.5 % Consolidated gross profit decreased by $7.0 million, or 0.6%, in 2023, including a favorable foreign currency translation impact of $13.3 million.
The intersegment sales elimination, which is required for the presentation of consolidated net sales, represents the elimination of components sold between our segments. 33 Gross Profit The following table presents gross profit and related gross margins, consolidated and by reportable segment and by unallocated: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Proprietary Products: Gross profit $ 900.5 $ 1,034.0 $ 1,053.3 (12.9 %) (1.8 %) Gross profit margin 38.6 % 43.1 % 43.8 % Contract-Manufactured Products: Gross profit $ 98.0 $ 96.0 $ 82.9 2.1 % 15.8 % Gross profit margin 17.5 % 17.4 % 17.3 % Unallocated items $ — $ (0.8) $ — Consolidated gross profit $ 998.5 $ 1,129.2 $ 1,136.2 (11.6 %) (0.6 %) Consolidated gross profit margin 34.5 % 38.3 % 39.4 % Consolidated gross profit decreased by $130.7 million, or 11.6%, in 2024, including an unfavorable foreign currency translation impact of $2.1 million.
Operating Profit The following table presents operating profit and adjusted operating profit, consolidated and by reportable segment, corporate and unallocated items: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Proprietary Products $ 710.1 $ 784.4 $ 796.1 (9.5 %) (1.5 %) Contract-Manufactured Products 72.1 60.4 67.2 19.4 % (10.1 %) Corporate and unallocated (106.2) (110.8) (111.0) (4.2 %) (0.2 %) Consolidated operating profit $ 676.0 $ 734.0 $ 752.3 (7.9 %) (2.4 %) Consolidated operating profit margin 22.9 % 25.4 % 26.6 % Unallocated items 14.6 28.0 10.1 Adjusted consolidated operating profit $ 690.6 $ 762.0 $ 762.4 (9.4 %) (0.1 %) Adjusted consolidated operating profit margin 23.4 % 26.4 % 26.9 % Consolidated operating profit decreased by $58.0 million, or 7.9%, in 2023, including a favorable foreign currency translation impact of $10.9 million, due to the factors described above.
Operating Profit The following table presents operating profit and adjusted operating profit, consolidated and by reportable segment, corporate and unallocated items: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Proprietary Products $ 577.8 $ 710.1 $ 784.4 (18.6 %) (9.5 %) Contract-Manufactured Products 72.3 72.1 60.4 0.3 % 19.4 % Corporate and unallocated (80.2) (106.2) (110.8) (24.5 %) (4.2 %) Consolidated operating profit $ 569.9 $ 676.0 $ 734.0 (15.7 %) (7.9 %) Consolidated operating profit margin 19.7 % 22.9 % 25.4 % Unallocated items 2.9 14.6 28.0 Adjusted consolidated operating profit $ 572.8 $ 690.6 $ 762.0 (17.1 %) (9.4 %) Adjusted consolidated operating profit margin 19.8 % 23.4 % 26.4 % Consolidated operating profit decreased by $106.1 million, or 15.7%, in 2024, including an unfavorable foreign currency translation impact of $1.6 million, due to the factors described above.
Liquidity and Capital Resources The table below presents selected liquidity and capital measures as of: ($ in millions) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 853.9 $ 894.3 Accounts receivable, net $ 512.0 $ 507.4 Inventories $ 434.7 $ 414.8 Accounts payable $ 242.4 $ 215.4 Debt $ 206.8 $ 208.9 Equity $ 2,881.0 $ 2,684.9 Working capital $ 1,264.6 $ 1,400.5 Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased.
Liquidity and Capital Resources The table below presents selected liquidity and capital measures as of: ($ in millions) December 31, 2024 December 31, 2023 Cash and cash equivalents $ 484.6 $ 853.9 Accounts receivable, net $ 552.5 $ 512.0 Inventories $ 377.0 $ 434.7 Accounts payable $ 239.3 $ 242.4 Debt $ 202.6 $ 206.8 Equity $ 2,682.3 $ 2,881.0 Working capital $ 987.7 $ 1,264.6 Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased.
(6) During 2022, we recorded a gross pension settlement charge of $52.2 million within other nonoperating (income) expense, which primarily relates to the full settlement of the U.S. qualified defined benefit plan (the "U.S. pension plan").
(6) During 2022, we recorded a gross pension settlement charge of $52.2 million within other nonoperating expense (income), which primarily relates to the full settlement of the U.S. qualified defined benefit plan (the "U.S. pension plan"). Please refer to Note 15, Benefit Plans , for further discussion of these items.
(7) During 2022, the Company increased its expected tax benefit related to the prepayment of future royalties from one of its subsidiaries by $1.3 million . During 2021, the Company prepaid future royalties from one of its subsidiaries, which resulted in a $18.5 million tax benefit.
(7) During 2022, the Company increased its expected tax benefit related to the prepayment of future royalties from one of its subsidiaries by $1.3 million .
For further information on our position regarding permanent reinvestment of foreign subsidiary earnings and profits refer to Note 17, Income Taxes . 38 Working capital - Working capital at December 31, 2023 decreased by $135.9 million, or 9.7%, as compared to December 31, 2022, which includes a favorable foreign currency translation impact of $25.4 million.
For further information on our position regarding permanent reinvestment of foreign subsidiary earnings and profits refer to Note 17, Income Taxes . 38 Working capital - Working capital at December 31, 2024 decreased by $276.9 million, or 21.9%, as compared to December 31, 2023, which includes an unfavorable foreign currency translation impact of $41.8 million.
Net Sales The following table presents net sales, consolidated and by reportable segment: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Proprietary Products $ 2,397.3 $ 2,406.8 $ 2,317.3 (0.4 %) 3.9 % Contract-Manufactured Products 552.5 480.4 514.7 15.0 % (6.7 %) Intersegment sales elimination — (0.3) (0.4) (100.0 %) (25.0 %) Consolidated net sales $ 2,949.8 $ 2,886.9 $ 2,831.6 2.2 % 2.0 % Consolidated net sales increased by $62.9 million, or 2.2%, in 2023, including a favorable foreign currency translation impact of $27.9 million.
Net Sales The following table presents net sales, consolidated and by reportable segment: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Proprietary Products $ 2,334.5 $ 2,397.3 $ 2,406.8 (2.6 %) (0.4 %) Contract-Manufactured Products 558.7 552.5 480.4 1.1 % 15.0 % Intersegment sales elimination — — (0.3) — % (100.0 %) Consolidated net sales $ 2,893.2 $ 2,949.8 $ 2,886.9 (1.9 %) 2.2 % Consolidated net sales decreased by $56.6 million, or 1.9%, in 2024, including an unfavorable foreign currency translation impact of $7.0 million.
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.
Please refer to Note 10, Debt , for further discussion of our multi-currency revolving credit facility. 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.
During 2021, the Company recorded expense to restructuring and other charges of $2.2 million to optimize certain organizational structures within the Company. (4) During 2023, 2022 and 2021, the Company recorded $0.7 million, $0.7 million and $0.8 million, respectively, of amortization expense within operating profit associated with an acquisition of an intangible asset during the second quarter of 2020.
(2) During 2024, 2023 and 2022, the Company recorded $0.8 million, $0.7 million and $0.7 million, respectively, of amortization expense within operating profit associated with an acquisition of an intangible asset during the second quarter of 2020.
Equity in net income of affiliated companies decreased by $3.0 million, or 14.5%, in 2023, primarily due to less favorable operating results at the Mexico affiliates. 37 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following table presents cash flow data for the years ended December 31: ($ in millions) 2023 2022 2021 Net cash provided by operating activities $ 776.5 $ 724.0 $ 584.0 Net cash used in investing activities $ (368.7) $ (288.2) $ (253.1) Net cash used in financing activities $ (459.6) $ (293.6) $ (168.1) Net Cash Provided by Operating Activities Net cash provided by operating activities increased by $52.5 million in 2023, primarily due to favorable working capital management in 2023, as compared to 2022.
Equity in net income of affiliated companies decreased by $3.0 million, or 16.9%, in 2024, primarily due to less favorable operating results at Daikyo. 37 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following table presents cash flow data for the years ended December 31: ($ in millions) 2024 2023 2022 Net cash provided by operating activities $ 653.4 $ 776.5 $ 724.0 Net cash used in investing activities $ (378.7) $ (368.7) $ (288.2) Net cash used in financing activities $ (622.6) $ (459.6) $ (293.6) Net Cash Provided by Operating Activities Net cash provided by operating activities decreased by $123.1 million in 2024, primarily due to a decline in operating results.
At December 31, 2023, the borrowing capacity available under the 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. Please refer to Note 10, Debt , for further discussion of our Credit Facility.
At December 31, 2024, we had no outstanding borrowings under the multi-currency revolving credit facility. At December 31, 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.
Additionally, during 2023, 2022 and 2021, the company recorded $2.1 million of amortization expense in association with an acquisition of increased ownership interest in Daikyo. (5) During 2023 , the Company recorded a benefit of $3.8 million within other nonoperating (income) expense as a result of a favorable legal settlement related to a matter not included in our normal operations.
(5) During 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.
Net Cash Used in Financing Activities Net cash used in financing activities increased by $166.0 million in 2023, primarily due to increases in purchases under our share repurchase program in 2023, as compared to 2022. This was partially offset by reduced debt repayments and increased proceeds from stock-based compensation awards in 2023, as compared to 2022.
Net Cash Used in Financing Activities Net cash used in financing activities increased by $163.0 million in 2024, primarily due to increases in purchases under our share repurchase program, increased principal repayments on finance leases and decreased proceeds from stock-based compensation awards in 2024, as compared to 2023.
Net Cash Used in Investing Activities Net cash used in investing activities increased by $80.5 million in 2023, due to an increase in capital expenditures for additional manufacturing capacity in 2023 to meet customer demand and improve manufacturing lead times.
Net Cash Used in Investing Activities Net cash used in investing activities increased by $10.0 million in 2024, due to an increase in capital expenditures for additional manufacturing capacity to meet future customer demand.
During 2021, the Company recorded a tax benefit of $1.4 million due to the impact of a United Kingdom tax law change enacted during the period. 32 RESULTS OF OPERATIONS We evaluate the performance of our segments based upon, among other things, segment net sales and operating profit.
(8) During 2022, the Company incurred additional tax expense of $5.7 million due to the impact of a tax law change in the state of Pennsylvania enacted during the period. 32 RESULTS OF OPERATIONS We evaluate the performance of our segments based upon, among other things, segment net sales and operating profit.
Excluding foreign currency translation effects and the impact related to the disposal of one of our plants of $11.5 million, consolidated net sales increased by $46.5 million, or 1.6%. Proprietary Products – Proprietary Products net sales decreased by $9.5 million, or 0.4%, in 2023, including a favorable foreign currency translation impact of $22.1 million.
Excluding foreign currency translation effects and the impact related to the disposal of one of our plants of $4.3 million, consolidated net sales decreased by $45.3 million, or 1.5%. Proprietary Products – Proprietary Products net sales decreased by $62.8 million, or 2.6%, in 2024, including an unfavorable foreign currency translation impact of $6.9 million.
GAAP) $ 762.0 $ 133.0 $ 650.0 $ 8.58 During 2022, we recorded a tax benefit of $16.5 million associated with stock-based compensation.
GAAP) $ 762.0 $ 133.0 $ 650.0 $ 8.58 During 2022, we recorded a tax benefit of $16.5 million associated with stock-based compensation. 31 (1) During 2024, the Company recorded expense to restructuring and other charges of $2.1 million.
The cash and cash equivalents balance at December 31, 2023 included $368.8 million of cash held by subsidiaries within the U.S. and $485.1 million of cash held by subsidiaries outside of the U.S.
The cash and cash equivalents balance at December 31, 2024 included $94.4 million of cash held by subsidiaries within the U.S. and $390.2 million of cash held by subsidiaries outside of the U.S.
($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2021 GAAP $ 752.3 $ 107.2 $ 661.8 $ 8.67 Unallocated items: Restructuring and other charges (3) 2.2 0.4 1.8 0.02 Pension settlement (6) — 0.5 1.5 0.02 Amortization of acquisition-related intangible assets (4) 0.8 0.1 2.8 0.04 Asset impairment (1) 2.8 — 2.8 0.04 Cost investment activity (2) 4.3 (0.1) 4.4 0.06 Royalty acceleration (7) — 18.5 (18.5) (0.25) Tax law changes (8) — 1.4 (1.4) (0.02) Year ended December 31, 2021 adjusted amounts (non-U.S.
GAAP financial measures: ($ in millions) Operating profit Income tax expense Net income Diluted EPS Year ended December 31, 2024 GAAP $ 569.9 $ 107.5 $ 492.7 $ 6.69 Unallocated items: Restructuring and other charges (1) 2.1 0.4 1.7 0.02 Amortization of acquisition-related intangible assets (2) 0.8 0.1 2.8 0.04 Year ended December 31, 2024 adjusted amounts (non-U.S.
Equity in Net Income of Affiliated Companies Equity in net income of affiliated companies was $17.7 million, $20.7 million, and $20.1 million for the years 2023, 2022, and 2021, respectively.
Please refer to Note 17, Income Taxes , for further discussion of our income taxes. Equity in Net Income of Affiliated Companies Equity in net income of affiliated companies was $14.7 million, $17.7 million, and $20.7 million for the years 2024, 2023, and 2022, respectively.
Consolidated gross profit margin decreased by 1.1 margin points in 2023. Proprietary Products – Proprietary Products gross profit decreased by $19.3 million, or 1.8%, in 2023, including a favorable foreign currency translation impact of $12.3 million. Proprietary Products gross profit margin decreased by 0.7 margin points in 2023.
Consolidated gross profit margin decreased by 3.8 margin points in 2024. Proprietary Products – Proprietary Products gross profit decreased by $133.5 million, or 12.9%, in 2024, including an unfavorable foreign currency translation impact of $2.1 million. Proprietary Products gross profit margin decreased by 4.5 margin points in 2024.
Excluding the impact of currency exchange rates, inventories, other current assets and total current liabilities increased by $13.5 million, $30.4 million and $145.1 million, respectively, while cash and cash equivalents and accounts receivable decreased by $56.1 million and $4.0 million, respectively.
Excluding the impact of currency exchange rates, cash and cash equivalents, total current liabilities and inventories decreased by $349.0 million, $103.3 million and $42.0 million, respectively, while accounts receivable increased by $58.8 million.
For unallocated items, please refer to the Financial Performance Summary section above for details. 36 Interest Expense, Net and Interest Income The following table presents interest expense, net, by significant component: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Interest expense $ 14.8 $ 11.6 $ 10.2 27.6 % 13.7 % Capitalized interest (5.8) (3.7) (2.0) 56.8 % 85.0 % Interest expense, net $ 9.0 $ 7.9 $ 8.2 13.9 % (3.7) % Interest income $ (28.0) $ (5.1) $ (1.0) 449.0 % 410.0 % Interest expense, net, increased by $1.1 million, or 13.9%, in 2023, primarily due to higher interest rates in 2023, as compared to 2022.
Interest Expense, Net and Interest Income The following table presents interest expense, net, by significant component: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Interest expense $ 16.2 $ 14.8 $ 11.6 9.5 % 27.6 % Capitalized interest (13.2) (5.8) (3.7) 127.6 % 56.8 % Interest expense, net $ 3.0 $ 9.0 $ 7.9 (66.7) % 13.9 % Interest income $ (19.6) $ (28.0) $ (5.1) (30.0) % 449.0 % 36 Interest expense, net, decreased by $6.0 million, or 66.7%, in 2024, primarily due to an increase in capitalized interest.
Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $72.1 million, or 15.0%, in 2023, including a favorable foreign currency translation impact of $5.8 million.
Contract-Manufactured Products – Contract-Manufactured Products net sales increased by $6.2 million, or 1.1%, in 2024, including an unfavorable foreign currency translation impact of $0.1 million.
Research and Development (“R&D”) Costs The following table presents consolidated R&D costs: Year Ended December 31, % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Consolidated R&D costs $ 68.4 $ 58.5 $ 52.8 16.9 % 10.8 % Consolidated R&D costs increased by $9.9 million, or 16.9%, in 2023, as compared to 2022, due to higher annual incentive compensation and additional research performed to identify new product opportunities.
Research and Development (“R&D”) Costs The following table presents consolidated R&D costs: Year Ended December 31, % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Consolidated R&D costs $ 69.1 $ 68.4 $ 58.5 1.0 % 16.9 % Consolidated R&D costs increased by $0.7 million, or 1.0%, in 2024, as compared to 2023, due to increased depreciation as a result of recent investments and increased salary and wages, offset by lower annual incentive compensation.
Contract-Manufactured Products – Contract-Manufactured Products other expense (income) changed by $2.1 million in 2023 as compared to 2022, primarily due to increased losses on foreign exchange transactions recorded in 2022, as compared to 2023. Corporate and unallocated items – Corporate and unallocated items changed by $10.4 million in 2023 as compared to 2022.
Proprietary Products – Proprietary Products other expense (income) changed by $7.2 million in 2024 as compared to 2023 , primarily due to increased losses on foreign exchange transactions and increased expense related to contingent consideration being recorded in 2024, as compared to 2023.
The increase in cost includes $3.5 million of incremental spend on research performed on glass systems. Efforts remain focused on the continued investment in elastomeric packaging components, formulation development, drug containment systems, self-injection systems and drug administration consumables.
Efforts remain focused on the continued investment in elastomeric packaging components, formulation development, drug containment systems, self-injection systems and drug administration consumable.
This was offset by 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 in 2023 and additional cost investment impairments being recorded within Corporate in 2023, as compared to 2022.
This is 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 during 2023, which was not repeated in 2024. Additionally, the Company recorded additional asset impairments related to our cost method investments in 2023, as compared to 2024.
(2) During 2023, the Company recorded a cost investment impairment charge of $4.3 million. During 2022, the Company recorded a cost investment impairment charge of $3.5 million.
The transaction closed during the second quarter of 2023. (4) During 2023 and 2022, the Company recorded cost investment impairment charges of $4.3 million and $3.5 million, respectively.
Excluding foreign currency translation effects, net sales increased by $66.3 million, or 13.8%, primarily due to an increase in the volume of sales of components associated with injection-related devices and healthcare diagnostic devices, as well as sales price increases.
Excluding foreign currency translation effects, net sales increased by $6.3 million, or 1.1%, primarily due to an increase in sales of self-injection devices for obesity and diabetes and sales price increases, offset by a decrease in sales of healthcare diagnostic devices.
Proprietary Products – Proprietary Products SG&A costs increased by $28.0 million, or 13.2%, in 2023, primarily due to higher annual incentive compensation, an increase in compensation costs and an unfavorable foreign currency translation impact of $1.3 million.
Proprietary Products – Proprietary Products SG&A costs decreased by $9.1 million, or 3.8%, in 2024, including a favorable foreign currency translation impact of $0.5 million. Proprietary Products SG&A costs decreased primarily due to lower annual incentive compensation, partially offset by increased salary and wages.
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.
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. 29 Components of and Key Factors Influencing Our Results of Operations In assessing the performance of our business, we consider a variety of performance and financial measures.
Corporate and unallocated items – Corporate SG&A costs increased by $5.0 million, or 6.0%, in 2023, primarily due to an increase in fees related to professional services and higher annual incentive compensation.
Corporate and unallocated items – Corporate SG&A costs decreased by $7.6 million, or 8.6%, in 2024, due primarily to a decrease in expense related to stock-based compensation, lower annual incentive compensation and decreased fees related to professional services, partially offset by increased salary and wages.
Proprietary Products – Proprietary Products operating profit decreased by $74.3 million, or 9.5%, in 2023, including a favorable foreign currency translation impact of $10.1 million, due to the factors described above, most notably the decline in COVID-related sales.
Proprietary Products – Proprietary Products operating profit decreased by $132.3 million, or 18.6%, in 2024, including an unfavorable foreign currency translation impact of $1.6 million, due to the factors described above, most notably lower gross profit driven by lower sales volume and an unfavorable mix of products sold.
These increases were offset by a decrease in other current liabilities due to declines in deferred income and accrued commissions, rebates and royalties . The decrease in cash and cash equivalents was due to capital expenditures and share repurchases in 2023 , offset by cash collections driven by positive operating results during the period.
The decrease in cash and cash equivalents was due to capital expenditures and share repurchases in 2024 , offset by cash collections driven by positive operating results during the period. The decrease in total current liabilities was primarily due to the Company amending its Credit Facility Agreement during 2024.
Debt and credit facilities - The $2.1 million decrease in total debt at December 31, 2023, as compared to December 31, 2022, resulted primarily from debt repayments under our Term Loan. Our sources of liquidity include our Credit Facility. At December 31, 2023, we had no outstanding borrowings under the Credit Facility.
Debt and credit facilities - The $4.2 million decrease in total debt at December 31, 2024, as compared to December 31, 2023, is due to the net activity of debt repayments and borrowings as mentioned in Note 10, Debt . Our sources of liquidity include our multi-currency revolving credit facility.
Excluding foreign currency translation effects and the impact related to the disposal of one of our plants of $11.5 million, net sales decreased by $20.1 million, or 0.8%, primarily due to a decline in COVID-related sales of approximately $320 million, offset by growth in our high-value components, primarily Westar ® , Daikyo ® and Envision ® , as well as growth in high-value devices, such as self-injection systems and administration systems, and sales price increases.
Excluding foreign currency translation effects and the impact related to the disposal of one of our plants of $4.3 million, net sales decreased by $51.6 million, or 2.2%, due to a decline in sales of certain High-Value Product ("HVP") offerings due to customer inventory management, primarily FluroTec® products, Westar® components and Daikyo® components.
Contract-Manufactured Products – Contract-Manufactured Products SG&A costs increased by $3.5 million, or 16.7%, in 2023, primarily due to a higher allocation of corporate function spend and higher annual incentive compensation.
Contract-Manufactured Products – Contract-Manufactured Products SG&A costs increased by $1.8 million, or 7.4%, in 2024, primarily due to increased salary and wages.
GAAP) $ 762.4 $ 128.0 $ 655.2 $ 8.58 31 During 2021, we recorded a tax benefit of $31.5 million associated with stock-based compensation. (1) During 2023 , the Company recorded expense of $11.6 million as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment.
Additionally, during 2024, 2023 and 2022, the company recorded $2.1 million of amortization expense in association with an acquisition of increased ownership interest in Daikyo. (3) During 2023 , the Company recorded expense of $11.6 million as a result of the sale of one of the Company’s manufacturing facilities within the Proprietary Products segment.
Consolidated other expense (income) changed by $4.6 million in 2023 as compared to 2022, due to the factors described below. 35 Proprietary Products – Proprietary Products other expense (income) changed by $17.1 million in 2023 as compared to 2022 , primarily due to a loss on foreign exchange transactions being recorded in 2023, while a gain on foreign exchange transactions was recorded during the same period in 2022.
Consolidated other expense (income) changed by $10.4 million in 2024 as compared to 2023, due to the factors described below.
Contract-Manufactured Products – Contract-Manufactured Products operating profit increased by $11.7 million, or 19.4%, in 2023, including a favorable foreign currency translation impact of $0.8 million, due to the factors described above, most notably an increase in sales of components associated with medical devices and diagnostic products.
Contract-Manufactured Products – Contract-Manufactured Products operating profit increased by $0.2 million, or 0.3%, in 2024, due to the factors described above, most notably the increased sales prices.
Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $13.1 million, or 15.8%, in 2023, including a favorable foreign currency translation impact of $1.0 million. Contract-Manufactured Products gross profit margin increased by 0.1 margin points in 2023, due to sales price increases and a favorable mix of products sold, offset by inflationary pressures, primarily within compensation costs.
Contract-Manufactured Products – Contract-Manufactured Products gross profit increased by $2.0 million, or 2.1%, in 2024. Contract-Manufactured Products gross profit margin increased by 0.1 margin points in 2024, primarily due to increased sales prices.
Interest income increased by $22.9 million in 2023, due primarily from 2023 investments in highly liquid low-risk money market funds in the U.S., Europe, and South America yielding higher interest rates compared to 2022. Other Nonoperating (Income) Expense Other nonoperating (income) expense was $(3.0) million, $51.3 million and $(3.8) million for the years 2023, 2022, and 2021, respectively.
Interest income decreased by $8.4 million in 2024, due primarily to the Company having a lower average cash balance during 2024, as compared to the same periods in 2023. Other Nonoperating Expense (Income) Other nonoperating expense (income) was $1.0 million, $(3.0) million and $51.3 million for the years 2024, 2023, and 2022, respectively.
Corporate and unallocated – Excluding the unallocated items, Corporate costs increased by $8.8 million, or 10.6%, in 2023, due to the factors described above.
Corporate and unallocated – Excluding the unallocated items, Corporate costs decreased by $14.3 million, or 15.6%, in 2024, due to the factors described above, most notably the decrease in expense related to stock-based compensation and lower annual incentive compensation. For unallocated items, please refer to the Financial Performance Summary section above for details.
We elected to follow this guidance for our annual impairment test in the prior year, however in the current year, 2023, we performed a quantitative analysis to support our historical qualitative assessments. No impairment in the carrying value of our reporting units was evident as a result of the quantitative assessment performed. 40 Valuing identifiable intangible assets requires judgment.
Based upon our assessment, we determined that it was not more likely than not that the fair value of each of our reporting units was less than its carrying amount and determined that it was not necessary to perform the quantitative goodwill impairment test in the current year. Valuing identifiable intangible assets requires judgment.
Removed
Other Macroeconomic Factors Through the twelve months ended December 31, 2023, the war between Russia and Ukraine has not had a material impact on the Company’s business, financial condition or results of operations as we do not have manufacturing operations or significant commercial relationships in either country.
Added
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.
Removed
However, the continuation of the Russia-Ukraine military conflict and/or an escalation of the conflict beyond its current scope may further weaken the global economy and could result in additional inflationary pressures and supply chain constraints, including the unavailability and cost of energy. 29 We have operations based in Israel that conduct research and development activities and manufacture certain components for our devices.
Added
GAAP) $ 572.8 $ 108.0 $ 497.2 $ 6.75 During 2024, we recorded a tax benefit of $19.5 million associated with stock-based compensation.
Removed
During 2023, we also experienced higher costs for raw materials. Due to the uncertainty that exists relative to the duration and overall impact of the macroeconomic factors discussed above, our future operating performance, particularly in the short-term, may be subject to volatility.
Added
The net expense represents the impact of two items, the first of which is $4.6 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.
Removed
The impacts of macroeconomic conditions on our business, results of operations, financial condition and cash flows are dependent on certain factors, including those discussed in Item 1A. Risk Factors . Components of and Key Factors Influencing Our Results of Operations In assessing the performance of our business, we consider a variety of performance and financial measures.
Added
This expense was partially offset by a $2.5 million benefit recorded within other expense (income) related to revised severance estimates in connection with the Company's 2022 restructuring plan.
Removed
The transaction closed during the second quarter of 2023.
Added
These reductions were partially offset by an increase in sales of self-injection device platforms and increased sales prices, which includes approximately $47 million in customer incentives earned in connection with volumes achieved during 2024, as compared to 2023.
Removed
During 2021, the Company recorded a $2.8 million impairment charge for certain long-lived and intangible assets related to the Company's manufacturing facility within the Proprietary Products segment that was sold during the second quarter of 2023, as it determined the carrying value was not fully recoverable. $1.9 million of this charge was recorded within cost of goods and services sold and $0.9 million of the charge is recorded in selling, general, and administrative expense, due to the nature of the impaired assets.
Added
The decrease is driven by 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 $47 million in customer incentives earned in connection with volumes achieved during 2024, as compared to 2023.
Removed
During 2021, the net cost investment activity was equal to $4.3 million, inclusive of an impairment charge of $4.6 million partially offset by a $0.3 million gain on the sale of a cost investment.
Added
Contract-Manufactured Products – Contract-Manufactured Products other expense (income) remained consistent in 2024 as compared to 2023. 35 Corporate and unallocated items – Corporate and unallocated items changed by $17.6 million in 2024 as compared to 2023.
Removed
In 2021, we recorded a pension settlement charge within other nonoperating (income) expense, as it was determined that normal-course lump-sum payments for our U.S. pension plan exceeded the threshold for settlement accounting. Please refer to Note 15, Benefit Plans , for further discussion of these items.
Added
Other nonoperating expense (income) changed by $4.0 million in 2024, primarily due to a benefit from a favorable legal settlement recorded in 2023 that was not repeated in 2024.
Removed
(8) During 2022, the Company incurred additional tax expense of $5.7 million due to the impact of a tax law change in the state of Pennsylvania enacted during the period.
Added
The increase in the effective tax rate in 2024 of 0.9% is primarily due to a decrease in the tax benefit related to stock-based compensation in 2024, as compared to 2023, partially offset by a decrease in our tax liability on unremitted earnings of our Germany subsidiaries due to a tax law change in 2024.
Removed
The decrease is driven by a decline in higher margin COVID-related sales, a decrease of approximately $21 million, net, in fees received from COVID-19 supply agreements, and inflationary pressures, primarily within compensation costs. These items were offset by increased sales prices.
Added
As part of this amendment, all current notes payable and other current debt amounts were repaid. The decrease in inventories and the increase in accounts receivable were both due to increased net sales leading up to the December 31, 2024 balance sheet date as compared to the December 31, 2023 balance sheet date.
Removed
The losses on foreign exchange transactions in 2023 were primarily driven by a highly inflationary environment in Argentina. Additionally, the Company recorded a loss of $1.3 million related to oil hedges during 2023, while a gain of $1.5 million was recorded in the same period in 2022 .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+3 added−4 removed7 unchanged
Biggest changeIn December 2019, we entered into a five-year floating-to-floating forward-starting cross-currency swap (the “cross-currency swap”) for $90 million, which we designated as a hedge of our net investment in Daikyo. The notional amount of the cross-currency swap is ¥8.9 billion ($81.0 million) as of December 31, 2023.
Biggest changeAs of December 31, 2024, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows: (in millions) Sell Currency Purchase USD EUR SGD EUR 20.8 22.9 — — JPY 6,683.7 28.4 14.8 1.8 SGD 39.8 16.9 12.2 — In December 2019, we entered into a five-year floating-to-floating forward-starting cross-currency swap for $90 million, which we designated as a hedge of our net investment in Daikyo.
Interest Rate Risk As a result of our normal borrowing activities, we have long-term debt with both fixed and variable interest rates. Long-term debt consists of our Term Loan and Series B and C notes.
Interest Rate Risk As a result of our normal borrowing activities, we have long-term debt with both fixed and variable interest rates. Long-term debt consists of our Term Loan and Series C notes.
As of December 31, 2023, the total amount of these forward exchange contracts was Euro ("EUR") 278.6 million and SGD 94.0 million.
As of December 31, 2023, the total amount of these forward exchange contracts was EUR 278.6 million and SGD 94.0 million.
All derivatives are recorded in our consolidated balance sheet at fair value. Foreign Currency Exchange Risk Sales outside of the U.S. accounted for 58.0% of our consolidated net sales in 2023. Virtually all of these sales and related operating costs are denominated in the currency of the local country and translated into USD for consolidated reporting purposes.
All derivatives are recorded in our consolidated balance sheet at fair value. Foreign Currency Exchange Risk Sales outside of the U.S. accounted for 57.5% of our consolidated net sales in 2024. Virtually all of these sales and related operating costs are denominated in the currency of the local country and translated into USD for consolidated reporting purposes.
The following table summarizes our interest rate risk-sensitive instruments: ($ in millions) 2024 2025 2026 2027 2028 Thereafter Carrying Value Fair Value Current Debt: U.S. dollar denominated $81.0 $81.0 $81.0 Average interest rate - variable 6.32% U.S. dollar denominated $53.0 $53.0 $52.6 Average interest rate - variable 3.82% Long-Term Debt: U.S. dollar denominated $73.0 $73.0 $71.0 Average interest rate - fixed 4.02% A change of 1.0% in variable interest rates would decrease or increase annual interest expense by $0.9 million based on our outstanding debt as of December 31, 2023.
The following table summarizes our interest rate risk-sensitive instruments: ($ in millions) 2025 2026 2027 2028 2029 Thereafter Carrying Value Fair Value Long-Term Debt: U.S. dollar denominated $130.0 $130.0 $130.0 Average interest rate - variable 5.68% U.S. dollar denominated $73.0 $73.0 $70.9 Average interest rate - fixed 4.02% A change of 1.0% in variable interest rates would decrease or increase annual interest expense by $1.3 million based on our outstanding debt as of December 31, 2024.
A sensitivity analysis of changes in brent crude oil prices indicated that a 10% decrease or increase in pricing would decrease or increase the fair value of our commodity call options by $0.3 million or $0.6 million, respectively, as of December 31, 2023. 43
During 2023, the loss recorded in other expense (income) related to these options was $1.3 million. A sensitivity analysis of changes in brent crude oil prices indicated that a 10% decrease or increase in pricing would decrease or increase the fair value of our commodity call options by $0.2 million or $0.4 million, respectively, as of December 31, 2024. 43
A sensitivity analysis of changes in fair value of these contracts outstanding as of December 31, 2023, while not predictive in nature, indicated that a 10% decrease or increase in the foreign currency exchange rates from their level would increase or decrease the fair value of these contracts by $7.0 million or $6.9 million, respectively, the majority of which relates to our hedges of the movement between the Euro and United States Dollar contracts.
Under the current cross-currency swap, we receive fixed USD interest rate payments in return for paying fixed JPY interest rate payments. 42 A sensitivity analysis of changes in fair value of these contracts outstanding as of December 31, 2024, while not predictive in nature, indicated that a 10% decrease or increase in the foreign currency exchange rates from their level would increase or decrease the fair value of these contracts by $7.0 million or $5.8 million, respectively, the majority of which relates to our hedges of the movement between the Euro and United States Dollar contracts.
As of both December 31, 2023 and December 31, 2022, the total amount of these forward exchange contracts was Singapore Dollar ("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 in June 2023.
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 December 31, 2024, the total amount of these forward exchange contracts was Euro ("EUR") 145.3 million and $47.1 million.
From November 2017 through December 2023 , we purchased several series of call options for a total of 995,426 barrels of crude oil to mitigate our exposure to such oil-based surcharges and protect operating cash flows with regards to a portion of our forecas ted elastomer purchases.
We regularly purchase call options on 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 December 31, 2023, we had outstanding contracts to purchase 206,316 barrels of crude oil from December 2023 to June 2025, at a weighted-average strike price of $88.78 per barrel.
As of December 31, 2024, we had outstanding contracts to purchase 190,773 barrels of crude oil from December 2024 to June 2026, at a weighted-average strike price of $84.70 per barrel. During 2024, the loss recorded in other expense (income) related to these options was $0.7 million.
Removed
As of December 31, 2023, we had outstanding foreign currency contracts to purchase and sell certain pairs of currencies, as follows: (in millions) Sell Currency Purchase USD EUR EUR 19.8 21.6 — Yen 6,065.2 30.7 13.2 SGD 41.6 13.9 15.8 In November and December 2019, in conjunction with the repayment of the outstanding long-term borrowings under our Credit Facility denominated in Euro and Japanese Yen, we de-designated these borrowings as hedges of our net investments in certain European subsidiaries and Daikyo.
Added
As of December 31, 2024 the total amount of these forward exchange contracts was Singapore Dollar ("SGD") 421.9 million and $13.4 million. As of December 31, 2023 the total amount of these forward exchange contracts was SGD 601.5 million and $13.4 million.
Removed
The amounts recorded as a cumulative translation adjustment in accumulated other comprehensive loss related to these borrowings (prior to de-designation) will remain in accumulated other comprehensive loss indefinitely, unless certain future events occur, such as the disposition of the operations for which the net investment hedges relate.
Added
This 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.
Removed
Under the cross-currency swap, we receive floating interest rate payments based on USD compounded SOFR plus a margin, in return for paying floating interest rate payments based on Japanese Yen (“Yen”) Tokyo Overnight Average Rate 42 ("TONAR") plus a margin. In addition, we receive periodic fixed principal payments of USD in return for paying fixed principal payments of Yen.
Added
As of December 31, 2024, the notional amount of the cross-currency swap is Japanese Yen ("JPY") 17.0 billion ($130.0 million) and the swap termination date is July 2, 2027.
Removed
During 2023, the loss recorded in other expense (income) related to these options was $1.3 million. Dur ing 2022, the gain recorded in other expense (income) related to these options was $1.5 million.

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